government as a discriminating monopolist in the financial market the case of china abstract we show that the many unusual features of china s financial markets are consistent with a government choosing regulations to maximize a standard type of social welfare function under certain conditions these regulations are equivalent to imposing explicit taxes on business and interest income yet should be much easier to enforce the observed implicit tax rates are broadly in line with those observed in other countries the theory also forecasts however that china will face increasing incentives over time to shift to explicit taxes

land subsidence production efficiency and the decision of aquacultural firms in taiwan to discontinue production abstract for some time the over pumping of groundwater by aquacultural producers has contributed to severe problems with land subsidence in many areas of taiwan this has led to policy initiatives that impose extra costs on groundwater users by investigating the effects of the conditions of aquifers production efficiency and other factors on decisions of taiwanese aquacultural producers to exit the industry this paper lays an important foundation for an understanding of the effects of these policy initiatives using data from a nationwide survey this exit decision is examined using an innovative empirical strategy that combines data envelopment analysis with a discrete choice econometric model results indicate that less efficient firms and those located in areas where land subsidence is severe are more likely to exit these relationships may in part reflect the effectiveness of the recent policy changes to reduce land subsidence attributable to aquaculture production

intertemporal substitution taste shocks and cointegration abstract the intertemporal elasticity of substitution is estimated by cointegrating regressions for the u s a the u k switzerland and west germany the results of this approach which is robust with respect to stationary taste shocks indicate a substantial extent of intertemporal substitution

real options approach to inter sectoral migration of u s farm labor the core of the literature on inter sectoral labor migration is based on net present value models of investment in which individuals are assumed to migrate to take advantage of positive wage differentials in this article we argue that a real options approach taken together with the adjustment costs associated with sectoral relocation may provide a basis for explaining the migration of farm labor out of the agricultural sector given the irreversibility of migration decisions and uncertainty in the economy potential migrants might choose to postpone migration even in the face of positive wage differentials using annual u s employment data from between 1948 and 2009 our results indicate that large elasticities between economic incentives and out farm migration are observed after a high threshold of wage differentials between farm and off farm sectors is surpassed

home bias and cross border taxation abstract the relationship between cross border taxation and free float home bias is examined this explicitly recognizes that insider shares are unavailable to foreigners other important explanations for home bias information asymmetry behavioural and governance issues are controlled when examining the impact of cross border tax variables in our sample of countries about sixty percent eighty percent withhold taxes on realized capital gains dividends of foreign investors and about thirty percent of the mature economies provide imputation of taxes paid on dividend income by domestic corporations dividend imputation is a statistically significant impediment to cross border equity flows a tax credit variable for foreign taxes paid on dividends is constructed and found to be statistically significant in reducing home bias a relatively high foreign tax rate that cannot be offset by tax credits is found to significantly increase home bias these results hold for float adjusted home bias and traditional international portfolio home bias

treble damage awards in private lawsuits for price fixing the traditional model for assessing the effects of treble damage pena lties on price fixing is reexamined and shown to yield surprising res ults unless the probability of detection is extremely sensitive to the price charged increasing the damage multiple will affect neither market efficiency nor expected distribution and will raise the mark et price copyright 1987 by university of chicago press

why farmers quit a county level analysis we identify the effects of alternative explanatory variables on the propensity of u s farmers to cease farming with a particular emphasis on understanding the roles of off farm employment and federal farm program payments conventional ordinary least squares analysis using all counties suggests that off farm employment has no statistical effect on the net number of farmers quitting between 1987 and 1997 ceteris paribus a more refined analysis which separates counties losing farmers from those that gained farmers reveals subtle and less clear cut effects of off farm employment and federal program payments on farm exits copyright 2001 oxford university press

probability and timing of succession or closure in family firms a switching regression analysis of farm households in germany in a two step econometric approach that corrects for selectivity bias we analyse the determinants of the probability of succession and the timing of succession or closure in a unique sample of 233 north german family farms we set up the succession decision as an intertemporal optimization problem the empirical results show that larger and more profitable farms which are specialized in dairy production are significantly more likely to have an intra family successor we find that a nonagricultural education of the current manager or the successor delay succession when the family decided to stop farming operations nonagricultural education of the owner delays closure of the farm closure occurs earlier if the manager is able to lease out the land in the process of retirement although farm households react to incentives originating from tax and pension regulations many important determinants of succession are beyond the control of policymakers

reducing child malnutrition how far does income growth take us how rapidly will child malnutrition respond to income growth this article explores that question using household survey data from 12 countries as well as data on malnutrition rates in a cross section of countries since the 1970s both forms of analysis yield similar results increases in income at the household and national levels imply similar rates of reduction in malnutrition using these estimates and better than historical income growth rates the article finds that the millennium development goal of halving the prevalence of underweight children by 2015 is unlikely to be met through income growth alone what is needed to accelerate reductions in malnutrition is a balanced strategy of income growth and investment in more direct interventions

the dividend tax credit and canadian ownership objectives this paper discusses the role of the dividend tax credit in determining the canadian ownership pattern of canadian industry the analytic tool used is the capital asset pricing model extended to include differential taxation of dividen ds and capital gains income across different countries the paper finds that changes in the dividend tax credit will have a differential impact on canadian ownership depending on sectoral differences in dividend yields and variances of rates of return and the correlation structure empirical simulation of the model suggests that the effects are significant

political commitment institutional capacity and tax policy reform in tanzania abstract the early literature on structural adjustment programs concentrated on the types of economic reforms required and more recent literature addresses the political and institutional dimensions of economic policy reform this paper presents a framework for analyzing the interaction between politics notably the political commitment to reform and institutions especially administrative capacity in implementing reform the framework is applied to tax reform and trade liberalization in tanzania a number of conclusions are drawn regarding the appropriate design and sequence of a reform program to increase the likelihood of effective implementation given the policy environment and political and institutional changes required

is part time farming really a step in the way out of agricultural one of the most important questions regarding the phenomenon of part time farming is whether it is a stable situation or just a step in the way out of agriculture this article provides support for the first possibility in the context of israeli family farms in the 1970s a multinomial logit model of work choices is estimated including estimated transition probabilities among the explanatory variables the results indicate that a high objective probability of exit from farming within the next decade decreased the tendency to engage in off farm work especially in a full time job in 1971

a general proposition on the design of a neutral business tax abstract a simple and general means of levying a business tax that is neutral in the sense that it does not affect the firm s decisions at the margin is discussed in particular we analyze the effect of a business tax of our design on the investment decision of the firm the well known imputed income and immediate write off methods of levying a neutral business tax are found to be special cases of our general tax design the implication of our results is that a neutral pure profits tax can be levied without the informational difficulties of the imputed income method or the cash flow disadvantages of the immediate write off method

the human development index yet another redundant composite development indicator abstract in its human development report 1990 the united nations development program undp proposes yet another composite indicator of development levels the human development index hdi the hdi assesses intercountry development levels on the basis of three so called deprivation indicators life expectancy adult literacy and the logarithm of purchasing power adjusted per capita gdp using simple statistical analysis this paper questions both the composition of the hdi and its usefulness as a new index of development it concludes that the hdi is both flawed in its composition and like a number of its predecessors fails to provide insights into intercountry development level comparisons which preexisting indicators including gnp per capita alone cannot

tough love and intergenerational altruism tough love and intergenerational altruism this article develops and studies a tough love model of intergenerational altruism we model tough love by modifying the barro becker standard altruism model in two ways first the child s discount factor is endogenously determined so lower childhood consumption leads to a higher discount factor later in life second the parent evaluates the child s lifetime utility with a constant high discount factor our model predicts that parental transfers will fall when the child s discount factor falls this is in contrast with the standard altruism model which predicts that parental transfers are independent of exogenous changes in the child s discount factor

human development concepts and measurement abstract the human development report hdr of the undp argues for a new approach to the definition measurement and achievement of development this paper traces the intellectual origins of the hdr in the recent literature on poverty entitlements and capability the paper also deals in particular with the human development index hdi and explains its rationale and its future revisions

an intertemporal model of international capital market segmentation this paper develops an intertemporal model of international capital market segmentation within the model under various forms of segmentation integration the equilibrium asset prices and allocations the risk free interest rate and the intertemporal consumption behavior and welfares of two countries are derived and compared it is shown that the equilibrium interest rate is increased on integration and that integrating markets may be significantly welfare decreasing for one of the countries conditions that may lead to a decrease in welfare are investigated the conclusions as to the effects of segmentation on asset prices in the mean variance model of the existing finance segmentation literature are also shown to break down in an intertemporal model

contract and exit decisions in finisher hog production finisher hog production in north america has shifted toward larger units and contract format since 1990 exit among independent growers has been high we develop a model showing that growers with any of three efficiency attributes lower innate hazard of exit variable costs or contract adoption costs are more likely to contract produce more and expend more on business protection using 2004 agricultural resource management survey data a recursive bivariate probit model confirms that contracting producers are less likely to exit specialization increases the probability of contracting education nonfarm income and older production facilities are significant in increasing expected exit

risk returns and values in the presence of differential taxation abstract we show that there exist separate security market lines smls for debt and equity securities in an equilibrium with differential taxation of debt and equity we characterize the conditions under which these smls have the same price of risk with different intercepts and the conditions under which the tax effect of leverage is linear in debt value as in the adjusted present value method we explore the implications of our results for cost of capital calculations how to calculate the cost of capital for debt and equity and how to unlever betas correctly accounting for differential taxation

factor ownership taxes and specialization this paper examines the incentives of regions to levy source based capital taxes when the tax revenue is not needed to finance the regional public sector it is assumed that capital is completely mobile among regions but that labour is completely immobile since each region can produce the same two tradable goods using the same technology then differences in tax rates on capital will lead to some specialization if residents of one region own more of the nation s capital per person then these tax differences may be an equilibrium phenomenon regions with below average capital endowment per person will levy capital taxes to lower the cost of the capital they import even though these taxes lead to capital flight and specialization in the labour intensive good

foreign equity investment restrictions capital flight and shareholder wealth maximization theory and evidence this article provides a theory of foreign equity investment restrictions we consider a model where the demand function for domestic shares differs between domestic and foreign investors because of deadweight costs in holding domestic and foreign securities that depend on the country of residence of investors we show that domestic entrepreneurs maximize firm value by discriminating between domestic and foreign investors the model implies that countries benefitting from capital flight have binding ownership restrictions such that foreign investors pay a higher price for shares than domestic investors the empirical implications of this theory are supported by evidence from switzerland article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

taxation of mobile factors as insurance under uncertainty this paper considers the effects of the taxation of mobile factors i e capital under uncertainty the wages earned by residents of a jurisdiction are uncertain due to random shocks since the uncertain wages in a jurisdiction depend on the amount of mobile capital employed in the jurisdiction and since taxation alters the quantity of capital employed taxation affects the riskiness of uncertain wages in particular the taxation of capital moderates the fluctuation of uncertain wages thereby providing insurance for this reason jurisdictions use distortionary capital taxation even if lump sum taxation is available in addition this insurance effect counteracts the tendency toward too low tax rates on capital arising from tax competition and possibly improves the efficiency of tax competition

a modified human development index abstract this paper discusses a modified index for measuring human development the suggested index is based on the components of the human development index hdi developed by the united nations development programme undp since 1990 it discusses two categories of technical issues related to the hdi for 1995 those related to the components and those relevant to the structure of the index the data from the human development report 1995 for 174 countries are used to test the robustness of the suggested index and the results are compared to those of the hdi the new index is then used to delineate with some justification different groups of countries at various levels of human development

simple rules for the optimal taxation of international capital income in this paper we reconcile and extend previous results on the collectively optimal taxation of international investment income the weighted average rule of horst 1980 for example is shown to rest on unattractive assumptions on the set of instruments available ruling out any need for distorting taxes the principal contribution is to establish a new and strikingly simple weighted average rule encompassing the other key result in this area for the general case in which lump sum taxes are unavailable the ability to tax pure profits is perhaps restricted and distorting taxes on both domestic and border crossing capital income are optimally deployed

family labor supply and asset returns abstract we study how shocks to wages and asset prices affect consumption and labor supply decisions of two earner households in a life cycle framework with housing and flexible preferences we provide a micro foundation of the wealth effects on consumption and labor supply we find evidence for non separability between non durable consumption housing services and hours of work the results also highlight the importance of family labor supply in understanding how households respond to shocks to financial and housing markets

stock index futures implications for international capital taxation abstract this paper develops a model of corporate capital structure and investor portfolio choice in an international setting the model s key feature is the stock index futures contract investors and companies specialize in securities based on tax and currency appreciation rates despite this specialization investors achieve complete diversification through futures positions nations should tax interest and capital gains equally and should not tax corporate income this contrasts with the result when futures do not exist in which foreigners desire for diversification provides countries with an incentive to use tax policy to reduce foreign ownership of domestic equity to acquire monopoly rents

on the effects of barriers to international investment a simple model is presented in which it is costly for domestic investors to hold foreign assets the implications of the model for the composition of optimal portfolios at home and abroad are derived it is shown that all foreign assets with a beta larger than some beta plot on either one of two security market lines some foreign assets with a beta smaller than are not held by domestic investors even if their expected return is increased slightly while it is obviously not true that asset markets are completely segmented between countries there is evidence of barriers to international investment although reality seems to lie in that grey area between complete segmentation and no segmentation at all most international asset pricing models are concerned with the extreme case of no barriers to international investment no effort seems to have been made to study the effect on portfolio choice of such barriers which make it costly to hold foreign securities as opposed to domestic securities but which do not in general render international diversification so onerous that investors avoid foreign securities completely casual empiricism suggests that models without barriers to international investment should be suspect those models cannot explain why it appears that in every country investors on average hold more domestic securities than would be required if they held the world market portfolio 2 this paper constructs a model of international asset pricing in which there is a cost associated with holding either long or short risky foreign securities for the sake of simplicity in most of the paper we assume that while domestic investors face barriers to international investment foreign investors face no such barriers it turns out that nothing significant is lost with such an assumption the main conclusions of this paper for the case in which foreign investors face no barriers to international investment are 1 in the presence of barriers to international investment some risky foreign

punishment schedules for capital flight w hat are appropriate penalties to discourage capital flight economic punishments can serve as effective deterrents for economic crimes but the penalties themselves are often costly to impose and enforce good public policy must take these costs into account in addition to the effectiveness of punishment schemes in order to construct a deterrent to economically motivated behaviour the environment that generates this motivation must be well understood we show that the incentives for capital flight can differ in predictable ways this difference in incentives implies that even though standard risk aversion analyses might suggest the opposite it will often be better to penalise larger transactions in a higher proportion than smaller ones a common definition of capital flight is the growth in the stock of one country s claims on non residents that generates income beyond the control of the domestic authorities see for example dooley 1988 rojas suarez 1990 or razin and sadka 1989 this notion is useful because it distinguishes between portfolio motivations for international capital allocation which are desirable on grounds of economic efficiency and movements of capital which are motivated by a desire to evade tax liabilities the latter type of capital movements imposes costs both in terms of lost government revenues and potential distortions in investment decisions we focus therefore on capital movements which are motivated by the illegal desire to shelter investment income from domestic taxation an understanding of capital flight requires a careful and consistent description of the economic environment that generates the motivations for this phenomenon for the remainder of this paper the following assumptions are maintained in order to match as closely as possible conditions that must hold for capital flight to exist

unemployment in the united kingdom since the war in this paper we first present a competitive macroeconomic model of an open economy which is suitable for estimation and contrast this with a non competitive model we then derive unemployment equations from the various models and estimate them over annual data from 1948 1979 we draw the following conclusions i the competitive model of the labour market does not fit the facts ii the non competitive model generates an equation for the constant inflation rate of unemployment which reveals how at certain times such as the mid 1970s a combination of factors conspired to raise this level forcing the government into a deflationary stance to prevent inflation rising drastically iii a number of factors have raised the level of unemployment in a secular fashion since the war in particular the increase in the variation of relative prices the increase in the benefit to income ratio the introduction of employment protection legislation and the rise in the intersectoral shifts of the labour force

international equity markets and trade policy abstract this paper derives optimal trade policies for exporting and importing countries when a market is imperfectly competitive and firms are internationally owned it is shown that an increase in foreign ownership of firms lowers both the optimal export subsidy of the exporting country and the optimal import tariff of the importing country at the same rate foreign ownership also affects the distribution of world welfare between countries however it does not affect trade patterns and firm values

food insecurity gender and international migration in low and middle income countries abstract the determinants of migration have been widely studied but research has rarely addressed the roles of food insecurity and gender in the migration decision process to address these gaps we examine these relationships for 135 078 individuals across 94 low and middle income countries we use a series of binary choice models with sample selection and data from the 2014 2015 waves of the gallup world poll survey which includes the first global measure of individual level food insecurity results which are robust indicate that food insecurity is an important determinant of both migration intentions and preparations and the probability of migration intentions increase monotonically with the severity of food insecurity and the probability of migration preparations decrease these relationships also differ significantly by gender and level of gross national income evidence suggests a need for increased coordination between the international food security and migration policy agendas

economic growth and the demand for education is there a wealth effect abstract human capital investment in developing countries is thought to be significantly constrained by household resources this paper studies the relationship between household resources and the demand for education using recent household survey data from vietnam the data cover a period 1993 1998 of exceptional income growth in vietnam during which secondary school enrollment rose substantially using consumption expenditures to measure household wealth we find a positive and significant relationship between changes in wealth and changes in the demand for education this wealth effect persists even after controlling for locality specific factors such as changes in education returns and the supply and quality of schools and for the opportunity costs of schooling

how are we doing on poverty and hunger reduction a new measure of country performance abstract the paper presents a new composite indicator the poverty and hunger index phi to measure countries performance toward achieving millennium development goal no 1 mdg1 on halving poverty and hunger by 2015 building on the statistical structure of the human development index the phi combines all five official mdg1 indicators thereby generating insights on a country s net progress towards its own goal as opposed to progress measured by a single yardstick nonparametric analysis on the phi components provides further evidence on the nature of the relationship between poverty and hunger measures while cross country results show significant variance in progress between and within regions an extension of the phi allows for consideration of the rate of progress made by each country in its own terms that is based on where it needs to be to attain all 5 mdg1 targets by 2015 countries needing priority attention are identified as well as areas for future research and recommendations for post 2015 initiatives

individual and aggregate labor supply in heterogeneous agent economies with intensive and extensive margins we develop a heterogeneous agent general equilibrium model that incorporates both intensive and extensive margins of labor supply a nonconvexity in the mapping between time devoted to work and labor services distinguishes between extensive and intensive margins we consider calibrated versions of this model that dier in the value of a key preference parameter for labor supply and the extent of heterogeneity the model is able to capture the salient features of the empirical distribution of hours worked including how individuals transit within this distribution we then study how the various specications inuence labor supply responses to aggregate technology shocks we nd that abstracting from intensive margin adjustment has large eects on the volatility of aggregate hours even if intensive margin uctuates relatively little

a review of hunger indices and methods to monitor country commitment to fighting hunger several indices measuring hunger and progress in achieving hunger eradication have been proposed in the literature this paper reviews existing hunger indices and critically assesses their quality against a number of desirable properties hunger indices are found to be unsatisfactory in a number of ways they ignore distributional issues they neglect the occurrence of food and health shocks and are sometimes based on unreliable data anthropometric measurements stunting in particular emerge as powerful indicators of hunger and are ideal for addressing a number of policy relevant issues the paper also introduces a conceptual framework for an index measuring country commitment to fighting hunger the constitutive elements of this index are illustrated political will anti hunger policies and programmes suggestions are made on how a commitment index can be built and what are the data requirements

the international financial market and us interest rates abstract this paper examines the linkages between the eurodollar and us domestic financial markets it is shown that using weekly data allows the isolation of significant fluctuations being transmitted between markets in both directions in particular financial markets in the us are affected significantly by foreign events it is impossible to reach precise conclusions about the causes of historical variation in the rates however this paper provides evidence that at most 40 of the variation in eurodollar interest rates over the 1975 1978 period can be traced to domestic us sources and that between about one fifth and two thirds of the variation in domestic rates can be traced to foreign sources

taxing capital in a large open economy abstract this paper analyzes capital taxation in a dynamic optimizing equilibrium model of a large open economy it is shown that the existence of current account imbalances may yield surprising results for example if a country has a current account deficit the tendency of an increased tax on investment to lower wages is dampened if the deficit is sufficiently large an increased investment tax may actually increase both wages and welfare in the long run a country with a current account surplus may find that temporary investment incentives improve its current account in all but the short run

the food stamp program and food insufficiency food stamp participants have higher food insufficiency rates than eligible nonparticipants even after controlling for other factors given the food stamp program s prominent role in the alleviation of hunger this is a counterintuitive result we conjecture that these higher rates are due to adverse selection insofar as households more likely to be food insufficient are also more likely to receive food stamps we establish a theoretical framework to address this adverse selection using a simultaneous equation model with two probits we show that once one controls for this adverse selection food stamp recipients have the same probability of food insufficiency as nonrecipients copyright 2001 oxford university press

credit constraints and the labour supply of immigrant families in canada the hours of work decisions in immigrant and nonimmigrant families are compared using an intertemporal labor supply model estimated over data from the 1981 and 1991 census of canada surveys the family investment hypothesis is evaluated the hypothesis states that the immigrant family is unable to borrow in the first years after migration and that the immigrant wife responds by working longer hours so as to support family consumption and her husband s labor market adjustment the empirical evidence in general supports the hypothesis since credit constraints are found to significantly distort the labor supply decisions of recently arrived immigrant families

labour market conditions and labour force participation the case of the netherlands we develop a model to explain the relationship between unemployment and labour force participation by males and females in the netherlands following recent advances in the literature a distinction is made between temporary and permanent unemployment our findings indicate that male labour force participation is significantly influenced by the temporary unemployment variable while permanent unemployment does not seem to play a significant part for females we find the opposite

taxation of asset income in the presence of a world securities market abstract this paper examines a capm model of world security prices in which governments recognize their ability to influence international security prices via their tax treatment of foreign and domestic investors in this model governments have the incentive to set tax rates such that investors tend to specialize in domestic securities and to restrict net capital flows between countries each country does this to increase the utility of domestic residents taking as given the tax policies of other governments but the net outcome is a reduction in world efficiency and likely a reduction in the utility of all investors

trouble down on the farm what role for agriculture in meeting food needs in the next twenty years considerable optimism exists in the world today that the eradication of hunger is finally within reach gillespie mason and martorell pinstrup andersen for example on the food supply side the sixth world food survey 6wfs issued in 1996 by the food and agriculture organization fao makes note of a steady increase in per capita daily energy supply in 1979 81 and 1990 92 from 2 330 calories to 2 520 calories fao 1996b these numbers imply that for developing regions as a whole the proportion of individuals with inadequate estimated intakes has declined from 35 in 1969 71 to 20 in 199092 for child

growth inequality and poverty looking beyond averages the evidence is compelling that the poor in developing countries do typically share in the gains from rising aggregate affluence and in the losses from aggregate contraction but how much do poor people share in growth do they gain more in some settings than others do some gain while others lose does pro poor growth mean more or less aggregate growth recent theories and evidence suggest some answers but deeper microeconomic empirical work is needed on growth and distributed change only then will we have a firm basis for identifying the specific policies and programs needed to complement and possibly modify growth oriented policies

effects of permanent and transitory tax changes in a life cycle labor supply model with human capital i examine effects of labor income taxation in life cycle models with human capital accumulation in this case the opportunity cost of time equals the wage plus returns to work experience this has several interesting consequences first the data appear consistent with larger labor supply elasticities than prior work suggests second contrary to conventional wisdom permanent tax changes can have larger effects on current labor supply than temporary changes third human capital dampens responses of young workers to transitory tax changes fourth labor supply elasticities increase with age fifth human capital amplifies the effect of permanent tax changes in the long run

economic inequality and its socioeconomic impact abstract income inequality is of fundamental interest not only to economists but also to other social scientists a substantial literature in economics and the social sciences has investigated the relationship between income inequality and economic growth and a variety of social phenomena the links between inequality and economic growth are explored as well as those between inequality and such key social variables as political conflict education health and crime the analysis in this paper follows a two step process first a review of the empirical evidence relating inequality to growth and to each of the above social variables is undertaken second the various causal mechanisms that have been proposed in the social science literature to explain those links are surveyed

farmers health and agricultural productivity agriculture is one of the most hazardous productive sectors around the world most previous studies have focused on health issues of farmers in developing countries while little attention has been paid to farmers health problems in developed countries the present study assesses the effect of farmers health conditions on agricultural productivity in norway employing stochastic frontier regression techniques we conclude that differences in farmers health help to explain the variance in agricultural production efficiency

can capital income taxes survive in open economies optimal tax theory forecasts that small open economies should not tax capital income yet countries do tax capital income why the inconsistency this paper shows that use of the double taxation convention whereby governments credit taxes paid abroad against domestic taxes helps explain this inconsistency in particular capital income will be taxed if a dominant capital exporter acts as a stackelberg leader when setting its tax policy due to the convention other countries will then tax capital imports making it attractive for the dominant capital exporter to tax capital income without a dominant capital exporter however the model still forecasts no capital income taxes can taxation of capital income survive the increasing integration of world capital markets a number of recent papers suggest not diamond and mirrlees 1971 for example showed that a small open economy would not choose to tax the income generated by the physical capital located within the country this is because production would occur efficiently under an optimal tax system which requires that domestic investments earn the rate of return available on the world capital market in principle a country might still attempt to tax income earned on the savings of its residents however in practice income from savings invested outside the country is virtually impossible for a government to monitor individuals therefore can evade tax on such savings with very little risk as razin and sadka 1989 show such capital flight in theory eliminates any possibility of a tax on savings investors will simply transfer their funds abroad to avoid taxation yet virtually all countries do in fact tax the capital income earned by corporations and individuals located within their borders how can the theoretical forecast of no capital income taxation be reconciled with this simple observation it is difficult to use existing models with any confidence to analyze the implications of changes in capital income tax rates if these same models forecast that countries should never tax capital income

capital income taxation and international portfolio choice abstract distortionary proportional capital income taxation is shown to cause both static effects via portfolio re allocation and dynamic effects via changes in the value of a claim to future transfers as well as via perceived changes in the future investment opportunity set the stochastic structure of returns to investment is important for understanding the consequences of a unilateral increase in the domestic tax rate a government choosing optimal tax policy makes a tradeoff between the increase in the perceived value of future transfers and the distortion to portfolio allocation produced by taxation with corporate taxation the optimal tax rate is positive

the effect of part time work on wages evidence from the social security rules this article identifies the part time wage effect using hours variation caused by the social security rules we show that work hours and wages drop sharply at ages 62 and 65 we argue that the hours decline causes the wage decline resulting in a 25 wage penalty for men who cut their work week from 40 to 20 hours however we find little evidence for such an effect among women we also show that models that fail to account for the joint determination of hours and wages will understate the labor supply response to a tax change by about 26

the big push deja vu a review of jeffrey sachs s the end of poverty economic possibilities for our time jeffrey sachs s new book the end of poverty economic possibilities for our time penguin press new york 2005 advocates a big push featuring large increases in aid to finance a package of complementary investments in order to end world poverty these recommendations are remarkably similar to those first made in the 1950s and 1960s in development economics today as then the big push recommendation overlooks the unsolvable information and incentive problems facing any large scale planning exercise a more promising approach would be to design incentives for aid agents to implement interventions piecemeal whenever they deliver large benefits for the poor relative to costs

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

good and bad growth the human development reports abstract the 1996 human development report undp 1996 is about economic growth and human development in keeping with past reports in the series it emphasizes the diversity of country performance in improving human development indicators at given rates of growth this article reviews what the human development reports have said on this topic looking at how well the main messages have been supported by data and analysis and how compelling they are as a basis for public action

assessing food insecurity in latin america and the caribbean using fao s food insecurity experience scale abstract the complexity of the operational concept and definition of food insecurity has complicated the study of the food insecure and efforts to determine clear policy directions previous findings on the prevalence and severity of food insecurity are inconsistent and often depend on the measure used to overcome limitations in food security measurement the food and agriculture organization of the united nations developed the food insecurity experience scale which is the first survey protocol to measure people s direct experience of food insecurity on a global scale using this new measure our study contributes to the understanding of the food insecure by examining the determinants of food insecurity within and across countries in latin america and the caribbean lac using a series of multilevel linear models we find the three determinants associated with the largest increase in the likelihood of experiencing food insecurity in lac are low levels of education limited social capital and living in a country with low gdp per capita results suggest the need to promote education of the most vulnerable encourage social interactions that help build individuals social capital and adopt gender sensitive programs the results also suggest the need for a shift in policy from short term strategies to long term efforts that sustain household productive capacity and employment to promote sustained economic growth

a fresh look at the rotten kid theorem and other household mysteries gary becker s rotten kid theorem asserts that if all family members receive gifts of money income from a benevolent household member then even if the household head does not precommit to an incentive plan for family members it will be in the interest of selfish family members to maximize total family income i show by examples that the rotten kid theorem is not true without assuming transferable utility i find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a rotten kid theorem while restrictive these conditions still allow one to apply the strong conclusions of the rotten kid theorem in an interesting class of examples

wage growth landholding and mechanization in chinese agriculture this paper uses farm panel data from china to examine the dynamics of land transactions machine investments and the demand for machine services recently china s agriculture has experienced a large expansion of machine rentals and machine services provided by specialized agents which has contributed to mechanization of agricultural production the empirical results show that an increase in nonagricultural wage rates leads to expansion of self cultivated land size a rise in the proportion of nonagricultural income or the migration rate also increases the size of self cultivated land interestingly however relatively educated farm households decrease the size of self cultivated land which suggests that relatively less educated farmers tend to specialize in farming the demand for machine services has also increased if agricultural wage and migration rate increased over time especially among relatively large farms the results on crop income support the complementarity between rented in land and machine services demanded which implies that scale economies are arising in chinese agriculture with mechanization and active land rental markets

time series representations of economic variables and alternative models of the labour market accepting the hypothesis that the time series facts of the aggregate labour market may be summarized by the linear autoregressive and moving average representations of wages prices unemployment and interest rates implies that a useful theory ought to lead to predictions about these representations following this approach this paper first catalogues many of the time series facts about the aggregate labour market and then compares them against alternative models of the labour market based on the intertemporal substitution and staggered contract hypotheses

a pecking order of capital inflows and international tax principles abstract even though financial markets today show a high degree of integration the world capital market is still far from the textbook story of high capital mobility the purpose of this paper is to highlight key sources of market failure in the context of international capital flows and to provide guidelines for efficient tax structure in the presence of capital market imperfections the analysis distinguishes three types of international capital flows foreign portfolio debt investment foreign portfolio equity investment and foreign direct investment the paper emphasizes the efficiency of a non uniform tax treatment of the various vehicles of international capital flows

women s empowerment in agriculture what role for food security in bangladesh summary using a nationally representative survey from bangladesh we examine the relationship between women s empowerment in agriculture measured using the women s empowerment in agriculture index and per capita calorie availability dietary diversity and adult body mass index bmi accounting for potential endogeneity of empowerment we find that increases in women s empowerment are positively associated with calorie availability and dietary diversity at the household level overall household wealth education and occupation are more important than women s empowerment as determinants of adult nutritional status although negative impacts of group membership and credit on male bmi suggest that intrahousehold trade offs may exist

what is middle class about the middle classes around the world we expect a lot from the middle classes jim frederick writing in time magazine in 2002 stated china s burgeoning middle class holds the key to the future of the country in a more academic vein easterly 2001 concludes based on a comparison of a large number of countries that countries that have a larger middle class tend to grow faster at least if they are not too ethnically diverse in another article birdsall graham and pettinato 2000 rue the shrinking of the middle class the backbone of both the market economy and of democracy in most advanced societies in the face of burgeoning globalization the economic historian david landes writing about the wealth and poverty of nations 1998 explains england s early ascendancy in terms of the great english middle class of the eighteenth and nineteenth centuries of course there is nothing new about this faith in the middle class it follows a long line of theorizing going back at least to max weber 1905 at least three distinct arguments are traditionally made in one new entrepreneurs armed with a capacity and a tolerance for delayed gratification emerge from the middle class and create employment and productivity growth for the rest of society for a formalization of this argument see acemoglu and zilibotti 1997 in a second perhaps more conventional view the middle class is primarily a source of vital inputs for the entrepreneurial class it is their middle class values their emphasis on the accumulation of human capital and savings that makes them central to the process of capitalist accumulation for example doepke and zilibotti 2005 2007 the third view a staple of the business press emphasizes the middle class consumer the consumer who is willing to pay a little extra for quality in this view the middle class demand for quality consumer goods feeds investment in production and marketing which in turn raises income levels for everyone murphy shleifer and vishny 1989 1 this essay asks what we should make of these arguments in the context of today s developing countries starting from data on patterns of consumption and investment by the middle class we look for what is distinct about the global middle class especially when compared to the global poor defined as those whose per capita daily consumption valued at purchasing power parity exchange rates is below 2 a day who were the subject of a previous essay in this journal banerjee and duflo 2007b in particular is there anything special about the way the middle class spend their money earn their incomes or bring up their children

unemployment as excess supply of labor implications for wage and price inflation abstract the introduction of both market clearing wages and nominal rigidities on wage setting can be used to rationalize unemployment as excess supply of labor in the new keynesian model as a result wage inflation dynamics are forward looking and depend negatively on the rate of unemployment moreover both price inflation and wage inflation evolve as indicated by equations equivalent to those obtained in erceg et al 2000 though with different slope coefficients in an equal volatility comparison the model with unemployment conveys less price stickiness and more wage stickiness

household choices in equilibrium this paper is an empirical investigation of equilibrium restrictions on household consumption and male labor supply it exploits a simple factor structure rationalized by two assumptions that household allocations are pareto optimal and that the labor market is competitive the paper estimates household preferences and tests how well this parsimonious factor structure represents panel data on married couples and time series data on asset returns most of the estimates are roughly comparable to those found in previous work no evidence against the simple factor representation is found and the intertemporal capital asset pricing model is not rejected copyright 1990 by the econometric society

the dynamics of chinese rural households participation in labor markets the work is devoted to the dynamics of labor market participation of chinese rural households based on a theoretical farm household framework the choice between four distinct labor market participation states is empirically analyzed using household data over the period 1995 2002 from the province zhejiang we apply a discrete time hazard approach to analyze households labor market participation histories in particular we investigate the movements between autarky and participation in general and more specifically the shifts between part time and full time farming estimation results suggest significant duration dependence more precisely a decreasing risk of moving from one state to another with an increasing time a household occupies one of these states further the likelihoods of starting any participation in labor markets and to start part time farming are considerably higher than to end participation or to return to full time farming in addition we find that labor market participation decisions are significantly related to several household and farm characteristics

the inequality adjusted human development index a constructive proposal abstract this paper proposes a method to incorporate a concern for distributional inequalities of income education and longevity into the framework of the human development index hdi as it is presently designed by the united nations development programme the paper constructs gini coefficients for a set of 20 developing countries measuring inequalities in annual income educational attainment and life span attainment these calculations are combined with data from the hdi to produce an inequality adjusted human development index iahdi the implications of this proposed index for evaluating and promoting development are considered

off farm work and capital accumulation decisions of farmers over the life cycle the role of heterogeneity and state dependence abstract this paper analyzes two principal simultaneous decisions of farm operators off farm labor supply and farm capital investment we first develop a theoretical model analyzing the effects of exogenous shocks on farmers decisions then we estimate jointly a multinomial probit model of farmers off farm labor supply and a switching regression model of farm capital using a two period panel data set from israel this method enables to account for both unobserved heterogeneity and structural state dependence the results demonstrate that farm capital investments during the 1970s which were enhanced by heavily subsidized credit prevented farmers from seeking off farm employment opportunities

on capital income tax policies under uncertainty this paper investigates corporate income and dividend taxation in a multi country world where production is subject to country specific productivity shocks singlecountry non cooperative tax policy is shown to imply a tax on foreign source dividends and a subsidy to domestic source dividends the optimal corporate tax may be negative if international portfolios are little diversified at the outset finally each country in a coordinating region should subsidize rather than tax domestic citizen s investment in equity in partner countries 1998 elsevier science b v all rights reserved

the economics of polygyny in sub saharan africa female productivity and the demand for wives in cote d ivoire polygyny is still practiced throughout much of sub saharan africa with important social consequences this paper makes the first attempt to link african polygyny directly to the productivity of women in agriculture using micro data i develop a structural model of the demand for wives that disentangles wealth and substitution effects using a large household survey from cote d ivoire i find that marked geographic diversity in cropping patterns leads to regional variation in female labor productivity i also find that conditional on wealth men do have more wives when women are more productive that is cheaper this substitution effect may explain why polygyny declined in rural areas of cote d ivoire during agricultural development

equate and conflate political commitment to hunger and undernutrition reduction in five high burden countries summary as political commitment is an essential ingredient for elevating food and nutrition security onto policy agendas commitment metrics have proliferated many conflate government commitment to fight hunger with combating undernutrition we test the hypothesis that commitment to hunger reduction is empirically different from commitment to reducing undernutrition through expert surveys in five high burden countries bangladesh malawi nepal tanzania and zambia our findings confirm the hypothesis we conclude that sensitive commitment metrics are needed to guide government and donor policies and programmatic action without historically inadequate prioritization of non food aspects of malnutrition may persist to imperil achieving global nutrition targets

after the decision implementing policy reforms in developing countries abstract implicit in many reform proposals is a model of the policy process that is roughly linear a proposed reform gets on the agenda for government action a decision is made on the proposal and the new policy or institutional arangement is implemented either successfully or unsuccessfully this article presents an alternative interactive model of implementation that focuses on the conflict and reactions that are evoked by efforts to bring about changed policy or institutional contexts for development and the resources that policy makers and managers are likely to require to sustain a reform in the face of such reactions central to the analysis is the assertion that characteristics of the reform being implemented will largely determine the kind of conflict it engenders where such reaction is likely to become manifest and what resources are needed for sustainability the analysis suggests a framework for the strategic management of reform initiatives

capital income taxation in a world economy a territorial system versus a residence system this paper investigates the effects of a tax reform of conversion from capital income to consumption taxes on capital accumulation in a two country model in the territorial system the tax reform will normally lead to a negative comovement between capital accumulation in two countries while in the residence system it will lead to a positive comovement copyright 1991 by royal economic society

off farm labor market decisions and agricultural shocks among rural households in kenya using household level data from rural kenya this article explores whether and how farm households respond to unfavorable agricultural production environments including any ex post adjustments in off farm labor supply in response to unexpected weather shocks while controlling for a wide range of educational demographic and other locational factors we examine how long term weather conditions and specific rainfall shocks influence a household s decision to engage in and their earnings from the off farm labor market we find that rural households engage in off farm work as a long term strategy to deal with the effects of anticipated weather conditions on their farming operations the analysis does not reveal major short term adjustments in off farm engagement as a result of specific unexpected rainfall shocks these households do however rely on remittance income and petty agricultural wage labor under these circumstances holding other factors constant and conditional on participation households in areas with a more productive local agriculture tend to earn more from off farm work especially in the informal business sector than their counterparts in regions with a less productive agriculture as expected a vibrant local economy in the form of public investment increases the probability of off farm participation

taxation of investment and savings in a world economy the equilibrium of capital and equilibrium market prices are derived for a world economy with a unified securities market mobile capital no uncertainty and varying tax rates on different sources of income in each country the paper then characterizes optimal tax rates for a small country in this setting focusing on the peculiar incentives created when the before tax rate of return differs among securities due to differences in their typical tax treatment copyright 1986 by american economic association

measuring the commitment to reduce hunger a hunger reduction commitment index abstract can an index be constructed to assess governments commitment to reduce hunger this paper argues for the need for such an index and outlines one way of constructing it we use secondary data to construct the hunger reduction commitment index hrci for 21 developing countries we operationalise commitment around 3 themes legal frameworks policies and programmes and government expenditures to find malawi the gambia guatemala brazil and senegal heading the list with china nepal lesotho zambia and guinea bissau coming bottom rankings were robust to our choices about weighting and ranking methods the paper demonstrates a viable method to measure political commitment and highlights the analytical importance of disentangling hunger commitment from hunger outcomes cross tabulations of hrci scores with hunger wealth administrative capacity and voice and accountability scores can guide action from different stakeholders governments civil society donors finally we show how primary data collection might be used to assess areas of strength and weakness in country specific commitments to reduce hunger

the taxation of foreign profits a unified view this paper synthesizes and extends the literature on the taxation of foreign source income in a framework that covers both greenfield and acquisition investment and a general constraint linking investment at home and abroad for the multinational by introducing a cost of adjustment for the mobile factor unless the cost of adjustment is zero the domestic tax on foreign source income should always be set to ensure the optimal allocation of the mobile factor between domestic and foreign assets and should follow the classical rules in the literature national optimality requires the deduction rule and global optimality requires the credit rule only in the zero cost case does exemption become optimal allowances can be set so as to ensure that domestic and foreign asset purchases are undistorted by the tax system this requires a cash flow tax on domestic investment in the greenfield case and a cross border cash flow tax on foreign investment in both cases these basic results extend to various extensions of the model notably i when a profit shifting motive is present and ii to some extent when a corporate income tax is in place the introduction of tax administration costs into the model can explain the empirical trend towards the use of the exemption regime

do agricultural outputs of partly autarkic peasants affect their health and nutrition evidence from rwanda abstract in rural areas of less developed countries because of market imperfections the health and nutritional status of peasants may directly depend on the production levels of specific agricultural goods rather than solely on income levels this channel of health and nutrition determination has never been studied in order to assess and test the empirical possibility of this channel we estimate the responses of health and nutritional status of autarkic agricultural households in rwanda with respect to differences in socio demographic characteristics and the main agricultural outputs and inputs while controlling for local environment and sampling scheme several food outputs are found to have a positive influence on health and nutrition whereas the production of traditional beers has a negative impact moreover greater land negatively affects health and nutrition conditionally on agricultural production perhaps because of a larger relative workload for households who have a large farm an alternative interpretation of the estimates is that they inform on the validity of the common hypothesis of perfect agricultural input output markets with no effect of agricultural inputs outputs on health and nutrition status this hypothesis is rejected

assets activities and rural income generation evidence from a multicountry analysis summary this paper examines the links between the assets and the economic activities of rural households in developing countries to provide insight into how the promotion of certain key assets particularly education land and infrastructure influences the economic choices of these households nationally representative data from 15 countries which form part of the rural income generating activities riga database are used in the analysis the results indicate that improved land access is linked to agricultural production and thus will lead households to take on average this path for improving household welfare higher levels of education and greater access to infrastructure appear to be most closely linked to non agricultural wage employment