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Equilibrium Layoff As Termination Of A Dynamic Contract, Cheng Wang Dec 2006

Equilibrium Layoff As Termination Of A Dynamic Contract, Cheng Wang

Economics Working Papers (2002–2016)

In a dynamic model of the labor market with moral hazard, equilibrium layoff is modeled as termination of an optimal long-term contract. Termination, together with compensation (current and future), is used as an incentive device to induce worker efforts. I then use the model to study analytically the effects of a firing tax on termination and worker compensation and utility. There are three layers to the impact of a firing tax on layoff and worker utility. A higher firing tax could either reduce aggregate termination and increase worker utility, or increase aggregate termination and reduce worker utility, depending on the ...


Partially Identifying The Prevalence Of Health Insurance Given Contaminated Sampling Response Error, Brent Kreider Dec 2006

Partially Identifying The Prevalence Of Health Insurance Given Contaminated Sampling Response Error, Brent Kreider

Economics Working Papers (2002–2016)

This paper derives simple closed-form identification regions for the U.S. nonelderly population's prevalence of health insurance coverage in the presence of household reporting errors. The methods extend Horowitz and Manski's (1995) nonparametric analysis of contaminated samples for the case that the outcome is binary. In this case, draws from the alternative distribution (i.e., not the distribution of interest) might naturally be defined as response errors. The derived identification regions can dramatically reduce the degree of uncertainty about the outcome distribution compared with the contaminated sampling bounds. These regions are estimated using data from the Medical Expenditure ...


Understanding Post-War Changes In U.S. Household Production: A Full-Income Demand-System Perspective, Wallace Huffman Nov 2006

Understanding Post-War Changes In U.S. Household Production: A Full-Income Demand-System Perspective, Wallace Huffman

Economics Working Papers (2002–2016)

This paper examines the changing structure of U.S. household production over the post-World War II period. We apply production theory in order to define a new set of inputs for U.S. households and use newly constructed data so as to examine with the aid of a relatively simple complete household aggregate demand system. The goal is to extent our understanding of the changing structure of the U.S. household sector over the post-World War II period, including the demand for inputs of women’s and men’s housework or unpaid household labor and seven other aggregate input categories ...


Effects And Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food, Matthew Rousu, Wallace Huffman, Jason F. Shogren, Abebayehu Tegene Nov 2006

Effects And Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food, Matthew Rousu, Wallace Huffman, Jason F. Shogren, Abebayehu Tegene

Economics Working Papers (2002–2016)

Food products containing genetically modified (GM) ingredients have entered the market over the past decade. The biotech industry and environmental groups have disseminating conflicting private information about GM foods. This paper develops a unique methodology for valuing independent third-party information in such a setting and applies this method to consumers’ willingness to pay for food products that might be GM. Data are collected from real consumers in an auction market setting with randomized information and labeling treatments. The average value of third-party information per lab participant is small, but the public good value across U.S. consumers is shown to ...


Rejuveniles And Growth, Richard C. Barnett, Joydeep Bhattacharya Aug 2006

Rejuveniles And Growth, Richard C. Barnett, Joydeep Bhattacharya

Economics Working Papers (2002–2016)

Rejuveniles are "grown-ups who cultivate juvenile tastes in products and entertainment". In this note, we study a standard AK growth model of overlapping generations populated by rejuveniles. For our purposes, rejuveniles are old agents who derive utility from "keeping up" their consumption with that of the current young. We find that such cross-generational keeping up is capable of generating interesting equilibrium growth dynamics, including growth cycles. No such growth dynamics is possible either in the baseline model, one where no such generational consumption externality exists, or for almost any other form of keeping up. Steady-state growth in a world with ...


Inferring Disability Status From Corrupt Data, Brent Kreider, John Pepper Aug 2006

Inferring Disability Status From Corrupt Data, Brent Kreider, John Pepper

Economics Working Papers (2002–2016)

In light of widespread concerns about the reliability of self-reported disability, we investigate what can be learned about the prevalence of work disability under various assumptions on the reporting error process. Developing a nonparametric bounding framework, we find that inferences are highly sensitive to the maintained assumptions - especially to how one models po- tential inconsistencies between subjective self-assessments of work limitation and more objective measures of functional limitation. We estimate tight bounds under our strongest assumptions but then find that identification deteriorates rapidly as the assumptions are relaxed.


How Does Family Structure Affect Children's Outcomes? Evidence From The Civil War, David M. Frankel May 2006

How Does Family Structure Affect Children's Outcomes? Evidence From The Civil War, David M. Frankel

Economics Working Papers (2002–2016)

We propose a novel approach to measuring the causal effect of family structure on a child’s outcomes. In a war, some fathers are killed in action and cannot return to their families. This creates a natural experiment in which the effects of a father’s absence can be tested. Using data from the U.S. Civil War, we find no evidence that a father’s death in the war affected his child’s labor income as a young adult. We also find no effect on labor force participation or the chance of being married in 1880. Daughters of fathers ...


Farm Technology And Technical Efficiency: Evidence From Four Regions In China, Zhuo Chen, Wallace Huffman, Scott Rozelle May 2006

Farm Technology And Technical Efficiency: Evidence From Four Regions In China, Zhuo Chen, Wallace Huffman, Scott Rozelle

Economics Working Papers (2002–2016)

In this paper we fit stochastic frontier production functions to data for Chinese farms grouped into each of four regions—North, Northeast, East, and Southwest—over 1995-1999. These frontier production functions are shown to have statistically different structures, and the marginal product information shows overuse of chemical inputs in the East and capital services in the North. Labor also has a low marginal product. Next, we use the data and the production parameters to create technical efficiency scores for each of the farms and then standardize them. Standardized technical efficiency is shown to have the same structure across regions and ...


Optimal Monetary Policy And Economic Growth, Joydeep Bhattacharya, Joseph Haslag, Antoine Martin Apr 2006

Optimal Monetary Policy And Economic Growth, Joydeep Bhattacharya, Joseph Haslag, Antoine Martin

Economics Working Papers (2002–2016)

This paper studies a overlapping generations economy with capital where limited communication and stochastic relocation create an endogenous transactions role for fiat money. We assume a production function with a knowledge-externality (Romer-style) that nests economies with endogenous growth (AK form) and those with no long run growth (the Diamond model). We show that the Tobin effect is always operative. Under CRRA preferences, irrespective of the degree of risk aversion, we also show that for some positive inflation to be optimal and for the Friedman rule to be sub-optimal, it is sufficient (but not necessary) that there be a mild degree ...


Economics Of Intellectual Property Rights In Plant Materials, Wallace Huffman Apr 2006

Economics Of Intellectual Property Rights In Plant Materials, Wallace Huffman

Economics Working Papers (2002–2016)

This paper presents an economic perspective on intellectual property in plant materials, including its value, and summary information on the U.S. seed industry. It first considers intellectual property rights--types, economic incentives that they bestow, and uses across developed and developing countries. Second, it considers the U.S. seed industry-- characteristics for major crops, optimal pricing of a superior variety, and relative size of public and private research expenditures. Some conclusions and implications are presented in the final section.


Heterogeneity Of Southern Countries And Southern Intellectual Property Rights Policy, Harvey Lapan, Jeong-Eon Kim Mar 2006

Heterogeneity Of Southern Countries And Southern Intellectual Property Rights Policy, Harvey Lapan, Jeong-Eon Kim

Economics Working Papers (2002–2016)

We develop a model with one innovating northern firm and heterogeneous southern firms that compete in a final product market. We assume southern firms differ in their intrinsic costs and their ability to adapt technology and study southern incentives to protect intellectual property rights. We find that in a non-cooperative equilibrium governments will resist IPR protection, but collectively southern countries benefit from some protection. We show that countries with more efficient firms prefer higher collective IPR protection than those with less efficient firms. However, given the aggregate level of IPR protection, it is more efficient if the more efficient countries ...


Grading, Minimum Quality Standards, And The Labeling Of Genetically Modified Products, Giancarlo Moschini, Harvey E. Lapan Mar 2006

Grading, Minimum Quality Standards, And The Labeling Of Genetically Modified Products, Giancarlo Moschini, Harvey E. Lapan

Economics Working Papers (2002–2016)

In this paper we relate the economics of labeling genetically modified (GM) products to the theory of grading and minimum quality standards. The model represents three stages in the supply chain (farm production, marketing handlers, and final users) and allows explicitly for the accidental co-mingling of non-GM products at the marketing stage. Regulation takes the form of a threshold level of purity for non-GM products. The paper also presents a novel demand specification for differentiated GM and non-GM products that is particularly useful in our stochastic framework. First, we find that if the threshold purity level for non-GM products is ...


Do Market Pressures Induce Economic Efficiency?: The Case Of Slovenian Manufacturing, 1994-2001, Peter F. Orazem, Milan Vodopivec Mar 2006

Do Market Pressures Induce Economic Efficiency?: The Case Of Slovenian Manufacturing, 1994-2001, Peter F. Orazem, Milan Vodopivec

Economics Working Papers (2002–2016)

Using a unique longitudinal data set on all manufacturing firms in Slovenia from 1994-2001, this study analyzes how firm efficiency changed in response to changing competitive pressures associated with the transition to market. Results show that the period was one of atypically rapid growth of total factor productivity (TFP). The rise in firm efficiency occurs across almost all industries and firm types: large or small; state or private; domestic or foreign-owned. Changes in firm ownership type have no direct impact on firm efficiency. However, increased market competition related to rising market share of private firms, new market entrants, foreign-owned firms ...


The Economics Of Obesity-Related Mortality Among High Income Countries, Wallace E. Huffman, Sonya K. Huffman, Abebayehu Tegene, Kyrre Rickertsen Jan 2006

The Economics Of Obesity-Related Mortality Among High Income Countries, Wallace E. Huffman, Sonya K. Huffman, Abebayehu Tegene, Kyrre Rickertsen

Economics Working Papers (2002–2016)

Health production and supply functions based on models for productive households are established. Data for 18 high income countries over 1971-2001 are used in the empirical analysis. In the health production function, mortality from cardiovascular diseases and diabetes is positively related to inputs of calories and sweeteners but not to input of fat or to national health care. In the health supply function, a high real price of food, real wage rate and non-labor income, a modest level of socialized medicine, and a low labor force participation rate decrease mortality. A cheap food policy erodes gains from reduced smoking and ...


Computer Adoption And Returns In Transition, Yemisi Kuku, Peter F. Orazem, Rajesh Singh Jan 2006

Computer Adoption And Returns In Transition, Yemisi Kuku, Peter F. Orazem, Rajesh Singh

Economics Working Papers (2002–2016)

Across nine transition economies, it is the young, educated, English-speaking workers with the best access to local telecommunications infrastructures that work with computers. These workers earn about 25% more than do workers of comparable observable skills who do not use computers. Controlling for likely simultaneity between computer use at work and labor market earnings makes the apparent returns to computer use disappear. These results are corroborated using Russian longitudinal data on earnings and computer use on the job. High costs of computer use in transition economies suppress wages that firms can pay their workers who use computers.