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Department Of Economics Newsletter, V12, Winter 2005, University Of Northern Iowa. Department Of Economics.

Department of Economics Newsletter

Inside This Issue:

--A Message From the Department Head

--Scholarship News

--New Scholarships

--Alumni News

--Another Field for Economists: The Football Field

--Economics Scholarship Contributors

--Alumni-In-Residence

--Reflections from Melissa, '99

--Reflections from Tom, '86

--How my Economics Major Served me in my Career and in Life

--Nicholas Sly, ‘04

--State Support and Higher Education

--The Economics Club

--Comments from Club President

--Janet Rives on Being Retired

--Departing Faculty...and New Faculty

--From Our Emeritus Faculty

--The Russia Trip - 2005

--Faculty Notes...as they report it!

--Center for Economic Education

Liberalization Of Village Banking In Guatemala: Structural Differences In Village Banking Institutions, Erica L. Hill

Honors Theses

The International Year of Microcredit in 2005 facilitates public awareness campaigns of microfinance initiatives. Village banking allows microfinance services to reach a wider geographic region, with particular emphasis on rural regions and the poorest sector of society. It attends to those marginalized by a history of repression and conflict. In Guatemala, ethnic diversity and its accompanying social divisions have deep roots. Guatemala is an important case for village banking because of its economic reliance on village banking, the size of the country, and the large number (9) of VBIs in the country. Recent literature calls for an increase in flexibility …

Behavioral Economics And Institutional Innovation, Robert J. Shiller

Cowles Foundation Discussion Papers

Behavioral economics has played a fundamental role historically in innovation in economic institutions, even long before behavioral economics was recognized as a discipline. Examples from history, notably that of the invention of workers’ compensation, illustrate this point. Though scholarly discussion develops over decades, actual innovation tends to occur episodically, particularly at times of economic crisis. Fortunately, some of the major professional societies, the Verein für Sozialpolitik, the American Economic Association and their successors, have managed to keep a broad discourse going, involving a variety of research methods including some that may be described today as behavioral economics, thereby maintaining an …

Crime, Punishment, And Prevention: An Economic Approach, Jeff Arthur

Masters Theses

Gary Becker's seminal paper laid the foundation for the economic analysis of crime. Using this framework, the government has attempted to increase the costs of crime to a level that effectively deters individuals from criminal activity. Despite the relative lack of discussion in economics, Becker's model suggests alternatives to deterrence. Instead of focusing exclusively on increasing the costs of crime, society can increase the benefits of lawful behavior. Rather than punish the crook, reward the citizen. The purpose of this research is to compare the relative effectiveness of prison and police expansion with prevention programs. Prevention programs aimed at increasing …

Poverty And Income Distribution In The Transition Economies Of Central And Eastern Europe And Central Asia, Andreea Chiritescu

Masters Theses

For the transition economies of Eastern and Central Europe and Central Asia, this study reveals that poverty and income distribution move in the same direction. Following a low income inequality and a target of zero poverty before 1989, the transition caused a worsening of distribution of income and wealth, and an increase in absolute poverty.

Using simple trend analysis, some factors that have a positive influence on poverty in these transition economies are the external debt ratio and the population growth rate, and some factors that have a negative influence on poverty are foreign aid, external debt, foreign direct investment, …

Trends Of Employment-Based Health Insurance: Why Did The Coverage For Private-Sector Workers Decrease During Economic Boom, Yan Ni

Masters Theses

After a decade of erosion of employment-based health insurance coverage in the American population, the overall employment-based health insurance coverage increased beginning in the mid-1990s when the strong economy occurred. According to the previous studies, the labor market and health insurance premium are primary determinants of the coverage rate. However, in spite of the tight labor market and non-existent health care cost inflation (the growth of health insurance premiums is close to the growth of wages), the health insurance coverage of private-sector workers continued to decline. Since the private sector workers are the bulk of the population who benefit from …

Effects Of The State Minimum Wages On Youth: Evidence From The States Of Washington And Connecticut, Zhi Su

Masters Theses

Youth aged from 16 to 24 is the group that is most likely to hold minimum wage jobs. A concern of economists and policy makers is: 1) whether the employment opportunities to youth are discouraged by the minimum wage and 2) how the minimum wage influences their choice over work or study. This study advances and combines some ideas from previous studies to examine the effects of the state minimum wages upon youth employment and behavior patterns over school and work. The study concentrates on conditions in the states of Washington and Connecticut during the period of 1998 to 2003, …

Calculating The Added Costs Of Educating Disadvantaged Students, John Yinger

Center for Policy Research

It’s Elementary is a series of essays on topics in education and education policy. The main focus is on education finance in New York State, but general research findings in education and education policy issues in several other states are also discussed. John Yinger, Professor of Economics and Public Administration at the Maxwell School, Syracuse University is the author of most of these essays, although a few are written by or co-authored with other scholars.

Simulation-Based Two-Step Estimation With Endogenous Regressors, Kamhon Kan, Chihwa Kao

Center for Policy Research

This paper considers models with latent/discrete endogenous regressors and presents a simulation-based two-step (STS) estimator. The endogeneity is corrected by adopting a simulation-based control function approach. The first step consists of simulating the residuals of the reduced-form equation for endogenous regressors. The second step is a regression model (linear, latent or discrete) with the simulated residual as an additional regressor. In this paper we develop the asymptotic theory for the STS estimator and its rate of convergence.

On The Estimation And Inference Of A Panel Cointegration Model With Cross-Sectional Dependence, Jushan Bai, Chihwa Kao

Center for Policy Research

Most of the existing literature on panel data cointegration assumes cross-sectional independence, an assumption that is difficult to satisfy. This paper studies panel cointegration under cross-sectional dependence, which is characterized by a factor structure. We derive the limiting distribution of a fully modified estimator for the panel cointegrating coefficients. We also propose a continuous-updated fully modified (CUP-FM) estimator). Monte Carlo results show that the CUP-FM estimator has better small sample properties than the two-step FM (2S-FM) and OLS estimators.

Do Credit Market Barriers Exist For Minority And Women Entrepreneurs?, Lloyd Blanchard, Bo Zhao, John Yinger

Center for Policy Research

This paper examines whether methodological deficiencies in the literature on discrimination in small business credit markets have a significant impact on the estimation of discrimination and provides a preliminary investigation into the causes of discrimination in these markets. We find substantial, statistically significant evidence of discrimination in loan approval against black-owned and Hispanic-owned businesses in 1998 with additional control variables, with a variety of different specifications, and with a simultaneous model of the application and loan-denial decisions. We also find that discrimination in small business lending may take the form of statistical discrimination, driven by lenders' stereotypes about the ability …

Ranking Inequality: Applications Of Multivariate Subset Selection, William C. Horrace, Joseph T. Marchand, Timothy M. Smeeding

Center for Policy Research

Inequality measures are often presented in the form of a rank ordering to highlight their relative magnitudes. However, a rank ordering may produce misleading inference, because the inequality measures themselves are statistical estimators with different standard errors, and because a rank ordering necessarily implies multiple comparisons across all measures. Within this setting, if differences between several inequality measures are *simultaneously* and statistically insignificant, the interpretation of the ranking is changed. This study uses a multivariate subset selection procedure to make simultaneous distinctions across inequality measures at a pre-specified confidence level. Three applications of this procedure are explored using country-level data …

A Study Of The Civil Justice Reform Act Of 2003: Can Tort Reform Benefit Arkansas?, Scott Jackson

Inquiry: The University of Arkansas Undergraduate Research Journal

Without question, reforming America's civil justice system has become a hot button issue in today's political landscape. While most Americans move about their daily lives without giving the subject a second thought, politicians ranging from aspiring state assemblymen to the recently reelected George W Bush have placed tort reform at the forefront of American political affairs. Although problems plaguing American courts have been discussed for years, criticism of America's current system for adjudicating tort cases has reached a fever pitch. Among the more vocal critics are powerful lobbyist groups, such as the American Medical Association (AMA) and the American Tort …

Sailing Into A Strong Future: The Massachusetts Marine Science And Technology Industry, Clyde Barrow, Rebecca Loveland, David Terkla

Economics Faculty Publication Series

With its focus on high-technology, value-added markets, the Bay State’s marine science and technology cluster and its diverse range of companies keeps expanding into high-end markets.

Now That We Do: Same-Sex Couples And Marriage In Massachusetts, A Demographic And Economic Perspective, Randy Albelda, Michael Ash, M.V. Lee Badgett

Economics Faculty Publication Series

Gay and lesbian couples can now legally marry in Massachusetts. This article examines the demographics of same-sex couples and concludes that gay marriage will have a relatively small but positive long-term aggregate economic impact on the Commonwealth.

The Economic Impact Of The Greater Dayton Area Hospital Association Hospitals On The Dayton, Ohio Regional Economy, Nihan Ezel

Masters Culminating Experiences (1993-2011)

This study measures the economic impact of the Greater Dayton Area Hospital Association (GDAHA) hospitals. Measurement of the economic impact employs total expenditures, full-time equivalent employment and the total payroll generated by the GDAHA hospitals in the healthcare industry and ripple effect in the supporting and related industries in the Greater Dayton Area. This study uses input-output analysis with IMPLAN multipliers as a methodology to measure the economic impact of the GDAHA hospitals in Dayton, Ohio. The results of this study indicate that the hospitals generate a substantial amount of output, employment, payroll, and community benefits in the Greater Dayton …

A Study Of The Registered Nurse Labor Market: Wage, Job Satisfaction, And Labor Force Withdrawal, Li Li

Masters Culminating Experiences (1993-2011)

This paper examines the factors that explain differences in earnings among RN’s. In addition, it also looks at the factors that determine the level of job satisfaction among RN’s and examines the factors that determine the probability of leaving the nursing profession. The analysis of RN wage rates shows that nurses who have a 4-year college degree receive a wage premium. However, the results also show that the premium is reduced for nurses who are employed in hospitals. This finding is consistent with the hypothesis that nursing wages are subject to monoposony power in a hospital setting. In fact, the …

The Consequences Of The Growth Of Health Insurance Premiums, Katherine Baicker, Amitabh Chandra

Dartmouth Scholarship

n the United States, two-thirds of the non-elderly population is covered by employer- provided health insurance (EHI). According to a Kaiser Family Foundation national survey (2003), the cost of EHI has increased by over 59 percent since 2000 with no accompanying in- crease in the scale or scope of benefits. These increases in health insurance premiums may have significant effects on labor markets, including changes in the number of jobs, hours worked per employee, wages, and compensation packages. Indeed, it is possible that a significant portion of the increase in the uninsured population may be a consequence of employers shedding …

Beyond Gender Differences In U.S. Life Cycle Happiness, Enrico A. Macelli, Richard A. Easterlin

Economics Faculty Publication Series

We employ two decades of General Social Survey data consisting of 83 birth cohorts from 1893 to 1975 to estimate the influence of satisfaction in seven life domains (family, finances, work, health, friends, place of residence, and leisure time activity) on life-cycle happiness among men and women aged 18 to 89 years in the United States. The adult population is estimated to be happiest at age 51, and men are estimate to surpass women in happiness at age 48. Contrary to both genetic or personality (e.g., traditional gender role) and access to resources (“more is always better”) explanations of happiness, …

Why Equality? How Equality?: The Desirability Of A Focus On Income Distribution, Arthur Macewan

Economics Faculty Publication Series

Much of the discussion of economic development in low and middle income countries and of poverty reduction has either ignored the issue of income distribution or has tended to view income distribution only in terms of its impact on economic growth. In this paper I argue that such an approach is misguided. I will explain, first, why I believe that it is desirable to give a great deal of attention to income distribution in the analysis of economic development and poverty reduction. My argument includes conceptual, political and practical elements. Second, I will suggest some of the ways in which …

A Groundhog Day Economy In The Bay State, Alan Clayton-Matthews

Public Policy and Public Affairs Faculty Publication Series

The Bay State’s economic expansion peaked in December 2000, when the MassBenchmarks Current Economic Index, which is a proxy for gross state product, reached 150.2. But even before reaching that peak, warning signs were on the horizon. The MassBenchmarks Leading Economic Index, which forecasts changes in gross state product six months hence, turned negative in November 2000 and, except for one month, stayed negative for a year. The Current Index did not rise again until April 2003 and since then has risen at a stubbornly slow pace. While there have been eight successive quarters of growth in the Current Index, …

Economic Currents: The State Of The State Economy, Alan Clayton-Matthews

Public Policy and Public Affairs Faculty Publication Series

The Massachusetts economy is recovering, but at a relatively slow pace that is consistent with the state’s experience coming out of the last recession. Job creation continues to lag, and the Commonwealth faces continuing economic challenges, including strengthening the technology sector and addressing worker migration.

Estimating Models Of Complex Fdi: Are There Third-Country Effects?, Badi H. Baltagi, Peter Egger, Michael Pfaffermayr

Center for Policy Research

The recent general equilibrium theory of trade and multinationals emphasizes the importance of third countries and the complex integration strategies of multinationals. Little has been done to test this theory empirically. This paper attempts to rectify this situation by considering not only bilateral determinants, but also spatially weighted third-country determinants of foreign direct investment (FDI). Since the dependency among host markets is particularly related to multinationals' trade between them, we use trade costs (distances) as spatial weights. Using panel data on U.S. industries and host countries observed over the 1989-1999 period, we estimate a "complex FDI" version of the knowledge-capital …

The Role Of Gender And Race In Determining Returns To Higher Education: Evidence From Annual Demographic Survey, Gayatri Rajendra Deshpande

Masters Culminating Experiences (1993-2011)

This study’s objective is to determine the net present values (NPV) of both a master’s degree and Ph.D. degree for six demographic categories. One of the purposes of this study is to determine whether from a social perspective a master’s and Ph.D. degree should be pursued. Cost/benefit analysis is performed to determine whether social benefits exceed social costs of these degree programs. The goal is to determine whether it is advantageous to society to obtain more education. A second and equally important purpose of this study is to determine the role of gender and race in establishing returns to higher …

Direct Selling By Urban Farmers: Constraints In Value Creation, Albert C. Manyengawana

Masters Culminating Experiences (1993-2011)

According to Heimlich (1989), one of the leading development economists who has published several articles on small and urban farming, there are two major forms of urban farms namely backyard gardens and community gardens. These may, further be classified into recreational, adaptive, and traditional farms. Urban farms emerged as a direct response to beautify the landscape, provide food security and serve as an additional income source. Over time, changes in the farming sector allowed farmers to adopt direct marketing initiatives, circumventing the intermediaries in the distribution chain. These tactics of selling directly to consumers included farmers’ markets, road-side sales, and …

Capital Flight From Thailand, 1980–2000, Edsel L. Beja Jr, Pokpong Junvith, Jared Ragusett

Economics Department Faculty Publications

We measure capital flight from Thailand from 1980 to 2000 and analyze the relationships between capital flight and capital inflows, economic growth, crisis, and financial liberalization. We define capital flight as net private unrecorded capital outflows from a capital-scarce developing country, measured as the difference between the recorded sources and uses of funds. This definition is commonly referred to as the ‘residual’ definition of capital flight (see, for example, Erbe 1985; Morgan Guaranty 1986; World Bank 1985). As discussed in Chapter 3, there are several definitions of capital flight: capital flight as the undeclared stock of external assets of domestic …

A Report To The Urban League Of Greater Cleveland: An Assessment Of Business Support Services Available To Existing And Start-Up Small Businesses In The City Of Cleveland, Stuart Mendel

All Maxine Goodman Levin School of Urban Affairs Publications

Developing small businesses is a way to concentrate wealth, employ city residents, improve neighborhood amenities, and provide entrepreneurial role models in urban neighborhood communities currently bereft of such. In a city where well over half of the resident population belong to groupings of people traditionally in the minority, and whose ranking is high in terms of concentrated poverty, nurturing existing and new small minority business enterprises makes good policy sense and offers a systematic intervention strategy to alleviate poverty. This report has been completed to help leadership organizations such as the Urban League of Greater Cleveland and policy-makers such as …

Assessing Demographic Changes And Income Inequalities: A Case Study Of West Virginia, Yohannes G. Hailu, Tesfa Gebremedhin, Randall Jackson

Regional Research Institute Working Papers

The study examines the trends in demographic changes and income inequalities in West Virginia from 1990 to 2000. The relationship between economic growth and income inequality is tested using a system of equations model and county level data. The empirical results indicate that except for 65 years and above age group, income inequality increased in all other age groups. The highest increase was in the age group under 25 years and those 35 to 44 years. Using 3-Stage-Least-Squares estimations, the endogenous dependent variable per capita income growth was positively related with population and employment growth, but it is significantly and …

Loglinear Residual Tests Of Moran’S I Autocorrelation: An Application To Kentucky Breast Cancer Data, Ge Lin, Tonglin Zhang

Regional Research Institute Working Papers

Spatial regressions have been widely used, but their use with the permutation tests of residuals either in linear or loglinear models is rarely seen. In the present study, we have linked the Cliff-Ord permutation test of Moran’s I on linear regression errors to loglinear regression residuals under asymptotic normality. We devised both Pearson residual Moran’s IP R and deviance residual Moran’s IDR tests and applied them to a set of log-rate models for early stage and late-stage breast cancer together with socioeconomic and access-to-care data in Kentucky. The results showed that socioeconomic and access-to-care variables were sufficient to account for …

Cross-Border Shopping And The Sales Tax: A Reexamination Of Food Purchases In West Virginia, Mehmet Serkan Tosun, Mark Skidmore

Regional Research Institute Working Papers

In this paper we present new evidence of cross-border shopping in response to sales taxation. While several instructive studies provide estimates of the cross-border shopping effect, we utilize a unique opportunity to evaluate the effect of a large discrete change in sales tax policy. Using county level data on food income and sales tax data for West Virginia over the 1982-2000 period we estimate that for every one-percentage point increase in the county relative price ratio due to sales tax change, the per capita food income decreases by about 0.7 percent. Our estimates indicate that food sales fell in West …