Economics Commons^™

Local Labor Markets And The Federal Earned Income Tax Credit, Andrew R. Hanson, Zackary Hawley

Economics Faculty Research and Publications

The Earned Income Tax Credit (EITC), which offers relief from federal income-tax payments for a targeted group of taxpayers, is based on national income limits and the presence of dependent children. Benefits determinations are made with a flat national maximum level of assistance. The EITC is extended to nearly 29 million families and costs the U.S. Treasury about $64 billion annually.

While the EITC uses national parameters to determine eligibility and benefits, the U.S. labor force is dispersed among a series of disparate labor markets in metropolitan areas. Each market within each geography has unique characteristics, with vastly different wage …

Heterogeneity In The Preferences And Pro-Environmental Behavior Of College Students: The Effects Of Years On Campus, Demographics, And External Factors, Andrew G. Meyer

Economics Faculty Research and Publications

Models from several social science fields have identified factors that lead to pro-environmental behavior. This research builds on those models by analyzing a survey completed by over 500 undergraduates at a US liberal arts university to examine the characteristics of students that are associated with more environmentally friendly behavior and quantify the desirability of different environmental initiatives. There is evidence that the probability of pro-environmental behavior substantially increases with each additional year that a student spends on campus. The magnitude of the effect is between 4 and 10 percentage points per year, depending on the specific behavior and empirical model. …

(Wp 2016-01) Transformation Without Paternalism, John B. Davis, Tom Wells

Economics Working Papers

Human development is meant to be transformational in that it aims to improve people’s lives by enhancing their capabilities. But who does it target: people as they are or the people they will become? This paper argues that the human development approach relies on an understanding of personal identity as dynamic rather than as static collections of preferences, and that this distinguishes human development from conventional approaches to development. Nevertheless this dynamic understanding of personal identity is presently poorly conceptualized and this has implications for development practice. We identify a danger of paternalism and propose institutionalizing two procedural principles as …

Individual Attitudes Toward The Impact Of Multinational Corporations On Domestic Businesses: How Important Are Individual Characteristics And Country-Level Traits?, Joseph P. Daniels, Miao Grace Wang, M.C. Sunny Wong

Economics Faculty Research and Publications

We study the importance of individual characteristics and national factors influencing individual attitudes towards the impact of multinational corporations on local businesses. Our sample includes more than 40 000 respondents in 29 countries from the 2003 National Identity Survey conducted by the International Social Survey Programme. We find that individual demographic factors and socioeconomic status, such as gender, age, income and education, are strong predictors of their attitudes. For example, income and education are positively associated with favourable attitudes towards the impact of multinational corporations (MNCs) on local businesses while age is negatively associated with individual attitudes towards MNCs. In …

How Much Versus Who: Which Social Norms Information Is More Effective?, Andrew G. Meyer, Guanyi Yang

Economics Faculty Research and Publications

We conduct an experiment to investigate how different types of information about social norms affect individuals’ stated contributions to a specific pro-environment program, a student ‘green fee’, in the context of a referendum. Compared to students that receive no information about peer contributions, on average, students that receive information about the dollar value range of contributions at peer institutions contribute less while students that learn about the high percentage of students voting ‘yes’ on green fee programs at peer institutions contribute more. The results are economically significant as the absolute values of both effects represent approximately 25% of average contributions. …

Review Of Economics Imperialism Versus Multidisciplinarity, John B. Davis

Economics Faculty Research and Publications

This paper examines the implications of Chicago School economist Edward Lazear’s 2000 defense of economics imperialism using standard trade theory. It associates that defense with interdisciplinarity or the idea that the sciences are relatively autonomous, but treats this defense as a mask for a more conventional imperialist strategy of promoting Chicago School neoclassicism. Lazear’s argument actually created a dilemma for Chicago regarding how it could espouse interdisciplinarity while operating in a contrary way. I argue that the solution to this dilemma was for neoclassicism to rebuild economics imperialism around neoclassicism as a theory that sees the world in its own …

Exchange Rate Volatility And Its Effect On Stock Market Volatility, K. Kennedy, Farrokh Nourzad

Economics Faculty Research and Publications

This paper investigates empirically the effect of volatility of the exchange rate of the U.S. dollar vis-à-vis the euro on U.S. stock market volatility while controlling for a number of drivers of stock return volatility. Using a GARCH(1, 1) model and using weekly data covering the period from the week of January 1, 1999 through the week of January 25, 2010, it is found that the 9/11 terrorist attack, bear markets, fluctuations in jobless claims, and negative equity market returns increase financial volatility. On the other hand, no conclusive results are found regarding the effect of fluctuations in M2, or …

Economics As Science, John B. Davis, Nancy Cartwright

Economics Faculty Research and Publications

No abstract provided.

Lawson On Veblen On Social Ontology, John B. Davis

Economics Faculty Research and Publications

This paper discusses Lawson’s use of Veblen’s concept of ‘neoclassical economics’ and argument that the category of neoclassical economics should be jettisoned on the grounds that it obfuscates effective critique of mainstream economics. The paper links Lawson’s critique of closed systems and Veblen’s cumulative causation view by offering a reflexivity, feedback loop formulation of the latter aimed at overcoming the pre-Socratic dichotomy between Heraclitian and Parmenidean ontological thinking. The paper then reviews what this implies for three key social ontology doctrines: social reality as processual and highly transient; emergence and the appearance of novelty; the internal relatedness of social reality. …

Situating Care In Mainstream Health Economics: An Ethical Dilemma?, John B. Davis, Robert Mcmaster

Economics Faculty Research and Publications

Standard health economics concentrates on the provision of care by medical professionals. Yet ‘care’ receives scant analysis; it is portrayed as a spillover effect or externality in the form of interdependent utility functions. In this context care can only be conceived as either acts of altruism or as social capital. Both conceptions are subject to considerable problems stemming from mainstream health economics’ reliance on a reductionist social model built around instrumental rationality and consequentialism. Subsequently, this implies a disregard for moral rules and duties and the compassionate aspects of behaviour. Care as an externality is a second-order concern relative to …

Bilateral Tax Treaties And Us Foreign Direct Investment Financing Modes, Joseph P. Daniels, Patrick O'Brien, Marc Von Der Ruhr

Economics Faculty Research and Publications

Though it is often claimed that bilateral tax treaties promote foreign direct investment (FDI), previous empirical studies do not support this view. Indeed, the literature provides mixed results where bilateral tax treaties have a positive impact on FDI flows in some studies and a negative impact in other studies. Using US FDI outflows disaggregated into financing modes, equity capital, reinvested earnings, and inter-company debt, we estimate fixed-effects quantile regression models that include controls for new tax treaties, existing treaties (in place prior to the start of the sample period), and the total number of tax treaties a host country has …

Terms Of Trade Shocks And Private Savings In The Developing Countries, Abdur Chowdhury

Economics Faculty Research and Publications

Economic agents in the developing countries are subject to tight credit constraints, which are more pronounced during bad state of nature. Thus, adverse shocks to commodity prices in the world market can force them to reduce savings by a larger amount than they would otherwise have. Empirical analysis using a dynamic GMM model and data from 45 developing countries confirm that most of the determinants of savings identified in the literature also apply to the developing countries. The transitory component in the terms of trade have a larger positive impact than the permanent component. This reflects the lack of access …

The Impacts Of Elicitation Mechanism And Reward Size On Estimated Rates Of Time Preference, Andrew G. Meyer

Economics Faculty Research and Publications

We run experiments with real monetary rewards ranging from $10 to $500 to estimate rates of time preference and test for hyperbolic discounting. Individuals become more patient with increasing reward sizes, which is consistent with a magnitude effect. This magnitude effect is robust across specifications including a nonparametric analysis and structural maximum likelihood estimation. Subjects are divided between two different elicitation mechanisms (one a matching task and one a choice task) that should both theoretically provide an incentive for participants to reveal their true time preferences. We find some evidence of differences between the rates from the matching and choice …

Does Education Increase Pro-Environmental Behavior? Evidence From Europe, Andrew G. Meyer

Economics Faculty Research and Publications

It is often observed that individuals with higher education levels tend to be more environmentally friendly. Yet, the causal evidence is lacking because there may well be omitted variables that cause individuals to attain more education and also cause individuals to be environmentally conscious. We implement a regression discontinuity design to estimate the increase in educational attainment due to changes in compulsory education laws in 20th century Europe. This allows us to overcome the identification problem of endogenous educational attainment. Using two waves of Eurobarometer surveys, we find a positive local average treatment effect for 7 of the 8 pro-environmental …

(Wp 2015-03) Lawson On Veblen On Social Ontology, John B. Davis

Economics Working Papers

This paper discusses Lawson’s use of Veblen’s concept of ‘neoclassical economics’ and argument that the category of neoclassical economics should be jettisoned on the grounds that it obfuscates effective critique of mainstream economics. The paper links Lawson’s critique of closed systems and Veblen’s cumulative causation view by offering a reflexivity, feedback loop formulation of the latter aimed at overcoming the pre-Socratic dichotomy between Heraclitian and Parmenidean ontological thinking. The paper then reviews what this implies for three key social ontology doctrines: social reality as processual and highly transient; emergence and the appearance of novelty; the internal relatedness of social reality. …

Geographic Mobility And The Costs Of Job Loss, Nicholas A. Jolly

Economics Faculty Research and Publications

This paper uses data from the 1968 through 1997 survey waves of the Panel Study of Income Dynamics to analyze how the long-term costs of job loss vary by a worker’s post-displacement migration status. Results from the analysis show that those individuals who move within the first 2 years after a job loss experience lower earnings losses, lower reductions in hours worked, and smaller increases in time unemployed when compared to a group of displaced workers who are not geographically mobile during the early years following this life event. Workers who move within the first 2 years after displacement face …

Incidence And Salience Of Alcohol Taxes: Do Consumers Overreact?, Andrew R. Hanson, Ryan Sullivan

Economics Faculty Research and Publications

We use a unique, geocoded micro data set of retail prices to estimate the incidence of alcohol taxation. We estimate the pass-through of alcohol taxation employing both standard ordinary least squares (OLS) and a regression discontinuity design (RDD), using the abrupt change in excise tax occurring at state borders for identification. Our results show that sales and excise taxes on alcohol have different effects on final consumer price. Our estimates suggest that while 40 percent to 50 percent of sales taxes are passed on to consumers, excise taxes have a negative pass-through rate. Negative rates of pass-through on the excise …

Job Displacement’S Long-Run Effect On Access To Employer-Provided Health Insurance And Other Fringe Benefits, Nicholas A. Jolly, Brian J. Phelan

Economics Faculty Research and Publications

This paper investigates the effect of job displacement on access to employer-provided fringe benefits. We find that displacement is associated with lost access to all seven employer-provided benefits investigated. These losses increase the cost of displacement by 10% per year.

Rational Speculative Bubbles In The Us Stock Market And Political Cycles, Miao Grace Wang, Sunny Wong

Economics Faculty Research and Publications

This paper tests the existence of rational speculative bubbles during Democratic and Republican presidential terms, which has not been systematically researched in existing studies. With monthly real returns on equally-weighted and value-weighted portfolios in the U.S. from January 1927 to December 2012, we find that there are rational speculative bubbles under Republican Presidents but not under Democratic Presidents. Our results are robust to different specifications.

How Responsive Are Eu Coal-Burning Plants To Changes In Energy Prices?, Andrew G. Meyer, Grzegorz Pac

Economics Faculty Research and Publications

The European Union (EU) Emissions Trading System (ETS) has implicitly made it more expensive to burn coal relative to natural gas because coal has a higher carbon content. Therefore, it is important to understand how much plants reduce their coal usage in response to higher coal prices to assess the effectiveness of the ETS in reducing carbon emissions. We analyze a novel panel of coal-burning large combustion plants from a subsample of eight EU countries and found that, holding constant the natural gas price, a 1% increase in the coal price results in a 0.36% decrease in coal consumption. At …

International Comovement Of Economic Fluctuations: A Spatial Analysis, Miao Wang, M. C. Sunny Wong, Jim Granato

Economics Faculty Research and Publications

We consider the comovement of economic volatility across multiple countries. Using spatial models with data from 187 countries over the period of 1960–2007, we find a strong spatial comovement of economic volatility. More interestingly, the effect of geographical proximity on economic volatility comovement is strongest during the period of international shocks (1973–86), but almost disappears over the globalization era (1987–2007). By way of contrast, the influence of trade relations in determining the comovement of economic volatility is significant over 1987–2007.

Medicaid Expansions For The Working Age Disabled: Revisiting The Crowd-Out Of Private Health Insurance, Kathryn L. Wagner

Economics Faculty Research and Publications

Disabled individuals under 65 years old account for 15% of Medicaid recipients but half of all Medicaid spending. Despite their large cost, few studies have investigated the effects of Medicaid expansions for disabled individuals on insurance coverage and crowd-out of private insurance. Using an eligibility expansion that allowed states to provide Medicaid to disabled individuals with incomes less than 100% of the federal poverty level, I address these issues. Crowd-out estimates range from 49% using an ordinary least squares procedure to 100% using two-stage least-squares analysis. This potentially large degree of crowd-out could have fiscal implications for the Affordable Care …

(Wp 2015-01) Can Ten Do It Better? Impact Of Red Card In The English Premier League, Abdur Chowdhury

Economics Working Papers

After penalties and goals, red cards are the next most significant event that can impact the outcome of a soccer (football) game. Using data from the English Premier League, this paper statistically analyzes the impact of whether a sending-off of a player actually turns out to be a punishment for the penalized team, or if - as a popular soccer myth states – penalized teams perform better than they would have performed, had they not received a red card. The results show that the sending-offs negatively affect the performance of the penalized team, no matter when the sending-off occurs. Getting …

(Wp 2015-02) Is Unemployment Good For The Environment?, Andrew G. Meyer

Economics Working Papers

Environmental quality is a public good, potentially impacted by everybody. Individual level pro-environmental behavior affects environmental quality in the aggregate. Therefore, it is important to understand what causes individual’s pro-environmental behaviors to change. We quantify the causal effect of one determinant, unemployment, using an EU-27 population representative Eurobarometer survey. Drawing on results from the theory of the private provision of public goods, and recognizing that unemployment decreases income and the opportunity cost of time, we formulate testable predictions that unemployment will decrease the extent of pro-environmental behaviors that require monetary contributions and increase the extent of pro-environmental behaviors that mainly …

Implications Of Globalization For The Output-Inflation Relationship: An Assessment, Joseph P. Daniels, Sandeep Mazumder, David D. Vanhoose

Economics Faculty Research and Publications

During the past two decades, a growing body of research has explored the implications of increased trade and financial openness for the relationship between output and inflation. This paper reviews proposed theoretical channels through which the degree of openness might ultimately affect the output-inflation trade-off and surveys the empirical studies that have sought to determine the net effect of greater openness on this trade-off. In addition, the paper utilizes a single cross-country data set to evaluate, taking into account recent developments in the literature, the likely sign and significance of this net effect. In particular, we find current data imply …

Curbing Corruption, Financial Development And Income Inequality, Sourav Batabyal, Abdur Chowdhury

Economics Faculty Research and Publications

In recent years, many of the Commonwealth countries have experienced a reduction in income inequalities due to the development of financial markets and intermediaries. At the same time, widespread corruption among public officials, civil servants, or politicians from these countries have been well documented. A key public policy question is whether the return to financial sector development at the level of massive corruption, exacerbate income inequality, offsetting the benefits of financial development. Using a panel data of 30 Commonwealth countries over the period of 1995–2008, it is found that the high rates of corruption in the Commonwealth countries are crowding …

Stratification Economics And Identity Economics, John B. Davis

Economics Faculty Research and Publications

Stratification economics represents an important new approach devoted to explaining economic inequality in terms of how social groups are separated or stratified along economic lines. This paper combines stratification economics with identity economics to address complications that the phenomenon of intersectionality – people having multiple social group identities – creates for stratification economics. It distinguishes two types of social identities recognized by social psychologists, categorical and relational social identities, and uses this distinction to explain how individuals’ personal identities, understood as ordered sets of social identities, can be seen to be both socially and self-constructed. Individuals order and rank their …

Revenue Sharing And Within-Team Payroll Inequality In Major League Baseball, Nicholas A. Jolly

Economics Faculty Research and Publications

Using data from the 2000 to 2012 Major League Baseball seasons, this article investigates how changes to revenue sharing in the 2007 collective bargaining agreement altered within-team payroll inequality. Results indicate that inequality within teams decreased after the 2007 bargaining agreement. This reduced inequity is concentrated among those teams that were already experiencing relatively higher levels of inequality. This indicates that changes to revenue sharing should help increase competitive balance within the league. Additionally, the reduction in inequality occurs only among hitters and not pitchers. These results highlight how collective bargaining can have heterogeneous effects on groups of workers despite …

Trade Liberalization And Trade Performance Of Environmental Goods: Evidence From Asia-Pacific Economic Cooperation Members, Qi He, Hong Fang, Miao Wang, Bo Peng

Economics Faculty Research and Publications

In this article, we study the impact of trade liberalization, including reductions in both tariff and nontariff trade barriers, on environmental goods (EGs) exports. Using bilateral trade data from 20 Asia-Pacific Economic Cooperation members, we find that tariff reduction in an exporting country has a larger positive impact on its exports of EGs than tariff reduction in an importing country. Our results also show that a lower nontariff barrier in an importing country increases its imports of EGs. A considerable amount of heterogeneity also exists in subsample results based on countries’ income levels.

Agency And The Process Aspect Of Capability Development: Individual Capabilities, Collective Capabilities, And Collective Intentions, John B. Davis

Economics Faculty Research and Publications

This paper addresses the process aspect of capability development in connection with the debate in the capability approach over the relationship between individual and collective capabilities by combining Sen’s ‘privateness’ interpretation of different aspects of the self and Granovetter’s social embeddedness framework. It interprets Sen’s commitment aspect of the self in collective intentionality terms, uses this to explain his view of ‘identification with’ social groups, and then uses social identity theory’s distinction between relational and categorical social group identities to explain a general relationship between individual and collective capabilities. The paper applies this analysis to three broad domains of social …