QUALITY AND ECONOMIES OF SCALE IN HIGHER EDUCATION: A SEMIPARAMETRIC SMOOTH COEFFICIENT ESTIMATION

This paper proposes a semiparametric smooth coefficient cost model to study the university cost structure where coefficients are an unknown function of the university's overall quality. A local least square method with a kernel weight function is used to estimate the cost function, and a simple statistic for testing a parametric model of the additive quality versus the semiparametric smooth coefficient model is applied. Empirical results from 56 universities in Taiwan show that, taking quality into account, higher education is subject to diseconomies of scale. In all categories—comprehensive and science/technology and public and private universities—the current university scale in Taiwan is too big to be cost efficient. (JEL I21, H52, 9120)     

CONSUMPTION EXTERNALITIES, PREFERENCE CHANGES AND THE 'SAMARITAN'S DILEMMA'

This paper examines the desirability of an exogenously induced change in the preferences of individuals in an economy characterized by (i) asymmetrical, localized positive consumption externalities, (ii) private, non-market, negotiation-free transfers, and (iii) the ‘Samaritan's dilemma.’ A model is analysed in which a benefactor (individual 1) makes an unrestricted voluntary transfer to a beneficiary (individual 2) who ran use the transfer to increase 2's consumption of either a purely private good x or a good y that generates external benefits for 1. Once 1 makes a transfer to 2, 1 cannot control how 2 spends it. If 2 fails to take into account this externality, then good y is under consumed and a loss in social welfare results. When such externalities and their concomitant welfare losses arise, conventional solutions are frequently inappropriate, impractical or impossible. This power shows that exogenously inducing the adoption of new externality internalizing preferences by the benefactor and the beneficiary not only increases the benefactor's transfer and the beneficiary's consumption of good y but also produces a ‘socially superior’ state. The welfare improvement is measured in terms of a welfare criterion that is based on the initial and new preferences of each individual     

PUBLIC CAPITAL, PRODUCTIVE EFFICIENCY AND CONVERGENCE IN THE SPANISH REGIONS (1964–93)

This paper analyses the behaviour of productive efficiency in the Spanish regions for the period 1964–93. From a growth accounting approach, it describes the regional evolution of total factor productivity (TFP'), based on a private inputs production function. A stricter measure of efficiency is then quantified, which is not equivalent to Solow's residual, since public capital is included in the production function and constant returns to scale are not imposed. Finally, on the basis of the measures of total factor productivity and efficiency, the study discusses the existence of technological convergence among Spanish regions and the role played in it by public capital. The renewed interest in the analysis of the process of growth reflected in economic literature in recent years has also occurred in the case of the Spanish economy, with some peculiarities which are worth mentioning. In the 1980s, two important institutional changes took place: a profound political and administrative decentralization, the regions now being autonomous in many decisions on public expenditure, and the incorporation of Spain into the European Community, which as it is well known has a powerful regional policy. Both changes have meant that the analysis of regional economies, and especially their growth paths, have received much more attention from politicians and economists, and even from the population in general. In particular, intense discussion has taken place regarding the effects of development policies and on criteria for geographical distribution of infrastructures. In both cases, much attention has been paid to discussing their capacity to contribute to convergence among the different regions. As a consequence of this greater interest in the analysis of growth from a regional perspective, efforts have also been made to improve the relevant statistical information. In particular, statistical series have been drawn up for investment and accumulated capital stock in each region, both private and public.' This information, only recently available and the first of its kind, as far as we know, in the European regions, substantially broadens the possibilities of research into the Spanish case in this field, where before not even the simplest exercises in growth accounting could be attempted. Further-more, since the series now available allow the time dimension of growth analysis to be combined with the regional dimension, it is possible to work with a panel of data and apply the corresponding techniques. This article analyses the growth of the Spanish economy over the period 1964–93, during which it can be observed that the per capita income levels of the Spanish regions converged. The objective of the study is to evaluate this process of convergence in income from the perspective of the productive efficiency of the regions, in three different ways. First, Section I considers the importance of the contributions of the private factors of production and of improvements in total factor productivity to the growth of output. Secondly, section II studies the existing relationship between the standard measure of efficiency (Solow's residual or TFP') and a stricter measure when the endowments of public capital are considered. Section III analyses whether or not the convergence in per capita income     

INVERSE RELATIONSHIP BETWEEN PRODUCTIVITY AND FARM SIZE: THE CASE OF CHINA

In developing agricultures, past research has suggested an inverse relationship between farm productivity and size. The raw data from China show such an inverse relationship. However, the inverse relationship disappears after we instrument for land area using the fact that one of the objectives of the land allocation process in rural China is to ensure local households to meet their nutritional needs. The empirical inverse relationship is likely due to the failure to account for the unobserved land quality that is unevenly distributed across the farm size continuum, rather than inherent to China's agriculture. (JEL O13, Q12, Q15)     

POOR AND SICK: ESTIMATING THE RELATIONSHIP BETWEEN HOUSEHOLD INCOME AND HEALTH

This study evaluates the effect of the individual's household income on their health at the later stages of working life. A structural equation model is utilized in order to derive a composite and continuous index of the latent health status from qualitative health status indicators. The endogenous relationship between health status and household income status is taken into account by using IV estimators. The findings reveal a significant effect of individual household income on health before and after endogeneity is taken into account as well as a host of other factors known to influence health, including hereditary factors and the individual's locus of control. Importantly, it is also shown that the childhood socioeconomic position of the individual has long lasting effects on health as it appears to play a significant role in determining health during the later stages of working life.     

WHAT DO CITIZENS THINK ABOUT PUBLIC ENTERPRISES? SUBJECTIVE SURVEY DATA ON THE LEGITIMACY OF THE ECONOMIC ACTIVITIES OF THE GERMAN PUBLIC SECTOR

We analyse the legitimacy of public enterprises that perform economic activities by focusing on the citizens’ subjective preferences, i.e. determining their political legitimacy. Using data from a representative survey conducted among 318 citizens of the German state of Rhineland‐Palatine, we explore determinants for the support of either privatisation efforts or the instrumental thesis, a widespread principle in German‐speaking countries, which considers public enterprises solely as instruments to fulfil economic policy objectives. Our results indicate that the respondents’ perception of the efficiency of public enterprises as well as their personal economic situation are important factors for the support of privatisation. The influential factors for the use of public enterprises as policy instruments are political ideology, the perception of a higher security of supplying goods and services as well as opinions regarding corporate social responsibility. The subjective preferences of a (democratic) country's citizens are thus an important reason why the public sector should or should not play an active part in providing goods and services. This can play an important role when decision makers from the public sector are keen to take into account the citizens’ approval or disapproval of privatisation measures.     

SOCIAL CHALLENGES TO ECONOMIC ACCOUNTING AND ECONOMIC CHALLENGES TO SOCIAL ACCOUNTING

The question addressed in this paper is: Why can't we have a good measuring rod of the economic and social performance of our society? The answers are basically positive but lie mostly in the direction of (1) avoiding simplistic solutions such as turning the national income accounts into a measure of social welfare and (2) providing the elements of an information strategy to obtain such a measure or more accurately such a set of measures. The proposed information strategy highlights five activities: (1) the presentation and analysis of welfare outcomes, an activity which is analogous to but broader than “social indicators”; (2) social accounting which includes economic accounting, demographic accounting, and time-use accounting; (3) model building and operation which, unlike accounting, are concerned with behavioral or causal relationships used to explain and project welfare outcomes; (4) hypothesis testing to develop new insights into economic and social behavior; and finally (5) the building and maintenance of a data base required for carrying on the aforementioned four activities.     

Modelling economic growth with internal and external imbalances: Empirical evidence from Portugal

Thirlwall's Law considers that growth can be constrained by the balance-of-payments when the current account is in permanent deficit. The Law focuses on external imbalances as impediments to growth and does not consider the case where internal imbalances (budget deficits or public debt) can also constrain growth. The recent European public debt crisis shows that when internal imbalances are out of control they can constrain growth and domestic demand in a severe way. The aim of this paper is to fill this gap by developing a growth model in line with Thirlwall's Law that takes into account both internal and external imbalances. The model is tested for Portugal which recently fell into a public debt crisis with serious negative consequences on growth. The empirical analysis shows that the growth rate in Portugal is in fact balance-of-payments constrained and the main drawback is the high import elasticity of the components of demand and in particular that of exports.     

Are Public and Private Social Expenditures Complementary?

Most analyses of social protection are focussed on public arrangements. However, social effort is not restricted to the public domain; all kinds of private arrangements can be substitutes to public programs. OECD data indicate that accounting for private social benefits has an equalising effect on levels of social effort across a number of countries. This suggests complementarity between public and private social expenditures. But their distributional effects differ. Using cross-country data, we find a negative relationship between net public social expenditures and income inequality, but a positive relationship between net private social expenditures and income inequality. We conclude that changes in the public/private mix in the provision of social protection may affect the redistributive impact of the welfare state.Part of Leiden Social Security Incidence Project. Revised version of a paper presented at the 57th International Atlantic Economic Conference, Lisbon, Portugal (March 10–14, 2004), and at the 60th Congress of the International Institute of Public Finance, Milan, Italy (August 23–26, 2004). The usual disclaimer applies.     

THE HISTORY OF THE UNITED STATES NATIONAL INCOME AND PRODUCT ACCOUNTS: THE DEVELOPMENT OF AN ANALYTICAL TOOL*

The purpose of this article is to record the history of the national income and product accounts of the United States, concentrating on the period 1932–47. During that period the single national income aggregate evolved into a set of accounts and the estimates emerged as an important analytical tool. Interviews with participants in these developments were extensively utilized to trace the events, people, ideas, and other factors which shaped the history of the accounts. The generally recognized need for economic information during the Great Depression stimulated the request that the Department of Commerce undertake what became the first official continuing series on national income in the United States. These estimates were prepared with the cooperation of the National Bureau of Economic Research and were published in 1934. By the late 1930's, estimates were extended to include income by state and a monthly series. World War II was the impetus for the development of product, or expenditure, estimates. By the mid-1940's, the estimates had evolved into a set of income and product accounts–a consolidated production account, sector income and outlay accounts, and a consolidated saving-investment account–designed to provide a bird's-eye-view of the economy. During this period uses of the accounts widened; analysis of wartime production goals and anti-inflation policy are noteworthy examples. The National Income, 1947 Edition was the culmination of a period of intensive conceptual discussion, extension of data sources, and improvement of estimating techniques. Thereafter the mainlines of development are more familiar, encompassing refinement and elaboration of the estimates and proliferation of uses.     

COMPLEMENTARY MEASURES TO FOREIGN AID: TAIWAN AND THE PRC UNDER DIPLOMATIC RIVALRY

The competition on foreign aid, as a means for securing foreign policy and other benefits by the donor, can lead to diplomatic rivalry. This article utilizes a game theoretic model to analyze the existing rivalry for foreign aid and international status between Taiwan and the People's Republic of China. Similar to the role of political contributions in the public choice theory, foreign aid is taken a means of international lobbying, to realize the donor's objective. Research results, based on the policy effect consideration, indicates that the equilibrium aid policy, which is endogenously determined, renders an inability on the part of the donors, which affects the recipient's optimal foreign policy. How does a donor obtain favorable outcomes when such rivalry exists? Strengthening diplomatic endeavors to realize the access effect has been proved an effective method. Analytical results have shown that this method not only complements aid rivalry but also increases the welfare of the donor.     

THE ASSOCIATION BETWEEN PHYSICIAN SUPPLY AND THE MIX OF GENERALIST AND SPECIALIST SERVICES USED

Variations in physician supply, and the impact on a patient's use of physicians, remains a concern. This article asks how the supply of physicians is associated with both the number of visits and the dollar value of services received from general practitioners and specialists. Ontario respondents in the Canadian Community Health Survey 2000/2001 are linked to their Ontario Health Insurance Program claims for 3 years (1999–2002). A geographic weighting method is employed to account for physician supply in surrounding jurisdictions. The results are consistent with the conclusion patients substitute one physician type for another when physician supply is constrained. (JEL I10, I12, C29, C39, C52)     

HETEROGENEOUS EFFECTS OF THE ACA MEDICAID EXPANSION ON HOSPITAL FINANCIAL OUTCOMES

This study examines the effect of the Affordable Care Act's Medicaid expansion on hospital financial outcomes. A key innovation relative to prior studies is that we explicitly account for heterogeneity across states in the timing and extent of the expansion as well as across hospital types. We find that Medicaid expansion led to a decrease in uncompensated care expenditures and an increase in average operating margins. The effects were larger in states where the Medicaid expansion led to a greater increase in program eligibility. Operating margins improved most for public hospitals and facilities located in rural areas. (JEL I11, I13, I18)     

FAVORITISM AND REFEREE BIAS IN EUROPEAN SOCCER: EVIDENCE FROM THE SPANISH LEAGUE AND THE UEFA CHAMPIONS LEAGUE

In this paper, we test for, and find evidence of, referee bias in favor of home teams in European football using minute‐by‐minute analysis to control for within‐game events. The context for the analysis is Spain's Primera Liga and the Union of European Football Association (UEFA) Champions League. We find that the award of sanctions by Spanish referees in the Champions League are not significantly different to those of the referees from other countries and as such are subject to the same sources of bias. In Primera Liga matches where the crowd is separated from the pitch by running tracks, we find that the probability of the award of a yellow card to the home team is higher and that of the away team is lower compared to matches played at stadia without running tracks. Similar results are found in the Champions League, where efforts are made to hire “neutral” referees. Referee behavior is also influenced by the size of the crowd in attendance. (JEL D8, J2)     

Rethinking Work and Income Maintenance Policy: Promoting Gender Equality Through a Citizens' Basic Income

A citizens' basic income scheme is based on the principles of individuality, universality, and unconditionality; when combined with the notion of meeting "basic needs" it would serve to provide a minimum income guarantee for all adult members of society. However, implementation would entail radical reform of existing patterns of welfare delivery and would bring into question the institutionalized relationship between work and welfare, a basic premise of modern welfare states. To date, the debate over a citizens' basic income has emphasized its effects on labor markets, thereby displaying an androcentric bias. Although the role of women in society is central to social policy reform, the existing basic income literature is disturbingly void of any comprehensive treatment of women. No genuine discussion has taken place about the nature of women's lives and work and how these should be valued. Social policy reform should take account of all gender inequalities and not just those relating to the traditional labor market. This paper argues that the citizens' basic income model can be a tool for promoting gender-neutral social citizenship rights, but that any future marriage of justice and efficiency must first divorce work from income.     

INFORMATION AND THE DEMAND FOR CLEAN AIR

This paper examines the relationship between the relocating household's reaction to air quality and its information on environmental quality. The results suggest households exposed to public information on the environment are more responsive to air quality differences if they also are knowledgeable about local environmental conditions. (JEL Q510, R230, D830)     

MEGA‐EVENTS AND TOURISM: THE CASE OF BRAZIL

Mega‐sporting events such as the Fédération Internationale de Football Association (FIFA) World Cup are expensive affairs. Host countries often justify the spending required to stage these events by predicting that mega‐events will draw large numbers of tourists. This paper analyzes monthly foreign tourist arrivals into Brazil between 2003 and 2015 and finds that the 2014 FIFA World Cup increased foreign tourism by roughly 1 million visitors. This number far exceeded expectations, but we show that roughly a quarter of this increase in foreign tourism was caused by the fortuitous advancement of Argentina's national team, and potential hosts should not count on the event to consistently produce out‐sized tourism figures. We conclude that on‐field results can greatly influence FIFA World Cup tourism. (JEL L83, F14)     

Speculative Attacks with Multiple Sources of Public Information*

We propose a speculative attack model in which agents receive multiple public signals. Diverse pieces of public information can be taken into account differently by different players and are likely to lead to different appreciations ex post. This process defines players' expected private values of a successful attack. The main result shows that equilibrium uniqueness depends on two conditions: (i) signals are sufficiently dispersed and (ii) private beliefs about signals' relative precision differ sufficiently. We derive some implications for information dissemination policy. Transparency in this context is multidimensional: it concerns the publicity of announcements, the number of signals disclosed and their precision.     

THEORY OF THE STATE, GOVERNMENT TAX AND PURCHASING POLICY, AND INCOME DISTRIBUTION

Until recently, there has been virtually no discussion among professional economists of the impact of government expenditures on the distribution of income.¹ Neoclassical economics has traditionally shown little interest in distributional issues. Little is said beyond the assumption that factors are paid their marginal products. Micro economics is said to take a “neutral” stance with regard to distributional issues. Static efficiency of allocation is attainable for any income distribution, and consequently, so the parable goes, no income distribution is superior on purely economic grounds to any other. Macro economics also purports to be neutral with respect to distribution. Government expenditures in Keynes' model appear as an undifferentiated blob called “G”. The only interest macro economics takes in distribution issues is concerned with the marginal effect of redistribution on the marginal propensity to consume out of income. Keynesian economics, therefore, is unable to say whether one form of government expenditure is superior to another so long as both accomplish macro objectives. When orthodox economists have approached the issue of the government's distributional impact, they have until recently focused solely on its use of taxes and transfer payments. Public finance has traditionally ignored the expenditure side of state activity since, after all, government activity was a necessary evil, benefiting no one. Gillespie's path-breaking study in 1965 finally acknowledged the utility of government spending, but his analysis and those that have followed in the orthodox tradition have been hampered by a number of awkward premises. First, the orthodox studies of fiscal incidence implicitly accept the view of the government as a neutral arbiter rather than a protagonist of the dominant classes in society. Second, benefits of government services are assumed to be accurately measured by outlays. Thus, if we find that the government spends four times as much on highways as on police, it is assumed that the utility of highways is four times that of police even though one cannot even imagine the continuity of the status quo without the police while many responsible citizens argue that we should drastically curtail outlays on roads. Obviously, the utility of the police in terms of system maintenance exceeds that of the more expensive highway expenditures. Third, it is assumed that for each dollar spent by the government, only one person will benefit when, in fact, many disparate groups can benefit from the same expenditure. A dollar spent on education benefits the student as well as hislher employer. Fourth, Gillespie and his orthodox followers ignore any effect of the government on the pre-tax, pre-transfer distribution of income which they take as given. A hypothesis which we examine in this paper is that the government has an enormous influence over the shape of the pre-tax, pre-transfer income distribution. A more general criticism of previous studies of fiscal incidence is that they suffer from a poorly defined theory of the state. This assertion is most clzarly illustrated by the categorization in previous studies of a wide variety of public exp-enditures as “public goods” (such as national military expenditures). The benefits of these “public goods” are allocated among various income groups in several ways, for example on the basis of wealth ownership (both productive and consumptive) or on a per capita basis. The method of allocation chosen has enormous consequences for one's estimate of overall fiscal incidence. According to Herriot and Miller, those with incomes over $50,000 either receive a net benefit of 4.5 percent of their total income from the government or lose 42.1 percent, depending upon the allocation formula chosen for public goods. Previous studies have taken an agnostic position with respect to the appropriateness of the several allocative assumptions. But this is merely simple empiricism without theoreticai foundation, and thus the formulation of specific hypotheses which employ scientific procedures is impossible. What is needed to provide an interpretation of the data is a well-articulated theory of the state-an area to which we turn our attention in the next section of this paper.