Assessing the impact of taxes on female labor supply using a finite mixture approach

This paper expands the standard analysis of female labor supply to permit preference heterogeneity by using a finite mixture model. Using the extended model, we obtain theory consistent results whereas a traditional model produces a negative substitution effect. We use our model to illustrate the labor supply effects of a tax reform, corresponding to 1983–1992 changes in the Swedish income-tax schedule. The results shows an expected reduction in tax revenues of about 17%. Finally, we use Monte Carlo simulations and show that our proposed mixture model is robust towards different misspecifications. First version received: March 1998/final version accepted: October 1999     

Growth and income inequality: a canonical model

Summary. We develop an endogenous growth model with elastic labor supply, in which agents differ in their initial endowments of physical capital. In this framework, the growth rate and the distribution of income are jointly determined. The key equilibrating variable is the equilibrium labor supply. It determines the rate of return to capital, which in turn affects both the rate of capital accumulation and the distribution of income across agents. We then examine the impact of various structural shocks on growth and distribution. We find that faster growth is associated with a more unequal, contemporaneous distribution of income, consistent with recent empirical findings.Received: 7 October 2004, Revised: 18 February 2005, JEL Classification Numbers: O17, O40.Cecilia García-Peñalosa: Correspondence toGarcía-Peñalosa would like to acknowledge the financial support received from the Institut d’Economie Publique (IDEP), Marseille. Turnovsky’s research was supported in part by the Castor endowment at the University of Washington. The paper has benefited from seminar presentations at the University of California, Riverside, and the University of Kansas, as well as from the comments of an anonymous referee.     

Rate of profit and interest in a growth theory with endogenous money

This paper attempts to incorporate an endogenous money approachinto post-Keynesian growth theory in order to derive the fullemployment equilibrium rate of interest as well as that of profit.This rate of interest, named the ideal rate of interest, differsfrom the rate of profit in that it is in proportion to a monetaryvariable, not a real variable. Further, the rate of profit alsodiffers from the rate of interest as a premium because it isproductive. The rate of interest could be important in explainingcircumstances in which financial capital has been accumulatedin excess.     

Perpetual youth and endogenous labor supply: A problem and a possible solution

In the “perpetual youth” overlapping-generations model of Blanchard and Yaari, if leisure is a “normal” good then some agents will have negative labor supply. We suggest a solution to this problem by using a modified version of Greenwood, Hercowitz and Huffman’s utility function. The modification incorporates real money balances, so that the model may be used to analyze monetary as well as fiscal policy. In a Walrasian version of the economy, we show that increased government debt and increased government spending raise the interest rate and lower output, while an open-market operation to increase the money supply lowers the interest rate and raises output.     

Too much of a good thing: Endogenous business cycles generated by bounded technological progress

Following Jones and Williams [Jones, C.I., Williams, J., 2000. Too much of a good thing? The economics of investment in R&D. Journal of Economic Growth vol. 5 (no. 1), 65–85], we assume that R&D is simultaneously subject to positive and to negative external effects (e.g., the non-rival nature of technology conflicts with congestion externalities). This observation allows to conceive an economy where two R&D sectors evolve without departing significantly from each other in terms of their productive results (society tends to penalize imbalances in technical progress, making negative external effects to appear associated to a sector when this outstands relatively to the other sector; the second sector, in turn, will be subject to positive externalities that reflect a catching up effect). The proposed framework, when associated to a growth setup, is able to replicate the existence of endogenous fluctuations and, therefore, it intends to be a contribution to the literature on endogenous business cycles.     

商品价值的两种存在形态

物化劳动不是商品价值的惟一存在形态。是否创造有形物质产品不是创造价值的必要条件。物化劳动只是有形商品价值的存在形态。服务劳动是一种商品,活劳动是其价值存在形态。因此,商品价值应有两种存在形态：一种是物化劳动形态,另一种是活劳动形态。     

Endogenous time preference and optimal growth

We adapt the classic one-sector optimal growth model to include an endogenous rate of time preference along the lines of Becker and Mulligan (1997). The resulting model is both time-consistent and analytically tractable. Capital sequences are shown to be globally monotone and stable under very general circumstances using lattice programming techniques and value orders. We analyze a series of examples that exhibit a variety of behaviors, including closed-form solutions, unique steady-states, multiple steady-states, and conditionally sustained growth. The endogenous rate of discount preserves monotonicity and stability while allowing for the possibility of non-global convergence.I would like to thank Robert Becker, Leonard Mirman, Michael Kaganovich, Itzhak Zilcha, and an anonymous referee for helpful comments and discussions.     

Monetising the Classical Equations: a theory of circulation

The Classical Equations describe output and income in real terms.To use them to analyse aggregate demand, the transactions theydescribe must be ‘monetised’. A sum of money equalto the wage bill of the capital goods sector can be shown tobe necessary and sufficient to carry out all transactions, ina process of circulation which also defines an expression forvelocity. When money has intrinsic value, the quantity approachmay hold in the short run but, in the long run, money will beendogenous. In these conditions, the rate of interest will bedetermined by the supply and demand for reserves, but when moneyis purely nominal, only a minimum rate will be fixed, and therate of interest will have to be pegged. The Appendix developsthe Classical Equations and shows that they define an invariableunit of account.     

On local indeterminacy and endogenous cycles in Ramsey models with heterogeneous households

It is well-known that endogenous cycles can occur in Ramsey models with heterogeneous households and borrowing constraints. In this note, we address the issue of robustness in the more general case of endogenous labor supply and we explain the occurrence of local indeterminacy under progressive taxation.

The geometry of distributional preferences and a non-parametric identification approach: The Equality Equivalence Test

This paper proposes a geometric delineation of distributional preference types and a non-parametric approach for their identification in a two-person context. It starts with a small set of assumptions on preferences and shows that this set (i) naturally results in a taxonomy of distributional archetypes that nests all empirically relevant types considered in previous work; and (ii) gives rise to a clean experimental identification procedure – the Equality Equivalence Test – that discriminates between archetypes according to core features of preferences rather than properties of specific modeling variants. As a by-product the test yields a two-dimensional index of preference intensity.     

Endogenous fertility and growth in a model with old age support

Summary. This paper examines the interrelationship between capital accumulation, fertility, and growth by introducing an endogenous fertility decision into Diamond's (1965) neoclassical growth model. Under the assumptions that children provide old age support and that individuals incur a variable time cost of raising children, it investigates the potential for cyclical fluctuations in the capital-labor ratio and fertility, as well as for development trap phenomena to be observed. It is shown that when capital and labor are highly substitutable in production, there is a unique steady state equilibrium, and either damped or undamped oscillations in fertility and the capital-labor ratio may occur. However, when the elasticity of substitution between capital and labor is less than one, two steady state equilibria may exist; one with a high capital-labor ratio and a high rate of population growth, and the other with a lower capital-labor ratio as well as a lower population growth rate. The former is a saddle, while the latter may be either a source or a sink. In the latter case development traps are possible. Received: June 16, 1997; revised version: December 18, 1997     

Differences in Work Hours and Hours Preferences by Race in the U.S.

Significant differences exist in actual and preferred work hours by race. Specifically, black males work 20 percent fewer annual hours than white males. The differences between black and white women are small. Black workers are significantly more likely than white workers to prefer additional work and fewer are satisfied with their current hours of work. I use the hours-inequality hypothesis of Bell and Freeman (1995,1997) to evaluate the extent to which race differences in work hours and hours preferences are related to race differences in incentives. I demonstrate that whereas white workers work longer hours in response to overall wage variation in their relevant labor market cell, black workers react to the wage variation among black workers but not to the variation overall. The fact that labor market incentives are different for otherwise similar black and white workers is difficult to reconcile with standard competitive theory.     

Pollution effects on preferences: A unified approach

In this paper, we introduce a unified Ramsey model where pollution has an impact on preferences and affects both consumption demand and labor supply. Pollution comes from production activities and is viewed as a stock variable with a strong inertia. A government is introduced and levies a proportional tax on production to finance depollution expenditure. We find two interesting results when pollution raises the consumption demand (compensation effect). First, in the long run, a higher green‐tax rate increases the pollution level at the steady state (green paradox) when pollution raises the labor supply (disenchantment effect). Second, in the short run, local indeterminacy can arise through a Hopf bifurcation when pollution lowers the labor supply (leisure effect) even if pollution has a strong inertia.     

基于动态视角的中国劳动力供给决策实证分析--以杭州出租车司机为例

生命周期劳动供给理论预测工人的劳动供给对短期工资波动有正向的反应,然而不少研究发现国外出租车司机劳动供给弹性是负的。国内出租车司机的情况如何呢？文章用杭州出租车GPS 行程数据分析了司机的内延性和外延性劳动供给。为解决由测量误差和同事效应产生的内生性问题,我们用司机当天遇到的长途载客次数作为其每小时工资的工具变量,进而探讨每小时工资对司机劳动供给时间的影响。我们发现,杭州出租车司机的内延性和外延性劳动供给工资弹性均显著为正,这说明政府增加司机每公里燃油补贴等政策的确能激励司机增加劳动供给。另外,这也说明放松出租车市场的价格管制能使司机更好地根据市场需求优化自己的工作决策。     

The optimal degree of commitment in a negotiation with a deadline

Summary. This note explores the consequences of a player's freedom of choice over his degree of commitment for the bargaining outcome. In particular, we modify the nonstationary structure of Fershtman and Seidmann (1993)'s bargaining by allowing one player to possess imperfect commitments where the degree of commitment is chosen prior to the negotiation stage. We show that a player optimally chooses an intermediate degree of irrevocability provided the costs of increasing the degree of commitment are small enough. In this case, not only an immediate agreement is reached but also the commitment is effective.Received: 18 July 2002, Revised: 20 March 2003, JEL Classification Numbers: C78.Part of this work was written while I was visiting the IAE-CSIC and the University of Essex, whose hospitalities are gratefully acknowledged. This paper has benefited from comments of seminar participants at the University of Essex, 56th European Econometric Society Meeting, 16th Annual Congress of the European Economic Association in Lausanne and the XXVI Symposium of Economic Analysis in Barcelona. I thank Vicent Calabuig and Gonzalo Olcina for very helpful comments. I am especially indebted t o Clara Ponsatí and an anonymous referee for some very detailed comments which lead to substantial improvement of the paper. I also gratefully acknowledge the financial support from Generalitat Valenciana under a postdoctoral grant.     

The historical development of the consumption of sweeteners - a learning approach

From a theoretical point of view, addressing the adoption of novelty and change in consumption is a topic of major interest since it challenges the axiomatic foundations of modern microeconomics. Starting from the “continuity hypothesis” which considers the evolution of culture to be based on biological evolution, an evolutionary approach is presented which highlights the role of consumer learning. By means of a case study on the complex consumption history of sweeteners, it is shown that this approach complements the Lancasterian characteristics approach to the adoption of novelty in consumption in a fruitful way.JEL Classification: B52, D11, D12, Q13The author thanks Guido Buenstorf, Klaus Rathe and Ulrich Witt for helpful discussions and comments.     

Expected utility theory and prospect theory: one wedding and a decent funeral

Choice behavior is typically evaluated by assuming that the data is generated by one latent decision-making process or another. What if there are two (or more) latent decision-making processes generating the observed choices? Some choices might then be better characterized as being generated by one process, and other choices by the other process. A finite mixture model can be used to estimate the parameters of each decision process while simultaneously estimating the probability that each process applies to the sample. We consider the canonical case of lottery choices in a laboratory experiment and assume that the data is generated by expected utility theory and prospect theory decision rules. We jointly estimate the parameters of each theory as well as the fraction of choices characterized by each. The methodology provides the wedding invitation, and the data consummates the ceremony followed by a decent funeral for the representative agent model that assumes only one type of decision process. The evidence suggests support for each theory, and goes further to identify under what demographic domains one can expect to see one theory perform better than the other. We therefore propose a reconciliation of the debate over two of the dominant theories of choice under risk, at least for the tasks and samples we consider. The methodology is broadly applicable to a range of debates over competing theories generated by experimental and non-experimental data.     

Variable Labor Supply,Terms of Trade Shocks,and Domestic Prices: A Note

This paper develops a two-good, small-country, general-equilibrium trade model with endogenous labor supply, where trade is restricted by a tariff or an import quota. Within this framework, it is shown that, contrary to Anam (1989), under an import quota domestic and world prices may vary in the same direction. This is due to the possibly positive employment effects of terms of trade shocks. In such a case, compared to fixed labor supply, variable labor supply is likely to make the domestic prices less sensitive to foreign price volatility. Received June 13, 2001; revised version received November 14, 2001     

Existence of equilibrium in an OLG model with production and altruistic preferences

Summary. This note deals with the existence and uniqueness of a non-trivial steady-state equilibrium in an overlapping generations (OLG) model with productive capital and altruistic agents. We establish a necessary and sufficient condition for operative bequests which extends Abel (1987) and Weil (1987). Interestingly, we prove that the OLG model with production and altruistic agents always experiences a non-trivial steady-state equilibrium. Received: July 16, 1998; revised version: January 29, 1999