Anti-insurance: Analysing the Health Insurance System in Australia

This paper develops a model to analyse the Australian health insurance system when individuals differ in their health risk and this risk is private information. In Australia private insurance both duplicates and supplements public insurance. We show that, absent any other interventions, this results in implicit transfers of wealth from those most at risk of adverse health to those least at risk. At the social level, these transfers represent a mean preserving spread of income, creating social risk and lowering welfare – what we call anti-insurance. The recently introduced rebate on private health insurance can improve welfare by alleviating anti-insurance.     

Consumption externalities, production externalities, and efficient capital accumulation under time non-separable preferences

The effects of consumption and production externalities on economic performance under time non-separable preferences are examined both theoretically and numerically. We show that a consumption externality alone has long-run distortionary effects if and only if labor is supplied elastically. With fixed labor supply, it has only transitional distortionary effects. Production externalities always generate long-run distortions, irrespective of labor supply. The optimal tax structure to correct for the distortions is characterized. We compare the implications of this model with those obtained when the consumption externality is contemporaneous. While some of the long-run effects are robust, there are also important qualitative and quantitative differences, particularly along transitional paths.     

A Picture of Male and Female Unemployment among Britain's Ethnic Minorities

Using a sample of around one million observations, formed by combining two micro datasets from the 1991 Census of Population, the paper explores male and female unemployment differences across Britain's ethnic minorities. The large sample size allows a detailed multivariate analysis of females for the first time. Unemployment differences are not simply the result of characteristic differences or discrimination by the white majority. The empirical work shows that there are equally wide discrepancies in female unemployment rates, compared with males, between the white majority and the non-white ethnic minorities. Of particular interest is the comparison between UK born and foreign born ethnic minorities. Unemployment rates among the former tend to be considerably higher, but this is accounted for by characteristic differences. Thus there is no evidence that the UK born are doing worse, as the raw data suggest, but they do not seem to be becoming better assimilated either.     

Context-Sensitive Benefit Transfer Using Stated Choice Models: Specification and Convergent Validity for Policy Analysis

Benefit transfer has been an important, practical policy tool appealing to government agencies, especially when time or budget is constrained. However, the literature fails to support convergent validity of benefit transfer using the stated-preference method. This empirical study conducts four convergent validity assessments of benefit transfer using the choice modeling method and data from Rhode Island and Massachusetts, regarding coastal land management. The comparisons evaluate how individual characteristics improve benefit transfer and yield insights relevant to research specifications to produce studies adaptable for transfer applications. Empirical tests show benefit transfer using choice modeling may be acceptable, and even empirically valid, depending on the policy objectives and the context.     

Does One Soros Make a Difference? A Theory of Currency Crises with Large and Small Traders

Do large investors increase the vulnerability of a country to speculative attacks in the foreign exchange markets? To address this issue, we build a model of currency crises where a single large investor and a continuum of small investors independently decide whether to attack a currency based on their private information about fundamentals. Even abstracting from signalling, the presence of the large investor does make all other traders more aggressive in their selling. Relative to the case in which there is no large investor, small investors attack the currency when fundamentals are stronger. Yet, the difference can be small, or non-existent, depending on the relative precision of private information of the small and large investors. Adding signalling makes the influence of the large trader on small traders' behaviour much stronger.     

An error-correction model for forecasting changes in foreign currency futures spreads

The foreign currency futures pricing model of Amin and Jarrow (1991) is used to develop a model that predicts the primary determinants of foreign currency futures spreads. Our data set consists of daily observations of futures prices, spot exchange rates, and Eurocurrency LIBOR for the British pound and Japanese yen from January 2, 1990 to December 31, 2004. Using a 5-year moving window methodology, we find repeated evidence of cointegration between the futures spread, spot exchange rates, and interest rates over ten different estimation periods. An errorcorrection model is used to develop a trading strategy that generates significant out-of-sample profits.     

Community income distributions in a metropolitan area

We extend de Bartolome and Ross [C.A.M. de Bartolome, S.L. Ross, Equilibrium with local governments and commuting: Income sorting vs. income mixing, Journal of Urban Economics 54 (2003) 1–20] to the case when the income distribution in the metropolitan area is a continuous distribution. In particular, we consider a circular central city surrounded by a suburban community. All households must commute to the metropolitan center and public service levels differ in the two jurisdictions. There is intra-jurisdictional and inter-jurisdictional capitalization. Our model has an equilibrium in which the income distributions of the central city and of the suburban community do overlap. Our finding contrasts with the traditional finding of Alonso–Mills–Muth-type models of spatial sorting and of Tiebout-type models of fiscal sorting, both of which have been shown to predict that the income distributions of the two communities do not overlap. In addition, the model explains the fixedness in jurisdictional boundaries.     

To be strategic in the new public sector,HR must remember its operational activities

This article examines the level of operational and strategic involvement by human resource departments, the influence of HR departments, and the level of strategic integration as predictors of human resource management per‐formance. Surveys from 146 senior line managers and HR executives in com‐mercialized and noncommercialized public‐sector agencies in Australia were the basis of organizational‐ and individual‐level analyses. Results indicate positive relationships between the degree to which operational HR activities are transferred to line managers, HR influence, strategic integration, and the performance of the HRM function. Interestingly, no relationship was found between the level of strategic involvement by HR departments and the per‐ceived performance of the function. Analysis of the individual‐level data sup‐ports the multiple‐constituency approach to HRM, with differences in the evaluation of HRM by respondents from different job functions. The study highlights challenges faced by HR practitioners needing to be operational, to be valued strategically. © 2007 Wiley Periodicals, Inc.     

Transport Policy and Transport Tax Reform

We are now entering a new phase of transport policy fiscal instruments. Rather than reforming existing measures, the UK and several other countries are moving towards replacing the whole transport taxation regime. This article reviews the ways that car taxation is used internationally to promote fuel economy, cleaner fuels and reduce traffic growth. Fiscal measures to manage traffic growth in the UK have faced political difficulties and, since 2000, have given way to a somewhat random set of policy decisions, together with a shift in focus towards the dominant issue of congestion reduction. An eventual replacement of existing car taxation measures with a new national road user charging regime is now contemplated, but there is a danger that the confusion in purpose that now characterizes transport taxation policy could be carried over to the new regime.     

Cross-Generation Correlations of Union Status for Young People in Britain

This paper investigates whether young people whose fathers are union members are themselves more likely to join a union. We find that young people with unionized fathers are twice as likely to be unionized as those with non‐union fathers; this rises to three times higher for those whose fathers are active in the union. This supports the idea that socialization within the family plays a role in encouraging union membership. It is not the case that the cross‐generation correlations we observe are driven by common within‐family characteristics (like occupation, industry and political persuasion) that are strongly related to union membership.