Optimal Taxation of Risky Human Capital*

In a two‐period life‐cycle model with ex ante homogeneous households, earnings risk, and a general earnings function, we derive the optimal linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against incentives to work. Education subsidies are not used for social insurance, but they are only targeted at offsetting the distortions of the labor tax and internalizing a fiscal externality. Both optimal education subsidies and tax rates increase if labor and education are more complementary, because education subsidies indirectly lower labor tax distortions by stimulating labor supply. Optimal education subsidies (taxes) also correct non‐tax distortions arising from missing insurance markets. Education subsidies internalize a positive (negative) fiscal externality if there is underinvestment (overinvestment) in education because of risk. Education policy unambiguously allows for more social insurance if education is a risky activity. However, if education hedges against labor‐market risk, optimal tax rates could be lower than in the case without education subsidies.     

Simulating the Reform of Means‐tested Benefits with Endogenous Take‐up and Claim Costs*

Microsimulation models are commonly used to examine the distributional impact of reforms of the means‐tested benefit system. Take‐up behaviour is related to the level of entitlement, so reform may induce changes in take‐up. We develop a stochastic simulation method and apply it to a probit model of ‘income support’ take‐up by the UK pensioners. The method allows us to adjust net income for the welfare losses because of tangible or intangible claim costs. Endogenous take‐up and claim costs both have an important impact on the simulated outcomes of the policy reform.     

Patient enrollment in medical trials: Selection bias in a randomized experiment

Self-selection can bias estimates of treatment effects from randomized experiments if one is interested in extrapolating results to the general population. This paper notes that there is an isomorphism between the Roy model for the sorting of workers into sectors and the decision of subjects to participate in randomized experiments. The main implication is that, as the probability of receiving active treatment rises, patients who are less optimistic about new treatment will begin to enroll and estimates of treatment effects will fall. This, in turn, implies that selection bias is positive. These findings are confirmed with data from trials of ulcer medications.     

Transferable Ageing Provisions in Individual Health Insurance Contracts

Abstract. We consider lifetime health insurance contracts in which ageing provisions are used to smooth the premium profile. The capital stock accumulated for each individual can be decomposed into two parts: a premium insurance and an annuitized life insurance, only the latter being transferable between insurers without triggering premium changes through risk segmentation. In a simulation based on German data, the transferable share declines in age and falls with an increasing age of entry into the contract. In spite of different benefit profiles, it is almost identical for women and men.     

Does Raising the Principal's Wage Improve the School's Outcomes? Quasi‐experimental Evidence from an Unusual Policy Experiment in Israel

This paper reports estimates of the causal effects of a 50 percent increase in the salary of headmasters of high schools in Israel. The results suggest that the program led to significant improvements in twelfth‐grade students' academic achievements. However, the effect was relatively modest, comprising increases of about 5–10 percent in the school mean matriculation rate, average score and number of subjects and credit units taken in matriculation programs. Based on these results and the lack of evidence regarding the effect of increasing teachers' salary, it seems that priority should be given to paying higher wages to school principals.     

Information Technology and Consumer Search for Health Insurance

We explore the impact of information technology on the level of premiums paid for individual health insurance by asking which kinds of buyers will have larger gains from the use of new technology. We compare ‘asking price’ data posted on an electronic insurance exchange with survey data on premiums actually paid before the advent of exchange and examine whether the pattern of differences between asking prices and transactions prices can be explained using a simple search theory. We hypothesize that older consumers, expecting to pay higher premiums for a given policy, had engaged in more intensive search than younger consumers, given the same distribution of prices and search costs. Therefore, the introduction of an electronic exchange that lowers the cost of search should have a larger effect on decreasing the level of premiums paid for those who previously searched less (i.e., younger consumers). We find evidence consistent with this hypothesis.     

Generic Competition in the US Pharmaceutical Industry

We develop a simultaneous equations estimation framework to understand the interactions among generic entry, prices, and market shares. We base our estimates on a panel data sample of 40 brand‐name drugs that first experienced generic competition during the period July 1992–January 1998. We find that generic share and price are simultaneously determined, while the number of generic entrants is a key determinant of generic market share and the generic‐to‐brand price ratio. In addition, we find generic competition to be particularly intense for blockbuster drugs, which experience significantly more generic entrants, price erosion, and generic penetration than other drugs.     

Reliable inference for the Gini index

Although attention has been given to obtaining reliable standard errors for the plug-in estimator of the Gini index, all standard errors suggested until now are either complicated or quite unreliable. An approximation is derived for the estimator by which it is expressed as a sum of IID random variables. This approximation allows us to develop a reliable standard error that is simple to compute. A simple but effective bias correction is also derived. The quality of inference based on the approximation is checked in a number of simulation experiments, and is found to be very good unless the tail of the underlying distribution is heavy. Bootstrap methods are presented which alleviate this problem except in cases in which the variance is very large or fails to exist. Similar methods can be used to find reliable standard errors of other indices which are not simply linear functionals of the distribution function, such as Sen’s poverty index and its modification known as the Sen–Shorrocks–Thon index.     

美海军C4I系统配置管理研究

介绍了美海军C4I系统配置管理的主要机构和程序,分析了其主要特点.在此基础上,得出了互连互通互操作对我们的一些启示.