JOB DISPLACEMENT AND THE INTER‐TEMPORAL MOVEMENT OF WORKERS THROUGH THE EARNINGS AND INCOME DISTRIBUTIONS

This paper uses the Panel Study of Income Dynamics to examine how job displacement influences intragenerational earnings and income mobility. Job displacement increases the probability of downward labor earnings mobility for several years after separation occurs. Furthermore, the probability of being in the bottom half of the earnings distribution increases significantly, not only in the year of displacement, but also for several years afterwards. However, after considering additional measures of financial well‐being (income from other family members and government transfer payments), the short‐ and long‐term impact of displacement on movements throughout the distribution is reduced. (JEL J63, J65)     

FERTILITY RISK IN THE LIFE CYCLE

In this article, I study fertility decisions with special emphasis on the timing of births and abortions over the life cycle. Given the policy debate regarding abortion availability and recent evidence of its positive impact on women's outcomes, understanding the fertility process should help guide the discussion. Here, I present a life‐cycle model of consumption–savings and fertility decisions in an environment with uninsurable income shocks and imperfect fertility control. My model presents a framework in which both opportunity costs of child rearing and technological restrictions (in the form of contraception effectiveness) have roles shaping lifetime fertility choices.     

UNDERSTANDING MEASURES OF NONMARITAL FERTILITY: THE ROLES OF MARRIAGE AND ACCESS TO HUMAN CAPITAL

This paper proposes an explanation for several decades of rising U.S. nonmarital birth rates and shares, and for cross‐sectional differences in black‐white fertility. Significantly, the explanation does not rely on changes over time or differences across races in individual fertility behavior. It is consistent with the rising nonmarital fertility measures observed in the United States since the mid‐1970s, higher measured fertility for unmarried blacks than whites, and differences across races in the timing of childbearing, despite nearly constant total fertility rates and increasingly similar target family sizes for blacks and whites. The explanation relies on a selection effect associated with changes in the marriage rate and on racial differences in access to human capital investment opportunities. We find strong support for the explanation using U.S. data over the period 1957–2002. Our findings suggest caution in interpreting the results of empirical studies of childbearing that examine marital and nonmarital fertility rates separately, as these studies typically ignore the selection effect of marriage. (JEL J12, J13, I38)     

FAMILY PLANNING AND WOMEN'S EDUCATIONAL ATTAINMENT: EVIDENCE FROM THE ONE‐CHILD POLICY

This paper exploits China's one‐child policy (OCP) to study the relationship between fertility and educational attainment of the mothers of China's “sibling‐less generation.” I take two difference‐in‐differences approaches to estimate the OCP's effect on women's education: one compares gender difference among the ethnic majority group and the other compares ethnicity differences between ethnic majority women and ethnic minority women. I also explore the heterogeneity of the policy's effects by parent's status at the Communist Party. I find that the OCP has a positive and significant effect on women's education and explains about half of the increase in educational attainment for women born between 1960 and 1980. Their increased educational attainment associates with delayed entry into first marriage, delayed entry to parenthood and increased labor supply. (JEL I20, J13, J16, J18)     

THE INCOME REDISTRIBUTION EFFECT OF CHINA'S PERSONAL INCOME TAX: WHAT THE MICRO‐DATA SAY

This article uses continuous micro‐level data to investigate the income redistribution effect of the personal income tax (PIT) in China beginning in 1997. We find that the average tax rate plays a larger role in determining the income redistribution effect of PIT than tax progressivity does. Although tax progressivity decreased as a result of rising personal incomes and a constant PIT policy prior to 2005, the income redistribution effect of the PIT improved as a result of the higher average tax rate. The tax reform beginning in 2006 increased tax progressivity while decreasing the average tax rate, thereby weakening the income redistribution effect of the PIT. Further analysis indicates that the middle‐income group was the only net loser before 2005, but it benefited from the PIT policy reform. A cross‐country comparison shows that China has a lower PIT burden and higher progressivity than developed countries; in fact, China's levels of progressivity and tax burden are similar to those of Latin American countries. (JEL H24, D31, H31)     

The effect of the timing and spacing of births on the level of labor market involvement of married women

We analyze the effect of the timing and spacing of births on the labor supply of married women in a framework that accounts for the endogeneity of the labor market and fertility decisions, for the heterogeneity of the effects of children on labor supply and their correlation with the fertility decisions, and for the correlation of sequential labor market decisions. Delaying the first birth leads to higher pre-natal levels of labor market involvement and reduces the negative effect of the first child on labor supply. The effect of the second child increases with the spacing of the two births as women, returning to work after the first birth, finance child care time increasingly through reductions in market time. Individual heterogeneity is considerable; women with lower propensity for children have the first birth later in life and space subsequent births more closely together, work more before the birth of the first child, but face larger effects of children on their labor supply.     

HOUSING MARKETS AND THE GLOBAL FINANCIAL CRISIS: THE COMPLEX DYNAMICS OF A CREDIT SHOCK

We analyze the multiple channels of influence that global financial crisis‐induced credit restrictions had on New Zealand's subnational housing markets. The dynamics caused by the credit shock are compared to those caused by a migration shock, a more common form of housing shock in New Zealand. We focus on the impacts on two outcome variables, house prices and housing supply, within a structural time series model of regional housing markets. Both shocks cause substantial and prolonged cyclical adjustments in each variable. Similar cyclical dynamics could complicate the conduct of macroprudential policies designed to affect bank credit allocation. (JEL E32, E44, R21)     

MEASURING THE IMPACT OF VALUING HEALTH INSURANCE ON LEVELS AND TRENDS IN INEQUALITY AND HOW THE AFFORDABLE CARE ACT OF 2010 COULD AFFECT THEM

A substantial part of the U.S. inequality literature focuses on yearly levels and trends in pre‐tax, post‐transfer cash income and its distribution over time and finds that median income appears to be stagnating, with income growth primarily coming at higher income levels. When we use data from the Current Population Survey for 1995–2008 and add the value of employer‐ and government‐provided health insurance coverage, not only does it increase the upward trend in the level of resources controlled by Americans, but also reduces the level of inequality in these resources and its upward trend. We then provide a highly stylized example of this broader income measure's value in capturing the impact of two key provisions of the Affordable Care Act of 2010—an expansion in Medicaid and the provision of subsidies to lower‐income families for purchasing private coverage on state‐run exchanges. Even though these incremental expansions build on existing systems of government‐provided health insurance, we find that the vast majority of the benefits would still accrue to the bottom three deciles of the income distribution when we include the value of employer‐ and government‐provided health insurance in our expanded yearly income measure. (JEL D31, H51, I14)     

INDUSTRIAL UPGRADE,EMPLOYMENT SHOCK,AND LAND CENTRALIZATION IN CHINA

After 30 years of agricultural reform started in 1978, peasant workers in China are experiencing new changes in their employment, land security, and income inequalities. This article theoretically investigates the relationships among industrial upgrading, mid‐aged peasant nonfarm employment, and land conversion systems. We prove that China's efforts to upgrade its industries generate a negative employment shock on mid‐aged peasant workers, forcing some of them to return to their home villages. The current lump‐sum land acquisition system, however, will neither help peasant workers deal with the adverse employment shock nor promote land centralization for industrial and urban uses. On the contrary, land cooperation, an emerging land centralization system, will help peasant workers mitigate the adverse employment shock and centralize rural land for nonagricultural purposes. (JEL Q15, J43)     

THE LABOR MARKET CONSEQUENCES OF TEENAGE CHILDBEARING

This paper provides estimates of the impact of an unanticipated child during adolescence on labor supply and earnings using data for women who gave birth between 1976 and 2015 drawn from 1990 and 2000 censuses and the American Community Surveys. Twins at first birth are used as an instrument to avoid the problems of fertility endogeneity. Estimates from our instrumental variable models indicate that the arrival of a second‐born twin had severe economic consequences for adolescent women over most of our data. (JEL J13, J31, J16)     

RESTRICTING EMPLOYMENT OF LOW‐PAID IMMIGRANTS: A GENERAL EQUILIBRIUM ASSESSMENT OF THE SOCIAL WELFARE IMPLICATIONS FOR LEGAL U.S. WAGE‐EARNERS

This paper builds on earlier work that used a general‐equilibrium model to show that reducing employment of unauthorized immigrants in the United States through a tighter border‐security policy lowers the average income of legal residents. Here we exploit further the detail available in the general‐equilibrium model to look at distributional effects, recognizing that the policy increases wage rates for low‐paid legal workers. We assess the social welfare effect on legal workers using a constant elasticity of substitution social welfare function. We contrast our general‐equilibrium approach to immigration analysis with the more commonly used partial‐equilibrium, econometric approach. (JEL D63, J61, C68)     

Why Do Women Wait? Matching, Wage Inequality, and the Incentives for Fertility Delay

This paper explores the interaction between wage inequality and the marriage and fertility decisions of young women. We develop an equilibrium search model of marriage, divorce, and investment in children that allows for differential timing of fertility. We show how patterns of fertility timing in U.S. data can be explained by the incentives for fertility delay implied by marriage and labor markets. We find that these incentives help explain both the cross-sectional relationship between women's wages and fertility timing and the changes over the past 40 years in married women's fertility timing and labor supply. Journal of Economic Literature Classification Numbers: J12, J13.     

INCOME INSTABILITY AND THE RESPONSE OF THE SAFETY NET

This paper examines the response of safety net transfer and tax programs to earnings and income shocks across recessions since the early 1980s. Safety net programs in the United States are designed to dampen economic instability and maintain basic needs for families. Such programs, including TANF, SNAP (food stamps), and the Earned Income Tax Credit (EITC), have been tested during and between recessions of the past 30 years, including the recent 2007–2009 Great Recession. I use matched data in the March Current Population Survey (CPS) from 1980 to 2012 to estimate pre‐ and post‐transfer income instability over the 1980s, 1990s, and 2000s, as well as across recessions. The results are disaggregated by family structure, race, income, and education. Transfer programs are associated with lowered instability levels and flatter trend growth from 1980 to 2012 among socioeconomically disadvantaged subgroups, while the tax system reduces income instability for families in the top 40th percentile of the income distribution. Although the largest instability reductions occur among the poor, since 1980 the safety net appears less responsive to instability for the bottom income quintile, female‐headed families, and black families. (JEL I38, J63)     

THE BEHAVIOR OF CASINO GAMING REVENUE OVER THE BUSINESS CYCLE CONSIDERING ALTERNATIVE MEASURES OF “INCOME”

Reasons exist for believing that casino gaming revenue does not respond equally to all sources of income over the business cycle. We examine the growth and variability of casino revenue resulting from the growth and variability in different sources of income. We find that casino revenue behaves quite differently in response to short‐run and long‐run variation in each income source, thus revealing that the common use of personal income masks underlying drivers of each state's business cycle. Our results have implications for revenue forecasting models, research on the growth and variability of tax bases in general, and public policy. (JEL H72, H79, L83)     

HEALTH INSURANCE,FERTILITY, AND THE WANTEDNESS OF PREGNANCIES: EVIDENCE FROM MASSACHUSETTS

Health insurance reform in Massachusetts lowered the cost of both pregnancy (by increased coverage of pregnancy‐related medical events) and pregnancy prevention (by increasing access to reliable contraception). We empirically examine fertility responses and find no overall effect from increased coverage due to the Massachusetts reform. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34—with high latent fertility and pregnancy wantedness—fertility increased by approximately 1%. For unmarried women in the same age range—for whom pregnancies are typically unwanted—fertility declined by 8%. (JEL I13, I18, J13)     

THE MORTALITY COST OF EXPENDITURES

This paper updates the mortality cost of expenditures, which has relevance to a broad range of policies, including regulations, wars, and COVID‐19 restrictions. Because changes in income lead to changes in mortality risk, health investments costing more per life saved than a threshold cost‐per‐life‐saved cutoff level are expected to increase mortality risk. This article discusses the mechanisms driving this relationship and provides recent empirical support. The 2019 cost‐per‐life‐saved cutoff level at which expenditures increase mortality risk has a lower bound of $83.1 million and an upper bound of $133.8 million, with a midpoint of $108.5 million. (JEL D61, I18, J17, K32)     

Why Are Women Delaying Motherhood in Germany?

Abstract

German fertility trends show that the average age at which women have their first child has increased in recent decades. Moreover, researchers have argued that delayed maternity is an important factor in reduced fertility. Using data from the German Socio-Economic Panel (SOEP), this paper contributes to the debate about maternity timing and reduced fertility in Germany by analyzing some of the factors determining the delay of motherhood. The results suggest that German women who have accumulated more years of education and longer work experience at the time of marriage delay motherhood more. On the other hand, women with higher labor income and a higher contribution to household income delay motherhood less. The results confirm that women consolidate their careers before motherhood in order to reduce career costs. Therefore, if fertility rates are to be increased in Germany further policies that aim to combine women's careers and motherhood need to be developed.     

QUANTILE FORECASTS OF FINANCIAL RETURNS USING REALIZED GARCH MODELS*

This article applies the realized generalized autoregressive conditional heteroskedasticity (GARCH) model, which incorporates the GARCH model with realized volatility, to quantile forecasts of financial returns, such as Value‐at‐Risk and expected shortfall. Student's t‐ and skewed Student's t‐distributions as well as normal distribution are used for the return distribution. The main results for the S&P 500 stock index are: (i) the realized GARCH model with the skewed Student's t‐distribution performs better than that with the normal and Student's t‐distributions and the exponential GARCH model using the daily returns only; and (ii) using the realized kernel to take account of microstructure noise does not improve the performance.     

WELFARE REFORM AND CHILDREN'S EARLY COGNITIVE DEVELOPMENT

In this paper, we use a dynamic structural model to measure the effects of (1) single mothers' work and welfare use decisions and (2) welfare reform initiatives on the early cognitive development of the children of the NLSY79 mothers. We use PIAT‐Math scores as a measure of attainment and show that both the mothers' work and welfare use benefit children on average. Our simulation of a policy that combines a time limit with work requirement reduces the use of welfare and increases employment significantly. These changes in turn significantly increase children's cognitive attainment. This implies that the welfare reform was not only successful in achieving its stated goals, but was also beneficial to welfare children's outcomes. In another policy simulation, we show that increasing work incentives for welfare population by exempting labor income from welfare tax can be a very successful policy with some additional benefits for children's outcomes. Finally, a counterfactual with an extended maternal leave policy significantly reduces employment and has negative, though economically insignificant, impact on cognitive outcomes. (JEL I38, J22, J18)     

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.