Social network and private provision of public goods

Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the standard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a social utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equilibrium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing an agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments.     

A further look at consistent conjectures and private provision of public goods

A model of private provision of a public good under conjectural variations is discussed and the rule for a symmetric consistent conjectures equilibrium (CCE) derived. It is shown that in a number of reasonable cases symmetric CCEs fail to exist in economies with identical individuals, while there may exist asymmetric ones. The relevance of these results for the use of the conjectural variations approach in public good theory is then discussed together with some suggestions for further research.     

Backing out of private pension provision: lessons from Germany

Financing pensions in the EU is a challenge. Many EU countries introduced private pension schemes to compensate declining public pension levels due to reforms made necessary by demographic change. In 2001, Germany introduced the Riester pension. Ten years after introduction the prevalence rate of this voluntary private pension scheme approximates 37 %. However, numerous criticisms raise doubts that the market for Riester products is transparent. Using the 2010 German SAVE survey, this article investigates terminated and dormant Riester contracts on a household level for the first time. Respectively 14.5 and 12.5 % of households who own or have owned a Riester contract terminated or set dormant their contract. We find that around 45 % of terminated or dormant Riester contracts are caused at least partly by product-related reasons, which is significantly higher than for endowment life insurance contracts. The uptake of a new contract after a termination is more likely if a termination is product-related. Nevertheless, after a termination 73 % of households do not sign a new contract, which can have serious long-term consequences for old-age income. Households with low income, low financial wealth or low pension literacy are more likely to have terminated or dormant contracts. Low income and low financial wealth households also have the lowest prevalence rate of Riester contracts and are at higher risk of old-age poverty.     

关于教育与就业关系的一个理论模型及实证检验

In this paper, we divide the process of educational development into two aspects: the change in educational structure and the expansion of educational scale. Based on this hypothesis, we analyze the relationships between each of the two aspects and employment respectively. In this paper, the factors and the transmission mechanism of the influence that education has on employment are also explained. Then, the theoretical models of the relationship between education and employment are built up. Finally, we use the empirical data collected in China to test the theoretical models and give explanations to the status quo of the unemployment structure within various educational levels. It suggests that: the development of education in China at present is beneficial to the increase in the employment rate, the increase in the proportion of the laborers with junior school education has negative effects on employment, and the development of higher education creates positive effects on the employment, but no evidence shows any significant correlation between the proportion of the laborers with senior high school education and the unemployment rate. Translated from Xin Zhengzhi Jingjixue Pinglun 新政治经济学评论 (Review of New Political Economy), 2006, 2(1): 46–69     

On the provision of official and private foreign aid

The provision of official relative to private foreign aid varies considerably between donor countries. We explain the variations in terms of country size, household composition, income distribution, and the government's ability to commit to aid, and derive inter alia the results: (1) official aid crowds out private aid, (2) total aid and official aid collected from each household are lower in more populous countries, (3) total aid is lower if (i) the distribution of income favors the more altruistic households, and (ii) the government can credibly commit to a certain level of aid. Evidences suggest that the theoretical results can explain stylized facts.     

The impact of working conditions on sickness absence: a theoretical model and an empirical application to work schedules

This paper explores how poor working conditions impact sickness absence through their effect on health. Our contribution is two-fold. First, we develop a static theoretical model based on the concept of health capital, wherein poor working conditions are partially compensated by higher wages. According to our model, the effect of working conditions on sickness absence is ambiguous. Second, we apply our model to the case of working time arrangements and test the effect of working irregular schedules or work around the clock on sickness absence, using data from the French Labor Force Survey on a specific population (male manual workers in private sector). As heterogeneity may lead to severe bias, we use propensity score matching methods. Our estimates show that working irregular schedules has a significant impact on sickness absence. The results are more mitigated for work around the clock. In any case, the extent crucially depends on age.     

Search equilibrium and social and private returns to education

Social and private returns to education are computed using the structural estimates of an extended Burdett-Mortensen search equilibrium model. The extension includes different skill groups linked via a production function with variable degree of homogeneity, allowing thereby for a unimodal earnings density with a decreasing right tail. We find that the decreasing unemployment risk for higher skill groups and the absence of tuition fees in Germany increase private returns and lead to a too large share of high skilled individuals in the workforce, which is suboptimal from the social point of view.     

Institutions,quality competition and public service provision: The case of public education

This paper contributes to the literature on integovernmental competition in two ways. First, the institutional setting within which public services are delivered is analyzed with respect to the impact on the quality of services provided. Previous studies have measured competition only in terms of governmental structure, ignoring the issue of service quality and the potential for differentiating local governmental jurisdictions along quality dimensions. Second, the outcome of competition is defined in terms of service quality. Previous studies generally have measured the outcome of competition by examining the fiscal effects of fragmentation and accountability through service costs or tax revenue impacts. School districts were used to empirically test quality competition. Student academic performance was modeled as a function of control variables and the degree of competition from neighboring school districts. Academic performance in public schools was positively associated with the performance of neighboring districts, although the effect was small. These findings, however, suggest that strategies to strengthen interjurisdictional competition may be useful in enhancing public service quality.     

Depreciation and intergenerational altruism in the private provision of public goods

The static model of the private provision of public goods is refuted by empirical and experimental evidence which shows that contributions are above the levels predicted by the theory. The model is reconsidered here in an intertemporal framework that allows the formation of a stock of public good over time and admits intergenerational altruism into preferences. Both of these factors affect the level of private provision. An intertemporal version of the Samuelson rule is derived and it is shown that, for some parameter values, the provision level determined by this is matched by private provision. For other parameter values, it is shown how a system of taxation can achieve the optimum.     

Rewards and the private provision of public goods on dynamic networks

We study an evolutionary model of a public good game with rewards played on a network. Giving rewards to contributors transforms the game but gives rise to a second-order dilemma. By allowing for coevolution of strategies and network structure, the evolutionary dynamics operate on both structure and strategy. Players learn with whom to interact and how to act and can overcome the second-order dilemma. More specifically, the network represents social distance which changes as players interact. Through the change in social distance, players learn with whom to interact, which we model using reinforcement dynamics. We find that, for certain parameter constellations, a social institution, prescribing prosocial behavior and thus solving the second-order dilemma, can emerge from a population of selfish players. Due to the dynamic structure of the network, the institution has an endogenous punishment mechanism ensuring that defectors will be excluded from the benefits of the institution and the public good will be supplied efficiently.     

从公共产品的私人供应看发展我国民办高等教育问题

本针对我国高等教育大众化发展进程中遇到的财政和学生双重贫困的障碍问题，运用公共产品私人供应理论分析了发展我国民办高等教育以提高教育效率，提供更多教育公平的可行性，并相应提出了发展我国民办高等教育的政策建议。     

日本企业IT应用面面观

90年代以来迅速发展的IT革命,在人类历史上第一次形成了全球性的信息通讯网络,这不仅有力地促进了信息化社会的发展,也给企业经营战略带来了很大的影响。日本企业在IT应用方面亦有了很大的进展并形成了自己的特点,在增加信息化投资、实现企业信息化的同时,从新产品开发、零部件     

Measuring tax incidence: an application to mortgage provision in the UK

This paper derives measures of the average and marginal incidence of a tax or subsidy in imperfect competition, in the context of the UK housing market. We argue that one form of mortgage, common in the UK but not elsewhere (the endowment mortgage), exists primarily because of the structure of taxation in the UK. We estimate the determinants of the choice of the type of mortgage, and the size of mortgage conditional on the choice, using data from the Building Societies Association on 43 000 individual mortgages taken out between 1985 and 1989. The estimated parameters are an input to the incidence measures. Results suggest that between 70 and 80% of the additional subsidy to endowment mortgages is captured by lenders, rather than borrowers.     

The public and private provision of pure public goods and the distortionary effects of income taxation: a political economy approach

Abstract .  A pure public good is provided by the government and the voluntary contributions of two types of households. The government finances its contribution by means of income taxation. The latter has distortionary effects. A third type of household never makes contributions. We analyse the effects of changes in the income tax rate on (a) the provision of the public good, (b) the private contributions of the households, and (c) changes in the distribution of income and welfare between contributing and non-contributing households. We derive a simple and testable condition under which the lowering of the income tax entails a Pareto improvement.     

The effect on the Italian private pension market of increased uncertainty concerning public pension provision

This paper examines the effect on the demand for private pensions in Italy of the recent strong increase in uncertainty concernin future public pension provision. Theory suggests that such increase uncertainty will increase the demand for all forms of private sector saving, and, in particular, the demand for private pensions — despite the present generosity of the Italian public pension arrangement. This theoretical proposition is confirmed by an empirical test. The implications are important.     

Heterogeneity,impatience, and dynamic private provision of a discrete public good

We analyze dynamic private provision of a discrete public good by heterogeneous agents, who differ in terms of their levels of impatience, in a differential game framework. In contrast to the strategic complementarity result for homogeneous individuals, we show that an asymmetric completion Markov perfect equilibrium exists, where the individual contributions and the strategic behaviors depend crucially on an impatience differential: the difference in rates of time preference across groups of individuals. When this differential is insignificant, contributions of both types of individuals are strategic complements. On the other hand, when this impatience differential exceeds a threshold, the contributions of impatient individuals become strategic substitutes, whereas the contributions of patient individuals remain strategic complements. We show that group size has an interesting role to play in the strategic behavior: increasing the number of patient individuals aggravates the incentives to free‐ride by the impatient agents. We also derive a condition under which all the socially beneficial projects get completed in the equilibrium.     

Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe

We study the impact of regulatory barriers to entry on workplace training. We develop a model of training in imperfectly competitive product and labour markets. The model indicates that there are two contrasting effects of deregulation on training. As stressed in the literature, with a given number of firms, deregulation reduces the size of rents per unit of output that firms can reap by training their employees. Yet, the number of firms increases following deregulation, thereby raising output and profit gains from training and improving investment incentives. The latter effect prevails. In line with the predictions of the theoretical model, we find that the substantial deregulation in the 1990s of heavily regulated European industries (energy, transport and communication) increased training incidence.     

A switching regression model with different change-points for individual coefficients and its application to the energy demand equations for Japan

In this paper, we set up a switching regression model in which individual coefficients are allowed to shift at different change-points. We also apply it to the energy demand equations and examine structural change in the demands for total fuel oil and for light oil and kerosene at the second oil crisis. It is shown that assuming the different change-points for individual coefficients yields more Plausible results than assuming the same change-point for all coefficients.We thank Professor S. Katayama for his help in another related project.     

The implications of private tutoring on the school education in LDCs

In many LDCs, we observe that the public school teachers receive low wages, expend less than their full effort at school, and provide private tutoring to the students for a fee. To capture this institutional arrangement, we develop a theoretical model which shows that in comparison with ‘no-tutoring’, ‘tutoring’ is welfare reducing for all students in the economy. However, if the government considers only the students in the public system, then ‘tutoring’ can be welfare improving. In that case, the government would set a lower tax rate to pay wages to the teachers and let them provide tutoring to the students for a fee.