Allocation of Time and Household-level Consumption Equivalent Welfare: A Case of South Korea

Using “2014 Time Usage and Quality of Life” of 17th KLIPS (Korean Labour and Income Panel Study), the first and most detailed time use survey of its kind in South Korea, we first document the patterns of time use in market work, nonmarket work (household work), child care, and a variety of definitions in leisure. We find that, while men work longer hours, men’s additional market work is well compensated by more leisure and less hours in nonmarket work and child care. We also find within-household unequal distribution of time use in nonmarket work, child care, and leisure in favour of men. Consistent with the cases of the US and other advanced economies, high-income earners tend to enjoy less hours of leisure while they spend more money on leisure activities. Secondly, we calculate the household-level consumption equivalent measure that considers consumption, leisure, life expectancy, and uncertainty. We find that taking into account non-separable preference over leisure and consumption and the quality of leisure is important and household-level welfare measures based solely on income or consumption are both incomplete and misleading.     

Public distrust and valuation biases: Identification and calibration with contingent valuation studies of two air quality improvement programs in China

Economic valuation can be biased by public distrust in local institutions when those institutions are involved in the valuation scenario design, which is often the case for contingent valuation (CV) studies. To better identify and to calibrate the potential biases, we conduct two CV surveys on people's willingness to pay (WTP) for the implementation of new air quality improvement programs at the municipality level in China. A joint selection modeling strategy is developed and employed to identify the potential biases in WTP estimations caused by people's ex-ante distrust in local institutions. The results show the various channels through which the distrust in local institutions affects people's WTP between two cities. For one city, the distrust in local institutions significantly increases the probability of one protesting the new program, which results in an underestimation of WTP by 16%. For the other city, the distrust in local institutions leads to a lower estimation of WTP by 26%, mostly via the determination function.     

Distributional Effects of Freedom and Income on Life Satisfaction: Evidence from East Asian Chinese Societies

We estimate the distributional effects of freedom and income on life satisfaction (LS) for East Asian Chinese societies through an ordinal parametric quantile regression approach. The results show that freedom and income exhibit positive and mostly significant effects across societies and LS levels. The freedom effects generally become larger for those at higher LS quantiles. However, the income effects decline as the LS quantile level increases. Thus, one may have a trade-off between freedom and income without compromising individual LS. The trade-off of freedom (income) for income (freedom) is more pronounced for people at a lower (higher) LS level.     

Inflation and Welfare in Latin America

This paper follows Bailey (J Polit Econ 64:93–110, 1956) and Lucas (Econometrica 68:247–274, 2000) and estimates the welfare cost of inflation for 17 Latin American economies. We use annual data, from 1955 to 2000, and recent advances in the field of applied econometrics to estimate the inflation rate elasticity of money demand and report significantly high and differential welfare cost estimates for these economies.     

Transitions from Welfare and the Employment Prospects of Low-Skill Workers

This study examines the effects that labor market conditions and welfare policy changes had on single mothers' welfare participation and economic outcomes using longitudinal, individual-level data from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). The study uses special versions of the SIPP panels that include state and county identifiers and links the individual information to county-specific measures of low-skill employment opportunities and state measures of welfare policies. It estimates transition models of program entry and exit and regression models of economic outcomes. The study finds that employment conditions and welfare benefit levels were significant determinants of single mothers' welfare participation and economic success over the period 1992-95. However, it does not find statistically distinguishable differences in participation and economic success between states that did and did not reform their welfare programs through waivers to the federal rules.     

VALUING BLUE FLAG STATUS AND ESTUARINE WATER QUALITY IN MARGATE,SOUTH AFRICA1

This study estimates the costs associated with reduced water quality and withdrawal of Blue Flag status in Margate, Kwazulu‐Natal, based on travel costs and contingent behaviour (reported change in visits contingent on a hypothetical scenario). Costs associated with hypothetical loss of Blue Flag status (based on reduced visits) range between R17 and R25 million per annum. Interestingly, Blue Flag status was withdrawn shortly after completion of the survey, owing to reduced water quality. This study therefore provides an estimate of the associated welfare losses, and of the benefits of actions to improve water quality and restore Blue Flag status.     

Education and welfare program compliance: Firm-level evidence from a pension reform in China

This study examines how firms with heterogeneous human capital quality respond differently to a welfare policy shock. In 2002, China expanded pension mandates from state-owned enterprises (SOEs) to private enterprises. Based on data covering all median and large manufacturers in China (around 250,000 firms), we find that their compliance rates varied widely across firms and increased in the average education level of employees. Utilizing these heterogeneous responses at the firm level, we estimate that the pension reform might have increased the return to education of employees by 8.75%. To address endogeneity in firms' human capital levels, we exploit the historical scale of local university as an instrumental variable. Moreover, we use SOEs as a control group, which was not directly affected by the policy shock. We find our empirical estimates robust to both measures.     

Gender discrimination in China revisited: a perspective from family welfare

The strong son preference tradition in China has been weakened by the rapid development in the cultural, economic, political, and social environment, which leads to a rather ambiguous picture regarding the situation of women and girls. This article revisits this issue by comparing two approaches inspired from Engel’s method to identify equivalence scales, and directly measures and tests gender bias using household expenditure and food consumption data. Using both parametric and semiparametric estimates, we find that households need a higher compensation for the arrival of a boy than the arrival of a girl, implying that gender inequality still exists in China, particularly in rural China. We find no evidence that education reduces gender inequality in China, and the results are quite robust to using different methods. Our study indicates that gender inequality does not only extend to sex-selective abortions but still affects living children. To reduce this inequality, more attention and efforts are needed to reduce son preference. More generally, the method developed in this study can also be used to proxy welfare changes in household.     

Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries

Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates (PSEs and CSEs), can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country’s support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sectoral or economywide models using price elasticity estimates, but the results can be contentious if there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate PSEs and CSEs. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.     

Two neglected categories of immigrants to Canada: temporary immigrants and returning Canadians

Results are presented from an attempt to improve Canadian statistics on international migration so as to comply with U.N. guidelines by including data on long-term residents with temporary status and Canadian citizens and permanent residents returning from abroad. "The estimation procedures involve extensive operations on three Canadian administrative data systems: the Visitors Immigration Data System of Employment and Immigration Canada; the Family Allowances Files of Health and Welfare Canada; and the Customs and Excise Files of Revenue Canada. These data are used to produce the number of immigrants in both of the neglected categories, as well as to calculate the geographic (origin and destination) and demographic (sex, age, marital status) structures of these groups. Results of the analysis of estimates for the period 1982-1988 show that, due to their size and characteristics, both of these neglected categories of immigrants constitute a significant part of immigration to Canada, and their importance has and will continue to increase over time."     

Growth, inequality, and welfare: comparisons across space and time

We propose and apply several welfare measures that combine averageincome with a measure of inequality to undertake cross-countrycomparisons of aggregate welfare for the 1970 to 2000 period.Our welfare measures, which are based on theoretical and empiricalfindings on the role of inequality in social welfare, drasticallychange the impression of levels of welfare, significantly affectthe welfare ranking of countries in different benchmark years,affect changes in ranking over time, and affect convergencebetween industrialized and developing countries. While the resultsare sensitive to the type of inequality and its presumed effecton welfare, the results are robust to different ways to addresscomparability problems inherent in the inequality data used.     

Hurricane Katrina as an Experiment in Housing Mobility and Neighborhood Effects: Were the Relocated Poor Black Evacuees Better-Off?

Hurricane Katrina induced hundreds of thousands of New Orleans citizens to evacuate and relocate to different neighborhoods. Some of these evacuees moved to neighborhoods with poverty rates lower than the one they left in New Orleans. With survey data on a small sample of black Katrina evacuees who registered for absentee voter ballots, this paper explores whether or not there were improvements in the welfare of black evacuees—neighborhood effects—as a result of moving to neighborhoods with a lower poverty rate. With data from a small sample of relocated Katrina evacuees, we provide matching estimates of the short-run treatment effect of different types of changes in neighborhood poverty on five different measures of individual welfare. Treatment parameter estimates reveal—conditional upon the change in origin to destination neighborhood poverty rate—positive neighborhood effects mostly for black evacuees who did not move from high poverty to low poverty neighborhoods, but could have. Our results suggest that at least in the short-run, antipoverty policies based on housing mobility and changing the poverty characteristics of neighborhoods are not necessarily effective in improving the welfare of poor black households.     

Human capital estimates in China: New panel data 1985–2010

We introduce new provincial level panel data on human capital in China from 1985 to 2010. Our estimation of human capital is based on the Jorgenson–Fraumeni lifetime income approach modified to fit the Chinese data, thereby allowing a more comprehensive measurement of human capital than traditional partial measurements, such as education. Our provincial data are adjusted for purchasing power parity via a living-cost index as well as for real values so that all values are comparable across the provinces and time. We discuss various characteristics of the data, including total human capital, per capita human capital, and labor force human capital, which in turn are disaggregated based on gender and urban or rural location. Our human capital estimates are compared with the provincial physical capital estimates and provincial GDP. As an illustration, we also use the data to estimate a production function and to decompose China's economic growth from physical capital, human capital, and TFP. Our results, compared with those that use traditional specifications, reassure us as to the reliability of our new China human capital data.     

Going Home: Evacuation-Migration Decisions of Hurricane Katrina Survivors

In the wake of Hurricane Katrina, many evacuees from the Gulf region began the difficult process of deciding whether to rebuild or restart elsewhere. We examine pre-Katrina Gulf residents' decision to return to the postdisaster Gulf region—which we call the “return migration” decision. We estimate two separate return migration models, first using data from a mail survey of individuals in the affected region and then focusing on self-administered questionnaires of evacuees in Houston. Our results indicate that return migration can be affected by household income; age; education level; and employment, marital, and home ownership status, but the results depend on the population under consideration. We find no effect of “connection to place” on the return migration decision. Although the effect of income is relatively small within subsamples, we find a much higher proportion of middle income households planning to return than lower income households when comparing across the subsamples. In addition, the real wage differential between home and host region influences the likelihood of return. Larger implicit costs, in terms of foregone wages for returning, induce a lower likelihood of return. Exploiting this difference at the individual level, we are able to produce estimates of willingness to pay (WTP) to return home. Average WTP to return home for a sample of relatively poor households is estimated at $1.94 per hour or $3954 per year.     

The Effect of Child Care Costs on the Employment and Welfare Recipiency of Single Mothers

This paper considers the effect of child care costs on two labor market outcomes for single mothers—whether to work for pay and whether to receive welfare. Hourly child care expenditures are estimated using data drawn from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). These expenditures are then used to predict the probability of welfare recipiency and employment. While the direction and significance of key variables are robust to changes in specification, the quantitative results are found to be sensitive to identification restrictions. All results show a substantial positive effect of child care costs on welfare recipiency, with the child care price elasticity of welfare recipiency varying from 1.0 to 1.9. Similarly, we find a significant negative effect of child care price on employment with elasticity estimates from -.3 to -1.1, showing that controlling for the welfare choice does not reduce the price elasticity of employment found in other studies.     

The first 35 years of Soviet living standards: Secular growth and conjunctural crises in a time of famines

This article investigates welfare and living standards in the Soviet Union during the great crises of the first 35 years of Soviet power, during which the USSR experienced 5 major famines. It reviews the classic literature on traditional measures of Soviet consumption and recent critiques of them. It discusses the nature of welfare and welfare indicators, the reliability of Soviet statistical indicators on welfare, and it charts the dimensions of the groups in Soviet society that were most vulnerable to these welfare crises. A range of welfare indicators covering nutrition, mortality and stature are critically examined both regarding their immediate and long-term consequences and the groups affected.     

MEASURING THE WELFARE COST OF INFLATION IN SOUTH AFRICA

In this paper, we estimate the long‐run equilibrium relationship between money balance as a ratio of income and the Treasury bill rate for the period of 1965:02 to 2007:01, and in turn use the relationship to obtain welfare cost estimates of inflation. Using the Johansen technique, we estimate a log‐log specification and a semi‐log model of the above relationship. Based on the fits of the specifications, we decided to rely more on the welfare cost measure obtained under the log‐log money demand model. Our estimates suggest that the welfare cost of inflation for South Africa ranges between 0.34% and 0.67% of GDP, for a band of 3‐6% of inflation. Thus, it seems that the South African Reserve Bank's current inflation target band of 3‐6% is not too poorly designed in terms of welfare.     

Trade protection and market power: evidence from US antidumping and countervailing duties

Contingent protection measures were originally intended to protect domestic producers from what were considered to be “unfairly” cheap imports. However, due to the way in which these policies are designed and implemented, they have been heavily criticised for their greatly disruptive effects on markets, and particularly on competition. The analysis presented in this paper contributes to the debate by studying the impact of US antidumping (AD) and countervailing (CV) duties on domestic producers’ price-cost margins (PCM). To this end, the study takes advantage of a long panel of 4-digit industries in the United States covering 26 years of AD/CV activity, including the periods before and after the changes to AD/CV laws introduced following the Uruguay Round (UR). It finds evidence of a positive effect of AD/CV duties on PCM for the period prior to the UR, but the effect seems to disappear in the years following the UR. The analysis accounts for potential endogeneity in AD/CV duties, as well as the intensity of the protection granted.     

Measuring poverty with noisy and corrected estimates of annual consumption: Evidence from Nigeria

An opportunity to improve measurement and modelling of poverty in Africa arises from recent intra‐year panel surveys that observe household consumption in post‐planting and post‐harvest periods. Observing the same household twice lets an intra‐year correlation be estimated, which can be used to form a corrected estimate of annual consumption. The usual approach surveys consumption for just one short period, like a week or month, and extrapolates to an annual total. This may adequately estimate mean annual consumption for samples spread over a year but overstates dispersion. The resulting noise in consumption estimates inflates measures of poverty and inequality and creates misclassification errors that bias logit and probit models of poverty determinants. This study uses data from the 2012/2013 Nigeria General Household Survey panel to show effects on poverty measures of using annual estimates extrapolated from short‐period surveys. With the corrected extrapolation method that uses intra‐year correlations to adjust for inflated variances, Nigeria's poverty headcount rate falls by one half. Hence, much of the poverty measured in cross‐sectional surveys is transient poverty, for which different policy interventions are needed than for alleviating chronic poverty.