Poverty in US Lesbian and Gay Couple Households

Poverty is a widely researched topic in economics. However, despite growing research on the economic lives of lesbians and gay men in the United States since the mid 1990s, very little is known about poverty in same-sex couple households. This study uses American Community Survey data from 2010 to 2014 to calculate poverty rates for households headed by different-sex versus same-sex couples. Comparing households with similar characteristics, the results show that those headed by same-sex couples are more likely to be in poverty than those headed by different-sex married couples. Despite that overall disadvantage, a decomposition of the poverty risk shows that same-sex couples are protected from poverty by their higher levels of education and labor force participation, and their lower probability of having a child in the home. Lastly, the role of gender – above and beyond sexual orientation – is clear in the greater vulnerability to poverty for lesbian couples.     

Sexual Orientation,Sexual History,and Inequality in the United States

Much of the literature on sexual orientation discrimination reports earnings differentials for gay, lesbian, and bisexual individuals when compared with heterosexuals. The General Social Survey (GSS) has previously been used due to its extensive coverage of demographic variables and sexual behavior in the United States. This study uses updated GSS data to investigate whether the income differentials found in earlier work have persisted and how estimates based on categorizing respondents according to the reported sex of their sex partners compare to estimates based on the respondents’ self-reported sexual orientation. Results for the years 2008–14 indicate that self-identification as an LGB individual and/or same-sex sexual behavior are correlated with a lower income; however, not all the results are statistically significant. In addition, there is a statistically significant negative income differential of 32 percent for men who report having had a same-sex partner at some point, but identify as straight/heterosexual.     

Income Underreporting and Tax Evasion in Italy: Estimates and Distributional Effects

The paper estimates the extent of evasion of personal income tax (PIT) in Italy by integrating two methods that the literature has previously applied separately. The consumption-based method introduced by Pissarides and Weber (1989) is used to estimate misreporting of income in micro data collected in the household IT-SILC survey. We adopt an econometric specification close in spirit to that of Feldman and Slemrod (2007), which allows us to estimate income misreporting at different rates for different income sources. The misreporting estimates are then used in the discrepancy method to correct the incomes compared with administrative registered data. The comparison provides new estimates of evasion of personal income tax by type of income, region and income class. The estimates are used to improve microsimulation analyses of the distributional impact of tax evasion.     

Measuring political information rents: Evidence from the European agricultural reform

This paper develops a method to estimate information rents – the difference between the actual compensation and the true willingness to accept – of losers of a reform who receive a monetary compensation. Our method explicitly accounts for survey respondents' reluctance to reveal a willingness to accept which is smaller than the actual compensation. We apply our approach to the case of the 2005 European agricultural reform using uniquely gathered survey data from farmers in Lower Saxony, Germany. We find empirical indications for strategic misreporting. Correcting for these effects with a structural model, we find that information rents are in the order of up to 14% of total compensation paid. Moreover, we show that the reform could not have been implemented distinctly cheaper by conditioning compensation schemes on observable factors.     

Estimating the gravity model when zero trade flows are frequent and economically determined

ABSTRACT

Since the 1950s, we have known that the presence of zero-valued dependent variables can seriously bias econometric estimates whether the zeros are included or excluded. Yet the widely-used gravity model is frequently estimated on samples that include large fractions of zeros. An influential paper by Santos Silva and Tenreyro – based on simulations that include no economically-determined zeros – concludes that the bias problems resulting from zeros and those resulting from heteroscedasticity and nonlinearity can be solved using the Poisson Pseudo-Maximum-Likelihood (PPML) model including the zero values. This paper begins by adapting the Santos Silva and Tenreyro experimental design to include economically-determined zeros to see whether this conclusion continues to hold. With this design, it finds that alternative estimators have lower bias than PPML. Changing to a Monte Carlo design that replicates the much-higher real-world frequency of predicted values near zero restores the finding of lower bias with the PPML estimator. The results highlight the need for very careful design of Monte Carlo experiments when evaluating alternative estimators of the gravity model.     

An experimental study on the incentives of the probabilistic serial mechanism

We report an experiment on the Probabilistic Serial (PS) mechanism for allocating indivisible goods. The PS mechanism, a recently discovered alternative to the widely used Random Serial Dictatorship mechanism, has attractive fairness and efficiency properties if people report their preferences truthfully. However, the mechanism is not strategy-proof, so participants may not truthfully report their preferences. We investigate misreporting in a set of simple applications of the PS mechanism. We confront subjects with situations in which the theory suggests that there is an incentive or no incentive to misreport. We find little misreporting in situations where misreporting is a Nash equilibrium. However, we also find a significant degree of misreporting in situations where there is actually no benefit to doing so. These findings suggest that the PS mechanism may have problems in terms of truthful elicitation.     

Dominant carrier market power in US international telephone markets

An econometric model is used to examine market power in US international telephone markets. Lerner index estimates suggest AT&T's collection rate-cost margin was between 12% and 24% during 1991 to 1995. Although Lerner estimates imply deadweight welfare losses of up to US $261 million per annum, such losses are small compared to those from the inefficient pricing of international interconnection. Settlement rate-cost margins on US bilateral markets of approximately 89% translate into a US $4907 million transfer from consumers to carriers in 1995.     

Economic consequences of the Home Appliance Eco-Point Program in Japan: a dynamic discrete choice approach

This study combined a dynamic discrete choice model for air conditioner replacement decisions with an inter-industry model in order to evaluate the economic impact of Japan’s Home Appliance Eco-Point Program, an appliance replacement program that was in effect from May 2009 to March 2011. Focusing on air conditioners produced from 1995 to 1999 and replaced during the period from 2005 to 2013, we found that the eco-point program increased replacement probabilities by 1.5% to 1.9% in 2009. Moreover, the program produced an additional output of 31,337 million yen and a total value added of 21,259 million yen. However, the benefit–cost ratio – determined by dividing the increase in value added by the monetary value of the points awarded for appliance replacement – was only 0.68. From a cost-benefit perspective, the program can be judged not to have been an effective policy measure.     

Housing rent dynamics in Italy

In this paper we focus on tenant rents in Italy and compare results from several methods for the rent dynamic estimation. We first document the sources of data available and then introduce quality adjusted techniques, which enable us to separate the price variation due to qualitative changes in housing attributes from pure price changes. Finally, we compare these measures with unconditional and matched-type price indices derived from microdata. Over the period 1998–2006, we estimate a cumulative rent increase ranging between 40 and 80%. The upper bound refers to the average dynamic for a subset of flats entering the market in a given period. Our hedonic estimates point to an average rent increase of approximately 40%, almost 20 percentage points above the one recorded by the rent component of the Italian consumer price index. A simple calibration model suggests that only part of the difference between our estimates and the official ones is due to survey non-response.     

New Evidence on Gay and Lesbian Household Incomes

Using independent data from the Centers for Disease Control, the author tests a key assumption of previous research on gay and lesbian incomes: that same-sex unmarried partner households are, indeed, gay or lesbian. The author shows that this independent data suffers from less severe underreporting of same-sex unmarried partner households than the 1990 Decennial Census. Furthermore, individual level information on sexual behavior and family planning is used to show that these households exhibit sexual behavior that is systematically different from married and different-sex couples and that is consistent with a large body of public health and HIV literature on gay men and lesbians. Finally, the author replicates, confirms, and extends previously published Census-based results on the household income penalty faced by gay male couples, showing that these results are not an artifact of deficient data. He finds similar results for lesbian couples. (JEL J1 , J3 )     

Measuring peer effects in the Brazilian school system

Using the identification strategy proposed by Graham and Hahn (2005), we estimate the magnitude of classmate effects on math scores using Brazilian data from 2005. In addition, we provide a detailed discussion about the identification of endogenous peer effects in the linear in means models. Our results show that both peer characteristics (exogenous peer effects) – like race, socioeconomic status and gender – and peer actions (endogenous peer effects) are important determinants of students’ outcomes in the fifth grade of elementary school. Our estimates of endogenous peer effects are about 0.008 of 1 SD of math test scores, which can be interpreted as evidence of a so-called ‘conformist’ individual behaviour, under which students face large costs to exert effort levels that are distant from what is believed to be the norm in the classroom. Those estimates of endogenous peer effects imply a social multiplier of about 1.67.     

Reconciling microeconomic and macroeconomic estimates of price stickiness

This paper attempts to reconcile the high estimates of price stickiness from macroeconomic estimates of a New-Keynesian Phillips curve (NKPC) with the lower values obtained from surveys of firms’ pricing behaviour. This microeconomic evidence also suggests that the frequency with which firms adjust their prices varies across sectors. Building on the insights of Carvalho (2006), we present Monte Carlo evidence that suggests that in the presence of this heterogeneity estimates of the NKPC obtained using conventional methods, such as GMM, are likely to considerably overstate the degree of aggregate price stickiness. Furthermore, if roundabout production is a characteristic of the economy the NKPC will falsely suggest that a sizeable fraction of prices are indexed to past inflation. These problems arise because of a type of misspecification and a lack of suitable instruments.     

Cheating to win: Dishonesty and the intensity of competition

We argue that the intensity of competition within a group or organization can have an important influence on whether or not people cheat. To make this point we first work through a simple model of strategic misreporting in the workplace. For low and high levels of competition we show that, in equilibrium, few are predicted to misreport. It is for medium levels of competition that misreporting is predicted to be highest. We test this prediction experimentally and find good support for it. This finding has implications for the design of incentive structures within groups and organizations.     

Application of Sample Selection Model to Double-Bounded Dichotomous Choice Contingent Valuation Studies

Modeling households' behavior with the data from a contingentvaluation (CV) survey is often complicated by samplenon-response, which can cause non-response bias and sampleselection bias, leading to inconsistent parameter estimates and adistorted mean willingness-to-pay estimate. This paper reportsthe results of empirical tests for both biases using householdsurvey data in which the double-bounded dichotomous choice CVquestion involved the benefit of a tap water quality improvementpolicy in Korea. No non-response bias, but sample selection bias,is detected in the sample. To correct for sample selection bias,a sample selection model is employed. The authors also discusshow failure to correct for bias may distort aggregate benefitestimates.     

Estimating Tropical Cyclone Damages Under Climate Change in the Southern Hemisphere Using Reported Damages

This paper estimates the damages from tropical cyclones (TCs) in the Southern Hemisphere under future climate change scenarios based on the historical TC records in Australia. From the best-track TC data, we examine the changes in frequency, intensity, and economic damage of the TCs that made landfall since 1970. From the detailed individual TC reports, damage estimates are constructed based on reported damages. We find that the TC frequency has significantly declined over time. The intensity, however, does not show a significant trend. Average damage per TC has declined significantly from 43 million AUD in the 1970s to 11 million in the 1990s. This paper finds that 1 % decrease in minimum central pressure leads to 32.7 % increase in economic damage, which is more than three times larger than that found in the US hurricane study with regards to maximum wind speeds. For future damage projections, characteristics of the 14,000 TCs generated under seven different AOGCM climate models are applied. All seven climate models predict a decrease in TC frequency in the Southern Hemisphere but intensity predictions vary. By the end of the twenty second century, changes in climate are expected to increase the TC damage under the MRI ( \(+\) 94 %), the MIROC ( \(+\) 73 %), and the CSIRO ( \(+\) 66 %) model due to increased intensity. However, TC damage is expected to fall under the GFDL ( \(-\) 92 %) and the CNRM ( \(-\) 85 %) model due to decreased intensity and frequency. Adaptation will be a key determinant of the future vulnerability to TCs in the Southern Hemisphere.     

Smoking and absenteeism

Studies of the causes of absence from work tend to indicate uniformly that smokers miss more work than non-smokers. Some estimates of this increased smoker absenteeism range as high as 32%, or about 81 million additional lost days of work per year in the US alone. Unfortunately these studies, in the main, employ only a simple means difference test as a statistical basis for their deductions, and hence are incapable of determining whether smokers miss more work because they smoke or for other reasons common to smokers as a group. In this study, we posit a native model of absenteeism and employ Tobit analysis to estimate its response to various determinants using data from the 1968 PSID. We than empoly a Blinder-type decomposition technique to attempt to determine the amount of absenteeism attributable directly or indirectly to smoking behaviour of workers. Our results suggest that smokers miss no more work than non-smokers because they smoke. Rather smokers tend to be younger, heavier drinkers, blue collar workers, etc., and these groups will miss more work regardless of whether or not they smoke.     

Cooperation in collective action*

The ability to cooperate in collective action problems – such as those relating to the use of common property resources or the provision of local public goods – is a key determinant of economic performance. In this paper we discuss two aspects of collective action problems in developing countries. First, which institutions discourage opportunistic behaviour and promote cooperation? Second, what are the characteristics of the individuals involved that determine the degree to which they cooperate? We first review the evidence from field studies, laboratory experiments, and cross community studies. We then present new results from an individual level panel dataset of rural workers.     

REVENUE, POPULATION, AND COMPETITIVE BALANCE IN MAJOR LEAGUE BASEBALL

This article examines the impact of hometown market size on competitive balance in Major League Baseball. We use a four-equation simultaneous model of win percent, team payroll, team total revenue, and team local revenue in order to avoid simultaneity bias in the estimates. Using two-stage least squares, our results show that consolidated metropolitan statistical area population does have a statistically significant positive impact on local revenue. This leads to increased payroll, which has a significantly positive, but small, impact on win percent. Specifically, the estimated impact of an additional one million in population ranges from 0.233 to 1.126 additional wins per season. ( JEL L38)     

INTELLIGENT MACHINE TECHNOLOGY AND PRODUCTIVITY GROWTH

This paper provides preliminary estimates of the productivity impact of intelligent machine technology (IMT) and the rate of return to IMT research and development (R&D) over the next two decades. The paper adapts economists’ traditional productivity growth model to enable the use of industrial experts’ forecasts of a few key parameters of the model to form the estimates of productivity growth and rate of return. Respondents – from a sample of firms operating in IMT development and applications in the automotive, aerospace, and capital construction industries – anticipate that IMT will generate substantial productivity growth over the next two decades, and the estimated social rates of return to IMT R&D are substantial.     

Job changing decisions of faculty members: a case study of a model with multiple selection

A model of faculty job search behaviour must explain the two decisions of whether to search for another position and of whether to accept the new position if an offer is received. Developing a theoretical model of this process is not diffcult, but estimation difficulties caused by the self-selection inherent in the data subsamples of non-searchers, searchers who stay, and searchers who leave must be considered. To estimate the structural determinants of these decisions we make assumptions regarding the covariance matrix of the error terms of the structural equations that allow us to use a straightforward extension of earlier approaches to this problem. The particular variables that correspond to the theoretical measures in the model are not common to most data bases on faculty. Thus, we were forced to use a rather old data base to estimate the model, which reduces the usefulness of the estimates for current policy purposes. Nonetheless, the estimates do shed light on the efficacy of the model and illustrate the issues involved in the estimation problems.