Social security and savings plans in overlapping-generations models

This paper examines the impact of social security and saving plans on a simple overlapping-generations model with no uncertainty. The model is related to, and provides a reconciliation of, the Diamond and Samuelson–Gale models of public debt and public capital. Savings plans and pay-as-you-go social security are seen to have quite different effects depending on the assumptions governing the growth rates of public debt and capital, and it is also shown that the social security program proposed by Feldstein is infeasible in the steady state he adopts as a starting-point.     

Social norms,cooperation and inequality

This paper analyzes the outcomes that can be supported by social norms in a society of infinitely lived and patient agents that are randomly matched in pairs every period to play a given game. I find that any mutually beneficial outcome can be supported by a self-enforcing social norm under both perfect information and a simple local information system. These Folk Theorem results explain not only how social norms can provide incentives that support cooperation in a community, providing support to the concepts of social capital and corporate culture, but also how they can support inequality and discrimination.I am grateful to David Levine for invaluable guidance and ideas. I also thank Anna Aizer, Hongbin Cai, Walter Cont, Ernesto Dal Bó, Jean-Laurent Rosenthal, Federico Weinschelbaun, William Zame, anonymous referees and seminar participants at Universidad de Buenos Aires, UCLA, Universidad T. Di Tella, Harvard Business School and Stockholm School of Economics for very useful comments and discussions     

Social norms and the indirect evolution of conditional cooperation

We develop a model of social norms and cooperation in large societies. Within this framework we use an indirect evolutionary approach to study the endogenous formation of preferences and the co-evolution of norm compliance. The multiplicity of equilibria, which emerges in the presence of social norms, is linked to the evolutionary analysis: individuals face situations where many others cooperate as well as situations where a majority free-rides. The evolutionary adaptation to such heterogenous environments favors conditional cooperators, who condition their pro-social behavior on the others’ cooperation. As conditional cooperators react flexibly to their social environment, they dominate free-riders as well as unconditional cooperators.     

Optimal unemployment insurance in an estimated job search model with savings

This paper estimates a job search model with savings on Danish micro data that include observations on wealth and wages. Controlling for extensive observed and unobserved worker characteristics heterogeneity, the estimation relates observed unemployment spells to the model implied hazard rate for each worker. The model estimates are sensible and fit the data well. Optimal UI policy is determined in the estimated model as a trade-off between insurance provision and distortion of search incentives. The analysis emphasizes an important policy sensitivity to the interest rate and the importance of including transitional dynamics in the analysis.     

Social norms and core outcomes in a sharecropping economy

This paper employs Greenberg'sTheory of Social Situations to explain the variation of sharecropping contracts across economies as a function of social norms that satisfy von Neumann-Morgenstern stability. We demonstrate that equal division and core outcomes are jointly possible when bargaining is unrestricted. By contrast, when the landlord acts as a monopsonist, core outcomes are the only possible social norm. In addition, if the presence of an outside wage is recognized, core and equal division norms may coincide.     

Social morality and the primacy of individual perspectives

This paper examines themes and concerns about my book, The Order of Public Reason, raised in the three essays in this symposium by Peter Boettke & Rosolino Candela, Michael Munger and Kevin Vallier. The three essays present variations on a common theme: I need to embrace deeper commitments than The Order of Public Reason acknowledges. In my estimation these proposals lead to places that I do not wish to go — nor should anyone devoted to core Hayekian insights. The goal of the book is show how a diversity of moral views can lead to a cooperative social morality while abjuring as far as possible “external” moral claims — claims that do not derive from the perspectives of cooperating individuals. The diverse individual moral perspectives, and what they understand as normative, must be the real engines of social normativity. In this essay I stress the primacy of the individual normative perspectives in generating social morality; this helps show why the urge to embrace deeper commitments should be resisted. Rather than going over the presentation in The Order of Public Reason to stress this point, I sketch a modest recasting of the analysis in terms of models of individual moral interaction.     

Social norms and female labor force participation in urban China

This study investigates the impact of social norms on the labor supply decision of married women in urban China. Our estimation results indicate that men raised by non-working mothers are more likely to support traditional gender roles, are more averse to having working wives, and tend to be less productive or less willing to engage in housework than other men. Consequently, the labor force participation rate of married women with non-working mothers-in-law is 5–18 percentage points lower than that of married women with working mothers-in-law in urban China.     

Social insurance and social justice—Another look at the antipoverty effects of social insurance programs

This paper analyzes social insurance programs in the United States to determine if they support the principles of social justice, with special emphasis on the principle of preferential treatment of the poor. The paper also examines the antipoverty effects of social insurance programs. The major conclusions are the following: (1) social insurance programs generally are consistent with the principles of social justice, but parts of certain programs clearly violate the norms of social justice; (2) social insurance programs are especially powerful in reducing the poverty rate and poverty gap for the elderly, but are generally ineffective in reducing the poverty rate for single-parent families with related children under age 18; (3) social insurance programs have only a minor impact in reducing the poverty rate among married-couple families with related children under age 18; and (4) although the Social Security payroll results in a small increase in the poverty rate, social insurance programs are especially effective in reducing income inequality.     

Social context reveals gender differences in cooperative behavior

A number of previous researches indicate that men prefer competition over cooperation, and it is sometimes suggested that women show the opposite behavioral preference. In the current study the effects of social context on gender differences in cooperation are investigated. For the purpose, we compared men and women behavior under two social conditions: in groups of strangers and in groups with long-term socialization—groups of friends. The differences were found in changes in the level of cooperation, taking into account the effects of mixing social and gender variables. Social interaction and communication made cooperation of group members strength and sustainable. However, men’s and women’s cooperative behavior in groups differed. Women were initially more inclined to cooperate in interaction with strangers. Men showed greater sensitivity to sociality effects. They tended to make cooperative decisions more often if there were friends in the group. Furthermore, men cooperated with previously unknown people after socialization with them significantly more than women.     

Social status and group norms: Indirect reciprocity in a repeated helping experiment

In the economic literature, reciprocity is typically studied in situations of repeated interaction between two individuals. It refers to one individual rewarding kind acts of the other or punishing hostile acts. In contrast, this paper studies indirect reciprocity, where a cooperative action is rewarded by a third actor, not involved in the original exchange. We provide experimental evidence on indirect reciprocity. The experiment is based on the ‘repeated helping game’ developed by Nowak and Sigmund (J. Theoret. Biol. 194 (1998) 561; Nature 393 (1998) 573), involving random pairing in large groups. Pairs consist of a donor and a recipient. Donors decide whether or not to provide costly ‘help’ to the recipients they are matched with, based on information about the recipient's behavior in encounters with third parties. We observe clear evidence of indirect reciprocity. Many decision-makers respond to the information about previous decisions (whether or not to help others) of the recipients. In our experiments, this indirect reciprocity is largely based on norms about how often the recipient should have helped others in the past. We show that these norms develop similarly within groups of interacting subjects, but distinctly across groups. This leads to the emergence of group norms.     

Government policy in the formal and informal sectors

The paper quantitatively investigates, in general equilibrium, the interaction between the firms' choice to operate in the formal or the informal sector and government policy on taxation and enforcement, given a level of regulation. A static version of Ghironi and Melitz's (2005) industry model is used to show that firms with lower productivity endogenously choose to operate in the informal sector. I use cross-country data on taxes, measures of informality, and measures of regulation (entry and compliance costs, red tape, etc.) to back out how high the enforcement levels must be country by country to make the theory match the data. The welfare gains from policy reforms are on average 1.2% (measured in terms of consumption) for OECD countries. I also find that the welfare gains from reducing regulation are on average 2.1%. Finally, performing a similar decomposition to that of Hall and Jones (1999), I find that distortions associated with informality account for a factor of 1.5 of the output per capita difference between the richest and the poorest countries.     

Inequality, corruption and the informal sector

The marginal impact of corruption on income inequality is shown to be a linear function of the size of the informal sector. This implies that anti-corruption policies alone are unlikely to reduce inequality in countries with a large informal sector.     

Performance of European insurance firms in the single insurance market

The deregulation and liberalization process towards establishing a single European financial market has some important implications for the insurance industries. Due to the increased competition, insurance firms have to adjust their costs and operate efficiently to survive in this new environment. This paper attempts to analyze the cost efficiency and scale economies in the single European insurance market. Considering the ongoing enlargement process of the EU, our sample includes the insurance industries of the major EU‐15, four new members and a candidate country, Turkey, over the period 1995–2005. We use the firm‐level financial data and estimate a stochastic cost frontier that controls for differences in environmental conditions. All insurance systems display significant levels of cost inefficiency. The results further indicate that there are significant economies of scale, particularly for small‐ and medium‐size insurance firms. Finally, the analyses suggest similar results for major EU countries, new members and the candidate.     

Contract enforcement and the size of the informal economy

This paper describes a model where the size of the informal sector decreases as the degree to which financing contracts can be enforced in the formal sector rises. Agents who choose to operate in the informal sector can evade taxes, but they have no access to official means of contract enforcement. Numerical simulations of the model suggest that lax tax enforcement alone does not suffice to generate a large informal sector. Contractual imperfections, on the other hand, can generate a large informal sector and account for several distinguishing features of the organization of production in developing economies. I would like to thank Tim Kehoe, Ed Prescott and Manuel Santos for their guidance, and seminar participants at ITAM, the Universidad Torcuato di Tella and the University of Montréal for their valuable comments. The views expressed herein are those of the authors and may not reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.     

Children and savings in less developed countries

"A commonly cited motive for childbearing in LDCs is the support in old age provided by one's children. Alternative means of retirement support become available as a country develops. This paper presents a simple two period model in which financial institutions are allowed to substitute for children in the provision of this service. The 'quality' of financial institutions is given an operational definition and the hypotheses of the model are tested on a cross-section sample of countries."     

The genuine savings criterion and the value of population

Summary. In any dynamic model of the economy with changing population, the latter should properly be one of the state variables of the system. It enters both in the maximand, at least under total utilitarianism, and into the production function in one way or another. If population growth is exponential and constant returns prevails, then a simple transformation to per capita variables can be used to eliminate one state variable, but this ceases to be true if growth is not exponential, as it obviously is not and cannot be. If the growth of population is exogenous, then introducing it into the system does not affect the optimal policy. However, if one asks whether the system is sustainable, in the sense of at least maintaining total welfare (integral of discounted utilities), then the criterion is that that the value of the rates of change of the state variables is non-negative, so that the shadow price of population becomes relevant. In this paper, we derive explicit formulas in a simple model, showing that the rate of growth of per capita capital is not the correct formula but must have another terms added to it. We also study the question under an alternative criterion of long-run average utilitarianism. Received: June 1, 2002; revised version: September 27, 2002 RID="*" ID="*"Research support was provided by the William and Flora Hewlett Foundation. An earlier version of this paper was presented at a celebration of Mordecai Kurz's 66th birthday at Stanford University, 1–3 August 2002. Correspondence to: K.J. Arrow     

工伤保险与团体意外伤害保险的分析与比较

文章阐述了工伤保险和团体意外伤害保险的溯源及性质,分析了两种保险之间的关系与区别。工伤保险和团体意外伤害保险是一种功能互补关系,并对企业的安全生产及提高劳动者保障水平,增强企业凝聚力和增进企业职工福利具有重要作用。     

Identifying the savings potential of bedside terminals

Savings estimates from using bedside terminal systems must be unit and shift-specific to properly determine which functional areas offer savings potential, the potential savings on different shifts, and which nursing units have the greatest savings potential.     

Precautionary savings by natives and immigrants in Germany

This article analyses the savings behaviour of natives and immigrants in Germany. It is argued that uncertainty about future income and legal status (in case of immigrants) is a key component in the determination of the level of precautionary savings. Using the German dataset, we exploit a natural experiment arising from a change in the nationality law in Germany to estimate the importance of precautionary savings. Using a Difference-in-Differences (DiD) approach, we find a significant reduction in savings and remittances for immigrants after the easing of citizenship requirements, compared to the pre-reform period. Our parametric specification shows that introduction of the new nationality law reduces the gap in marginal propensity to save between natives and immigrants by up to 80%. These findings suggest that many of the differences in terms of the savings behaviour between natives and immigrants are driven by the savings arising from the uncertainties about future income and legal status rather than cultural differences.