The Distributive and Labor Supply Impact of the Minimum Insertion Income: The Case of Italy

This paper analyzes the redistributive and labor supply effects of extending at national level the Minimum Insertion Income, introduced experimentally in 1999 in some Italian municipalities. We develop a behavioral microsimulation tax-benefit model that allows for simultaneous labor supply decisions by household members, endogenous choice between dependent employment and self-employment, complete representation of the current Italian tax-benefit system. The results show a positive impact on both inequality and poverty, while overall labor supply reduces. On average magnitude of labor supply disincentive is small for married individuals, relatively larger for single persons and, within this category, for women than men.     

Taxation and the asymmetric adjustment of selected retail energy prices in the UK

This paper investigates the adjustment of the prices of four key petroleum products in the UK following changes in the price of crude oil. We find significant evidence that the pre-tax prices of diesel, kerosene, and gas oil adjust more rapidly in an upward than a downward direction, but that the pre-tax price of unleaded petrol adjusts symmetrically. However, these patterns are obscured at the pump once one accounts for fuel duty and value-added tax, raising the possibility that firms can use the tax system to conceal rent-seeking behaviour.     

Sources of investment inefficiency: The case of fixed-asset investment in China

This study attempts to measure the inefficiency associated with aggregate investment in a transitional economy. The inefficiency is decomposed into allocative and technical inefficiency based on standard production theory. Allocative inefficiency is measured by the deviation of actual investment from the theoretically desired investment demand. Institutional factors are then identified as part of the driving force of the deviation. The resulting model is applied to Chinese provincial panel data. The main findings are: Chinese investment demand is strongly receptive to expansionary fiscal policies and inter-provincial network effects; the tendency of over-investment remains, even with signs of increasing allocative efficiency and improving technical efficiency.     

Inequity in American Schools: A New Perspective on the Distributional Effects of School Expenditures on Economic Well‐Being

This article explores how inequities in public K‐12 school spending impact the distribution of economic well‐being across American households with public school students in 1989 and 2000. Adapting concepts from the public finance literature, I explore the impact of school spending on the vertical and horizontal equity and its impact relative to other types of public spending on social programs and taxation. Conventionally, vertical equity refers to the size of the income gaps between households. Horizontal equity refers to the ranking of households along the income distribution with any change in ranks producing horizontal inequity. My main findings show that school spending, when converted into a component of income, served to reduce extended‐income inequality through improvements in vertical equity without the discriminatory implications of exacerbating horizontal inequity across households. Additionally, this impact was at least as large as that of spending on other social programs. This finding bolsters standard arguments for equity and progressivity of school finance across students.     

Evidence on the Convergence of Per Capita Income: A Comparison of Founder Members of the Association of South East Asian Nations and the South Asian Association of Regional Cooperation

This paper investigates the per capita income convergence patterns of a set of Association of South East Asian Nations (ASEAN) and South Asian Association of Regional Cooperation (SAARC) countries. We obtained a time‐series analysis for stochastic convergence by applying unit‐root tests in the presence of two endogenously‐determined structural breaks. We then supplemented the results by tests that produced evidence for β convergence. The evidence shows that the relative per capita income series of ASEAN‐5 countries were consistent with stochastic convergence and β convergence, but this was not found for SAARC‐5 countries. For the ASEAN‐5 countries, the structural breaks associated with the world oil crisis and the Asian crisis impacted heavily on the convergence/divergence process.     

The impact of the Self‐Sufficiency Project on the employment behaviour of former welfare recipients

Abstract The Self‐Sufficiency Project (SSP) was a Canadian randomized trial in which the program group had 12 months to find full‐time employment in order to qualify for a subsidy that roughly doubled their pre‐tax earnings for the next three years. We find evidence of significant impacts of SSP on non‐employment and employment durations. For the treated group, simulation results show an impact on the employment rate at 52 months after random assignment in the range of 7 to 11 percentage points; this is approximately a 25% increase in the employment rate compared with having no treatment in place.     

Evaluating the Cost-Effectiveness of In-Work Benefits: A Simulation Study for Switzerland

Abstract. Income support for working low-income families (the 'working poor') is on top of the political agenda in Switzerland. The current social assistance system is considered inadequate to support working poor households. Several European countries have introduced in-work benefits in order to make work pay. Based on a structural labour supply model, this paper provides microsimulation results of the effects of introducing different schemes of in-work benefits. It turns out that adding a minimum hours requirement to the current social assistance system is the most cost-effective reform. One-third of expected costs can be attributed to behavioural changes in labour supply.     

Poverty,undernutrition and vulnerability in rural India: role of rural public works and food for work programmes

This paper analyses the effects of access to Rural Public Works (RPW) or Food for Work programme (FFW) on consumption poverty, vulnerability and undernutrition in India using the large household data sets constructed by the National Sample Survey for 1993 and 2004. The treatment-effects model is used to take account of sample selection bias in evaluating the effects of RPW in 1993 or FFW in 2004 on poverty. We have found significant and negative effects of participation in RPW and the Food for Work Programme on poverty, undernutrition (e.g. protein) and vulnerability in 1993 and 2004.     

The economic impact of EU-enlargement: assessing the migration potential

This paper analyzes the determinants of immigration flows to Germany in a time series-cross section framework. The reduced form of a well established theoretical model is estimated for a sample of 17 sending countries and a period covering 1960 to 1994. The estimates are then used to perform out-of-sample forecasts to assess the immigration potential from the Eastern European accession candidates to Germany. These scenarios predict a moderate increase in immigration to Germany, especially for the first round accession candidates. First version received: July 1999/Final version received: July 2000     

Health spending in Italy: The impact of immigrants

The welfare impact of immigration is a highly debated issue especially for countries on the external borders of the European Union. This paper studies how immigrants affect public health expenditure across Italian regions during the period 2003–2016 using NUTS II level data. Identification strategy is based on shift–share instruments, which are made robust to pull factors that might attract immigrants in Italy and to internal migration of natives. We find that a 1 percentage point increase in immigrants over total resident population leads to a decrease in public health expenditure per capita by about 3.8% (i.e. around 69 euro per capita). Among possible channels, we find no support for any crowding out effect from public to private health services by natives due to increasing immigration or for any role played by different levels of efficiency across regional health systems. Our results are driven by immigrants' demographic structure: they are mostly males and younger workers that call for less health spending, according to a positive selection mechanism. Moreover, linguistic barriers contribute to limiting the immigrants' reliance on public healthcare, which is confirmed also by the use of the European Health Interview Survey microdata.     

Education, Work and Wages in the UK

Abstract. This paper is concerned with the relationship between education, wages and working behaviour. The work is partly motivated by the sharp distinction in the literature between the returns to education and the effect of wages on labour supply. Education is the investment that cumulates in the form of human capital while labour supply is the utilization rate of that stock. Yet, variation in education is usually the basis for identifying labour supply models – education is assumed to determine wages but not affect labour supply. Moreover, it is commonly assumed that the private rate of return to education can be found from the schooling coefficient in a log-wage equation. Yet, the costs of education are largely independent of its subsequent utilization but the benefits will be higher the greater the utilization rate. Thus the returns will depend on how intensively that capital is utilized and we would expect that those who intend to work least to also invest least in human capital. Indeed, the net (of tax liabilities and welfare entitlements) return to education will be a complex function of labour supply and budget constraint considerations.
Here we attempt to model the relationship between wages, work, education and the tax/welfare system allowing for the endogeneity of education as well for the correlations between the unobservable components of wages and working behaviour. We use the estimates to simulate the effect of a new UK policy designed to increase education for children from low-income households.     

The impact of the Bolsa Escola/Familia conditional cash transfer program on enrollment, dropout rates and grade promotion in Brazil

We examine the impact of Brazil's Bolsa Escola/Familia program on Brazilian children's education outcomes. Bolsa provides cash payments to poor households if their children (ages 6 to 15) are enrolled in school. Using school census data to compare changes in enrollment, dropping out and grade promotion across schools that adopted Bolsa at different times, we estimate that the program has: increased enrollment by about 5.5% (6.5%) in grades 1-4 (grades 5-8); lowered dropout rates by 0.5 (0.4) percentage points in grades 1-4 (grades 5-8); and raised grade promotion rates by 0.9 (0.3) percentage points in grades 1-4 (grades 5-8). About one third of Brazil's children participate in Bolsa, so assuming no spillover effects onto non-participants implies that Bolsa's impacts are three times higher than these estimates. However, simple calculations using enrollment impacts suggest that Bolsa's benefits in terms of increased wages may not exceed its costs.     

With a little help from our friends: The effect of USAID assistance on SME growth in a transition economy

Using survey data on Macedonian firms that participated in USAID programs providing technical and financial assistance for small and medium-sized enterprises (SMEs) and on firms that did not, we estimate the effectiveness of such assistance in increasing the growth of employment in the assisted firms. We control for selection bias in program participation and use both kernel and caliper propensity score matching to estimate the excess growth of employment in assisted firms. We find that assistance programs raised employment growth by 16-20 percentage points in the first year after assistance and by 26-30 points by the third year.     

Differences by mother’s education in the effect of childcare on child obesity

Previous studies have found adverse effects of maternal employment on child obesity for higher educated mothers. Using a quasi-structural model, we find additionally a lower risk of obesity for children of less educated mothers with increased time in non-parental childcare.     

The Indian Public Distribution System as provider of food security: Evidence from child nutrition in Andhra Pradesh

We study whether a sudden increase of the price of rice supplied by the Indian Public Distribution System in Andhra Pradesh, a large Indian state, had a negative impact on child nutrition. A few months after the price increase, a health survey started to record weight for a large sample of children. The data collection continued for several months, so that children measured later lived for a longer period of time in a less favorable price regime. Using different estimation techniques we find that longer exposure to high prices are not accompanied by worse nutritional status, as measured by weight-for-age.     

The impact of endogenous tax treaties on foreign direct investment: theory and evidence

Abstract .  This paper investigates the effect of tax treaties on bilateral stocks of outward FDI. For this purpose we employ a numerically solvable general equilibrium model of trade and multinational firms to study the impact of tax treaties on both welfare and outward FDI. The model indicates under which factor endowment configurations countries gain in welfare when implementing a tax treaty. This motivates an empirical specification of the endogenous selection into implementing new tax treaties. Using data of bilateral OECD outward FDI between 1985 and 2000, we find a significant negative impact of newly implemented tax treaties on outward FDI stocks.     

Monopoly pricing with negative network effects: The case of vaccines

We study the market for vaccinations considering income heterogeneity on the demand side and monopoly power on the supply side. A monopolist has an incentive to exploit the external effect of vaccinations and leave the poor susceptible in order to increase the willingness to pay the rich. Even the possibility of price discrimination does not remove this incentive. We demonstrate that the weaknesses of standard policy measures are mitigated when income heterogeneity is taken into account. This offers an efficiency based rationale for distribution oriented national or international public health interventions.     

Child welfare programs and child nutrition: Evidence from a mandated school meal program in India

Utilizing the data I collected on a nationally mandated school meal program in India, I examine the extent to which children benefit from the targeted public transfer. Relying upon built-in randomness in whether a child's 24-hour food consumption recall was for a school or non-school day, I find that the daily nutrient intake of program participants increased substantially by 49% to 100% of the transfers. The results are robust to the potential endogeneity of program placement and individual participation. The findings suggest that for as low a cost as 3 cents per child per school day the scheme reduced the daily protein deficiency of a primary school student by 100%, the calorie deficiency by almost 30% and the daily iron deficiency by nearly 10%. At least in the short-run, therefore, the program had a substantial effect on reducing hunger at school and protein-energy malnutrition.