LABOR MARKET IMPACTS OF SMOKING REGULATIONS ON THE RESTAURANT INDUSTRY

This paper examines the impact of smoking regulations on restaurant employment in West Virginia, a state with a high rate of smoking prevalence. Using a confidential establishment‐level dataset, our results suggest that smoking bans reduced restaurant employment by between 0.7 and 1.5 workers, depending on model specification. We find that smoking restrictions have heterogeneous impacts across establishments, with the largest impacts on mid‐sized establishments, defined as those with 10–29 employees. Our results also suggest that the impact of smoking restrictions was larger in counties with higher rates of smoking prevalence. (JEL L51, D78, H0)     

Measuring Peer Effects on Youth Smoking Behaviour

This paper examines the role of peer effects in teenagers' smoking behaviour in the U.S.A. I present a random utility model that incorporates complementarity between individual and peer smoking. A Markov process model of smoking interactions between individuals is presented. I estimate the structural parameters of the model using a steady-state distribution that is determined by the Markov process. The empirical results strongly support the presence of positive peer effects. Interestingly, peer interactions are found to be stronger within the same gender than across genders. The same result is found for race. Moreover, a multiplier effect is found.     

Health Selection and the Effect of Smoking on Mortality

We show that individuals who are in poorer health, independently from smoking, are more likely to start smoking and to smoke more cigarettes than those with better non‐smoking‐related health. We present evidence of selection, relying on extensive data on morbidity and mortality. We show that health‐based selection into smoking has increased over the last 50 years with knowledge of its health effects. We show that the effect of smoking on mortality is greater for more highly educated individuals and for individuals in good non‐smoking‐related health.     

Smoking Behavior of Older Adults: A Panel Data Analysis Using HRS

Using longitudinal data from Health and Retirement Surveys over 1992–2010, this paper analyzes decisions by older American to continue smoking and the number of cigarettes to consume using two-part hurdle models with correlated effects. We build on the existing literature by incorporating a myriad of factors including cigarette prices, health shocks and smoke-free laws in one econometric framework. Our estimates indicate that higher cigarette prices play an important role in both reducing participation and the intensity of consumption even for this adult population. In addition, health shocks, as measured by newly diagnosed diseases, raise the probability of quitting, highlighting the ‘curative’ aspects of cessation. However, we find very little effect of health on smoking intensity if an older adult does not quit after a health shock. Per capita cigarette consumption in the US declined by over 64% during the period. We show that increased cigarette prices and health shocks together contribute almost equally to explain nearly 86% of the decline, with little that can be attributed to smoking bans and anti-smoking sentiment.

     

Does High‐skilled Migration Affect Publicly Financed Investments?

This paper analyzes the interaction between migration of high‐skilled labor and publicly financed investment. We develop a theoretical model with multiple, ex ante identical jurisdictions where individuals decide on education and subsequent emigration. Migration decisions are based on differences in net income across jurisdictions which may occur endogenously. The interaction between income differences and migration flows gives rise to the potential of multiple equilibria: a symmetric equilibrium without migration and an asymmetric equilibrium in which net income levels differ among jurisdictions and trigger migration flows. In the former equilibrium, all jurisdictions have the same public investment level. In the latter one, public investment is high in host economies of skilled expatriates and low in source economies. We empirically test the hypothesis that emigration rates are negatively associated with publicly financed investment levels for OECD countries.     

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.     

Public Goods and Tax Competition in a Two‐Sided Market

A rather neglected issue in the tax competition literature is the dependence of equilibrium outcomes on the presence of firms and shoppers (two‐sided markets). Making use of a model of vertical and horizontal differentiation, within which jurisdictions compete by providing public goods and levying taxes in order to attract firms and shoppers, this paper characterizes the noncooperative equilibrium. It also evaluates the welfare implications for the jurisdictions of a popular policy of tax coordination: The imposition of a minimum tax. It is shown that the interaction of the two markets affects the intensity of tax competition and the degree of optimal vertical differentiation chosen by the competing jurisdictions. Though the noncooperative equilibrium is, as it is typically the case, inefficient such inefficiency is mitigated by the strength of the interaction in the two markets. A minimum tax policy is shown to be effective when the strength of the interaction is weak and ineffective when it is strong.     

Smoking laws and their differential effects on restaurants, bars, and taverns

This article examines the effect of restrictive smoking laws on restaurants, bars, and taverns. Supporters of these laws often argue that they do not harm firms and may even raise profits. Opponents argue that owners cater to customer smoking preferences, and laws mandating specific policies will negatively impact profits. This article provides a framework for examining the distribution of effects that smoking laws exert on businesses, and demonstrates that changes in total sales or tax revenues do not provide a meaningful understanding of the economic implications because smoking laws exert different effects on different firms. The distribution of these effects is examined using data from a nationwide survey of 1,300 restaurant, bar, and tavern owners. While some subsets of firms are predicted to suffer revenue declines, bars are predicted to be more than twice as likely to experience losses as restaurants. An important implication is that the increasing level of governmental restrictions on smoking in the hospitality sector could gradually impact the types of service available to the public.     

Fashionable food: a latent class analysis of social status in food purchases

A framed field experiment combined with a latent class econometric approach was used to investigate how prestige-seeking behaviour influences food choices. We propose a theoretical framework to test conspicuous consumption of specialty food products. We test the hypothesis empirically by categorizing individuals into unobserved latent classes according to their general prestige-seeking behaviour. We find evidence of food consumption driven by prestige to the point of becoming a symbol of social status. The prestige-seeking behaviour seems to be motivated by invidious comparison or higher-class individuals seeking to differentiate themselves from lower-class individuals; and pecuniary emulation, or lower-class individuals buying prestigious goods in order to be perceived as members of a higher class. Findings from this study revealed that the effects of differentiating labelling attributes had a higher impact for individuals classified into classes with prestige-seeking behaviour to attain an elevated social status.     

Environmental Regulations Under Simple Negligence or Strict Liability

We use negligence and strict liability as the basis for environmentalregulations and show that, when jurisdictions compete for firms that engagein environmentally risky behaviour, strict liability implements the sociallyoptimal outcome while simple negligence does not, even if the jurisdictionsfully cooperate in setting standards of care. Consequently, we argue that,even if jurisdictions delegate standard setting to a central authority, likein the European Union, this would not implement the socially optimaloutcome. We also demonstrate that harmonization of environmental regulationsmakes more sense if strict liability is used rather than simple negligence.     

Smoking,wealth accumulation and the propensity to plan

We investigate the relationship between wealth, smoking, and individual propensities to plan. Planning propensity affects wealth but not smoking, suggesting that planning is not an all-purpose skill. Financial planning may draw on different abilities than those that facilitate smoking cessation.     

Effects of Pregnancy and Birth on Smoking and Drinking Behaviours: A Comparative Study Between Men and Women

Using panel data obtained from monthly surveys for 3 years, we examined how the effects of life events on smoking and drinking behaviours differ between men and women. The key findings were that: (i) consumption of alcohol and cigarettes by men and women were lower during pregnancy and after childbirth than before pregnancy; (ii) pregnancy and childbirth led women to stop drinking and led men to reduce their alcohol consumption but not to stop drinking; and (iii) marriage, pregnancy and childbirth led women to stop smoking and marriage and birth led men to stop smoking but the effects of pregnancy on men are unclear.     

International corporate taxation and U.S. multinationals' behaviour: an integrated approach

Abstract .  This paper explores the effects of corporate taxation on U.S. capital invested abroad and on tax planning practices. The econometric analysis first indicates that investment is strongly influenced by average tax rates, with a magnified impact particularly for low-tax rates, implying that the attractiveness of low-tax countries is not weakened by anti-deferral rules and cross-crediting limitations. Further explorations suggest that firms report higher profit, higher Subpart F income, and are less likely to repatriate dividends when they are located in low-tax jurisdictions. Finally, when the role of effective transfer pricing regulations is estimated, it appears that low degrees of law enforcement are associated with higher income shifting.     

TESTING REGULATORY CONSISTENCY

We undertake an analysis of regulatory consistency using a database of publicly available regulatory decisions in Australia. We propose a simple exploratory model which allows us to test for regulatory consistency across jurisdictions and industries without detailed knowledge of the regulatory process. We compare two measures using our approach—the weighted average cost of capital (WACC) and the proportion of firms' revenue requirement claims disallowed by the regulator. Our comparison suggests that the WACC is a very poor measure of regulatory consistency. Moreover, our empirical results may be interpreted as indicating that a range of measures ought to be considered when assessing regulatory consistency. Our results also provide an empirical foundation for theoretical modeling of regulatory processes. (JEL L51)     

CARTELISING GROUPS IN DYNAMIC HYPERBOLIC OLIGOPOLY WITH ANTITRUST THRESHOLD

Empirical evidence, and theoretical results have shown that, in an industry, higher concentration index indicates higher price‐cost margin. In order to detect collusive behaviour the antitrust authorities often monitor the Herfindahl‐Hirschman Index. We consider N‐firm oligopolies where a group of firms partially cooperate with each other, and monitor the Herfindahl‐Hirschman Index as well. After suspecting that the authorities might notice the violation of antitrust regulations, they stop their cooperation. The group will not cooperate again until the Index moves back to the legal domain. This flip‐flop dynamical model is formulated, the equilibria are determined, and the asymptotic properties of the system are examined.     

STRESS AND SMOKING: ASSOCIATIONS WITH TERRORISM AND CAUSAL IMPACT

This study analyzes the effects of the Oklahoma City bombing and 9/11 terrorist attacks on stress, smoking, and smoking quit attempts using 1,657,985 observations from the Behavioral Risk Factor Surveillance System. Regression discontinuity results suggest that, in the fourth quarter of 2001, stress increased by nearly an extra half day per 30 days (11.9%) among ever smoking adults. In the 2 years after 9/11, smoking prevalence increased by 1.1 percentage points (2.3%) among ever smoking adults, resulting in between 950,000 and 1,300,000 adult former smokers becoming smokers again because of terrorism. The net cost to the government was between $530 million and $830 million through the end of 2003. Adults reported disproportionate stress increases based on community military participation and education. Simultaneity between smoking and stress is addressed by an instrumental variables model, providing validity to the hypothesized causal pathway between terrorism, stress, and smoking. This model suggests that an extra day of stress per 30 days causes a 3.4 percentage point increase in smoking among ever smoking adults. Results help to quantify a hidden cost of terrorism and provide a better understanding of utility maximization during periods of high stress. (JEL I12, I18)     

Much ado about nothing? Smoking bans and Germany's hospitality industry

Over the past years, public smoking bans have been introduced in most European countries. Unlike elsewhere, in Germany such bans were introduced at state level at different points in time, which provides important intra-country regional variation that can be exploited to identify the effects of such bans on the hospitality industry. Using monthly data from a compulsory survey carried out by the German Federal Statistical Office, we study the short-run effects that these bans had on establishments’ sales. In contrast to the largely US-based literature, we find that smoke-free policies had a negative (yet moderate) effect on establishment sales. Closure rates of businesses in the hospitality industry, however, were not significantly affected by the introduction of state smoking bans.     

The role of pregnancy health problems on maternal smoking behaviours

To explore the effects of pregnancy health problems (PHPs) on smoking behaviours during and after pregnancy (‘smoking-inducing’ effect), we estimate a two-period model that jointly determines prenatal and postnatal smoking decisions, taking into consideration the presence of PHPs. While PHPs are likely to reduce prenatal (except for heavy smokers) and postnatal smoking propensity, we still observe considerable postnatal relapse in the sample, which can be attributed to smoking addiction, as well as information asymmetries and maternal stress associated with PHPs. Thus, we advocate for smoking cessation policies and programmes throughout and beyond pregnancy to avoid potential intertemporal substitution between prenatal and postnatal cigarette consumption.