Following or Leading Public Opinion? Social Security Policy and Public Attitudes Since 1997

This paper examines New Labour's social security and related policies since 1997 in the light of evidence on public attitudes. The list of measures where policies have been in or have come into line with public attitudes is much longer than the list of measures where policies have been out of line with public attitudes or appear to have led them. One interpretation is that policy has been led by opinion surveys and focus groups, with opportunities lost to take more radical action and then persuade people of the need and justification for it. An alternative would be that policy has navigated with the grain of some of the more progressive parts of public opinion to achieve a result that has carried the public with it, in a way that would not have been sustainable if there had simply been an increase in the generosity of an unreformed social security system.     

Simplicity versus Fairness in Means Testing: The Case of Civil Legal Aid

For most state financial benefits, the making of any payment, or its level, depends upon a means test to assess the applicant's income or wealth. Attempts to make such tests fair often lead to procedures that are complicated to administer and confusing for the applicant. This paper describes the analysis underlying a review of means testing for civil legal aid in England and Wales, to achieve considerable simplification without sacrificing fairness.     

Social security in the UK under New Labour: what did the Third Way mean for welfare reform?

In 1997, the Labour Party was elected in the UK with few explicitly articulated ideas about social security reforms. This paper reviews the large number of subsequent reforms to social security, and argues that some consistent themes have emerged. A commitment to keep to the tight spending plans of the previous, Conservative, administration left little scope for increases in benefit spending during the first two years in office. Since that time, increases in the generosity of some social security programmes have been directed towards achieving certain goals. An emphasis on encouraging paid work has been a consistent theme, whilst aims of reducing poverty rates for children and pensioners have been emphasised since 1999. Spending to achieve these goals has often been directed through means‐tested programmes, and there has been a related weakening of the link between paid National Insurance contributions and benefit entitlements. It remains to be seen whether reforms to the process of income assessment will increase take‐up.     

Entrepreneurship,College, and Credit: The Golden Triangle

We develop a model to evaluate the aggregate impact of college finance in an environment with entrepreneurship. The calibrated model captures the stylized fact that entrepreneurs with college are more common and more profitable in the United States. The calibration indicates this is mainly because higher labor earnings allow college‐educated agents to ameliorate credit constraints if and when they eventually become entrepreneurs. Changes in financing constraints on entrepreneurs can thus affect college attendance, and changes in financing constraints on college can affect entrepreneurship rates as well.     

Voluntary Contributions to Personal Pension Plans: Evidence from the British Household Panel Survey

In this paper, we use data from the British Household Panel Survey (BHPS) for the years 1992 to 1998 to study the determinants of saving in the form of voluntary contributions to personal pension plans (PPPs). We first estimate a probit model with selection for the probability of making these voluntary contributions. We then estimate a random‐effects tobit regression for the amounts contributed and compare the results with those of a similar regression for conventional saving. Our findings suggest that voluntary contributions to PPPs are made essentially for retirement purposes, whereas conventional saving is undertaken for precautionary motives. The former type of saving is thus unlikely to offset the latter completely.     

The impact of consumer behavior on financial security of households in Poland

The paper applies the concept of identity to investigate whether consumer behavior matters for a household's financial security. It is assumed that considerable part of households may express their identity through status-oriented consumption. The research is carried out in two steps. First, the index of financial security is built and used to determine the level of financial security experienced by working-age families in Poland. Second, the simulation results based on an econometric model are employed to find the answer to the question: Does financial insecurity result more from the need to manifest consumption at the higher level than average in an income-group of which people are members, or people want to be distinguishable inside their own income-group but they do not identify with a group having consumption at visibly higher level, or from the need to improve self-image by bringing own consumption closer to the pattern of a group with higher wealth status of which they are not members? The source of data is the 2005-2009 Households Budget Surveys in Poland. The findings offer empirical evidence for the relevance of consumer behavior for financial security of households in Poland. Considerable part of households expresses identity through conspicuous consumption. Both groups of households, the insecurity rich and the insecurity poor, accept the same ranking of status goods: a car on the first position, next homes (housing and equipment) and clothes on the third place. Status-oriented consumption creates life beyond means and pushes even relatively rich households towards financial insecurity.     

Participating mortgages and the efficiency of financial intermediation

This paper establishes a basic framework to study three different variants of Participating Mortgages (PMs). We obtain results for Shared Appreciation Mortgages (SAMs), Shared Income Mortgages (SIMs) and Shared Equity Mortgages (SEMs) in closed-form. We illustrate our findings with examples that show PMs are also attractive in an environment where prepayment can occur. Finally we conclude with the public policy implications of employing PMs as workout loans, especially post sub-prime crisis. We argue that by facilitating better risk sharing, PMs offer a means to enhance the efficiency and resiliency of the financial system.     

我国二元化城乡社会保障体系反思与重构:基于城乡统筹的视角分析

现行的二元化城乡社会保障制度使得我国城乡居民的实际收入水平不仅没有缩小,反而进一步扩大,而失地农民和农民工的社会保障问题在城市化和工业化进程中日益突出,如何制订一个切实可行的城乡社会保障制度政策已经成为我国当前经济持续高速发展中急需解决的重大课题。本文基于城乡统筹的背景,分析了我国二元化城乡社会保障体系的现状并对其进行绩效评价,在此基础上对其重构的必要性和可行性进行了反思,从正确理解城乡统筹内涵、明确战略思路、确立城乡社会保障制度衔接的突破口和明晰三方责任分摊机制等方面提出了政策建议。     

Heterogeneous Consumers and Fiscal Policy Shocks

This paper studies empirical facts regarding the effects of unexpected changes in aggregate macroeconomic fiscal policies on consumers that differ depending on individual characteristics. We use data from the Consumption Expenditure Survey to estimate individual‐level responses and multipliers for government spending. We find that unexpected fiscal shocks have substantially different effects on consumers depending on their income and age levels: the wealthiest individuals tend to behave according to predictions of standard Real Business Cycle (RBC) models, whereas the poorest ones behave according to standard IS–LM (non‐Ricardian) models, most likely due to credit constraints. Furthermore, government spending policy shocks tend to decrease consumption inequality.