A Multi-state model of state dependence in labor supply: Intertemporal labor supply effects of a shift from joint to individual taxation

In this paper I develop an intertemporal discrete choice model of female labor supply to analyze the effects of true state dependence and its effect on labor supply behavior over time. The estimation results show that state dependence is significantly positive at the extensive margin and lower but in general still significant at the intensive margin. I apply this model to study the short and long run labor supply effects of a fundamental reform of the German income tax system, i.e. the shift from joint to individual taxation of married couples and show that labor supply responses are significantly higher in the long run than in the short run.     

Learning trajectory in offshore OEM cooperation: Transaction value for local suppliers in the emerging economies

We focus on the unique role of offshore OEM cooperation as a learning opportunity for local suppliers in the emerging economies. In particular, we conceptually argue and empirically confirm the links between learning intent, capability enhancement, governance mode, and overall innovativeness from the perspective of local suppliers in offshore OEM cooperation in China as well as the influence of local business culture within these links. We address two issues: (1) offshore OEM cooperation can be a unique opportunity for local suppliers with strong intent to learn from foreign buyers for capability enhancement and (2) the moderating effects of trust and contact as two distinctive governance modes. Addressing the two issues, we make two specific contributions to the research on inter-firm cooperation, both of which derive from the often-neglected theoretical lens of transaction value. Our general contribution lies in the extension of the transaction value perspective by specifying its dual tenets of inter-firm co-specialization and shared-trust as the central theme of inter-firm cooperation to complement the transaction cost economics and also contextualize the research on inter-firm cooperation in terms of different partners’ perspectives as well as different governance modes.     

Bootstrapping I(1) data

A functional law is given for an I(1) sample data version of the continuous-path block bootstrap of Paparoditis and Politis (2001a). The results provide an alternative demonstration that continuous-path block bootstrap unit root tests are consistent under the null.     

FAMILIES, TIME AND MONEY IN CANADA, GERMANY, SWEDEN, THE UNITED KINGDOM AND THE UNITED STATES

Using microdata from the Luxembourg Income Study, we assess "time crunch" for families with children in Canada, Germany, Sweden, the U.K. and the U.S. Both theory and empirical evidence suggest that both time and money are important inputs to the well-being of parents and children. We present cross-country comparisons of "total available adult hours" under different assumptions about the varying time needs of families of different size. We also present estimates of "time shortages." In all cases, we provide separate estimates for families located at different points in the country income distributions, since being short of both time and money is likely to be particularly problematic. Although paid work hours are highest for high-income families, we nonetheless find significant numbers of lower-income families in which parents work very long hours in the paid labor market; this is particularly the case in the U.S.     

Subjective recursive expected utility

We axiomatize a subjective version of the recursive expected utility model. This development extends the seminal results of Kreps and Porteus (Econometrica 46:185–200 (1978)) to a subjective framework and provides foundations that are easy to relate to axioms familiar from timeless models of decision making under uncertainty. Our analysis also clarifies what is needed in going from a represention that applies within a single filtration to an across filtration representation.Part of this research was conducted when Ozdenoren visited MEDS in Fall 2003. We thank Tapas Kundu, Costis Skiadas, Jean-Marc Tallon and Tan Wang for helpful discussions and also thank audiences at Koc University, Northwestern University, the CERMSEM conference “ Mathematical Models in Decision Theory” at Universite Paris I, and the FUR XI conference on foundations and applications of utility, risk and decision theory     

The effect of foreign aid on income inequality: Evidence from panel cointegration

This paper examines the long-run effect of foreign aid on income inequality for 21 recipient countries using panel cointegration techniques to control for omitted variable and endogeneity bias. We find that aid exerts an inequality increasing effect on income distribution.     

Production Technology Estimates and Balanced Growth

Capital‐labour substitution and total factor productivity (TFP) estimates are essential features of many economic models. Such models typically embody a balanced growth path. This often leads researchers to estimate models imposing stringent prior choices on technical change. We demonstrate that estimation of the substitution elasticity and TFP growth can be substantially biased if technical progress is thereby mis‐specified. We obtain analytical and simulation results in the context of a model consistent with balanced and near‐balanced growth (i.e. departures from balanced growth but broadly stable factor shares). Given this evidence, a constant elasticity of substitution production function system is then estimated for the US economy. Results show that the estimated substitution elasticity tends to be significantly lower using a factor‐augmenting specification (well below one). We are also able to reject conventional neutrality forms in favour of general factor augmentation with a non‐negligible capital‐augmenting component. Our work thus provides insights into production and supply‐side estimation in balanced‐growth frameworks.     

Testing the impact of predefined and self-defined end anchors on the linearity of the category rating scale

In this research the impact of two types of end anchors on the linearity of the category rating scale is studied. Two functional measurement experiments were carried out, each requiring a different kind of judgement, i.e., job satisfaction ratings and attractiveness ratings. One group of participants rated the stimuli using a category rating scale with fixed anchors, while another group was presented with a self-anchoring category rating scale. The results indicate that researchers can be confident in the ability of both category rating scales to provide linear data. This implies that the different end anchors do not impact on the linearity of the category rating scale.     

Illicit drug markets and economic irregularities

Markets for illicit drugs present an interesting case study for economics, combining non-standard characteristics such as addiction and product illegality. One response has been to argue the generality of economic principles by suggesting that they apply even in the extreme case of markets for addictive substances, e.g., by showing that demand for illicit goods is responsive to price [1] [Reframing health behavior change with behavioral economics. Hillsdale, NJ:Lawrence Earlbaum Associates; 2000. p. 89-111.] and even by modeling addiction as rational [2] [J Political Econ 1988;96:675-700]. This paper sketches examples of an alternative reaction, focusing on idiosyncrasies of drug markets that might plausibly create counter-intuitive effects, including supply curves that slope downward because of enforcement swamping and/or a good serving as the only available store of wealth for its producer, demand reduction programs that increase demand, and consumption by “jugglers” possibly increasing rather than decreasing as prices rise. This analysis yields non-obvious policy recommendations; for example, source country control programs should concentrate on growing regions with a healthy banking sector.