Crime and benefit sanctions

In this paper we look at the relationship between crime and economic incentives in a different way to other work in the economics of crime field. We look at empirical models where a toughening of the unemployment benefit regime can be used to study how people on the margins of crime may react to changes in economic incentives. We present three sets of complementary evidence, all of which show that toughening the benefit regime can have an unintended consequence, namely increases in crime. The first approach presents quasi-experimental evidence, looking at crime rates in areas of England and Wales before and after the introduction of a new, tougher unemployment benefit programme—the Jobseekers Allowance (JSA)—in October 1996. The second approach considers qualitative evidence on individuals affected by the change in the benefit regime. The third relates changes in area crime rates to post-JSA sanctions. Each of these approaches uncovers evidence of higher crime occurring as a consequence of the benefit reform.

p-Best response set and the robustness of equilibria to incomplete information

In this paper, we use p-best response sets—a set-valued extension of p-dominance—in order to provide a new sufficient condition for the robustness of equilibria to incomplete information: if there exists a set S which is a p-best response set with , and there exists a unique correlated equilibrium μ^* whose support is in S then μ^* is a robust Nash equilibrium.     

The dollar and its discontents

Has the US dollar delivered the benefits that the rest of the world is expecting from its holdings of international liquidity? US government debt has been liquid and safe, and it is supplied in sufficient quantity. But it has given a low return to the countries that accumulated the most reserves, especially when those returns are measured in terms of the countries' own consumption. I argue in this paper that the countries that accumulate the most reserves should expect a low return in terms of their own consumption, and that there is little that international monetary reform can do to change that fact.     

Fixed-Reimbursement Insurance: Basic Properties and Comparative Statics

In a number of settings, insurance contracts specify a fixed reimbursement in the event of a loss which is not conditioned on the size of the realized loss. In this article, we explore the theoretical properties of this form of insurance and draw comparisons with other types of insurance policies, such as those based on coinsurance and deductibles. We also examine links between our results and those from the literature on precautionary saving.     

Comparing inequality aversion across countries when labor supply responses differ

We analyze to which extent social inequality aversion differs across nations when controlling for actual country differences in labor supply responses. Towards this aim, we estimate labor supply elasticities at both extensive and intensive margins for 17 EU countries and the US. Using the same data, inequality aversion is measured as the degree of redistribution implicit in current tax-benefit systems, when these systems are deemed optimal. We find relatively small differences in labor supply elasticities across countries. However, this changes the cross-country ranking in inequality aversion compared to scenarios following the standard approach of using uniform elasticities. Differences in redistributive views are significant between three groups of nations. Labor supply responses are systematically larger at the extensive margin and often larger for the lowest earnings groups, exacerbating the implicit Rawlsian views for countries with traditional social assistance programs. Given the possibility that labor supply responsiveness was underestimated at the time these programs were implemented, we show that such wrong perceptions would lead to less pronounced and much more similar levels of inequality aversion.     

The Design of an Optimal Area Yield Crop Insurance Contract

This article focuses on the design of a crop insurance contract when the indemnity is based on the aggregate yield of a surrounding geographical area. Coinsurance under a critical yield often provides an efficient sharing of systemic risk. Under a linear relationship between individual yield and aggregate yield, the optimal form depends on the individual beta coefficient, which measures the sensitivity of individual yield to aggregate yield. The optimal hedging position of the producer on the yield options market is to buy put options or call options depending upon whether his beta coefficient is positive or negative.     

How do strategic factor markets respond to rivalry in the product market?

This paper explores the interplay between product market, strategic factor market, and resource development. More competition in the product market makes resource buyers bid higher for resources, as the value of trying to preempt the resources is higher. Holding other initial conditions constant, resources are developed more in industries with factor markets than in industries without. When buyers of resources cannot integrate more than one resource, developers choose to develop either at a low or high level, generating a type of heterogeneity that would not arise otherwise. Changes in the intensity of competition in the product market can have the opposite effect on resource development efforts depending on the presence or absence of factor markets. Copyright © 2013 John Wiley & Sons, Ltd.