HOW MISLEADING ARE INCOME DISTRIBUTIONS?

Starting from the proposition that economic welfare is better measured by the capitalized value of expected future income at age 18 than by income at a point of time, the present paper explores the bias introduced in comparison of earnings and income distributions.
The earning distribution chosen for study is that for males in 1959 in the United States. It is shown that earnings distributions are biased and therfore can be considered highly misleading in most comparisons unless the comparison involves two groups with identical age distributions and identical distributions of earnings over the working life of earners.
Further, a most striking effect can be discerned in comparing the earnings to the present value distributions by educational level. As one moves up the educational ladder, the within-group distribution of lifetime income becomes more and more equal, in sharp contrast to the findings for the distribution of earnings at a point in time.
The result are sufficiently interesting and striking to warrant further studies of distributions of present value of lifetime expected earnings (and income).     

Selection effects in auctions for monopoly rights

We demonstrate that auctioning market licenses may result in higher market prices than assigning them via more random allocation mechanisms. When future market profit is uncertain, winning an auction is like winning a lottery ticket. If firms differ in risk attitudes, auctions select the least risk-averse firm, which, in turn, set a higher price (or a higher quantity, in case quantity is the decision variable) in the marketplace than an average firm.     

A Test for Hysteresis in International Trade

The article suggests a new test for strong hysteresis, that is, at the macro level, in international trade. The variables that capture the effects of hysteresis are based on a theoretical model with calibrations using a state–space model to determine the parameters for each point in time. These variables are then applied to a cointegration test with breaks, where it is possible to verify whether the hysteresis effect is essential in determining the long‐term equilibrium.     

Informality in an economy with active labour courts

Job regulations and the justice branch interfere on several aspects of labour contracts. We build a model which explores the role of labour courts on the wage distribution in both formal and informal sectors. We obtain that the presence of active labour courts produces a negative relation between the wage gap and the productivity of the worker, a regularity documented in the empirical literature. Active labour courts also reduce informality of unskilled workers but do not have an impact on informality of skilled workers. Some elements and implications of our model are tested using Brazilian data.     

Patient care,satisfaction and service quality in health care

It is becoming increasingly important in the healthcare setting to treat patients as consumers and measure their satisfaction with medical services rendered. As such, patient satisfaction should be considered an important output of a country's healthcare system, basically reflecting the stage of its development. The conducted study tested students’ satisfaction with the quality of service provided by student polyclinics. In particular, the study has analysed the impacts of personal relationships, promptness and tangibility on student satisfaction. The findings imply that all three factors significantly affect patient satisfaction, with personal relationships having the strongest impact. Such results suggest that healthcare providers should encourage their doctors to devote more time to their patients and show genuine concern for patients’ problems if they wish to improve overall satisfaction of their patients with the delivered services.     

Taylor principle and inflation stability in emerging market countries

The goal of this paper is to evaluate the validity of the Taylor principle for inflation control in 12 developing countries that use inflation targeting regimes: Brazil, Chile, Colombia, Hungary, Israel, Mexico, Peru, Philippines, Poland, South Africa, Thailand and Turkey. The test is based on a state-space model to determine when each country has followed the principle; then a threshold unit root test is used to verify if the stationarity of the deviation of the expected inflation from its target depends on compliance with the Taylor principle. The results show that such compliance leads to the stationarity of the deviation of the expected inflation from its target in all cases. Furthermore, in most cases, non-compliance with the Taylor principle leads to nonstationary deviation of the expected inflation.     

Risk attitudes and migration experience

Although risk and uncertainty are intrinsic to human migration, there is surprisingly little explicit research on the willingness to take risks in this context. This paper analyses whether migrants are more or less likely than non‐migrants to be risk tolerant, and whether these differences are gendered. Attitudes are explored in terms of responses under conditions of both risk and uncertainty, and self‐assessment of capabilities is also taken into account. The research is based on a sample of students who provide a relatively homogeneous group in socio‐economic terms, and relatively large numbers of individuals with experiences of temporary migration. Their attitudes to risk were assessed under experimental conditions, which measured their willingness to take risks on hypothetical gambles under different conditions. While there are some differences between males and females, and between migrants and non‐migrants, the outstanding finding is the far greater risk tolerance of female migrants as opposed to female non‐migrants, especially when compared to males.     

The structure of production in urban housing: a multi-input cost function approach

This paper uses a two-stage cost function model to analyse substitution possibilities among inputs in the production of urban housing. Aggregate price indexes for groups of inputs are generated in the first stage, and then used in the estimation of the aggregate cost function in the second stage. The procedure is valid under the assumption of weak separability. The use of flexible functional forms at both stages allowed the analysis to be carried out by imposing fewer restrictions as a part of the maintained hypothesis than has been the case in the previous literature. The findings are consistent with the postulates of cost-minimising factor demand theory.