HOW LONG SHOULD WE STAY IN EDUCATION IF ABILITY IS SCREENED?

We examine how ability‐screening affects demand for education and the shape of an optimal education system. Explicitly incorporating gradual screening by education into the model, we illustrate how individuals of different abilities decide to stay in education or drop out. Gradual screening induces low‐ability individuals to receive over‐education, reducing the net benefit obtained from education by society as a whole, as well as such individuals. A mixed education system, in which public education is provided before private education, is superior to a wholly private system, in terms of both efficiency and equity, because it reduces the over‐education of low‐ability individuals.     

An Interactive Independent Topic Analysis for a Mass Document Review Service

In this paper, we propose an interactive constrained independent topic analysis in text data mining. Independent topic analysis (ITA) is a method for extracting independent topics from document data using independent component analysis. In this independent topic analysis, the most independent topics between each topic are extracted. By extracting the independent topic, managing documents with a large number of text data is easy with document access support systems and document management systems. However, the topics extracted by ITA are often different from the topics a user requests. For the system to be of service to users, an interactive system that reflects the user’s requests is necessary. Thus, we propose an interactive ITA that works for the user. For example, if there are three topics, i.e., topic A, topic B, and topic C, and a user choose the content from topics A and B, a user can merge those topics into one topic D. In addition, if a user wants to analyze topic A in more detail, a user could separate topic A into topics E and topic F. To that end, we define Merge Link constraints and Separate Link constraints as user requests. The Merge Link constraint is a constraint that merges two topics into one topic. The Separate Link constraint is a constraint that separates two topics from one topic. In this paper, we propose a method for extracting a highly independent topic that meets these constraints. We conducted evaluation experiments on our proposed methods, and obtained results to show the effectiveness of our approach.     

An Explicit Finite Difference Approach to the Pricing Problems of Perpetual Bermudan Options

The pricing problem of options with an early exercise feature, such as American options, is one of the important topics in mathematical finance. Pricing formulas for options with the early exercise feature, however, are not easy to obtain and the numerical methods are thus frequently required to derive the price of these options. The value function of perpetual Bermudan options is characterized with the partial differential equation and this is solved by the finite difference method in this article.     

The spirit of capitalism, stock market bubbles and output fluctuations

This paper presents a representative agent model in which stock market bubbles cause output fluctuations. Assuming that utility depends directly on wealth, we show that stock market bubbles arise if the marginal utility of wealth does not decline to zero as wealth goes to infinity. Bubbles can affect output positively or negative depending on whether the production function exhibits increasing or decreasing returns to scale. In sunspot equilibria, the bursting of a bubble is followed by a sharp decline in output one period later. Various numerical examples are given to illustrate the behavior of stochastic bubbles and the relationship between bubbles and output.     

EQUILIBRIUM SELECTION IN THE YANO MODEL OF PRICE LEADERSHIP

Abstract. A number of studies have provided a theoretical explanation for the fact that the technologically superior firm becomes a price leader in a duopoly market for a homogeneous product. While previous studies show that the state in which the technologically superior firm becomes a price leader is a Nash equilibrium (superior leader equilibrium), they do not eliminate the possibility that the state in which the technologically inferior firm becomes a price leader is also a Nash equilibrium (inferior leader equilibrium). We demonstrate that an inferior leader equilibrium can be eliminated by the iterative elimination of weakly dominated strategies.     

ON THE MOTHER AND CHILD LABOR NEXUS UNDER CREDIT CONSTRAINTS: FINDINGS FROM RURAL INDIA

There is an emerging consensus that lack of credit is a major cause of child labor and inequality in the intrahousehold distribution of resources. At the same time, patterns in how children spend their time appear to be strongly influenced by maternal employment decisions. This paper includes an assessment of the effect of credit constraints on maternal employment and that of maternal employment on the intrahousehold allocation of labor, a nexus which has been left unexplored by existing studies. Three findings emerge: (1) a mother is more likely to work outside when a household lacks resources, and her domestic labor can be easily replaced by other members, (2) credit market accessibility is one of the major determinants of maternal labor, and (3) elder daughters assume a large part of the burden of maternal employment by providing domestic labor. Under binding credit constraints, results of this study support the collective as opposed to the unitary model of households.     

Social security and trust fund management

In this paper we investigate why and to what extent the government should have a social security trust fund, and how it should manage the fund in the face of demographic shocks, based on a simple overlapping-generations model. We show that, given an aging population, a trust fund in some form could achieve the (modified) golden rule or to offset the negative income effect of a PAYGO system. Besides, in a closed economy where factor-prices effects dominate, using the trust fund as a buffer for demographic shocks could lead to a widening of intergenerational inequality. We also the discuss policy implications of our analysis on the social security reform debate in Japan, including the fixed tax method and the use of the trust fund in the face of a rapidly aging population. J. Japanese Int. Economies 18 (4) (2004) 528–550.     

The long-term impacts of orphanhood on education attainment and land inheritance among adults in rural Kenya

Although the long-term economic impacts of the AIDS epidemic on orphans have been major concerns, few studies have investigated the impacts of orphan status into adulthood. Therefore, this article examines the education attainment and land inheritance of former orphans, who have lost at least one parent before reaching the age of 15 years, by using household surveys in Kenya. We find about a one-year lower educational attainment among former maternal orphans compared with former nonorphans among adults who started schooling before the Free Primary Education program introduced in 1974 but not among adults who started schooling after 1974. On inherited land, we find no significant difference between households headed by former orphans and nonorphans, after controlling for land owned by parents, numbers of brothers and sisters, and birth order among brothers.