NATIONAL ACCOUNTS IN TRANSITION COUNTRIES: BALANCING THE BIASES?

In the past several years, efforts have been made to introduce the 1993 System of National Accounts (1993) SNA ) in most of the formerly centrally planned economies. In doing so, a number of problems have emerged, some of which are particular to the situation of these countries. Some of these problems will probably cause overestimates of national accounts variables, others will cause underestimates, and it would be purely coincidental if these effects cancel out. This paper discusses the most disconcerting issues in this situation, and possible solutions.     

Permanent and transitory wages of British men, 1975–2001: year,age and cohort effects

We examine the mean and variance–covariance structure of log-wages over calendar time and the life cycle of British men, hereby controlling for birth cohort effects. We attribute the strong increase in mean log-wage during the 1980s and 1990s to a rise in mean log-wage with the year of birth. This rise is diminishing with the year of birth, which implies lower wage inequality between cohorts with the year of birth. Wage inequality has increased during the 1980s and early 1990s and remained fairly stable in the second half of the 1990s. The year effects, however, show increasing wage inequality up to 2001, mainly due to a strong rise in transitory wage inequality. Transitory wages are strongly correlated over time and an increase in transitory wage inequality therefore has highly persistent inequality consequences. The stable wage inequality in the second half of the 1990s is attributed to lower within-cohort wage inequality for the younger cohorts. The age effects show that permanent wage inequality increases with age, in particular up to age 30 and over age 50. Copyright © 2007 John Wiley & Sons, Ltd.     

What Do Wages Add to the Health‐Employment Nexus? Evidence from Older European Workers

The role of wages in the health‐employment nexus can be important for designing employment policies aimed at older workers with health limitations. We, therefore, estimate the direct effect of health on employment and hours worked and its indirect effect that is mediated through wages using individual‐level panel data from SHARE. The endogeneity of self‐reported health is controlled for by instrumenting it with severe health conditions in a correlated random effects model. For men, we find that the direct effects of health deterioration, as measured by a reduction in health from the 75th to the 50th percentile of the health distribution, are about a 20% point lower employment probability and about 171 fewer hours worked per year. The indirect health effects through wages work in the opposite directions as health positively affects wages and wages negatively affect employment and hours worked. The total effects of this health deterioration amount to a 12% point lower employment probability and 95 fewer hours worked per year. In particular our finding of a large direct health effect on employment suggests an instrumental role for policy aimed at accommodating workers with health limitations to keep them employed at older ages.     

Holocaust concentration camp memorial sites: an exploratory study into expected emotional response

This study explored Dutch people's expected intensity of emotional responses of a potential visit to a concentration camp memorial site in the Netherlands. A total of 1050 online panel members participated in a questionnaire that contained a 33-item emotion scale. Results reveal that individuals with a closeness to the Holocaust expect to feel most emotions more intensely, specifically emotions that are traditionally considered ‘positive’, such as pride, love, joy, inspiration, excitement and affection. Overall, respondents expect to feel disgust, shock, compassion and sadness the strongest. Those who look from the viewpoint of the offenders mainly expect to feel emotions that are traditionally considered ‘negative’, whereas those who took the point of view of the victims also expect a more ‘positive’ emotional reaction to the visit. Managerial implications address aspects of education, storytelling and authenticity.     

Consumption Behavior,Annuity Income and Mortality Risk of Retirees

Previous empirical studies have found that individuals do not draw down their assets after retirement which is at odds with the predictions of a simple life cycle model without uncertainty. Hurd (Econometrica 57(4):779–813, 1989; Mortality risk and consumption by couples, 1999) explains such saving behavior of retired singles and couples by adding lifetime uncertainty to the simple life cycle model. We tested whether predictions about consumption during retirement of this extended life cycle model hold for a sample of older Americans. We used data from the Health and Retirement Study supplemented with data from the Consumption and Activities Mail Survey. In line with theory we found that, on average, total consumption is greater than their annuity income after retirement and that this difference increases with the level of initial wealth. For older singles but not for couples our results suggest that, as predicted by the extended theoretical model of Hurd, the on average negative consumption growth decreases with higher mortality rates.     

MICRO-MACRO LINK FOR GOVERNMENT

In the Dutch statistics on government finance a micro/macro link is established. The paper describes why and how this has been done. It appears to be of relevance to the users of the statistics to present two different data sets: one according to an accounting/administrative point of view and one fitting in the National Accounts. The main features of the way in which these data sets are derived from the underlying bookkeeping documents are given and it is shown how they relate to the accounting and juridical structures of the various government agencies. It appears that in order to arrive at homogeneous data sets, adaptations are in order, mainly bearing on the entries; for the National Account data further transformations, relating to transactions as well as transactors, will appear necessary. It will be enunciated how the relation between these data sets is shown in the statistics on government finance and how, in the same course a micro/macro link is provided for.     

Repeated Experimentation to Learn About a Flow-Pollutant Threshold

We examine in discrete time the management of a flow pollutant that causes damage when it crosses a fixed but unknown threshold. The manager sequentially chooses a pollution level that allows learning about the threshold, thereby improving future decisions. If crossed, damage can be reversed at some cost. We analyze the conditions under which experimentation is optimal, and explore how experimentation depends on restoration costs, information about the threshold, and the discount rate. Our results suggest that the level of experimentation, defined as the difference between the optimal activity with and without learning, is non-monotonic in costs and decreasing in the discount rate. We identify two stopping boundaries for the experiment, depending on cost levels compared to the lower bound of the threshold’s interval. We show that when costs are high the stopping boundary under an infinite number of decisions is the same as when there are only two decision moments. A computational extension to more than two decisions suggests that an optimal sequence of experiments can cross the same threshold several times before experimentation ceases. These results shed light on a large class of environmental decision problems that has not been examined in the literature.