PRICE SEARCH,CONSUMPTION INEQUALITY AND EXPENDITURE INEQUALITY OVER THE LIFE ‐CYCLE

We differentiate consumption from expenditure by incorporating price search decision into an otherwise standard life‐cycle model. We first analytically show that, under very general conditions, poorer households search more and pay lower prices compared to wealthier ones. As a result, consumption inequality is smaller than expenditure inequality, and the gap between them increases over the life‐cycle. Next, using a plausibly calibrated model, we find that life‐cycle increase in consumption inequality is about 30% lower than the increase in expenditure inequality. Price search provides an insurance mechanism against income shocks and increases the welfare of a newborn by 3.9%.     

IMPLICATIONS OF FARM TENURE FOR A REGION'S FOOD PRODUCING POTENTIAL: A NORTHEAST U.S. CASE STUDY

Farm tenure places important production decisions in the hands of farm operators, who may not be the most efficient decisionmakers. This study estimates a Cobb-Douglas production function to examine the effect of the structure of farm tenure categories on agricultural production in the northeast region of the US. The analysis indicates that a 10 percent increase in full-owner and part-owner operations decreases and increases output by 2 percent and 3 percent, respectively; tenant operations also increase agricultural output by 1.8 percent to 2.5 percent. The results suggest that the relationship between tenure structure and agricultural production may hold long-term implications for agricultural production.