THE LONG‐TERM EFFECTS OF CONDITIONAL CASH TRANSFERS ON CHILD LABOR AND SCHOOL ENROLLMENT

This paper investigates the long‐term effects of conditional cash transfers on school attainment and child labor. To this end, we construct a dynamic heterogeneous agent model, calibrate it with Brazilian data, and introduce a policy similar to the Brazilian Bolsa Família. Our results suggest that this type of policy has a very strong impact on educational outcomes, sharply increasing primary school completion. The conditional transfer is also able to reduce the share of working children from 22% to 17%. We then compute the transition to the new steady state and show that the program actually increases child labor over the short run, because the transfer is not enough to completely cover the schooling costs, so children have to work to be able to comply with the program's schooling eligibility requirement. We also evaluate the impacts on poverty, inequality, and welfare. (JEL O11, I25, J24)     

IN-KIND VERSUS CASH TRANSFERS IN THE PRESENCE OF DISTORTIONARY TAXES

In-kind transfers can Pareto-dominate cash transfers as a means of income redistribution if in-kind transfers and leisure are Hicks substitutes and leisure is a normal good. The result holds when redistributive instruments also include a linear income tax. The paper proves that if the poor receive more in-kind transfers (and the rich less) than what they would choose for themselves then, compared to cash transfers, there will be a higher labor supply by the poor, a lower labor supply by the rich, and higher levels of aggregate pre-tax income and tax revenues.     

SELF-SELECTION AND THE EFFICIENCY OF TOURNAMENTS

The literature has shown that the overall efficiency of exogenously imposed tournaments is reduced by a high variance in performance. This article reports results from an experiment analyzing whether allowing subjects to self-select into different payment schemes is reducing the variability of performance in tournaments. We show that when the subjects choose to enter a tournament instead of a piece-rate payment scheme, the average effort is higher and the between-subject variance is substantially lower than when the same payment scheme is imposed. Mainly based on risk aversion, sorting is efficiency enhancing since it increases the homogeneity of the contestants . ( JEL M52, J33, J31, C81, C91)     

THE DISTRIBUTION OF WEALTH AND THE EFFICIENCY OF INSTITUTIONS

This paper explores the efect on economic efficiency of the distribution of wealth and systems for enforcing property rights. We construct a two-person, two-period economy in which each person can consume, plant, transfer or steal corn. We find circumstances in which redistribution of wealth is Pareto optimal and in which increasing sanctions against theft to their maximum level is not. These results suggest that it is not only important to consider distribution in the design of property institutions, but also that redistribution itself may serve to increase the efficiency of systems of property rights.     

THE TIMING OF MARKETS AND MONETARY TRANSFERS IN CASH-IN-ADVANCE ECONOMIES

In cash-in-advance models, do the timing of markets and the timing of the monetary transfer affect equilibrium money demand? The timing of markets generates different individual money demands; however, under the common assumption that agents are identical, these differences do not affect the behavior of equilibrium real balances. In contrast, the timing of the monetary transfer has important implications for agent's information sets; these implications can influence the equilibrium characteristics of real balances.     

THE RELATIVE STICKINESS OF WAGES AND PRICES

While many modern business cycle theories posit the existence of nominal wage and/or output price stickiness, their relative importance remains an unsettled issue. Using a structural VAR model, this paper exploits evidence on the behavior of real wages to assess the relative importance of these two sources of stickiness. The empirical results suggest that a positive shock to aggregate demand causes a significant temporary fall in real wages. This is taken as evidence that sticky wages have played a more important role than sticky prices in transmitting aggregate demand shocks to real economic activity in the post-war U.S. (JEL E32)     

THE CYCLICAL BEHAVIOR OF PRICES AND RELATIVE PRICES

Price and output shock correlations provide information concerning macroeconomic shocks. Previous research generally finds small or negative correlations between real gross domestic product (GDP) and GDP deflator shocks but positive correlations between industrial production (IP) and consumer price index (CPI) shocks at short forecast horizons. We show that mismatched price and output correlations may have different magnitudes or signs than matched pairs. Matched and mismatched correlations between disaggregated prices and output from the GDP accounts indicate the procyclical price of nondurables to durables makes correlations between mismatches misleading. Thus, there is reason to be skeptical of results based on IP and the CPI. (JEL E31, E32)     

TRANSFERS TO THE POOR AND LONG RUN SAVINGS

This paper examines the sensitivity of long run capital accumulation to income redistribution to the poor. I address this question using a simulation model composed of two classes of life cycle consumers, rich and poor, whose economic lives have fifty-five periods. The poor hue a higher marginal propensity to consume than the rich because they possess a higher rate of time preference and for because they are liquidity constrained. Considering a wide range of parameter values, I find that lump sum, intergenerational redistribution from rich to poor causes minimal reduction in long run life cycle savings.     

THE WELFARE EFFECTS OF TEMPORARY TAX CUTS AND SUBSIDIES: THEORY,ESTIMATION, AND APPLICATIONS

This article presents a tractable and intuitive theory on the welfare effects of temporary tax cuts and subsidies, fiscal policies that I generically term “holidays.” The Kaldor–Hicks efficiency effects are theoretically ambiguous, with competing pro‐ and anti‐efficiency effects on newly incentivized versus time‐shifted purchases. To rectify this ambiguity I derive expressions for the welfare effects that are consistent with constant elasticity assumptions and depend only upon readily and reliably observed information. To demonstrate the framework's broad applicability, I analyze two different policies: the 2009 Cash for Clunkers program and states' sales tax holidays. I estimate that both policies generated substantial deadweight loss. (JEL H21, H30, D91)     

MORAL MESSAGES: THE RELATIVE INFLUENCE OF DENOMINATION ON THE RELIGIOSITY-ALCOHOL RELATIONSHIP

This article examines the use and misuse of alcohol across religious denominations. After controlling for standard sociodemographic variables, we find that the impact of religiosity on alcohol use is greatest among those denominations taking a strong stand against its consumption, mainly because religion constitutes a significant reference group for members. We also find that religiosity fails to influence misuse, and discuss the possible reasons for this result.     

THE CONSEQUENCES OF (DE)REGULATION ON EMPLOYMENT DURATION AND EFFICIENCY: AN EXPERIMENTAL STUDY

If the future market wage is uncertain, engaging in long‐term employment is risky, with the risk depending on how regulated the labor market is. In our experiment long‐term employment can result either from offering long‐term contracts or from repeatedly and mutually opting for rematching. Treatments differ in how regulations restrict the employer's flexibility in adapting the employment contract. All treatments allow for longer contract duration as well as for mutually opting to be rematched. Effort is chosen by employees after a contract is concluded. Treatments vary from no contract flexibility to no restriction at all. Will more (downward) flexibility be used in ongoing employment but reduce labor market efficiency? And will regulation crowd out long‐term employment, in the form of long‐term contracts or voluntary rematching? (JEL C72, C90, F16, J21, J24, L10)     

THE RELATIVE IMPORTANCE OF INTRINSIC AND EXTRINSIC REWARDS AS DETERMINANTS OF WORK SATISFACTION*

This study investigates the nature and sources of overall work satisfaction in several occupational groups. The effects of three types of work rewards on work satisfaction are assessed. They are: intrinsic task rewards, extrinsic social rewards and extrinsic organizational rewards. Data from 1,385 workers representing five occupational groups suggest that intrinsic rewards followed by extrinsic social rewards, are powerful determinants of satisfaction across all occupational groups. Extrinsic organizational rewards appear to emerge as an important determinant only in lower-level occupations. The implications of these findings for job redesign programs are subsequently discussed.     

THE DETERMINANTS OF RELATIVE POLITICAL CAMPAIGN EXPENDITURES

This paper develops and tests a model of relative political campaign spending in an election formulated within a capital theory framework. Probability of election is treated as a function of the relative political capital stocks of the candidates, and campaign expenditure is viewed as the mechanism by which candidates optimally adjust their political capital stocks. If contributors are risk-neutral, then all factors that increase a candidate's initial political capital stock tend to decrease his relative campaign expenditures, while all factors that increase the value of the office to the candidate tend to increase his relative campaign expenditures. However, if contributors are risk-averse, then the former effect is theoretically indeterminate. Empirically, a candidate is more likely to outspend his opponent if he is an incumbent, a member of the weaker political party, and the younger candidate.     

RELATIVE WELL-BEING AMONG CHILDREN AND THE ELDERLY:

While recent decades have witnessed sharply divergent trajectories in the well-being of children and the elderly, little research explores the social-structural forces behind these trends. This study examines several key elements of Preston's theory relating relative age group size to the well-being of children and the elderly. First considered is the degree to which membership in a relatively large age group enhances well-being; second, the role of family structure in promoting well-being: third, differences between these processes for children and the elderly. An analysis of three indicators of group well-being—poverty, mortality, and suicide rates—for U.S. states provides mixed support for Preston's theory. Among the elderly, group size is inversely related to suicide and mortality, but unrelated to poverty. Contrary to Preston's view, larger group size diminishes the well-being of children. However. consistent with Preston's theory, family structure is substantially more important for the well-being of children than for the elderly.