THE EFFECT OF NONCONTRIBUTORY PENSIONS ON SAVING IN MEXICO

This paper examines the effects of noncontributory pension programs at the federal and state levels on Mexican households' saving patterns using micro data from the Mexican Income and Expenditure Survey. We find that the federal program curtails saving among households whose oldest member is either 18–54 or 65–69 years old, possibly through anticipation effects, a decrease in the longevity risk faced by households, and a redistribution of income between households of different generations. Specifically, these households appear to be reallocating income away from saving into human capital investments, like education and health. Generally, state programs have neither significant effects on household saving, nor does the combination of federal and state programs. Finally, with a few exceptions, noncontributory pensions have no significant impact on the saving of households with members 70 years of age or older—individuals eligible for those pensions, plausibly because of their dissaving stage in the lifecycle. (JEL D14, J26, O12, H55)     

THE EFFECT OF COMPETITION ON CAPACITY UTILIZATION IN THE ELECTRIC UTILITY INDUSTRY

Theory predicts that the combined capacity of two competing utility firms will be greater than the market requires and excess capacity will result. This study tested a set of monopoly and a set of duopoly electric utility firms and found that the outcome predicted by theory did not occur. Even though the duopoly firms did face more downward pressure on capacity utilization than the monopoly firms, the difference was not statistically significant. These results reveal that public policy decisions, predicated upon assumptions that combined capacity of two competing electric firms would be greater than the market requires, should be re-examined.     

THE EFFECT OF HOUSING WEALTH LOSSES ON SPENDING IN THE GREAT RECESSION

We use panel data on a complete inventory of household spending and assets to estimate the spending response to the sharp and largely unexpected declines in house values that occurred in the Great Recession. Our study complements the existing literature on this topic by relying exclusively on longitudinal micro data on both household wealth and expenditure. Our data span the period 2002–2012, allowing us to separate trends in spending from innovations in response to unexpected wealth changes. We find the marginal propensity to consume out of an unexpected housing wealth change to be 6 cents per dollar among older American households. (JEL D12, D14, E21)     

THE EFFECT OF A NEGATIVE INCOME TAX ON RISK-TAKING IN THE LABOR MARKET

Theory argues that negative income taxes will increase the economic risks that workers take in the labor market. Data from the income maintenance experiments is analyzed to reveal that those workers subject to a NIT seemed to bear more risks than their control group counterparts. Implications and reservations about this finding are offered.     

THE IMPACT OF DEREGULATION ON THE PRODUCTION STRUCTURE OF THE MOTOR CARRIER INDUSTRY

Empirical analysis of the motor carrier industry pre- and post-regulatory reform reveals that deregulation resulted in significant changes in firm production structure and lower real average costs. Translog cost functions for firms operating in 1977 and 1983 were estimated and compared for "other specialized commodity" carriers. Fitted average costs were computed from these functions. The results indicate significant differences in the cost functions and real costs that cannot be attributed to technological changes but rather suggest efficiency gains. The results also suggest that it is inappropriate to predict outcomes of deregulation using empirical analyses of firms in the regulated environment.     

THE EFFECT OF UNIT FEES ON THE CONSUMPTION OF QUALITY

A law-of-demand explanation to the Alchian-Allen, or "shipping the good apples out," proposition rests on a change in the relative price of quality when a unit fee is introduced. However, the manner in which quality is consumed is crucial. In some cases, for instance, there is no substitution between the quality attribute and the priced, quantity-measured attribute. This paper shows that in these cases the relative price of quality is unchanged by a unit fee. Nevertheless, while the "unit fee" proposition fails to obtain for individual choice, it does hold in aggregate.     

THE EFFECT OF DIVORCE ON SUICIDE IN DENMARK, 1951–1980

Past research on the effect of marital dissolution on suicide is limited largely to the cultural and institutional framework of the U.S. The present article studies Denmark, a nation with a different social context. A Cochrane-Orcutt iterative regression analysis replicates the American-based pattern for Denmark. The divorce index is more closely associated than the unemployment rate with changes in the suicide rate. A 1% increase in divorce is associated with a 0.32% increase in suicide. Divorce trends also predict the incidence of youth suicide. The study further confirms the generalization that links rapid change in kinship structures to suicide in industrial societies.     

THE EFFECT OF ABORTION LEGALIZATION ON CHILDBEARING BY UNWED TEENAGERS IN FUTURE COHORTS

This article examines the long‐term impact of legalized abortion on childbearing by unwed teenagers in the United States. I find that the 1970 legalization of abortion in the repeal states led to about a 6% reduction in unwed childbearing rates for white women aged 15–20 who were born in these states immediately after abortion became legal. I find a larger long‐term impact for African‐American women of the same ages: a 7.5%–13% reduction in unwed childbearing. My estimates are smaller and not as precise for the effect of Roe v. Wade. This outcome is not surprising given that I am able to estimate only a potential lower bound of the effect on unwed childbearing rates. On the other hand, when I estimated a Difference‐in‐Difference regression for the non‐repeal states assuming that there was no national trend that affected the childbearing behavior of the treatment age groups and their respective control age groups separately, I found that the true effect of Roe v. Wade on childbearing by unwed teenagers was about an 11% and 3% reductions for white and African‐American teenagers, respectively. (JEL J13, I18)     

THE AGRICULTURAL PRODUCTIVITY GAP IN EUROPE

For 15 European countries over the 1970–2004 period we find large and persistent agricultural productivity gaps, the ratio of value added per hour in nonagriculture to that in agriculture. Comparing the gap in value added per hour to the wage gap between the two sectors suggests that value added in the data is mismeasured. We further find that, controlling for differences in gross domestic product per capita and institutions, the mismeasurement is positively related to self‐employed share of hours in agriculture. Correcting for underreporting of self‐employment income using our preferred correction factor reduces the measured agricultural productivity gap by 38%. These findings suggest that underreporting can account for a significant portion of the measured agricultural productivity gap. (JEL E01, O47, O52, Q10)     

SIGNALING IN HIGHER EDUCATION: THE EFFECT OF ACCESS TO ELITE COLLEGES ON CHOICE OF MAJOR

I propose a model of postsecondary education in which major field of study can be used by individuals to signal productivity to employers. Under this signaling model, I show that geographic areas with high access to elite universities result in fewer science, technology, engineering, and mathematics (STEM) majors among lower ability students at nonelite colleges. This is distinct from the prediction of a full information model in which access to elite schools should only affect high ability individuals directly. Using data from the National Center for Education Statistics' Baccalaureate & Beyond survey, I find evidence that is consistent with the signaling model prediction, specifically a 2.3–3.7 percentage point or 16%–25% decrease in the probability of choosing a STEM major among lower ability students in areas with greater access to elite colleges. (JEL I21, J24)     

THE EFFECT OF INSURANCE COVERAGE ON PREVENTIVE CARE

Despite the growth in health insurance products that differentially cover preventive care and nonpreventive care, little is known about how preventive care utilization responds to targeted changes in coverage. Using administrative data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the price of nonpreventive care while decreasing the price of prevention. Leveraging a difference‐in‐differences research strategy, we find that preventive care utilization did not increase and even declined due to the differential price change. This evidence indicates a meaningful negative cross‐price effect, suggesting that nonpreventive care and preventive care are complements. (JEL I13, I11)     

THE EFFECT OF TECHNICAL CHANGE ON MARKET STRUCTURE

The paper examines the effects of technical change on market structure. It is found that: 1) the role of independent inventors and small firms is much more important in the early stages of the evolution of a product; 2) the net effect of innovations on entry reverses itself over the product cycle; 3) there is a shift in the importance of various sources of innovation over the product cycle. The two forces which contribute to this result are: 1) a decline in the importance of innovations as technology matures and 2) the proliferation of products adapted to specialized uses.     

THE EFFECT OF THE FOOD STAMP PROGRAM ON NUTRIENT INTAKE

Receipt of food stamps is often observed to be positively correlated with intake of nutrients. However, this observed fact could be the result of self-selection into the food stamp program by those individuals who are more interested in maintaining good nutrition. We observe that, controlling for participation in the food stamp program, nutrition is negatively affected by food stamp income for a sample of elderly people. However, we find that the levels of nutrients do not decrease enough to cause individuals to fall below the Recommended Dietary Allowance.