Beyond Tariffs: The Role of Non‐Tariff Barriers in Dairy Trade in the East African Community Free Trade Area

This study used a spatial equilibrium modelling approach to quantify the relative welfare impacts of eliminating tariffs and non‐tariff barriers on trade in dairy products among East African Community (EAC) member countries. The results indicated that removing tariffs only would not produce any significant welfare improvements unless it was accompanied by trade‐enhancing measures such as reductions in non‐tariff barriers and transport costs. In the current modelling framework, net welfare gains were higher in relatively lower‐income countries like Burundi than in higher‐income countries like Kenya. This indicates that reductions in trade costs may reduce regional imbalances in the EAC.     

On the margin? Residential child care in Scotland and Finland

Situated on the margins of Europe, Scotland and Finland are small countries which share similar demographic and economic profiles. In many European countries, residential child care can also be considered to be ‘on the margin’ of child care provision; there is ambivalence about residential care and a view that it should be used as a last resort. This paper examines systems and practices of residential care in Scotland and Finland, locating these in the context of wider child welfare policy in both countries. The underpinning principles of child welfare provision in both countries are similar—based on children's rights and primarily family-focused. In both countries there are also similar concerns about the fragmentation of child care provision and the cost of residential services. However, there are also important differences relating to child welfare provision and the use of residential care. In Finland, overall numbers of children in residential care are much greater than in Scotland; the age profile of these children and young people is very different; and the two countries vary markedly in the use of secure accommodation and custody. This comparative analysis suggests new ways of understanding the similarities and difference in the use of residential care in the two countries. It highlights the continuing challenge to develop residential care as a positive and integral part of a continuum of care services.     

FISCAL STABILIZATION WITH PARTIAL EXCHANGE RATE PASS‐THROUGH

This article examines the role of fiscal stabilization policy in a two‐country framework that allows for partial exchange rate pass‐through. Analytical solutions for optimal monetary and fiscal policy rules depend on the degree of pass‐through. Each country unilaterally uses its fiscal instrument to stabilize the costs facing exporters. The welfare effects differ strongly depending on the degree of pass‐through. For high levels, both countries are better off with the fiscal instrument and welfare is closer to the benchmark flex‐price level. For low levels, however, the unilateral equilibrium policy rules lead to high volatility in taxes, and fiscal policy ends up being destabilizing by transmitting exchange rate fluctuations. Because these results stem from strategic considerations by the two countries, the fiscal instrument is not used under policy coordination. In addition, imposing a monetary union increases welfare when pass‐through is low, including the case of local currency pricing. (JEL E52, E63, F41, F42)     

COSTLY INTERMEDIATION AND CONSUMPTION SMOOTHING

This paper studies quantitatively how intermediation costs affect household consumption loans and welfare. Agents face uninsurable idiosyncratic shocks to labor productivity in a production economy with costly financial intermediation and a borrowing limit. Reducing intermediation costs has two effects: (1) For a given decrease in the interest rate on borrowing, agents' ability to smooth consumption over time improves. (2) The demand for loans increases, which increases the interest rate. The net welfare gain of reducing intermediation costs from 3.927% (U.S. level) to 1% is about 1.14% of equivalent consumption in the baseline economy for an endogenous interest rate and 1.90% for an exogenous interest rate. The gains are distributed unevenly: households at the bottom wealth decile improve welfare by 3.96% and 5.86% of equivalent consumption, while those at the top decile have welfare gains of 0.35% and 0.2%, respectively. Sufficiently high intermediation costs eliminate borrowing and hence the welfare gain of reducing costs is not substantial. The welfare analysis includes transitional dynamics between steady states. (JEL D91, E60, G38)     

On the welfare loss caused by inequality of opportunity

Based on the ethical principle of equality of opportunity, this paper presents a measure of the welfare loss that is caused by an unfair distribution of a particular outcome (income, health, education, etc). The key idea is that a fair society should produce outcomes that depend on individuals’ effort and not on their external circumstances such as gender, socioeconomic background, etc. We propose measuring inequality of opportunity as the welfare loss attributed to the outcome differences among individuals who exert a similar level of effort. Our results are in line with those aspects of fairness literature that give priority to the ex post compensation approach to equality of opportunity. Finally, we present an empirical application for the measurement of the welfare loss in the income distribution in Europe. We have observed a high degree of heterogeneity among European countries. The welfare loss due to inequality of opportunity ranges in those, from basically zero to almost one fifth of their potential welfare.     

Income Inequality,Globalization, and the Welfare State: Evidence from 23 Industrial Countries, 1990–2009

The debate regarding the welfare state–weakening effect and the income inequality‐increasing effect of globalization remains a contentious issue among stratification scholars. For some, globalization increases income inequality, while for others, globalization has no, or a negligible, effect on income inequality. This study brings new evidence to bear on this debate by separately investigating effects of multiple indicators of globalization (international trade, foreign direct investment [FDI] and immigration), and of welfare state generosity (government social‐protection spending) on (1) income inequality before taxes and transfers and (2) income inequality after taxes and transfers, using data from 23 Organisation for Economic Co‐operation and Development (OECD) countries over 1990–2009. First, results show a positive effect of international trade, a negative effect of immigration, but no effect of FDI and government social‐protection spending on income inequality before taxes and transfers. Second, results show no effect of the globalization indicators but a negative effect of government social‐protection spending on income inequality after taxes and transfers. These findings suggest that (1) globalization has inequality‐increasing effects depending on measures of income inequality; (2) the welfare state, in many OECD countries, continues to shape income distribution; and (3) in contrast with the popular narrative, immigration may decrease income inequality.     

Energy crop production in an urban area: a comparison of habitat types and land use forms targeting economic benefits and impact on species diversity

In urban areas, the potential of biomass production is rarely utilized, although many biomass sources are located in cities, ranging from road margins to public parks. There is, however, increasing interest in these potential biomass sources, as they are close to consumers and provide options to reduce maintenance costs of urban green areas. We analyzed the costs and benefits of utilizing biomass, and compared it to the biodiversity maintained on 17 urban land use forms the Ruhr Metropolitan Area (Germany). Economic costs and benefits were reflected by contribution margins, while biodiversity was measured by species numbers of plants, birds and butterflies. For the 17 land use types, there is a weak overall correlation between contribution margins and species numbers. However, this is mainly due to the two land use forms with the highest contribution margins (cultivation of energy maize and fertilized grassland), which are characterized by the lowest species numbers. For the remaining cases, there is no relationship between contribution margins and species numbers. Comparatively high contribution margins and high mean species numbers were observed for road margins, industrial fallows with wood cutting for biogas production and water-influenced grassland mown traditionally. We conclude that biomass production and the maintenance of urban biodiversity is not necessarily a contradiction.     

THE WELFARE EFFECT OF ACCESS TO CREDIT

I present a model in which credit and outside money can be used as means of payment in order to analyze how access to credit affects welfare when credit markets feature limited participation. Allowing more agents to use credit has an ambiguous effect on welfare because it may make consumption‐risk sharing more inefficient. I calibrate the model using U.S. data on credit‐card use and show that the increase in access to credit from 1990 to the near present has had a slightly negative impact on welfare. (JEL E51, E41)     

创新福利模式 优化社会管理

创造适合国情的福利模式,是社会管理成功的基础和奥妙所在。一个好的福利模式要能保持四个基本均衡:经济发展与福利支出的均衡,福利支出中的基础部分与非基础部分的均衡,福利机制中的刚性与柔性的均衡,福利责任结构中的政府与市场、家庭、个人之间的均衡。中国一些富裕农村所搞的集体福利为实现这些均衡提供了实践经验,而这些经验与底线公平理论非常契合。底线公平福利模式具有四个特点和优势:教育为基,劳动为本,服务为重,健康为要。它充分发挥中国优秀文化和社会结构优势,把发展性要素内置于福利模式之中,可以实现社会福利的内外平衡,为社会安全奠定基础。     

Evaluating the Effectiveness and Efficiency of Hong Kong Welfare Programmes in Reducing Child Poverty

This paper examines the effectiveness and efficiency of welfare programmes that are relevant to child poverty reduction in Hong Kong. We employ data from a cross‐sectional survey of a representative sample of families, conducted in 2015 through face‐to‐face interviews. Our results indicate that all four welfare programmes were inadequate in alleviating child poverty. This was either due to the deep poverty gap to be filled or high rates of exclusion error. Most programmes are also inefficient because of inclusion error. We conclude by suggesting some policy implications for the welfare programmes.     

CORPORATE TAX POLICY AND INDUSTRY LOCATION WITH FULLY ENDOGENOUS PRODUCTIVITY GROWTH

This paper considers how national corporate tax policy affects productivity growth through adjustments in geographic patterns of industry in a two‐country model of trade. With trade costs and imperfect knowledge spillovers between countries, production concentrates partially and innovation concentrates fully in the country with the lowest tax rate. A rise in the international corporate tax differential accelerates productivity growth through an increase in the production share of the low‐tax country that improves knowledge spillovers from industry to innovation. The paper also investigates the relationship between the corporate tax differential and the level of market entry, and analytically characterizes the effects of changes in tax policy on national welfare. (JEL F43, O30, O40, R12)     

The relationship between child welfare financing,screening, and substantiation

This study examines the relationship between state-level child welfare spending and two important decision points in the child welfare system: the decision to screen out a referral and the decision to substantiate. The model is estimated using a pooled fractional probit estimator that controls for year effects and state-level clustering. The findings suggest that decreases in state-level child welfare expenditures predict increases in the proportion of referrals that are screened out and decreases in the proportion of maltreatment claims that are substantiated. The results are robust to the inclusion of caseload and federal spending as control variables, to the exclusion of states known to have changed their screening or funding practices during the sample period, and to the use of combined state and local child welfare expenditures as an explanatory variable in lieu of state-level child welfare expenditures. The findings imply that the amount of money a state spends on child welfare may influence important decisions in the child welfare process.     

Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US

Following the report of the Stiglitz Commission, measuring and comparing well-being across countries has gained renewed interest. Yet, analyses that go beyond income and incorporate non-market dimensions of welfare most often rely on the assumption of identical preferences to avoid the difficulties related to interpersonal comparisons. In this paper, we suggest an international comparison based on individual welfare rankings that fully retain preference heterogeneity. Focusing on the consumption-leisure trade-off, we estimate discrete choice labor supply models using harmonized microdata for 11 European countries and the US. We retrieve preference heterogeneity within and across countries and analyze several welfare criteria which take into account that differences in income are partly due to differences in tastes. The resulting welfare rankings clearly depend on the normative treatment of preference heterogeneity with alternative metrics. We show that these differences can indeed be explained by estimated preference heterogeneity across countries—rather than demographic composition.     

The distribution problem and Rawlsian reasoning

The difference principle of Rawls has been wrongly translated in the formal literature on welfare economics and social choice theory. The difference principle is concerned with the welfare of the members of the least advantaged segment, and, thus, does not – as frequently argued – assign dictatorial power to the person in the worst off position in society. This distinction is important, and the focus on a leximingroup rule makes the Rawlsian position more plausible than it is in the `disguise' of the conventional leximin rule. However, there is a difficulty with this approach, to wit how to understand the least advantaged segment in society. Various definitions are considered in the paper, but it turns out that in most cases these definitions imply that we have to accept the leximin rule. We suggest one line of reasoning that makes the Rawlsian leximingroup rule a genuine alternative to the leximin rule. In this approach, an independent norm level is imposed on the analysis (i.e. a cut off line that is independent of the distribution of welfare under consideration), and the least advantaged segment is identified as those who have less than this minimum stipend. Received: 21 December 1994/Accepted: 15 June 1998     

Marginal Welfare Costs of Taxation with Human and Physical Capital

We develop a perfect foresight, overlapping generations model with intragenerational inequality and endogenous human and physical capital investment, and we calculate welfare costs for marginal reforms of taxation and public spending. Welfare costs are uniformly lower than in the equivalent static model where human and physical capital are fixed. Most of the upward bias in static estimates arises from fixed human capital because welfare cost is predominantly tax leakage from lower effective labor supply, but reallocating time between education and labor can leave effective labor supply unchanged. Hence, adjustments in human capital have an important mitigating influence on marginal welfare costs. (JEL D91, H20, H31, H41, J22, J24 )     

Revisiting Welfare States. Performance in Reducing Poverty through Longitudinal Multinational Comparison

This article presents the results of a comparative study on the effects of social welfare programs in selected developed countries. Using a fully comparable longitudinal data file from nationally representative household surveys, we estimate the poverty rate and poverty gap before and after social welfare transfers and taxes in order to identify the direct effects of social welfare on poverty. In general, the findings reveal that countries with conservative welfare regimes demonstrate higher poverty performance than do countries with liberal welfare regimes. In particular, the United States lagged behind through all periods under investigation, whereas Germany exhibited the highest performance in poverty reduction.     

Welfare Services for Migrants Can they be better planned?

A study of the welfare responses to migrants' welfare needs in different national contexts reveals that countries vary enormously in their welfare responses. These responses reflect prevailing welfare philosophies and structures, different social stratification realities, and the varying circumstances that give rise to the particular intake of migrants. This variation may also reflect some lack of direction, or some inability to plan for the existing and discernible potential needs of particular migrant populations. The 6 levels or areas of welfare intervention appropriate to the migration-integration process are 1) immigration policies and practice (pre-migration), 2) reception-settlement policies and practice, 3) community education, 4) equality of opportunity measures, 5) community development, and 6) provision of personal welfare services. The field of immigrant welfare calls for a set of policies and programs that 1) is comprehensive, 2) is based on a clear understanding of the nature of the migration-integration process, 3) reflects an adequate understanding of the significance of culture, ethnicity, and race, and 4) is based on a framework which can ensure a rational and sensitive relationship between the various levels of development, the many programs established, and the variety of structures involved. While to achieve this goal is not easy, more can be done in most countries. Moreover, a more rational approach than currently prevails will represent, in most cases, a better use of resources, a better deal for immigrants, and a greater chance of more equitable and harmonious societies.     

Social Cost Pricing when Public Transport is an Option Value

A well-known principle of welfare economics states that an efficient allocation of resources can be achieved in a competitive economy when market prices are in line with social marginal costs. When applied to the transport sector, this implies that the price of the various transport modes should be made equal to the sum of marginal production and external costs, like congestion, accidents, pollution, and road maintenance. It is sometimes argued the internalization of external costs would bring about a change in demand patterns with a shift towards public transport and cleaner modes. But public transport is already favoured by discriminatory fiscal treatment. Whereas public services are normally (heavily) subsidized, private transport is taxed in several ways and, in some countries, quite substantially so. The application of the 'optimal pricing' principle, therefore, critically depends on how the subsidization of public services is interpreted. This paper addresses the issue of optimal pricing of urban transport, using different hypotheses concerning the treatment of public services. After reviewing some traditional arguments in favour of public transport subsidization, a new approach, based on uncertainty and option values, is discussed. The implications of this approach are investigated by means of an applied model, where optimal prices for urban transport services in the city of Bologna are computed under alternative assumptions.     

Cost analysis of the strengthening families program in reducing time to family reunification among substance-affected families

Decision makers typically face uncertainty in determining whether the outcomes of promising child welfare interventions justify the investment. Despite repeated calls for cost analysis in child welfare, original studies that evaluate the costs and effects of child welfare programs have been limited. Moreover, no cost analyses have focused on family reunification programs that address the needs of substance-affected families. The purpose of this study was to evaluate the costs and effects of a federally funded implementation of the Strengthening Families Program (SFP), a 14-week family training curriculum, on time to reunification with a substance-involved child welfare population. Based on event history analysis, we find the typical child participating in SFP spends 190 fewer days in out of home care when compared to a propensity score matched comparison group of children in out-of home care receiving treatment as usual. Re-entry rates between the two groups were not significantly different at follow-up. At an average out-of-home care rate of $86 per child per day in this state, SFP saves approximately $16,340 per participating child in out-of-home care costs. From a cost–benefit perspective, every $1 invested in SFP yields an average savings of $9.83 in this Midwestern demonstration.