Fertility and education premiums

This study examines households fertility variations in response to expected permanent shifts in the return to education. Wage premiums measurethe return to education because their long-run movements are driven by factors exogenous to the fertility process. The results indicate that high education parents fertility responds negatively to changes in the expected return to college and negatively to changes in the expected return to high school. On the other hand, the fertility of low education parents does not vary with changes to expected returns to education. These results can be consistently interpreted within a standard quality/quantity model of endogenous fertility.I am grateful to seminar participants at Penn State University, Virginia Tech. University, the Economic Demography Workshop at the annual meeting of the Population Association of America and the Mid-West Macroeconomics Conference and well as to a helpful referee. Responsible editor: Junsen Zhang.     

Assessing the Impact of Proposed Bank Mergers on Rural Communities: A Case Study of Bbritish Columbia

The restructuring of financial markets and financial institutions through bank mergers has been accompanied in many countries by concerns about the resulting `geography of finance. In Canada, two proposed mergers involving four of the largest banks have raised concerns about the possibleimpacts of the proposed mergers on the access to financial institutions in rural Canada. This paper assesses the potential impact of the proposed mergers on the geography of finance in rural communities in British Columbia. The methodological choices which must be made to frame such an anlysis are discussed and include choices related to the definitions of `accessibility, the `industry, a `competitive industry, a `bank branch and a `community. A new Index is devised to measure the vulnerability of rural communities to post-merger bank branch closures. It is concluded that the bank mergers will, if approved, have significant negative impacts for the accessibility of the banking system in rural British Columbia. It is also suggested that Canada needs to examine establishing a wider regulatory framework which addresses the issue of accessibility on a longer term basis.     

City Effect and Urban Overload as Program Indicators of the Regional Policy

The paper explores the constraints of an optimal regional policy, and itidentifies them through program indicators of city effect and overload.Based on a `programming approach to the regional analysis, and on the``optimal centrality' concept as meeting point of the city-effect andcity-overload curves, the paper outlines a core list of indicators ofcity-effect and overload, quantifying their dimensions (as findings ofresearch conducted for the European Commission, from 20 cities in 4countries of the EU: France, Germany, Italy and United Kingdom).Further, a ``strategy' for an appropriate urban-regionalreorganization, and for an appropriate `ambit of measuring urban lifequality, is outlined. And finally the misleading risks of comparisons inthe wrong spatial `ambit of data collecting about quality of life, arediscussed.     

Subsidy policies with capital accumulation: Maintaining employment levels

We study a dual economy model of growth and unemployment in the presence of Harris-Todaro type labor migration. The model is a discrete time model of economic growth with given population but endogenous migration of labor. The economy tries to reach development in the quickest possible time while not allowing unemployment to rise above a socially acceptable level. We characterize situations under which maximizing the accumulation of capital in each period is optimal. We also study how particular taxes and subsidies affect unemployment and capital accumulation. Finally, we show that a higher initial capital stock does not necessarily mean a quicker attainment of self-sustained full employment.     

Demographic Efficiency: Concept and Estimation

The concept of demographic efficiency is proposed and data envelopment analysis (DEA) is introduced as a method for determining which countries are demographically efficient. While the purpose of the paper is primarily to introduce the concept and the method, several simple examples are used for purposes of illustration. The first two explore how efficiently countries have converted their level of development (the input) into male and female life expectancy at birth (the outputs). The second two reverse the postulated relationship, treating life expectancies as inputs reflecting general health status of a population, and level of development as the output. Countries are said to be efficient if they have achieved the maximum output observable for a given level of input, or if they have minimized the inputs needed to achieve a prescribed level of output. Together, the efficient cases form an efficiency frontier. DEA, a form of linear programming, also permits the degree of inefficiency of countries lying behind this frontier to be measured by calculating the extent of the output slacks that are present. Output slacks are the shortfalls in the level of performance that could have been achieved given the inputs available, and may themselves be treated as independent variables in explorations of the sources of demographic inefficiency. One example of such an exploration is offered—an attempt to account for shortfalls in female life expectancy, given levels of development.     

Geographic compactness vs. race/ethnic compactness and other criteria in the delineation of legislative districts

Several criteria have evolved in law and tradition to constrain the delineation of Congressional and State and local legislative districts, such as population equality, geographic compactness, race/ethnic compactness, and integrity of political boundaries. Among the various criteria, I focus on compactness, and in particular, the legal and mensural aspects. Following the passage of the Voting Rights Act in 1965, racial compactness has been employed more and more frequently as a primary criterion, and with reduced restraint compared with other criteria, except perhaps for population equality. In Thornburg v. Gingles (1986), the Supreme Court recognized racial/ethnic compactness and polarization in voting practices as prerequisites for newly established majority-minority districts. In Shaw v. Reno (1993), the Court reaffirmed the principle of geographic compactness as against racial compactness by noting that the shape of Cong. Dist. 12 of North Carolina was bizarre and that it was drawn solely on racial grounds. With this decision, race/ethnic compactness and, by extension, the broad interpretation of the Voting Rights Act have been put in conflict with geographic compactness as criteria. More recently, in Miller v. Johnson (1995), use of race as a predominant factor in district delineation, apart from compactness, was rejected. These developments should renew interest in and support for formal statistical guidelines in evaluating geographic compactness in redistricting plans. Many formulas for measuring compactness have been proposed and tested. Here the commonly used perimeter/circle measure and the circumscribed area/circle measure are compared by an examination of some simple geometric figures and 1990-Census-based C.D.'s. Some problems with these measures are noted, and a new measure, the CV/radii measure (the complement of the coefficient of variation of the radii of the district), is proposed and illustratively applied.     

China's ‘later’ marriage policy and its demographic consequences

Using data from China's One-Per-Thousand Fertility Survey conducted in 1982, a cohort analysis is carried out to estimate the demographic consequences of the later marriage policy implemented in the People's Republic of China. The findings show that the later marriage policy had a strong positive effect on mean age at first marriage and first birth but a negative impact on the length of the first-birth interval, suggesting that the depressing effects on fertility of the administratively enforced postponement of marriage are more or less offset by adjustments over the first-birth interval by Chinese couples.     

From stagnation to growth: Revisiting three historical regimes

This paper explores the role of mortality in the long transition from Malthusian stagnation to sustained economic growth. An endogenous child mortality rate that varies inversely with parents standard of living is added to the framework in Galor and Weil (AER 2000). In our version of the model, the transition from stagnation to growth, triggered by an exogenous shock to technology, comprises a mortality revolution succeeded by a demographic transition.This paper has benefitted from discussions with and suggestions made by KarlGunnar Persson, Christian Schultz, and, particularly, Christian Groth at the University of Copenhagen. I gratefully acknowledge the insightful criticisms of two anonymous referees, and I thank Paula Madsen for English proof-reading. Responsible editor: Alessandro Cigno.     

The impact of cash-benefit reform on parents’ labour force participation

This paper evaluates the impact of a recent Norwegian family-policy reform. The reform provides benefits of up to NOK 3,000 (approximately € 400) per month to families with one- to three-year-old children, who do not utilize state-subsidized day-care centres. We investigate the reforms effect on parents labour force participation. We find that, on average, the reform reduced womens labour force participation and increased the specialization of work between couples. We find that the effect of the reform depends on womens schooling. Specifically, the labour force participation of highly educated mothers fell by more than that of mothers with less education.I am grateful to Associate Professor Espen Bratberg and Professor Alf Erling for their valuable comments. My special thanks to Kjell Vaage, Arild Aakvik and Afsane Bjorvatn for helpful suggestions. This paper was presented in a seminar at the Department of Economics, University of Bergen, Norway. I am thankful to the participants of the seminar for their positive feedback. The paper has also benefited from the reports given by three anonymous referees. I am also thankful to Professor Heather Joshi for helpful remarks on the paper. Responsible editor: Christoph M. Schmidt.     

Have the relative employment prospects for the low-skilled deteriorated after all?

Has the relative unemployment propensity for the low-skilled increased during the 1990s? We address this question empirically, based on two notions of low skills; i) low education, and ii) low ability, conditioned on education and work experience. Ability is identified by previous earnings. Evaluated by the education-based measure, we find that unemployment propensity has not developed unfavourably for the low-skilled. Evaluated by the ability-based measure, it has. We uncover a steady deterioration of employment prospects for persons with low ability relative to others with similar formal qualifications. The adverse employment effects of being low-skilled are stronger the higher is formal education.All correspondence to Knut Røed. The paper is part of the project Sorting, exposed groups and labour market programs financed by the Research Council of Norway. We wish to thank Rolf Aaberge, Paul Gertler, Harald Goldstein, Karl Ove Moene, Jon Strand, Steinar Strøm, Asbjrn Rødseth and an anonymous referee for helpful comments. Responsible editor: John F. Ermisch.     

Utilitarian tradeoff between population growth and income growth

Utilitarian social welfare functions were devised for a world with a fixed population. With endogenous population, Edgeworth conjectured that the Benthamite principle of maximizing total utility (classical utilitarianism) would lead to a larger population size and a lower standard of living than the Millian principle of maximizing per capita utility (average utilitarianism). One objection to the Benthamite criterion was that its application to a world with finite resources often implied large population size in conjunction with an embarrassingly low average standard of living. In a static environment with altruistic parents, this may not be warranted. In a growth situation, this criticism is even less likely to be supported. This paper extends the comparison of classical and average utilitarianism from a static to a dynamic and endogenously growing economy. Using a stylised endogenous growth framework, it confirms that the Benthamite population growth rate exceeds the Millian growth rate. In terms of the rate of growth of per capita income, the reverse is true. Having the standard of living often increasing under the Benthamite criterion, our results thereby depart significantly from the repugnant conclusion levelled against classical utilitarianism.We would like to thank an anonymous referee for helpful suggestions.     

Social Development Trends in the Middle East, 1970–1997: the Search for Modernity

The nations of the Middle East have arrived at a historic crossroad.Anchored in centuries-old political and economic systems, bitterethnic rivalries, recurrent intra-regional warfare, and risingfundamentalism, the majority of the regions countries haveremained largely apart from the transformative processes that areshaping development in other world regions. Indeed, the impressionexists that no development miracles are occurring in theMiddle East and that, to a very great extent, the region isseeking to remain on the sidelines of modern history. And,yet, if the countries of the Middle East are to flourish in thenext century they, too, must restructure themselves for dealingwith the complex realities associated with increasing globalizationand internationalization. This paper reports on the socialdevelopment successes and failures of 22 Middle Eastern countriesbetween 1970 and 1997. Also identified are the regions SocialLeaders (SLs), Socially Least Developing Countries (SLDCs),and Middle Performing Countries (MPCs). The social, political,and economic factors most closely associated with each countrysdevelopment classification are identified.     

Tribal membership requirements and the demography of ‘old’ and ‘new’ Native Americans

This paper examines the twentieth-century population recovery of Native Americans with reference to urbanization, intermarriage, and differing definitions of the Native American population from census and tribal enrollment data. The recent increase in the Native American population reflected in regular US decennial censuses since 1960 is discussed in terms of changing self-identification of individuals as Native American. Also discussed are criteria for enrollment in Native American tribes, particularly blood quantum requirements. Census enumerations are compared with tribal enrollment data, and it is illustrated that a large proportion of those identifying as Native American in the census are not enrolled in Native American tribes. Special attention is given to how Native American tribal enrollment criteria might impact future population size.     

Optimally Scaled Quality-of-Life Indicators

When studying quality of life, researchers have to rely on the subjective evaluations, which are typically categorized, collected in surveys. When statistical analysis are applied to these data, they used to apply the simplistic approach including (i) direct quantification, which assigns discrete numerical values to ordinal response scale, and (ii) complete-case analysis, which discards all observations selecting any of the off-scales choices like Dont Know No Answer from the analysis. The present paper examines the disadvantages of this approach and introduces the optimal scaling method as a remedy. The new scheme attempts to restore the continuity property of the measurements as well as provide estimates for most of the missing responses. Application of the new scheme to the Hong Kong QOL data illustrates how the scheme works, demonstrates its advantages and shows how the QOL indicators, the global QOL indicator as well as its inherited indicators, can be constructed from series of principal component analyses. Factor analysis of the 20 life domain indicators verifies Wan's opinion (1992) that the global sense of well-being can best be captured by two dimensions, namely the personal well-being and the societal well-being. Although previous QOL studies had seldom included perceptions towards various societal conditions to identify life satisfaction in general, our data analysis shows that satisfaction on these conditions do constitute an important component of the global QOL.     

The effect of immigration on wages in three european countries

We analyse the impact of immigrants on natives wages from reduced form wage equations for The Netherlands, United Kingdom and Norway. We find very small effects on natives wages and no dominant robust patterns of substitution and complementarity. Effects on earlier immigrants own wages are larger but less reliable. Further work should focus on these own effectsData on the Netherlands have been made available by CEREM, Statistics Netherlands(LSO 1997) and SEO (GPD). The British QLFS have been made available by the Office for National Statistics through the Data Archive, University of Essex. Norwegian KIRUT data have been made available by NSD, Bergen. We are grateful to these organisations. None of these organisations bear any responsibility for the analyses or interpretations of data sets used in this paper.Two anonymous referees and the editor-in-chief, Klaus Zimmermann, provided very valuable inputs for a substantial revision of an earlier draft. Responsible editor: Klaus F. Zimmermann.     

Is There a Trade-Off Between Economic Efficiency and a Generous Welfare State? A Comparison of Best Cases of `The Three Worlds of Welfare Capitalism’

A crucial debate in policy-making as well as academiccircles is whether there is a trade-off betweeneconomic efficiency and the size/generosity of thewelfare state. One way to contribute to this debate isto compare the performance of best cases ofdifferent types of state. Arguably, in the decade198594, the US, West Germany and the Netherlands were best cases best economic performers in whatEsping-Andersen (1990) calls the three worlds ofwelfare capitalism. The US is a liberalwelfare-capitalist state, West Germany a corporatiststate, and the Netherlands is social democratic in itstax-transfer system, although not its labor marketpolicies. These three countries had rates of economicgrowth per capita as high or higher than other richcountries of their `type, and the lowest rates ofunemployment.At a normative or ideological level the three types ofstate have the same goals but prioritise themdifferently. The liberal state prioritises economicgrowth and efficiency, avoids work disincentives, andtargets welfare benefits only to those in greatestneed. The corporatist state aims to give priority tosocial stability, especially household incomestability, and social integration. The socialdemocratic welfare state claims high priority forminimising poverty, inequality and unemployment.Using ten years of panel data for each country, weassess indicators of their short (one year), medium(five year) and longer term (ten year) performance inachieving economic and welfare goals. Overall, in thistime period, the Netherlands achieved the bestperformance on the welfare goals to which it gavepriority, and equalled the other two states on most ofthe goals to which they gave priority. This resultsupports the view that there is no necessary trade-offbetween economic efficiency and a generous welfarestate.The three panel studies are the American Panel Studyof Income Dynamics (PSID), the German Socio-EconomicPanel (GSOEP) and the Dutch Socio-Economic Panel(SEP). They all have samples of over 15,000 and arethe only national panels to have run for tenconsecutive years or more, so making it possible toassess the longer term performance ofwelfare-capitalist states.     

Marriage and the value of waiting

Using a simple model where singles try to maximize their pizazz, we examine the value of the option to give up single life in favor of marriage when singles pizazz levels follow correlated geometric Brownian motions. We derive the critical level of relative pizazz levels that triggers the move to marriage and find that for relatively small (large) potential economies of scale in marriage, a single will generally be willing to get married if his/her prospective partners pizazz is strictly higher (lower) than his/her own.Comment by two anonymous referees are gratefully acknowledged. Responsible editor: Alessandro Cigno.     

How Do Classes Make Use of Their Incomes?

Against the backdrop of occasional claims by social scientists that class analysis is no longer relevant this article will study the consumption patterns of different classes. Two hypotheses are derived and tested. These are to assume that classes' consumption differences are due to processes of social closure, or are of a cultural kind. This is investigated using a Swedish family expenditure data-set from 1992. The focus is on classes' different uses of their incomes regarding basic expenditures, expenditures on non-durables and ownership of durables. The most striking result is that 'higher' classes tend to spend a great deal of money on activities outside the home, 'appearance' and information, while other classes' consumption resembles the 'higher' classes, to different degrees. Moreover, the class hierarchy, constructed theoretically from employment factors, resembles a hierarchy constructed from similarities in patterns of consumption. The main conclusion is that class matters, in interesting ways, for consumption, though there are also other powerful factors. The closure hypothesis receives support, even though a combination of the two hypotheses seems sound.     

Social security and strategic inter-vivos transfers of social capital

This paper explains public provision of social capital in an overlapping generations model with gerontocracy, without resort to any bequest motive. The old generation has an incentive to provide education and infrastructure because these goods shift the Laffer curve of social security taxation, thereby increasing old-age income in the political equilibrium. The incentive is stronger if population growth is larger. The marginal productivity of social capital in the political equilibrium may exceed or fall short of the marginal productivity of social capital in an efficient allocation.Comments by Ursula Arlt, Tom G. McCarthy, Wolfgang Peters, the participants in seminars at the Universities of Cologne and Dortmund and two anonymous referees are gratefully acknowledged. The usual caveat applies.     

Welfare participation and welfare dependence among the unemployed

We regard individual unemployment duration as an important determinant of individuals welfare dependence. Welfare receipt is modelled for a unique data set of 4,655 Finnish unemployed individuals. A two-stage binomial hurdle model is applied, and estimations are made by both ML and GMM. Disregarding the full interrelation between unemployment and welfare clearly underestimates the importance of the former. Unemployment has a clear impact on both the probability of welfare participation and on welfare dependence among recipients. Using a finite mixture model we find that there is a small minority of unemployed welfare recipients who are locked-in in welfare dependence.All correspondence to Maria Melkersson. We thank participants at the ESPE 2001 conference, João Santos Silva and two anonymous referees for valuable comments. Financial support from Rektor för Åbo Akademi is gratefully acknowledged (Saarela). Responsible editor: Junsen Zhang.