Labor supply responses and welfare effects from replacing current tax rules by a flat tax: Empirical evidence from Italy, Norway and Sweden

This paper employs a microeconometric framework to examine the labor supply responses and the welfare effects from replacing current tax systems in Italy, Norway and Sweden by a flat tax on total income. The flat tax rates are determined so that the tax revenues are equal to the revenues as of 1992. The flat tax rates vary from 23 per cent in Italy, 25 per cent in Norway, to 29 per cent in Sweden. In all three countries the labor supply responses decline sharply with pre-reform disposable income. The results show that the efficiency costs of the current tax systems relative to a flat tax may be rather high in Norway and much lower, but positive, in Italy and Sweden. In all three countries “rich” households – defined by their pre-tax-reform income – tend to benefit (in terms of welfare) more than “poor” households. In Italy and Sweden a majority will lose from a shift to a flat tax, while in Norway a majority is predicted to win. Received: 19 May 1998/Accepted: 02 July 1999     

Labor Migration,Remittances and Economic Well-being of Households in the Philippines

Labor Migration has long been viewed as a strategy adopted by the household unit to allocate family resources rationally to increase the flows of income and to raise family standard of living. The research reported here examines the extent to which remittances sent by Filipino overseas workers increase the income and standard of living of households in the Philippines. Data for the analysis were obtained from a representative sample of 2,388 households drawn in 1999–2000 from four major “labor sending” areas in the Philippines. The analysis compares households with and without overseas workers to estimate the contribution of remittances to household income and to household standard of living (measured once by an ‘objective’ indicator and once by a ‘subjective’ assessment). The data reveal that due to remittances the income of households with overseas labor migrants is considerably higher than the income of households without overseas workers. The data also reveal that remittances are used mostly for consumption purposes (e.g. purchase of food, clothing, education, and goods) and that most of the difference in standard of living (whether measured on the ‘objective’ or the ‘subjective’ scale) between households with and without overseas workers are attributed to remittances. The implications of labor migration and the policy that encourages and supports labor migration for the Filipino society are evaluated and discussed.

Fraught with Ambivalence: Reproductive Intentions and Contraceptive Choices in a Sub-Saharan Fertility Transition

Demographic studies that search for signs of fertility transition in sub-Saharan Africa rarely examine the complex gamut of individual aspirations and misgivings, hopes and frustrations, failures and triumphs that accompany the emerging declines of fertility rates in the subcontinent. This study draws upon qualitative data collected in peri-urban areas of Maputo, Mozambique’s capital and largest metropolis, to explore contradictory meanings and feelings surrounding changes in fertility intentions and contraceptive choices. It argues that although changes in these two aspects of reproductive life are interrelated, they are predicated on distinct types and configurations of external pressures and psychological apparatus, which is often manifested as a puzzling disjunction between fertility preferences and contraceptive use. This disjunction can be further reinforced by persistent gender divisions in reproductive views and strategies. Informal social interaction plays an important role in building societal consensus over fertility matters, but because such interaction deals with reproductive intentions and contraceptive use through largely different mechanisms, it may also help accentuate the intentions-contraception disjunction. This study’s findings therefore call upon both researchers and policymakers to attend more closely to the multidimensionality of fertility transitions in sub-Saharan societies and specifically to the complexities underlying such popular notions as “unmet need for family planning,” “spacing” versus “limiting” births, or “spousal communication” on reproductive matters.     

Gender discrimination and efficiency in marriage: the bargaining family under scrutiny

We consider a repeated family bargaining model that links the topics of employment and households. A key aspect of the model is that marital bargaining power is determined endogenously. We show that: (1) the efficiency of household decisions is sometimes inversely related to the prevailing degree of gender discrimination in labor markets; (2) women who are discriminated against have difficulty enforcing cooperative household outcomes because they may be extremely limited to credibly punish opportunistic behavior by their male partners; (3) the likelihood that sharing rules such as “equal sharing” are maintained throughout a marriage relationship is highest when men and women face equal opportunities in labor markets. Responsible editor: Deborah Cobb-Clark     

Estimating a Dynamic Model of Sex Selection in China

High ratios of males to females in China, which have historically concerned researchers (Sen 1990), have increased in the wake of China’s one-child policy, which began in 1979. Chinese policymakers are currently attempting to correct the imbalance in the sex ratio through initiatives that provide financial compensation to parents with daughters. Other scholars have advocated a relaxation of the one-child policy to allow more parents to have a son without engaging in sex selection. In this article, I present a model of fertility choice when parents have access to a sex-selection technology and face a mandated fertility limit. By exploiting variation in fines levied in China for unsanctioned births, I estimate the relative price of a son and daughter for mothers observed in China’s census data (1982–2000). I find that a couple’s first son is worth 1.42 years of income more than a first daughter, and the premium is highest among less-educated mothers and families engaged in agriculture. Simulations indicate that a subsidy of 1 year of income to families without a son would reduce the number of “missing girls” by 67% but impose an annual cost of 1.8% of Chinese gross domestic product (GDP). Alternatively, a three-child policy would reduce the number of “missing girls” by 56% but increase the fertility rate by 35%.     

Social Stratification and Consumption Patterns in Turkey

In this article, by analyzing consumption practices of Turkish households, I attempted to identify whether there are distinctions between different social classes in Turkey. Stated another way, I assessed and explored the impact of socio-economic forces on consumption patterns, taste and lifestyle. In doing so, I tested emprically, two theoretical approaches, Bourdieu’s “reproduction theory” and Giddens “class Structuration thesis”. A total of eight dependent variables are analyzed in terms of the linkages between those selected consumption items and social structure. In general, the emprical findings indicated that the intersection and reinforcement of social class variables, such as income, education, occupation, sector, and neighborhood differentiation, determined consumption patterns and lifestyle differences in Turkey.     

Population,projections, and policy: A cautionary perspective

Population projections depend on censuses, vital statistics and sample surveys, all of which have deficiencies that are most marked in the less developed countries (LDCs). Long-range projections by international agencies have recently undergone major revisions, while forecasts of the U.S. population have changed drastically over the past four years. The United Nations typically prepares “high,” “medium” and “low” projections. Even the high projection contains optimistic assumptions about fertility decline, while assumptions of constant or increasing fertility receive no serious attention. The paper suggests that high and constant fertility projections should receive more attention from policy makers, with medium estimates treated more as targets achievable only through considerable programmatic effort. At the same time, economic and social plans should be laid for dealing with the population sizes implied by the “high” variants.     

The effects of motherhood timing on career path

This paper estimates the effects of motherhood timing on female career path, using biological fertility shocks to instrument for age at first birth. Motherhood delay leads to a substantial increase in earnings of 9% per year of delay, an increase in wages of 3%, and an increase in work hours of 6%. Supporting a human capital story, the advantage is largest for college-educated women and those in professional and managerial occupations. Panel estimation reveals both fixed wage penalties and lower returns to experience for mothers, suggesting that a “mommy track” is the source of the timing effect.     

Wages and Fertility in Australia

This paper applies a simple economic model to explain short run movements in Australian fertility, abstracting from social and cultural conditions. It shows that Australian fertility can be modelled with some success using only wages and employment data, once we allow for the different effects of changes in men’s and women’s wages for the period 1966–90. The elasticity of the total fertility rate over this period is found to be negative with respect to women’s wages and positive with respect to men’s wages. As well as having the expected sign, the estimated elasticities are similar in magnitude to those for the United States over the period 1948–75.     

Quality of Community Life Among Rural Residents: An Integrated Model

The purpose of this research was to explore the relationships among housing satisfaction, community attachment and community satisfaction and the complex mechanisms involved in predicting community satisfaction among residents in rural communities. The role of housing satisfaction and community attachment in predicting community satisfaction was of particular interest. A structural equation model of community satisfaction was tested with mail survey data drawn from a randomly selected rural sample of 974 households. The results of this study confirmed the influences and mediating role of community attachment and housing satisfaction in predicting community satisfaction. “Spillover” effects from “lower levels of life concerns” (e.g., satisfaction with local services, assessment of current housing conditions) in perceived community satisfaction were found that support previous research (Sirgy and Cornwell in Social Indicators Research 59:79–114, 2002).     

Trade, population growth, and the environment in developing countries

We examine pollution in a developing country where fertility is endogenous and wealth increases welfare through status. When the country has defective environmental laws, it has a comparative advantage in capital-intensive “dirty” goods. Gains from trade due to trade liberalization then increase income and boost population growth. With strong incentives to save, they also stimulate investment, which hampers population growth. Because population growth crowds out labor supply, production of capital-intensive dirty goods first increases and then decreases. This yields a typical environmental Kuznets path: pollution increases at the earlier stages but decreases at the later stages of development.     

Legal Protections and Advocacy for Contingent or “Casual” Workers in the United States: A Case Study in Day Labor

Contingent, non-standard or “casual” work is present in large numbers in virtually every sector of the United States economy. Staffing strategies that use subcontracted or contingent work – strategies that once characterized only some low-wage workers such as garment and agriculture – have now spread to virtually every area of industry, including high tech and finance. United States law is a patchwork of provisions in separate federal statutes – and sometimes in each of the 50 states – governing whether a particular individual is an “employee.” Day laborers in the United States have particular challenging enforcing their limited rights. To address the issues of vulnerable low-wage workers being locked out of labor protections, activists have developed a number of strategies, including litigation and legislative campaigns. These strategies have more recently been broadened to facilitate developing leadership in a new social movement. In this article I draw a portrait of the day labor workforce from city- and state-based surveys of day laborers themselves. I then discuss strategies employed by day laborers to advance their workplace rights.

Normative evaluation of tax policies: from households to individuals

We simulate a hypothetical family tax credit on a sample of French couples, using jointly a collective model of labor supply and a tax-benefit calculator. Work behaviors represent here a general concept of “effort,” and hence, individual productivities cannot be assimilated with wage rates. They are retrieved by inversion of the optimal household program under simple assumptions on household preferences and bargaining rules. The calibrated model is used to predict incentive effects of the reform and distributive impacts on individuals and households. The desirability of the reform depends on which of these two welfare units is used for normative evaluation.      

Youth unemployment and government policy

Young people of working age tend to be particularly prone to labor market inefficiencies that keep their wages excessively high and their employment excessively low. These inefficiencies are usually magnified through unemployment benefit systems. This paper examines how these problems can be tackled through “employment vouchers,” i.e. hiring subsidies or tax breaks for the unemployed. It examines how vouchers to the young unemployed should differ from those to the adult unemployed. The employment vouchers considered here reduce unemployment and impose no cost on the government, since they are financed by the induced fall in government expenditures on unemployment benefits. Among other things, we find that young workers should receive lower vouchers as displacement of the old rises and as deadweight from providing vouchers to the old increases.     

Gender and savings in rural India

In this study we use data from rural India to examine the impact of the birth of a boy relative to the birth of a girl (i.e., the “gender shock”) on the savings, consumption and income of rural Indian households. We find that the gender shock reduces savings for medium and large farm households, although there is no evidence that the shock affects savings for the landless and the small farm households. We also estimate the effect of the shock on income and consumption for the former group in order to determine the source of the drop in savings. The results indicate that the fall in savings subsequent to the gender shock arises from its effect on consumption in the year following the birth, and from its effect on income in other years. Received: 3 September 1996 /Accepted: 15 July 1997     

Measuring Accessibility for Inclusive Development: A Census Based Index

State is often involved in the challenging process of judicious allocation and apportioning of resources for an inclusive growth through creating infrastructure and ensuring accessibility- the “ability of the people to reach and engage in opportunities and activities”. The issue at the heart of the debate concerns with the “opportunities” available in a geographic area and the inhabitants’ use of those opportunities in terms of their “behaviour”. The extant literature suggests that the dominant component of the accessibility is mobility infrastructure. The present paper argues that the impact of the human development and the information infrastructure should also be considered. This paper uses the Indian census data of 2001 and develops the methodology for creating an accessibility index for a geographic unit. The paper also discusses the use of the accessibility index (AI) as a tool for evaluating the efficacy of a public policy initiative towards decreasing the exclusion of geographic units. Validation of the tool is done using the patient inflow data at a large charitable hospital in Central India and household level employment data from National Rural Employment Guarantee Scheme (NREGS).     

Quality of Life as a Social Representation in China: A Qualitative Study

This study explores the meaning of quality of life (QOL) in China from the perspective of social representations. The data were collected by open-ended individual interviews with 16 ordinary Chinese people. The study shows that social thinking about QOL in Chinese society is activated in five critical domains of life: health, family, work, social relations and the natural environment. Meanwhile, “having” and “being”, the two antinomic, yet dialogical interdependent, interpretive repertoires, have an overarching generative and normative power over the discourse about QOL. They permeate and underpin the different domains of life. Dominated by an “economic logic”, the “having” repertoire constructs these life domains through a set of economic consequences and posits them as resources leading to material possessions. While dominated by an “existential logic”, the “being” repertoire confesses existential meanings to the same life domains, and emphasises the joy derived from them. Thereby, it infers that QOL as a social representation is generated from, and organised around, a central thema of “having” and “being”.     

Demographic transition and economic growth: Empirical evidence from Greece

Over the past decades, due to a combination of declining fertility rates and rising life expectancies, most industrialized countries have experienced aging populations and low numbers of young populations that may pose economic problems in the future. This paper investigates the relationship first between fertility rate and infant mortality rate and second among demographic changes, real wages and real output in Greece over the period 1960–96. When we control for fluctuations in overall economic activity and the labor market on the bivariate relationship between fertility and mortality rates, the evidence suggests that Granger-causation must exist in at least one direction. The results show that in the long run a decrease in infant mortality rates, taking into consideration economic performance and the labor market, causes a reduction in fertility rates. Also, employing the vector error-correction models, the variance decomposition analysis and the impulse response functions, the empirical results support the endogeneity of fertility choice to infant mortality, the labor market and the growth process. Received: 16 May 1999/Accepted: 18 September 2000     

Childhood and Capability Deprivation in Germany: A Quantitative Analysis Using German Socio-Economic Panel Data

Child poverty has been widely discussed in Germany since the publication of the third official Poverty and Wealth Report of the German government in 2008 which—inter alia—focused on the situation of children and families. However, child poverty is not only caused by low household incomes and impacts of child poverty are not only restricted to financial consequences. The capability approach takes into account this multidimensionality of well-being and poverty of children. It conceptualizes human well-being as not only depending on financial means but also gives the same importance to the personal and social conversion factors which determine how far financial means can be converted into personal well-being. Before 2008 the capability approach had only been applied to the well-being of adults in Germany, but not specifically to the well-being of children. However, there are several reasons why a capability analysis for children will differ from a capability analysis for adults. Adults’ capability sets comprise dimensions that are less relevant for small children while other valuable capabilities have to be added. Furthermore the capability set depends to a large extent on the age of the child. The paper focuses on a multidimensional poverty analysis in the capability perspective of 5–6 years old children. In the domains of “Education/Leisure”, “Health”, “Social Participation” and “Income” child poverty is measured by predefined indicators. The relationship to the social and personal conversion factors of the caretakers is then evaluated. Additionally, a multidimensional poverty measure is analyzed.     

Male-female differences in labor market outcomes during the early transition to market: The cases of Estonia and Slovenia

Changes in women's relative wages and employment are analyzed, using social security data from Slovenia (1987–1992) and a retrospective labor force survey in Estonia (1989–1994). Estonia adopted liberal labor market policies. Slovenia took an interventionist approach. Nevertheless, relative wages for women rose in both countries. Factors favoring women included: returns to human capital rose in transition, benefiting women; relative labor demand shifted toward predominantly female sectors; low-wage women had a disproportionate incentive to exit the labor market, especially in Estonia. However, women were less mobile across jobs in both countries, so men disproportionately filled new jobs in expanding sectors. Received: 27 November 1997/Accepted: 20 December 1998