Conservative accounting as a signaling device in debt covenants

This paper provides a signaling explanation for benefits of conservative accounting in a debt contracting setting. It develops a model in which firms want to finance more or less risky projects through debt, which is private information. Creditors price the risk on average riskiness, which implies a relatively high interest rate for low-risk firms. These firms can signal their low-risk type by implementing a conservative accounting system. The accounting signal is used in a debt covenant that stipulates early repayment in case of a bad signal. Thus, the low-risk firms benefit from a lower interest cost, but at the cost of higher risk of being forced to liquidate a profitable project. The analysis establishes conditions for separating and pooling equilibria and determines their individual and social welfare implications. It shows that conservative accounting by low-risk firms can even increase social welfare if it mitigates underinvestment.     

Was there compression of disability for older Americans from 1992 to 2003?

Medical advances and the growth of the elderly population have focused interest on trends in the health of the elderly. Three theories have been advanced to describe these trends: compression of morbidity, expansion of morbidity, and dynamic equilibrium. We applied multistate life table methods to the Medicare Current Beneficiary Survey to estimate active and disabled life expectancy from 1992 to 2003, defining disability as having difficulty with instrumental activities of daily living or activities of daily living. We found increases in active life expectancy past age 65 and decreases in life expectancy with severe disability. These trends are consistent with elements of both the theory of compression of morbidity and the theory of dynamic equilibrium.     

Using age and spatial flow structures in the indirect estimation of migration streams

This article outlines a formal model-based approach for inferring interregional age-specific migration streams in settings where such data are incomplete, inadequate, or unavailable. The estimation approach relies heavily on log-linear models, using them to impose some of the regularities exhibited by past age and spatial structures or to combine and borrow information drawn from other sources. The approach is illustrated using data from the 1990 and 2000 U.S. and Mexico censuses.     

As low birth weight babies grow,can well-educated parents buffer this adverse factor? A research note

This research note combines two national Taiwanese data sets to investigate the relationships among low birth weight (LBW) babies, their parents' educational levels, and their future academic outcomes. We find that LBW is negatively correlated with the probability of such children attending college at age 18; however, when both parents are college or high school graduates, such negative effects may be partially offset. We also show that discrimination against daughters occurs, but only for daughters who were LBW babies. Moreover high parental education can buffer the LBW shock only among moderately LBW children (as compared with very LBW children) and full-term LBW children (as compared with preterm LBW children).     

Race,military service,and marital timing: Evidence from the NLSY-79

I use data from the 1979 National Longitudinal Study of Youth to examine the relationship between military service and marital timing for white men and black men during the 1980s. I use information about active-duty and reserve-duty service as well as veteran status to implement strong controls for selectivity. I find that active-duty military service increases the probability of first marriage for both whites and blacks. In part, this relationship is due to positive selectivity into the military and, for whites, to greater income and economic stability. Above and beyond the effects of selectivity, income, and economic stability, the effect of active-duty military service is particularly strong for black men.     

The demography of disability and the effects of immigrant history: Older Asians in the United States

Using data from the 2000 U.S. census, we compare the older Asian population with U.S.-born, non-Hispanic whites with respect to three indicators of disability. Insofar as any Asian "advantage" in health vis-a-vis whites exists among the population aged 65 and over, our evidence suggests that it occurs primarily among the U.S.-born segments of this population. We also investigate how differences in disability levels among Asian immigrant groups are influenced by country of birth and by the combined effects of duration of residence in the United States and life cycle stage at entry. These results highlight the diversity of the older Asian population with respect to the ways in which immigration and origin history are linked to disability outcomes. We conclude that in later life, immigrant status confers few disability advantages among the Asian population in the United States.     

Strength of attachment: Survey coverage of people with tenuous ties to residences

This article draws on evidence from an exploratory survey of living situations to assess the validity of assumptions about residence and to offer methodological innovations to improve coverage of people with tenuous attachment to households. These innovations include more inclusive probes and questions used to compile the roster of household residents; a review of the places a person stayed the previous few months; and a Residential Attachment scale that measures strength of attachment to households. This scale shows that it takes more probing to list tenuously attached people than most surveys do, suggesting that tenuously attached people are likely to be omitted from the typical survey roster. The Residential Attachment scale is correlated with social and economic participation in households, suggesting that participation is fairly high even among those with tenuous or no residential attachment.     

Child support and father-child contact: Testing reciprocal pathways

I use three waves of panel data to examine the relationship between child support payments and fathers' contact with their nonmarital children. I disaggregate support into fathers' formal and informal payments and incorporate cross-lagged effects models to identify the direction of causality between payments and contact. After including the behavior from the prior wave (lagged term) and a rich set of family characteristics, I find a marginally significant effect of paying formally at Time 1 on the likelihood of contact at Time 2 but no effect of contact at Time 1 on formal payments at Time 2. In the first examination of the relationship between informal support and father-child contact, I find a strong, positive reciprocal relationship between the likelihood and frequency of father-child contact and the likelihood and amount of informal support, with slightly stronger and more consistent effects of contact on payments than of payments on contact.     

How do marital status,work effort,and wage rates interact?

How marital status interacts with men's earnings is an important analytic and policy issue, especially in the context of debates in the United States over programs that encourage healthy marriage. This paper generates new findings about the earnings-marriage relationship by estimating the linkages among flows into and out of marriage, work effort, and wage rates. The estimates are based on National Longitudinal Survey of Youth panel data, covering 23 years of marital and labor market outcomes, and control for unobserved heterogeneity. We estimate marriage effects on hours worked (our proxy for work effort) and on wage rates for all men and for black and low-skilled men separately. The estimates reveal that entering marriage raises hours worked quickly and substantially but that marriage's effect on wage rates takes place more slowly while men continue in marriage. Together; the stimulus to hours worked and wage rates generates an 18%-19% increase in earnings, with about one-third to one-half of the marriage earnings premium attributable to higher work effort. At the same time, higher wage rates and hours worked encourage men to marry and to stay married. Thus, being married and having high earnings reinforce each other over time.     

Homogamy by education and migration status in Monterrey,Mexico: changes and continuities over time

This paper reviews changes in homogamy by migration status and educational level in Monterrey, Mexico, through the analysis of marriage patterns for two cohorts of men born in 1905–1934 and 1940–1969. Results show a significant increase in educational homogamy, as well as in homogamy by rural origins. The changes suggest that education has played an increasingly important role in the process of mate selection, although certain particularistic characteristics, such as being a rural immigrant, are still important in marriage formation. The paper concludes with a discussion of the implications of these findings for the relationship between homogamy and social stratification.