“Economic Theory’s Stance On No-Fault Divorce”

This article explores key insights that economic theory can shed on the issue of no-fault divorce in the United States, addressing modifications in the incentive structure of individuals that resulted from the legislative reforms of the 1970s. After stressing the importance of correctly interpreting and classifying divorce laws, this work investigates the contributions of the theory of property rights, the contributions of game theory and intra-household bargaining, and the contributions of general equilibrium analysis in our understanding of how divorce laws work and what their impact is. By doing so, this exposé analyzes the theoretical consequences of no-fault divorce on the decision whether to get married or divorced, on the characteristics of spouses and divorcees, on divorce rates, and on marital-specific and non marital-specific investments.     

Demand for Immunization,Parental Selection,and Child Survival: Evidence from Rural India

This study focuses on the estimation of demand for immunization as well as its technological effect on the survival probability of a child in rural India. Careful attention is paid to the consequences of parental selection on survival technology and demand for health inputs. The results suggest that child mortality is negatively related to the likelihood of purchasing vaccination, but imperfect vaccination substantially reduce the beneficial effect. Results also suggest that a mother who perceives her child faces a risk of higher likelihood of death compensates for their beliefs in a beneficial way. Consequently, estimations that ignore this selection underestimate the impact of immunization on child survival. Mothers also engage in complementary behavior by reinforcing investment when they choose among health inputs. Estimations that ignore the complementarity substantially overstate the impact of prenatal care and delivery care on demand for immunization. The evidence for complementarity among measured inputs also implies that there might be favorable selection between measured and unmeasured inputs, although the adverse selection seems dominant in this study.Useful comments were received from Michael Grossman, John Strauss, Agnes Quisumbing, Robert Retherford, Rakesh Munshi, DoAnne Sanchez, Kathleen Beegle, seminar participants in the Econometric Society meeting and University of Hawaii, and two anonymous referees. I would like to thank Gayle Yamashita and Vicky Ho for their assistance with compiling data.     

The Relationship Between Wife’s Education and Husband’s Earnings: Evidence from 1960 to 2000

Previous research finds a positive relationship between a wife’s education and her husband’s earnings using data from the 1960s. Earlier theories suggest that benefits accrue from informational sharing between partners in a marriage. This paper tests the hypothesis that a wife’s education is positively associated with her husband’s earnings, using data from the 1960, 1970, 1980, 1990, and 2000 Censuses. Between 1960 and 2000, the educational attainment and labor-force participation of married women has increased dramatically. As women have embarked upon their own careers, has their education continued to be positively associated with their husbands’ earnings? Yes. The coefficient of the wife’s education remains positive and significant for all the years under study. The size of the coefficient decreases, however, from 1960 to 2000.     

Does Returning to Work After Childbirth Affect Breastfeeding Practices?

This study examines the effect of the timing and intensity of returning to work after childbirth on the probability of initiating breastfeeding and the number of weeks of breastfeeding. Data come from the National Longitudinal Survey of Youth (NLSY79). Baseline probit models and family-level fixed effects models indicate that returning to work within 3 months is associated with a reduction in the probability that the mother will initiate breastfeeding by 16–18%. Among those mothers who initiate breastfeeding, returning to work within 3 months is associated with a reduction in the length of breastfeeding of 4–5 weeks. We find less consistent evidence that working at least 35 h per week (among mothers who return to work within 3 months) detracts from breastfeeding. Future research is needed on understanding how employers can design policies and workplaces that support breastfeeding.     

A neoclassical Kaldor model of real wage declines

A model linking macroeconomic equilibrium and income distribution in balanced growth equilibria is developed as a variant to the Kaldor model of factor shares. It departs from the original Kaldor model in assuming equal saving rates and a neoclassical production function. Macroeconomic equilibrium (national savings equal to investment) combines with competitive microeconomic behavior to determine the real wage and real interest rate. An increase in the ratio of national debt to labor reduces the real wage, explaining recent declines.     

Mutual-Fund Benchmarking and Market Bubbles: A Behavioral Approach

Dynamics of equity risk premium is not directly measurable on the market. Numerous studies and empirical research analyse its volatility also considering the time span, concluding that the dynamics of equity risk premium over time is inversely proportional to the economic cycle. This study analyses the passive role that, implicitly, would place institutional investors in such a context. In reality, savings management is delegated to a small number of professional operators (institutional investors), as opposed to pure theoretical models in which every person can act directly on the market thus ensuring unlimited price elasticity. Institutional investors should be rational and completely informed so that they can assume an anticyclical position on the market. Thus, supply and demand should quickly smooth over emerging price pressures and avoid price bubbles. We analyse one possible explanation for this situation not to occur, namely, that professionals suffer from operational limits that prevent them from doing their job in the best possible way. Using empirical evidence from the Italian Stock Exchange (Comit Index), we conclude that three factors reduce the freedom of institutional investors to manage their portfolios – the market target size, the fund structure, and the benchmarking – and discuss some implications for each of them.     

Rating System as a Banking Performance Regulator in the Conditions of Transition Economy

Taking into consideration the importance of having a strong banking system, the issue of bank performance evaluation and analysis becomes essential for the bank regulation process in the countries with an emerging economy. For banking performance evaluation and analysis various methods are used in international practice. These methods have many disadvantages and are unusable for the banking systems in the countries with transition economy. In this article a new and complex system of analysis and evaluation of bank performance is described. This is a multidimensional system of bank performance indicators. This system enables to analyze bank performance through integrated indicators, viewing them in corresponding surfaces. Implementation of this system will allow to efficiently analyze bank performance by different directions, to reveal existing problems in the bank, to make corresponding regulation decisions for each bank, and to and group banks according to different criteria.     

Networking of Intellectual Capital in Southeast Europe: Boosting the Transition to Meritocratic Societies

Being aware that brain drain is perceived as a menace for national economies in the region of Southeast Europe, this paper will closely address the possible beneficial aspects of highly skilled migration and ways to achieve regional sustainability utilising this kind of migratory movement. In this sense, the appearence of a scientific diaspora and other knowledge networks would be stressed not just as a crucial result of their migration but also as a potential method of deriving benefits that can ensure development and consolidation of a meritocratic society. The process would be elaborated in the context of the regional integration with the European Union and accepting inherent standards, but also in the context of the wider social reforms which contain a transition process as whole. The paper will try to argue that civil societies in the region have the capacity to utilise accumulated human capital in the networks to a more significant extent.     

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Local principal curves

Principal components are a well established tool in dimension reduction. The extension to principal curves allows for general smooth curves which pass through the middle of a multidimensional data cloud. In this paper local principal curves are introduced, which are based on the localization of principal component analysis. The proposed algorithm is able to identify closed curves as well as multiple curves which may or may not be connected. For the evaluation of the performance of principal curves as tool for data reduction a measure of coverage is suggested. By use of simulated and real data sets the approach is compared to various alternative concepts of principal curves.