Business strategy and the social norm of tipping

Tipping is an important economic phenomenon, involving about $47 billion a year in the US food industry alone, and trillions of dollars across different occupations and countries over the years. Moreover, tipping is a major source of income for millions of workers. This article discusses the implications of tipping for business strategy in the relevant industries. For example, firms can choose to impose a compulsory service charge in lieu of tipping - what are the advantages and disadvantages of doing so? How does tipping change the profit-maximizing level of investing in screening job applicants, training workers, monitoring them, and providing performance-based incentives by the firm? Can industries such as the music industry use tips (i.e., prices being voluntary and determined by the customers) as an alternative business model?     

The US–China trade war and Phase One agreement

The Trump administration changed US trade policy toward China in ways that will take years for researchers to sort out. This paper makes four specific contributions to that research agenda. The first is to carefully mark the timing, definitions, and scale of the products subject to the tariff changes affecting US–China trade from January 20, 2017 through January 20, 2021. One result was each country increasing its average duty on the other to rates of roughly 20 percent, with the new tariffs and counter-tariffs covering more than 50 percent of bilateral trade. The second contribution is to highlight two additional channels through which bilateral tariffs changed during this period that received less research attention. One tariff change is through product exclusions, another is trade remedy policies of antidumping and countervailing duties. The third contribution is to provide an initial exploration into why China fell more than 40 percent short of meeting the goods purchase commitments set out under the first year of the Phase One agreement. The last contribution is to consider additional trade policy actions—involving forced labor, export controls for reasons of national security or human rights, and reclassification of trade with Hong Kong—likely to affect US–China trade beyond the Trump administration.     

The psychology and behavioural economics of poverty

The paper provides an overview and assessment of an emerging literature on the psychology and behavioural economics of poverty. We particularly highlight poverty experiences, role of neighbourhoods, poverty dynamics and transmission, child poverty and disability and personal finance. In addition we consider psychology and policy responses by looking and autonomy and empowerment, and poverty reduction programs. Our central thesis is that the detailed knowledge of individual experiences, cognitions and social factors in psychology and related social science complements the traditional economic emphasis on structural factors and policy instruments in a way that is exemplified by emerging work in behavioural economics. We conclude it is increasingly recognised that poverty reduction policies which are informed by behavioural insights may, as a result, be more effective.     

Labour supply effects of a cash-for-care subsidy

From 1999, all parents in Norway with children aged one to three, who did not attend publicly subsidised daycare, became eligible for a cash-for-care (CFC) subsidy. One effect of the CFC-subsidy was to increase in the relative price of external child care. This article analyses whether the CFC-subsidy has led to a reduction in the labour supply of mothers. A framework for evaluating policy reforms when reforms are equally and nation-wide accessible is put forward. The results show that the CFC-subsidy has reduced womens labour supply. The results are sustained after controlling for contemporaneous macroeconomic shocks, using a triple difference approach.The author thanks Hege Torp, Erling Barth and Harald Dale-Olsen at The Institute for Social Research, as well as participants at the European Society for Population Economics (ESPE) conference in Bilbao in June 2002, participants at the Lunch-seminar at Statistics Norway, and two anonymous referees for valuable comments. The work is financed by the Norwegian Research Council, grant #137230/530. The financial support is gratefully acknowledged.Responsible editor: Deborah Cobb-Clark.     

A note on the changing relationship between fertility and female employment rates in developed countries

In this paper we look at a panel of OECD aggregate fertility and labor market data between 1970 and 1995 and we report some striking recent developments. Total Fertility Rates (TFR) were falling and Female Participation Rates (FPR) were increasing, conforming to a well known long-run trend. Along the cross-sectional dimension, the correlation between TFR and FPR was negative and significant during the 1970's and up to the early 1980's. This seemed consistent with secular comovements. However, by the late 1980's the correlation had become positive and equally significant. We discuss our findings within the framework of standard neoclassical models of fertility and labor supply adapted to macro data, as in Butz and Ward (1979). Received: 14 April 2000/Accepted: 29 December 2000 All correspondence to Pedro Mira. Namkee Ahn is grateful for financial support received from the Bank of Spain and from Spain's Ministerio de Educación y Cultura, grant SEC97-1249. We benefited from comments by two anonymous referees and by seminar participants at FEDEA, CEMFI and ESPE-98. All remaining errors are our own. Responsible editor: John F. Ermisch.     

An analysis of reproductive behaviour in Canada: results from an intertemporal optimizing model

Results based on a sample of Canadian households challenge the findings of most studies which show significant negative effects of schooling on the fertility of women under the age of 45. This is due to the application of methods to an optimization model which distinguish between those households which have completed their reproductive behaviour from those which have not. Completion status and the desired number of children are used to infer characteristics of the optimal programme which are then employed to derive a likelihood function. Traditional demographic methods have so far not fully utilized the distinction between incomplete and completed households in sample surveys. These methods also lead to the conclusion that completed fertility had increased from its all time low in the nineteen seventies. Received: 9 July 1997/Accepted: 6 June 1998     

Fertility decisions when infant survival is endogenous

There is evidence that fertility is positively correlated with infant mortality, and that a child‘s chance of surviving to maturity increases with the level of nutrition, medical care, etc. received in the early stages of life. By modelling parental decisions as a problem of choice under uncertainty, the paper shows that fertility and infant mortality are most likely to move in opposite directions if, as implicitly assumed by existing economic theories, parents believe that there is nothing they can do to improve the survival chances of their own children. By contrast, if parents realize that those chances improve with the amount they spend for the health, nutrition, etc. of each child that they put into the world, then fertility and infant mortality may move in the same direction. Under such an assumption, the model has the strong policy implication that directly death-reducing public expenditures are most effective, but stimulate population growth, at low levels of development. By contrast, at high levels of development, such expenditures tend to crowd out parental expenditures, and are a factor in fertility decline. Received: 14 October 1996 / Accepted: 28 July 1997     

The pattern of birth spacing during Taiwan's demographic transition

This paper considers the impact of an extended family structure on the fertility behavior of married women in Taiwan. A sequential duration model is applied to identify the differences in fertility behavior during the early and latter stages of a woman's reproductive period. Heterogeneity adjustments which correct the respondent-specific characteristics are also implemented. It is found that living with the husband's parents has an impact on the wife's fertility only at the early stage of her childbearing period, and that the subjective son preferences together with the objective fact of no son in the previous 2 births do force a wife to expedite her third birth. These results are robust across different cohorts during the demographic transition and under different specifications of hazard functions. We thank an anonymous referee for his or her valuable comments and suggestions. Responsible editor: Junsen Zhang.     

The determinants of fertility in rural Peru: Program effects in the early years of the national family planning program

Using data from the 1991 Peru Demographic Health Survey, a linked Situation Analysis, and a unique region-level data set, this paper examines the determinants of fertility in rural Peru before and after the 1985 enactment of its National Policy on Population. The empirical framework combines a model of the timing and spacing of conceptions with a model of the timing of the placement of family planning services in communities in order to control for non-random placement of services. Results show the program helped reduce fertility post 1985. The magnitude of the effects is quantified with simulations. All correspondence to David Guilkey.We thank the editor and two referees for detailed comments on an earlier draft of this paper. Funding support for this project was provided by the MEASURE Evaluation Project under a Cooperative Agreement between the U.S. Agency for International Development and the Carolina Population Center (Number HRN-A-00-97-0018-00). The views expressed herein are those of the authors and not the sponsoring agency. Responsible editor: Junsen Zhang.