Exact confidence intervals generated by conditional parametric bootstrapping

Conditional parametric bootstrapping is defined as the samples obtained by performing the simulations in such a way that the estimator is kept constant and equal to the estimate obtained from the data. Order statistics of the bootstrap replicates of the parameter chosen in each simulation provide exact confidence intervals, in a probabilistic sense, in models with one parameter under quite general conditions. The method is still exact in the case of nuisance parameters when these are location and scale parameters, and the bootstrapping is based on keeping the maximum-likelihood estimates constant. The method is also exact if there exists a sufficient statistic for the nuisance parameters and if the simulations are performed conditioning on this statistic. The technique may also be used to construct prediction intervals. These are generally not exact, but are likely to be good approximations.     

Internationally Adopted Children's Reading Comprehension in Second Grade

This is a longitudinal study assessing language and literacy skills in internationally adopted children and controls at four years and in second grade at school. The results show small differences between the groups on language skills except for language comprehension at the age of four and reading comprehension in second grade where the adoptees scored significantly lower than their peers did. Significant predictors of the reading comprehension in the second grade were impressive vocabulary for the non-adoptees and letter recognition for the adoptees at the age of four, and decoding skills and expressive vocabulary for both groups in second grade.     

Do more equal slices shrink the cake? An empirical investigation of tax-transfer reform proposals in Italy

A crucial issue in efficiency-equality evaluations of tax reforms resides in the possibility that the level as well as the distribution of welfare may change, where the household-specific measures of welfare capture the value of income as well as the value of leisure. A better-designed redistribution and income support system may not only foster equality but also improve the configuration of incentives and by this route contribute in its turn to efficiency. This paper presents an empirical analysis of the welfare effects for married couples of replacing the Italian tax system by three alternative hypothetical reforms: a flat tax, a negative income tax, and a work fare scheme. We employ a microeconometric model of household labour supply that represents partners simultaneous choices, allows for constraints in the choice of hours of work, and is sufficiently flexible to capture a large variety of supply responses. These features appear to be crucial in the evaluation of reform effects. The results suggest that there is scope for improving upon the current system under both the efficiency and the equality criterion. The benefits from the reforms, however, come from unexpected directions since the largest labour supply contribution come from poor and middle class households whereas rich households appear to be much less responsive to changes in the tax rates. The simulation results reveal that a crucial role in shaping the results is played by the relatively higher behavioural responsiveness of married women living in low and average income households.All correspondence to Ugo Colombino. We would like to thank Tom Wennemo for skilful programming assistance, Anne Skoglund for technical assistance and word processing, K.A. Breke and E. Holmøy and an anonymous referee for useful comments. Special thanks to Dino Rizzi (University of Venezia), who provided us with a program written by him for the simulation of the direct and inverse 1993 tax-transfer rules (Rizzi 1996). Part of the paper was written when Aaberge and Strøm were visiting ICER and the Department of Economics in Torino. ICER is gratefully acknowledged for providing financial support and excellent working conditions. Ugo Colombino gratefully acknowledges financial and organisational support from Statistics Norway and the Department of Economics in Oslo, and from the Italian Ministry of University and Scientific Research (MURST research grants 1998 and 2000). Responsible editor: Alessandro Cigno.     

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     

Who is watching? The market for prostitution services

This paper presents an economic model of prostitution that differs from the existing literature in that it makes no restrictive assumptions regarding the gender, pay, and nature of forgone earning opportunities of prostitutes and clients, and applies the same behavioural hypotheses to both. Our model gives a central role of stigma and reputation effects to both clients and prostitutes. We discuss demand, supply, and equilibrium results, indicating the possible effects of different policies on the industry and its different markets.     

DISCRIMINATION AND EMPLOYMENT PROTECTION

We study a search model with employment protection legislation. We show that if the output from the match is uncertain at the hiring stage, a discriminatory equilibrium may exist in which workers with the same productive characteristics are subject to different hiring standards. If a bad match takes place, discriminated workers will take longer to find another job, prolonging the costly period for the firm. This makes it less profitable for firms to hire discriminated workers, thus sustaining the discrimination. In contrast to Becker's model, the existence of employers with a taste for discrimination may make it more profitable to discriminate, even for firms without discriminatory preferences.     

The Institutional Trust Paradox in Bangladesh

This paper maps institutional trust in Bangladesh and analyzes to what extent citizens perceive public institutions to be trustworthy. According to a number of expert evaluations, public and political institutions in Bangladesh do not stand out as very trustworthy. Yet, despite such expert evaluations, recent survey data indicate that popular trust is quite high in certain major institutions such as the parliament and the central government. Since it is misplaced, the high level of popular institutional trust presents a paradox. It implies some kind of blind or naive trust, which may be dysfunctional for the emergence of a democratic governance system.     

Academic Achievement Among Adopted and Nonadopted Children in Early School Years

The study examined academic achievement among adopted and nonadopted children in Norway. The adopted group included children adopted from China, South Korea, South Africa, Ethiopia, and Colombia. The study also included a control group of nonadopted classmates with same gender and age. The findings show no significant differences in academic achievement between adopted and nonadopted in either first or third grade, but a greater variety in adopted children’s performance. Adopted children received more special education and more support from parents than nonadopted classmates did. Language skills and hyperactive behavior made a significant contribution in explaining the variance in academic achievement among adopted children.     

On private incentives to acquire household production skills

In non-cooperative family models, being good at contributing to family public goods like household production may reduce one's utility, since it tends to crowd out contributions from one's spouse. Similar effects also arise in cooperative models with non-cooperative threat point: improved contribution productivity entails loss of bargaining power. This strategic effect must be traded against the benefits of household production skills, in terms of increased consumption possibilities. Since cooperation involves extensive specialization, incentives to acquire household production skills are strikingly asymmetric, with the one not specializing in household production having strong disincentives for household skill acquisition. Received: 06 July 1999/Accepted: 08 June 2000     

Heterogeneity and Unemployment Duration

ABSTRACT: Various unemployment duration models are estimated on a large Norwegian dataset covering labour market history 1.1.1989-31.12.1992 for all persons who became unemployed during October 1990. As many unemployed leave the unemployment register without going directly to a job, two alternative definitions of unemployment are used — register unemployment and joblessness. The problem of heterogeneity is addressed both by partitioning the individuals into four categories by previous unemployment history, and by including a random term in the job hazard. Observed as well as unobserved heterogeneity affects the estimates of expected duration to a great extent. When gamma-distributed unobserved heterogeneity is accounted for, the estimates of duration dependence become more positive relative to models where unobserved heterogeneity is ignored. Among persons who are entitled to unemployment benefit, the duration dependence appears to be significantly positive. Alternative specifications of the baseline hazard hardly affect estimates of the effects of the covariates on duration.