Hybrid consumption paths in the attribute space: A model and application with scanner data

This paper presents and estimates a dynamic choice model in the attribute space considering rational consumers. In light of the evidence of several state-dependence patterns, the standard attribute-based model is extended by considering a general utility function where pure inertia and pure variety-seeking behaviors can be explained in the model as particular linear cases. The dynamics of the model are fully characterized by standard dynamic programming techniques. The model presents a stationary consumption pattern that can be inertial, where the consumer only buys one product, or a variety-seeking one, where the consumer shifts among varied products.We run some simulations to analyze the consumption paths out of the steady state. Underthe hybrid utility assumption, the consumer behaves inertially among the unfamiliar brandsfor several periods, eventually switching to a variety-seeking behavior when the stationary levels are approached. An empirical analysis is run using scanner databases for three different product categories: fabric softener, saltine cracker, and catsup. Non-linear specifications provide the best fit of the data, as hybrid functional forms are found in all the product categories for most attributes and segments. These results reveal the statistical superiority of the non-linear structure and confirm the gradual trend to seek variety as the level of familiarity with the purchased items increases.

Unemployment vs. mismatch of talents: Reconsidering unemployment benefits

We develop an equilibrium search-matching model with risk-neutral agentsand two-sided ex-ante heterogeneity. Unemployment insurance has thestandard effect of reducing employment, but also helps workers to get a suitable job. The predictions of our simple modelare consistent with the contrasting performance of the labor market in Europeand US in terms of unemployment, productivity growth and wage inequality.To show this, we construct two fictitious economies with calibratedparameters which only differ by the degree of unemployment insurance andassume that they are hit by a common technological shock which enhancesthe importance of mismatch. This shock reduces the proportion of jobs whichworkers regards as acceptable in the economy with unemployment insurance(Europe). As a result, unemployment doubles in this economy.In the laissez-faire economy (US), unemployment remains constant,but wage inequality increases more and productivity grows less due to largermismatch. The model can be used to address a number of normative issues.

Nonparametric bounds on the returns to language skills

This paper applies the theoretical literature on nonparametric bounds ontreatment effects to the estimation of how limited English proficiency (LEP)affects wages and employment opportunities for Hispanic workers in theUnited States. I analyze the identifying power of several weak assumptionson treatment response and selection, and stress the interactions between LEPand education, occupation and immigration status. I show that thecombination of two weak but credible assumptions provides informative upperbounds on the returns to language skills for certain subgroups of thepopulation. Adding age at arrival as a monotone instrumental variable alsoprovides informative lower bounds.

World population growth and fertility patterns, 1960-2000. A simple model explaining the evolution of world's fertility during the second half of the 20th Century

In this paper we attempt to describe the general reasons behind the world populationexplosion in the 20th century. The size of the population at the end of the century inquestion, deemed excessive by some, was a consequence of a dramatic improvementin life expectancies, attributable, in turn, to scientific innovation, the circulation ofinformation and economic growth. Nevertheless, fertility is a variable that plays acrucial role in differences in demographic growth. We identify infant mortality, femaleeducation levels and racial identity as important exogenous variables affecting fertility.It is estimated that in poor countries one additional year of primary schooling forwomen leads to 0.614 child less per couple on average (worldwide). While it may bepossible to identify a global tendency towards convergence in demographic trends,particular attention should be paid to the case of Africa, not only due to its differentdemographic patterns, but also because much of the continent's population has yet toexperience improvement in quality of life generally enjoyed across the rest of theplanet.

Schumpeterian technology shocks

We analyze the labor market effects of neutral and investment-specific technologyshocks along the intensive margin (hours worked) and the extensive margin(unemployment). We characterize the dynamic response of unemploymentin terms of the job separation and the job finding rate. Labor market adjustmentsoccur along the extensive margin in response to neutral shocks, along theintensive margin in response to investment specific shocks. The job separationrate accounts for a major portion of the impact response of unemployment. Neutralshocks prompt a contemporaneous increase in unemployment because of asharp rise in the separation rate. This is prolonged by a persistent fall in thejob finding rate. Investment specific shocks rise employment and hours worked.Neutral shocks explain a substantial portion of the volatility of unemploymentand output; investment specific shocks mainly explain hours worked volatility.This suggests that neutral progress is consistent with Schumpeterian creative destruction,while investment-specific progress operates as in a neoclassical growthmodel.

Is altruism important for understanding the long-run effects of social security?

This paper quantifies the effects of social security on capital accumulation and wealth distribution in a life cycle framework with altruistic individuals. The main findings of this paper are that the current U.S. social security system has a significant impact on capital accumulation and wealth distribution. I find that social security crowds out 8\% of the capital stock of an economy without social security. This effect is driven by the distortions of labor supply due to the taxation of labor income rather than by the intergenerational redistribution of income imposed by the social security system. In contrast to previous analysis of social security, I found that social security does not affect the savings rate of the economy. Another interesting finding is that even though the current U.S. social security system is progressive in its benefits, it may lead to a more disperse distribution of wealth.

The impact of tax credits on labour supply

One of the principle aims of the Working Families' Tax Credit in the UK was to increase the participation of single mothers. The literature to date concludes there was approximately a five-percentage-point increase in employment of single mothers. The differences-in-differences methodology that is typically used compares single mother with single women without children. However, the characteristics of these groups are very different, and change over time in relative covariates are likely to violate the identifying assumption. We find that when we control for differential trends between women with and without children, the employment effect of the policy falls significantly. Moreover, the effect is borne solely by those working full-time (30 hours or more), while having no effect on inducing people into the labor market from inactivity. Looking closely at important covariates over time, we can see sizeable changes in the relative returns to employment between the treatment and control groups.

Forecasting and turning point predictions in a Bayesian panel VAR model

We provide methods for forecasting variables and predicting turning points in panel Bayesian VARs. We specify a flexible model which accounts for both interdependencies in the cross section and time variations in the parameters. Posterior distributions for the parameters are obtained for a particular type of diffuse, for Minnesota-type and for hierarchical priors. Formulas for multistep, multiunit point and average forecasts are provided. An application to the problem of forecasting the growth rate of output and of predicting turning points in the G-7 illustrates the approach. A comparison with alternative forecasting methods is also provided.

Elicited beliefs and social information in modified dictator games: What do dictators believe other dictators do?

We use subjects actions in modified dictator games to perform a within-subject classification ofindividuals into four different types of interdependent preferences: Selfish, Social Welfaremaximizers, Inequity Averse and Competitive. We elicit beliefs about other subjects actions inthe same modified dictator games to test how much of the existent heterogeneity in others actions is known by subjects. We find that subjects with different interdependent preferences infact have different beliefs about others actions. In particular, Selfish individuals cannotconceive others being non-Selfish while Social Welfare maximizers are closest to the actualdistribution of others actions. We finally provide subjects with information on other subjects actions and re-classify individuals according to their (new) actions in the same modified dictatorgames. We find that social information does not affect Selfish individuals, but that individualswith interdependent preferences are more likely to change their behavior and tend to behavemore selfishly.

The challenge of representative design in psychology and economics

The demands of representative design, as formulated by Egon Brunswik (1956), set a high methodological standard. Both experimental participants and the situations with which they are faced should be representative of the populations to which researchers claim to generalize results. Failure to observe the latter has led to notable experimental failures in psychology from which economics could learn. It also raises questions about the meaning of testing economic theories in abstract environments. Logically, abstract tests can only be generalized to abstract realities and these may or may not have anything to do with the empirical realities experienced by economic actors.

Agglomeration-effects in Europe

The paper estimates agglomeration-effects for France, Germany, Italy, Spain, and the UK. Estimation takes into account endogeneity of the spatial distribution ofemployment and spatial fixed-effects. Empirical resultssuggest that agglomeration-effects in these Europeancountries are only slightly smaller than agglomeration-effects in the US: the estimated elasticity of average-labor-productivity with respect to employment-density is 4.5 percent compared to 5 percent in the US.

Immigration and the survival of the welfare state

This paper analyzes the political sustainability of the welfare state in a model where immigration policy is also endogenous. In the model, the skills of the native population are affected by immigration and skill accumulation. Moreover, immigrants affect future policies, once they gain the right to vote. The main finding is that the long-run survival of redistributive policies is linked to an immigration policy specifying both skill and quantity restrictions. In particular, in steady state the unskilled majority admits a limited inflow of unskilled immigrants in order to offset growth in the fraction of skilled voters and maintain a high degree of income redistribution.Interestingly, equilibrium immigration policy shifts from unrestricted skilled immigration,when the country is skill-scarce, to restricted unskilled immigration, as the fraction of native skilled workers increases. The analysis also suggests a new set of variables that may help explain international differences in immigration restrictions.

Deciding analytically or trusting your intuition? The advantadges and disadvantadges of analytic and intuitive thought

Recent research has highlighted the notion that people can make judgmentsand choices by means of two systems that are labeled here tacit(or intuitive) and deliberate (or analytic). Whereas most decisionstypically involve both systems, this chapter examines the conditions underwhich each system is liable to be more effective. This aims to illuminatethe age-old issue of whether and when people should trust intuition or analysis. To do this, a framework is presented to understand how thetacit and deliberate systems work in tandem. Distinctions are also madebetween the types of information typically used by both systems as wellas the characteristics of environments that facilitate or hinder accuratelearning by the tacit system. Next, several experiments that havecontrasted intuitive and analytic modes on the same tasks are reviewed.Together, the theoretical framework and experimental evidence leads tospecifying the trade-off that characterizes their relative effectiveness.Tacit system responses can be subject to biases. In making deliberate systemresponses, however, people might not be aware of the correct rule to dealwith the task they are facing and/or make errors in executing it. Whethertacit or deliberate responses are more valid in particular circumstancesrequires assessing this trade-off. In this, the probability of making errorsin deliberate thought is postulated to be a function of the analytical complexityof the task as perceived by the person. Thus the trade-off is one of bias (inimplicit responses) versus analytical complexity (when tasks are handled indeliberate mode). Finally, it is noted that whereas much attention has beenpaid in the past to helping people make decisions in deliberate mode, effortsshould also be directed toward improving ability to make decisions intacit mode since the effectiveness of decisions clearly depends on both. Thistherefore represents an important frontier for research.

The intra-generational redistributive effects of social security

This paper provides a quantitative evaluation of the intra--cohortredistributive elements of the United States social security system in thecontext of a computable general equilibrium model. I determine how thewell--being of individuals that differ across {\sl gender, race} and {\sl education}is affected by government social security policy. I find that females, whitesand non--college graduates stand less to gain (lose) from reductions(increases) in the size of social security than males, non--whites andcollege graduates, respectively. Differences in mortality risk and laborproductivity translate into differences in the magnitudes of capitalaccumulation and labor supply distortions, that are responsible for theobserved welfare difference between types. Results imply that the currentprogram is lifetime progressive across gender and education, yet lifetimeregressive across race.

Drug utilization studies and data registries in primary care

This article reviews the methodology of the studies on drug utilization with particular emphasis on primary care. Population based studies of drug inappropriateness can be done with microdata from Health Electronic Records and e-prescriptions. Multilevel models estimate the influence of factors affecting the appropriateness of drug prescription at different hierarchical levels: patient, doctor, health care organization and regulatory environment.Work by the GIUMAP suggest that patient characteristics are the most important factor in the appropriateness of prescriptions with significant effects at the general practicioner level.