Hunting the unobservables for optimal social security a general equilibrium approach

We study the optimal size of a pay-as-you-go social security program for an economy composed of both permanent-income and hand-to-mouth consumers. While previous work on this topic is framed within a two-period partial equilibrium setup, we study this issue in a life-cycle general equilibrium model. Because this type of welfare analysis depends critically on unobservable preference parameters, we methodically consider all parameterizations of the unobservables that are both feasible and reasonable—all parameterizations that can mimic key features of macro data (feasible) while still being consistent with micro evidence and convention (reasonable). The baseline model predicts that the optimal tax rate is between 6 percent and 15 percent of wage income.

Traffic fatalities: does income inequity create an externality?

Responsible for 20 million severe injuries and/or deaths annually, few epidemics receive less attention than traffic accidents. Going beyond confirming an inverted U-shaped relationship between mean income and fatalities, we show theoretically that income inequality can positively affect fatalities in two ways. Each operates through heterogeneity between road users, and while the direct effect can be expected to evaporate with rising income, the indirect effect may prove to be an externality in that the relationship remains regardless of the level of income. Our model is supported by evidence from 79 countries between 1970 and 2000.

Evidence of panel stationarity from Chinese provincial and regional income

The aim of this paper is to examine whether Chinese provincial and regional real GDP and per capita real GDP are panel stationary for the period 1952–2003. We allow for multiple structural breaks based on a technique developed by Carrion-i-Silvestre et al. [Carrion-i-Silvestre, J. L., Barrio-Castro, T, D., & Lopez-Bazo, E. (2005). Breaking the panels: An application to the GDP per capita. Econometrics Journal, 8, 159–175]. Allowing for at most five structural breaks, we find that for 67% of the provinces, per capita real GDP is stationary; while we only find stationarity of real GDP for 17% of the provinces. However, when we extend the analysis to panel data models, we find statistically strong evidence of panel stationarity of Chinese provincial and regional income.

Discrepancy between expected and actual child support payments : predicting the health and health-related quality of life of children living in low-income, single-parent families

Objective Although the amount and frequency of child support payments received by single parents are often erratic and fluctuate, no study to date has quantitatively explored how the discrepancy between expected and actual payments relates to child health. This study aims to examine whether the discrepancy between expected and actual child support payments predicts a range of child health outcomes, including global health, health-related quality of life, involvement in activities and parental psychological distress.

Methods This study used results from the Longitudinal Study of Australian Children, which included a sample of parents of children aged 4–5 years (n = 4983). The questionnaire was completed by the parent who spent the most time with the child and knew the child best. From the 4983 families, 332 low-income single parents reliant on welfare with a formal or informal child support order in place were identified.

Results After controlling for income, the discrepancy between expected and actual child support predicted school functioning, conduct problems, total mental health problems and involvement in activities. Discrepancy between expected and actual child support payments did not predict the remaining health-related quality of life domains, mental health domains, global child health or parental psychosocial distress.

Conclusion This was the first study to examine how the discrepancy between expected and actual child support payments relates to child health, providing important data on the effectiveness of the child support system for children's well-being. These findings highlight the potential impact of the discrepancy on school functioning, conduct problems, total mental health problems and involvement in activities.

Do permanent shocks explain income levels? a common cycle-common trend analysis of regional income levels for China

In this paper, we analyse per capita income levels of China's three main regions: the western region, the eastern region and the central region using common cycle and common trend tests. Our main contribution is that we impose the common cycle and common trend restrictions in decomposing shocks into permanent and transitory components. We find that: (i) there is evidence for two cointegrating relationships and one common cycle; and (ii) the variance decomposition analysis of shocks provides evidence that over short horizons, permanent shocks play a large role in explaining variations in regional per capita incomes.

Enforcing tax compliance : to punish or persuade

A long standing debate has existed between those who believe deterrence-based enforcement strategies work for gaining compliance from offenders and those who believe gentle persuasion and cooperation is more effective. This article is concerned with the issue of how to best deal with offenders so as to increase support for the law and lower the rate of subsequent re-offending. Using survey data from 652 taxpayers who have been through an enforcement experience with the Australian Taxation Office, the present study will show that depending on how an enforcement experience is perceived by offenders (as either stigmatic or reintegrative in nature) can influence the feelings of resentment they experience, but more importantly these feelings of resentment mediate the effect of punishment on subsequent compliance behaviour. In other words, it is these feelings of resentment in response to disapproval that go on to predict who will and will not comply with their subsequent obligations under the law.

Temporal causality and the dynamics of judicial appellate caseload, real income and socio-economic complexity in Australia

This study applies Granger causality tests within a multivariate error correction framework to examine the relationship between judicial caseload, real income and urbanization for Australia using annual data from 1904 to 2001. Decomposition of variance and impulse response functions are also considered. The Granger causality results as well as the decomposition of variance and impulse response functions suggest that urbanization is the most exogenous of the three variables in both the long run and short run while judicial caseload and real income are relatively exogenous in the short run.

Higher education, real income and real investment in China : evidence from Granger causality tests

This paper employs cointegration and error-correction modelling to test the causal relationship between real income, real investment and tertiary education using data for the People's Republic of China over the period 1952-1999. To proxy tertiary education we use higher education enrolments and higher education graduates in alternative empirical specifications. One of the paper's main findings is that real income, real investment and tertiary education are cointegrated when real investment is the dependent variable, but are not cointegrated when either tertiary education or real income is the dependent variable. We also extend the in-sample analysis to examine the decomposition of variance and impulse response functions.

What determines migration flows from low-income to high-income countries? An empirical investigation of Fiji-U.S. migration 1972-2001

This article examines the long-run and short-run determinants of migration from Fiji to the United States between 1972 and 2001 using a human capital framework, which is extended to take account of political instability in Fiji. In the long-run the authors find that differences in income levels, disparities in police strength, disparities in the number of doctors, costs of moving, and political instability in Fiji are all statistically significant with the expected sign. In the short run the cost of moving, lagged migration, political instability, and differences in both police strength and medical care are the main determinants of Fiji-United States immigration.

Does modifying the household food budget predict changes in the healthfulness of purchasing choices among low- and high-income women?

Food cost has a strong influence on food purchases and given that persons of low income often have more limited budgets, healthier foods may be overlooked in favour of more energy-dense lower-cost options. The aim of this study was to investigate whether modifications to the available household food budget led to changes in the healthfulness of food purchasing choices among women of low and high income. A quasi-experimental design was used which included a sample of 74 women (37 low-income women and 37 high-income women) who were selected on the basis of their household income and sent an itemised shopping list in order to calculate their typical weekly household shopping expenditure. The women were also asked to indicate those foods they would add to their list if they were given an additional 25% of their budget to spend on food and those foods they would remove if they were restricted by 25% of their budget. When asked what foods they would add with a larger household food budget, low-income women chose more foods from the ‘healthier’ categories whereas high-income women chose more foods from the less ‘healthier’ categories. However, making the budgets of low- and high-income women more ‘equivalent’ did not eradicate income differences in overall healthfulness of food purchasing choices. This study highlights the importance of cost when making food purchasing choices among low- and high-income groups. Public health strategies aimed at reducing income inequalities in diet might focus on promoting healthy diets that are low cost.