Optimal educational choice and redistribution when parental education matters

Higher education plays an important role in determining lifetime earnings. In turn, the decision to become educated depends to a large extent on family characteristics, such as wealth and education. In this paper, we focus on the interaction between fiscal policies and educational choices when parental education matters. We derive optimality conditions for a linear income tax and a lump‐sum subsidy for education in a dynamic framework in which generations are linked by educational background. The factors that determine their sign and magnitude include concerns for redistribution, efficiency, and the educational externality on future generations.

Optimal redistribution when educational background matters

Higher education plays an important role in determining individuals lifetime
earnings. In turn, the decision to become educated depends to a large extent on innate ability and on family characteristics, including both family
wealth and educational background. In this paper, we abstract from family
income differences to concentrate on the effects of fiscal policies on the
decision to undertake higher education when the educational background
matters. In a dynamic framework, where successive generations are linked by educational background, we consider a government that uses both linear income taxation and a lump-sum subsidy to education. Conditions for
optimality of each policy are derived. The factors that determine the sign
and magnitude of the tax rate and the subsidy are identified and include
concerns for redistribution, efficiency and the educational externality on
future generations

Public finance and income redistribution in interwar Australia: towards a class analysis

In this paper I focus on a neglected aspect of Australian political history, the extent to which Australian governments actually redistributed income. The German sociologist Rudolf Goldscheid argued that 'the budget is the skeleton of the state stripped of all misleading ideologies'. In Australia a party that claimed to represent lower income earners, the Labor Party, was a major political force, but did Labor actually make a difference to the distribution of income across social classes, or did Labor's rhetoric of equity merely serve to incorporate workers into the capitalist system? A quantitative approach to the political history of labour may enable us to escape both nostalgia for old labourism (which the Howard years have encouraged) and a simple and undifferentiated rejection of labourism as a reformist agent of social integration.

This paper incorporates some material from a 2005 paper that examined overall expenditure patterns and taxation patterns across the states and Commonwealth from 1910 to 1940 but it goes beyond the aggregate approach of this paper to consider the extent which the varying patterns of taxation and public expenditure across Australia impacted on different social classes during the 1930s. It is very much a preliminary analysis based on existing compilations of taxation statistics. It is a static analysis and does not consider if nominally redistributive taxation and expenditure patterns might be rendered ineffective by consequent interstate migration.

Optimal redistribution with hetrogeneous preferences for leisure

This paper examines the properties of the optimal nonlinear income tax when preferences are quasi–linear in leisure and individuals differ in their ability and their preferences for leisure. The government seeks to redistribute income. It can perfectly observe the level of endogenous income but cannot observe either ability or preferences. The heterogeneity of preferences leads to problems of comparability between individual utilities which challenge the design of redistributive schemes. We analyze the consequences of adopting a utilitarian social welfare function where the government is allowed to give different weights to individuals with different preferences. Under this particular social objective and given the quasi–linearity of preferences, we are able to obtain closed–form solutions for the marginal tax rates and to examine the progressivity of the tax system according to the weights used.

Redistribution of glucose from skeletal muscle to adipose tissue during catch-up fat. A link between catch-up growth and later metabolic syndrome.

Catch-up growth, a risk factor for later obesity, type 2 diabetes, and cardiovascular diseases, is characterized by hyperinsulinemia and an accelerated rate for recovering fat mass, i.e., catch-up fat. To identify potential mechanisms in the link between hyperinsulinemia and catch-up fat during catch-up growth, we studied the in vivo action of insulin on glucose utilization in skeletal muscle and adipose tissue in a previously described rat model of weight recovery exhibiting catch-up fat caused by suppressed thermogenesis per se. To do this, we used euglycemic-hyperinsulinemic clamps associated with the labeled 2-deoxy-glucose technique. After 1 week of isocaloric refeeding, when body fat, circulating free fatty acids, or intramyocellular lipids in refed animals had not yet exceeded those of controls, insulin-stimulated glucose utilization in refed animals was lower in skeletal muscles (by 20–43%) but higher in white adipose tissues (by two- to threefold). Furthermore, fatty acid synthase activity was higher in adipose tissues from refed animals than from fed controls. These results suggest that suppressed thermogenesis for the purpose of sparing glucose for catch-up fat, via the coordinated induction of skeletal muscle insulin resistance and adipose tissue insulin hyperresponsiveness, might be a central event in the link between catch-up growth, hyperinsulinemia and risks for later metabolic syndrome.

Scope for further analytical solutions for constant flux infiltration into a semi-infinite soil profile or redistribution in a finite soil profile.

We attempt to generate new solutions for the moisture content form of the one-dimensional Richards' [1931] equation using the Lisle [1992] equivalence mapping. This mapping is used as no more general set of transformations exists for mapping the one-dimensional Richards' equation into itself. Starting from a given solution, the mapping has the potential to generate an infinite number of new solutions for a series of nonlinear diffusivity and hydraulic conductivity functions. We first seek new analytical solutions satisfying Richards' equation subject to a constant flux surface boundary condition for a semi-infinite dry soil, starting with the Burgers model. The first iteration produces an existing solution, while subsequent iterations are shown to endlessly reproduce this same solution. Next, we briefly consider the problem of redistribution in a finite-length soil. In this case, Lisle's equivalence mapping is generalized to account for arbitrary initial conditions. As was the case for infiltration, however, it is found that new analytical solutions are not generated using the equivalence mapping, although existing solutions are recovered.

Wellbeing of Australians : work, wealth and happiness : part A

The Australian Unity Wellbeing Index monitors the subjective wellbeing of the Australian population. Our first survey was conducted in April 2001 and this report concerns the 17th survey, undertaken in April 2007. Our previous survey had been conducted six months earlier in October 2006. This intervening period was relatively uneventful in terms of events likely to change population wellbeing. A new leader of the opposition Labor Party was appointed (Kevin Rudd) who seemed more likely than
his predecessors to wrest power from long-serving Prime Minister John Howard (Liberal Party) in an election to be held around the end of 2007.
Each survey involves a telephone interview with a new sample of 2,000 Australians, selected to represent the national population geographic distribution. These surveys comprise the Personal Wellbeing Index, which measures people’s satisfaction with their own lives, and the National
Wellbeing Index, which measures how satisfied people are with life in Australia. Other items include a standard set of demographic questions and other survey-specific questions. The specific topics for Survey 17 are time at work, and anticipated happiness at doubling or halving household income.

Wealth holdings and portfolio allocation of the elderly : the role of marital history

This paper investigates the role of marital history in terms of explaining differences in wealth holdings and portfolio allocation of older individuals by studying data from the first wave of Health and Retirement Study which was conducted in 1992. The results generally suggest that both men and women suffer from the negative shocks of past marital dissolutions in terms of household wealth accumulation. The significance level, however, differs across currently married couples, single males, and single females. The examination of the asset components of net worth also indicates that both the probability of owning a particular asset and the fraction of wealth allocated to that asset might vary depending on the elderly individuals’ marital history.

Wealth effect of auditor switch during crisis and non-crisis period : the Malaysian experience

This study examines the auditor switch effect on share prices among listed companies in Malaysia, mainly the Second Board companies during economic crisis and the economic growth period. Data on companies listed on the KLSE that reported switching of auditors were gathered from the respective companies’ annual reports for the period of 1990 until 1999. Daily stock prices and the Second Board Index for an interval of 200 days windows were extracted from the KLSE Daily Dairy. The wealth effect of auditor’s switch was investigated using the market model event study methodology. The general findings of the study imply that it is consistent with the theory, the market reacts positively to news involving switching to higher prestige audit firms before the economic crisis but reacted negatively during the economic crisis. News involving switching to lower prestige auditors received negative reaction both before and during the crisis. This study postulate that the negative reaction to switches during the economic crisis (either to higher prestige or to lower prestige auditors) may be due to cost cutting exercise rather than obtaining qualified audit reports.

The macroeconomics of sovereign wealth funds

The dramatic growth in sovereign wealth funds (SWFs) has implications which are still emerging for national economies and globally. This paper considers why SWFs have become key international financial institutions for some countries, particularly developing ones. This adds to the literature on second best development strategies (Hausmann and Rodrik 2003), here applying it to SWFs. A macroeconomic approach is taken towards the phenomenon of reserves accumulation and motives for SWFs. These are evaluated in terms of the pattern of balance of payments and inferred trade and exchange policies. The role of SWFs in promoting country growth and international stability is considered in view of the global financial crisis (GFC).