Efficiency in Managing the Environment and the Opportunity Cost of Pollution Abatement

Using the directional distance function we study a cross section of 110 countries to examine the efficiency of management of the tradeoffs between pollution and income. The DEA model is reformulated to permit 'reverse disposability' of the bad output. Further, we interpret the optimal solution of the multiplier form of the DEA model as an iso-inefficiency line. This permits us to measure the shadow cost of the bad output for a country that is in the interior, rather than on the frontier of the production possibilities set. We also compare the relative environmental performance of countries in terms of emission intensity adjusted for technical efficiency. Only 10% of the countries are found to be on the frontier. Also, there is considerable inter-country variation in the imputed opportunity cost of CO2 reduction. Further, differences in technical efficiency contribute substantially to differences in the observed levels of CO2 intensity.

Deregulation and Structural Change in the U.S. Commercial Banking Industry

Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminated with the Interstate Banking and Branching Efficiency Act of 1994. Banking analysts anticipated dramatic consolidation with large numbers of mergers and acquisitions. Some expressed concern about the long-term health of the smaller community banks. This paper describes and discusses the actual evolution of the U.S. banking industry over the past two decades, using the 1976 to 1998 Report of Condition and Income (Call Report) and merger data recently posted on the web site of the Federal Reserve Bank of Chicago. Among several results, more permissive interstate banking and branching regulation significantly associates with higher merger rates, with lower net entry rates, and with higher concentration within states. Interestingly, more permissive intrastate banking and branching regulation only associates with higher concentration.

Income Inequality in the 1990s: Re-Forging a Lost Relationship?

Using data from March Current Population Surveys we find gains from economic growth over the 1990s business cycle (1989-2000) were more equitably distributed than over the 1980s business cycle (1979-1989) using summary inequality measures as well as kernel density estimations. The entire distribution of household size-adjusted income moved upwards in the 1990s with profound improvements for African Americans, single mothers and those living in households receiving welfare. Most gains occurred over the growth period 1993-2000. Improvements in average income and income inequity over the latter period are reminiscent of gains seen in the first three decades after World War II.

The Aggregate Demand for Private Health Insurance Coverage in the U.S.

This paper estimates the aggregate demand for private health insurance coverage in the U.S. using an error-correction model and by recognizing that people are without private health insurance for voluntary, structural, frictional, and cyclical reasons and because of public alternatives. Insurance coverage is measured both by the percentage of the population enrolled in private health insurance plans and the completeness of the insurance coverage. Annual data for the period 1966-1999 are used and both short and long run price and income elasticities of demand are estimated. The empirical findings indicate that both private insurance enrollment and completeness are relatively inelastic with respect to changes in price and income in the short and long run. Moreover, private health insurance enrollment is found to be inversely related to the poverty rate, particularly in the short-run. Finally, our results suggest that an increase in the number cyclically uninsured generates less of a welfare loss than an increase in the structurally uninsured.

Tax Motivated Takings

Tax motivated takings are takings by a local government aimed purely at increasing its tax base. Such an action was justified by the Supreme Court's ruling in Kelo v. New London, which allowed the use of eminent domain for a private redevelopment project on the grounds that the project promised spillover public benefits in the form of jobs and taxes. This paper argues that tax motivated takings can lead to inefficient transfers of land for the simple reason that assessed values understate owners' true values. We therefore propose a reassessment scheme that greatly reduces the risk of this sort of inefficiency.