Female labour supply in Spain: The importance of behavioural assumptions and unobserved heterogeneity specification

We estimate four models of female labour supply using a Spanish sampleof married women from 1994, taking into account the complete form of theindividual s budget set. The models differ in the hypotheses relating tothe presence of optimisation errors and/or the way non-workers contributeto the likelihood function. According to the results, the effects of wagesand non-labour income on the labour supply of Spanish married women dependon the specification used. The model which has both preference andoptimisation errors and allows for both voluntarily and involuntarilyunemployed females desiring to participate seems to better fit the evidencefor Spanish married women.

Are changes in education important for the wage premium and unemployment?

A generalized rise in unemployment rates for both college and high-schoolgraduates, a widening education wage premium, and a sharp increase incollege education participation are characteristic features of thetransformations of the U.S. labor market between 1970 and 1990. This paperinvestigates the interactions between these changes in the labor marketand in educational attainment. First, it develops an equilibrium searchand matching model of the labor market where education is endogenouslydetermined. Second, calibrated versions of the model are used to studyquantitatively whether either a skill-biased change in technology or amismatch shock can explain the above facts. The skill-biased shock accountsfor a considerable part of the changes but fails to produce the increasein unemployment for the educated labor force. The mismatch shock explainsinstead much of the change in the four variables, including the wage premium.

La imposición de los carburantes de automoción en España: algunas observaciones teóricas y empíricas

This article deals with the taxation of private car fuels in Spain,analyzing its theoretical foundations and carrying out a comparativestudy of tax design and tax levels. Moreover, we estimate a demandsystem of car fuels with data from Encuesta Continua de PresupuestosFamiliares, which allows for microsimulation of various tax reforms. Inparticular, we evaluate and assess the effects of the new Spanish taxon car fuel sales and of the application in Spain of the EU directiveon harmonization of energy taxes.

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.

An evaluation of the life-cycle effects of minimum pensions on retirement behavior

In this paper we explore the effects of the minimum pension program on welfare andretirement in Spain. This is done with a stylized life-cycle model which provides a convenient analytical characterization of optimal behavior. We use data from the Spanish Social Security to estimate the behavioral parameters of the model and then simulate the changes induced by the minimum pension in aggregate retirement patterns. The impact is substantial: there is threefold increase in retirement at 60 (the age of first entitlement) with respect to the economy without minimum pensions, and total early retirement (before or at 60) is almost 50% larger.

A consistency test of the time trade-off

This paper tests the internal consistency of time trade-off utilities.We find significant violations of consistency in the direction predictedby loss aversion. The violations disappear for higher gauge durations.We show that loss aversion can also explain that for short gaugedurations time trade-off utilities exceed standard gamble utilities. Ourresults suggest that time trade-off measurements that use relativelyshort gauge durations, like the widely used EuroQol algorithm(Dolan 1997), are affected by loss aversion and lead to utilities thatare too high.

Competition amongst contests

This article analyses the allocation of prizes in contests. While existing models consider a single contest with an exogenously given set of players, in our model several contests compete for participants. As a consequence, prizes not only induce incentive effects but also participation effects. We show that contests that aim to maximize players aggregate effort will award their entire prize budget to the winner. In contrast, multiple prizes will be awarded in contests that aim to maximize participation and the share of the prize budget awarded to the winner increases in the contests randomness. We also provide empirical evidence for this relationship using data from professional road running. In addition, we show that prize structures might be used to screen between players of differing ability.

Measurement and explanation of socioeconomic inequality in health with longitudinal data

This paper presents a method for the measurement of changes in health inequality and income-related health inequality over time in a population.For pure health inequality (as measured by the Gini coefficient) andincome-related health inequality (as measured by the concentration index),we show how measures derived from longitudinal data can be related tocross section Gini and concentration indices that have been typicallyreported in the literature to date, along with measures of health mobilityinspired by the literature on income mobility. We also show how thesemeasures of mobility can be usefully decomposed into the contributions ofdifferent covariates. We apply these methods to investigate the degree ofincome-related mobility in the GHQ measure of psychological well-being inthe first nine waves of the British Household Panel Survey (BHPS). Thisreveals that dynamics increase the absolute value of the concentrationindex of GHQ on income by 10%.

The provision of relative performance feedback information: An experimental analysis of performance and happiness

This paper studies the effect of providing relative performance feedback information onindividual performance and on individual affective response, when agents are rewardedaccording to their absolute performance. In a laboratory set-up, agents perform a realeffort task and when receiving feedback, they are asked to rate their happiness, arousaland feeling of dominance. Control subjects learn only their absolute performance, whilethe treated subjects additionally learn the average performance in the session.Performance is 17 percent higher when relative performance feedback is provided.Furthermore, although feedback increases the performance independent of the content(i.e., performing above or below the average), the content is determinant for theaffective response. When subjects are treated, the inequality in the happiness and thefeeling of dominance between those subjects performing above and below the averageincreases by 8 and 6 percentage points, respectively.

The economic tragedy of the XXth Century: Growth in Africa

The dismal growth performance of Africa is the worst economic tragedy ofthe XXth century. We document the evolution of per capita GDP for thecontinent as a whole and for subset of countries south of the Saharadesert. We document the worsening of various income inequality indexesand we estimate poverty rates and headcounts. We then analyze some ofthe central robust determinants of economic growth reported bySala-i-Martin, Doppelhofer and Miller (2003) and project the annual growthrates Africa would have enjoyed if these key determinants had taken OECDrather than African values. Expensive investment goods, low levels ofeducation, poor health, adverse geography, closed economies, too muchpublic expenditure and too many military conflicts are seen as keyexplanations of the economic tragedy.

A test of the predictive validity of non-linear QALY models using time trade-off utilities

This paper presents a test of the predictive validity of various classes ofQALY models (i.e., linear, power and exponential models). We first estimatedTTO utilities for 43 EQ-5D chronic health states and next these states wereembedded in health profiles. The chronic TTO utilities were then used topredict the responses to TTO questions with health profiles. We find that thepower QALY model clearly outperforms linear and exponential QALY models.Optimal power coefficient is 0.65. Our results suggest that TTO-based QALYcalculations may be biased. This bias can be avoided using a power QALY model.

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.

Las deducciones en el IRPF por gasto sanitario privado: situación actual y posibilidades de reforma

The paper provides information about the tax treatment given to personalhealth expenditures in the Personal Income Tax in Spain, and analyseswhat we know about it and how the tax credit or other forms ofpreferential tax treatment can contribute to the financement of privatehealth expenditures, of special relevance in view of the recent PersonalIncome Tax modification proposals . It also points out some of the mainredistributive results coming out from this type of public financement,differentiating between types of expenditures (mainly those on healthservices which are not provided by the public health system, from thosewhich are).

Immigration, family responsibilities and the labor supply of skilled native women

This paper investigates the effects of Spain s large recent immigration wave on thelabor supply of highly skilled native women. We hypothesize that female immigration led to an increase in the supply of affordable household services, such as housekeeping and child or elderly care. As a result, i) native females with high earnings potential were able to increase their labor supply, and ii) the effects were larger on skilled women whose labor supply was heavily constrained by family responsibilities. Our evidence indicates that over the last decade immigration led to an important expansion in the size of the household services sector and to an increase in the labor supply of women in high-earning occupations (of about 2 hours per week). We also find that immigration allowed skilled native women to return to work sooner after childbirth, to stay in the workforce longer when having elderly dependents in the household, and to postpone retirement. Methodologically, we show that the availability of even limited Registry data makes it feasible to conduct the analysis using quarterly household survey data, as opposed to having to rely on the decennial Census.

Retirement incentives, individual heterogeneity and labour transitions of employed and unemployed workers

In this paper we analyze the sensitivity of the labour market decisions of workers close toretirement with respect to the incentives created by public regulations. We improve upon the extensiveprior literature on the effect of pension incentives on retirement in two ways. First, bymodeling the transitions between employment, unemployment and retirement in a simultaneousmanner, paying special attention to the transition from unemployment to retirement (which is particularlyimportant in Spain). Second, by considering the influence of unobserved heterogeneity inthe estimation of the effect of our (carefully constructed) incentive variables.Using administrative data, we find that, when properly defined, economic incentives have astrong impact on labour market decisions in Spain. Unemployment regulations are shown to be particularlyinfluential for retirement behaviour, along with the more traditional determinants linked tothe pension system. Pension variables also have a major bearing on both workers reemploymentdecisions and on the strategic actions of employers. The quantitative impact of the incentives, however,is greatly affected by the existence of unobserved heterogeneity among workers. Its omissionleads to sizable biases in the assessment of the sensitivity to economic incentives, a finding thathas clear consequences for the credibility of any model-based policy analysis. We confirm theimportance of this potential problem in one especially interesting instance: the reform of earlyretirement provisions undertaken in Spain in 2002. We use a difference-in-difference approach tomeasure the behavioural reaction to this change, finding a large overestimation when unobservedheterogeneity is not taken into account.