Social security in theory and practice (I): Facts and political theories

166 countries have some kind of public old age pension. What economic forcescreate and sustain old age Social Security as a public program? We document some of the internationally and historically common features of Social Security programs including explicit and implicit taxes on labor supply, pay-as-you-go features, intergenerational redistribution, benefits which areincreasing functions of lifetime earnings and not means-tested. We partition theories of Social Security into three groups: "political", "efficiency" and "narrative" theories. We explore three political theories in this paper: the majority rational voting model (with its two versions: "the elderly as the leaders of a winning coalition with the poor" and the "once and for all election" model), the "time-intensive model of political competition" and the "taxpayer protection model". Each of the explanations is compared with the international and historical facts. A companion paper explores the "efficiency" and "narrative" theories, and derives implicationsof all the theories for replacing the typical pay-as-you-go system with a forced savings plan.

Markups, gaps and the welfare costs of business fluctuations

In this paper we present a simple theory-based measure of the variations in aggregate economic efficiency: the gap between the marginal product of labor and the household s consumption/leisure tradeoff. We show that this indicator corresponds to the inverse of the markup of price over social marginal cost, and give some evidence in support of this interpretation. We then show that, with some auxilliary assumptions our gap variable may be used to measure the efficiency costs of business fluctuations. We find that the latter costs are modest on average. However, to the extent the flexible price equilibrium is distorted,the gross efficiency losses from recessions and gains from booms may be large. Indeed, we find that the major recessions involved large efficiency losses. These results hold for reasonable parameterizations of the Frisch elasticity of labor supply, the coefficient of relative risk aversion, and steady state distortions.

Employee referrals and the inter-industry wage structure

This paper investigates the role of employee referrals in the labor market.Using an original data set, I find that industries that pay wage premia andhave characteristics associated with high-wage sectors rely mainly on employeereferrals to fill jobs. Moreover, unemployment rates are higher in industries which use employee referrals more extensively. This paper develops an equilibrium matching model which can explain these empirical regularities. Inthis model, the matching process sorts heterogeneous firms and workers into two distinct groups: referrals match "good" jobs to "good" workers, while formalmethods (e.g., newspaper ads and employment agencies) match less-attractive jobs to disadvantaged workers. Thus, well-connected workers who learn quickly aboutjob opportunities use referrals to jump job queues, while those who are less well placed in the labor market search for jobs through formal methods. The split of firms and workers between referrals and formal search is, however, not necessarily efficient. Congestion externalities in referral search imply that unemployment would be closer to the optimal rate if firms and workers 'at themargin' searched formally.

Protective or counter-productive? Labor market institutions and the effect of immigration on EU natives

We estimate the effect of immigrant flows on native employment in WesternEurope, and then ask whether the employment consequences of immigrationvary with institutions that affect labor market flexibility. Reducedflexibility may protect natives from immigrant competition in the nearterm, but our theoretical framework suggests that reduced flexibility islikely to increase the negative impact of immigration on equilibriumemployment. In models without interactions, OLS estimates for a panel ofEuropean countries in the 1980s and 1990s show small, mostly negativeimmigration effects. To reduce bias from the possible endogeneity ofimmigration flows, we use the fact that many immigrants arriving after1991 were refugees from the Balkan wars. An IV strategy based onvariation in the number of immigrants from former Yugoslavia generateslarger though mostly insignificant negative estimates. We then estimatemodels allowing interactions between the employment response toimmigration and institutional characteristics including business entrycosts. These results, limited to the sample of native men, generallysuggest that reduced flexibility increases the negative impact ofimmigration. Many of the estimated interaction terms are significant,and imply a significant negative effect on employment in countrieswith restrictive institutions.

Bargaining efficiency and screening: An experimental investigation

This paper investigates whether information about fairness types canbe useful in lowering dispute costs and enhancing bargaining efficiency.An experiment was conducted in which subjects were first screened usinga dictator game, with the allocations chosen used to separate participantsinto two types. Mutually anonymous pairs of subjects then bargained, witha dispute cost structure imposed. Sorting with identification reducesdispute costs; there are also significant differences in bargainingefficiency across pairing types. Information about types is crucial forthese differences and also strongly affects the relative bargainingsuccess of the two types and the hypothetical optimal bargaining strategy.

Pension plan funding and stock market efficiency

The paper argues that the market signifficantly overvalues firms with severely underfunded pension plans. These companies earn lower stock returns than firms with healthier pension plans for at least five years after the first emergence of the underfunding. The low returns are not explained by risk, price momentum, earnings momentum, or accruals. Further, the evidence suggests that investors do not anticipate the impact of the pension liability on future earnings, and they are surprised when the negative implications of underfunding ultimately materialize. Finally, underfunded firms have poor operating performance, and they earn low returns, although they are value companies.

The quasi-judicial role of large retailers: An efficiency hypothesis of their relation with suppliers

The paper explores an efficiency hypothesis regarding the contractual process between large retailers, such as Wal-Mart and Carrefour, and their suppliers. The empirical evidence presented supports the idea that large retailers play a quasi-judicial role, acting as "courts of first instance" in their relationships with suppliers. In this role, large retailers adjust the terms of trade to on-going changes and sanction performance failures, sometimes delaying payments. A potential abuse of their position is limited by the need for re-contracting and preserving their reputations. Suppliers renew their confidence in their retailers on a yearly basis, through writing new contracts. This renovation contradicts the alternative hypothesis that suppliers are expropriated by large retailers as a consequence of specific investments.

Clinical evaluation of iron treatment efficiency among non-anemic but iron-deficient female blood donors: a randomized controlled trial.

ABSTRACT: Iron deficiency without anemia (IDWA) is related to adverse symptoms that can be relieved by supplementation. Since a blood donation can induce such an iron deficiency, we investigated the clinical impact of an iron treatment after blood donation. METHODS: One week after donation, we randomly assigned 154 female donors with IDWA aged <50 years to a 4-week oral treatment of ferrous sulfate vs. placebo. The main outcome was the change in the level of fatigue before and after the intervention. Also evaluated were aerobic capacity, mood disorder, quality of life, compliance and adverse events. Biological markers were hemoglobin and ferritin. RESULTS: Treatment effect from baseline to 4 weeks for hemoglobin and ferritin were 5.2 g/L (p < 0.01) and 14.8 ng/mL (p < 0.01) respectively. No significant clinical effect was observed for fatigue (-0.15 points, 95% confidence interval -0.9 to 0.6, p = 0.697) or for other outcomes. Compliance and interruption for side effects was similar in both groups. Additionally, blood donation did not induce overt symptoms of fatigue in spite of the significant biological changes it produces. CONCLUSIONS: These data are valuable as they enable us to conclude that donors with IDWA after a blood donation would not clinically benefit from iron supplementation. Trial registration: NCT00689793.

The efficiency of a novel delivery system (PEI600-Tat) in development of potent DNA vaccine using HPV16 E7 as a model antigen.

DNA vaccination is a promising approach for inducing both humoral and cellular immune responses. The mode of plasmid DNA delivery is critical to make progress in DNA vaccination. Using human papillomavirus type 16 E7 as a model antigen, this study evaluated the effect of peptide-polymer hybrid including PEI600-Tat conjugate as a novel gene delivery system on the potency of antigen-specific immunity in mice model. At ratio of 10:50 PEI-Tat/E7DNA (w/w), both humoral and cellular immune responses were significantly enhanced as compared with E7DNA construct and induced Th1 response. Therefore, this new delivery system could have promising applications in gene therapy.

Efficiency of the induced mating technique for Toxorhynchites theobaldi (Diptera, Culicidae)

Toxorhynchites mosquitoes play important ecological roles in aquatic microenvironments, and are frequently investigated as potential biological control agents of mosquito disease vectors. Establishment of Toxorhynchites laboratory colonies can be challenging because for some species, mating and insemination either do not occur or require a prohibitive amount of laboratory space for success. Consequently, artificial insemination techniques have been developed to assist with mass rearing of these species. Herein we describe an adapted protocol for colony establishment of T. theobaldi, a species with broad distribution in the Neotropics. The success of the technique and its implications are discussed.

Declining labor force attachment and downward trends in unemployment and participation

The US labor market witnessed two apparently unrelated secular movements in thelast 30 years: a decline in unemployment between the early 1980s and the early 2000s,and a decline in participation since the early 2000s. Using CPS micro data and a stock-flow accounting framework, we show that a substantial, and hitherto unnoticed, factorbehind both trends is a decline in the share of nonparticipants who are at the margin ofparticipation. A lower share of marginal nonparticipants implies a lower unemploymentrate, because marginal nonparticipants enter the labor force mostly through unemployment,while other nonparticipants enter the labor force mostly through employment.

Labor market heterogeneity and the aggregate matching function

The matching function -a key building block in models of labor market frictions- impliesthat the job finding rate depends only on labor market tightness. We estimate such amatching function and find that the relation, although remarkably stable over 1967-2007,broke down spectacularly after 2007. We argue that labor market heterogeneities are notfully captured by the standard matching function, but that a generalized matching functionthat explicitly takes into account worker heterogeneity and market segmentation is fullyconsistent with the behavior of the job finding rate. The standard matching function canbreak down when, as in the Great Recession, the average characteristics of the unemployedchange too much, or when dispersion in labor market conditions -the extent to which somelabor markets fare worse than others- increases too much.

Effects of the transition time between muscle-tendon stretch and shortening on mechanical efficiency.

The net mechanical efficiency of positive work (eta(pos)) has been shown to increase if it is immediately preceded by negative work. This phenomenon is explained by the storage of elastic energy during the negative phase and its release during the subsequent positive phase. If a transition time (T) takes place, the elastic energy is dissipated into heat. The aim of the present study was to investigate the relationship between eta(pos) and T, and to determine the minimal T required so that eta(pos) reached its minimal value. Seven healthy male subjects were tested during four series of lowering-raising of the body mass. In the first series (S (0)), the negative and positive phases were executed without any transition time. In the three other series, T was varied by a timer (0.12, 0.24 and 0.56 s for series S (1), S (2) and S (3), respectively). These exercises were performed on a force platform sensitive to vertical forces to measure the mechanical work and a gas analyser was used to determine the energy expenditure. The results indicated that eta(pos) was the highest (31.1%) for the series without any transition time (S (0)). The efficiencies observed with transition times (S (1), S (2) and S (3)) were 27.7, 26.0 and 23.8%, respectively, demonstrating that T plays an important role for mechanical efficiency. The investigation of the relationship between eta(pos) and T revealed that the minimal T required so that eta(pos) reached its minimal value is 0.59 s.

Efficiency and safety of bilateral contemporaneous pallidal stimulation (deep brain stimulation) in levodopa-responsive patients with Parkinson's disease with severe motor fluctuations: a 2-year follow-up review.

OBJECT: The aim of this study was to evaluate the long-term safety and efficacy of bilateral contemporaneous deep brain stimulation (DBS) in patients who have levodopa-responsive parkinsonism with untreatable motor fluctuations. Bilateral pallidotomy carries a high risk of corticobulbar and cognitive dysfunction. Deep brain stimulation offers new alternatives with major advantages such as reversibility of effects, minimal permanent lesions, and adaptability to individual needs, changes in medication, side effects, and evolution of the disease. METHODS: Patients in whom levodopa-responsive parkinsonism with untreatable severe motor fluctuations has been clinically diagnosed underwent bilateral pallidal magnetic resonance image-guided electrode implantation while receiving a local anesthetic. Pre- and postoperative evaluations at 3-month intervals included Unified Parkinson's Disease Rating Scale (UPDRS) scoring, Hoehn and Yahr staging, 24-hour self-assessments, and neuropsychological examinations. Six patients with a mean age of 55 years (mean 42-67 years), a mean duration of disease of 15.5 years (range 12-21 years), a mean "on/off' Hoehn and Yahr stage score of 3/4.2 (range 3-5), and a mean "off' time of 40% (range 20-50%) underwent bilateral contemporaneous pallidal DBS, with a minimum follow-up period lasting 24 months (range 24-30 months). The mean dose of levodopa in these patients could not be changed significantly after the procedure and pergolide was added after 12 months in five patients because of recurring fluctuations despite adjustments in stimulation parameters. All but two patients had no fluctuations until 9 months. Two of the patients reported barely perceptible fluctuations at 12 months and two at 15 months; however, two patients remain without fluctuations at 2 years. The mean improvements in the UPDRS motor score in the off time and the activities of daily living (ADL) score were more than 50%; the mean off time decreased from 40 to 10%, and the mean dyskinesia and complication of treatment scores were reduced to one-third until pergolide was introduced at 12 months. No significant improvement in "on" scores was observed. A slight worsening after 1 year was observed and three patients developed levodopa- and stimulation-resistant gait ignition failure and minimal fluctuations at 1 year. Side effects, which were controlled by modulation of stimulation, included dysarthria, dystonia, and confusion. CONCLUSIONS: Bilateral pallidal DBS is safe and efficient in patients who have levodopa-responsive parkinsonism with severe fluctuations. Major improvements in motor score, ADL score, and off time persisted beyond 2 years after the operation, but signs of decreased efficacy started to be seen after 12 months.

Iowa Efficiency Review Report to Governor Chet Culver and Lieutenant Governor Patty Judge, December 18,2009

Public Works is pleased to present the following Iowa Efficiency Review Report to Governor Chet Culver and Lieutenant Governor Patty Judge. This report is the product of a collaboration between our consulting team and very dedicated Iowa state employees who worked with us to share ideas and cost‐saving proposals under very difficult circumstances caused by the national financial crisis that is affecting state budgets throughout the country. For example, during the course of this review, Iowa departments were also asked to develop across‐the‐board cuts to achieve immediate reductions in state spending. It is a credit to Iowa state government that departmental staff continued to work on this Efficiency Review Report despite these challenges of also having to develop across‐the‐board budget cuts to achieve a balanced budget. We hope that these ideas will set the stage for further future budget improvements from achieving efficiencies, eliminating outdated practices, increasing the use of information technology solutions and finding new sources of non‐tax funding. The Efficiency Review Team faced a second challenge. Statewide Efficiency Reviews usually take from nine to 12 months to complete. In Iowa, we worked with dedicated department staff to complete our work in less than 4 months. The Governor challenged all of us to work intensely and to give him our best thinking on efficiency proposals so that he could act as quickly as possible to position state government for success over the next several years.