Putting health in all policies: The National Institute for Welfare Enhancement

Welfare is a rather vague term whose meaning depends on ideology, values andjudgments. Material resources are just means to enhance people s well-being, butgrowth of the Gross Domestic Production is still the standard measure of thesuccess of a society. Fortunately, recent advances in measuring social performanceinclude health, education and other social outcomes. Because what we measureaffects what we do it is hoped that social policies will change. The movementHealth in all policies and its associated Health Impact Assessment methodologywill contribute to it. The task consists of designing transversal policies thatconsider health and other welfare goals, the short term and long-term implicationsand intergenerational redistributions of resources. As long as marginalproductivity on health outside the healthcare system is higher than inside it,efficiency needs cross-sectoral policies. And fairness needs them even more,because in order to reduce social inequalities in health, a wide social and politicalresponse is needed.Unless we reduce the well-documented inefficiencies in our current health caresystems the welfare states will fail to consolidate and the overall economic wellbeingcould be in serious trouble. In this article we sketched some policy solutionssuch as pricing according to net benefits of innovation and public encouragementof radical innovation besides the small type incremental and market-ledinnovation. We proposed an independent agency, the National Institute forWelfare Enhancement to guarantee long term fair and efficient social policies inwhich health plays a central role.

Consumer Advisory Bulletin, Warning: "Work-at-Home" Schemes, October 2004

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Warning: "Work-at-Home" Schemes

The macroeconomic effects of German unification: Real adjustments and the welfare state

We study the effects of German unification in a model with capital accumulation, skill differences and a welfare state. We argue that this event is similar to a mass migration of low-skilled agents holding no capital into a foreign country. Absent a welfare state, we observe an investment boom, depressed output and employment conditions. Capital owners and high-skilled agents are willing to give up to 4% of per-capita consumption to favor unification. When a welfare state exists the investment boom disappears and the recession is prolonged. Now, with unification, capital owners and high-skilled agents lose 4% of per-capita consumption.

Disability, capacity for work and the business cycle: An international perspective

An important policy issue in recent years concerns the number of people claimingdisability benefits for reasons of incapacity for work. We distinguish between workdisability , which may have its roots in economic and social circumstances, and healthdisability which arises from clear diagnosed medical conditions. Although there is a linkbetween work and health disability, economic conditions, and in particular the businesscycle and variations in the risk of unemployment over time and across localities, mayplay an important part in explaining both the stock of disability benefit claimants andinflows to and outflow from that stock. We employ a variety of cross?country andcountry?specific household panel data sets, as well as administrative data, to testwhether disability benefit claims rise when unemployment is higher, and also toinvestigate the impact of unemployment rates on flows on and off the benefit rolls. Wefind strong evidence that local variations in unemployment have an importantexplanatory role for disability benefit receipt, with higher total enrolments, loweroutflows from rolls and, often, higher inflows into disability rolls in regions and periodsof above?average unemployment. Although general subjective measures of selfreporteddisability and longstanding illness are also positively associated withunemployment rates, inclusion of self?reported health measures does not eliminate thestatistical relationship between unemployment rates and disability benefit receipt;indeed including general measures of health often strengthens that underlyingrelationship. Intriguingly, we also find some evidence from the United Kingdom and theUnited States that the prevalence of self?reported objective specific indicators ofdisability are often pro?cyclical that is, the incidence of specific forms of disability arepro?cyclical whereas claims for disability benefits given specific health conditions arecounter?cyclical. Overall, the analysis suggests that, for a range of countries and datasets, levels of claims for disability benefits are not simply related to changes in theincidence of health disability in the population and are strongly influenced by prevailingeconomic conditions. We discuss the policy implications of these various findings.

Take-the-best and other simple strategies: Why and when they work 'well' in binary choice

The effectiveness of decision rules depends on characteristics of bothrules and environments. A theoretical analysis of environments specifiesthe relative predictive accuracies of the lexicographic rule 'take-the-best'(TTB) and other simple strategies for binary choice. We identify threefactors: how the environment weights variables; characteristics of choicesets; and error. For cases involving from three to five binary cues, TTBis effective across many environments. However, hybrids of equal weights(EW) and TTB models are more effective as environments become morecompensatory. In the presence of error, TTB and similar models do not predictmuch better than a naïve model that exploits dominance. We emphasizepsychological implications and the need for more complete theories of theenvironment that include the role of error.

Protestants and Catholics: Similar work ethic, different social ethic

This article develops two hypotheses about economically-relevant values of Christianbelievers, according to which Protestants should work more and more effectively, as in the work ethic argument of Max Weber, or display a stronger social ethic that would lead themto monitor each other s conduct, support political and legal institutions and hold morehomogeneous values. Tests using current survey data confirm substantial partial correlations andpossible different effects in mutual social control, institutional performance and homogeneityof values but no difference in work ethics. Protestantism therefore seems conducive to capitalisteconomic development, not by the direct psychological route of the Weberian work ethic butrather by promoting an alternative social ethic that facilitates impersonal trade.

How binding are legal limits? Transitions from temporary to permanent work in Spain

This paper studies the duration pattern of xed-term contracts and the determinantsof their conversion into permanent ones in Spain, where the share of xed-termemployment is the highest in Europe. We estimate a duration model for temporaryemployment, with competing risks of terminating into permanent employment versusalternative states, and exible duration dependence. We nd that conversion rates aregenerally below 10%. Our estimated conversion rates roughly increase with tenure,with a pronounced spike at the legal limit, when there is no legal way to retain theworker on a temporary contract. We argue that estimated di¤erences in conversionrates across categories of workers can stem from di¤erences in worker outside optionsand thus the power to credibly threat to quit temporary jobs.

The survival of the welfare state

This paper provides an analytical characterization of Markov perfectequilibria in a politico-economic model with repeated voting, whereagents vote over distortionary income redistribution. The key featureof the theory is that the future constituency of redistributive policiesdepends positively on the current level of redistribution, since thisaffects both private investments and the future distribution of voters.Agents vote rationally and fullly anticipate the effects of their politicalchoice on both private incentives and future voting outcomes. The modelfeatures multiple equilibria. In "pro-welfare" equilibria, both welfarestate policies and their effects on distribution persist forever. In"anti-welfare equilibria", even a majority of beneficiaries ofredistributive policies vote strategically so as to induce the formationof a future majority that will vote for zero redistribution.

Crossing the Rio Grande: Migrations, business cycles and the welfare state

In this paper we study the macroeconomic effects of an inflow oflow-skilled workers into an economy where there is capital accumulation and two types of agents. We find that there are substantial dynamic effects following unexpected migrations with adjustments that resemble those triggered by a sudden disruption of the capital stock. We look at the interrelations between these dynamic effects and three different fiscal systems for the redistribution of income and find that these schemes can change the dynamics and lead to prolonged periods of adjustments. Theaggregate welfare implications are sensitive to the welfare system: while there are welfare gains without redistribution, these gains may be turned into costs when the state engages in redistribution.

Long-run selection and the work ethic

That individuals contribute in social dilemma interactions even when contributing is costly is a well-established observation in the experimental literature. Since a contributor is always strictly worse off than a non-contributor the question is raised if an intrinsic motivation to contribute can survive in an evolutionary setting. Using recent results on deterministic approximation of stochastic evolutionary dynamics we give conditions for equilibria with a positive number of contributors to be selected in the long run.

Stabilization versus insurance: Welfare effects of procyclical taxation under incomplete markets

We construct and calibrate a general equilibrium business cycle model with unemployment and precautionary saving. We compute the cost of business cycles and locate the optimum in a set of simple cyclical fiscal policies. Our economy exhibits productivity shocks, giving firms an incentive to hire more when productivity is high. However, business cycles make workers' income riskier, both by increasing the unconditional probability of unusuallylong unemployment spells, and by making wages more variable, and therefore they decrease social welfare by around one-fourth or one-third of 1% of consumption. Optimal fiscal policy offsets the cycle, holding unemployment benefits constant but varying the tax rate procyclically to smooth hiring. By running a deficit of 4% to 5% of output in recessions, the government eliminates half the variation in the unemployment rate, most of the variation in workers'aggregate consumption, and most of the welfare cost of business cycles.

A measure of rationality and welfare

There is evidence showing that individual behavior often deviates fromthe classical principle of maximization. This evidence raises at least two importantquestions: (i) how severe the deviations are and (ii) which method is the best forextracting relevant information from choice behavior for the purposes of welfare analysis.In this paper we address these two questions by identifying from a foundationalanalysis a new measure of the rationality of individuals that enables the analysis ofindividual welfare in potentially inconsistent subjects, all based on standard revealedpreference data. We call such measure minimal index.

Immigration and the survival of the welfare state

This paper analyzes the political sustainability of the welfare state in a model where immigration policy is also endogenous. In the model, the skills of the native population are affected by immigration and skill accumulation. Moreover, immigrants affect future policies, once they gain the right to vote. The main finding is that the long-run survival of redistributive policies is linked to an immigration policy specifying both skill and quantity restrictions. In particular, in steady state the unskilled majority admits a limited inflow of unskilled immigrants in order to offset growth in the fraction of skilled voters and maintain a high degree of income redistribution.Interestingly, equilibrium immigration policy shifts from unrestricted skilled immigration,when the country is skill-scarce, to restricted unskilled immigration, as the fraction of native skilled workers increases. The analysis also suggests a new set of variables that may help explain international differences in immigration restrictions.

Children's work in Spanish textiles during the 19th and 20th Centuries

This essay deals with the reasons explaining children s work in 19th century textile factories and their removal during the first part of the 20th century. The inadequacy of the structure of incomes and expenditures of the household and the very low economic incentives to educate children can explain why children were in the factories and not in the school. Moreover, the marginal economic contribution to the economy of the household of a child was the same as that of his mother. This normally implied that women and children were perfect substitutes. When the family had a child at working age this allowed to replace the paid work input of the mother. With the beginnings of the 20th century a set of changes leading to the increase of women s productivity and hourly real wages, switched the situation and involved the new incorporation of women into paid work and the investment in children s human capital.