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1992 - VOLUME 5, NUMBER 4
SYMPOSIUM ON SAVING AND AGE STRUCTURE
93.89.01 - English - Daphne T. GREENWOOD, Department of Economics, University of Colorado, Colorado Springs, CO 80933 (U.S.A.), and Edward N. WOLFF, Department of Economics, New York University, 269 Mercer Street, New York, NY 10003 (U.S.A.)
Changes in Wealth in the United States, 1962-1983. Savings, Capital Gains, Inheritance, and Lifetime Transfers (p. 261-288)
A simulation model is developed to account for observed changes in mean household wealth both overall and by age cohort over the 1962-1983 period in the United States. There are three major findings. First, capital gains are the major factor explaining overall wealth changes and account for 77% of the simulated growth in wealth over the entire period. Second, for cohorts under age 40, inheritance and inter vivos transfers dominate observed changes in wealth. Indeed, the oldest age groups appear to have transferred sizable amounts of their wealth to younger generations inter vivos, raising the wealth of these younger groups substantially above what it would be based on saving. Third, while differences in portfolio composition favored the younger cohorts over this period, such differences do not explain a large portion of the great variation in real wealth changes by cohort over the two decade period. (UNITED STATES, WEALTH, HOUSEHOLD INCOME, AGE GROUPS)
93.89.02 - English - Axel BÖRSCH-SUPAN, Department of Economics, University of Mannheim, P.O. Box 103262, W-6800 Mannheim 1 (Germany)
Saving and Consumption Patterns of the Elderly. The German Case (p. 289-303)
The paper provides an empirical analysis of saving and consumption choices of the elderly in Germany, based on the German income and expenditure surveys 1978 and 1983. Main feature of these data is the large sample size making it possible to analyze saving and consumption patterns of the very old (aged 75 and above). The observed age-consumption profiles are very different from those predicted by the pure life-cycle theory. Although wealth is declining between age 60 and 70, it increases again after 70, such that the very old have the highest savings rates among all age groups and accumulate wealth rather than decumulate it. These profiles are not confounded by cohort effects and mortality differences. The corresponding expenditure data suggest the following explanation: due to the generous German pension system and the almost complete coverage of health expenses by the mandatory health insurance in Germany, the declining consumption in very old age cannot exhaust the annuity income of the elderly such that wealth is being accumulated in old age. (GERMANY, AGED, SAVINGS, EXPENDITURES, WEALTH)
93.89.03 - English - Sergio PERELMAN and Pierre PESTIEAU, Department of Economics, Université de Liège, Bd du Rectorat 7, Liège (Belgium)
Inheritance and Wealth Composition (p. 305-317)
This paper studies the effects of variables pertaining to alternative bequest motives on the composition of households' portofolio. It relies on a 1986 survey on the assets structure of 5,600 French households. The main conclusion is that bequest motives indeed influence the composition of households' wealth. However, available data does not allow one to sort out the influence of specific models of inheritance. (FRANCE, HOUSEHOLD INCOME, WEALTH, INHERITANCE)
93.89.04 - English - Alessandro CIGNO, Faculty of Political Science, University of Pisa, I-56126 Pisa (Italy), and Furio C. ROSATI, Faculty of Economics, University of Rome-Tor Vergata, I-00100 Rome (Italy)
The Effects of Financial Markets and Social Security on Saving and Fertility Behaviour in Italy (p. 319-341)
The paper aims to ascertain the extent to which saving and fertility decisions are affected by the availability and attractiveness of market-based or state-provided alternatives to the family as a source of old-age support. The saving and fertility implications of two alternative models of family choice - based one on the assumption of pure self-interest, the other on that of intergenerational altruism - are first derived theoretically. Saving and fertility equations are then estimated from Italian time-series data, using as explanatory variables the market rate of interest, the social security deficit, various measures of capital market accessibility and social security coverage, and a number of income and wage variables. Particularly worthy of note is the result that a fully-funded increase in social security coverage raises saving, while an increase in the social security deficit has the opposite effect. The empirical findings appear to support the assumption that fertility is endogenous and jointly determined with saving, and to favour the hypothesis that individual decisions are motivated by self-interest rather than intergenerational altruism. Some of the policy implications are briefly discussed in the concluding section. (ITALY, SAVINGS, FERTILITY, SOCIAL SECURITY)
1993 - VOLUME 6, NUMBER 1
93.89.05 - English - McKinley L. BLACKBURN, Department of Economics, University of South Carolina (U.S.A.), David E. BLOOM, Department of Economics, Columbia University (U.S.A.), and David NEUMARK, Department of Economics, University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104-6297 (U.S.A.)
Fertility Timing, Wages, and Human Capital (p. 1-30)
Women who have first births relatively late in life earn higher wages. This papers offers an explanation of this fact based on a simple life-cycle model of human capital investment and timing of first birth. The model yields conditions (that are plausibly satisfied) under which late childbearers will tend to invest more heavily in human capital than early childbearers. The empirical analysis finds results consistent with the higher wages of late childbearers arising primarily through greater measurable human capital investment. (ECONOMIC DEMOGRAPHY, FIRST BIRTH, MATERNAL AGE, WAGE LEVEL)
93.89.06 - English - Christopher J. FLINN, Department of Economics, New York University, New York, NY 10003 (U.S.A.)
Cohort Size and Schooling Choice (p. 31-55)
We develop a perfect-foresight overlapping generations model to investigate the effects of cohort size on schooling decisions and cohort-specific welfare measures. A set of sufficient conditions are presented which ensure the existence of an unique sequence of human capital rental rates and schooling choices for any sequence of cohort sizes. We calibrate the partial equilibrium model using data on schooling investments and aggregate wages over the period 1920 through 1980, and use the parameters to assess the magnitude of lifetime cohort wealth and schooling elasticities computed with respect to the entire cohort size sequence. We find that the equilibrium response of schooling to perturbations in the cohort size sequence is small, so that the adverse effects of increases in the size of own and neighboring cohorts on cohort wealth are not significantly migrated by adjustments in schooling investments within our modelling framework. (ECONOMIC DEMOGRAPHY, GENERATIONS, EDUCATION, ECONOMIC MODELS)
93.89.07 - English - Leif DANZIGER, Department of Economics, York University, Toronto, Ontario M3J 1P3 (Canada), and Shoshana NEUMAN, Department of Economics, Bar-Ilan University, Ramat Gan 52900 (Israel)
Equality and Fertility in the Kibbutz (p. 57-66)
The kibbutz' quest for equality makes a member's consumption independent of his contribution to production, and the kibbutz itself responsible for almost all childrearing expenses. This fundamental departure from the standard organization of economic life of course affects fertility. We find that a parent's predicted wage (as determined by the parent's individual characteristics) has a smaller positive effect on fertility in the city than in the kibbutz, and that a parent's education has a negative effect on fertility in the city and either a smaller negative effect or no effect in the kibbutz. (ISRAEL, SOCIAL ORGANIZATION, DIFFERENTIAL FERTILITY, FERTILITY DETERMINANTS)
93.89.08 - English - Charles VAN MARREWIJK, Department of Economics, and Jos VERBEEK, Tinbergen Institute, Erasmus University, P.O. Box 1738, 3000 DR Rotterdam (Netherlands)
On Opulence Driven Poverty Traps (p. 67-81)
Endogenous population growth, i.e., making the rate of population growth dependent on society's opulence, causes parametric changes to have a larger impact and can cause multiplicity of steady states in a dynamic intertemporal optimization framework. This provides a simple explanation for the possibility of differing growth paths between countries (using a standard production function) or another explanation of the "poverty trap". We give two examples ("opulence sensitivity" and "production sensitivity") that both give rise to three steady states in which poor (rich) countries will evolve over time to the low (high) income steady state. In both examples there are middle income countries that will choose the low (high) income steady state if they are impatient (patient), where patience is measured through the rate of time preference Q. Foreign aid in the form of a large transfer of capital from abroad enables poor and impatient middle income countries to move to the high income steady state. (ECONOMIC DEMOGRAPHY, POPULATION GROWTH, WEALTH, POVERTY)
93.89.09 - English - Bernard DELHAUSSE, Axel LUTTGENS and Sergio PERELMAN, Department of Economics, Université de Liège, Bd du Rectorat 7, Liège (Belgium)
Comparing Measures of Poverty and Relative Deprivation. An Example for Belgium (p. 83-102)
This paper presents three different poverty standards. A first approach takes the disposable income as an indicator of poverty. A second approach uses the Leyden approach. Finally an aggregate index of deprivation, based on the observation of consumption events, is constructed through a particular econometric procedure proposed by Desai and Shah (1988). These alternative measures are then compared on a sample composed of 6,380 Belgian households. Such an analysis can be expected to provide some further insight into the problem of measuring poverty, which has been the subject of a recent controversial debate. (ECONOMIC THEORY, POVERTY, MEASUREMENT, COMPARATIVE ANALYSIS)
1993 - VOLUME 6, NUMBER 2
93.89.10 - English - N. Anders KLEVMARKEN, Department of Economics, Gothenburg School of Economics, Gothenburg University, Viktoriagatan 30, S-41125 Göteborg (Sweden)
Demographics and the Dynamics of Earnings (p. 105-122)
This paper discusses how demographic changes, in particular changes in cohort size, female labor force participation and migration, influence the dynamics of wage rate profiles. A review of the literature suggests that there are demographic effects on wage rate profiles, although they are usually rather small. Future research should concentrate on second-order adjustments and long-term effects of demographic changes. (ECONOMIC DEMOGRAPHY, POPULATION DYNAMICS, WAGES)
93.89.11 - English - Harrie VERBON, Department of Economics, Tilburg University, P.O. Box 90153, 5000 LE Tilburg (Netherlands)
Public Pensions. The Role of Public Choice and Expectations (p. 123-135)
In this paper the public-choice approach to explaining the evolution of public pension schemes is surveyed. Emphasis is laid on the relation between expectations on future political decisions and future demographic and economic developments, on the one hand, and current political and economic decisions, on the other hand. (ECONOMIC DEMOGRAPHY, RETIREMENT PENSIONS, GOVERNMENT POLICY)
93.89.12 - English - Julian L. SIMON, College of Business and Management, University of maryland, College Park, MD 20742 (U.S.A.)
Economic Thought about Population Consequences: Some Reflections (p. 137-152)
This essay discusses predecessors of long ago, and the 1950s and 1960s, who studied the effects of population change. The history is not systematic, but rather is idiosyncratic. It focuses on the valuable elements from which we may learn, not on failings. It concentrates on work which has had little influence upon subsequent thought. I find need for more investigation of economic sub-systems and of the mechanisms that operate over very long periods - centuries and more. (ECONOMIC THEORY, HISTORY, POPULATION DYNAMICS, ECONOMIC IMPLICATIONS)
93.89.13 - English - C. DUSTMANN, Department of Economics, University of Bielefeld, P.O. Box 100131, W-4800 Bielefeld (Germany)
Earnings Adjustment of Temporary Migrants (p. 153-168)
The strong incentives of migrants to invest into human capital and the positive selective character of migration are the main explanations for the rapid decrease of the earnings gap between migrants and natives, and, in some cases, the cross-over of migrants' earnigs profiles with those of native workers, as found in a variety of empirical studies on migration to the USA, Canada and Australia. The present paper shows that in the case of temporary migration the optimal investment into country specific human capital should be lower than in the case of permanent migration. Investments may not be sufficient to allow migrants' earnings to catch up with those of native workers. Furthermore, it is shown that migration is positively selective only under certain labor market conditions. Empirical findings support the hypothesis that the migrant's length of stay in the host country has an effect on his investment into human capital and, consequently, on his earnings position. The results strongly suggest the need for carefully differentiating between temporary and permanent migration when investigating migrants' earnings assimilation. (MIGRANT ASSIMILATION, TEMPORARY MIGRATION, INCOME)
93.89.14 - English - Da-Hsiang Donald LIEN, Department of Economics, University of Kansas, Lawrence, KS 66045 (U.S.A.)
Asymmetric Information and the Brain Drain (p. 169-180)
Within an asymmetric information framework, we investigate the effects of subsidies for return when the size of the foreign student population is endogenous. Given the stability condition and the assumption that the education system is effective in the home country, we show that subsidies for return always act to improve the average ability of returning Ph.D.s but the impact upon the number of emigrants is ambiguous. As a consequence, subsidies for return may be ineffective for a general, reasonable government objective function. Also, we show that the number of emigrants with asymmetric information structure may be smaller than the case of symmetric information due to uncertainties present in our model. (BRAIN DRAIN, INFORMATION, RETURN MIGRATION, SUBSIDIES)
93.89.15 - English - James A. DUNLEVY, Department of Economics and Program in International Studies, Miami University, Oxford, OH 45056 (U.S.A.)
Migrant Stock vs. Lagged Migrant Flow as a Determinant of Migrant Settlement (p. 181-188)
In a recent contribution to this Journal Anjomani and Hariri present an interesting study of United States interstate migration which explicitly incorporates so-called "flow diversion" and "flow creation" effects. Their discussion and evaluation of the model, however, are marred by several factors. This paper contrasts the roles of migrant stock and lagged migration in migration analysis and then addresses (a) the problems encountered when the "family-friends" effect is proxied with measures of lagged migrant flows, (b) the problem of using a two-period lagged value of earlier migrant flow as an explanatory variable, and (c) this paper suggests an alternative method of correcting the Anjomani-Hariri model's problems with multicollinearity. (MIGRATION DETERMINANTS, METHODS OF ANALYSIS, MODELS)
93.89.16 - English - Tilak ABEYSINGHE, Department of Economics and Statistics, National University of Singapore, 10 Kent Ridge Cressent, Singapore 0511 (Singapore)
Time Cost, Relative Income and Fertility in Canada (p. 189-198)
A regression model which combines both the time cost and relative income hypotheses is estimated using Canadian data. The results indicate that the influence of relative income is greater on completed fertility and the effect of time cost is greater on timing of births. Some policy implications are derived. (CANADA, FERTILITY DETERMINANTS, REGRESSION ANALYSIS)
1993 - VOLUME 6, NUMBER 3
93.89.17 - English - Ranjan RAY, Department of Economics, Delhi School of Economics, Delhi University, Delhi 110 007 (India)
Optimal Demogrants and Taxes in a Federal Welfare State (p. 199-214)
This paper provides a framework for the simultaneous calculation of optimal commodity and income taxes in a federal framework with demogrants. The optimal income tax rate is shown to depend on a range of demographic and economic variables. Alternative models of fiscal federalism are proposed, and their implications for optimal commodity taxes and demogrants considered. Illustrative empirical evidence on Indian data confirms sensitivity of tax magnitudes to federal specification, and to assumptions about resource transfer between the federal and provincial authorities. (TAXATION, SUBSIDIES, INCOMES POLICY, ECONOMIC MODELS)
93.89.18 - English - Greg J. DUNCAN, Survey Research Center, Room 3260 ISR, University of Michigan, P.O. Box 1248, Ann Arbor, MI 48106-1248 (U.S.A.) et al.
Poverty Dynamics in Eight Countries (p. 215-234)
Despite very different macro-economic conditions, demographic structures and degrees of income inequality, favorable income changes among low-income families with children were widespread and strikingly similar across the eight countries in our study. In most European countries, the combination of modest inequality and extensive mobility among the poor enabled virtually all families to avoid relative income deprivation at least occasionally. However, even substantial mobility among the poor in the Unites States could not elevate the living standards of one in seven white and two in five black families to a level that was half that enjoyed by a typical American family. (UNITED STATES, STANDARD OF LIVING, POVERTY, HOUSEHOLD INCOME)
93.89.19 - English - Karel VAN DEN BOSCH, Centre for Social Policy, University of Antwerp, Prinsstraat 13, B-2000 Antwerp (Belgium) et al.
A Comparison of Poverty in Seven European Countries and Regions Using Subjective and Relative Measures (p. 235-259)
This paper presents comparative results on poverty in seven countries and regions of the European Community: Belgium, The Netherlands, Luxembourg, Lorraine, Ireland, Catalonia and Greece. The data are obtained from comparable socio-economic surveys in each country. Subjective as well as relative poverty lines are used. The results indicate that the subjective poverty lines are plausible in a comparative context, although the levels of the subjective standards are rather generous. The estimated equivalence scales are much flatter than the one recommended by the OECD. The extent of poverty is much greater in the "peripheral" EC-countries than in the "central" ones. Though similar factors are found to be associated with poverty in all countries, there are also important differences in the characteristics of the poor across countries. The impact of social security transfers on poverty appears to be much smaller in the southern countries Greece and Catalonia, than in the Benelux and Lorraine. (EUROPE, POVERTY, COMPARATIVE ANALYSIS)
93.89.20 - English - Susan E. MAYER, Harris School of Public Policy Studies, University of Chicago, 1155 East 60th, Chicago, IL 60637 (U.S.A.)
Living Conditions Among the Poor in Four Rich Countries (p. 261-286)
The share of income going to the poorest 10% of Americans is much smaller than the share of income going to the poorest 10% of Canadians, Swedes, or Germans (before unification). However, comparisons across countries of the distribution of housing conditions, consumer durables, health, and visits to the doctor and dentist suggest that compared to the average person in their country, low-income Americans are no worse off than low-income residents of other countries. But these conclusions partly depend on how income is adjusted for family size. Americans whose incomes are low for a long time may suffer more material deprivation than Canadians whose incomes are low for a long time. Conclusions about economic well-being based on current income may not rank nations the same as comparisons based on deprivation in living conditions. (UNITED STATES, CANADA, SWEDEN, GERMANY, POVERTY, INCOME, LIVING CONDITIONS)
1993 - VOLUME 6, NUMBER 4
"New World Perspectives on Population and Development"
(Articles Assembled for the Symposium on the 5th Centary of the Discovery of America)
93.89.21 - English - George PSACHAROPOULOS and Zafiris TZANNATOS, The World Bank, 1818 H Street NW, Washington, DC 20433 (U.S.A.)
Economic and Demographic Effects on Working Women in Latin America (p. 293-315)
The paper uses historical census data and the latest household surveys to investigate the evolution of female employment in Latin America, the effect of demographic factors on female labor force participation, and the reasons for the observed male-female gap in labor earnings. The findings show that, though women's labor force participation in Latin America has indeed increased despite the adverse economic conditions of the last two decades, marriage and fertility still exercise a large negative effect on women's labor supply. On average in the 15 countries studied, marriage reduces the probability that a woman would work by half, and each child by a further 3-5%. These effects result in age-participation profiles that decrease with age although the econometric analysis suggests that, as women get older, they have a ceteris paribus greater probability to seek employment. In all the countries studied women are rewarded less than men and gender differences in human capital characteristics cannot account for the observed earnings differential. The paper discusses the significance of the findings for potential policies to assist women, especially in the areas of education and fertility, and also suggests the direction of further reserarch. (LATIN AMERICA, FEMALE EMPLOYMENT, SEX DIFFERENTIALS, WAGES)
93.89.22 - English - Deborah S. DEGRAFF, Department of Economics, Bowdoin College, Brunswick, ME 04011 (U.S.A.), and Richard E. BILSBORROW, Carolina Population Center, University of North Carolina, 123 W. Franklin Street, Chapel Hill, NC 27516 (U.S.A.)
Female-Headed Households and Family Welfare in Rural Ecuador (p. 317-336)
This paper examines the relationships between female headship status of households and family welfare in rural Ecuador. We first review theoretical arguments for why female headship may affect family welfare. Descriptive analysis indicates that female-headed households are worse off according to a variety of measures of welfare. We then focus on children's school enrollment as a specific measure of welfare and estimate a multivariate model to assess the effects of female headship on the probability of enrollment. We find that children in female-headed households are disadvantaged in this respect and that the effect of female headship varies across marital status categories of the female head. (ECUADOR, RURAL ENVIRONMENT, FAMILY WELFARE, HEAD OF HOUSEHOLD)
93.89.23 - English - Robert E. WRIGHT, Department of Political Economics, Adam Smith Building, University of Glasgow, Glasgow G12 8RT (Scotland), and Paul S. MAXIM, Population Studies Centre, University of Western Ontario, London, Ontario N6A 5C2 (Canada)
Immigration Policy and Immigrant Quality. Empirical Evidence from Canada (p. 337-352)
This paper examines the earnings of foreign-born and native-born men in an attempt to evaluate whether the decline in the quality of Canadian immigrants is related to changes in the country-of-origin mix and the class (type, mix of immigrants. Based on a human capital interpretation, "higher quality" immigrants are defined as immigrants who have smaller on-entry earnings differentials and have earnings that grow at a faster rate (relative to native-born Canadians), based on 1971 and 1986 Canadian Censuses. Overall, the analysis confirms that there has been a sharp secular decline in the quality of Canadian immigrants and suggests that it is related to changes in both the country-of-origin and class mix of immigrants. (CANADA, IMMIGRATION POLICY, EVALUATION, INCOME, PLACE OF ORIGIN)
93.89.24 - English - Ph. MICHEL, Université Paris I, Centre de Mathématiques Economiques, 12 place du Panthéon, 75005 Paris (France), and P. PESTIEAU, Department of Economics, Université de Liège, Bd du Rectorat 7, Liège (Belgium)
Population Growth and Optimality. When Does Serendipity Hold?) (p. 353-362)
This note gives the conditions under which there is an interior optimum rate of population growth in a two-generations-overlapping model. These conditions imply complementarity both in production and in consumption. They also validate Samuelson's serendipity theorem. (ECONOMIC DEMOGRAPHY, THEORETICAL MODELS, OPTIMUM RATE OF GROWTH)
93.89.25 - English - Yossef SPIEGEL, 2M-356, Bellcore, 445 South Street, P.O. Box 1910, Morristown, NJ 07762-1910 (U.S.A.)
Rawlsian Optimal Population Size (p. 363-373)
In this paper, the author examines the implications of the Rawlsian maximin criterion for optimal population size and intergenerational allocation of resource when fertility is endogenous. The article shows that whenever children are better-off than their parents in laissez-faire, then the size of the population and parental bequests are also optimal according to the Rawlsian criterion. Otherwise, laissez-faire leads to overpopulation and suboptimal bequests. The author then shows that by using proper price-based corrective policies, society can achieve a Rawlsian optimal allocation. These policies involve either a combination of a subsidy to aggregate future consumption and a per-capita tax on children, or a subsidy to average future consumption. (ECONOMIC DEMOGRAPHY, THEORETICAL MODELS, OPTIMUM POPULATION, LIBERALISM)
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