Credit Constraints in Education

We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints are increasingly important for schooling and other aspects of households' behavior. We highlight the importance of early childhood investments, since their response largely determines the impact of credit constraints on the overall lifetime acquisition of human capital. We also review the intergenerational literature and examine the macroeconomic impacts of credit constraints on social mobility and the income distribution. A common limitation across all areas of the human capital literature is the imposition of ad hoc constraints on credit. We propose a more careful treatment of the structure of government student loan programs as well as the incentive problems underlying private credit. We show that endogenizing constraints on credit for human capital helps explain observed borrowing, schooling, and default patterns and offers new insights about the design of government policy.Human Capital, Incentive Problems, Government Loans, Early Investments, Social Mobility

Indicators of Labour Market Conditions in Canada

There are three main objectives for this report. The first is to ascertain to what degree the unemployment rate is an adequate predictor of labour market conditions in the context of the changing economy. Labour market conditions refer to the state of the labour market and encompass different dimensions. The second is to assess the suitability of other labour market indicators as predictors of labour market conditions. The third is to discuss the feasibility of aggregating relevant labour market indicators into a composite indicator of labour market conditions that might be considered for use in the design of government programs. This report concludes that the unemployment rate is actually a good indicator of labour market conditions, although it is wise to supplement it with additional indicators. The construction of composite indices does not seem to provide much more information on labour market conditions than the unemployment rate does.Labour market indicators, unemployment rate, composite indicators.

Choosing to Have Less Choice

This paper investigates choice between opportunity sets. I argue that individuals may prefer to have fewer options for two reasons: First, smaller choice sets may provide information and reduce the need for the agent to contemplate the alternatives. Second, contemplation costs may be increasing in the size of the choice set, making smaller sets more desirable even when they do not provide any information to the agent. I identify which of these reasons drives individual behavior in a laboratory experiment. I find strong support for both the information and cognitive overload arguments. The effects do not disappear as participants gain experience with the task. Applications of these results include firms’ choices of product variety, as costs increase with the number of products offered, and the design of government policies, such as the Medicare Drug Discount Card Program, in which older citizens can choose among numerous cards for discounts in prescription drugs.Choice, Opportunity Sets

Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras

Droughts, hurricanes and other environmental shocks punctuate the lives of poor and vulnerable populations in many parts of the world. The direct impacts can be horrific, but what are the longer-term effects of such shocks on households and their livelihoods? Under what circumstances, and for what types of households, will shocks push households into poverty traps from which recovery is not possible? In an effort to answer these questions, this paper analyzes the asset dynamics of Ethiopian and Honduran households in the wake of severe environmental shocks. While the patterns are different across countries, both reveal worlds in which the poorest households struggle most with shocks, adopting coping strategies which are costly in terms of both short term and long term well-being. There is some evidence that shocks threaten long term poverty traps and that they tend to militate against any tendency of the poor to catch up with wealthier households. Policy implications are discussed in terms of access to markets and the design of government safety net programs.Ethiopia; Honduras; Shocks; Drought; Hurricanes; Assets; Poverty traps; Asset smoothing; Social capital

The Effect of Participation in Government Consortia on the R&D Productivity of Firms: A Case Study of Robot Technology in Japan

This paper examines the effect of participation in government-sponsored R&D consortia on the R&D productivity of firms in the case of robot technology in Japan. We attempt to provide a new empirical analysis and discussions on the issue of government project evaluation by using indicators of the quality of patents, by investigating the impact of the evolution of government programs, and comparing government-sponsored R&D consortia with collaborative R&D among firms. Using indicators of the quality of patents which enables us to provide an estimation of quality-adjusted research productivity, we find that participation in government programs has a positive impact on the research productivity of participating firms, but the impact of participation became much higher after the design of government programs in this field changed in the late 1990s. Also, we find that participation in government-sponsored consortia has a greater impact on research productivity than participation in collaborative R&D among firms. This may support government involvement in R&D as a coordinator of R&D collaboration.industrial policy, robot thchnology, Japanese innovation system, collaborative R&D

Models of Firm Behavior Under Minimum Wage Legislation

This paper sets out three simple models of firm behavior under minimum wage legislation. The key feature of these models is that they account for important aspects of the government's mechanism for monitoring and enforcing compliance with the minimum wage law. The major results of the paper are (1) that minimum wage legislation does not generally lead to upward movements along labor demand curves but rather, that it often leads to movements off, and to the left, of the labor demand curve; (2) that minimum wage legislation is likely to have a positive effect on the distribution of wages paid to workers who would earn less than the minimum in the absence of the legislation, but is not likely to bring all of those workers up to the minimum; and (3) that imposing additional penalties on second offenders promotes compliance by firms with no previous violations. The paper considers the implications of these results for empirical work on the adverse employment effects of minimum wage legislation andfor the design of government compliance mechanisms.

Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras

Droughts, hurricanes and other environmental shocks punctuate the lives of poor and vulnerable populations in many parts of the world. The direct impacts can be horrific, but what are the longer-term effects of such shocks on households and their livelihoods? Under what circumstances, and for what types of households, will shocks push households into poverty traps from which recovery is not possible? In an effort to answer these questions, this paper analyzes the asset dynamics of Ethiopian and Honduran households in the wake of severe environmental shocks. While the patterns are different across countries, both reveal worlds in which the poorest households struggle most with shocks, adopting coping strategies which are costly in terms of both short term and long term well-being. There is some evidence that shocks threaten long term poverty traps and that they tend to militate against any tendency of the poor to catch up with wealthier households. Policy implications are discussed in terms of access to markets and the design of government safety net programs.

Shocks, sensitivity and resilience: tracking the economic impacts of environmental disaster on assets in Ethiopia and Honduras

"Droughts, hurricanes and other environmental shocks punctuate the lives of poor and vulnerable populations in many parts of the world. The direct impacts can be horrific, but what are the longer-term effects of such shocks on households and their livelihoods? Under what circumstances, and for what types of households, will shocks push households into poverty traps from which recovery is not possible? In an effort to answer these questions, this paper analyses the asset dynamics of Ethiopian and Honduran households in the wake of severe environmental shocks. While the patterns are different across countries, both reveal worlds in which the poorest households struggle most with shocks, adopting coping strategies which are costly in terms of both short term and long term well-being. There is some evidence that shocks threaten long term poverty traps and that they tend to militate against any tendency of the poor to catch up with wealthier households. Policy implications are discussed in terms of access to markets and the design of government safety net programs." Authors' AbstractEnvironmental disasters, Economic situation, Impact evaluation, Droughts, Vulnerability, households, Livelihoods, Poverty, coping strategies, Safety nets, Government policy,