Consumption Smoothing and the Welfare Consequences of Social Insurance in Developing Economies

Studies of risk in developing economies have focused on consumption fluctuations as a measure of the value of insurance. A common view in the literature is that the welfare costs of risk and benefits of social insurance are small if income shocks do not cause large consumption fluctuations. We present a simple model showing that this conclusion is incorrect if the consumption path is smooth because individuals are highly risk averse. Empirical studies find that many households in developing countries rely on inefficient methods to smooth consumption, suggesting that they are indeed quite risk averse. Hence, social safety nets may be valuable in low-income economies even when consumption is not very sensitive to shocks.

The Effect of Anticipated Tax Changes on Intertemporal Labor Supply and the Realization of Taxable Income

We use anticipated changes in tax rates associated with changes in family composition to estimate intertemporal labor supply elasticities and elasticities of taxable income with respect to the net-of-tax wage rate. Changes in the ages of children can affect marginal tax rates through provisions of the tax code that are tied to child age and dependent status. We identify behavioral responses to these tax changes by comparing families who experienced a tax rate change to families who had a similar change in dependents but no resulting tax rate change. A primary advantage of our approach is that these changes can be anticipated, allowing us to estimate substitution effects that are not confounded by life-cycle income effects. We estimate an intertemporal elasticity of family labor earnings of 0.75 for families earning between $35,000 and$85,000 in the Survey of Income and Program Participation (SIPP) and find very similar estimates using the IRS-NBER individual tax panel.

Thirteen Economic Facts about Social Mobility and the Role of Education

This document provides thirteen economic facts on the growth of income inequality and its relationship to social mobility in America; on the growing divide in educational opportunities and outcomes for high- and low-income students; and on the pivotal role education can play in increasing the ability of low-income Americans to move up the income ladder.It is well known that the income divide in the United States has increased substantially over the last few decades, a trend that is particularly true for families with children. In fact, according to Census Bureau data, more than one-third of children today are raised in families with lower incomes than comparable children thirty-five years ago. This sustained erosion of income among such a broad group of children is without precedent in recent American history. Over the same period, children living in the highest 5 percent of the family-income distribution have seen their families' incomes double.What is less well known, however, is that mounting evidence hints that the forces behind these divergent experiences are threatening the upward mobility of the youngest Americans, and that inequality of income for one generation may mean inequality of opportunity for the next. It is too early to say for certain whether the rise in income inequality over the past few decades has caused a fall in social mobility of the poor and those in the middle class -- the first generation of Americans to grow up under this inequality is, on average, in high school -- but the early signs are troubling

Renewing Economically Distressed American Communities

All communities do not fare equally well after recessions and other economic shocks. Some bounce back fairly quickly. Others suffer more and take longer to recover—sometimes decades longer. A sluggish return to growth is not always necessary, however. There is evidence that well-targeted policies may be able to speed the pace of recovery

Are There Returns to Experience at Low-Skill Jobs? Evidence from Single Mothers in the United States over the 1990s

Policy changes in the United States in the 1990s resulted in sizable increases in employment rates of single mothers. We show that this increase led to a large and abrupt increase in work experience for single mothers with young children. We then examine the economic return to this increase in experience for affected single mothers. Despite the increases in experience, single mothers’ real wages and employment have remained relatively unchanged. The empirical analysis suggests that an additional year of experience increases single mothers’ wage rates by less than 2 percent, a percentage lower than previous estimates in the literature

Are There Returns to Experience at Low-Skill Jobs? Evidence from Single Mothers in the United States over the 1990s

Policy changes in the United States in the 1990s resulted in sizable increases in employment rates of single mothers. We show that this increase led to a large and abrupt increase in work experience for single mothers with young children. We then examine the economic return to this increase in experience for affected single mothers. Despite the increases in experience, single mothers’ real wages and employment have remained relatively unchanged. The empirical analysis suggests that an additional year of experience increases single mothers’ wage rates by less than 2 percent, a percentage lower than previous estimates in the literature

Salience and Taxation: Theory and Evidence

Using two strategies, we show that consumers underreact to taxes that are not salient. First, using a field experiment in a grocery store, we find that posting tax-inclusive price tags reduces demand by 8 percent. Second, increases in taxes included in posted prices reduce alcohol consumption more than increases in taxes applied at the register. We develop a theoretical framework for applied welfare analysis that accommodates salience effects and other optimization failures. The simple formulas we derive imply that the economic incidence of a tax depends on its statutory incidence, and that even policies that induce no change in behavior can create efficiency losses.Economic

Modeling Thermoregulatory Responses to Cold Environments

The ability to model and simulate the rise and fall of core body temperature is of significant interest to a broad spectrum of organizations. These organizations include the military, as well as both public and private health and medical groups. To effectively use cold models, it is useful to understand the first principles of heat transfer within a given environment as well as have an understanding of the underlying physiology, including the thermoregulatory responses to various conditions and activities. The combination of both rational or first principles and empirical approaches to modeling allow for the development of practical models that can predict and simulate core body temperature changes for a given individual and ultimately provide protection from injury or death. The ability to predict these maximal potentials within complex and extreme environments is difficult. The present work outlines biomedical modeling techniques to simulate and predict cold-related injuries, and discusses current and legacy models and methods