Patterns of Aging in Thailand and Cote D'Ivoire

This paper is broadly concerned with the living standards of older people in two contrasting developing countries, Cote d'Ivoire and Thailand. We use a series of household surveys from these two countries to present evidence on factors affecting the living standards of the elderly: living arrangements, labor force participation, illness, urbanization, income and consumption. One of the issues we examine is whether life-cycle patterns of income aid consumption can be detected in the data. The fact that few of the elderly live alone makes it difficult to accurately measure the welfare levels of the elderly, or to make statements about the life-cycle patterns of income aid consumption of individuals. We find that labor force participation and individual income patterns follow the standard life-cycle hump shapes in both countries, but that avenge living standards within households are quite flat over the life-cycle. The data presented suggest that changes in family composition aid living arrangements of the elderly are likely to be more important sources of old-age insurance than asset accumulation.

Labor Supply Preferences, Hours Constraints, and Hours-Wage Tradeoffs

In a labor market in which firms offer tied hours-wage packages and there is substantial dispersion in the wage offers associated with a particular type of job, the best job available to a worker at a point in time may pay well but require an hours level which is far from the worker's labor supply schedule, or pay poorly but offer desirable hours. Intuitively, one would expect hours constraints to influence the pattern of wage-hours tradeoffs which occur when workers quit to new jobs. Constrained workers may be willing to sacrifice wage gains for better hours. Likewise, workers may accept jobs offering undesirable hours only if the associated wage gains are large. We investigate this issue empirically by examining whether overemployment (underemployment) on the initial job increases (reduces) the partial effect on the wage gain of a positive change in hours for those who quit. We also examine whether overemployment (underemployment) on the new job increases (reduces) the partial effect on the wage gain of a positive change in hours for those who quit. Despite the limitations imposed by small sample sizes and lack of information on the magnitude of hours constraints, our results support the view that an individual requires compensation to work in jobs which, given the individual's particular preferences, offer unattractive hours.

Job Characteristics and Hours of Work

This paper provides evidence that hours of work are heavily influenced by the particular job which a person holds. The empirical work consists of a comparison of the variance in the change in work hours across time intervals containing a job change with the variance in the change in hours across time periods when the job remains the same. To the extent that workers choose hours and these hours choices are influenced by shifts in individual preferences and resources, the variance in the time change of hours should not depend upon whether the worker has switched jobs. The desire to reduce or increase hours could be acted upon in the current job. On the other hand, if hours are influenced by employer preferences or if job specific characteristics dominate the labor supply decision, then hours changes should be larger when persons change jobs than when they do not. Using the Panel Study of Income Dynamics and the Quality of Employment Survey, we find that hours changes are typically two to four times more variable across jobs than within jobs. This result holds for both men and women and for both quits and layoffs, is obtained for weeks per year, hours per week, and annual hours, andis not sensitive to the use of controls for a set of job characteristics (including the wage) which might influence the level of hours persons wish to supply. The findings are also inconsistent with the view that workers may costlessly adjust hours by changing jobs.The finding that the job has a large influence on work hours suggests that much greater emphasis should be given to demand factors and to job specific labor supply factors in future research on hours of work. The overwhelming emphasis upon the wage and personal characteristics inconventional labor supply analyses of work hours may in part be misplaced.

The Dynamics of Dual-Job Holding and Job Mobility

This article concerns the incidence and dynamics of dual-job holding, and its link to job mobility. The first section presents evidence on patterns of dual-job holding, hours changes, and job mobility in the United States, using data from the Panel Study of Income Dynamics and the Current Population Survey. The results indicate that most workers experience dual-job holding sometime during their working lives, and there is a great deal of movement into and out of dual-job holding. Mobility into and out of second jobs is associated with large changes in weekly and annual hours, and there is evidence that dual-job holding is prompted by hours constraints on the main job. The second section of the article turns to theories of dual-job holding. Much of the empirical literature on second jobs is motivated by a simple model of labor supply in which workers face upper constraints on main-job hours: a worker who would like to work more on his main job, but cannot, will take a second job provided the second-job wage is high enough. These models do not account for the fact that workers may also avoid hours constraints by finding new main jobs with higher hours. We develop a stochastic dynamic model of dual-job holding and job mobility in which decisions to take second jobs and/or change main jobs are made simultaneously. This model is consistent with our findings and provides new insights into the economics of dual-job holding and labor mobility.

Approximation Bias in Linearized Euler Equations

A wide range of empirical applications rely on linear approximations to dynamic Euler equations. Among the most notable of these is the large and growing literature on precautionary saving that examines how consumption growth and saving behavior are affected by uncertainty and prudence. Linear approximations to Euler equations imply a linear relationship between expected consumption growth and uncertainty in consumption growth, with a slope coefficient that is a function of the coefficient of relative prudence. This literature has produced puzzling results: Estimates of the coefficient of relative prudence (and the coefficient of relative risk aversion) from regressions of consumption growth on uncertainty in consumption growth imply estimates of prudence and risk aversion that are unrealistically low. Using numerical solutions to a fairly standard intertemporal optimization problem, our results show that the actual relationship between expected consumption growth and uncertainty in consumption growth differs substantially from the relationship implied by a linear approximation. We also present Monte Carlo evidence that shows that the instrumental variables methods commonly used to estimate the parameters correct some, but not all, of the approximation bias.

Labor Supply, Hours Constraints and Job Mobility

If hours can be freely varied within jobs, the effect on hours of changes in preferences for those who do change jobs should be similar to the effect on hours for those who do not change jobs. Conversely, if employers restrict hours choices, then changes in preferences should affect hours more strongly when the job changes than when it does not change. For a sample of married women we find that changes in many of the labor supply preference variables produce much larger effects on hours when the job changes.

Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand.

This paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income. Time-series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks. The relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income. Copyright 1992 by American Economic Association.

Approximation Bias In Linearized Euler Equations

A wide range of empirical applications rely on linear approximations to dynamic Euler equations. Among the most notable of these is the large and growing literature on precautionary saving that examines how consumption growth and saving behavior are affected by uncertainty and prudence. Linear approximations to Euler equations imply a linear relationship between expected consumption growth and uncertainty in consumption growth, with a slope coefficient that is a function of the coefficient of relative prudence. This literature has produced puzzling results: estimates of the coefficient of relative prudence (and the coefficient of relative risk aversion) from linear regressions of consumption growth on uncertainty in consumption growth imply estimates of prudence and risk aversion that are unrealistically low. Using numerical solutions to a fairly standard intertemporal optimization problem, our results show that the actual relationship between expected consumption growth and uncertainty in consumption growth differs substantially from the relationship implied by a linear approximation. We also present Monte Carlo evidence that shows that the instrumental-variables methods that are commonly used to estimate the parameters correct some, but not all, of the approximation bias. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology