327 research outputs found
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The Impact of Performance Incentives on Providing Job Training to the Poor: The Job Traning Partnership Act (JTPA)
The Job Training Partnership Act (JCPA) uses performance incentives to encourage more efficient provision of services. The incentive mechanism adopted potentially suffers from information problems. Performance standards imperfectly reflect policy goals explicitly stated in terms of changes in employment and earnings. Existing standards measure levels of employment and earnings following training. Therefore, they may induce subcontractors to become more effective teachers or training providers may take advantage of the moral hazard problem associated with not using value-added measures by substituting harder-to-train clients with those more easily placed in high-wage jobs (cream-skimming). This study exploits state level variation in JTPA incentives to examine how training providers respond to the JTPA incentive system. Using a random sample drawn from the National Longitudinal Survey of Youth, the study proceeds in three steps. First, I model the probability that an individual is enrolled in a JTPA training program and find that higher incentives encourage enrollment of individuals with more work experience. This may reflect service providers targeting services to individuals for whom the value added is largest or it may arise from the moral hazard problem. Therefore, I analyze whether value added is higher for more experienced enrollees and whether stronger incentives lead to higher value added. I find support for the existence of moral hazard. However, holding all else equal, stronger incentives increase value added. The study provides strong evidence that non-random selection of participants by administrators is a statistically important effect and adds empirical content to the literature on the use of incentive contracts to resolve principal agent problems
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Why Has Wage Dispersion Grown in Mexico? Is It the Incidence of Reforms of Growing Demand for Skills?
In the mid 1980s, Mexico undertook major trade reform, privatization and
deregulation. This coincided with a rapid expansion in wages and employment
that led to a rise in wage dispersion. This paper examines the role of industry
and occupation-specific effects in explaining the growing dispersion. We find that
despite the magnitude and pace of the reforms, industry-specific effects explain
little of the rising wage dispersion. In contrast occupation-specific effects can
explain almost half of the growing wage dispersion. Finally, we find that the
economy became more skill-intensive and that this effect was larger for the
traded sector because this sector experienced much smaller low-skilled
employment growth. We therefore suggest that competition from imports had an
important role in the fall of the relative demand for less-skilled workers
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The Premium for Skills: Evidence from Mexico
"During the 1987-1993 period average real urban full time wages and employment in Mexico grew 30 and 22 percent
respectively. After controlling for the changing labor force quality, all education-experience skill classes have
experienced significant employment and real wage growth. This growth was accompanied by a large increase in wage
dispersion within and across skill classes. The relative wage patterns for Mexico mimic those of developed countries:
the premium for skills is rising.
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Should the Government Invest, or Try to Spur Private Investment?
The U.S. economy clearly needs stimulation, but the Obama administration's plan for accelerated depreciation is an 'old economy' approach to stimulating aggregate investment and unlikely to ease the Great Recession. The authors suggest alternative policies consisting of carefully designed carrots and sticks
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Measuring the Incentive to be Homeless
We study the incentives to enter and to leave homeless shelters. After 2 years of decline, the number of homeless families in New York City's shelters system began rising again in spring 1990 and continued to rise until it hit an all time record high in summer 1993. The conventional wisdom about why this happened is that a flood of new families were attracted into shelters by the Dinkins administration's aggressive policy of placement into subsidized housing. We test the conventional wisdom and reject it. Better prospects of subsidized housing increase flows into the shelter system, but this incentive effect is not nearly large enough to offset the first order accounting effect taking families out of the shelters reduces the number of families in them. Why then did the shelter system population grow after spring 1990? A major part of the reason is that the city responded to conventional wisdom and slowed placement in to subsidized housing. Other major factors were higher unemployment (which slowed self initiated exits), greater use of more attractive Tier II shelter instead of hotels, and possibly increasing cocaine use
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Dynamics of Canadian Welfare Participation
Although Canada is contemplating major reforms of welfare policy, there is scant information regarding the use of welfare. This paper rectifies this situation by documenting the dynamics of welfare participation in British Columbia over the period 1980-1982. We find: most welfare spells are shorter than 6- months (75%). a little more than 10% last longer than a year. almost no welfare cases last 4 years and those that do involve families with children. single parents and older individuals have longer spells. couples (with and without children)and childless single individuals have shorter spells . the fraction of the caseload who are employable has been steadily rising from 38% in 1980-82 to 64% in 1991-92 the fraction of the caseload who are single males has risen by 10 percentage points from 34% in 1980-82, while the fraction of all other types of households have fallen. the age structure of the caseload is virtually unchanged over the decade: over 70% are over age 25. a quarter of welfare recipients are back on the welfare rolls within three months of leaving, while a full 50% return within a year. some couples and single individuals without children exhibit a strong seasonal pattern in welfare return rates . These patterns suggest several conclusions important to policy: first, governments need to focus on helping individuals become self-sufficient and remain off-welfare more than encouraging quicker exits; and second, it may be more efficient for governments to target special programs at single parent families who remain on welfare for a long period of time, taking account of their needs and circumstances
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Climate Consumption and Climate Pricing from 1940 to 1990
Compensating differentials studies have consistently found that temperate climate is capitalized into local wages and rents. This paper extends earlier single cross-section by studying the evolution of climate expenditure over time by estimating the same climate compensating differentials model every decade from 1960 to 1990. Over this time period, per capita expenditure on climate has increased ( particularly for the elderly). This increase is explained by both a rise in consumption and also a dramatic shift in climate price capitalization. From 1960 to 1990 there has been a large two-and-a-third increase in climate prices capitalized into rents and moderate 60 percent decline in climate prices capitalized into wages. Overall elderly households are paying much more for climate while the price paid by working households has roughly remained constant
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New Estimates on Climate Demand: Evidence from Location Choice
This paper builds on Graves' (1979) migration research on climate demand and on Rosen's (1974) research agenda of identifying structural demand parameters for capitalized non-market amenities. Graves (1972, 1982, 1985) has used aggregated migration net flow data to quantify migratory elasticities with respect to local amenities. Our research extends this earlier migration research along two dimensions. First, the opportunity cost of locational choice can be further disaggregated. Second, earlier reduced form research's coefficient estimates could not be used for calculating consumer surplus from amenities. One of the only empirical papers to attempt to identify structural parameters is Quigley (1982). His contribution was to combine knowledge of the non-linear budget constraints with an explicit parameterization of the utility function to estimate structure parameters. Our discreet choice method closely mirrors this methodology. Our estimates of willingness to pay for amenities build Bartik, Butler and Liu's (1992) estimates of amenities demand as revealed by the initial decision of whether to move. Our research also adds to the hedonic quality of life literature. Migration data offers an additional source of information that has not been exploited in equilibrium hedonic studies. In the 1980s, several studies pointed out the inherent difficulties of conducting the "standard" hedonic two stage identification procedure. The hedonic literature has ranked locations based on index weights generated by how much people pay for each attribute. Our paper offers an alternative method for ranking locations based on how much people are willing to pay
Carbon Geography: The Political Economy of Congressional Support for Legislation Intended to Mitigate Greenhouse Gas Production
Stringent regulation for mitigating greenhouse gas emissions will impose different costs across geographical regions. Low-carbon, environmentalist states, such as California, would bear less of the incidence of such regulation than high-carbon Midwestern states. Such anticipated costs are likely to influence Congressional voting patterns. This paper uses several geographical data sets to document that conservative, poor areas have higher per-capita carbon emissions than liberal, richer areas. Representatives from such areas are shown to have much lower probabilities of voting in favor of anti-carbon legislation. In the 111th Congress, the Energy and Commerce Committee consists of members who represent high carbon districts. These geographical facts suggest that the Obama Administration and the Waxman Committee will face distributional challenges in building a majority voting coalition in favor of internalizing the carbon externality.
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