Informal family insurance and the design of the welfare state

We study the problem of unemployment benefit provision when the family is also a provider of social insurance. As a benchmark, a simple model is presented where risksharing motives govern intra-family transfers and more generous unemployment benefits, provided by the State, crowd out family risk-sharing arrangements one-forone. The model is then extended to capture the idea that the State has an advantage vis-a-vis the family in the provision of insurance because it can tax individuals, whereas the family must rely on self-enforcing agreements. In this case, the effect of State transfers on intra-family transfers is found to be more than one-for-one. Thus, somewhat perversely, both informal transfers and total insurance transfers to the unemployed fall as the State's generosity increases. This does not imply that the optimal Welfare State is zero. Our results still hold when families are assumed to be better than the State at monitoring the job search activities of the unemployed. --Self-enforcing contracts,Optimal welfare generosity

Partisan social happiness

We use data on the subjective well-being of more than a quarter of a million people living in the OECD over the period 1975-92 to study the behavior of partisan social happiness functions. Controlling for personal characteristics of the respondents, year and country fixed effects and country specific time trends, we find that the data describe social happiness functions for left-wing and right-wing individuals where inflation and unemployment enter negatively. We use these functions to test the root assumption of partisan business cycle models where leftwing individuals care more about unemployment relative to inflation than rightwingers (e.g. Alesina (1987)). Bootstrap confidence intervals suggest that up to 90 per cent of the time the evidence is consistent with this assumption. We also find that left-wingers like increases in government consumption more than rightwingers, that the latter have become more concerned with inflation over time and that the poor (rich) behave differently from the left (right). Finally, we find that individuals declare themselves to be happier when the party they support is in power, even after controlling for economic variables. Our findings are hard to explain using median voter models but are to be expected in a partisan world. --Median voter,partisan business cycles,subjective well-being

The determination of unemployment benefits

While much empirical research has been done on the labour market consequences of unemployment benefits, there is remarkably little evidence on the forces determining benefits. The paper presents a simple model where workers desire insurance against the possibility of unemployment and unemployment benefits increase the unemployment rate. We then conduct, what we believe, is one of the first empirical analyses of the determinants of the parameters of the unemployment benefit system. Using OECD data for 1971-1989, controlling for year and country fixed effects, and controlling for the political colour of the government, we find evidence suggesting that benefits fall when the unemployment rate is high. This is consistent with the tax-effect described in Wright (1986) and Atkinson (1990). There is weaker evidence that benefits increase with positive changes in the unemployment rate, which may be proxying for the inflow rate and could be called an insurance effect. --endogenous unemployment benefits,unemployment,politics

The consequences of labour market flexibility: Panel evidence based on survey data

We introduce a new data set on hiring and firing restrictions for 21 OECD countries for the period 1984-90. The data are based on surveys of business people in the countries covered, so the indices we use are subjective in nature. Controlling for country and time fixed effects, and using dynamic panel data techniques, we find evidence that increasing the flexibility of the labor market increases both the employment rate and the rate of participation in the labor force. A conservative estimate suggests that if France were to make its labor markets as flexible as those in the US, its employment rate would increase 1.6 percentage points, or 14% of the employment gap between the two countries. The estimated effects are larger in the female than in the male labor market, although both groups seem to have similar long run coefficients. There is also some evidence that more flexibility leads to lower unemployment rates and to lower rates of long-term unemployment. The analysis of inflows and vacancies present some inconsistencies, although there is some evidence that the correlation between inflows and the business cycle is stronger in more flexible labor markets (again this is stronger for females). We also find some evidence consistent with the hypothesis that inflexible labor markets produce “jobless recoveries” and introduce more unemployment persistence. --Job security provisions,subjective data,employment,unemployment

Life satisfaction and economic conditions in East and West Germany pre- and post-unification

Economic disruption in East Germany at the time of unification resulted in a noticeable drop in life satisfaction. By the late 1990s East Germany's life satisfaction had recovered to about its 1990 level, and its shortfall relative to West Germany was slightly less than that before unification. In West Germany life satisfaction was fairly constant before unification, but subsequently trended moderately downward, with Turkish life satisfaction declining noticeably relative to Germans. Changes in life satisfaction in East and West Germany both for Germans and foreigners are most closely associated with relative income variables, not absolute income

MAPping out distribution routes for kinesin couriers

In the crowded environment of eukaryotic cells, diffusion is an inefficient distribution mechanism for cellular components. Long-distance active transport is required and is performed by molecular motors including kinesins. Furthermore, in highly polarized, compartmentalized and plastic cells such as neurons, regulatory mechanisms are required to ensure appropriate spatio-temporal delivery of neuronal components. The kinesin machinery has diversified into a large number of kinesin motor proteins as well as adaptor proteins that are associated with subsets of cargo. However, many mechanisms contribute to the correct delivery of these cargos to their target domains. One mechanism is through motor recognition of subdomain-specific microtubule (MT) tracks, sign-posted by different tubulin isoforms, tubulin post-translational modifications (PTMs), tubulin GTPase activity and MT associated proteins (MAPs). With neurons as a model system, a critical review of these regulatory mechanisms is presented here, with particular focus on the emerging contribution of compartmentalised MAPs. Overall, we conclude that – especially for axonal cargo – alterations to the MT track can influence transport, although in vivo, it is likely that multiple track-based effects act synergistically to ensure accurate cargo distribution

Rental Housing Assistance for the 21st Century

Current rental housing assistance programs are not designed to provide a safety net for people whose lives are volatile, or to encourage poor people to live in good locations. These failings can be corrected. HUD should establish a program of rental insurance-like mortgage insurance, but for renters. Low income housing assistance formulas should be revised to reward good neighborhood features, and punish bad

MAP1B Regulates Axonal Development by Modulating Rho-GTPase Rac1 Activity

This article shows a novel function for the MAP1B protein, related to the control of actin dynamics through interaction with Tiam1