Unemployment Insurance and Precautionary Saving

We consider both theoretically and empirically the effect of unemployment insurance (UI) on precautionary savings behavior. Simulations of a stochastic life cycle model suggest that increasing the generosity of UI will substantially lower the asset holdings of the median worker, and that this effect will both rise with unemployment risk and fall with worker age. We test these implications by matching data on potential UI replacement rates to asset holdings in the Survey of Income and Program Participation (SIPP). Our empirical results are quite consistent with the predictions of the model. We find that raising the replacement rate for UI by 10 percentage points lowers financial asset holdings by 1.4 to 5.6%, so that UI crowds out up to one-half of private savings for the typical unemployment spell. We also find that this effect is stronger for those facing higher unemployment risk and weaker for older workers.

Mutual funds and the U.S. equity market

Mutual funds have become an important intermediary between households and financial markets, especially the equity market. About half of all households have a mutual fund account, and mutual funds hold about one-fifth of household financial assets. Because households have favored equity investments in their mutual fund accounts, mutual funds currently hold about one-fifth of all publicly traded U.S. equities. In addition to discussing the recent growth of mutual funds and their role in household finances, this article analyzes the relationship between households' investment decisions in equity mutual funds and equity market prices.Mutual funds ; Capital market ; Stock market

Federal Government Debt and Interest Rates

Does government debt affect interest rates? Despite a substantial body of empirical analysis, the answer based on the past two decades of research is mixed. While many studies suggest, at most, a single-digit rise in the interest rate when government debt increases by one percent of GDP, others estimate either much larger effects or find no effect. Comparing results across studies is complicated by differences in economic models, definitions of econometric approaches, and sources of data. Using a standard set of data and a simple analytical framework, we reconsider and add to empirical evidence on the effect of federal government debt and interest rates. We begin by deriving analytically the effect of government debt on the real interest rate and find that an increase in government debt equivalent to one percent of GDP would be predicted to increase the real interest rate by about two to three basis points. While some existing studies estimate effects in this range, others find larger effects. In almost all cases, these larger estimates come from specifications relating federal deficits (as opposed to debt) and the level of interest rates or from specifications not controlling adequately for macroeconomic influences on interest rates that might be correlated with deficits. We present our own empirical analysis in two parts. First, we examine a variety of conventional reduced-form specifications linking interest rates and government debt and other variables. In particular, we provide estimates for three types of specifications to permit comparisons among different approaches taken in previous research; we estimate the effect of: an expected, or projected, measure of federal government debt on a forward-looking measure of the real interest rate; an expected, or projected, measure of federal government debt on a current measure of the real interest rate; and a current measure of federal government debt on a current measure of the real interest rate. Most of the statistically significant estimated effects are consistent with the prediction of the simple analytical calculation. Second, we provide evidence using vector autoregression analysis. In general, these results are similar to those found in our reduced-form econometric analysis and consistent with the analytical calculations. Taken together, the bulk of our empirical results suggest that an increase in federal government debt equivalent to one percent of GDP, all else equal, would be expected to increase the long-term real rate of interest by about three basis points, though one specification suggests a larger impact, while some estimates are not statistically significantly different from zero. By presenting a range of results with the same data, we illustrate the dependence of estimation on specification and definition differences.

The Effects of Tax-Based Saving Incentives On Saving and Wealth

This paper evaluates research examining the effects of tax-based saving incentives on private and national saving. Several" factors make this an unusually difficult problem. First, households that participate in, or are eligible for, saving incentive plans have systematically stronger tastes for saving than other households. Second, the data indicate that households with saving incentives have taken on more debt than other households. Third, significant changes in the 1980s in financial markets, pensions, social security, and nonfinancial assets interacted with the expansion of saving incentives. Fourth, saving incentive accounts represent pre-tax balances, whereas conventional taxable accounts represent post-tax balances. Fifth, the fact that employer contributions to saving incentive plans are a part of total employee compensation is typically ignored. A major theme of this paper is that analyses that ignore these issues overstate the impact of saving incentives on saving. We show that accounting for these factors largely or completely eliminates the estimated positive impact of saving incentives on saving found in the literature. Thus, we conclude that little if any of the overall contributions to existing saving incentives have raised private or national saving. *Portions of this article were published in the JEP, 1996, under title of "The Illusory Effects of Saving Incentives on Saving."

The Adequacy of Retirement Saving

macroeconomics, saving, retirement

How to make career advancement in Economics more inclusive

Men are overrepresented in senior academic positions in Economics (Teunissen and Hogendoorn, 2018). While gender inequality in ­academia is universal (Miller et al., 2015), it is especially pronounced in the Economics discipline (Leslie et al., 2015) and in the Netherlands in particular (Miller et al., 2015). In nearly four decades, only six women have ever made it into the ESB Economics Top 40. It is important to note that promoting gender equality is not just a matter of fairness; it is – as should be of interest to Economists – also a matter of ­efficiency. For instance, Hsieh et al. (2018) have argued that no less than a quarter of the economic growth in the US between 1960 and 2010 can be attributed to what they call “the improved allocation of talent” of members of underrepresented groups. For the Netherlands specifically, The McKinsey Global Institute recently calculated that greater gender parity in labor force participation, STEM fields, and senior positions, would add more than 100 billion euros to Dutch GDP (McKinsey, 2018). To shed light on this phenomenon and to present insight into possible interventions, we provide a conceptual and empirical analysis of the factors underlying gender differences in career advancement in Economics, drawing on the latest research in the behavioural sciences

Learning from conflicts? The relations between task and relationship conflicts, team learning and team performance

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Play therapy insights into everyday social pedagogical practice in residential child care

Psychotherapy and social pedagogical care, help and support in relation to children placed in out-of-home care are typically perceived as two separate forms of practice. In its typical form, psychotherapy is pictured as a meeting between therapist and client in a ‘therapeutic space’ separated out from daily life and activities, while social pedagogical care, help, and support is carried out in close proximity to everyday life in what is regarded as the person’s home. This article analyses an alternative relationship and way of collaborating between psychotherapy – more specifically play therapy – and everyday social pedagogical practice in residential care for children with severe emotional and behavioural problems. This is done by drawing on an empirical case study of the relationship between everyday practice and expertise of social pedagogical practice and play therapy in a children’s home in Denmark. Meeting the needs of children who have been severely neglected and/or abused is challenging in different ways, and it requires highly developed relational, emotional, and reflective skills. The authors argue that play therapy has a particular potential in foregrounding and developing core social pedagogical knowledge and skills. When designed and carried out as an integrated part of everyday social pedagogical practice, play therapy can support practitioners in integrating a reflective and conscious approach to understanding and meeting the children’s emotional and relational needs with the ability to create and enter into ‘playful encounters’ with the children that challenges one-sided and taken-for-granted power relationships, practices and norms

Frequency and Use of Medications in Horses Racing at Prairie Meadows

An analysis was made of the horses racing at Prairie Meadows race track in Altoona, Iowa during 1993 to determine the number of entries designated as racing under the influence of phenylbutazone (Bute(RX)), furosemide (Lasix(Rx)) or both medications. In a total of 1379 Quarter Horse entries, 5.7 % raced with no medication, 74.9 % raced on phenylbutazone, 0.5 % raced on furosemide, and 18.9 % raced on both phenylbutazone and furosemide. In a total of 3424 Thoroughbred entries, 2.1 % raced under no medication, 43.6 % raced on phenylbutazone, 0.4 % raced on furosemide, and 53.9 % raced on both phenylbutazone and furosemide. Overall, of the 4803 entries, 3.2 % raced with no medication, 52.6 % raced on phenylbutazone, 0.4 % raced on furosemide, and 43.9 % raced on both phenylbutazone and furosemide

The Effect of Furosemide on Arterial Blood Gases and Performance in Quarter Horses Performing a Fatigue Test on a Treadmill

Four Quarter Horses (1 filly age 2, 1 mare age 5 and 2 geldings ages 3 and 4; average weight 539 kg) were used in a 2 x 2 crossover design. The effects of furosemide (Lasix(Rx)) on arterial blood packed ceii voiume (PCV), hemogiobin (Hb), pH, pO2, pCO2, HCO-3 and base excess (BE) were measured. Plasma lactate, heart rate, and fatigue time were determined as indicators of perlormance while the horses performed a fatigue test on a high-speed treadmill. The left carotid artery was surgically elevated subcutaneously to facilitate collection of arterial blood samples. Horses were conditioned for 13 weeks with increasing intensity then randomly assigned furosemide (F) or physiological saline (C) as treatments. Treatments were administered 4 hours prior to the fatigue test in accordance with racing regulations. Arterial blood samples were collected prior to treatment dose, prior to exercise, at the 2nd, 4th, and 6th minute during the fatigue test, at fatigue, and at the 5th, 15th, 30th, and 45th minute post-exercise. Arterial blood samples were analyzed for blood gases, Hb, PCV, and plasma lactate. Heart rate and fatigue time were recorded. No difference between treatments (P \u3e 0.05) was observed for blood gases except for pCO2 at rest, and HCO-3 and BE at the 2 minute collection period. No difference between treatments (P \u3e 0.05) was observed for Hb, PCV, lactate and heart rate except at 15 minutes post-exercise for Hb and PCV, and 45 minutes postexercise for Hb. Fatigue times were 11 min 56 sec ± 5 min 30 sec for F horses and 11 min 35 sec--± 2 min 6 sec for C horses. No difference (P \u3e 0.05) was observed in fatigue time. Based on our data, the trend indicated that all parameters measured returned to pre-exercise levels more rapidly for furosemide treated horses. However, furosemide did not enhance performance