Index-Number Tests and the Common-Scaling Social Cost-of-Living Index

For a change in prices, the common-scaling social cost-of-living index is the equal scaling of every individual's expenditure level needed to restore the level of social welfare to its pre-change value. This index does not, in general, satisfy two standard index-number tests. The reversal test requires the index value for the reverse change to be the reciprocal of the original index. And the circular test requires the product of index values for successive price changes to be equal to the index value for the whole change. We show that both tests are satisfied if and only if the Bergson-Samuelson indirect social-welfare function is homothetic in prices, a condition which does not require individual preferences to be homothetic. If individual preferences are homothetic, however, stronger conditions on the Bergson-Samuelson indirect must be satisfied. Given these results, we ask whether the restrictions are empirically reasonable and find, in the case that individual preferences are not homothetic, that the restrictions make little difference to estimates of the index.social cost of living, aggregation, welfare economics

Glass Ceilings or Glass Doors? Wage Disparity Within and Between Firms

We investigate whether immigrant and minority workers' poor access to high-wage jobs---that is, glass ceilings---is attributable to poor access to jobs in high-wage firms, a phenomenon we call glass doors. Our analysis uses linked employer-employee data to measure mean- and quantile-wage differentials of immigrants and ethnic minorities, both within and across firms. We find that glass ceilings exist for some immigrant groups, and that they are driven in large measure by glass doors. For some immigrant groups, the sorting of these workers across firms accounts for as much as half of the economy-wide wage disparity they face.glass ceilings, wage differentials, immigration, visible minorities, quantile regression, linked employer-employee data

The social cost-of-living: welfare foundations and estimation

We present a new class of social cost-of-living indices and a nonparametric framework for estimating these and other social cost-of-living indices. Common social cost-of-living indices can be understood as aggregator functions of approximations of individual cost-of-living indices. The Consumer Price Index (CPI) is the expenditure-weighted average of first-order approximations of each individual's cost-of-living index. This is troubling for three reasons. First, it has not been shown to have a welfare economic foundation for the case where agents are heterogeneous (as they clearly are.) Second, it uses an expenditure-weighted average which downweights the experience of poor households relative to rich households. Finally, it uses only first-order approximations of each individual's cost-of-living index, and thus ignores substitution effects. We propose a 'common-scaling' social cost-of-living index, which is defined as the single scaling to everyone's expenditure which holds social welfare constant across a price change. Our approach has an explicit social welfare foundation and allows us to choose the weights on the costs of rich and poor households. We also give a unique solution for the welfare function for the case where the weights are independent of household expenditure. A first order approximation of our social cost-of-living index nests as special cases commonly used indices such as the CPI. We also provide a nonparametric method for estimating second-order approximations (which account for substitution effects).Inflation, social cost-of-living, demand, average derivatives

Glass Ceilings or Glass Doors? Wage Disparity Within and Between Firms

We investigate whether immigrant and minority workers’ poor access to high-wage jobs— that is, glass ceilings— is attributable to poor access to jobs in high-wage …rms, a phenomenon we call glass doors. Our analysis uses linked employer-employee data to measure mean- and quantile-wage di¤erentials of immigrants and ethnic minorities, both within and across …rms. We …nd that glass ceilings exist for some immigrant groups, and that they are driven in large measure by glass doors. For some immigrant groups, the sorting of these workers across …rms accounts for as much as half of the economy-wide wage disparity they face.glass ceilings, wage di¤erentials, immigration, visible minorities, quantile regression, linked employer-employee data

The Social Cost-of-Living: Welfare Foundations and Estimation

We present a new class of social cost-of-living indices and a nonparametric framework for estimating these and other social cost-of- living indices. Common social cost-of-living indices can be understood as aggregator functions of approximations of individual cost-of-living indices. The Consumer Price Index (CPI) is the expenditure-weighted average of first-order approximations of each individual’s cost-of-living index. This is troubling for three reasons. First, it has not been shown to have a welfare economic foundation for the case where agents are heterogeneous (as they clearly are.) Second, it uses an expenditure-weighted average which downweights the experience of poor households relative to rich households. Finally, it uses only first-order approximations of each individual’s cost-of-living index, and thus ignores substitution effects. We propose a “common-scaling” social cost-of-living index, which is defined as the single scaling to everyone’s expenditure which holds social welfare constant across a price change. Our approach has an explicit social welfare foundation and allows us to choose the weights on the costs of rich and poor households. We also give a unique solution for the welfare function for the case where the weights are independent of household expenditure. A first order approximation of our social cost-of- living index nests as special cases commonly used indices such as the CPI. We also provide a nonparametric method for estimating second- order approximations (which account for substitution effects).Inflation, Social cost-of-living, Demand, Average Derivatives

Glass Ceilings or Glass Doors? Wage Disparity Within and Between Firms

We investigate whether immigrant and minority workers’ poor access to high-wage jobs – that is, glass ceilings – is attributable to poor access to jobs in high-wage firms, a phenomenon we call glass doors. Our analysis uses linked employer-employee data to measure mean- and quantile-wage differentials of immigrants and ethnic minorities, both within and across firms. We find that glass ceilings exist for some immigrant groups, and that they are driven in large measure by glass doors. For some immigrant groups, the sorting of these workers across firms accounts for as much as half of the economy-wide wage disparity they face.glass ceilings, wage differentials, immigration, visible minorities, quantile regression, linked employer-employee data

The Social Cost-of-Living: Welfare Foundations and Estimation

We present a new class of social cost-of-living indices and a nonparametric framework for estimating these and other social cost-of-living indices. Common social cost-of-living indices can be understood as aggregator functions of approximations of individual cost-of-living indices. The Consumer Price Index (CPI) is the expenditure-weighted average of first-order approximations of each individual’s cost-of-living index. This is troubling for three reasons. First, it has not been shown to have a welfare economic foundation for the case where agents are heterogeneous (as they clearly are.) Second, it uses an expenditure-weighted average which downweights the experience of poor households relative to rich households. Finally, it uses only first-order approximations of each individual’s cost-of-living index, and thus ignores substitution effects. We propose a “common-scaling” social cost-of-living index, which is defined as the single scaling to everyone’s expenditure which holds social welfare constant across a price change. Our approach has an explicit social welfare foundation and allows us to choose the weights on the costs of rich and poor households. We also give a unique solution for the welfare function for the case where the weights are independent of household expenditure. A first order approximation of our social cost-of-living index nests as special cases commonly used indices such as the CPI. We also provide a nonparametric method for estimating second-order approximations (which account for substitution effects).Inflation, Social cost-of-living, Demand, Average derivatives

Generalized Random Coefficients With Equivalence Scale Applications

We propose a generalization of random coefficients models, in which the regression model is an unknown function of a vector of regressors, each of which is multiplied by an unobserved error. We also investigate a more restrictive model which is additive (or additive with interactions) in unknown functions of each regressor multiplied by its error. We show nonparametric identification of these models. In addition to providing a natural generalization of random coefficients, we provide economic motivations for the model based on demand system estimation. In these applications, the random coefficients can be interpreted as random utility parameters that take the form of Engel scales or Barten scales, which in the past were estimated as deterministic preference heterogeneity or household technology parameters. We apply these results to consumer surplus and related welfare calculations

The Effects of Gender and Parental Education on Participation Within Post-Secondary Education in the 1970s and 1980s

Knowledge of factors affecting access to post-secondary education is growing, but we know much less about influences shaping patterns of study within higher education. This paper explores the impact of gender and parental education on student decisions to study part-time or full-time, to choose college or university, and to enroll in different fields of study. These issues are examined using representative national samples of Canadian students from 1974-75 and 1983-84. We demonstrate that both gender and family education play decisive roles in influencing patterns of participation in higher education and that the effects of family background differ significantly between women and men.Nous connaissons de mieux en mieux les facteurs qui affectent l'accès à l'éducation post-secondaire, ce qui n'est pas le cas des influences qui façonnent les programmes d'étude à V intérieur de /' éducation supérieure. Le présent article examine les effets de V éducation des parents et du sexe de l'étudiant sur la décision de s'inscrire comme étudiant à plein temps ou à temps partiel, sur le choix entre le collège et l'université, et sur le choix du domaine d'étude. Ces questions sont abordées en faisant appel à des échantillons nationaux représentatifs des étudiants canadiens en 1974-1975 et 1983-1984. Nous démontrons que le sexe de l'étudiant et l'éducation des parents jouent un rôle décisif dans les modèles de participation à l'éducation supérieure, et que l'historique familial exerce une influence fort différente selon qu'il s'agit d'un étudiant ou d'une étudiante