An Evaluation of the State of Iowa Revenue Forecasts, 1995 – 2017

A critical task in establishing the State of Iowa budget is to project available tax revenue. The 2017 fiscal year was characterized by tax revenues that did not live up to predictions, leading to midyear cuts in planned government expenditures and tapping into reserves. That experience raises the question of whether the Iowa state government revenue forecasts are faulty. Are revenue shortfalls avoidable through improved forecasts or are occasional shortfalls inevitable with even the best statistical predictions? I will show that the Iowa government revenue forecasts pass the standard tests of unbiasedness and rationality, meaning that they are not obviously flawed. However, policies that have increased the proportion of tax revenues that are refunded are making our tax system less efficient. Moreover, forecasts of net tax revenue have become less reliable, leading to increased likelihood of revenue shortfalls and midyear cuts in planned government services

Review of Economic Facts and Fallacies

The latest book by prolific author Thomas Sowell, the Rose and Milton Friedman Senior Fellow at Stanford University’s Hoover Institution, has two aims: to provide a list of widely held but demonstrably false economic beliefs and then to demonstrate their invalidity using hard facts. These economic beliefs come in six areas: the economics of cities, differences between men and women, differences among races, higher education, income inequality, and developing economies. He deals with each topic in a separate chapter

Lack of Education

This chapter reviews the stylized facts regarding the distribution of human capital investments and the returns to those investments in developing countries. It then examines recent evidence regarding which policies can induce increased human capital investments in the most efficient manner, using estimated benefits and costs as a guide. Supplyside strategies such as increasing school access or improving school quality are more costly, have less certain benefits, and have a weak record of success. Demand-side interventions such as school sited health programs, vouchers, and conditional transfers have a greater likelihood of improving literacy in the most cost-effective manner

Male‐Female Supply to State Government Jobs and Comparable Worth

The proportion of women in state government jobs and applicant pools is well explained by a model emphasizing supply-side factors. Relative to men, women’s supply is least sensitive to wages in predominantly male jobs and most sensitive to wages in predominantly female jobs. These results suggest that comparable worth policies that shift relative pay toward traditionally female jobs and away from traditionally male jobs will increase the proportion of females in male-dominated, female-dominated, and total state government jobs. The implication is that supply side responses need not prevent comparable worth pay adjustments from raising total female compensation

The Political Economy of Comparable Worth: The Iowa Case 1983-1987

Comparable worth pay plans have been inplemented in several states since the early 1980\u27s. We examine the case of comparable worth in Iowa, as proposed in 1984 and as actually implemented (in compromise form) in 1985 and as adjusted as a result of the appeals process in 1987, In particular, we identify the relative winners and losers from comparable worth by analyzing the impact on earnings for males, females, minorities, unionized ^ployees and particular occupational groups such as supervisors and professionals. In addition, we are able to determine whether the relationships between the State pay structure and variables such as market wages, educational attainment, and work experience are altered by the plans

Comparable Worth and the Structure of Earnings: The Iowa Case

Comparable worth pay plans have been implemented in several states since the early 1980s. To our knowledge, however, no study exists of the actual impact of such plans on the pay structure of state government. We examine the case of comparable worth in Iowa, both as proposed in 1984 and as actually implemented (in compromise form) in 1985. In particular, we identify the relative winners and losers from comparable worth by analyzing the impact on earnings for men, women, minorities, unionized employees, and particular occupational groups, such as supervisors and professionals. In addition, we are able to determine whether the relationships between the state pay structure and such variables as market wages, educational attainment, and work experience are altered by the plans

The Implementation Process of Comparable Worth: Winners and Losers

This paper provides a unique opportunity to observe how a public policy affected the earnings of various interest groups at different stages of implementation. Specifically, we examine how the earnings of women, union members, and supervisory and professional staff were affected by various proposed and implemented comparable worth pay plans in Iowa. We find that large relative gains to women in the original proposed plans were reduced as the process evolved. As a result, some of the original gains to women were redistributed to union members, supervisors, and professionals

A Theoretical and Empirical Study of Occupational Choice under Uncertainty

This paper will present a model of occupational choice in which the agents are uncertain about their wage within the occupation. Agents are assumed to know their own stock of human capital and the distribution of wages per unit of human capital in the occupation at the time of initial labor market entry. The agents decide which occupation to select based on their expected utility from each occupation, given the tastes for future consumption, the available stock of human capital, the tastes for the occupation, the costs of entry into the occupation, the assets available for consumption, the tastes for risk, and the distribution of wages within each occupation. By specifying the form of the utility function, we can derive estimable equations relating the probability of choosing an occupation, i, to the moments of the distribution of wages and the past accumulations of human capital. By imposing appropriate restrictions on the parameters of the model, both within equations and across equations, all the parameters of the structural model underlying the occupational choice may be derived

Returns to Graduate and Professional Education: The Roles of Mathematical and Verbal Skills by Major

Students in majors with higher average quantitative GRE scores are less likely to attend graduate school while students in majors with higher average verbal GRE scores are more likely to attend graduate school. This sorting effect means that students whose cognitive skills are associated with lower earnings at the bachelor’s level are the most likely to attend graduate school. As a result, there is a substantial downward bias in estimated returns to graduate education. Correcting for the sorting effect raises estimated annualized returns to a Master’s or doctoral degree from about 5% to 7.3% and 12.8% respectively. Estimated returns to professional degrees rise from 13.9% to 16.6%. These findings correspond to a large increase in relative earnings received by postgraduate degree holders in the United States over the past 20 years

The Money Supply Announcements Puzzle: Comment

In a recent paper in this Review (1983), Bradford Cornell presented a survey of existing literature on the empirical relationship between weekly money supply announcements made by the Federal Reserve and changes in the spot prices of several financial instruments at the time of the announcement. Cornell sought to unify and extend the work done in this area by estimating a number of relationships which bear directly on this issue. Among his main conclusions are that asset markets are efficient with re­spect to money supply announcements since only the unexpected component of the announcement is correlated with price changes, and that the unexpected compo­ nent of money supply announcements has a highly significant positive correlation with short-term interest rates, but only after the October 6, 1979 change in Fed policy (p. 651). Both of these conclusions are at vari­ ance with results reported in similar studies by Jacob Grossman (1981), V. Vance Roley (1982), and Thomas Urich and Paul Wachtel (1981). All three find that unanticipated announcements matter in periods before October 6, 1979, and Roley and Urich-Wachtel find that anticipated announcements matter in at least some of their regressions