Unemployment Insurance and Household Welfare: Microeconomic Evidence 1980-93

This study examines the relative economic well-being of households that receive unemployment insurance (UI) benefits, as measured by consumption flows that are derived from information on households' spending in the Consumer Expenditure Surveys from 1980- 1993. For each quarter during this period we obtain the per-capita and equivalence-scale adjusted economic welfare of the two types of households. Adjusting for differences in the households' characteristics, we find: 1) The average UI recipient household during this period had a level of economic well-being that was on average between 3 and 8 percent below that of otherwise identical households (depending on the welfare measure used); 2) During a substantial part of this time the economic well-being of households that received UI benefits was at least that of other households; and 3) There is no cyclical variation in the relative well-being of UI recipient households compared to others. The findings imply that during the 1980s and early 1990s states' UI programs did a satisfactory job of maintaining the well-being of UI recipients. Emergency programs enacted during recessions raised potential duration sufficiently to prevent the economic position of the average UI recipient from deteriorating.

U. S. labor supply and demand in the long run

In this paper we model U.S. labor supply and demand in considerable detail in order to capture the enormous heterogeneity of the labor force and its evolution over the next 25 years. We represent labor supplies for a large number of demographic groups as responses to prices of leisure and consumption goods and services. The price of leisure is an after-tax wage rate, while the final prices of goods and services reflect the supply prices of the industries that produce them. By including demographic characteristics among the determinants of household preferences, we incorporate the expected demographic transition into our long-run projections of the U.S. labor market.Labor supply ; Labor market

Measurement in Economics and Social Science

The paper discusses measurement, primarily in economics, from both analytical and historical perspectives. The historical section traces the commitment to ordinalism on the part of economic theorists from the doctrinal disputes between classical economics and marginalism, through the struggle of orthodox economics against socialism down to the cold-war alliance between mathematical social science and anti-communist ideology. In economics the commitment to ordinalism led to the separation of theory from the quantitative measures that are computed in practice: price and quantity indexes, consumer surplus and real national product. The commitment to ordinality entered political science, via Arrow’s ‘impossibility theorem’, effectively merging it with economics, and ensuring its sterility. How can a field that has as its central result the impossibility of democracy contribute to the design of democratic institutions? The analytical part of the paper deals with the quantitative measures mentioned above. I begin with the conceptual clarification that what these measures try to achieve is a restoration of the money metric that is lost when prices are variable. I conclude that there is only one measure that can be embedded in a satisfactory economic theory, free from unreasonable restrictions. It is the Törnqvist index as an approximation to its theoretical counterpart the Divisia index. The statistical agencies have at various times produced different measures for real national product and its components, as well as related concepts. I argue that all of these are flawed and that a single deflator should be used for the aggregate and the components. Ideally this should be a chained Törnqvist price index defined on aggregate consumption. The social sciences are split. The economic approach is abstract, focused on the assumption of rational and informed behavior, and tends to the political right. The sociological approach is empirical, stresses the non-rational aspects of human behavior and tends to the political left. I argue that the split is due to the fact that the empirical and theoretical traditions were never joined in the social sciences as they were in the natural sciences. I also argue that measurement can potentially help in healing this split

Empirical Approaches to the Measurement of Welfare

It has now been over twenty-five years since Arnold Harberger (1971) published his open letter to the profession, in which he proposed a set of guidelines for applied welfare economics. Since then, there has been great progress in the implementation of measures of welfare that are ordinally equivalent to household utility. While welfare measurement at the micro level is of independent interest, of greater practical concern is the issue of the well-being of groups of households. In the second half of the survey, I examine the issue of the aggregation of welfare across households and describe a framework that provides a consistent ranking of social outcomes.

Gaining Ground: Poverty in the Postwar United States.

Official measures of poverty in the United States are compiled by the Census Bureau by comparing a household's income level to a prespecified threshold. From a theoretical perspective it is more appropriate to evaluate the level of poverty using a consumption-based measure of household welfare. This paper evaluate s the level of poverty using expenditure data from the Consumer Expenditure Survey. It finds that consumption-based poverty rates ar e much lower than income-based ones. The trend in the poverty rate in the United States is sensitive to the price index and equivalence scales used to adjust the poverty thresholds. Copyright 1993 by University of Chicago Press.

Aggregate Consumption and Saving in the Postwar United States.

Two commonly used sources of aggregate expenditure data are personal consumption expenditures in the National Income an d Product Accounts and the Consumer Expenditure Surveys administered by the Bureau of Labor Statistics. The author adjusts b oth data sources to incorporate the service flows from owner-occupied housing and other consumer durables. A comparison of the two estimat es of aggregate expenditure reveals that the differences between the tw o data sets have been growing over time. By 1989 the level of aggregat e expenditure in the national accounts exceeds that reported in the Consumer Expenditure Surveys by $1224 billions. Less than half of th is difference can be attributed to definitional differences in the two data sources. Copyright 1992 by MIT Press.

Consumption, Needs and Inequality.

Most empirical studies demonstrating a U-turn in inequality in the United States are based on the distribution of income. However, utility is derived from the consumption of goods and services and there are many reasons to expect the distribution of expenditure to be different from the distribution of income. The author demonstrates that consumption-based inequality indexes actually decrease over the postwar era. This conclusion differs from the stylized facts because of differences in the income and expenditure distributions. Differences also arise from the inclusion of equivalence scales to account for the different needs of heterogeneous households. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.