Welfare reform revisited

Welfare

Privatization and the transition to a market economy

The Chinese government has announced its intention to privatize thousands of state-owned enterprises. Such an effort would dwarf recent privatizations in the industrialized West and be comparable only to the Eastern European experience following the fall of the Soviet Union. As such, an examination of the Eastern European privatization may provide valuable lessons for China and any other developing economy that embarks upon a large-scale privatization program. In this article, Jason Saving considers three problems with which Eastern European privatizations have had to contend: a scarcity of information, an inability to exercise managerial oversight, and the absence of competitive markets. He suggests that a lack of information need not prevent privatization. He explores the holding company as a potential solution to the managerial-oversight problem. And he suggests that effective privatization requires both managerial oversight and a legal framework that permits freedom of entry for competing firms.Europe, Eastern ; Economic policy ; Privatization

Keys to economic growth: what drives Texas?

Texas continued to grow after the nation sank into recession in December 2007. Staying up so long in down times adds to the state's reputation for superior economic performance. For the past 40 years, employment has consistently grown faster in Texas than the U.S.--by 1 percentage point a year on average. ; In looking at the drivers of economic growth, recent research has put increasing emphasis on human capital and institutions, such as taxes and public spending. These factors partly explain why some U.S. states and regions have managed to maintain business climates conducive to faster growth. ; Various studies have tied Texas' edge over the rest of the nation to such advantages as low tax burdens and flexible labor markets. The challenge will be to preserve these features while positioning the state to compete in a more knowledge-intensive economy. ; Texas faces issues in public finance, education, changing demographics and infrastructure. How the state addresses them will help determine whether it can maintain its edge.>Economic conditions - Texas ; Economic development

The effect of welfare reform and technological change on unemployment

Unemployment has fallen to its lowest level in a generation. Some welcome this development because they believe it increases the average person's ability to achieve the American dream. Others view low unemployment as a precursor to dire economic consequences. Jason Saving examines the issue of unemployment and reaches three main conclusions. First, welfare reform can significantly reduce unemployment, and the empirical evidence to date suggests the recent American welfare reform effort has caused hundreds of thousands of Americans to leave the welfare rolls and enter the labor force. Second, welfare reform can increase the official unemployment rate, but it cannot increase the number of people who are out of work. Finally, technological change can help low-skilled or disabled individuals become productive members of the labor force, and there is reason to believe it has done so during the 1990s.

European economic integration: a conflict of visions

European Union

"Tough Love": implications for redistributive policy

Jason Saving explores the economic and political implications of "tough love" for redistributive policy. The American welfare system unquestionably helps support the least fortunate among us, but, in making poverty less onerous, it may discourage employment among some individuals. Traditional notions of altruism assume that compassion for the poor is measured by one's willingness to redistribute income but to the extent that more generous support for the poor actually encourages recipiency, welfare programs simultaneously mitigate and exacerbate the problem of poverty. A "new altruistic" approach that incorporates tough love would reduce the number of poor people but could only do so by worsening the living standards of those who remain in poverty.Welfare ; Employment (Economic theory) ; Unemployment ; Poverty

Inequality and growth: challenges to the old orthodoxy

Discussions of how best to alleviate poverty often center on the relative merits of policies that boost growth and those that promote redistribution. If greater inequality allows economies to expand faster, or if it’s an inevitable consequence of pro-growth measures, the two principles seem incompatible. Under such a scenario, societies seeking rapid growth rates have to forgo redistribution from rich to poor. Conversely, choosing a high degree of redistribution implies the decision to accept lower growth rates.Income distribution

Regional update : Texas economy still slowing; energy, exports are bright spots

Economic conditions - Texas ; Energy industries ; Exports ; Employment - Texas

Autocracy, democracy, bureaucracy, or monopoly: can you judge a government by its size?

We develop a simple theoretical framework to examine on an integrated basis how the form of government affects its power and size. The analytical framework abstracts from distortions that arise from the means ofgovernment finance and separates government power into two dimensions-pure coercive power and pure monopoly power. A government can exert its coercive power to shift the demand for its services outward and/or its monopoly power to restrict the output along a given demand curve to earn rents. Among the implications drawn from the analysis are that government officials have an incentive to provide a non-optimal combination of taxes and services, and that neither size nor rents alone are reliable indicators of the extent to which government fails to achieve optimality in its provision of services.Finance ; Power resources

Why did Texas have a jobless recovery?

Employment ; Immigrants ; Labor market