A new idea for welfare reform

This article analyzes several proposals to build work incentives into the U.S. welfare system. It concludes that the most cost effective way to do that is to offer a work subsidy to all low-income single parents—in other words, to simply pay them for working in the labor market. This conclusion is based on a model of the labor force participation behavior of low-income single mothers that the author developed with Robert Moffitt. Among the proposals evaluated in the article, besides the work subsidy, are proposals to reduce the rate that welfare benefits are reduced when welfare recipients work, to provide wage subsidies to low-wage workers, to expand the earned income tax credit, and to subsidize the fixed costs of working.Welfare

Effects of feeding management and breed type on muscle chemical composition and relationships between carcass and muscle compositional traits in steers

peer-reviewedThere is little published information on the chemical composition of muscle from beef steers produced in Irish production systems. The objective of this study was to determine the effects of feeding management and breed type on m. longissimus chemical composition of steers, and to examine relationships between selected carcass traits and measures of carcass and muscle composition. A total of 117 steers (65 Friesians and 52 Charolais Friesians) were assigned on weight within breed type to a pre-experimental slaughter group and to one of 12 finishing groups (6 feeding treatments by 2 finishing periods). The 6 feeding treatments were: (1) silage only offered ad libitum (SO), (2) and (3) SO plus a low concentrate level, (4) and (5) SO plus a high concentrate level, (6) concentrates ad libitum. In Treatments 2 and 4, the silage and concentrates were offered separately whereas in Treatments 3 and 5 they were offered as a total mixed ration (TMR). The two finishing periods were 105 and 175 days. Mean low, high and ad libitum concentrate levels were proportionately 0.415, 0.732 and 0.927, respectively, of daily dry matter intake. Carcass weight, fat depth, fat proportion in the rib joint and m. longissimus lipid concentration all increased (P < 0.01) asymptotically with increasing concentrate level. Carcass fat class (P < 0.07), perinephric plus retroperitoneal fat weight (P < 0.001), fat depth (P < 0.06), fat proportion in the rib joint (P < 0.001) and m. longissimus lipid concentration (P < 0.001) were higher for Friesians than for Charolais crosses. Carcass weight increased (P < 0.001) with increased duration of the finishing period, as did carcass fat class (P < 0.06), fat proportion in the rib joint (P < 0.001) and m. longissimus lipid concentration (P < 0.001). Method of feeding had no effect on any of the traits measured

Comparison of pasture and concentrate finishing of Holstein Friesian, Aberdeen Angus × Holstein Friesian and Belgian Blue × Holstein Friesian steers

peer-reviewedCrossbreeding Holstein Friesian dairy cows with both early and late maturing beef breed bulls is common in Ireland. This study concerned the comparison of spring-born Holstein Friesian (HF), Aberdeen Angus × Holstein Friesian (AA) and Belgian Blue × Holstein Friesian (BB) steers slaughtered directly off pasture in the autumn or following a period of concentrate finishing indoors. Male calves (18 per breed type) were reared together until August of their second year when they were assigned to a 3 (breed type) × 3 (finishing strategy) factorial experiment. The three finishing strategies were (i) pasture only for 94 days to slaughter (PE), (ii) concentrate ad libitum indoors for 94 days to slaughter (CE), and (iii) pasture only for 94 days followed by concentrate ad libitum indoors for 98 days to slaughter (PC). For HF, AA, and BB, mean carcass weight, carcass conformation score and carcass fat score values were 275, 284 and 301 (s.e. 5.1) kg, 1.75, 2.42 and 2.89 (s.e. 0.11), and 2.48, 2.89 and 2.17 (s.e. 0.11), respectively. Pasture alone supported live-weight and carcass-weight gains of approximately 800 g/day and 400 g/day, respectively. Live-weight and carcass-weight gains on concentrate ad libitum were approximately 1400 and 870 g/day, respectively. For PE, CE and PC, mean carcass weight, carcass conformation score and carcass fat score values were 244, 287 and 329 (s.e. 5.1) kg, 1.81, 2.56 and 2.69 (s.e. 0.11), and 1.83, 2.71 and 3.01 (s.e. 0.11), respectively. It is concluded that none of the breed types reached an acceptable carcass weight on PE and only HF had acceptable carcass finish. All breed types were acceptably finished on both concentrate finishing strategies

A computationally practical simulation estimation algorithm for dynamic panel data models with unobserved endogenous state variables

This paper develops a new simulation estimation algorithm that is particularly useful for estimating dynamic panel data models with unobserved endogenous state variables. The new approach can deal with the commonly encountered and widely discussed ``initial conditions problem,'' as well as the more general problem of missing state variables at any point during the sample period. Repeated sampling experiments on a dynamic panel data probit model with serially correlated errors indicate that the estimator has good small sample properties and is computationally practical for use with panels of the size that are likely to be encountered in practice. <br><br> Keywords; initial conditions, missing data, discrete choice, simulation estimation

Money, Political Ambition, and the Career Decisions of Politicians, Second Version

In this paper we assess the impact of a variety of policies that may influence the career decisions of members of the U.S. Congress, using the empirical framework of Diermeier, Keane and Merlo (2005). These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, non-pecuniary rewards and career prospects (both in and out of Congress). We find that reducing the relative wage of politicians would substantially reduce the duration of congressional careers. Notably, however, the effect varies considerably across different types of politicians. A reduction in the congressional wage would disproportionately induce exit from Congress by “skilled” politicians, Democrats, and politicians who were relatively young when first elected. Interestingly, however, it would not cause the type of politicians who most value legislative accomplishments (“achievers”) to disproportionately exit Congress. Thus, wage reductions would not reduce the “quality” composition of Congress in this sense. Term limits also have similar effects on achievers and non-achievers. However, we find that term limits would disproportionately induce members of the majority party to exit Congress. This has the interesting implication that term limits make it more difficult to sustain substantial congressional majorities over time. We do find three types of policies that disproportionately induce non-achievers to leave Congress: (i) elimination of seniority as a determinant of key committee assignments, (ii) restricting private sector employment after leaving Congress, and (iii) reducing the seniority advantage in elections.politicians, political careers, monetary and non-monetary incentives, U.S. Congress

Money, Political Ambition, and the Career Decisions of Politicians

In this paper we assess the impact of a variety of policies that may influence the career decisions of members of the U.S. Congress, using the empirical framework of Diermeier, Keane and Merlo (2005). These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, nonpecuniary rewards and career prospects (both in and out of Congress). We find that reducing the relative wage of politicians would substantially reduce the duration of congressional careers. Notably, however, the effect varies considerably across different types of politicians. A reduction in the congressional wage would disproportionately induce exit from Congress by “skilled” politicians, Democrats, politicians who were relatively young when first elected, and those without pre-congressional political experience. Interestingly, however, it would not cause the type of politicians who most value legislative accomplishments (“achievers”) to disproportionately exit Congress. Thus, wage reductions would not reduce the “quality” composition of Congress in this sense. Term limits also have similar effects on achievers and non-achievers. However, we find that term limits would disproportionately induce members of the majority party to exit Congress. This has the interesting implication that term limits make it more difficult to sustain substantial congressional majorities over time. We do find three types of policies that disproportionately induce nonachievers to leave Congress: (i) elimination of seniority as a determinant of key committee assignments, (ii) restricting private sector employment after leaving Congress, and (iii) reducing the seniority advantage in elections.politicians, political careers, monetary and non-monetary incentives, U.S. Congress

Exploring the Usefulness of a Non-Random Holdout Sample for Model Validation: Welfare Effects on Female Behavior

Opportunities for external validation of behavioral models in the social sciences that are based on randomized social experiments or on large regime shifts, that can be treated as experiments for the purpose of model validation, are extremely rare. In this paper, we consider an alternative approach, namely mimicking the essential element of regime change by non-randomly holding out from estimation a portion of the sample that faces a significantly different policy regime. The non-random holdout sample is used for model validation/selection. We illustrate the non-random holdout sample approach to model validation in the context of a model of welfare program participation. The policy heterogeneity that we exploit to generate a non-random holdout sample takes advantage of the wide variation across states that has existed in welfare policy.Model validation, Hold-out sample, Public welfare

Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland

This paper challenges the conventional wisdom that inequality in Poland increased markedly during the economic transition that began in 1989-90. Using micro data from the Household Budget Surveys, we find that, after a brief spike in 1989, income and consumption inequality actually declined to below pre-transition levels during 1990-92 and then increased gradually, rising only moderately above pre-transition levels by 1997. In sharp contrast, inequality in labor earnings increased markedly and consistently throughout the 1990-97 period. We find that social transfer mechanisms, including pensions, played an important role in mitigating increases in both overall inequality and poverty. We argue that, from a political economy perspective, transfer mechanisms were well-designed to reduce political resistance to market-oriented reforms in the early years of transition, paving the way for rapid growth. Finally, we provide cross-country evidence from the transition economies that is consistent with our interpretation of the Polish experience and is also consistent with recent work in growth theory which suggests that redistribution that reduces inequality can enhance growth.

Mixture of normals probit models

This paper generalizes the normal probit model of dichotomous choice by introducing mixtures of normals distributions for the disturbance term. By mixing on both the mean and variance parameters and by increasing the number of distributions in the mixture these models effectively remove the normality assumption and are much closer to semiparametric models. When a Bayesian approach is taken, there is an exact finite-sample distribution theory for the choice probability conditional on the covariates. The paper uses artificial data to show how posterior odds ratios can discriminate between normal and nonnormal distributions in probit models. The method is also applied to female labor force participation decisions in a sample with 1,555 observations from the PSID. In this application, Bayes factors strongly favor mixture of normals probit models over the conventional probit model, and the most favored models have mixtures of four normal distributions for the disturbance term.Econometric models

A Computationally Practical Simulation Estimation Algorithm for Dynamic Panel Data Models with Unobserved Endogenous State Variables

This paper develops a simulation estimation algorithm that is particularly useful for estimating dynamic panel data models with unobserved endogenous state variables. The new approach can easily deal with the commonly encountered and widely discussed “initial conditions problem,” as well as the more general problem of missing state variables during the sample period. Repeated sampling experiments on dynamic probit models with serially correlated errors indicate that the estimator has good small sample properties. We apply the estimator to a model of married women’s labor force participation decisions. The results show that the rarely used Polya model, which is very difficult to estimate given missing data problems, fits the data substantially better than the popular Markov model. The Polya model implies far less state dependence in employment status than the Markov model. It also implies that observed heterogeneity in education, young children and husband income are much more important determinants of participation, while race is much less important.Initial Conditions, Missing Data, Simulation, Female Labor Force Participation Decisions