Welfare Work Requirements with Paternalistic Government Preferences

Work requirements in means-tested transfer programs have grown in importance in the U.S. and in some other countries. The theoretical literature which considers their possible optimality generally operates within a traditional welfarist framework where some function of the utility of the poor is maximized. Here we consider a case where society is paternalistic and instead has preferences over the actual work allocations of welfare recipients. With this social welfare function, optimality of work requirements is possible but depends on the accuracy of the screening mechanism which assigns work requirements to some benefit recipients and not others. Numerical simulations show that the accuracy must be high for such optimality to occur. The simulations also show that earnings subsidies can be justified with the type of social welfare function used here.

Estimating Marginal Returns to Higher Education in the UK

A long-standing issue in the literature on education is whether marginal returns to education fall as education rises. If the population differs in its rate of return, a closely related question is whether marginal returns to higher education fall as a greater fraction of the population enrolls. This paper proposes a nonparametric method of estimating marginal treatment effects in heterogeneous populations, and applies it to this question, examining returns to higher education in the UK. The results indicate that marginal returns to higher education fall as the proportion of the population with higher education rises, consistent with the Becker Woytinsky Lecture hypothesis.

The Role of Randomized Field Trials in Social Science Research: A Perspective from Evaluations of Reforms of Social Welfare Programs

One of the areas of policy research where randomized field trials have been utilized most intensively is welfare reform. Starting in the late 1960s with experimental tests of a negative income tax and continuing through current experimental tests of recent welfare reforms, randomized evaluations have played a strong and increasing role in informing policy. This paper reviews the record of these experiments and assesses the implications of that record for the use of randomization. The review demonstrates that, while randomized field trials in the area of welfare reform have been professionally conducted and well-run, and have yielded much valuable and credible information, their usefulness has been limited by a number of weaknesses, some of which are inherent in the method and some of which result from constraints imposed by the political process. The conclusion is that randomized field trials have an important but limited role to play in future welfare reform evaluations, and that it is essential that they be supplemented by nonexperimental research.

Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004

We estimate the trend in the transitory variance of male earnings in the U.S. using the Michigan Panel Study of Income Dynamics from 1970 to 2004. Using both an error components model as well as simpler but only approximate methods, we find that the transitory variance started to increase in the early 1970s, continued to increase through the mid-1980s, and then remained at this new higher level through the 1990s and beyond. Thus the increase mostly occurred about thirty years ago. Its increase accounts for between 31 and 49 percent of the total rise in cross-sectional variance, depending on the time period.

Productivity Growth and the Phillips Curve

We present a model in which workers' aspirations for wage increases adjust slowly to shifts in productivity growth. The model yields a Phillips curve with a new variable: the gap between productivity growth and an average of past wage growth. Empirically, this variable shows up strongly in the U.S. Phillips curve. Including it explains the otherwise puzzling shift in the unemployment-inflation tradeoff since 1995.

Variable Earnings and Nonlinear Taxation

We explore the interaction between two facts. The first is that income is variable; the second is that the tax and transfer system transforms before tax income into after tax income in highly non-linear ways. The effect is to penalize (and reward) income variability in a manner which is both substantial and capricious.

Subsurface Fish Handling to Limit Decompression Effects on Deepwater Species

A method of handling hooked fish at intermediate depth was developed for species which occur deeper than conventional scuba depths. Juvenile pink snappers, Pristipomoides filamentosus, were hauled from 65-100 m to a depth of only 30 m, where the ambient pressure change was a fraction of that produced by hauling fish to the sea surface. This method afforded a unique opportunity to acoustically tag deepwater, physoclistous fish without the need to alter the fish's original swim bladder volume and without the high risk of further injury associated with surface handling. Tagged P. filamentosus survived and behaved well and were tracked successfully. This basic method could be applied to a variety of deepwater species in a number of research approaches, including tagging and dietary studies