2016 Working Papers
- Working Paper 16-02: Welfare Analysis:Bridging the Partial and General Equilibrium Divide for Policy Analysis” by Scott Farrow and Adam Rose.
Abstract: Advances in general equilibrium modeling brought its conceptual foundations in line with standard microeconomic constructs. This reduced the theoretical gap between welfare measurements using a partial or a general equilibrium result although the separation of literature and empirical approach lingers in many applications. The common conceptual foundation and the importance of functional specification, commonality of price movements and closure rules are presented. The existing US Government exclusion of secondary effects from welfare measures in some applications is questioned.
- Working Paper 16-01: In-state tuition and financial aid for undocumented immigrants in the United States: impact on high school graduation, college enrollment and college graduation by L. Dickson, T. H. Gindling and J. Kitchin.
2015 Working Papers
- Working Paper 15-03: “Integrating Cyber Losses into the Standard Microeconomics of Consumer and Firm: Defining Losses in the Gordon and Loeb Model” by Scott Farrow.
- Working Paper 15-02: “FDI Outflows and Domestic Investment: Substitutes or Complements? Exploring the Indian Experience” by Nandita Dasgupta.
Abstract:The recent phenomenon of rising outward foreign direct investment (OFDI) flows has raised serious policy concerns about its effects on the domestic investment and capital formation in the countries of origin of such FDI flows. Does OFDI stimulate domestic investment or does it crowd it out? The concern arises because OFDI activities could shift not only some of the production activities from home to foreign destinations but also could possibly threaten the availability of scarce financial resources at home by allocating resources abroad. All this have the potential to reduce domestic investment, thus lowering the long run sustainable economic growth and employment of the home economies. The central goal of this paper is to empirically explore the evidence of the macroeconomic relationship between OFDI and levels of domestic capital formation in India. Our study reveals that OFDI has long run strong positive causality with domestic investment and thus figures out to be a significant factor affecting domestic investment in India. It becomes imperative therefore that the nation make special effort to promote its OFDI through the designing of appropriate OFDI policies that would help stimulate its domestic investment now and in the future so as to sustain economic growth and development in the long run.
- Working Paper 15-01: “Home Country Effect of FDI Outflows from the BRIC Countries: Study of Domestic Investment” by Nandita Dasgupta.
Abstract:The recent phenomenon of rising outward foreign direct investment (OFDI) flows has raised serious policy concerns about its effects on the domestic investment and capital formation in the source countries. Does OFDI stimulate domestic investment or does it crowd it out? The concern arises because OFDI activities could shift not only some of the production activities from home to foreign destinations but also could possibly threaten the availability of scarce financial resources at home by allocating resources abroad. All this have the potential to reduce domestic investment, thus lowering the long run economic growth and employment of the home economies. The central goal of this paper is to empirically explore the evidence of the macroeconomic relationship between OFDI and levels of domestic capital formation in the BRIC economies. Our study reveals that OFDI has both short run and long run positive causality with domestic investment and thus figures out to be a significant factor affecting domestic investment in the BRIC nations. It becomes imperative, therefore, that the BRIC countries make special effort to promote their OFDI through the designing of appropriate OFDI policies that would help stimulate their domestic investment and economic growth now and in the future.
2014 Working Papers
- Working Paper 14-06: “Fiscal Austerity, Growth Prospects, and Sovereign CDS Spreads: The Eurozone and Beyond” by Chunming Yuan and Tanu J. Pongsiri.
Abstract:This paper applies both conventional panel data models and a dynamic simultaneous equations model to analyze the impact of fiscal austerity and growth prospects along with other macro fundamentals on the pricing of sovereign credit default swaps (CDS) for a panel of 36 countries including the Eurozone. We find that austerity practice generally leads to an expectation of improved fiscal situations, which tends to help the CDS market grow more confidence in indebted sovereigns’ ability to service their debt. The public debt to GDP ratio and projected future output growth also play an important role in determining the prices of sovereign debt insurance. Our analyses further show that the behavior of CDS spreads is considerably affected by common time trends over the sample period.
- Working Paper 14-05: “Policy Transmissions, External Imbalances, and Their Impacts: Cross-Country Evidence from BRICS” by Chunming Yuan and Ruo Chen.
Abstract:This paper provides an empirical exploration of the interaction between fiscal policy, monetary policy, exchange rates, and external balances as well as their impacts on real economic growth and inflation for the BRICS countries. A panel VAR model is employed to assess the dynamic relationships. Our results generally confirm the significant impacts of a monetary shock on real economic activity but the effect of fiscal policy appears to be much weaker from the cross-country perspective. We do not find evidence supporting the “twin deficits” hypothesis but the positive interaction between inflation and interest rates – the “price puzzle” – is documented. When bilateral exchange rates and trade deficits (vis-à-vis the US) are used, we find that the BRICS–US bilateral trade balances do not react considerably to currency depreciation shocks, indicating that exchange rates may not play a critical role in the adjustment of large trade deficits for the U.S.
- Working Paper 14-04: “Willingness to pay to host the Summer Olympic Games” by Dennis Coates and Stefan Szymanski.
- Working Paper 14-03: “Comparing television news acquisition from the Gulf and Valdez oil spills: similarities and differences” by Scott Farrow and Douglas M. Larson.
Abstract:The Deepwater Horizon well blow-out in 2010 in the U.S. Gulf of Mexico is a recent example of a major news and environmental event while the Exxon Valdez spill in 1989 is more distant with some similar characteristics. Previous work by the authors estimated the welfare loss from “passive use value” associated with gathering news. We replicate that approach here using similar Nielsen TV viewing data and find the characteristics of the story have a similar effect in both events but the key economic relationship to the price of time has changed. We discuss reasons for this finding, and suggestions for improvement.
- Working Paper 14-02: “An empirical analysis of life jacket effectiveness in recreational boating” by Christelle Viauroux and Ali Gungor.
Abstract:This paper presents the results of an analysis on Life Lacket (LJ) effectiveness in U.S. recreational boating between 2008 and 2011. We use the US Coast Guard’s Boating Accident Report Database (BARD) to fit a Poisson regression of number of fatalities on many different factors interacting at the time of the accident. We find that LJ wear is one of the most influential determinant of the number of fatalities on a vessel, together with the number of vessels involved, the type and engine of the vessel. We estimate that the expected number of deceased per vessel would decrease by about 80% if the operator wears his LJ. The number of deceased is also estimated 1.86 times higher when the vessel is a canoe or a kayak, but 80% lower as one more vessel is involved, and 34% lower when the operator has more than 100 hours of experience. Interestingly, we find LJ effectiveness decrease significantly with the length of the boat and slightly with increases in water temperature; it increases slightly with the age of the operator.
We simulate the impact of a LJ regulation that would impose all operators to wear their LJ, corresponding to a a minimum of 20% increase in wear rate (to about 40%). Between 2008 and 2011, we estimate that such a policy would have saved between 1,721 and 1,889 (out of 3047) boaters, i.e. 1,234 out of 2,185 drowning victims. A similar policy restricted to 16 to 30 feet length boats would have saved approximately 778 victims. Finally, an analysis of causes of death shows that a policy on LJ wear would reduce the share of drowning victims compared to other causes.
- Working Paper 14-01: “Residual Risk Accounting: A Pilot Study of the Coastal Sector” by Scott Farrow.
Abstract:Risks continue near the coasts such as flooding, oil spills, deaths and unemployment despite numerous policies to prevent and mitigate their effects. Such policies are typically analyzed in their natural units, such as jobs, and so comparisons are difficult across risk categories. An approach similar to supplemental national income and product accounting allows direct comparison of the relative importance and variability of these residual risks. Results for the coastal sector highlight the stability and large expected annual costs associated with some activities such as recreational boating fatalities. In contrast, other categories such as oil spills and flooding exhibit high variability and in the case of flooding, a high level of damages. The results are useful in the strategic development of regulations, causal models and policy design.
2013 Working Papers
- Working Paper 13-07: “Slot Machine Payback Percentages: The Devil is in the Moment” by Scott Farrow and Jackson Costa.
Abstract:The average payback percentage from slot machines is important to gamblers, casinos, and governments. While apparently simple to define several complications can exist, among them which measure to average and potentially misleading formulas to calculate the average. Daily slot machine data from the state of Maryland for 19 months are analyzed for the expected value of the average payback ratio per machine and per dollar gambled. On a per dollar gambled basis, the payback percentage meets legislative requirements that the gaming floor payback at least 90 percent. On a per machine basis, that requirement is not met which can imply a significant shift of money from gamblers to casino operators and the state. Other payback measures are hypothesized to also be less than the per-dollar gambled measure but data are lacking.
- Working Paper 13-06: “Do Faculty Matter? Effects of Faculty Participation in University Decisions” by Kathleen A. Carroll, Lisa M. Dickson and Jane E. Ruseski.
Abstract:This paper models faculty participation in university decision-making and the effects on enrollment, academic quality and non-academic quality. The model predicts that faculty participation positively affects student enrollment and investments in academic quality. Without faculty involvement in decision-making, universities may choose to overinvest in non-academic quality (e.g. athletics, recreational activities) relative to academic quality. If academic quality provides positive externalities as the economic literature indicates, then faculty involvement in decision-making is socially preferred to having decisions made only by university administrators.
- Working Paper 13-05: “The habit for voting, “civic duty” and travel distance” by Tim Pawlowski and Dennis Coates.
Abstract:There is a rich literature addressing the paradox of not voting and election turnout from both theoretical and empirical perspectives. By taking advantage of a unique dataset from an “experimental” setting, this paper is the first to estimate the utility that drives the “civic duty” or the habit for voting. Consistent with the general turnout literature, education level, marital status, household size, and distance all affect the persistence of voter participation.
Abstract:Benefit-cost analysis is seen by some as a controversial activity in which the analyst can be significantly bias the results. This note highlights some of the ways that analysts can “lie” in a benefit-cost analysis but more importantly, provides guidance on how not to lie and how to better inform public decisionmakers.
- Working Paper 13-03: “Government Intervention in the U.S. Market for Education” by Lisa Dickson.
Abstract:The purpose of government involvement in education is to insure that individuals invest in the optimal level of education and that education is produced efficiently. In this chapter, we provide an overview of human capital theory and highlight some of the reasons why individuals may not choose the socially optimal level of education. We then discuss the rationale for government intervention in the market for education. Currently, the federal government intervenes in the education market by providing federal funds, evaluating educational programs and administering educational programs. Federal funds are used to defray the costs of education for some students, to evaluate educational programs and / or to encourage innovation in education. In this chapter, we also present a few of the challenges facing higher education in the United States.
- Working Paper 13-02: “The Consequences of Increased Enforcement of Legal Minimum Wages in a Developing Country: An evaluation of the impact of the Campaña Nacional de Salarios Mínimos in Costa Rica” by T. H. Gindling, Nadwa Mossaad and Juan Diego Trejos.
Abstract: In August 2010 the Costa Rican government implemented a comprehensive program to increase compliance with legal minimum wages, the Campaign for Minimum Wages. To evaluate the impact of the Campaign, we use a regression discontinuity approach, which compares what happened to workers who before the campaign had been earning below the minimum wage to those who before the Campaign had been earning above the minimum wage. We analyze a panel data set with information on workers from before the Campaign began (July 2010) and after the Campaign had been in operation for some time (July 2011). We find evidence that the Campaign led to an increase in compliance with minimum wage laws in Costa Rica; the mean earnings of those earning less than the minimum wage in 2010 increased by approximately 10% more than the earnings of those who had been earning more than the minimum wage. The Campaign led to the largest increases in the wages of women, younger workers and less-educated workers. We find no evidence that the Campaign had a negative impact on the employment of full-time workers whose wages were increased. We find some weak evidence that the Campaign had a negative impact on the employment of part-time private sector employees. Although increased inspections were mainly targeting minimum wage violations, we also observe an increase in compliance with a broader set of labor standards and a positive spillover effect relative to other violations of labor laws. Specifically, the analysis provides evidence that the Campaign had a positive impact on the probability that workers receive legally mandated non-wage benefits such as Social Security (which includes pension and health insurance), overtime pay, sick-leave and paid vacations.
- Working Paper 13-01: “The distribution of income in Central America” by T. H. Gindling and Juan Diego Trejos.
Abstract: We document changes in income and earnings inequality in the five Central American countries from the early 1990s to 2009. In the 1990s Costa Rica had the most equal distribution of income in Central America, and one of the most equal distributions of income in Latin America. At the other extreme, Guatemala, Honduras and Nicaragua were among the most unequal countries in Latin America. Inequality in El Salvador was between these extremes. Then, in the first decade of the 21st century inequality in El Salvador and Nicaragua decreased while inequality in Costa Rica, Guatemala and Honduras increased. By 2009 levels of inequality in El Salvador and Nicaragua were similar to those in Costa Rica. In this paper, we examine why income and earning inequality differs between the five Central American countries, and why inequality decreased in El Salvador and Nicaragua but increased in Costa Rica, Guatemala and Honduras.
2012 Working Papers
- Working Paper 12-04: “Explaining the Revolution in U.S. Fertility, Schooling and Womens Work Among Households Formed in 1875, 1900 and 1925” by Matthias Cinyabuguma, William Lord, and Christelle Viauroux (Previously entitled: Revolution in U.S. Fertility, Schooling and Women’s Work, 1875-1940: Assessing Proposed Explanations, updated November 2013).
Abstract: -This paper addresses revolutionary changes in the education, fertility and market work of U.S. families formed in the 1870s-1920s: Fertility fell from 5.3 to 2.6; the graduation rate of their children increased from 7 to 50 percent; and the fraction of adulthood wives devoted to market-oriented work increased from 7 to 23 percent (by one measure).
-These trends are addressed within a uni ed framework to examine the ability of several proposed mechanisms to quantitatively replicate these changes. Based on careful calibration, the choices of successive generations of representative husband-and-wife households over the quantity and quality of their children, household production, and the extent of mothers involvement in market-oriented
production are simulated.
-Rising wages, declining mortality, a declining gender wage gap, and increased efficiency and public provision of schooling cannot, individually or in combination, reduce fertility or increase stocks of human capital to levels seen in the data. The best t of the model to the data also involves: 1) a decreased tendency among parents to view potential earnings of children as the property of parents
and, 2) rising consumption shares per dependent child.
-Greater attention should be given the determinants of parental control of the work and earnings of children for this period.
-One contribution is the gathering of information and strategies necessary to establish an initial baseline, and the time paths for parameters and targets for this period beset with data limitations. A second contribution is identifying the contributions of various mechanisms toward reaching those calibration targets.
- Working Paper 12-03: “Conditional Stable Matchings” by Vilmos Komornik and Christelle Viauroux (updated August 2013).
Abstract: In matching theory of contracts the substitutes condition plays an essential role to ensure the existence of stable matchings. We study many-to-many matchings where groups of individuals, of size possibly greater than two, are matched to a set of institutions. Real-world examples include orphan brothers accepting an adoptive family conditional on all of them being included; hiring contracts that may only be chosen together; or a situation where a firm accepts to hire several workers only if they accept to work on different days (part-time jobs).
We demonstrate by several examples that such extra conditions may alter the natural choice maps so that stable matchings cannot be obtained by applying the standard theorems. We overcome this difficulty by introducing a new construction of choice maps. We prove that they yield stable matchings if the construction respects an “anti-trust” rule on the supply side of the market.
- Working Paper 12-02: “Zoning on the urban fringe: Results from a new approach to modeling land and housing markets” by Nicholas Magliocca, Virginia McConnell, Margaret Walls and Elena Safirova.
Abstract: This paper uses an economic agent-based model of land use in a hypothetical urban fringe community to examine the effects of large-lot zoning on land conversion, land prices, and the spatial configuration and density of new development. The model incorporates the actions of heterogeneous housing consumers, developers, and farmer/landowners who make economic decisions in land and housing markets. The model allows for population growth and simulates the evolution of land use patterns and prices over a 20-year time period. Zoning regulations in the form of minimum lot size restrictions imposed in an outlying area are shown to have effects that vary with the stringency of the regulations: 2-acre minimum lot sizes have little effect on the spatial patterns of development, but they do increase land and housing prices and result in higher incomes in the region; 5-acre minimum lot sizes push development toward the city center, leaving agricultural land in the zoned region undeveloped until quite late in the simulation period. While house prices are higher with 5-acre zoning, land prices in the zoned region fall, highlighting the countervailing influences of lot size restrictions on land prices. The new modeling approach allows for the tracking of the transitional dynamics of development, both over space and time as the urban area grows.
- Working Paper 12-01: “Evaluating Central Regulatory Institutions with an Application to the U.S. Office of Information and Regulatory Affairs” by Scott Farrow.
Abstract: Alternative governmental models and evaluation designs are used to analyze central regulatory institutions. Such institutions are increasingly used world wide to coordinate or advise decision making on regulatory actions that extend across multiple agencies. Bureaucratic, economic, and political framings are used to inform data collection and analysis. These framings and designs are illustrated using analyses of the process and outcome of regulatory review at the U.S. Office of Information and Regulatory Affairs. Several data sets are analyzed, including a quantile regression of data from Morrall (2003).
2011 Working Papers
- Working Paper 11-136: “An Examination of the Effects of the Recent Economic Crisis on Major League Baseball (MLB) Attendance Demand” by Dennis Coates, Sungil Hong and Michael Mondello.
Abstract: We investigate the effects of the recent economic crisis on Major League Baseball (MLB) attendance during the 2008 and 2009 seasons. To elaborately capture the impact of economic circumstances, we adopt the composite index of coincident indicators released by Federal Reserve Bank of Philadelphia. Major advantages of the coincident indexes are the ability to specify monthly changes in state economic conditions as well as combining the information from several economic indicators. The estimates for the coincident indicators suggests the economic downturn drives a fall in attendance of about 6%, compared to the reported decline of 6.77%. The success of the composite index in explaining the impact of the recent economic crisis on attendance in MLB suggests the indicator is a viable proxy for income in game attendance demand studies.
- Working Paper 11-135: “Returns to handedness in professional hockey” by Dennis Coates and Sara Azmoudeh Fard.
Abstract: Research in economics has examined many determinants of earnings, including whether an individual is left or right handed. In the soccer labor market, being able to kick well with both the left and the right foot is rewarded with a salary premium. This paper examines pay and performance for hockey players that shoot left-handed versus those that shoot right handed. We find that after controlling for points, time on the ice, player size and age, and team and season, players are paid differently by position, and players playing the same position may be paid differently because they shoot left versus right handed. Moreover, points scored are compensated differently for left handed shooting players on the right wing than for other players. These results suggest a hockey player labor market inefficiency.
Abstract: Surveys of patrons of the 2011 Baltimore Grand Prix provide evidence of the economic impact of the event that is vastly smaller than the projections by the events promoter, Baltimore Racing Development. Our best estimate of the gross spending impact of the event is about $25 million, while the promoter projected impact of $70 million. About 76% of the patrons in our sample came from Maryland, and about 64% of them from the Baltimore metropolitan area. Consequently, about $10 million of the spending we found would likely have occurred in Baltimore or Maryland even without the event. Based on our survey information, the Baltimore Grand Prix was certainly not a game changer.
Abstract: This paper presents evidence that reductions in mortgage interest rates associated with prepayment penalties are greater for riskier borrowers, as measured by mortgage type, credit scores, and local incomes and education levels. This is consistent with an efficiency view that, by reducing the reclassification risk faced by lenders, prepayment penalties can be welfare-improving. Additional findings indicate that prepayment penalties are also used as a predatory lending tool, but that the efficiency view dominates the predatory view in most circumstances. State anti-predatory lending laws restricting the duration and amount of prepayment penalties appear to curb the predatory use of prepayment penalties.
- Working Paper 11-132: “Tax sharing in insurance markets: A useful parameterization ” by Christelle Viauroux.
Abstract: In this paper, we use a Principal-Agent model (à la Holmström) to evaluate the economic impacts at imposing a tax on insurance payment resulting from an optimal contract in presence of moral hazard. We show that, in most cases, the tax generates a disincentive for the risk averse insured to provide sufficient effort at maintaining care, hence increasing insurance payments. As a result, company’s profit and overall welfare decrease. Simulations show that this last result can be reversed only in cases where the cost of effort is low and the perceived insurance quality is very high.
- Working Paper 11-131: “Comparing Multi-State Expected Damages, Option Price and Cumulative Prospect Measures for Valuing Flood Protection; (updated 3-11-2013, previously entitled: The Ex-Ante Willingness to Pay for Flood Protection)by Scott Farrow and Michael Scott.
Abstract: Floods are risky events ranging from small to catastrophic. Although expected flood damages are frequently used for economic policy analysis, alternative measures such as option price and cumulative prospect value exist. The empirical magnitude of these measures whose theoretical preference is ambiguous is investigated using case study data from Baltimore City. The outcome for the base case option price measure increases mean willingness to pay over the expected damage value by about 3 percent, a value which is increased with greater risk aversion, reduced by increased wealth, and only slightly altered by higher limits of integration. The base measure based on cumulative prospect theory is about 46 percent less than expected damages with estimates declining when alternative parameters are used. The method of aggregation is shown to be important in the cumulative prospect case which can lead to an estimate up to 41 percent larger than expected damages. Expected damages remain a plausible and the most easily computed measure for analysts.
- Working Paper 11-130: “Game Attendance and Competitive Balance in the National Hockey League“; by Dennis Coates and Brad R. Humphreys.
Abstract: We examine the relationship between attendance, uncertainty of outcome, and team quality in the National Hockey League. Based on results from a reduced form model of attendance at 6054 regular season NHL games from 2005/06 to 2009/10, we find evidence that attendance increases when fans expect the home team to win by a large margin. Attendance increases for home team underdogs, but the extent of that boost declines as the underdog status worsens. An asymmetric relationship exists between expected game outcomes and attendance, suggesting the need for an expanded definition of the Uncertainty of Outcome Hypothesis.
- Working Paper 11-129: “Modeling the University Decision Process: The Effects of Faculty Participation in University Decision Making” by Kathleen A. Carroll, Lisa M. Dickson and Jane E. Ruseski.
Abstract: This paper develops models of decision making in a university setting with and without faculty participation. The models predict values for the level of services or programs offered and the quality of those services in a university setting for either private nonprofit or public universities. These predictions indicate conditions under which outcomes are similar or differ with faculty participation in the decision process. The model predicts that without shared governance that universities may overinvest in non-academic quality (e.g. athletics, recreational activities). This would be exacerbated in for-profit forms of higher education. Notably, nonprofit and/or public institutions are not inefficient relative to for-profit institutions, which questions the rationale for subsidies to for-profit institutions. If academic quality provides positive externalities as has been suggested in the literature, then shared governance may be socially preferred to university decision making without faculty involvement.
2010 Working Papers
- Working Paper 10-128: “ Are There Net State Social Benefits or Costs from Legalizing Slot Machine Gambling? ” by Scott Farrow and Judith Shinogle.
Abstract: The estimated impacts, benefits, and costs of legalizing slot machines in Maryland are analyzed. The analysis provides insight into the components and the total net benefits to the state and its citizens, the role of uncertainty, distributional impacts, and a basic tax alternative. The results forecast net benefits for Maryland both in comparison to doing nothing and in comparison to raising an equivalent amount in taxes. However, if revenue raised from the lower income population has a higher social cost, then doing nothing or raising taxes appears preferred.
- Working Paper 10-127: ” Improving Compliance with Legal Minimum Wage in Costa Rica” by T. H. Gindling and Juan D. Trejos.
- Working Paper 10-126: “ The Impact of Minimum Wages on Wages, Work and Poverty in Nicaragua” by Enrique Alaniz, T. H. Gindling and Katherine Terrell (Updated May 2011).
Abstract: In this paper we use an individual- and household-level panel data set to study the impact of changes in legal minimum wages on a host of labor market outcomes including: a) wages and employment, b) transitions of workers across jobs (in the covered and uncovered sectors) and employment status (unemployment and out of the labor force), and c) transitions into and out of poverty. We find that changes in the legal minimum wage affect only those workers whose initial wage (before the change in minimum wages) is close to the minimum. For example, increases in the legal minimum wage lead to significant increases in the wages and decreases in employment of private covered sector workers who have wages within 20% of the minimum wage before the change, but have no significant impact on wages in other parts of the distribution. The estimates from the employment transition equations suggest that the decrease in covered private sector employment is due to a combination of layoffs and reductions in hiring. Most workers who lose their jobs in the covered private sector as a result of higher legal minimum wages leave the labor force or go into unpaid family work; a smaller proportion find work in the public sector. We find no evidence that these workers become unemployed.
- Working Paper 10-125: “Do In-State Tuition Benefits Affect the Enrollment of Non-Citizens? Evidence from Universities in Texas” by Lisa M. Dickson and Matea Pender.
Abstract: In 2001, the Texas state legislature passed House Bill 1403 and became the first state to offer in-state tuition rates at public universities for non-citizens who attended high school in the state for three years. As a result of the policy change, the cost of attending college at public universities in Texas fell dramatically for non-citizens. Using administrative data from six universities in Texas, we employ a quasi-experimental design to identify the effects of the policy change on the probability of enrollment. The results demonstrate a large and significant positive effect of lowering tuition on the enrollment of non-citizens at the University of Texas at Pan American and a positive and marginally significant effect on the probability of enrollment at the University of Texas at San Antonio. The results also suggest that the policy had a negative effect on enrollment at Southern Methodist University, a private university whose tuition was unchanged by the policy.
- Working Paper 10-124 : “Origination Channel, Prepayment Penalties, and Default” by Morgan J. Rose (updated July 2011).
Abstract: This paper presents evidence that non-bank-originated subprime mortgages have a higher probability of default than bank-originated subprime mortgages, but only for loans with prepayment penalties.
Evidence also indicates that non-banks price prepayment penalties less favorably to borrowers than banks do, and non-banks originate disproportionately more loans with prepayment penalties in locales with less financially sophisticated borrowers. State anti-predatory lending law provisions restricting the use of prepayment penalties eliminate the elevated default risk of non-bank originations relative to bank originations. These findings are consistent with incentives generated by non-bank compensation via yield spread premiums on loans with prepayment penalties.
- Working Paper 10-123: “The Occupation, Marriage, and Fertility Choices of Women: A Life-Cycle Model” by Bing Ma.
Abstract: An extensive literature in labor economics recognizes that the life-cycle labor force participation of a woman is highly associated with her family choices. There is, however, virtually no study going further to incorporate female occupational choices. This paper attempts to fill this gap in labor supply literature by examining the interrelatedness of occupation, marital status and fertility choices of women over the life cycle. A discrete choice dynamic utility maximization model is constructed to investigate how relevant determinants influence a woman’s career and family path and how these decisions interplay with each other. Using longitudinal data on women from the 1979 youth cohort of the National Longitudinal Survey of Youth, I estimate my model through the maximum likelihood estimation method in a dynamic programming fashion which takes into account the uncertainties from random arrivals of job opportunities, unexpected failure of birth control and temporary shocks to family
earnings. The estimation results of structural parameters indicate that women’s lifecycle patterns of occupation, marriage and contraceptive behaviors vary significantly with their observable characteristics such as age, education, ability, race, and the presence of young children.
- Working Paper 10-122: “Socioeconomic Status and Obesity Gradient over Age: New Evidence from China” by Bing Ma (former title: “Socioeconomic Status and Overweight and Obesity: How Does the Gradient Change with Age? New Evidence from China”, updated March 2012).
Abstract: This paper presents a systematic analysis of the impact of socioeconomic status(SES) on overweight and obesity in China and investigates how and why the SES-obesity gradient differs with age. Using a longitudinal sample drawn from the China Health and Nutrition Survey (CHNS), I find that body mass index (BMI) is positively associated with SES during early childhood but becomes inversely related to childhood SES as children age into adulthood. Estimation results show that children from low SES families are less likely to be overweight or obese than their median and high SES peers. The results from subsamples stratified by living area reveal that the SES gaps of obesity are generally larger for urban residents than rural residents. Females are significantly less likely to be overweight than males in China. The SES during childhood has independent effects after controlling for respondents’ contemporaneous SES. The relationship between the contemporaneous SES of a male adult and his chance of being overweight or obese is significantly positive, while the contemporaneous SES of a female adult is negatively related to her chance of being overweight or obese.
- Working Paper 10-121: “World Cup Economics: What Americans Need to Know about a US World Cup bid” by Dennis Coates.
Abstract: An American bid to host either the 2018 or 2022 World Cup is supported by a private economic impact report commissioned by the bid organizing committee. Independent evaluation of the economic impact report is problematic as the document is not available for review. The brief press release on the bid committee website raises warning flags about the accuracy and reliability of the report. This paper outlines concerns with the methods and suggests questions that must be answered before American taxpayers get the bill for enormous profits to soccer business interests.
- Working Paper 10-120: “Stable Schedule Matchings” by Vilmos Komornik, Zsolt Komornik and Christelle Viauroux (updated July 2011).
Abstract: In order to treat a natural schedule matching problem related with worker-firm matchings, we generalize some theorems of Baiou–Balinski and Alkan–Gale by applying a fixed point method of Fleiner.
- Working Paper 10-119: “Supplementary Results for “Geographic Variation in Subprime Loan Features, Foreclosures and Prepayments” by Morgan J. Rose (updated March 2011).
Abstract: This document provides supplementary results to the analyses of Rose (2011), “Geographic Variation in Subprime Loan Features, Foreclosures and Prepayments,” which examines the geographic variation in the effects of prepayment penalties, balloon loans, and reduced documentation on the probabilities of foreclosure and prepayment. Specifically, this supplement presents complete results for all specifications reported in that paper, as well as those from a constant heterogeneity weight approach used to contend with convergence problems associated with multinomial logit models that incorporate unobserved heterogeneity. Due to space limitations in Rose (2011), the complete regression results appear here.
- Working Paper 10-118: “Geographic Variation in Subprime Loan Features, Foreclosures and Prepayments” by Morgan J. Rose (updated March 2011).
Abstract: Using data on subprime mortgages from ten cities, I examine geographic variation in the effects of prepayment penalties, balloon loans, and reduced documentation on the probabilities of foreclosure and prepayment. Results indicate that across cities, reduced documentation is consistently related to higher probabilities of foreclosure, and prepayment penalties are consistently related to lower probabilities of prepayment. Prepayment penalties and balloon loans are more sporadically associated with foreclosures, and reduced documentation and balloon loans are more sporadically associated with prepayments. These results are robust to controls for several state anti-predatory lending law provisions, whose effects are also tested.
2009 Working Papers
- Working Paper 09-117: “Incorporating Equity in Regulatory and Benefit-Cost Analysis Using Risk Based Preferences” by Scott Farrow.
Abstract: Governmental guidance for regulatory and benefit-cost analysis is targeted for applied analysts. Existing Federal guidance recommends sensitivity analysis in general without being specific regarding the implicit distributional assumptions of standard benefit-cost analysis. Recommendations for Federal guidance are developed to: 1) better communicate expectations for distributional analysis, 2) develop guidance for descriptive statistics related to distributional issues, and 3) integrate Government published measures of inequality aversion and to evaluate compensation for identified sensitive populations. While such actions have a data collection and analysis cost, they may make the results of regulatory analysis more relevant by investigating both efficiency and equity measures.
- Working Paper 09-116: “Speculation and Hedging in the Currency Futures Markets: Are They Informative to the Spot Exchange Rates” by Aaron Tornell and Chunming Yuan (Updated February 2011).
Abstract: This paper presents an empirical analysis investigating the relationship between the futures trading activities of speculators and hedgers and the potential movements of major spot exchange rates. A set of trader position measures are employed as regression predictors, including the level and change of net positions, an investor sentiment index, extremely bullish/bearish sentiments, and the peak/trough indicators. We find that the peaks and troughs of net positions are generally useful predictors to the evolution of spot exchange rates but other trader position measures are less correlated with future market movements. In addition, speculative position measures usually forecast price-continuations in spot rates while hedging position measures forecast price-reversals in these markets.
- Working Paper 09-115: “Forecasting Exchange Rates: The Multi-State Markov-Switching Model with Smoothing” by Chunming Yuan (Updated April 2011).
Abstract: This paper presents an exchange rate forecasting model which combines the multi-state Markov-switching model with smoothing techniques. The model outperforms a random walk at short horizons and its superior forecastability appears to be robust over different sample spans. Our finding hinges on the fact that exchange rates tend to follow highly persistent trends and accordingly, the key to beating the random walk is to identify these trends. An attempt to link the trends in exchange rates to the underlying macroeconomic determinants further reveals that fundamentals-based linear models generally fail to capture the persistence in exchange rates and thus are incapable of outforecasting the random walk.
- Working Paper 09-114: “The Exchange Rate and Macroeconomic Determinants: Time-Varying Transitional Dynamics” by Chunming Yuan (Updated August 2011).
Abstract: In this paper, I consider modeling the effects of the macroeconomic determinants on the nominal exchange rate to be channeled through the transition probabilities in a Markovian process. The model posits that the deviation of the exchange rate from its fundamental value alters the market’s belief in the probability of the process staying in certain regime next period. This paper further takes into account the ARCH effects of the volatility of the exchange rate. Empirical results generally confirm that fundamentals can affect the evolution of the dynamics of the exchange rate in a nonlinear way through the transition probabilities. In addition, I find that the volatility of the exchange rate is associated with significant ARCH effects which are subject to regime change.
- Working Paper 09-113: revised as Working Paper 10-118 above.
- Working Paper 09-112: “More Than a Wing and a Prayer: Government Indemnification of the Commercial Space Launch Industry” by Timothy J. Brennan, Carolyn Kousky and Molly K. Macauley.
Abstract: Using rockets to launch communications satellites and other spacecraft poses risks to the uninvolved public, including persons and property under the flight path of the launch vehicle. The federal government plays a pivotal technical role during the actual launch by carrying out certain risk-related procedures, thus causing third-party risk to be jointly produced by the company and the government. In addition, under the Commercial Space Launch Act, the government partially indemnifies commercial launch companies for third-party damages. We compare the indemnification policy to optimal liability rules under public-private co-production of risk. Under modest assumptions, shared liability created by the indemnification rules decreases the incentive of both parties to take care relative to the optimum. If care were observable, it would be preferable for the government to fully indemnify companies that take due care. The role of the government as an agent for third parties may qualify these findings.
Abstract: Among the many complex issues of technology, governance, and market design affecting the electricity sector, climate policy has become dominant. From the perspective of a nonspecialist looking at this changing dominance, a quiz illuminates some of the peculiar uses of language one can find in climate change and energy efficiency policy. Six economic challenges are then examined: cap-and-trade vs. taxes, non-price regulations, energy efficiency policies, mitigation vs. adaptation, trade effects, and transmission planning. Three additional challenges affect not just the means to the climate policy end but also the end itself: the “fat tails” problem, discount rates, and whether environmental protection should be evaluated by aggregating willingness to pay across persons. Planners in the public and private sectors need to be aware of not only the economic policy challenges but also arguments that may influence the intensity of the climate policies with which they have to cope.
Abstract: The cliché in the electricity sector, the “cheapest power plant is the one we don’t build,” seems to neglect the benefits of the energy that plant would generate. Those overall benefits could be countered by benefits to consumers if “not building that plant” was the result of monopsony. A regulator acting as a monopsonist may need to avoid rationing demand at monopsony prices. Subsidizing energy efficiency to reduce electricity demand at the margin can solve that problem, if energy efficiency and electricity use are substitutes. We may not observe these effects if the regulator can set price as well as quantity, lacks buyer-side market power, or is legally precluded from denying generators a reasonable return on capital. Nevertheless, the possibility of monopsony remains significant in light of the debate as to whether antitrust enforcement should maximize consumer welfare or total welfare.
- Working Paper 09-109: “Optimal Energy Efficiency Policies and Regulatory Demand-Side Management Tests: How Well Do They Match?” by Timothy J. Brennan.
Abstract: Under conventional models, subsidizing energy efficiency requires electricity to be priced below marginal cost. Its benefits increase when electricity prices increase to finance the subsidy. With high prices, subsidies are counterproductive unless consumers fail to make efficiency investments when private benefits exceed costs. If the gain from adopting efficiency is only reduced electricity spending, capping revenues from energy sales may induce a utility to substitute efficiency for generation when the former is less costly. This goes beyond standard “decoupling” of distribution revenues from sales, requiring complex energy price regulation. The models’ results are used to evaluate tests in the 2002 California Standard Practice Manual for assessing demand-side management programs. Its “Ratepayer Impact Measure” test best conforms to the condition that electricity price is too low. Its “Total Resource Cost” and “Societal Cost” tests resemble the condition for expanded decoupling. No test incorporates optimality conditions apart from consumer choice failure.
- Working Paper 09-108: “Health and the Revolution in Household Behavior 1880-1940: Fertility, Education and Married Female Labor Supply” by Matthias Cinyabuguma, Bill Lord and Christelle Viauroux(Previous title was “Schooling, Fertility, and Married Female Labor Supply: What Role for Health?”).
Abstract: Between the latter nineteenth century and the 1930s there was a dramatic revolution in American families. Family size continued its long-term decline, the schooling of older children expanded dramatically and the proportion of married females’ adulthood devoted to market-oriented activities increased. Over this same period there were significant reductions in mortality, especially among the young, and impressive reductions in morbidity. This paper considers all these trends jointly, modeling the changes in fertility, child schooling and lifetime married female labor supply as a consequence of exogenous changes in health. These interactions are then quantified using calibration techniques. The simulations suggest that reductions in child mortality alone cannot explain the transformation of the American family. Indeed, in our preferred calibration, reductions in child mortality lead to a modest decline in human capital and increase in fertility, with little effect on married female labor force involvement. In sharp contrast, reductions in morbidity are found to lower fertility and increase education. The time savings from lower fertility more than offset the increased time mothers invest in their childrens’ quality, freeing some time for market work. However, lower fertility alone cannot account for the increase in market work of married women. In our framework, the majority of the increase is a consequence of a narrowing of the gender wage gap. More generally, viewing the implications of health improvements deepens our understanding of the American family transformation, complementing explanations based on skill biased technical change and improvements in household durable goods.
- Working Paper 09-107: “Pricing urban congestion: a structural random utility model with traffic anticipation” by Christelle Viauroux (Updated April 2011, previous title was “Optimal pricing of endogenous congestion: a disaggregated approach”).
Abstract: We design and estimate a game theoretic congestion pricing mechanism in which the regulator aims at reducing urban traffic congestion by price discriminating travelers according to their Value Of Time (VOT). Travelers’ preferences depend on their observable characteristics, on the endogenous amount of congestion anticipated, on their Marginal Utility (MU) of income and on some unobserved factors. Using a French household survey, we estimate the demand models to simulate different pricing mechanisms. We find that unobserved determinants of transportation demand are significant and are used to measure the anticipated time spent in traffic and the comfort of traveling: diverging from these expectations is felt as more discomfort than if no expectations were formed a-priori. However some of this discomfort is derived from travelers’ marginal utility of income: the lost time in traffic is clearly “unpleasant” because of its opportunity cost. When the regulator and the transportation provider share common objectives, we show that a great welfare improvement can be achieved when implementing a homogenous pricing that accurately accounts for travelers VOT.
- Working Paper 09-106: “Urban Growth Externalities and Neighborhood Incentives: Another Cause of Urban Sprawl?” by Matthias Cinyabuguma and Virginia McConnell.
Abstract: This paper suggests a cause of low density in urban development or urban sprawl that has not been given much attention in the literature. There have been a number of arguments put forward for market failures that may account for urban sprawl, including incomplete pricing of infrastructure, environmental externalities, and unpriced congestion. The problem analyzed here is that urban growth creates benefi ts for an entire urban area, but the costs of growth are borne by individual neighborhoods. An externality problem arises because existing residents perceive the costs associated with the new residents locating in their neighborhoods, but not the full benefi ts of new entrants which accrue to the city as a whole. The result is that existing residents have an incentive to block new residents to their neighborhoods, resulting in cities that are less dense than is optimal, or too sprawling. The paper models several different types of urban growth, and examines the optimal and local choice outcomes under each type. In the fi rst model, population growth is endogenous and the physical limits of the city are fixed. The second model examines the case in which population growth in the region is given, but the city boundary is allowed to vary. We show that in both cases the city will tend to be larger and less dense than is optimal. In each, we examine the sensitivity of the model to the number of neighborhoods and to the size of infrastructure and transportation costs. Finally, we examine optimal subsidies and see how they compare to current policies such as impact fees on new development.
- Working Paper 09-105: “Is Tax sharing Optimal? An Analysis in a Principal-Agent Framework” by Barnali Gupta and Christelle Viauroux.
Abstract: We study the effects of a statutory wage tax sharing rule in a principal – agent framework with moral hazard (à la Holmstrom, 1979) using the approach of Bose, Pal, Sappington (2007) to model the stochastic relationship between the agent’s unobserved effort and his observed performance. The analysis indicates that tax sharing with positive legislated contributions from both the employer and employee does not maximize any of the outcomes — employee effort, wages, profits or welfare. Moreover, a rule which specifies a corner solution, with 100% of the tax statutorily levied on the employer will maximize effort, expected profit and expected welfare while 100% of the tax statutorily levied on the employee will maximize expected wages.
- Working Paper 09-104: “Family Separation and Reunification as a Factor in the Educational Success of Immigrant Children” by T. H. Gindling and Sara Z. Poggio.
We find that family separation during migration has a negative impact on the educational success of immigrant children in U.S. schools. Children separated from parents during migration are more likely to be behind others their age in school, are more likely to repeat a grade, and are more likely to drop out of high school. The negative impact of separation during migration on educational success is largest for Latin American immigrants, for children separated from their mothers (as opposed to fathers), for those whose parents have lived in the United States illegally, and for those who were separated from their parents at older ages and reunited with parents as teenagers.
- Working Paper 09-103: “Random Error and Simulation Models With an Unobserved Dependent Variable as applied to the Benefits and Costs of the Clean Air Act” by Scott Farrow.
Abstract: Most empirical simulation models used in benefit-cost or risk analysis investigate uncertainty based on variability in parameters and conditioning factors. A pure random error term is frequently omitted. Ex-ante benefit-cost analyses create a particular problem because there are not historically observed values of the dependent variable, such as net present value. An estimator for the error variance is developed based on analysis of variance measures and R-squared. When applied to a model of the net benefits of the Clean Air Act, the probability that the net present value is negative increases from .2 to 4.5 percent.
- Working Paper 09-102: “Improving the Regulatory Analysis of the Cooling Water Intake Structure Rule: What Does an Economist Want?” by Scott Farrow.
Abstract: As part of an edited volume devoted to the usefulness of benefit-cost analysis to inform regulatory review, this chapter presents a case study of the regulation of cooling water intake structures (CWIS) at existing power plants. The chapter first focuses on the consistency of the CWIS benefit-cost analysis with quality criteria to which the agency might have been expected to adhere. Second, criteria and outcomes with respect to decision rules for the selected alternatives are investigated. Finally, the challenge faced by agency analysis is described due to the difficulty in linking ecological and economic impacts. Suggestions for improvement are noted. As of the date of writing, the regulation is under review by the Supreme Court.
- Working Paper 09-101: “The Benefit-Cost Analysis of Security Focused Regulations” by Scott Farrow and Stuart Shapiro.
Abstract: Security focused regulations have been largely exempt from the benefit-cost type of analysis required for major Federal regulations and done routinely in areas such as transportation, environment and safety. among the reasons offered for exemption are the analytical difficulties of security issues involving complex or poorly understood probabilities and consequences. This paper investigates the magnitude of security focused regulations, a framework for developing an expected costs analysis of regulations, and the current “break-even” analysis used by the Department of Homeland Security. Key assumptions implicit in the current analysis are identified and suggestions are made for the difficult evolution of security regulations toward a more explicit benefit-cost analysis.
2004 Working Papers (incomplete)
- Working Paper 04-101: “Baseball Strikes and the Demand for Attendance” by Dennis Coates and Thane Harrison.
Abstract: Professional baseball has experienced numerous work-stoppages over the last 30 years, including three which resulted in the cancellation of games. Existing estimates of the demand for attendance at Major League Baseball games has found that only those events which caused the loss of games influenced attendance. This paper revisits the issue of whether strikes affect attendance and finds that even those lockouts and strikes that do not cause games to be canceled are associated with significantly lower attendance. Moreover, despite dramatic differences in the severity of the three strikes that canceled games, one cannot reject the hypothesis that the effects are the same. Finally, the evidence here suggests that attendance is adversely affected by events leading up to negotiation of a new Basic Agreement between the players and the owners.
- Working Paper 04-102: “Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica” by T. H. Gindling and Katherine Terrell
Abstract: The classic dual economy models of developing countries hold minimum wages (among other institutions) accountable for persistent dualism. They note that applying or enforcing minimum wage laws in only one sector of the economy will create wage differentials which will not be eroded with labor mobility to the high wage sector. In this paper we use 12 years of micro data on thousands workers living in Costa Rica to test whether legal minimum wages have a differential impact on the wages of workers in the formal sector vs. informal sector, defined in various ways in accordance with the dual development models. The evidence from Costa Rica is contrary to the assumptions of these models. We find that increases in minimum wages not only raise the wages of workers in the urban formal sector (large urban enterprises) who are covered by minimum wage law, but they also increase the wages of all other workers covered by minimum wage legislation in what are traditionally regarded as informal sectors and where the legislation is often considered not to be enforced. Specifically, we provide evidence that minimum wages increase the wages of workers in small urban enterprises, large rural enterprises and small rural enterprises. Further, our results suggest that higher legal minimum wages raise the average wage of workers in these “informal” sectors more than in the urban formal sector.
We concluded that in Costa Rica minimum wages are being enforced in the rural and small scale sectors and may actually work to reduce average wage differentials between these sectors and the urban formal sector. On the other hand, minimum wages have no significant impact on the wages of workers in another sector that is regarded as informal but which is not covered by minimum wage legislation: the self-employed workers (both urban and rural). Thus, one could argue that minimum wages may contribute to dualism between the formal and informal, defined as self-employed vs. salaried workers. However, we find no evidence of the bleaker scenario, that self-employed earnings are being lowered by minimum wages.
2003 Working Papers (incomplete)
- Working Paper 03-101:“Novelty Effects of New Facilities on Attendance at Professional Sporting Events” by Dennis Coates and Brad R. Humphreys.
Abstract: We investigate the possibility that new facilities affect attendance – the “novelty effect” – in professional baseball, basketball, and football from 1969-2001 by estimating the parameters of a reduced form attendance model. Our results indicate a strong, persistent novelty effect in baseball and basketball and little or no novelty effect in football. Our estimates of size and duration of the novelty effect imply that,
in a new facility, at a minimum, a baseball team would sell an additional 2,561,702 tickets over the first eight seasons, a basketball team 446,936 over the first nine seasons, and a football team 163,436 over the first five seasons. This increase in attendance also suggests a corresponding increase in revenues that could be tapped to help defray the large public subsidies that state and local governments frequently provide to new stadium and arena construction projects.
- Working Paper 03-102: “The Relationship Between Big-Time College Football and State Appropriations to Higher Education” by Brad R. Humphreys.
Abstract: I investigate the relationship between big-time college football programs and state appropriations to public institutions of higher
education. Estimation of a linear reduced form model of the determination of state appropriations to higher education, using a panel of financial, athletic, and state-specific economic data from 570 public institutions of higher education at the Baccalaureate level or higher from 1976-1996 shows that schools with Division I-A football programs receive about 6% more in state appropriations than schools that do not field a Division I-A football team. Institutions with successful football teams receive 3% to 8% increases in state appropriations the following year. Defeating an in-state rival in a prominent football game is also associated with an increased level of appropriation in the following year. These results support the predictions of the model of competition for political influence among pressure groups developed by Becker (1983) and suggest that the total economic benefit associated with big-time athletic programs may be larger than previously thought.
- Working Paper 03-103: “Professional Sports Facilities, Franchises and Urban Economic Development” by Dennis Coates and Brad R. Humphreys.
Abstract: Local political and community leaders and the owners of professional sports teams frequently claim that professional sports facilities and franchises are important engines of economic development in urban areas. These structures and teams allegedly contribute millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions
of dollars of public subsidies for the construction of many new professional sports facilities in the United Sates over the past decade. Despite these claims, economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies. We critically review the debate on the economic effects of professional sports and their role as an engine of
urban economic redevelopment, with an emphasis on recent economic research.
- Working Paper 03-104: “The Effect of Professional Sports on the Earnings of Individuals: Evidence from Microeconomic Data” by Dennis Coates and Brad R. Humphreys.
Abstract: This paper explores the impact of professional sports teams and stadiums on the wages of individuals employed in several narrowly
defined occupational groups in cities in the United States. The occupational groups examined are among those that proponents of
public funding of professional sports claim will benefit economically from these stadiums. Our analysis uses data from the March Supplement to the Current Population Survey (CPS) for the period 1977 to 1998 as well as sports variables previously utilized by Coates and Humphreys (1999), (2001). Previous research focused on aggregate measures of income whereas here the focus is on the wages of individual workers. The results of the study confirm conclusions of earlier research that the overall sports environment is frequently statistically significant as a determinant of earnings and that the predicted mean impact of sports on wages in a sample of individuals employed in occupations closely related to professional sports is an annual average decrease in real earnings of $47.95. The results also show that the effects of the sports environment on wages differ across job-types. Workers in retail occupations earn more on average each year due to the presence of professional sports while workers in other peripherally related occupations like food services and hotels earn less.
- Working Paper 03-105:“Voting on Stadium and Arena Subsidies” by Dennis Coates and Brad R. Humphreys.
Abstract: We analyze voting on subsidies for professional sports facilities in Harris County (Houston), Texas and Brown County (Green Bay), Wisconsin to learn more about voter preferences for these subsidies. The results differ somewhat between the two jurisdictions, as do the nature of the supports being proposed and the communities. One consistent result is that voting precincts that have a relatively high degree of poverty tend to oppose subsidies for professional sports. Another consistent result is that voters in close proximity to existing facilities are more likely to favor subsidies than are voters living farther from the facilities. In Harris County, the results consistently indicate that those over 65 years of age, whites, and those with Bachelors degrees statistically significantly oppose subsidies while those with higher incomes and blacks favor the subsidies. Different values of consumption benefits, stemming from differences in preferences, may explain these voting patterns.
- Working Paper 03-106: “Agency Behavior in a Nonprofit Setting: Effects of the 1984 Supreme Court NCAA Decision ” by Kathleen A. Carroll and Brad R. Humphreys.
Abstract: The NCAA is commonly viewed as a cartel. We model the cartel relationship between the member teams and the NCAA central
organization as a principal-agent relationship. Our model predicts imperfect agency behavior on the part of the NCAA with
corresponding overregulation relative to the level preferred by the member teams. We empirically test the model by examining the impact of the 1984 Supreme Court decision that reassigned the telecast rights for intercollegiate football from the NCAA to the individual member teams. Our empirical estimates of telecasts, attendance, and competitive balance support the prediction of imperfect agency behavior by the NCAA.
- Working Paper 03-107: “Literacy and Mobility in Rural versus Urban Victorian England: Evidence from linked marriage register and census records for Birmingham and Norfolk, 1851 and 1881” by David Mitch.
Abstract: This paper reports procedures and results obtained from linking marriage registers with the 1851 and 1881 censuses for Birmingham, a major industrial center, and rural areas in Norfolk. The results underscore regional contrasts in mobility processes. Those starting out in Birmingham from unskilled origins whether parental or initial occupation, had quite high probabilities of experiencing upward occupational mobility. Probabilities for those of unskilled origin were considerably lower in rural Norfolk; but for those of higher origins mobility rates could at least equal if not exceed those in Birmingham. More strikingly, literacy offered considerably greater prospects for advancement for those in rural Norfolk than industrial Birmingham. Basic education could matter more to the aspiring farm bailiff or rural shopkeeper than for the nail-maker or gunsmith. The career impact of literacy over and above impact on initial occupation at marriage was especially sizable for agricultural Norfolk in the earlier time period. The results suggest differences in the migration patterns in the two areas with overall rates of
migration being higher in Norfolk, but migration rates for the upwardly occupationally mobile being greater in Birmingham. There was no clear connection between literacy and geographic mobility. Thus, the results here do indicate a positive association between industrialization and occupational mobility. But they also underscore that mobility did occur in agricultural areas and that education could play at least as great a role in facilitating mobility in agricultural as in industrial areas.
- Working Paper 03-108: “Accounting for Changing Inequality in Costa Rica, 1980-1999” by T. H. Gindling.
Abstract: After declining from the mid-1970s to the mid-1980s, earnings inequality in Costa Rica stabilized from 1987 to 1992 and then increased from 1992 to 1999. In this paper we use recently-developed techniques to measure the extent to which these changes in earnings inequality were the result of changes associated with the distributions (or .quantities.) of personal and work place characteristics of workers, and the earnings differences (or .prices.) associated with those characteristics. We present evidence that the most important cause of the fall in inequality prior to 1987 was a decline in returns to education, which in turn was caused by an increase in the supply of more-educated workers. We find that the most important causes of rising inequality in the 1990s were the end of this decline in returns to education and increases in the variance of hours worked among workers. Inequality in hours worked increased because of an increase in the proportion of workers working a non-standard work week (part-time or over-time)
- Working Paper 03-109: “LA DESIGUALDAD EN AMÉRICA CENTRAL DURANTE LOS AÑOS NOVENTA” by T. H. Gindling and Juan Diego Trejos.
Abstract: Este trabajo pretende examinar dos preguntas: ¿cómo y por qué cambió la distribución de los ingresos en los países de América Central en los años noventa?, y, ¿por qué están los ingresos distribuido en una manera más equitativa en Costa Rica en comparación a los otros países de la región?. Para buscar respuestas a estas preguntas, se usa una técnica, basada en la estimación de ecuaciones de remuneración, que mide la magnitud de la desigualdad debido a diferentes características personales y del puesto de trabajo.
La dirección de los cambios en la desigualdad del ingreso en los países Centroamericanos en los años noventa no es clara. Solamente Costa Rica presenta un deterioro claro en la distribución del ingreso. En los otros países, los resultados dependen de la medida de la desigualdad y del preceptor que se utilice. Pero bajo de estos cambios brutos, se encuentran fenómenos comunes en todos los países en los mercados de trabajo. El aumento en la dispersión de las jornadas de trabajo, es el fenómeno que se identifica con el mayor impacto negativo sobre equidad.
Se identifican dos causas importantes de los diferentes niveles de desigualdad entre Costa Rica y el resto de los países de América Central. Primero, la educación está más igualitariamente distribuida en Costa Rica que en el resto de la región. Segundo, las diferencias salariales entre las zonas urbanas y rurales son más bajas en Costa Rica. Estos resultados implican que las políticas Costarricenses de la universalización de la educación primaria y de proveer aún a las comunidades rurales más aisladas de infraestructura económica y social son también causas importantes de las diferencias n la desigualdad entre Costa Rica y el resto de Centroamérica.