The B.E. Journal of Economic Analysis & Policy

Published by De Gruyter

Volume 18 Issue 3 -

July 2018

Issue of The B.E. Journal of Economic Analysis & Policy

Contents
Journal Overview

July 21, 2018

Teacher Turnover, Composition and Qualifications in the Year-Round School Setting

Jennifer Graves, Steven McMullen, Kathryn Rouse

Article number: 20170240

Abstract

We estimate the effects of year-round school (YRS) calendars on teacher turnover and teacher qualifications for the state of California, finding that YRS results in diminished teacher education and experience. This result is notable as previous research finds negative academic impacts of YRS in California. As context for our findings, we use comparisons with North Carolina, where research has found neutral academic impacts for the same calendar. While we find that schools in both locations hire more teachers to accommodate the calendar, teacher qualifications do not decrease for North Carolina. Our results are therefore consistent with, and can partly explain, evidence on the impact of YRS on student achievement. Additionally, as YRS is implemented in more affluent areas in North Carolina and in disadvantaged populations in California, we use matched samples to show that student demographics do not explain our teacher impacts found for California.

July 21, 2018

Self–Employment, Wealth and Start–up Costs: Evidence from a Financial Crisis

Koffi Elitcha, Raquel Fonseca

Article number: 20170187

Abstract

Using individual-level data from three uniquely comparable surveys (Survey of Health, Ageing and Retirement in Europe, English Longitudinal Study of Ageing and Health and Retirement Study) in Europe and the United States, as well as the World Bank’s Doing Business data, this paper empirically zeroes in on the impact of start-up costs on the self-employment–wealth relationship. The longitudinal nature of the data enables us to investigate the potential effects of the last global financial crisis. Results confirm the strong positive relationship between the entrepreneurial choice and wealth as well as the negative effect that stems from the increase in start-up costs. Interestingly, although there is no strong evidence that wealth in itself played a bigger role during the crisis, we find that the negative impact of start-up costs on the entrepreneurship–wealth relationship proved to be significantly pronounced during the last crisis.

July 7, 2018

Local Information, Income Segregation, and Geographic Mobility

Timothy N. Bond, Laura Salisbury

Article number: 20170314

Abstract

We develop a model of migration in the face of geographic information asymmetries. Firms from a given city observe whether or not a local worker is a member of a disadvantaged local community, a negative indicator of productivity, but do not have this information for migrants to this city. With this knowledge, workers must decide whether to migrate and obscure information about their community of origin. Our model generates results consistent with recent trends in intergenerational mobility and internal migration as well as new predictions about the relationship between migrant outcomes and income segregation. We confirm these predictions using data from the U.S. census.

June 8, 2018

Leadership in Tax Competition with Fiscal Equalization Transfers

Junichi Haraguchi, Hikaru Ogawa

Article number: 20170217

Abstract

We propose a timing game of asymmetric tax competition with fiscal equalization scheme. The study finds that governments tend to play a sequential-move game as the scale of equalization transfer increases, which explains the emergence of tax leaders in tax competition. The presence of a tax leader is likely to exacerbate capital misallocation among countries, suggesting that equalization transfers aimed at narrowing the interregional fiscal gap might cause an inefficient capital allocation.

June 22, 2018

Measuring the Deterrent Effect of European Cartel Law Enforcement

Birgit Moritz, Martin Becker, Dieter Schmidtchen

Article number: 20170235

Abstract

This article proposes a new approach to measuring the deterrent effect of cartel law enforcement by combining a game-theoretic model with Monte Carlo simulations. The game-theoretical analysis shows which type of perfect Bayesian Nash equilibria is obtained depending on the parameter setup: perfect compliance, imperfect compliance or zero compliance. For each equilibrium, we also derive the probabilities of type I (false-positive) and type II (false-negative) errors committed by the cartel authority. To account for the uncertainty and the vague knowledge concerning the model parameters, we perform Monte Carlo simulations based on parameter ranges extracted from the related literature. The simulations indicate that zero compliance dominates the picture and that the error probabilities are high for type II and negligible for type I errors. The results are fairly robust against correlation in the input parameters. Further robustness studies and interactive visualizations can be obtained with a supplemental web application.

June 21, 2018

Widowhood and Retirement Timing: Evidence from the Health and Retirement Study

Philipp Schreiber

Article number: 20170178

Abstract

The combination of an increasing life expectancy, low fertility rates, and an early effective retirement age creates a pressure to act for governments and organizations. The pay-as-you-go social security systems of many countries are troubled by the increasing ratio of retirees to working people. In addition, many organizations face difficulties caused by a shrinking workforce and the accompanied shortage of skilled workers. To counteract, it is essential to create an environment in which older workers are encouraged to stay in the workforce. Therefore, it is important to understand which factors influence the retirement timing decision of workers. This study analyzes how widowhood and changes in demographic, health-related, and financial factors lead to changes in retirement plans of Health and Retirement Study (HRS) respondents. I compare respondents’ actual retirement age with their retirement plans elicited in the HRS wave prior to retirement. The strongest change in retirement timing is caused by widowhood. Respondents who become widowed retire on average 1.7 years earlier than previously planned. The estimated effect of widowhood goes beyond the deterioration of physical health and mental health. My findings suggest that an intervention in an early stage after widowhood by the employer or by health and social care services can help the widowed employee to overcome the temporary adverse effects of widowhood and to prevent a precipitous retirement decision.

June 28, 2018

Guaranteed Nonlabor Income and Labor Supply: The Effect of the Alaska Permanent Fund Dividend

Robert M. Feinberg, Daniel Kuehn

Article number: 20180042

Abstract

One peculiar source of nonlabor income that has not been extensively studied for its effect on labor supply is the Alaska Permanent Fund (APF) dividend. This is somewhat surprising given the recent policy focus on Guaranteed Basic Income programs. An annual lump-sum payment, the Permanent Fund Dividend (PFD) is available to almost all Alaska residents, is clearly exogenous with respect to work effort, and – while relatively predictable – varies over time and across households (since it increases linearly with family size). This paper estimates the nonlabor income elasticity of labor supply using exogenous variation from the Alaskan PFD and data from the American Community Survey (ACS). The analysis finds that men have elasticities between −0.15 and −0.10, depending on the specification. Single women have elasticities between −0.14 and −0.09, while married women have somewhat larger elasticities between −0.18 and −0.11.

July 11, 2018

Do State Sales Taxes Crowd Out Local Option Sales Taxes?

Gregory S. Burge, Cynthia L. Rogers

Article number: 20180003

Abstract

Currently, sales taxes are imposed at both the state and local levels in 37 US states. In these environments, vertical tax competition occurs as governments share a common sales tax base, and local jurisdictions have autonomy over sales tax rates. As cash-strapped states look to sales taxes for additional revenues, local governments may worry about potentially adverse revenue impacts, as consumers react to combined tax rate increases. This study examines state-municipal and county-municipal fiscal spillovers using an empirical approach that accounts for endogenous tax policy leadership and voter tax fatigue. Employing comprehensive longitudinal data from Oklahoma, we find that state tax hikes significantly crowd out future rate increases for the large group of jurisdictions that are designated as followers. Leader jurisdictions are not found to display crowd-out tendencies, a result that is consistent with recent work suggesting that leaders may be less influenced by vertical fiscal externalities than other jurisdictions.

May 1, 2018

Social Network Structure and Risk Sharing in Villages

Bin Jiang, Jun Sung Kim, Chuhui Li, Ou Yang

Article number: 20170263

Abstract

This paper studies how the structure of friendship networks affects risk sharing in villages. Using techniques for partially identified econometric models, we construct a sharp bound on the true risk-sharing rate, which takes into account nomination errors in survey responses, and implement interval estimation. We show that the diameter of a network has a negative and significant impact on risk sharing. Our result implies that policymakers can effectively improve risk sharing between households by adopting policies that increase the network connectivity of individuals in the periphery of the social network.

July 3, 2018

Tele-Communications 2.0: The Age of the Internet

Vahagn Jerbashian, Anna Kochanova

Article number: 20180068

Abstract

Over the past few decades, the Internet has become the major tool for communication, greatly replacing the traditional telecommunication technologies. We use industry-level evidence from 21 European countries and the period 1997–2007 and identify the changing effects of traditional telecommunication technologies and the Internet on the functioning of markets. Specifically, we show that the effect of the traditional telecommunication technologies on competition in services and goods markets has dissipated and has become insignificant during this period. In contrast, the effect of the Internet has gained a significant momentum.

June 30, 2018

Number of Bidders and the Winner’s Curse

Ronald Peeters, Anastas P. Tenev

Article number: 20180025

Abstract

Within an affiliated value auction setting, we study the relationship between the number of bidders and the winner’s curse in terms of its frequency of occurrence and its expected harm. From a design perspective, we find that both the number of bidders and the level of affiliation are instrumental when choosing an auction format and whether to encourage or discourage bidder participation.

About this journal

Objective
The B.E. Journal of Economic Analysis & Policy (BEJEAP) welcomes submissions that employ microeconomics to analyze issues in organizational economics, consumer behavior, and public policy. Articles submitted to BEJEAP can come in two formats: research papers and letters. Authors should bring to their analysis whatever microeconomic theoretical, experimental or econometric tools are helpful. We publish both empirical work and applied theory (though not more abstract forms of applied theory), and our aim is to disseminate papers that have practical implications for public policy, organizational or individual decision making.

Topics

Design of organizations and institutions
Industrial organization
Health economics
Public finance
Labour Economics
Economics of education, family, development, law, or the environment
Effects of domestic and international policy

Article formats
Research Papers, Letters

> Information on submission process