New Economics Papers
on Economics of Happiness
Issue of 2008‒07‒05
nine papers chosen by

  1. Welfare reforms and child well-being in the US and UK By Waldfogel, Jane
  2. Welfare reform in the UK: 1997–2007 By Brewer, Mike
  3. Welfare reform: the US experience By Moffitt, Robert
  4. On Measuring the Complexity of Urban Living By Lubna Hasan
  5. Foreign Influence and Welfare By Pol Antràs; Gerard Padró i Miquel
  6. Age, Luck, and Inheritance By Jess Benhabib; Shenghao Zhu
  7. The US earned income tax credit, its effects, and possible reforms By Meyer, Bruce D.
  8. The Colonial Origins of Comparative Development: An Investigation of the Settler Mortality Data By David Y. Albouy
  9. The passive drinking effect: Evidence from Italy By Martina Menon; Federico Perali; Luca Piccoli

  1. By: Waldfogel, Jane (Columbia University School of Social Work)
    Abstract: This paper examines the effects of recent welfare reforms in the US and UK on the well-being of children in low-income families, looking specifically at the effects on poverty, family expenditures, and child health and development. The paper finds some commonalities but also some notable differences. Common to both countries is a sizable reduction in child poverty, although the reduction in child poverty in the US has been less, and some families appear to have been left behind. Expenditure data also point to divergence across the two countries. In the UK, low-income families affected by the reforms are spending more money on items related to children and are more likely to own a car and a phone, while in the US, families affected by welfare reforms are primarily spending more money on items related to employment but not items for children. Finally, a common finding across countries is a relative dearth of more direct evidence on the well-being of children, and specifically how the reforms have affected child health and development. Identifying such effects remains an important topic for further research.
    Keywords: Welfare reform; Child well-being
    JEL: I30 J10
    Date: 2008–05–17
  2. By: Brewer, Mike (Institute for Fiscal Studies)
    Abstract: This paper presents a tour of welfare reforms in the UK since the last change of government, summarising the most important changes in active labour market policies (ALMPS), and in measures intended to strengthen financial incentives to work. It argues that developments in the UK’s active labour market policies occurred in two broad phases: first, the Government sought to strengthen ALMPs for those individuals deemed to be unemployed, through the New Deal programme. Second, the Government has reformed benefits for individuals traditionally viewed as inactive and thus excused job search activity, such as lone parents, and the sick and disabled. Accompanying these have been changes to direct taxes, tax credits and welfare benefits aiming to strengthen financial work incentives. However, financial work incentives have been strengthened by less than might be expected given the early rhetoric: the expansion in family-based tax credits have weakened the financial work incentives of (potential) second earners in families with children, many more workers now face combined marginal tax and tax credit withdrawal rates in excess of 60 per cent than a decade ago, and a desire to achieve broad reductions in relative child poverty has led the Government to increase substantially income available to non-working families with children. We also summarise evaluations of three important UK welfare-to-work reforms (WFTC, NDYP and Pathways to Work), but without comparing their efficacy.
    Keywords: Welfare reform; Tax credits
    JEL: H53 I38
    Date: 2008–06–23
  3. By: Moffitt, Robert (John Hopkins University)
    Abstract: The reform of the cash-based welfare program for single mothers in the US which occurred in the 1990s was the most important since its inception in 1935. The reforms imposed credible and enforceable work requirements into the program for the first time, as well as establishing time limits on lifetime receipt. Research on the effects of the reform have shown it to have reduced the program caseload and governmental expenditures on the program. In addition, the reform has had generally positive average effects on employment, earnings, and income, and generally negative effects on poverty rates, although the gains are not evenly distributed across groups. A fraction of the affected group appears to have been made worse off by the reform.
    Keywords: Welfare reform; Poverty; Single mothers
    JEL: I30
    Date: 2008–05–17
  4. By: Lubna Hasan (Pakistan Institute of Development Economics, Islamabad)
    Abstract: This paper explores the concept of city ranking as a way to measure the dynamics and complexities of urban life. These rankings have various dimensions and uses. Both the context in which these rankings are done and their nature have changed considerably over time. These rankings face many methodological and measurement problems. A review of major city rankings and the related literature is carried out to suggest a framework for the ranking of Pakistani cities.
    Keywords: Quality of Life, Cities, Urbanisation
    JEL: R12 O18 R23
    Date: 2008
  5. By: Pol Antràs; Gerard Padró i Miquel
    Abstract: How do foreign interests influence the policy determination process? What are the welfare implications of such foreign influence? In this paper we develop a model of foreign influence and apply it to the study of optimal tariffs. We develop a two-country voting model of electoral competition, where we allow the incumbent party in each country to take costly actions that probabilistically affect the electoral outcome in the other country. We show that policies end up maximizing a weighted sum of domestic and foreign welfare, and we study the determinants of this weight. We show that foreign influence may be welfare-enhancing from the point of view of aggregate world welfare because it helps alleviate externalities arising from cross-border effects of policies. Foreign influence can however prove harmful in the presence of large imbalances in influence power across countries. We apply our model of foreign influence to the study of optimal trade policy. We derive a modified formula for the optimal import tariff and show that a country's import tariff is more distorted whenever the influenced country is small relative to the influencing country and whenever natural trade barriers between the two countries are small.
    JEL: D72 D74 F11 F13 F51 F59 H23 P16
    Date: 2008–06
  6. By: Jess Benhabib; Shenghao Zhu
    Abstract: We present a mechanism to analytically generate a double Pareto distribution of wealth in a continuous time OLG model with optimizing agents who have bequest motives, are subject to stochastic returns on capital and have uncertain lifespans. We disentangle, roughly, the contribution of inheritance, age and stochastic rates of capital return to wealth inequality, in particular to the Gini coefficient. We investigate the role of the fiscal and redistributive policies for wealth inequality and social welfare.
    JEL: E21 E25
    Date: 2008–06
  7. By: Meyer, Bruce D. (Harris School of Public Policy Studies, University of Chicago)
    Abstract: In this paper, I first summarize how the US Earned Income Tax Credit (EITC) operates and describe the characteristics of recipients. I then discuss empirical work on the effects of the EITC on poverty and income distribution, and its effects on labor supply. Next, I discuss a few policy concerns about the EITC: possible negative effects on hours of work and marriage, and problems of compliance with the tax system. I then briefly discuss some possible reforms to the structure of the current EITC.
    Keywords: Welfare reform; Earned income tax credit; EITC; Earnings subsidies; Tax credits; Poverty
    JEL: D31 H24 I38 J38
    Date: 2008–05–17
  8. By: David Y. Albouy
    Abstract: In a seminal contribution, Acemoglu, Johnson, and Robinson (2001) argue property-rights institutions powerfully affect national income, using estimated mortality rates of early European settlers to instrument capital expropriation risk. However 36 of the 64 countries in their sample are assigned mortality rates from other countries, typically based on mistaken or conflicting evidence. Also, incomparable mortality rates from populations of laborers, bishops, and soldiers - often on campaign - are combined in a manner favoring their hypothesis. When these data issues are controlled for, the relationship between mortality and expropriation risk lacks robustness, and instrumental-variable estimates become unreliable, often with infinite confidence intervals.
    JEL: I12 N10 O11 O57 P16 P51
    Date: 2008–06
  9. By: Martina Menon; Federico Perali; Luca Piccoli
    Abstract: This paper investigates whether consumption of alcoholic beverages affects distribution of resources among household members. We refer to this effect, highlighting the negative impact that alcohol addicted individuals can have on other household members wellbeing. To investigate this issue we rely on the collective framework and estimate a structural collective demand system. Our results show that for Italian households a high level of alcohol consumption influences the allocation of resources in favour of the husband, with a larger effect in poor households. This evidence implies that alcohol consumption is not only an individual problem. Public costs that are transferred to the other household members should be taken into account when designing social policies.
    Date: 2008

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