Analyses of the welfare system generally examine one of five competing models: (1) The work disincentive model; (2) the human capital model; (3) the macroeconomic model; (4) the public choice model; or (5) the cost-of-job-loss model. This paper employs the Granger causality concept and the multiple-rank F statistic to test the implications of all five of these models simultaneously. The results...

The suggestion to tax people on earnings capacity instead of earnings has been around for a long time and is attractive in terms of economic efficiency. In this paper we reflect on the feasibility of such a system and give an exploratory empirical implementation. We apply the Leyden Welfare Function of Income, a survey based measure of an individual’s welfare associated with income, to derive i...

This paper investigates consumer inertia in health insurance markets, where adverse selection is a potential concern. We leverage a major change to insurance provision that occurred at a large firm to identify substantial inertia, and develop and estimate a choice model that also quantifies risk preferences and ex ante health risk. We use these estimates to study the impact of policies that nud...

The majority of children placed into foster care are separated from their siblings upon entering the child welfare system. Some research suggests that siblings enjoy more stable home environments and fewer behavioral problems when placed together in care. The sibling relationship may provide stability, consistency, and unconditional positive regard to the children most at risk for poor outcomes...

This note analyses the interaction between nominal wage stickiness and costly employment adjustment in a small closed-economy New Keynesian model with simple rule-based or optimal monetary policy. The results show (1) the costs of nominal and real rigidity to depend on the policy regime, (2) optimal policy to substantially contain the welfare loss, and (3) the absence of quantitatively importan...

We extend an analytical general equilibrium model of environmental policy with pre-existing labor tax distortions to include pre-existing monopoly power as well. We show that the existence of monopoly power has two offsetting effects on welfare. First, the environmental policy reduces monopoly profits, and the negative effect on income increases labor supply in a way that partially offsets the ...

Changes in total surplus and deadweight loss are traditional measures of economic welfare. We propose necessary and sufficient conditions for rationalizing consumer demand data with a quasilinear utility function. Under these conditions, consumer surplus is a valid measure of consumer welfare. For nonmarketed goods, we propose necessary and sufficient conditions on market data for efficient pro...

Using urban household-level survey data from 1992 to 1998, we provide estimates of final demand for edible vegetable oils and animal fats in three regions of China based on the LinQuad incomplete demand system. For each region, the demand for the major “staple” oil is price inelastic. The demand for “condiment” or flavoring oils is more price responsive. All edible oils and fats have positive i...

Abstract We study fair allocations of indivisible goods and chores in conjunction with system efficiency, measured by two social welfare functions, namely utilitarian egalitarian welfare. To model preference, each agent is associated a cardinal additive valuation function. The fairness criteria we are concerned equitability up to any item (EQX) one (EQ1). For the trade-off between investigate e...

We present a model of the physician-patient relationship extending on the model by Farley [Farley, P.J., 1986. Theories of the price and quantity of physician services. Journal of Health Economics 5, 315-333] of supplier-induced demand (SID). First, we make a case for the way this model specifies professional ethics, physician competition, and SID itself. Second, we derive predictions from this...