Search

This paper presents a model of consumption behavior that explains the presence of "wealthy hand-to-mouth" consumers using a mechanism that differs from those analyzed previously. We show that a two-asset model with temptation preferences generates a demand for commitment and thus illiquidity, leading to hand-to-mouth behavior even when liquid assets deliver higher returns than illiquid assets. This preference for illiquidity has important implications for consumption behavior and for fiscal stimulus policies. Our model matches the recent empirical evidence that Marginal Propensity to Consume remain high even for large income shocks, suggesting a larger response to targeted fiscal stimulus than previously believed. [ABSTRACT FROM AUTHOR]

In this paper, I analyze the determinants of cohabitation, marriage, and divorce in the USA. I first document that college graduates are more likely to marry, and less likely to cohabit and divorce, than non-college educated individuals. To account for these facts within a unified framework, I build and estimate a life-cycle model of partnership formation and dissolution where income processes differ by gender and education. I find that the main driver of education-based differences in mating strategies is that the gender wage gap is larger among college graduates. Since divorce is more costly than ending a cohabitation, marriages tend to be more stable and therefore offer women more protection from human capital depreciation during non-employment. Consequently, marriage is a more effective means of enforcing household specialization. Since college graduates have more room for household specialization, they are more likely to choose marriage. The variance of income shocks, which affects the demand for consumption insurance, is larger among college graduates. Even if the variance of income shocks could potentially explain partnership choices, simulations suggest a small role of income volatility. [ABSTRACT FROM AUTHOR]

Empirically, the poor are more likely to support increases in the level of tax progressivity than the rich. Such income-stratified tax preferences can result from differences in preferences of what should be taxed as argued by previous literature. However, it may also result from income-stratified perceptions of what is taxed. This paper argues that the rich perceive higher levels of tax progressivity than the poor and that tax perceptions affect individuals' support for progressive taxation. Using data from an Austrian survey experiment, we test this argument in three steps: First, in line with past research, we show that individuals' income positions are connected to individuals' tax preferences as a self-interest rationale would predict. However, second, we show that this variation is mainly driven by income-stratified tax perceptions. Third, randomly informing a subset of the sample about actual tax rates, we find that changing tax perceptions causally affects support for redistributive taxation among those who initially overestimated the level of tax progressivity. Our results indicate that tax perceptions are relevant for forming tax preferences and suggest that individuals are more polarized in their perceptions of who pays how much taxes than in their support for who should pay how much tax. [ABSTRACT FROM AUTHOR]

This paper proposes a model of the distribution channel to study the decisions of manufacturers, retailers and consumers. The model is used to study how retail distribution affects manufacturing and consumers. As the cost of distribution falls, the retail sector increases assortment size and allows a larger mass of manufacturers to enter, allowing consumers to buy more variety. Entry primitives in manufacturing and retailing determine vertical pricing power. The equilibrium of the model predicts that the national retail sector is a fraction of the total economy that depends on the demand for variety. It is not affected by, e.g. consumer transportation cost or income. Data support this prediction. [ABSTRACT FROM AUTHOR]

This paper examines whether nonlinear and non-Gaussian features of earnings dynamics are caused by hours or hourly wages. Our findings from the Norwegian administrative and survey data are as follows: (i) Nonlinear mean reversion in earnings is driven by the dynamics of hours worked rather than wages since wage dynamics are close to linear, while hours dynamics are nonlinear—negative changes to hours are transitory, while positive changes are persistent. (ii) Large earnings changes are driven equally by hours and wages, whereas small changes are associated mainly with wage shocks. (iii) Both wages and hours contribute to negative skewness and high kurtosis for earnings changes, although hour-wage interactions are quantitatively more important. (iv) When considering household earnings and disposable household income, the deviations from normality are mitigated relative to individual labor earnings: changes in disposable household income are approximately symmetric and less leptokurtic. [ABSTRACT FROM AUTHOR]

Despite established links among persistent unemployment, low wages, and children's economic well-being, social scientists have yet to document how variability in work hours is linked to child poverty. Our knowledge of the safety net's heterogeneous responses to work-hour instability is also limited. This is of critical importance for scholars and policymakers. Using nationally representative data collected every 4 months, this paper examines how intra-year work-hour volatility is related to child poverty, measured through both the official poverty measure (OPM) and the supplemental poverty measure (SPM). It further assesses varying degrees of buffering effects of cash, in-kind benefits, and tax transfers on income in the context of work-hour volatility. Results indicate that more than one in four households (26%) facing the greatest volatility lived under the poverty line. Black and Hispanic children, as well as those living with unpartnered single mothers, faced substantially higher variability in household market hours worked. Hispanic children experienced not only greater volatility in their caregivers' work hours but also higher poverty level, even after taking government programs into account. In-kind benefits are more effective in buffering household income declines resulting from unstable work hours, followed by tax transfers and cash benefits. The effectiveness of near-cash benefits is particularly salient among Black children and children of single mothers. These results provide new evidence to inform policy discussions surrounding the best ways to help socioeconomically disadvantaged families to retain benefits and smooth their income in the face of frequent variation in work hours and, thus, earnings. [ABSTRACT FROM AUTHOR]

This paper presents the rationale for a four-asset growth policy model, which the US economy has executed only on a partial and intermittent basis over the past four decades. The need for such a model is driven by (1) growing global competition, (2) resulting slower gross domestic product and personal income growth, and (3) a consequent rise in income inequality. Without a more effective growth model to both broaden and deepen the role of technology, declining growth and its skewed distribution among income classes will perpetuate current social and political unrest. To achieve both broader and deeper technology-based growth across the economy, the proposed technology element model specifies the four major asset categories that characterize technology-based economic development, which combine to drive more effective growth policy analysis and development. [ABSTRACT FROM AUTHOR]

Women tend to experience a substantial decline in their labour income after their first child is born, while men do not. Do such 'child penalties' also exist in the political arena? Using comprehensive administrative data from Norway, we find that women are less likely than men to secure elected office after their first child is born. The effects already manifest from the nomination stage, where mothers receive less favourable rankings on party lists relative to comparable fathers. This paper broadens our understanding of a fundamental social issue in political representation and demonstrates how motherhood even affects positively selected women. [ABSTRACT FROM AUTHOR]

Objective Physical activity is recommended for recipients of a kidney transplant. However, ADHERE BRAZIL study found a high prevalence (69%) of physical inactivity in Brazilian recipients of a kidney transplant. To tackle this behavior, a broad analysis of barriers is needed. This study aimed to identify factors (patient and transplant center levels) associated with physical inactivity among recipients of a kidney transplant. Methods This was a subproject of the ADHERE BRAZIL study, a cross-sectional, multicenter study of 1105 recipients of a kidney transplant from 20 kidney transplant centers. Using a multistage sampling method, patients were proportionally and randomly selected. Applying the Brief Physical Activity Assessment questionnaire, patients were classified as physically active (≥150 min/wk) or physically inactive (<150 min/wk). On the basis of an ecological model, 34 factors associated with physical inactivity were analyzed by sequential logistic regression. Results At the patient level, physical inactivity was associated with smoking (odds ratio = 2.43; 95% CI = 0.97–6.06), obesity (odds ratio = 1.79; 95% CI = 1.26–2.55), peripheral vascular disease (odds ratio = 3.18; 95% CI = 1.20–8.42), >3 posttransplant hospitalizations (odds ratio = 1.58; 95% CI = 1.17–2.13), family income of >1 reference salary ($248.28 per month; odds ratio = 0.66; 95% CI = 0.48–0.90), and student status (odds ratio = 0.58; 95% CI = 0.37–0.92). At the center level, the correlates were having exercise physiologists in the clinical team (odds ratio = 0.54; 95% CI = 0.46–0.64) and being monitored in a teaching hospital (undergraduate students) (odds ratio = 1.47; 95% CI = 1.01–2.13). Conclusions This study identified factors associated with physical inactivity after kidney transplantation that may guide future multilevel behavioral change interventions for physical activity. Impact In a multicenter sample of recipients of a kidney transplant with a prevalence of physical inactivity of 69%, we found associations between this behavior and patient- and center-level factors. At the patient level, the chance of physical inactivity was positively associated with smoking, obesity, and patient morbidity (peripheral vascular disease and hospitalization events after kidney transplantation). Conversely, a high family income and a student status negatively correlated with physical inactivity. At the center level, the presence of a dedicated professional to motivate physical activity resulted in a reduced chance of physical inactivity. A broad knowledge of barriers associated with physical inactivity can allow us to identify patients at a high risk of not adhering to the recommended levels of physical activity. [ABSTRACT FROM AUTHOR]

Subjective well-being (SWB) measures, such as satisfaction with income, are increasingly being used to measure changes in well-being in response to policy changes and shocks. However, large policy changes or shocks themselves might cause individuals to change how they answer SWB questions in ways that have little to do with changes in objective well-being measures. For example, respondent-specific scales that individuals use to respond to SWB questions (e.g. threshold of income required to be satisfied) might change at the same time that income is changing following a shock. We illustrate the importance of this concern following the onset of conflict in Yemen, where households reported a large improvement in SWB across a range of different dimensions despite large declines in nearly all traditional and objective measures of well-being. [ABSTRACT FROM AUTHOR]

We explore the relationship between household welfare and informality, measuring household informality as the share of members' activities (hours worked or income) without social insurance. We discretize these measures into four bins or portfolios and assess their influence on consumption, as a measure of welfare. Cross-sectional regressions for five urban Sub-Saharan African countries reveal a non-linear relationship between the depth of informality and household welfare. A mixed formality household portfolio has at least the same welfare as a fully formal one. Using panel data for Nigeria, we assess household switches in informality portfolios, accounting for the selection on unobservables, and find it explains most welfare differences. Switching informality portfolios does not change welfare trajectories, with the notable exception of welfare gains for fully informal households becoming fully formal. From a policy perspective, our results suggest that policies incentivizing the formalization of the marginal worker may not result in perceivable welfare effects. [ABSTRACT FROM AUTHOR]