Explore the vast range of titles available.

We model earnings processes allowing for lots of heterogeneity across agents. We also introduce an extension to the linear ARMA model which allows the initial convergence in the long run to be different from that implied by the conventional ARMA model. This is particularly important for unit root tests, which are actually tests of a composite of two independent hypotheses. We fit to a variety of statistics including most of those considered by previous investigators. We use a sample drawn from the Panel Study of Income Dynamics (PSID), and focus on white males with a high-school degree. Despite this observable homogeneity, we find more latent heterogeneity than previous investigators. We show that allowance for heterogeneity makes substantial differences to estimates of model parameters and to outcomes of interest. Additionally, we find strong evidence against the hypothesis that any worker has a unit root.

Many countries delegate a substantial part of social service decisions to local administrative levels, while federal laws provide the overall framework for service levels. Strict regulations to reduce budget overruns may however leave local governments with a potential trade-off between adhering to fiscal budgets and supplying critical welfare services as e.g. programs to protect vulnerable children. We investigate if budgetary constraints influence child protection decisions using high-quality register data. We show that the introduction of fiscal sanctions to improve budget adherence contributed to a sharp decline in budget overruns on child protective services by reducing the number of children in out-of-home care. Our results further show that monthly variation in budget adherence within a fiscal year affects the probability of a placement in out-of-home care for children in need of help towards the end of a fiscal year. We estimate that a budget overrun of 10 percentage points by mid-year leads to a 1.2 percent reduction in the number of children in care over the remaining part of the fiscal year. Municipalities reduced child protection expenditure by choosing cheaper types of care and ending placement for children in out-of-home care, particularly for children turning 18. Our paper contributes to the literature on fiscal federalism by documenting the trade-off between managing public expenditure and providing safety and equal opportunity for vulnerable children. We thus highlight that enforcing strict budget adherence may be in conflict with social policy goals. Our results raise an important discussion about centralization versus delegation of critical public services.

In this paper, we investigate how the wage processes of women who are well established in the labour market are affected by having children. We estimate a flexible fixed-effects wage regression model extended by post-childbirth fixed effects. We use register data on West Germany, and we exploit the expansionary family policy during the late 1980s and 1990s for identification. On their return to work after childbirth, the wages of mothers drop by 3-5.7 per cent per year of leave. We find negative selection back to full-time work after childbirth. We discuss the policy implications regarding statistical discrimination and the results concerning the family gap.

Human papillomavirus (HPV) vaccine coverage was high in Denmark until it plunged following negative media coverage. We examined whether the decline in HPV vaccination undermined uptake of another adolescent vaccine, measles, mumps and rubella (MMR). The Danish national health register provided data on uptake of MMR vaccine dose 2 (at age 13) for children born from 1991 to 2003 (n = 827,716). The primary exposure variable comprised three time periods: before HPV vaccine introduction, during high HPV vaccine coverage, and after the drop in HPV vaccine coverage. To examine the effect of HPV vaccination on MMR2 uptake, we estimated MMR2 uptake by age 13 using logistic regression, controlling for gender, birth month, birth year, and maternal education. MMR2 vaccination coverage was high for both girls and boys (86% and 85%) in 2009. Following the introduction of HPV vaccine for girls in 2009, MMR2 coverage increased for girls even as it decreased for boys (gender gap 4·6 percentage points, 95% CI 4·3 to 4·8). Coverage with MMR2 for girls continued to be high over the following four years, and almost all girls (91%) who received MMR2 vaccination also received HPV1 vaccination within the same week. When negative media coverage led to a decline in HPV vaccination, MMR2 uptake for girls also declined. By 2015, MMR2 coverage for girls and boys had become similar again (80% and 79%). Families with the highest level of maternal education showed the strongest decline in MMR2 coverage for girls. Concomitant vaccine provision can increase overall vaccine uptake. However, reduced demand for one vaccine may reduce concomitant vaccination and undermine resiliency of a country’s vaccination program. Drs. Gørtz and Ejrnæs appreciate generous funding from the Novo Nordisk Foundation (grant no. NNF17OC0026542) and from the Danish National Research Foundation through its grant (DNRF-134) to the Center for Economic Behavior and Inequality (CEBI) at the University of Copenhagen.

We develop a model of consumption and income that allows for pervasive heterogeneity in the parameters of both processes. Introducing codependence between household income parameters and preference parameters, we also allow for heterogeneity in the impact of income shocks on consumption. We estimate the parameters of themodel using a sample from the Panel Study of Income Dynamics, covering the period 1968–2009. We find considerable codependent heterogeneity in the parameters governing income and consumption processes. Our results suggest a great deal of heterogeneity in the reaction of consumption to income shocks, highlighting the heterogeneity in the self-insurance available to households.

Does insurance provision reduce entrepreneurs' effort to avoid business failure? We exploit unique features of the voluntary Danish unemployment insurance (UI) scheme, that is available to the self-employed. Using a large sample of self-employed individuals, we estimate the causal effect of insurance choice on the probability to become unemployed. Identification of the insurance choice comes from eligibility conditions for an early retirement plan, accessible only to UI members. We find that those who are insured are 2 percentage points more likely to become unemployed subsequently compared with the uninsured, however only 0.6 percentage points are caused by moral hazard.

This article offers a formal identification analysis of the problem in comparing coefficients from linear probability models (LPM) between groups. We show that differences in coefficients from these models can result not only from genuine differences in effects, but also from differences in one or more of the following three components: outcome truncation, scale parameters and distributional shape of the predictor variable. These results point to limitations in using LPM coefficients for group comparisons. We also provide Monte Carlo simulations and real examples to illustrate these limitations, and we suggest a restricted approach to using LPM coefficients in-group comparisons.

Consumption by couples rises sharply in the beginning and falls later in life; the causes of the early rise are hotly contested. Among the suggestions are rule of thumb behavior, demographics, liquidity constraints, the precautionary motive, and nonseparabilities between consumption and labor supply. We develop two tests of the extreme hypothesis that only changes in family structure matter. We estimate effects of the numbers and ages of children on consumption. These estimates allow us to rationalize all of the increase in consumption without recourse to any of the causal mechanisms. Our estimates can be interpreted either as giving upper bounds on the effects of children or as evidence that the other causes are not important.

This paper develops a model of intrahousehold allocation with endogenous fertility, which captures the relationship between birth order and investment in children. It shows that a birth order effect in intrahousehold allocation can arise even without assumptions about parental preferences for specific birth orders of children or genetic endowments varying by birth order. The important contribution is that fertility is treated as endogenous, a possibility that other models of intrahousehold allocation have ignored. The implications of the model are that children with higher birth orders (that is, who are born later) have an advantage over siblings with lower birth orders, and that parents who are inequality-averse will not have more than one child. The model furthermore shows that not taking account of the endogeneity of fertility when analyzing intrahousehold allocation may seriously bias the results. The effects of a child's birth order on its human capital accumulation are analyzed using a longitudinal data set from the Philippines that covers a very long period. We examine the effects of birth order on both number of hours in school during education and completed education. The results for both are consistent with the predictions of the model.

We consider the decomposition of shocks to a dynamic process into a persistent and a transitory component. Without additional assumptions (such as zero correlation) the decomposition of shocks into a persistent and transitory component is indeterminate. The assumption that is conventional in the earnings literature is that there is no correlation. The Beveridge–Nelson decomposition that is widely used in time series analysis assumes a perfect correlation. Without restrictions on the correlation, the persistent-transitory decomposition is only set-identified. For reasonable autoregressive moving average (ARMA) parameters the bounds for widely used objects of interest are very wide. We illustrate that these disquieting findings are of considerable practical importance, using a sample of male workers drawn from the Panel Study of Income Dynamics (PSID).