Demand-side Constraints Research Articles

Evolution of Female Labor Force Participation in the United States: 1967 to 2003

This paper describes the changes in the employment choices of prime working-age women from 1967 to 2003. A neoclassical labor market participation model is presented and applied to data from the March Current Population Surveys (CPS). The paper provides a new insight: It highlights the different patterns of labor force participation by family-status categories. Also, the paper introduces the average annual unemployment rate at the state level as an explanatory variable to capture the demand-side constraint of the labor market. The results of the paper support the finding that since 1990, the increase in the participation of women in the labor force has slowed from previous decades.

Hong Kong's health spending projections through 2033

Objective To derive actuarial projection estimates of Hong Kong's total domestic health expenditure to the year 2033. Methods Disaggregating health expenditure by age, sex, unit cost and utilisation level, we estimated future health spending by projecting utilisation (by public/private, inpatient/outpatient care) to reflect demographic changes and associated increase in demand (from higher expectations and greater intensity of care), and then multiplying such by the projected unit costs (incorporating the impact of key cost drivers such as public expectations, technological changes and potential productivity gains) to obtain total expenditure estimates. Results The model was most sensitive to the excess health care price inflation rate, i.e. the annual price/cost growth of medical goods and services over and above per capita GDP growth. Population ageing and growth per se, without taking into account related technologic innovation for chronic conditions that particularly afflict older adults, contribute relatively little to overall spending growth. Given the model assumptions, it is possible to limit total health spending to below 10% of GDP by 2033, where the public share would gradually decline from the current 57% to between 46% and 49%. Conclusions Expenditure control through global budgeting, technology assessment and demand-side constraints should be considered although their effectiveness remains inconclusive.

'Making Work Pay' in a Rationed Labor Market

We assess the labor supply effects of two making work pay reforms in Germany. We provide evidence in favor of policies that distinguish between low effort and low productivity by targeting individuals with low wages rather than individuals with low earnings. In assessing the policies we account for demand-side constraints by using a double-hurdle model. We identify and decompose the potential bias of labor supply elasticities derived in standard unconstrained models. Although this bias is not significant when assessing policies which mainly target voluntarily unemployed workers (typically secondary earners), it is substantial for policies which affect groups with high shares of involuntary unemployment.

Sub-Optimality in NHS Sourcing in the UK: Demand-Side Constraints on Supply-Side Improvement

The UK NHS and its Purchasing and Supply Agency (PASA) are implementing reforms for the procurement of goods and services. One aspect of the new approach creates regional confederations in order to overcome the current inability to enforce ‘National Framework Agreements’ within individual NHS Trusts. This is a sensible approach to resolving a lack of effective consolidation of demand within the NHS at the Trust level, but recent research into the procurement practices of regionally based NHS Trusts has highlighted a number of internal demand problems that this new approach is unlikely to overcome. These include the failure by the Trusts individually, and by the NHS centrally, to control and manage the NHS design and specification process effectively and, in many cases, an inability to measure or collect information on the clinical and cost effectiveness of medical interventions. It is argued, therefore, that while the new reforms may be an improvement on the past, it is likely that the confederations are destined to fail. This is largely the result of the NHS – centrally, regionally and locally – lacking an understanding of how to align demand and supply effectively so as to provide the levers to manage the procurement of goods and services proactively.

Intervention complexity--a conceptual framework to inform priority-setting in health.

Health interventions vary substantially in the degree of effort required to implement them. To some extent this is apparent in their financial cost, but the nature and availability of non-financial resources is often of similar importance. In particular, human resource requirements are frequently a major constraint. We propose a conceptual framework for the analysis of interventions according to their degree of technical complexity; this complements the notion of institutional capacity in considering the feasibility of implementing an intervention. Interventions are categorized into four dimensions: characteristics of the basic intervention; characteristics of delivery; requirements on government capacity; and usage characteristics. The analysis of intervention complexity should lead to a better understanding of supply- and demand-side constraints to scaling up, indicate priorities for further research and development, and can point to potential areas for improvement of specific aspects of each intervention to close the gap between the complexity of an intervention and the capacity to implement it. The framework is illustrated using the examples of scaling up condom social marketing programmes, and the DOTS strategy for tuberculosis control in highly resource-constrained countries. The framework could be used as a tool for policy-makers, planners and programme managers when considering the expansion of existing projects or the introduction of new interventions. Intervention complexity thus complements the considerations of burden of disease, cost-effectiveness, affordability and political feasibility in health policy decision-making. Reducing the technical complexity of interventions will be crucial to meeting the health-related Millennium Development Goals.

The Chinese Coal Industry: An Economic History. By Elspeth Thomson. [London: RoutledgeCurzon, 2003. xx+412 pp. £75.00. ISBN 0-7007-1727-7.

The performance of the Chinese coal industry in the 20th century is undeniably important given the pivotal role played by coal as a source of energy for Chinese industry and consumers alike until very recently. Was the coal industry a binding constraint on Chinese economic growth across the 1949 divide? And if so, can we identify some form of managerial failure as its root cause?The answer offered by Tim Wright, in his well-known Coal Mining in China's Economy and Society 1895–1937 (1984), is that the coal shortages did not constrain pre-war economic growth. On the contrary: it was the slow growth of the Chinese economy in aggregate that limited the expansion of the coal industry. The main obstacle to the expansion of coal production was thus to be found on the demand side, and not in entrepreneurial failure or some other supply-side cause. Accepting this (rather Keynesian) conclusion, the question naturally arises as to whether the coal industry fared any better under Mao, and after. In particular, this framework of analysis invites us to consider whether the Maoist regime (and its successors) lifted the demand-side constraint, only to substitute a supply-side constraint in the form of state ownership and management.

Solving the 'Broadband Problem': A Challenge for Regulators or Producers?

Utilising population-based national Internet infrastructure purchase and utilisation figures from a country with high dial-up Internet use, wide availability and low prices of broadband infrastructures, but low levels of broadband uptake, this paper finds evidence for the existence of an applications-based demand-side constraint slowing the diffusion of broadband technologies. Moreover, the applications-based explanation can account for many of the differences in broadband uptake across OECD countries. The paper concludes that the solution to the broadband diffusion problem more likely lies in analysing the production and utilisation of information than in studying and regulating information transfer and transportation infrastructures.

Sustainable agriculture in the Corn Belt: Production-side progress and demand-side constraints

AbstractThis paper explores the constraints to sustainable agriculture in the Com Belt stemming from the trend toward increased farm size and the continued dependence of the region on undifferentiated farm commodities produced for regional, national, and international markets. It is based on a three-county comparison of 14 full-time farmers who have embraced sustainable principles and practices, and a randomly sampled group of 25 farmers. An encouraging finding was the substantial progress made towards lower-input production of com and soybeans by the nine farmers who had adopted the ridge tillage system, which uses elevated seedbeds, banded herbicides, and post-plant nitrogen application to reduce both soil erosion and synthetic chemical inputs while maintaining yields. However, operators of large farms that depend on hired labor and highly dispersed field sites regarded these practices as too risky at their scale of production despite their short-term economic and long-term environmental benefits. The region's commercial farmers appear split between family farmers who wish to avoid the headaches of scale expansion and hired labor, and therefore, embrace more efficient low-input systems such as ridge tillage versus those who reject the increased management intensity and risks of lower-input systems in favor of scale expansion via more chemical-intensive no-till systems. Although ridge tillage represents movement toward low-input cash grain production, low-input production systems alone are not sufficient to improve the underlying social welfare of rural areas. Arresting the trend towards fewer and larger farms will also require development of more specialized or more localized markets for sustainably produced commodities.

Demand-side constraints on the introduction of new food technologies: The case of food irradiation

This paper explores the factors influencing consumer acceptance of new food technologies through an in-depth analysis of consumer reactions to food irradiation. Consumer acceptance/rejection of innovative food technologies is the result of a complex decision-making process which involves an assessment of the perceived risks and benefits associated with the new technology and existing alternatives. The acceptance of a new food technology is not simply related to the characteristics of the process itself, but also the needs, beliefs and attitudes of individual food consumers and the nature of the economic, political and social environment in which food choices take place. Consequently, it is difficult to make generalisations about consumer acceptance/rejection of particular food technologies. Therefore, strategies aimed at improving the rate at which such technologies are adopted must address a wide range of issues relating to the technology itself and the food system into which it is introduced.

Employment maximization in construction in developing countries

This paper presents strategies to maximize construction sector employment in labour-surplus economies. These emerge as an integral part of any technology that seeks to maximize contruction output at the same time. This technology is determined in a dynamic framework by the resources available, however, without ignoring the relevant political, social and economic circumstances and related constraints. It is found to be unique for a given situation. The case study of Sri Lanka, recognizing the above principles, establishes concrete policies necessary to eliminate supply and demand side constraints and for steady growth of construction output and employment, within the bounds of this appropriate technology.

Durable-Goods Monopolists, Rational Consumers, and Improving Products

We consider the case of a monopolist supplying an improving durable product to a population that is heterogeneous in its valuation of product quality. In a two-period framework, we show that if consumers expect the product to improve in “present-value” terms, then intertemporal discrimination might result in the first-period marginal consumer being left with zero surplus and some higher-end consumers postponing purchase. The resulting trajectories for quality and price do not constitute a subgame-perfect equilibrium. One of our conclusions is that the logic of profit maximization in the context of rational consumer choice imposes a demand-side constraint on the rate of product improvement. We also emphasize the disequilibrium consequences of improving a product so rapidly that high-end consumers are tempted to wait for a future new-and-improved version. Finally, the formulation adopted in the paper may be useful to understand observed differences in product improvement rates in different markets.

The Demand for Consumer Durables in the United Kingdom in the Interwar Period

Distinct diffusion curves are identified by model type and significant differences in regional motor car ownership in the interwar U.K. economy. We assess the viability of applying mass production strategies such as Ford and General Motors pursued in America. Given the demand-side constraints present in the U.K. market, the price reductions made possible by the exploitation of economies of scale were insufficient to create a mass market. Hence, the relatively low levels of ownership achieved can be seen as a rational response to the constraints perceived by firms.

Identifying and assessing targets of opportunity for plastics recycling

This paper identifies and assesses “targets of opportunity” for additional recycling of plastic wastes. Targets are discussed in terms of the quantities of plastics wastes that might be affected, the relevant supply-side and demand-side constraints that must be overcome before these targets can be met, and the degree to which meeting these targets might be facilitated by government sponsored incentive programs or other regulatory measures. Five hypothetical scenarios are developed that depict various supply-side and demand-side conditions. In some cases, the supply-side and demand-side assumptions are consistent with current technical, economic, institutional, and regulatory conditions. In other cases, particularly with respect to supply-side constraints, the assumptions represent significant shifts in the ways plastics are collected and processed in the United States. The quantities and types of plastics that could be recycled, given the hypothetical conditions, are estimated. The viability of the assumptions in the various scenarios is also assessed. Given current conditions and expected future trends, three broad options exist to increase the percentage of plastics recycled. First, actions can be taken to promote the collection and recycling of relatively clean plastic waste. Technical constraints and the relative sizes of markets for different resins suggest that a focus on polyethylene terephthalate (PET) and high-density polyethylene (HDPE) packaging is most appropriate. Second, actions can be taken to promote the collection and recycling of commingled plastics. Third, plastics can be collected with other combustible wastes and incinerated to recover heat value. The recycling of PET and HDPE faces fewer technical, economic, and institutional constraints than does the recycling of commingled plastics. Although more risky, recycling of commingled plastics offers the opportunity to recycle a much larger percentage of the total plastics waste stream. Incineration with heat recovery could utilize all plastic wastes. The potential for incineration may, however, be limited by environmental concerns. Given the uncertainties that currently exist about these recycling approaches, a flexible public policy with respect to plastics recycling is suggested at this time.

Behavioural Response to UI Reform in Constrained and Unconstrained Models of Labour Supply

This paper investigates how taking account of demand-side constraints affects estimated models of labor supply and, hence, predicted behavioral responses to unemployment insurance reform in Canada. Constrained and unconstrained labor-supply equations are estimated for single men and women using microdata from the 1982 Survey of Consumer Finance. Detailed modeling of the impact of the Canadian unemployment insurance program on individual budget constraints enables the simulation of behavioral responses to the unemployment insurance reform proposals of the Forget and Macdonald commissions. Results indicate that in a high-unemployment economy, labor-supply responses will be negligible.

Quantity-Constrained Household Responses to Ui Reform

This paper explores the consequences of adopting a household perspective when evaluating proposals for the reform of the Canadian unemployment insurance system. A model of joint behavior that allows demand-side constraints to limit labor-supply choices is estimated. Quantity constraints faced by one spouse are, thus, important determinants of the other's behavior. Predicted household responses to unemployment insurance reform proposals are negligible and differ from those that would be obtained using a model of unconstrained individual behavior. Copyright 1990 by Royal Economic Society.

External demand constraints for agricultural exports: An impediment to structural adjustment policies in sub-Saharan African countries?

Structural adjustment programmes are being promoted throughout the developing countries. The recommended policy package, including price as well as non-price policies, is geared towards export growth and a long-term sustainable balance of payments. There is considerable scepticism, however, whether developing countries can indeed benefit from an export-oriented growth strategy. First, rigidities in domestic output supply responses could preclude significant export growth. Second, external demand-side constraints could impede export revenue growth if a jointly promoted export-led strategy resulted in world market price deterioration. Analysis reveals that in the case of sub-Saharan Africa neither of the above factors should cause a failure of structural adjustment policies. However, the outcome of adjustment policies could be improved if commodity and country-specific factors were taken into consideration.