Government Transfer Payments Research Articles

Exploring links between juvenile offenders and social disorganization at a large map scale: a Bayesian spatial modeling approach

This paper adopts a Bayesian spatial modeling approach to investigate the distribution of young offender residences in York Region, Southern Ontario, Canada, at the census dissemination area level. Few geographic researches have analyzed offender (as opposed to offense) data at a large map scale (i.e., using a relatively small areal unit of analysis) to minimize aggregation effects. Providing context is the social disorganization theory, which hypothesizes that areas with economic deprivation, high population turnover, and high ethnic heterogeneity exhibit social disorganization and are expected to facilitate higher instances of young offenders. Non-spatial and spatial Poisson models indicate that spatial methods are superior to non-spatial models with respect to model fit and that index of ethnic heterogeneity, residential mobility (1 year moving rate), and percentage of residents receiving government transfer payments are, respectively, the most significant explanatory variables related to young offender location. These findings provide overwhelming support for social disorganization theory as it applies to offender location in York Region, Ontario. Targeting areas where prevalence of young offenders could or could not be explained by social disorganization through decomposing the estimated risk map are helpful for dealing with juvenile offenders in the region. Results prompt discussion into geographically targeted police services and young offender placement pertaining to risk of recidivism. We discuss possible reasons for differences and similarities between the previous findings (that analyzed offense data and/or were conducted at a smaller map scale) and our findings, limitations of our study, and practical outcomes of this research from a law enforcement perspective.

Unemployment and Income Inequality: A Puzzling Finding from the US in 1941-2010

Persisting high unemployment and income inequality are two serious problems in global macroeconomic management. This paper sets out to explore the possible connection behind the co-existence of the two problems with an empirical study of the US from 1941-2010. Using the wage share in aggregate personal income as a measurement of income inequality, it discovers a puzzle that is against common sense and conventional belief: there is a robust tradeoff relationship between the change rates of unemployment rate and the wage share throughout 1941-2010. It means that unemployment and income inequality are positively correlated. By making the distinction between the wage income from the primary distribution and employees’ welfare incomes from government transfer payments, it also finds that employees’ social welfare had a weak positive relationship with unemployment.

JOB DISPLACEMENT AND THE INTER‐TEMPORAL MOVEMENT OF WORKERS THROUGH THE EARNINGS AND INCOME DISTRIBUTIONS

This paper uses the Panel Study of Income Dynamics to examine how job displacement influences intragenerational earnings and income mobility. Job displacement increases the probability of downward labor earnings mobility for several years after separation occurs. Furthermore, the probability of being in the bottom half of the earnings distribution increases significantly, not only in the year of displacement, but also for several years afterwards. However, after considering additional measures of financial well‐being (income from other family members and government transfer payments), the short‐ and long‐term impact of displacement on movements throughout the distribution is reduced. (JEL J63, J65)

The Effect of Social Entitlement Programs on Private Transfers: New Evidence of Crowding Out

This paper exploits a natural policy experiment to directly identify the crowding out effects of public transfers on the incidence and level of private transfers. The introduction of a large social security program in Taiwan is used to estimate the effect of an exogenous increase in government transfer payments to the elderly on the private transfer behavior of their adult children. Using an instrumental variables strategy that accounts for the endogeneity of receiving public transfers, the empirical results show strong evidence of crowding out on the extensive margin (the probability of providing a positive transfer) and weaker evidence of crowding out on the intensive margin (the amount of the transfer conditional on it being positive).

The Keynesian Multiplier Effect Reconsidered

In the standard Keynesian framework, government spending on useless public works has a larger multiplier effect than spending on government transfer payments does. In other words, spending on useless public works increases national income by more than an equivalent increase in government transfer payments would. Nevertheless, their effects on national benefit are identical. For both, the national benefit equals the direct benefit created by the spending. If there are two income classes, some transfers reduce both the national income and the national benefit. Some government purchases completely crowd out private consumption and reduce the national benefit.

The Effect of Social Entitlement Programs on Private Transfers: New Evidence of Crowding Out

This paper exploits a natural policy experiment to directly identify the crowding out effects of public transfers on the incidence and level of private transfers. The introduction of a large social security program in Taiwan is used to estimate the effect of an exogenous increase in government transfer payments to the elderly on the private transfer behavior of their adult children. Using an instrumental variables (IV) strategy that accounts for the endogeneity of receiving public transfers, the empirical results show strong evidence of crowding out on the extensive margin (the probability of providing a positive transfer), and weaker evidence of crowding out on the intensive margin (the amount of the transfer conditional on it being positive).

Fiscal and tax policy support for energy efficiency retrofit for existing residential buildings in China's northern heating region

Energy efficiency retrofit for existing residential buildings (EERERB) in China's northern heating region is an important component of the national energy strategy. The main content and related subject in EERERB performance is the basis of understanding and developing targeted policies. So, this paper designed the content system of EERERB. And then, provided a cost-benefit analysis on related subjects, assessed the government's function in EERERB, and come to the conclusion that the Chinese government should increase fiscal fund investment and implement more fiscal and tax incentive policies. Moreover, in view of China's current policy, which lacks long-term mechanism and flexibility, this paper proposed specific policy recommendations, including clarifying the government's corresponding responsibilities at all levels and increasing the intensity of the central government's transfer payments. It further proposed targeted financial and tax policies for supporting and encouraging heating enterprises and owners, as well as policies to cultivate energy-saving service markets and to support the ESCO.

The Katrina Effect: Was There a Bright Side to the Evacuation of Greater New Orleans?

Abstract This paper uses longitudinal data from Current Population Surveys conducted between 2004 and 2006 to estimate the net impact of Hurricane Katrina-related evacuation on various indicators of well-being. While evacuees who have returned to the affected region show evidence of returning to normalcy in terms of labor supply and earnings, those who persisted in other locations exhibit large and persistent gaps, even relative to the poor outcomes of individuals destined to become evacuees observed prior to Katrina. Evacuee outcomes are not demonstrably better in destination communities with lower initial unemployment or higher growth rates. The impact of evacuation on total income was blunted to some extent by government transfer payments and by self-employment activities. Overall, there is little evidence to support the notion that poor underemployed residents of the New Orleans area were disadvantaged by their location in a relatively depressed region.

The effects of government transfers on monthly cycles in drug abuse, hospitalization and mortality

This paper analyzes the monthly patterns of adverse outcomes due to the consumption of illegal drugs by recipients of government transfer payments. We find evidence that certain subpopulations on government cash aid significantly increase their consumption of drugs when their checks arrive at the beginning of the month, and as a result, experience adverse events including hospitalization and death. Using data from California, we find that the overall rate of drug-related hospital admissions increases abruptly at the beginning of the month, with admissions increasing 23% during the first five days of the month. We find that this cycle is driven largely by recipients of Supplemental Security Income (SSI). SSI recipients also experience an abrupt 22% increase in within hospital mortality after receiving their checks. These findings suggest that “full wallets” adversely affect some aid recipients, and that policymakers should explore alternate disbursement regimes such as a staggered disbursement schedule or in-kind support that have the potential to reduce the rate of adverse events.

Income inequality across Canadian provinces in an era of globalization: explaining recent trends

In this article, I use panel data methods to investigate possible factors influencing recent trends in income inequality across Canadian provinces. The ratio of the income share of the highest‐to‐lowest quintiles and the Gini coefficient of total income are used as measures of inequality. Both point to rising levels of inequality from 1981 to 1999, especially during the 1990s, and the estimation results suggest that several factors have had significant effects on such an increase. In particular, an increase in international trade, technological change, educational heterogeneity, and the unemployment rate are found to contribute to greater inequality. Deindustrialization and declining government transfer payments to persons are also factors explaining the rise in inequality. In contrast, an increase in the female labour force participation rate appears to have dampened inequality. There is also some evidence of a negative association between de‐unionization and inequality while no significant association is found between inequality and other demographic shifts, such as immigration and the share of the population over the age of 65.

The Quality of Fiscal Adjustment and the Long-Run Growth Impact of Fiscal Policy in Brazil

This paper describes the main trends of Brazil’s fiscal policy during the last decade and analyzes: (1) the ability to raise the primary surplus in response to external shocks, (2) the pro-cyclical nature of fiscal policy, and (3) the long-run impact of government expenditure composition and taxation. The use of the primary balance as a policy tool is analyzed within the Drudi-Prati model, wherein the government uses the primary balance to reveal its commitment to service its debt. We verify that both the debt ratio and the primary balance are determinants of spreads and credit ratings in Brazil. However, the relationship is non-linear: the impact of the primary balance on spreads is amplified as the debt ratio increases. Using an Autoregressive Distributed Lag (ARDL) approach, we analyze the relationship between the primary balance and economic activity, finding a positive correlation in the long run. However, in the short run, fiscal expansions are associated with primary balance reductions and vice-versa during output contractions confirming the procyclical nature of fiscal policy in the short run. The paper uses two approaches, the autoregressive distributed lag (ARDL) and a cointegrating VAR, to analyze the interaction between public expenditure composition and taxation on growth. Similar results are obtained: large elasticities of output with respect to capital stocks, a significant negative impact of taxation on long-run GDP, and a negative impact of government consumption and transfer payments on GDP. These results shed light on the contribution of fiscal policy to disappointing growth performance in Brazil during the past decade.

Taxes, Transfers, and Voter Behavior in U.S. Midterm Elections

The effects of changes in per capita real GDP, real taxes and real government transfer payments on midterm congressional election outcomes during the 1946–2002 period are examined. Voters are found to take all of these, except taxes and transfers at the state and local government levels, into account in casting their ballots. However, the weights they place on each are found not to be the same. Consequently, the common practice of summarizing the economic conditions faced by voters through disposable income seems to be inappropriate. Also, omission of tax and transfer variables from the vote equation, and using vote swing rather than vote share as the dependent variable is found to result in underestimation of the coefficient of per capita GDP growth.

Introducing the Issue

Introducing the Issue Isabel Sawhill (bio) and Sara McLanahan (bio) Isabel Sawhill Isabel Sawhill is senior fellow and co-director of the Center on Children and Families at the Brookings Institution and is a senior editor of The Future of Children. Sara McLanahan Sara McLanahan is director of the Center for Research on Child Wellbeing at Princeton University and editor-in-chief of The Future of Children. Notes 1. Gary Burtless and Christopher Jencks find that market income inequality in the United States is similar to that in other OECD countries but that taxes and transfers did more to redistribute these market incomes in other OECD countries in the 1990s, with the result that disposable incomes were more unequal in the United States in that decade. Gary Burtless and Christopher Jencks, "American Inequality and Its Consequences," in Agenda for the Nation, edited by Henry Aaron, James Lindsay, and Pietro Nivola (Brookings, 2003), p. 76. 2. Lawrence Mishell, Jared Bernstein, and Sylvia Allegretto, The State of Working America 2004/2005 (Cornell University Press, 2005), p. 214. 3. Authors’ calculation from Congressional Budget Office, "Historical Effective Federal Tax Rates, 1979-2003" (December 2005), table 1-C. The CBO calculations use the Census Bureau’s fungible value measure to determine the cash equivalent of in-kind government transfer payments. The CBO adjusted the resulting measure of comprehensive income for differences in the size of households in order to assign households to income quintiles. Quintiles contain equal numbers of people, but because households vary in size, quintiles generally contain unequal numbers of households. 4. Ibid. 5. Arthur B. Kennickell, "Currents and Undercurrents: Changes in the Distribution of Wealth, 1989-2004," Finance and Economics Discussion Series 2006-13 (Federal Reserve Board, 2006), www.federalreserve.gov/pubs/feds/2006/200613/200613abs.html (June 15, 2006). 6. Authors’ calculation interpolating data from Angus Maddison, "The World Economy: A Millennial Perspective" (Paris: Organization for Economic Cooperation and Development, 2001), tables A1-c and A1-d. 7. Authors’ calculation from U.S. Bureau of the Census, "Historical Income Tables—Families," Current Population Survey, table F-6, www.census.gov/hhes/www/income/histinc/f06ar.html (May 18, 2006). The Census Bureau adjusts income data for inflation using the CPI-U-RS. 8. Authors’ calculations using Urban-Brookings Tax Policy Center, "Table T06-0020. Current Law: Distribution of Gross Estate and Net Estate Tax by Size of Gross Estate" (January 23, 2006), www.taxpolicycenter.org/TaxModel/tmdb/Content/Excel/T06-0020.xls (May 18, 2006); and Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 2006 Annual Report (2006), tables V.A1 and V.A2, www.ssa.gov/OACT/TR/TR06/V_demographic.html (May 18, 2006). 9. Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16, subtitle C, "Increase in Exemption Amounts," sec. 521(a). See also Leonard Burman and William Gale, "The Estate Tax Is Down, but Not Out," Tax Policies Issues and Options Policy Brief 2 (Washington: Urban Institute, December 2001). 10. See "School Readiness: Closing Racial and Ethnic Gaps," Future of Children 15, no. 1 (2005). 11. See Jens Ludwig and Isabel V. Sawhill, "Success by Ten: Intervening Early, Often, and Effectively in the Education of Young Children" (Georgetown University and Brookings, 2006); and William T. Dickens, Isabel V. Sawhill, and Jeffrey Tebbs, "The Effects of Investing in Early Education on Economic Growth," Working Paper (Brookings, April 2006). [End Page 16] 12. For a set of specific, evidence-based proposals on effective ways to intervene, see Robert Gordon, Thomas J. Kane, and Douglas O. Staiger, "Identifying Effective Teachers Using Performance on the Job," Hamilton Project White Paper 2006-01 (Brookings, 2006). 13. See George Borjas, Heaven’s Door: Immigration Policy and the American Economy (Princeton University Press, 2001). 14. "Childhood Obesity," Future of Children 16, no. 1 (2006). [End Page 17] Copyright © 2006 The Woodrow Wilson School of Public and International Affairs at Princeton University and The Brookings Institution

The Liberal Assault on the Constitution

This review essay analyzes Ran Hirschl's recent important book entitled Toward Juristocracy. The book sets out a leftwing case against individual rights and constitutionalism, examining the creation of bills of rights in several nations. In each case, he argues and presents evidence that the true purpose of the new constitutional rights was the desire of elites to preserve their status in society and prevent democratic demands for government action, such as redistribution of wealth. Hirschl contends that the empowerment of the judiciary associated with individual constitutional rights undermines the general welfare and benefits the elites. Various other prominent authors from the left have made similar claims. This claim is amenable to empirical testing, using several endpoints of concern to Hirschl - poverty, democracy, and labor rights. I use multiple measures for each of these endpoints as dependent variables, with independent variables of the existence of a bill of rights, the degree of judicial power in the nation, ethnolinguistic fractionalization, and corporatist governmental structure. This yielded twelve regressions, and in no case did the presence of a bill of rights or judicial power appear to undermine the social welfare objectives. The associations were as often positive as negative and in no case approached statistical significance. The dependent variable measures included several scales of absolute poverty, relative poverty, the magnitude of government transfer payments, electoral participation, competitiveness, the World Bank scale for democratization, unionization, strikes, labor regulation, and the labor share of national income. While the study involved a relatively small sample of developed nations, the results lend no support for the claim that judicially enforceable individual rights systematically undermine human welfare.

Racism and redistribution in the United States: A solution to the problem of American exceptionalism

The two main political parties in the United States in the period 1976–1992 put forth policies on redistribution and on issues pertaining directly to race. We argue that redistributive politics in the US can be fully understood only by taking account of the interconnection between these issues in political competition. We identify two mechanisms through which racism among American voters decreases the degree of redistribution that would otherwise obtain. In common with others, we suggest that voter racism decreases the degree of redistribution due to an anti-solidarity effect: that (some) voters oppose government transfer payments to minorities whom they view as undeserving. We suggest a second effect as well: that some voters who desire redistribution nevertheless vote for the anti-redistributive (Republican) party because its position on the race issue is more consonant with their own, and this, too, decreases the degree of redistribution in political equilibrium. This we name the policy bundle effect. We propose a formal model of multi-dimensional political competition that enables us to estimate the magnitude of these two effects, and estimate the model for the period in question. We compute that voter racism reduced the income tax rate by 11–18% points; the total effect decomposes about equally into the two sub-effects. We also find that the Democratic vote share is 5–38% points lower than it would have been, absent racism. The magnitude of this effect would seem to explain the difference between the sizes of the public sector in the US and northern European countries.

Indonesian Local Government Spending, Taxing and Saving: An Explanation of Pre‐ and Post‐decentralization Fiscal Outcomes*

As a result of Indonesia's decentralization program, local governments have gained significantly more responsibility for service delivery, considerably larger fiscal resources, and much greater authority over the use of those resources than before. The present paper develops a simple budget model to describe and explain the substantial differences in pre‐ and post‐decentralization local government fiscal behavior related to spending, taxing and saving. During the post‐decentralization period special attention is paid to the fiscal behavior of natural resource rich regions. Among other things, the evidence suggests that: post‐decentralization local government spending is partly responsive to increasing needs and partly the subject of elite capture; local government taxation has become more aggressive under decentralization and appears to be mostly driven by local bureaucratic expectations related to routine overhead budgets; and the increased savings of local governments during the post‐decentralization period is determined to a large degree by delayed central government transfer payments.

Blindness registrations and socioeconomic factors in Canada: an ecologic study

purpose To investigate the socioeconomic factors associated with blindness registration in Canada and its regions using an ecologic approach.methods Canadian National Institute for the Blind (CNIB) blindness registration data for 1996 were divided into units of analysis using postal codes and correlated with demographic and socioeconomic information collected by the 1996 Census of Canada. A total of 1250 units were analyzed representing 28,429,519 persons (98.55% of the population of Canada). Six socioeconomic factors were examined using weighted linear multivariate regression analysis: 1) Percentage of the population aged 65 years and over; 2) Median household income; 3) Percentage of the population with university education; 4) Percentage of income derived from government transfer payments; 5) Recent immigrants; and 6) Visible minorities (blacks, Chinese, South Asians). Regression models were created for Canada as well as five geographic regions within Canada.results For Canada as a whole, blindness registration prevalence was positively correlated with age distribution and percentage of recent immigrants, and negatively correlated with level of government assistance income and percentage ethnic Chinese population. For five regional regression models, the common predictor variables were age distribution, median household income and percentage of the population who are black. None of the regional models produced an identical set of correlations.conclusions Socioeconomic factors associated with blindness registration prevalence varied across different regions. Median household income was the second most common factor after age distribution, suggesting that areas with lower incomes tend to utilize more blind services. Higher blindness registration rates were associated with areas that had a higher percentage of the population who were black. Differences in blindness registration rates may reflect under-utilization of blind services and/or variations in disease and treatment rates in different populations.

Cognitive skills and the youth labour market

With the use of test score data it is found that literacy, numeracy and education strongly influence the probability of being employed, unemployed, having a wage-paying job and obtaining government transfer payments in addition to incomes, weeks worked and weeks unemployed for a sample of 16 to 24-year-olds.

Fiscal adjustments and their effects during the transition to the EMU.

The transition phase to EMU hasbeen accompanied by considerable monetaryand fiscal consolidation efforts in the EU.This paper analyses this consolidationprocess and its effects on economicactivity in the EU. It is tested to what extent fiscal retrenchment efforts havedepressed or stimulated private spending. Inthe case of the latter non-Keynesian effectsdominate the traditional Keynesianexpenditure effects of government spending,taxation and transfer payments.

Desarrollo industrial y subdesarrollo económico: el caso chileno (1860-1920)

This is a classic work. Originally published in 1971, the major reasons for reviewing it are to notify Chileanists and students of modern Latin American economies that they no longer need to consult it with an Italian dictionary in hand, and to reflect on what remains after so much time. Carmagnani made the decision, as he explains in a brief comment, not to revise the work. Eduardo Cavieres helps maintains the work’s value with an excellent introduction, placing it in the context of Chilean economic historiography.The core of the work consists of four lengthy essays followed by 22 appendixes (anexos) and 17 graphs. The economic data that Carmagnani pulled together, from price and wage series to government revenues and trade indices, remain fundamental. The essays consist of two closely reasoned analyses of industrial formation, concentrating on a series of census information from the 1890s to 1920. The most important sectoral analysis focuses on the period with the best numbers, that is, from 1910 to 1919. These two concentrated descriptions of numbers and their meanings are followed by a couple of essays that are more expansive and reflective: one on the origins and gradual success of industrial protectionist views and another on Chile’s insertion into the world economy from 1860 to the end of World War I.Throughout these essays, Carmagnani asks the key questions of underdevelopment: Why did Chile develop industry in the pattern it did? Why did these industries lack dynamism? Why did they not become the center of economic growth rather than the periphery of a trade-based economy? And finally, how did Chile’s dependence on Great Britain shape its own economic prospects? The essay on the rise of protectionist sentiment and the obstacles it faced before gaining prominence is alone worth the price of this book. Carmagnani demonstrates that protectionism had strong support by the 1890s and argues that it was triumphant and industries were receiving government subsidies by 1920.Camagnani offers insights on the absence of labor contracts and what that meant for the demand side of growth, the nightmarish consequences of a government that covered its bills by printing money, and the importance of Chile’s balance of payments as the key to its sorry economic record. Then, he proposes a theory that should have received far more attention since he wrote this book. Many have argued that Chile took a wrong turn at the start of the nitrate era, around 1880. Carmagnani makes the case that linkages between Chile and Great Britain became seriously unbalanced only in the 1870s. Until then, despite its structural weaknesses, Chile had a balanced economy in its international payments but was vulnerable to external shocks. After the late 1870s and throughout what European historians call the Great Depression, that is, into the 1890s, Britain’s role within Chile allowed the dominant power to pass on the costs of its own troubled economy to a weaker partner. In making this argument, Carmagnani traces out sectoral linkages rather than imperialist actors as the engines of dependence. After the onset of the Great Depression, Chile’s economy was never, in terms of international payments, balanced again. Cycles of government indebtedness and transfer payments to foreign investors led to a steady monetary devaluation and an ever more asymmetrical relationship with foreign powers.While the analysis stays close to key economic issues, it never becomes bogged down in jargon of any kind. The work’s new accessibility will mean that a new generation of Latin American economic historians will pay attention to what it says.