Welfare Effects Research Articles

The Influence of Organizational Culture and Welfare on The Work Effectiveness of USK Employees

An organization is a forum in which there are activities of people working together to achieve a certain goal that has been determined together. This study aims to examine the influence of organizational culture and welfare on the work effectiveness of USK employees. The research method used is a survey using a questionnaire distributed to employees at the USK administrative headquarters. The collected data was analyzed using descriptive statistical and regression methods. The results of the study show that there is a positive relationship between strong organizational culture and employee welfare and employee work effectiveness. The influence of organizational culture on the work effectiveness of USK employees is 70.48%, which shows that organizational culture has a significant influence on the work effectiveness of employees at USK. While the influence of welfare is 66.76%, this shows a fairly good level of approval for the effectiveness of employee work. The combination of a strong organizational culture and employee well-being creates greater synergy in increasing work effectiveness. The influence of a strong and positive organizational culture significantly increases the effectiveness of employee work and the influence of employee welfare includes aspects such as fair compensation, a safe work environment, and contributes to increasing employee motivation and productivity. The implications of these findings show the importance of paying attention to organizational culture that allows employee participation and well-being in improving overall organizational performance.

A Welfare Analysis of Tax Audits Across the Income Distribution

Abstract We estimate the returns to IRS audits of taxpayers across the income distribution. We find an additional ${\$}$1 spent auditing taxpayers above the 90th income percentile yields more than ${\$}$12 in revenue, while audits of below-median income taxpayers yield ${\$}$5. We construct our estimates by drawing from comprehensive internal accounting information and audit-level enforcement logs. We begin by estimating the average initial return to all audits of US taxpayers filing in tax years 2010–2014. On average, ${\$}$1 in audit spending initially raises ${\$}$2.17 in revenue. Audits of high-income taxpayers are more costly, but the additional revenue raised more than offsets the costs. Audits of the 99–99.9th percentile have a 3.2:1 initial return; audits of the top 0.1% return 6.3:1. We then exploit the 40% audit reduction between tax years 2010 and 2014 to examine the returns to marginal audits. We find they exceed the returns to average audits. Revenues remain relatively unchanged but marginal costs fall below average costs due to economies of scale. Next, we use randomly selected audits to examine the impact of an initial audit on future revenue. This individual deterrence effect produces at least three times more revenue than the initial audit. Deterrence effects are relatively consistent across the income distribution. This results in the 12:1 return above the 90th percentile. We conclude by estimating the welfare consequences of audits using the MVPF framework and comparing audits to other revenue-raising policies. We find that audits raise revenue at lower welfare cost.

Forecast Errors and Welfare Conclusions Based on the Flyvbjerg Database

Abstract The so-called Flyvbjerg database is the largest source of data on the performance of major investment projects. It has generated influential analyses of the magnitude of and reasons for cost overruns and demand shortfalls in major projects. Those analyses have demonstrated, among other things, the systematic presence of large forecast errors in both construction costs and in user demand in the first year of operation. They have also linked those results to the social welfare consequences of the underlying projects, suggesting that the large and systematic forecast errors are indicative of welfare destruction. Given how influential those analyses have been, this paper examines the link between the database, empirical analyses thereof, and social benefit–cost analysis (BCA). To that end, both the measurement of variables in the database and the estimation of forecast errors are contrasted against BCA. The conditions for the estimated forecast errors to approximate those obtained from a BCA are spelled out, and the scope for drawing welfare conclusions based on those estimates is discussed. Furthermore, numerical simulations are presented to explore whether the estimated forecast errors do indeed imply likely welfare destruction. The simulations suggest that as large as the forecast errors are, welfare destruction is no foregone conclusion.

Welfare effect of rice outgrower scheme participation: empirical evidence from northern Ghana

Outgrower schemes can improve farmers’ welfare by boosting farm productivity and increasing market participation. In this context, we examined the effect of participating in outgrower schemes on household welfare indicators while controlling for potential observed and unobserved biases that could influence the outcomes. To address this objective, we employed an endogenous switching regression model to analyze primary data from 555 rice farmers in northern Ghana who use irrigation. The results revealed significant effect of sex of household’s head, age, marital status, education, dependency ratio, non-farm work, extension contact, access to credit, membership of farmer group, proximity to commercial markets, distance to outgrower schemes, familiarity with scheme operations, and the geographical location of the farmer on the propensity to participate in outgrower schemes. Importantly, participation in outgrower schemes resulted in a 57.6%, 23.6%, and 48.1% increase in household consumption expenditure per capita, income per capita, and asset ownership, respectively, exceeding what participants could have gained if they had not participated. Similarly, the non-participants, would have experienced a 21.2%, 34.0%, and 26.1% increase in household consumption expenditure per capita, income per capita, and assets, respectively, if they had joined the scheme Therefore, strategies to improve farmer groups and extension services are required as they are critical channels for encouraging more farmers to participate in the schemes and thereby improving their welfare.

Examining the effectiveness of dissuasive taxes as a policy tool for reducing tobacco and alcohol consumption in Cameroon: A welfare and microsimulation analysis

Deterrent taxes are a crucial policy tool for reducing the consumption of harmful products like tobacco and alcohol. However, assessing dissuasive taxes impact different income groups is important to ensure that their burden is not disproportionately borne by low-income households. This study examines the effectiveness of deterrent taxes as an economic policy tool for reducing tobacco and alcohol consumption in Cameroon. We analyse the impact on household welfare and distributional effects using microsimulation analysis. The data come from the Cameroon Household Living Conditions Survey and the 2022 tax records. Our methodology is based on a dynamic computable general equilibrium (CGE) model enriched with an addiction model. The results indicate that deterrent taxes can significantly reduce the consumption of these harmful products but also have regressive effects on low-income households. In response, we recommend the adoption of a progressive tax structure and the establishment of targeted support programmes to mitigate the negative impact on vulnerable populations.

Industrial Policy: Lessons from Shipbuilding

Industrial policy has been used throughout history in some form or other by most countries. Yet, it remains one of the most contentious issues among policy makers and economists alike. In part, this is because the empirical evidence on whether and how it should be implemented remains slim. Scant data on government subsidies, conflicting theoretical arguments, and the need to account for governments’ short and long-run objectives, render research particularly challenging. In this article, we outline a theory-based empirical methodology that relies on estimating an industry equilibrium model to measure hidden subsidies, assess their welfare consequences for the domestic and global economy, as well as evaluate the effectiveness of different policy designs. We illustrate this approach using the global shipbuilding industry as a prototypical example of an industry targeted by industrial policy, especially in periods of heavy industrialization. Just in the past century, Europe, followed by Japan, then South Korea, and more recently China, developed national shipbuilding programs to propel their firms to global leaders. Success has been mixed across programs, certainly by welfare metrics, and sometimes even by growth metrics. We use our methodology on China to dissect the impact of such programs, what made them more or less successful, and how we can justify why governments have chosen shipbuilding as a target.

Micro-level welfare effects of integrated soil fertility management in northern Ghana

Micro-level welfare effects of integrated soil fertility management in northern Ghana

How to fund unemployment insurance with informality and false claims: Evidence from Senegal

This paper studies the welfare effects from the provision of unemployment insurance (UI) benefits in a context where formal workers represent only a small proportion of the labor market and informal workers can submit fraudulent claims for UI benefits. We model these features and allow for varying degrees of enforcement and different funding sources. We then estimate the model’s key parameters by conducting a custom labor force survey in Senegal. Our findings show that the liquidity gains are large and the moral hazard response to the UI benefits among workers is relatively small: an extra dollar of UI benefits yields a consumption-equivalent gain of 60–90 cents, which exceeds comparable estimates from U.S. calibrations by a factor of three to sixteen. We then show that the welfare gains depend on the program design: UI funded through payroll taxes delivers the greatest welfare gains but becomes infeasible when there are few formal workers and high rates of fraudulent claims. On the other hand, UI funded through consumption taxes delivers lower welfare gains but remains feasible with high informality and false claims.

The social value of overreaction to information

We study the welfare effects of overreaction to information in markets with asymmetric information as well as the impact of a simple intervention in the form of a tax or a subsidy on trade volume. A large enough level of overreaction is always welfare decreasing: in these situations, introducing a tax can improve welfare. However, a small degree of overreaction can increase welfare. This is because of the interplay of two competing externalities: an information externality, due to the informational role of prices, and a pecuniary externality, due to the allocative role of prices. Depending on the balance of these externalities, a trade volume subsidy may be optimal.

Growth, Poverty, and Food Policy in the Philippines: Lessons for the Post-COVID-19 Era

The Philippine economy’s growth has accelerated since 2010, outperforming its Asian peers in the current decade. However, poverty reduction is comparatively weak in response to growth, suggesting that growth has been less inclusive than expected. Poverty in the Philippines is still largely a rural phenomenon despite the country’s rapid urbanization. Our primary objective is to reexamine how much the national food policy has influenced the poverty-reducing effects of economic growth using the more recent national household-level data from 2000 to 2021. The longer-term data, including a period of mobility relaxation following long lockdowns upon the onset of the COVID-19 pandemic, allow us to revisit the growth-poverty conundrum in the Philippines. We focus on the more recent decade of relatively sustained growth compared to earlier studies on the subject. We use Engel food shares as a proxy for household welfare and consider the differential welfare effects of food price changes across segments of the population. We show that economic growth in recent years would have been strongly pro-poor if not for the misguided set of policy tools chosen to achieve the food self-sufficiency goal. The government’s move to dismantle the quantitative restriction regime on rice imports in favor of tariffs is a step in the right direction.

Has the Euro Paid Off? A Study of the Trade‐Induced Welfare Effects of the EMU

Has the Euro Paid Off? A Study of the Trade‐Induced Welfare Effects of the EMU

Preferential trade liberalization with endogenous cartel discipline: Implications for trade and welfare

AbstractWe consider an international cartel whose members interact repeatedly in their own as well as in third‐country markets. Cartel discipline—an inverse measure of the degree of competition between firms—is endogenously determined by the cartel's incentive compatibility constraint, which strategically links markets that are otherwise independent. This linkage implies that trade cost reductions induce cartel members to adjust their sales, not only because of direct but also because of spillover effects. We apply these ideas to preferential trade agreements and show that the indirect effects can give rise to trade diversion. We also characterize the welfare effects of preferential tariff cuts for all countries and identify circumstances under which preferential trade liberalization is welfare‐reducing.

Does digital finance improve welfare effects of maize farmers’ productivity gains?

PurposeIn Burkina Faso, maize is a key component in farm households’ food security and welfare. However, maize productivity in the country is low and productivity improvements do not necessarily result in better living conditions. This paper aims to establish linkages between maize productivity and welfare by considering the context of digital finance adoption for farmers in Burkina Faso.Design/methodology/approachFor this purpose, we use an endogenous switching regression approach on the Burkina Faso’s Living Standard Measurement Survey of 2018.FindingsOur estimates show that digital finance adoption enhances the transmission of productivity gains to farm households’ welfare, with the welfare elasticity of maize productivity almost twice higher for digital finance adopters.Social implicationsOur findings highlight the importance of increasing the access to digital finance to improve farm household welfare.Originality/valueThis manuscript makes the valuable contribution of analysing the heterogeneity of the transmission of agricultural productivity to welfare, with a focus on the identification of the role of digital finance.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2024-0077

Environmental and Welfare Effects of Large-Scale Integration of Renewables in the Electricity Sector

AbstractThe 2022 energy crisis highlighted the dependence of the Europe electricity sector on imported natural gas and the need to accelerate the adoption of renewables to the power system. However, operating a reliable power system with high share of renewables might require curtailing some renewables and activating conventional generators not scheduled in the day-ahead markets to ensure system reliability. These actions can result in environmental impacts, higher system costs and welfare impacts for customers. We use a novel high-granularity data from the Spanish power system for the period 2019–2022 to estimate the effects of these actions and forecast future impact of implementing ambitious targets of the European Gas Reduction Plan. We show that reliance on conventional generators will sharply increase with the addition of renewables. However, higher electricity consumption reduces the negative welfare impacts of integrating renewables. Until renewables and storage technologies advance further, conventional generators are needed for reliable operation of the systems.

Mexico's Minimum Wage Data: Trends, Policies, and a Research Agenda

The decline of the real value of the minimum wage amid trade liberalization in Mexico has raised concerns about its policy effectiveness and unintended consequences. The literature has examined the impact of minimum wage adjustments on employment levels, worker earnings, poverty, and inequality. However, findings from different sample periods and regions still need to be reconciled. It is necessary to understand the mechanisms connecting minimum wage to other market components. This research note first explores Mexico’s minimum wage data from 1980 to 2023 to grasp its spatial and temporal trends. We then discuss several future research directions to explore mechanisms through which minimum wage potentially works, including the welfare effect of the policy, the informal sector, and interactions between different policy tools.

Environmental and social welfare effects of aviation liberalization: Evidence from Central Asia and China market

We investigate the effects of international aviation liberalization between China and Central Asia on environment and social welfare. Based on monthly international air traffic data between Central Asia and China, we estimate a random-coefficients discrete choice model and perform a counterfactual analysis to quantify the effects of improved air connectivity, mainly considering that the ratio of direct and connecting aviation services between Central Asia and Beijing is the same as those between Central Asia and Russia, between Central Asia and other former Soviet Union countries and between Central Asia and other Asian countries. The main findings are as follows. First, improving air connectivity intensifies competition in the market, resulting in a decrease in the passenger-weighted average airfares between Central Asia and Beijing by 0.86–5.15 US dollars (USD) in 2012 and an increase in the total number of passengers by 2930–20,790. Second, improving air connectivity increases total carbon emissions (CO2) between Central Asia and Beijing by 0.78–6.11 million kilograms (kg) in 2012 but also drives down per capita CO2 emissions in this market by 0.78–2.38 kg. Third, while increasing total environmental externality costs, improving air connectivity significantly enhances consumer welfare and airline profits, resulting in a net social benefit of 14.02–44.12 million USD between Central Asia and Beijing in 2012. Finally, several policy implications are discussed.

Employer-provided parking: Departure time choice, investment decision, and welfare effects

Employer-provided parking (EP) has become a prevalent way to reduce employees’ parking delays and late arrivals through offering them free or low-price parking spaces at the workplace. This paper explores the EP effects on employees’ trip scheduling, employer’s EP investment decision, and commercial parking operator’s pricing decision. An analytical trip scheduling equilibrium model is first presented to model the interaction between EP provision and employees’ departure time choices during morning commute. A profit maximization model incorporating the employee productivity is then developed to determine the employer’s optimal EP investment decision. A competitive game between employer’s investment decision and commercial parking operator’s parking pricing decision is analytically investigated, together with the effects of EP investment on social welfare. The results show that the EP investment can lead to a win-win situation with decreased employee commuting cost and increased firm production output; and the employer would like to provide only part of the employees with EP services. The competitive game solutions depend very much on the marginal costs of EP and commercial parking spaces. The EP investment with an excessively high commercial parking fee may hurt the society due to decreased social welfare.

Is Redistribution Good for Our Health? Examining the Macrocorrelation between Welfare Generosity and Health across EU Nations over the Last 40 Years

Context: Social determinants of health are finally getting much-needed policy attention, but their political origins remain underexplored. In this article, the authors advance a theory of political determinants as accruing along three pathways of welfare state effects (redistribution, poverty reduction, and status preservation), and they test these assumptions by examining impacts of policy generosity on life expectancy (LE) over the last 40 years. Methods: The authors merge new and existing welfare policy generosity data from the Comparative Welfare Entitlement Project with data on LE spanning 1980–2018 across 21 countries in the Organization for Economic Cooperation and Development. They then examine relationships between five welfare policy generosity measures and LE using cross-sectional differencing and autoregressive lag models. Findings: The authors find consistent and positive effects for total generosity (an existing measure of social insurance generosity) on LE at birth across different model specifications in the magnitude of an increase in LE at birth of 0.10–0.15 years (p < 0.05) as well as for a measure of status preservation (0.11, p < 0.05). They find less consistent support for redistribution and poverty reduction measures. Conclusions: The authors conclude that in addition to generalized effects of policy generosity on health, status-preserving social insurance may be an important, and relatively overlooked, mechanism in increasing LE over time in advanced democracies.

Trade under lockdown

To curb the effect of the Covid-19 pandemic on public health, many countries around the world introduced lockdown policies in 2020. This paper estimates the effect of these lockdowns on international trade flows using a rich dataset of monthly bilateral trade flows covering over 80% of world trade. We first document that both exporter and importer lockdowns significantly reduced trade flows, that this effect differed substantially across sectors, and has been declining over time. We then decompose this total effect into a direct effect of lockdowns on trade, and an indirect effect that is mediated by a decline in economic activity. Our results indicate that lockdowns reduced trade also conditional on economic activity, suggesting an important increase in trade costs due to lockdowns. A quantification exercise shows that the welfare consequences of these trade costs were sizable, amounting to about one sixth of the welfare loss under a complete return to autarky.

Shaping inequality and intergenerational persistence of poverty: Free college or better schools?

We evaluate the aggregate, distributional and welfare consequences of alternative government education policies to encourage college completion, such as making college free and improving funding for public schooling. To do so, we construct a general equilibrium overlapping generations model with intergenerational linkages, a higher education choice as well as a multi-stage human capital production process during childhood and adolescence with parental and government schooling investments. The model features rich cross-sectional heterogeneity, distinguishes between single and married parents, and is disciplined by US household survey data on income, wealth, education and time use. Studying the transitions induced by unexpected policy reforms we show that the “free college” and the “better schools” reform generate significant welfare gains, which take time to materialize and are lower in general than in partial equilibrium. It is optimal to combine both reforms: tuition subsidies make college affordable even for children from poorer parental backgrounds and better schools increase human capital thereby reducing dropout risk.