Welfare Effects Research Articles

School choice with independent versus consolidated districts

This paper studies the welfare effects of school district consolidation. Using incomplete rank-ordered lists (ROLs) submitted for admission to the Hungarian secondary school system, we estimate complete ROLs assuming that parents do not use dominated strategies and that the matching outcome is stable. These estimates aid in constructing a counterfactual district-based assignment and discerning the factors driving parents' preferences over schools. We find that district consolidation leads to large welfare gains in Budapest, equivalent to students attending a school five kilometres closer to their residences. These gains offset the additional travel distances incurred in the consolidated assignment. 73% of matched students benefit from district consolidation, while fewer than 3% are assigned to a less preferred school. Students from smaller and less under-demanded districts benefit relatively more, as well as those with high academic ability. Using reported preferences instead of estimated ones also yields large gains from district consolidation.

Competition policy in a general‐equilibrium platform economy

AbstractThis paper examines the wage and welfare effects of the competition policy in a platform economy. An increase in downstream platform providers widens the skilled‐unskilled wage gap in the short run. Moreover, competition brings about a beneficial price pass‐through effect but a detrimental cost‐pushing effect on upstream manufacturers. This leads to business dynamism in manufacturing firms. By numerical simulations, the number of manufacturing firms increases, thus further widening wage inequality in the long run. The optimal number of platform providers is smaller when the business‐stealing effect is larger, whereas it is larger when the price pass‐through effect is greater.

The social effects of energy regulation: Energy-consuming rights trading system and corporate labor demand

Although it is a key measure to control energy consumption and promote the improvement of industrial structure, energy market allocation reform has rarely been concerned with its impact on employment, an important livelihood issue. To fill this gap, this paper takes the Energy-Consumption Rights Trading System (ECRTS) enacted by China in 2016 as a research background and adopts the difference-in-difference approach to explore the effects and mechanisms of the ECRTS on enterprise labor demand. The results show that the ECRTS significantly reduces firms' labor demand, particularly for low-skilled workers, through both production scale effects and technological upgrading effects. Specifically, the ECRTS has led to a decrease in sales revenues and an increase in labor productivity, thereby reducing firms' labor demand. Heterogeneity tests indicate that the ECRTS has a greater impact on employment in firms with lower energy-consumption intensity, domestic capital injections, weaker innovation capacity, and lower market power. The paper also explores the welfare consequences of the policy, finding that while the ECRTS does not improve the environmental performance of firms it does not pass on the compliance costs of regulations to incumbent workers. The overall impact is neutral. This paper extends the study of the economic consequences of the ECRTS and has implications for other developing countries in reconciling energy regulation and employment.

FRICTIONAL SORTING: THE IMPACTS OF DUAL CONSTRAINTS ON MOBILITY AND HOUSING SUPPLY IN CHINA

AbstractUsing an equilibrium sorting model and microdata from China, we evaluate the impacts of dual constraints on mobility and housing supply on workers’ sorting behavior, quantifying the welfare and distributional consequences. Counterfactual simulations show that lowering migration costs associated with institutional restrictions and migrant‐specific amenities would increase welfare and reduce inequality by moving workers from inland to coastal regions in China. These impacts depend on the housing supply elasticity in coastal regions. Similarly, the impacts of relaxing housing supply restrictions depend on mobility constraints. Results highlight the policy complementarities between reducing the two kinds of frictions.

Cross-country unemployment insurance, transfers, and trade-offs in international risk sharing

A prerequisite for an optimum currency area are limited divergent developments. In this paper, we assess analytically whether an international transfer mechanism can enhance consumption risk sharing and efficiency of the international division of production in a monetary union. We also derive quantitative results for a potential European unemployment benefit scheme (EUBS). A EUBS can provide risk sharing by stabilizing relative consumption and unemployment differentials. Following supply and government-spending shocks, however, a EUBS would additionally reduce allocative efficiency. The welfare effects of a EUBS hence depend on the underlying cause for cross-country differentials. A EUBS that is only active after specific shocks would maximize overall welfare. Even without such a selective activation, a EUBS would raise welfare in European Core countries in the quantitative model, leaving welfare in the Periphery almost unchanged. During the euro crisis, the Periphery would have benefited from substantial transfers from the Core.

Ripe for contracts? Estimating the impact of an avocado producer organization contract farming intervention

AbstractWe evaluate the impact of a producer organization avocado contract farming intervention in Kenya that included (1) an agreement to sell to an avocado exporting company, (2) access to training, and (3) support to gain group‐level Global Good Agricultural Practices (GLOBALG.A.P.) certification as main activities. Using a (nonexperimental) doubly robust difference‐in‐differences design with farm‐level panel data from 2015 and 2017, we show that farmers began selling to the contracted company, were recently trained and received the GLOBALG.A.P. certification. However, the intervention's uptake was less than perfect, especially concerning the procurement aspect of the contract, suggesting widespread side selling. In terms of outcomes, contract farming nevertheless significantly improved sales prices and reported quality, increased direct sales to companies, and led to more planted trees, but also increased total production costs. The effects are driven by the Hass avocado variety, which is in higher demand in export markets and the contracted avocado variety. No significant income and other welfare effects were found.

The welfare effects of partial tariff reduction in Japan

When some sectors are more heavily protected than others, will removing lightly protected sectors’ tariffs improve welfare? We argue that this second-best question is highly relevant in Japan, wherein its government made some exceptions to the across-the-board tariff elimination during the Trans-Pacific Partnership negotiations. We have calibrated a specific factor model with multiple import-competing sectors to the 2015 Japanese economy and conducted some counterfactual exercises. Although the partial tariff removal policy in question barely affects Japanese welfare, when it is combined with the agricultural sector tariff removal (across-the-board tariff elimination) the effect on Japanese welfare is made positive. Furthermore, the positive welfare effect more than doubles if it is combined with the removal of the subsidy in the agricultural sector. Both findings indicate the severity of the existing distortion stemming from the Japanese agricultural sector protection as well as the importance of lowering the protection to render the nonagricultural sector tariff removal meritorious.

The welfare effects of degrowth as a decarbonization strategy

The welfare effects of degrowth as a decarbonization strategy

Evaluating Community Welfare Effects of the Tourism Development on Geopark Caldera Toba

Tourism is one of the economic support systems that encourage economic growth in Indonesia. Indonesia as a country with good tourist attractions has enormous potential in creating jobs. The greater the employment opportunities, the lower the unemployment rate. The purpose of this study was to analyze whether tourism development has a positive and significant effect on economic activity to improve Community Welfare in the Lake Toba area. With variables consisting of 3 elements Variables consisting of indicators, namely: independent variables of tourism development (X) with indicators: policy (X1), institutions (X2), human resources (X3), facilities and infrastructure (X4), budget (X5), environment (X6), security (X7), social (X8), culture (X9), tourist attractions (X10), investment (X11), licensing (X12), promotion (X13), system (X14), tourists (X15). intervening variables/variables between economic impacts (Z) with indicators: economic growth (Z1), income (Z2), equity (Z3), poverty reduction (Z4), unemployment reduction (Z5). The dependent variable is community welfare (Y) with indicators: income equality (Y1), health (Y2), education (Y3), information (Y4), consumption expenditure (Y5). While the research method model used is the SmartPLS approach The number of samples is 351. Karo Regency, Simalungun Regency, North Tapanuli Regency, Pakpak Bharat Regency, Dairi Regency, Humbang Hasundutan Regency, Toba Regency, Samosir Regency. Economic impact has a positive but insignificant effect on community welfare. The results of the research on the analysis of the economic impact of integrated tourism development in the Lake Toba area on the welfare of the Lake Toba area community in North Sumatra Province can contribute to local government, central government, business people, tourists and the community. local government and central government can review policies or decisions that are less effective in increasing community income.

Climate change in Tigray, Ethiopia: Assessing impacts on smallholders’ risk perception and food security

Amidst the ongoing global climate change crisis, characterized by unpredictable weather patterns and increasing environmental shocks, farming communities are among the most vulnerable. This vulnerability is particularly evident in Tigray, Ethiopia. This study, which investigates the incidence of climate change and its variability in relation to risk perception and food security of farming communities in Tigray, has significant implications for future action. It uses climate and the Living Standards Measurement Study panel data. A multi-method analytical procedure is employed to assess changes in temperature and rainfall, understand farmers’ climate change risk perception, and signify the welfare effects of droughts on farmers. The study finds significant warming trends, particularly increasing warming nights, and variable but increasing rainfall trends. Farmers do perceive climate change as a reality (85.53%) and a threat to their welfare (23%). Cooperation, diversification, irrigation, wealth, drought, and access to services were identified as drivers of this risk perception. Similarly, the study found drought is a significant driver of food insecurity. Other variables associated with food security status substantially are wealth, head marital status, and non-farm participation. It concludes that climate change is a reality and a perceived risk in Tigray. It poses a threat to the lives and livelihoods of its farming communities. It is recommended that farm households’ adaptive capacity be enhanced through improved livelihood options, promotion of cooperation, development of irrigation schemes, and increased access to weather and climate information.

Deductibles and health care utilization: An experiment on the role of forward-looking behavior

We investigate the effects of nonlinear deductible contracts on health utilization behavior by using a laboratory experiment in which we can control the likelihood of hitting the deductible. We also evaluate the effect of subjects receiving regular information updates on their remaining deductible. Our results show that varying the future price has a significant effect on health care consumption. At an individual level, we identify and richly characterize heterogeneity. We find fully forward-looking, fully myopic, as well as mixed types after controlling for risk preferences. We show that there is a substantial welfare loss due to a lack in forward-looking behavior. The distribution of the welfare loss are characterized and differ sharply according to the model of risk preferences adopted for normative evaluation. Potential drivers of welfare effects are investigated and have a tendency to differ across risk preference models.

Efficiency and Welfare Effects of Fiscal Policy in Emerging Economies: The Case of Morocco

This paper studies the welfare cost of fiscal policy in developing economies where a significant fraction of the population is government spending-dependent, using as an example Morocco. We develop a Dynamic General Equilibrium model representing an economy populated by three types of households: Standard Ricardian households with access to the financial market, households who supply labor but have no access to the financial market, and non-active government-dependent households (who behave as hand-to-mouth agents). The paper computes welfare changes of different tax rates and alternative spending policies and quantifies the trade-off of fiscal policy across the different groups of agents. We find that: (i) Distortions from some taxes can be positive due to the presence of public inputs; (ii) Output efficiency can be gained by changing the tax mix while keeping constant fiscal revenues; and (iii) Social welfare gains can be obtained by increasing public investment and reducing government consumption and keeping lump-sum transfers constant.

Welfare Effects of Food Tariff Changes on Urban and Rural Households

This study aims to analyze the effects of food tariff changes on the welfare of urban and rural households in Iran. The study considers the role of households as consumers, producers, and workers, as well as the market structure over the past fifteen years. Firstly, the study estimated the consumption behavior for the main food groups using the QUAIDS and pseudo-panel data. Then, the extent of tariff pass-through to domestic food prices was determined, and after that, price-wage elasticity and wage changes as a result of tariff changes were estimated. Finally, it calculated the effect of tariff changes on household purchasing power and income through an indirect utility function to get welfare effects. The results indicate that tariff pass-through to food prices is incomplete and varies between urban and rural areas. The study has found that skilled labor is more sensitive to food tariff reductions than unskilled labor, particularly in rural areas. The results reveal that tariff changes positively affect urban households' welfare, while rural households experience a loss due to these changes. Urban areas benefit from reduced household expenditure, while food prices are increasing in rural areas due to weak or absent tariff pass-through. Although these increases favor producers, they do not compensate for the loss suffered by consumers, resulting in reduced welfare in rural areas. The findings show that the effects of tariff changes vary across regions, not only between urban and rural areas but also among different provinces. Furthermore, the tariff reductions have been a boon for consumers, but a bane for producers, ultimately harming production in the long term. The findings suggest that regional markets may be either sufficient or insufficient to convert pass-through-the-border prices into domestic prices. Therefore, policymakers can use this study as a useful guide to reform the regional market structure to raise household welfare, food security, and income inequality.

The welfare effects of input price discrimination revisited

This paper revisits the welfare effects of input price discrimination in the canonical model in which an upstream monopolist, under linear pricing, sells an intermediate good to downstream Cournot competitors with different marginal costs. By leveling the downstream players, input price discrimination may have a positive output effect, with the magnitude depending on the convexity of final market demand and its rate of change. When demand is linear, concave, or convex with limited and nonincreasing convexity, welfare is reduced compared with uniform pricing. Instead, when there is sufficient and nondecreasing convexity—often observed in constant elasticity demand—price discrimination increases total welfare.

Mucosal organs exhibit distinct response signatures to hydrogen sulphide in Atlantic salmon (Salmo salar)

Hydrogen sulphide (H2S) is considered an immunotoxicant, and its presence in the water can influence the mucosal barrier functions of fish. However, there is a significant knowledge gap on how fish mucosa responds to low environmental H2S levels. The present study investigated the consequences of prolonged exposure to sub-lethal levels of H2S on the mucosal defences of Atlantic salmon (Salmo salar). Fish were continuously exposed to two levels of H2S (low: 0.05 µM; and high: 0.12 µM) for 12 days. Unexposed fish served as control. Molecular and histological profiling focused on the changes in the skin, gills and olfactory rosette. In addition, metabolomics and proteomics were performed on the skin and gill mucus. The gene expression profile indicated that the gills and olfactory rosette were more sensitive to H2S than the skin. The olfactory rosette showed a dose-dependent response, but not the gills. Genes related to stress responses were triggered at mucosal sites by H2S. Moreover, H2S elicited strong inflammatory responses, particularly in the gills. All mucosal organs demonstrated the key molecular repertoire for sulphide detoxification, but their temporal and spatial expression was not substantially affected by sub-lethal H2S levels. Mucosal barrier integrity was not considerably affected by H2S. Mucus metabolomes of the skin and gills were unaffected, but a matrix-dependent response was identified. Comparing the high-concentration group's skin and gills mucus metabolomes identified altered amino acid biosynthesis and metabolism pathways. The skin and gill mucus exhibited distinct proteomic profiles. Enrichment analysis revealed that proteins related to immunity and metabolism were affected in both mucus matrices. The present study expands our knowledge of the defence mechanisms against H2S at mucosal sites in Atlantic salmon. The findings offer insights into the health and welfare consequences of sub-lethal H2S, which can be incorporated into the risk assessment protocols in salmon land-based farms.

Stockpiling‐based pricing and its welfare effects

AbstractConsumer stockpiling involves the intertemporal demand substitution that allows the firm to differentiate stockpilers from others and employ varying pricing strategies. In this paper, I set up a two‐period monopoly model that incorporates consumer stockpiling behavior to investigate the effect of stockpiling‐based pricing. In equilibrium, I show that when the level of heterogeneity among consumers is high, consumer stockpiling can be used as a device for the firm to identify preferences and price discrimination. Welfare analysis suggests that consumer stockpiling improves consumer surplus and profit despite the associated stockpiling‐based pricing.

Bovine Digital Dermatitis: Treponema spp. on trimming equipment and chutes – effect of washing and disinfection

BackgroundDigital dermatitis (DD) is a contagious bovine foot disease causing reduced animal welfare and negative economic consequences for the farmer. Treponema spp. are the most important causative agents. Studies indicate that trimming equipment can transfer DD-associated treponemes between cows. The aim of this observational study in 22 DD-positive Norwegian dairy herds was to investigate the risk of transferring Treponema spp. with trimming equipment and chutes after claw trimming, and after washing and disinfection. Swabs from the trimming equipment and chutes were collected from nine different locations, at five different time points. Bacterial DNA was extracted from 647 swabs and analysed by qPCR for Treponema spp. In addition, 172 swabs taken immediately after trimming, were analysed by a multiplex qPCR targeting T. phagedenis, T. pedis and T. medium/vincentii. Biopsy sampling from DD lesions was performed on cows in the same herds during trimming. Altogether 109 biopsies were analysed by FISH for confirmation of the DD diagnosis and identification of Treponema phylotypes (PTs).ResultsHigh numbers of Treponema spp. were detected from all nine locations on the trimming equipment and chutes immediately after trimming, and T. phagedenis was detected on two or more locations in all but two herds, 1 and 19. There was a decline in the amount of Treponema spp. after washing and disinfection. The belly belt, the cuff, and the footrest on the chute had the highest proportion of positive samples after disinfection. The belly belt had the highest copy numbers of all nine locations (median = 7.9, max = 545.1). No Treponema spp. was detected on the hoof knives after disinfection. Treponema phagedenis, T. pedis, and Treponema phylotype 3 (T. refringens) were detected by FISH analysis of the biopsies. Treponema phagedenis was detected in biopsies from all herds except 1 and 19.ConclusionThis study shows that DD-associated Treponema spp. were present on the trimming equipment and chutes after trimming cows in DD-positive herds. Washing and disinfection reduced the load of Treponema spp. However, large differences in Treponema spp. between different locations were documented. High copy numbers on the grinder and the chute after disinfection, indicates that sufficient cleaning and disinfection of these locations is difficult, and that passive transfer of DD-associated treponemes (viable or not) is possible.

Clinical Presentation, Bacteriologic Findings and Possible Risk Factors for Ischemic Teat Necrosis in Cattle-A Case Series.

Ischemic teat necrosis (ITN) is a growing problem in the dairy industry characterized by teat lesions, necrosis, pruritus and automutilation. Despite the economic and welfare consequences, there is no treatment, and the etiology of the disease remains poorly understood. The aim of this study was to investigate ITN by analyzing its clinical presentation, potential risk factors and microbial involvement. Methods included collection of milk and swab samples from affected cows over a period of one-and-a-half years and completion of questionnaires by veterinarians and farmers. Microbial testing included PCR testing for Treponema spp. and cultural testing by anaerobic and aerobic incubation on blood agar. The results showed a high and significant prevalence of Treponema spp. and Staphylococcus aureus in affected teats compared to non-ITN-affected control teats, indicating their potential role in the development of ITN. Other factors such as edema and milking practices also appear to contribute to the tissue damage. First-lactation and early-lactation heifers are particularly at risk. In conclusion, ITN appears to have a multifactorial etiology with both infectious and non-infectious factors playing a role. Further research is needed to better understand the complex interplay of these factors and to develop effective prevention and management strategies.

Revealed Privacy Preferences: Are Privacy Choices Rational?

We investigate the extent to which trade-offs involving the sharing of personal information exhibit consistency with an underlying rational preference for privacy. In an experiment, people engage in trade-offs across two domains of personal information sharing, allowing us to classify whether their choices satisfy the generalized axiom of revealed preference. They also subsequently price the sharing of their personal information. Sixty-three percent of subjects act consistently with a rational preference ordering when allocating privacy levels, a level comparable to that observed in other domains. Individuals who are inconsistent when engaging in simple privacy trade-offs exhibit substantially more costly preference reversals when pricing personal information sharing. Only one-third of subjects exhibit consistency across both the selection of personal information to share and the pricing of such information sharing. Our results imply that monetizing personal information can have distinct welfare consequences for people with different degrees of rationality in their underlying ability to make sensible trade-offs involving personal information. We also provide evidence that preferences elicited over choices in our experiment correlate with real-world privacy behaviors. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: This work was supported by Forschungskredit (University of Zurich) [Grant FK-17-017] and Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung [Grant 174630] to Y.S. Lee. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.00807 .

Harmonizing fiscal policy: Indirect taxes and global public goods

AbstractThis article focuses on the welfare effects of the interaction of a rule of indirect tax harmonization under the destination principle and the provision of public goods that are global in nature. It stresses the role of international transfers between governments set in order to equalize the social (i.e., worldwide) marginal cost of public funds across countries. Under this condition, it is shown how the combination of the tax and expenditure side of such a “harmonizing fiscal policy” can give rise to a potential Pareto improvement. This requires considering aggregate revenue effects (and the ensuing effects on the provision of public goods) of the fiscal reform jointly with under/over provision of public goods in the (first‐best) Samuelson sense.