Showing papers on "Subsidy published in 1985"

Are Targeted Wage Subsidies Harmful? Evidence from a Wage Voucher Experiment:

Abstract: This paper presents the results of a controlled experiment designed to test the effectiveness of a targeted wage subsidy program. Such programs are intended to increase the employment of target group workers by offering employers reimbursement for part of those workers' wages. In the Dayton, Ohio, experiment, however, job seekers given experimental vouchers identifying them to employers as eligible for a generous wage subsidy were significantly less likely to find employment than were job seekers without vouchers. The author speculates that the vouchers had a stigmatizing effect and provided a screening device with which employers discriminated against economically disadvantaged workers.

Subsidies and Diplomacy: Rome and Persia in Late Antiquity

Abstract: D URING LATE ANTIQUITY (4th-6th c. A.D.) it was a common practice of the Romans to pay subsidies to foreign peoples. The purposes of these subsidies and the circumstances under which they were paid varied, but they fell into two broad categories. They were either a genuine subsidy, such as a reward for good behaviour or payment for assistance (usually military), or they were a rental of good behaviour. In the former case the subsidy, which was paid from strength, could be terminated at will and was often an economic alternative to military action. In the latter case the subsidy was paid from weakness (since a credible military alternative did not exist), and so the payments tended to become regular and to increase.' These payments, too, might be justified economically,2 but the political costs could be very high since the regularised subsidy had, in effect, become a tribute which implied the subordination of the payer to the recipient.3 This danger, in various forms, was recognised and debated during the period. In the fourth century, Ammianus Marcellinus (24.3.4) makes the Emperor Julian, in an address to his troops, say that payments to the barbarians have reduced the Roman Empire to beggary. In the fifth, Priscus (Fr. 15.2) makes Attila claim that Theodosius II is his slave bound to the payment of tribute.4 But discussion was most intense in the second half of the sixth century over the systematic use of payments by Justinian in the later part of his reign. Although both Agathias (5.24.2-25.6) and Menander the Guardsman (Fr. 5.1/4) see a positive side to the use of payments in sowing dissension amongst the barbarians, the position of Procopius (Anecd. 11.3-12), that the payments, by confessing Roman

Tariffs as Insurance: Optimal Commercial Policy When Domestic Markets Are Incomplete

Abstract: Free trade is not optimal for a small country that faces uncertain terms of trade if some factors are immobile - ex post, and markets for contingent claims are incomplete. The government can improve social welfare by using commercial policy that serves as a partial substitute for missing insurance markets. Using a combination of analytical and simulation techniques we demonstrate that optimal policy for this purpose will often have an anti-trade bias. We also show that the usual preference by economists for factor or product taxes and subsidies over tariffs and export subsidies may not be justified in this context.(This abstract was borrowed from another version of this item.)

Urban transit policy: an economic and political history

Abstract: This book examines transit policy in the U.S. from an historical perspective. The perspective is useful because policy is a changeable and changing contract created by negotiation among parties at interest. Transit policy is a social contract in which many parties have a stake--riders, transit workers, downtown employers, motorists and others. This contract has been renegotiated many times, steps both necessary and difficult. Renegotiation of policy is necessary because economic conditions, technology and social aspirations change. Policies good in the short and long term may differ. Large organizations rely on standardization to achieve efficiencies and economies of scale; this may harden into inertia, inflexibility and obsolescence. Transit policy in the U.S. has been characterized as erratic and volatile; the real problem may be inertia and deadlock. Change in transit has not paced change in economic conditions, technological opportunities and social goals. There are really two policies: (1) That imbedded in the routines of organizations and the technology they use; (2) That found in plans, regulations, mission statements and legislative mandates. The author sees the transit industry as structurally obsolete; its form suits the functions and markets that were served at the turn of the century. This book's goal is to provide a constructive debate about the kind of transit service appropriate to the modern American city. It tells the story of transit's growth and decline and assesses the performance of recent policies and programs designed to preserve and revitalize transit service, concluding that subsidy has not stabilized the industry. Understanding history before examining the policies of the 1960s and 1970s indicates how they might have been more effective. The need for a reorientation would have been better than replacement of aging equipment and extension of service. Public ownership has been a reprieve for transit but has not stabilized the industry. Subsidy is necessary, but endlessly increasing subsidy is both inappropriate and unrealistic. The last chapter is the author's suggestion for a reorganization alternative.

The Michigan Model of World Production and Trade: Theory and Applications

Abstract: This book presents the work that has been done to date with the Michigan Model of World Production and Trade, together with a full description and discussion of the model itself. Developed and refined for more than a decade, The Michigan Model is distinguished among general equilibrium trade models not only for its coverage (34 countries and 29 industries) but for its allowance for a wider variety of important short-run interactions among markets and a greater variety of policy parameters and institutional details than many other models permit. The model is intended as a practical tool for policymakers analyzing the effects of measures such as tariffs, taxes, and exchange rate changes on a set of highly disaggregated patterns of production, trade, and employment.Following an introductory chapter that discusses the development and use of The Michigan Model, its theoretical structure is introduced and compared to the theoretical structure of other computational models and its implementation is presented in terms of data requirements and parameters, methods of solution, and application to various issues. Six chapters then explore a number of different applications designed to analyze the effects of the Tokyo Round of Multilateral Trade Negotiations and post-Tokyo-Round negotiating alternatives, the effects of tariffs on the structure of protection in the U.S. and other major industrialized countries, the effects of domestic tax/subsidies on the structure of protection in the U.S., the U.K., and Japan, the sectoral impact of real exchange-rate changes, and the effect of trade on employment in major industrial countries. A final chapter draws together the lessons of the efforts for computer modeling of trade and for the direction of future research.Alan V. Deardorff is Professor of Economics at the University of Michigan, Ann Arbor. Robert M. Stern is Professor of Economics and Public Policy, also at Michigan.

Paying the price : pesticide subsidies in developing countries

Abstract: This paper shows that Third World governments subsidize pesticide production and sales by a variety of mechanisms: through access to foreign exchange on favorable terms, through tax exemptions or reduced rates, through easy credit, and through sale" below cost by government-controlled distributors...

UK Tax Policy and Applied General Equilibrium Analysis

Abstract: At the time of this volume's publication in 1985, general equilibrium modelling had become a significant area of applied economic research. Its focus was to develop techniques to facilitate economy-wide quantitative assessment of allocative and distributional impacts on policy changes. UK Tax Policy and Applied General Equilibrium Analysis was the first book-length treatment of the development and application of an applied general equilibrium model of the Walrasian type, constructed to analyse UK taxation and subsidy policy. As a whole, UK Tax Policy and Applied General Equilibrium Analysis offers the reader two things. First, it gives a detailed account of the development of an applied general equilibrium model of the UK. Second, it provides results of model experiments which have been designed to inform the policy debate, not only in the UK but also in other countries. It should thus be of interest to both researchers and students undertaking research in the applied general equilibrium area and to policy makers concerned with tax reform.

Rising deficits and the uses of transit subsidies in the united states

Abstract: This paper explores underlying causes or explanations of the increase in total U.S. urban mass transit operating losses between 1970 and 1982. Being financed entirely by direct government payments, the rapid increase can also be interpreted as the purposes or activities financed by government transit assistance. A comparative static model is used to estimate the contributions made by rises in the unit costs of operating transit vehicles, extending service during a period of declining demand, and reducing average fares. Almost 70% of increased government assistance simply financed rising unit operating expenses. Increasing service levels and cutting fares absorbed another 8%; 25% financed the service extensions and fare reductions that increasing assistance levels were intended to promote. Declining demand for urban transit service, and changes in transit fare structures, produced the fall in average fare revenue. The performance of U.S. transit operators is compared to a sample of European and Asian operators. Implications for government subsidy programmes to support urban transit are drawn. (Author/TRRL)

The Economics of Road Safety

Abstract: In This Paper We Present a Theoretical Framework for the Analysis of Road Safety in Different Contexts Characterized by the Following Factors: the Presence Or the Absence of Externalities, Moral Hazard, Taxes (Subsidies), Government Regulation, Liability Rules, Liability Insurance and Multi-Period Insurance Contracts.

Optimal pricing and subsidies for scheduled transport services

Abstract: Certain aspects of the recent discussion in this journal of optimal pricing in scheduled services and its implications for subsidies are developed and extended. The analysis suggests that if the relevant elasticities are of the order of magnitude suggested by empirical studies, in an optimal situation subsidies could cover a substantial proportion of total costs. In practice, institutional factors may prevent the potential benefits of subsidies being realised but it is suggested that the possibility of this happening could be reduced by linking subsidies to the control of fares. Some other implications of the analysis are also considered. (Author/TRRL)

Chapter 7 Housing subsidies. Effects on housing decisions, efficiency, and equity

Abstract: Publisher Summary This chapter discusses housing subsidies. The American housing market is subject to a mind-boggling array of government interventions by various levels of government. These include: housing codes, that set quality standards that must be met by builders; licensure of real estate brokers and sales people; exclusionary zoning, which stipulates that land in a given area can be used only for certain purposes; open housing laws, that prohibit discrimination in the selling of housing; rent control; interest rate and other regulations on mortgage lending institutions; urban renewal programs, under which communities use their powers of eminent domain to acquire urban land, destroy “slums,” and sell the land to private developers; real estate taxation; and interventions in the credit market to increase the flow of credit to housing. The chapter focuses on the two most important federal policies toward housing, at least in terms of costs to the government.

The Inefficiency of Unemployment: The Supervision Perspective

Abstract: We study an example economy with costly labor monitoring under a wage-cum-supervision arrangement, where workers' utilities are not equalized across sectors (workers are identical to each other). Our main task is to look for (and find) a set of "flat" taxes and subsidies that bring about a Pareto improvement over the laissez-faire solution. We show that any of such welfare-improving schemes involves a tax on labor income from those workers whose utility is the lowest.

The public/private division of responsibility for education

Abstract: In this chapter “private” schools are defined as those that were privately founded and are privately managed; they usually have some private funding, although in some cases considerable funding and control come from the government. The size and nature of the private sector is viewed as stemming from excess demand for education due to limited public spending (i.e., these are students who would prefer to use the public schools but are involuntarily excluded and pushed into the private sector); differentiated demand due primarily to cultural heterogeneity (i.e., these are students whose differentiated tastes along religious, linguistic or ethnic lines lead them voluntarily to choose the private sector even if a public school place is available); and the supply of non-profit educational entrepreneurship (e.g., founders who start schools to maximize religious faith or believers, rather than profits) by competing religious organizations. The impact of public policies, including public educational spending and private subsidies, is also considered.

Estimating the Benefits of Job Creation from Local Investment Subsidies

Abstract: This paper reviews the application of project appraisal techniques to analysing the cost-effectiveness of local investment subsidies (advance factory building). Cost per job measures are shown to be dependent upon the method of assessing the number of jobs created, and the assumptions used in evaluating Exchequer as well as social costs and benefits. If realistic probabilities are adopted about the likelihood of previously unemployed persons obtaining a job other than in the advance factories, then such local investment subsidies are not economically viable in Exchequer terms. Local investment subsidies may be justified on cost-benefit grounds, but even by this criterion, the number of subsidy-created relative to subsidy-diverted jobs is crucial to the decision.

Curbing Public Expenditure: Current Trends

Abstract: Nearly every OECD country has faced a scissors crisis in public finance since the worldwide depression of the mid-1970s; in slow growth economies public spending has been rising faster than tax revenues. In response, a great variety of methods have been employed to control public spending. Governments have sought to: impose global ceilings on spending; modify indexation rules; decentralize decremental decisions among government agencies; improve cash flow management; devise balanced packages; introduce new constitutional rules; provide incentives for retrenchment; and privatize public sector activities. Efforts to impose cuts in spending have been directed at the bureaucracy; transfer payments; subsidies; local and regional government; and quangos. The conclusion emphasizes that retrenchment policy presupposes a shift in the balance of power between guardians and spenders.

Supportability, Sustainability, and Subsidy-Free Prices

Abstract: This article studies the relationships among the concepts of subsidy-free prices, anonymously equitable prices, supportability, and sustainability. In particular, we set out conditions under which these concepts are not vacuous. Several new sets of conditions under which a subsidy-free price vector is sustainable are also presented. For general, nonseparable demands, we establish the existence of an Aumann-Shapley price vector that is anonymously equitable and sustainable.

Pricing of natural resources in a regional economy

Abstract: A computable general equilibrium model for New York State is used to analyze the effects of existing natural resource subsidies as well as the impact of alternative schemes of equal cost. The resource under consideration is hydroelectric power generated by state-owned facilities. Simulations indicate that, measured in terms of employment, the state would be better off selling hydropower to manufacturing at the residential and commercial rate and providing industry with an equal cost labor subsidy instead. This would promote energy conservation through more efficient pricing. 28 references, 5 tables.

The Welfare Cost of Hong Kong's Public Housing Programme

Abstract: Public housing is an important source of accommodation in Hong Kong. Subsidies to public housing are tied to the consumption of housing services. Consumer's consumption pattern will therefore be distorted, and a welfare loss incurred as compared to an equivalent cash transfer. This paper seeks to measure the extent to which tenants' benefit from public housing subsidies. A measure of net tenant benefit is used, which is based upon the Marshallian consumer surplus concept. The results indicate that Hong Kong's public housing programme has had a significant impact upon households' consumption patterns, and that the welfare loss is relatively low.