This paper examines tax-return-generated data on the labor force behavior of people before and after they receive inheritances. The results are consistent with Andrew Carnegie's century-old assertion that large inheritances decrease a person's labor force participation. For example, a single person who receives an inheritance of about $150,000 is roughly four times more likely to leave the labor force than a person with an inheritance below $25,000. Additional, albeit weaker, evidence suggests that large inheritances depress labor supply, even when participation is unaltered. Warren Kendall … heir to an insurance company fortune … says he's worth about $5 million and has an income of “about, oh, $300 and some thousand a year.” [H]e has never held a job, or wanted to. Going down to sea in cruise ships is his full-time pursuit. He estimates that he has taken about 250 cruises over the past couple of decades, spending at least 50 percent to 70 percent of the year afloat [Morgenthaler, 1991, p. Al].

We develop an empirical model of adolescent premarital childbearing in which a woman's decisions affect a sequence of outcomes: premarital pregnancy, pregnancy resolution, and the occurrence of marriage before the birth. State welfare, abortion, and family planning policies alter the costs and benefits of these outcomes. For white adolescents welfare, abortion, and family planning policy variables have significant effects on these outcomes consistent with theoretical expectations. Black adolescents' behavior shows no association with the policy variables. The different racial results may reflect differences in sample size or important unmeasured racial differences in factors that influence fertility and marital behavior.

We examine the effects of structural change in the U.S. banking industry, as well as key regulatory changes, including recently enacted deposit insurance reform legislation, on the resiliency of the FDIC-administered bank insurance fund (BIF) by estimating and comparing the probability of BIF insolvency over time. We do this using a Markov-switching model that relies on historical patterns of BIF disbursements to define the probability of switching among three “states” of the banking industry's financial health. Monte Carlo simulations are then performed to project the financial condition of the BIF over a 50-year period. Our results indicate that the insolvency risk to the bank insurance fund has increased significantly due to industry consolidation, and is mainly due to the concentration of deposits in the 10 largest U.S. banking companies. We also find that recent deposit insurance reforms will cause only a marginal reduction in the risk of BIF insolvency. The increased risk associated with a more concentrated industry structure simply dominates the reform effect.

This paper studies pure exchange economies with infinite dimensional commodity spacces in the setting of Riesz dual systems. An Edgeworth equilibrium is an allocation that belongs to the core of every replication of the ec onomy. Under some mild conditions, it is shown that (1) Edgeworth equ ilibria exist, (2) an allocation is an Edgeworth equilibrium if and o nly if it is an approximate quasiequilibrium, and (3) if preferences are uniformly proper, then every Edgeworth equilibrium is a quasiequi librium. The obtained results specialize to most exchange economies t hat have appeared in the literature of general equilib rium theory.

This paper presents results from an unusual microdata set assembled by the authors and researchers at the Social Security Administration. The data set pools information from three sources: death certificates for residents of Washington, D.C. dying in 1967; Washington, D.C. estate tax returns; and Social Security earnings records. Under an arrangement worked out by Smith with the city of Washington and the National Center for Health Statistics, all (about 2,500) estate tax returns for 1967 decedents were matched with their death certificates. The match provided information on age, sex, race, place of birth, marital status, cause of death and assets and liabilities. Washington, D.C. has its own estate tax, which unlike the federal estate tax, starts at a very low ($1,000) filing level. A full description of this part of the data base and an estate multiplier estimate of the distribution of wealth in Washington, D.C. has been published elsewhere (Smith). This year, thanks to our colleagues, Frederick Scheuren and Wendy Alvey of the Social Security Administration, a procedure was worked out which permitted us to turn over to them our files and to obtain from them analytical results from matched records from our files and their records of covered earnings under the Social Security Act. The intended use of this data base is to estimate a lifetime savings model with earnings as a key determinant. We still may be able to do so, but the prospects look rather grim. In the spirit that science is advanced by knowing what doesn't work as well as wuiat does, we present below a few initial findings which show some promise and of a lot of statistical husbandry which bore little fruit. We shall proceed by first looking at differences in the levels of covered income reported by black and white workers, then at the wealth levels of blacks and whites, and finally at an attempt to predict the wealth of black and white workers using demographic variables and earnings records.

This paper presents estimates of the concentration of personal wealth in the United States from 1922 to 1969. These estimates lead us to conclude that the distribution of wealth (1) became significantly more equal in the 1930's and early 1940's, two periods of massive government intervention in the marketplace, and (2) has remained essentially unchanged since 1945.1 In what follows, we compare the wealth held by the richest 1.0 and 0.5 percent of the population to that of all persons. The wealth of the richest 1.0 and 0.5 percent was estimated by the estate multiplier technique.2 The wealth of all persons was derived from national balance sheets.3 The estimates presented here for the period before 1953 were developed by Robert J. Lampman using highly aggregated Internal Revenue Service (IRS) data. For 1953 and 1958 we use detailed estimates (from special IRS tabulations) by Lampman and Smith, modified slightly to take account of current knowledge. Estimates for 1962, 1965, and 1969 are new detailed estimates developed by the authors using microdata files of estate tax returns prepared by the IRS for its routine publications. Here we focus on the years since 1953. Information available from estate tax returns varies from year to year, so a number of adjustments were made to bring the estimates for individual years into conceptual alignment with one another. The alignment problem was exacerbated because the IRS has destroyed tapes of returns filed before 1963, leaving only Lampman's and Smith's printed tabulations for 1953 and 1958.4 It was impractical to reestimate the distributions for 1953 and 1958 by better methods based on current knowledge. Consequently, the estimates for 1962, 1965, and 1969 were made consistent with those for 1953 and 1958 * The Urban Institute and the Pennsylvania State University. The work reported here is part of the Urban Institute's research program on income and wealth distribution. The support of the National Science Foundation is gratefully acknowledged. 1 We wish to make clear that our concern is with temporal change and that we have sacrificed best estimates for individual years to achieve consistency over the time series. Individual figures have a downward bias of 10 to 15 percent from our best estimates of concentration. (Best estimates for 1969 may be found in Smith; similar estimates for other years will appear later.) 2 Detailed descriptions of the methodology and attendant problems can be found in Smith and Staunton Calvert, Robert J. Lampman, and Smith. I National balance sheets were constructed for a person's sector using data supplied by the Board of Governors of the Federal Reserve System. Helen Stone Tice did the basic work on these special sector balance sheets. Smith provides a detailed description of the balance sheet. I A further problem resulted from the fact that the IRS erased the age field from the 1965 tape. This was most unfortunate because of all years for which the IRS has coded estate tax returns, 1965 had the most detailed classification of information. The erased data was restored by a stochastic process which took into account the relationship between age and other characteristics observable in the files for 1962 and 1969.

I examine the behavior of forex prices around the setting of the 4:00 pm WMR Fix. Numerous banks have been fined by regulators for their trading activities around the Fix, but the overall impact of their actions is not known. I first examine trading patterns around the Fix in a microstructure model of competitive trading. I then compare the model with the empirical behavior of forex prices across 21 currencies over a decade. Contrary to the predictions of the model, forex price changes display extraordinary volatility and negative serial correlation around the Fix.