Knowledge that Transforms

I discuss mechanisms linking health and inequality and review evidence for effects of income inequality on aggregate and individual mortality, over time and over space. I conclude that there is no direct link. Correlations come from factors other than income inequality itself, some of which are linked to broader notions of inequality and inequity that are most likely important for health. Whether income redistribution can improve population health does not depend on the existence of a direct link between income inequality and health and remains an open question.

task in financial markets, and it has held the attention of academics and practitioners over the last two decades. At the time of

Potential home buyers may initiate contact with a real estate agent by asking to see a particular advertised house. This paper asks whether an agent's response to such a request depends on the race of the buyer or on whether the house is located in an integrated neighborhood. Like previous research about the causes of housing discrimination, this paper uses data from fair housing audits, a matched-pair technique for comparing the treatment of equally qualified black and white home buyers. However, we shift the focus from differences in the treatment of paired buyers to agent decisions concerning an individual house. Using a sample of all houses seen during the 1989 national Housing Discrimination Study, we estimate a random-effect, multinomial logit model to explain a real estate agent's joint decisions concerning whether to show each house to a black auditor and to a white auditor. We find evidence that agents interpret an initial housing request as an indication of a customer's preferences, but also are more likely to withhold a house from all customers when it is in an integrated suburban neighborhood (redlining). Moreover, agents' marketing efforts increase with asking price for white, but not for black, customers; blacks are more likely than whites to see houses in suburban, integrated areas (steering); and the houses agents show are more likely to deviate from the initial request when the customer is black than when the customer is white. These three findings are consistent with the possibility that agents act upon the belief that some types of transactions are relatively unlikely for black customers (statistical discrimination).

We consider expectations of the form E[logy|x] = Σj=1d αj log xj as a good starting point for a more general analysis. We show why this naturally leads to the following flexible functional form: E[y|x] = f(Σj=1dhj(xj)), where f(ċ) and the hj(ċ)'s are estimated by cubic splines. The main objective of this paper is to provide a straightforward method to estimate E[y|x]. We demonstrate the usefulness of this approach by estimating gasoline demand from the 1994 RTECS data set, and in doing so, uncover interesting relationships of income and age to expected gasoline use.

This paper summarizes the dramatic changes in relative educational attainment by men and women over the past three decades. Stock measures of education among the entire adult population show rising attainment levels for both men and women, with men enjoying an advantage in schooling levels throughout this interval. Cohort-specific analysis reveals that these stock measures mask two interesting patterns: (a) gender difference at the cohort level had vanished by the early 1950 birth cohort and has been reversed in sign ever since; (b) for several cohorts, attainment rates were flat for women and flat and falling for men. This last is puzzling in the face of the large college premia that these cohorts observed when making their schooling choices. We present a simple human capital model showing how the anticipated dispersion of future wages should affect educational investment, and find that a model which includes measures of future earnings dispersion fits the data for relative schooling patterns quite well.

This paper calculates elasticities of demand for race groups in South Africa, government-revenue-maximizing tax rates, and excess burdens associated with taxes. A change in tax policy can be the political engine of income redistribution with appropriate taxes and subsidies on different commodities. This paper compares both semiparametric and parametric estimators with the censored least absolute deviation and censored maximum likelihood in calculating demand equations and elasticities. It is found that cigarettes and milk are the two commodities that generate the most government revenues from whites per unit of government revenues from blacks.

This paper examines data from U.S. federal tax returns to shed light on whether the timing of death is responsive to its tax consequences. We investigate the temporal pattern of deaths around the time of changes in the estate-tax system periods when living longer, or dying sooner, could significantly affect estate-tax liability. We find some evidence that there is a small death elasticity, although we cannot rule out that what we have uncovered is ex post doctoring of the reported date of death.

Wolf demonstrates that trade within the United States appears substantially impeded by state borders. We revisit this finding with improved data. We show that much intranational home bias can be explained by wholesaling activity. Shipments by wholesalers are much more localized within states than shipments from manufacturing establishments. Controlling for relative prices and the use of actual, rather than imputed, shipment distances also reduces home bias estimates.

Inspired by the recent literature on aggregation theory, this paper introduces HITS, a semiparametric model of consumer demand that allows for diversity in tastes. The strong variation of budget shares observed across income groups has two possible origins: the individual income effect, and taste differences between poor and rich households. Consumer surveys reporting repeated cross sections do not permit the direct measurement of these two effects. In HITS, linear heterogeneity allows the GMM estimation of structural coefficients on an aggregate series. The joint density of spending and tastes is then recovered from cross sections by a nonparametric procedure involving a deconvolution. We estimate the model on British data (1968–1998) and report that taste heterogeneity explains a large fraction of the variation of budget shares with income.

Empirical research over the last decade has uncovered predictive relationships between the slope of the yield curve and subsequent real activity and inflation. Some of these relationships are highly significant, but their theoretical motivations suggest that they may not be stable over time. We use recent econometric techniques for break testing to examine whether the empirical relationships are in fact stable. We consider continuous models, which predict either economic growth or inflation, and binary models, which predict either recessions or inflationary pressure. In each case, we draw on evidence from Germany and the United States. Models that predict real activity are somewhat more stable than those that predict inflation, and binary models are more stable than continuous models. The model that predicts recessions is stable over our full sample period in both Germany and the United States.