Knowledge that Transforms

We estimate the impact of employer-provided retiree health insurance (EPRHI) on the labor force transitions of men aged 51 to 62.Data from the Health and Retirement Survey provide detailed and accurate measures of retiree health insurance. Availability of EPRHI increases the rate of exit from employment by two percentage points per year if the individual shares the cost of the insurance with the firm, and by six percentage points if the firm pays the entire cost. The impact of cost-shared EPRHI on the annual rate of labor force exit increases with age, reaching 7.5 percentage points by age 61.

Empirical studies of forecasts often fail to reconcile the rational expectations hypothesis with a minimum mean square error objective function. Recent studies, however, have argued that observed bias may be rational in certain advising games, or for objective functions that include publicity or forecasting reputation as additional arguments. This paper analyzes multistep forecasting behavior for individuals forecasting bond yields in the Blue Chip Financial Survey over the 1987–1996 period and uncovers statistically significant evidence supportive of Ehrbeck and Waldmann's rational stubbornness. I find that forecasters rationally place too much weight on their previous forecasts in an attempt to mimic the behavior of more able forecasters (perhaps attempting to fool their clients). Jointly, I also find that this pattern of under-revision is positively correlated with mean square forecasting errors. Rational stubbornness is sensitive to the forecasting horizon as well as bond maturity.

This paper considers two problems that arise in determining the role of cognitive ability in explaining the level of and change in the rate of return to schooling. The first problem is that ability and schooling are so strongly dependent that it is not possible, over a wide range of variation in schooling and ability, to independently vary these two variables and estimate their separate impacts. The second problem is that the structure of panel data makes it difficult to identify main age and time effects or to isolate crucial education-ability-time interactions which are needed to assess the role of ability in explaining the rise in the return to education.

Economic effects of public policy alternatives often are analyzed with simulation models. The value of simulation is enhanced when model parameters can credibly be estimated econometrically. But unrestricted estimation can be expected to result in problematic estimates, for example, estimated parameters contrary in sign to what economic theory dictates. The information contract curve (ICC), developed by Leamer, provides a flexible means to impose regularity on estimated parameters at minimum-likelihood cost. We extend the ICC methodology, using conically uniform priors, and apply it to measuring the welfare costs of environmental regulations in the U.S. pulp, paper, and paperboard industry.

In a privatization competition, private contractors bid against an in-house team to perform a governmental function that is currently performed by the in-house team. The Department of Defense initiated 3,500 privatization competitions from 1978 to 1994, generating estimated annual savings of $1.46 billion. We estimate a reduced-form model of the savings from these competitions that takes into account the premature cancellation of some competitions and the censoring of the in-house bid at current cost. The Department of Defense maintains a list of candidates for future privatization competitions. Using our model, we forecast annual savings of $5.74 billion if privatization competitions were completed for all functions on this list.

November 01 2001 A Comment on James M. Poterba's ‘Demographic Structure and Asset Returns’ John Y. Campbell John Y. Campbell Harvard University Search for other works by this author on: This Site Google Scholar Author and Article Information John Y. Campbell Harvard University Received: June 12 2001 Accepted: June 12 2001 Online ISSN: 1530-9142 Print ISSN: 0034-6535 © 2001 President and Fellows of Harvard College and the Massachusetts Institute of Technology2001 The Review of Economics and Statistics (2001) 83 (4): 585–588. https://doi.org/10.1162/003465301753237669 Article history Received: June 12 2001 Accepted: June 12 2001 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn Email Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation John Y. Campbell; A Comment on James M. Poterba's ‘Demographic Structure and Asset Returns’. The Review of Economics and Statistics 2001; 83 (4): 585–588. doi: https://doi.org/10.1162/003465301753237669 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsThe Review of Economics and Statistics Search Advanced Search This content is only available as a PDF. © 2001 President and Fellows of Harvard College and the Massachusetts Institute of Technology2001 Article PDF first page preview Close Modal You do not currently have access to this content.

We estimate models of workers compensation claim duration for a sample of Canadian workers with serious low-back injuries. The models extend recent duration research by allowing worker characteristics to affect duration dependence through the nonlocation parameters of the duration distribution. We compare results for modified Weibull models and piecewise-constant hazard rate models of duration dependence. The results show that workers' responses to elapsed claim duration vary significantly with their characteristics and with economic incentives to return to work. Further, allowing for heterogeneity in duration dependence effects can dramatically change the coefficient estimates of the variables that determine the location parameter of the duration distribution.

This paper develops a discrete variant of the semiparametric methodology of DiNardo, Fortin, and Lemieux (1996) (DFL) to measure the effects of socio-economic variables on the income distribution. Although the proposed method is also based on the calculation of hypothetical income distributions by reweighting the original population, it is much easier to implement. The framework is applied to examine the distributional effects of rising unemployment, decreasing female labor market participation, and widening income structure in East Germany following the reunification with West Germany in 1990. The empirical results suggest that both these tendencies contributed considerably to the recent increase in income inequality in East Germany.