We examine the effects of education on financial decision‐making skills by identifying an interesting source of variation in pertinent training. During the 1990s, an increasing number of individuals ...were exposed to programs of financial education provided by their employers. If, as some have argued, low saving frequently results from a failure to appreciate economic vulnerabilities, then education of this form could prove to have a powerful effect on behavior. The current article undertakes an analysis of these programs using a previously unexploited survey of employers. We find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars. The effect is typically much stronger for nonhighly compensated employees than for highly compensated employees. The frequency of seminars emerges as a particularly important correlate of behavior. We are unable to detect any effects of written materials, such as newsletters and summary plan descriptions, regardless of frequency. We also present evidence on other determinants of plan activity.
Traditional analyses of the income tax greatly underestimate deadweight losses by ignoring its effect on forms of compensation and patterns of consumption. The full deadweight loss is easily ...calculated using the compensated elasticity of taxable income to changes in tax rates because leisure, excludable income, and deductible consumption are a Hicksian composite good. Microeconomic estimates imply a deadweight loss of as much as 30% of revenue or more than ten times Harberger's classic 1964 estimate. The relative deadweight loss caused by increasing existing tax rates is substantially greater and may exceed $2 per $1 of revenue.
Little is known about the timing and execution of open market repurchases. U.S. firms are under no obligation to disclose when they are trading, and generally report only quarterly changes in shares ...outstanding. We use 64 firms' supplementally disclosed repurchase trading data to provide the first examination of repurchase timing and execution. Across the days reported in our sample, firms adopted a variety of execution styles ranging from immediate intense repurchasing to delayed and smoothed repurchasing. We find no clear evidence that repurchases are timed to coincide with, precede, or follow, days on which information is released. We benchmark the costs and value of a given repurchase program against naive accumulation strategies achieving the same terminal portfolio. While there is considerable variation across the firms, NYSE firms on average beat their benchmarks, whereas NASDAQ firms do not. Finally, we document the liquidity impact of open market repurchases. We find that repurchasing contributes to market liquidity by narrowing bid-ask spreads and attenuating the price impact of order imbalances on days when repurchase trades are completed.
High rates of self-employment among ethnic minorities in England and Wales are investigated using a framework in which the self-employment decision is influenced by ethnic-specific attributes as well ...as sectoral earnings differentials. As expected, differences in an individual's predicted earnings in paid and self-employment are strongly correlated with self-employment decisions. Individuals with low English fluency, and recent immigrants, are less likely than other members of ethnic minorities to be self-employed. Perhaps surprisingly, this is also true of individuals living in “enclaves” — areas with a high percentage of their own ethnic group. The relatively deprived nature of such areas of England and Wales may explain this.
This paper discusses an experiment in which the value for an unfamiliar environmental good, whose total value has a large nonuse component, is verified using a revealed-preference method. As we were ...unable to observe preferences via an incentive compatible mechanism, we collected voluntary contributions toward the provision of the good. We make a case for interpreting these contributions as a “theoretical lower bound” on the value of the public good and estimate the lower bound. We also investigate whether we can use contingent donation data to estimate such lower bounds on values. We used a follow-up to the contingent donation question about the respondent's level of certainty with respect to her response to the contingent donation question. The results of this study suggest that use of the follow-up certainty question to differentiate respondents who would actually donate from those who would not is a promising approach to estimating a lower bound to Hicksian surplus measures.
A traditional explanation for stock splits is that they increase the number of small shareholders who own the stock. A possible reason for the increase is that the minimum bid-ask spread is wider ...after a split and brokers have more incentive to promote a stock. I document a large number of small buy orders following Nasdaq and NYSE/AMEX splits during 1993 to 1994. I also find strong evidence that trading costs increase, and weak evidence that costs of market making decline following splits. This is consistent with splits acting as an incentive to brokers to promote stocks.
This paper provides estimates of the return to education in wage employment in India by gender, age cohort and location (rural - urban) for the period 1993/94, and also evaluates the changes in ...returns over a period from 1983-94 using data from a large national level household survey. The estimates show that the returns to education increase up to the secondary level and decline thereafter. There is evidence of substantial gender and rural - urban differences in the returns to schooling. Investment im women's education, particularly at the middle, lower secondary and higher secondary levels, is more profitable than that for men in 1983 and also in 1993/94. The returns to women's primary and middle levels of education have declined while those to secondary and college levels have increased during the decade 1983-94. (DIPF/Orig.)
This paper investigates whether market interaction can, by itself, perpetuate the lack of ethnic diversity that is observed in the business communities of many developing countries. Using case study ...data on manufacturing firms in Kenya and Zimbabwe, we find no evidence that blacks or women are disadvantaged in the attribution of bank credit once we control for firm size and other observable characteristics. In contrast, an ethnic and gender bias is noticeable in the attribution of supplier credit. Although we cannot rule out the presence of discrimination, the bulk of the evidence indicates that network effects play an important role in explaining this bias.
► Routine activities such as recreation and work create social exposure to the risk of victimization. ► University students regard self-protection as complementary with recreation and work. ► Fear of ...crime encourages self-protection but does not universally discourage recreation and work. ► University students rely on social resources to protect themselves against crime.
Economic analysis of self-protection against crime has a lengthy history, but we have not extensively investigated how people simultaneously engage in self-protection alongside routine activities that expose individuals to the risk of crime victimization in the first place – behaviors such as recreation and work. This paper addresses three essential questions along these lines: how people decide to self-protect, how they blend self-protection with the other activities, and the influence of the social and economic environment around them. Conceptually, answers emerge when we apply the classic state-preference theoretical framework and carefully consider the role of the probability of victimization, the presumed effectiveness of self-protection, and the outcome of the self-protection decision in the context of recreation and work. To investigate the empirical environment of self-protection, I use a unique data set containing detailed information about the self-protective, recreational, and employment practices of over 3000 U.S. university students. A series of statistical probes provides a profile of personal as well as wider social and economic circumstances that shape the individual self-protection decision; the empirical patterns illustrate how individuals selectively use social and personal resources when protecting themselves against crime as they go about their everyday lives.
For some observers, the dramatic growth of the services sector in India reflects rapid strides made by educated professionals. Some others see it as the expansion of an employer of last resort. Given ...this heterogeneity, the object of this article is to analyse the quality of employment being created in different sub-sectors of services, relative to the industrial sector, where quality is defined to include wages, job security and social protection. Analysing household survey data from India in 1993-94 and 2004-05, we find the following. First, sub-sectors of services are generally either 'good' or 'bad' employers - higher wages do not compensate for less job security or less job protection. Second, the classification of most service sub-sectors as 'good' or 'bad' employers in 2004-05 is the same as that in 1993-94. Third, employment expansion during the 10-year period under consideration is more in service sub-sectors where quality of employment is low.
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