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"This paper investigates empirically whether financial incentives, and in particular governmental child subsidies, affect fertility. We use a comprehensive, nonpublic, individual-level panel dataset that includes fertility histories and detailed individual controls for all married Israeli women with two or more children from 1999-2005, a period with substantial variation in the level of governmental child subsidies but no changes in eligibility and coverage. We find a significant positive effect on fertility, with the mean level of child subsidies producing a 7.8 percent increase in fertility. The positive effect of child subsidies on fertility is concentrated in the bottom half of the income distribution. It is present across all religious groups, including the ultra-Orthodox Jewish population whose religious principles forbid birth control and family planning. Using a differences-in-differences specification, we find that a large, unanticipated reduction in child subsidies that occurred in 2003 had a substantial negative impact on fertility. Overall, our results support the view that fertility responds to financial incentives and indicate that the child subsidy policies used in many countries can have a significant influence on incremental fertility decisions"--National Bureau of Economic Research web site

ABSTRACTConsumers need to exert effort to use the incentives provided in a promotion campaign. This effort is critical in the consumers' decision process and for the success of the campaign. We develop a model of consumer redemption effort that is general in nature and is applicable to coupons, rebates, and other price‐discrimination devices. We find that the impact of redemption effort is quite intricate on a firm's profit and consumers' surplus. We find that there are cases where a firm would like to operate in a low redemption cost environment while consumers would be better off with higher costs. We identify cases where price can remain the same with or without the promotion. In these cases, it is possible that the surplus for each individual consumer is higher when a firm price discriminates and improves its profit. Our results indicate that a firm would rather have variation in consumer redemption costs than to have variation in consumer valuations. However, in a market with low valuation variability, consumer redemption cost variability is essential for an efficient promotion campaign. Therefore, the markets that naturally have a lot of variability in consumer valuations should be the ones targeted for online promotion programs that reduce consumer effort levels, not the markets with low variability.

AbstractWe model a moral hazard in teams problem in which a profit‐maximizing principal offers private contracts to multiple agents. Public contracts are common knowledge to all agents, but private contracts are known only by the principal and each individual agent. Public contracts can induce efficient outcomes but are subject to effort‐reducing collusion between the principal and any given agent. Private contracts, by construction, are immune to such collusion but necessarily inefficient, as the principal is forced to make the team collectively the residual claimant (on margin), whereas efficiency requires that each individual agent be the residual claimant on his own.

Holmström's (1982/99) career concerns model has become a workhorse for analyzing agency issues in many elds. The underlying signal jamming argument requires players to use information in a Bayesian way, which is difficult to directly test with eld data: typically little is known about the information that individuals base their decisions on. Our laboratory experiment provides prima facie evidence: i) the signal jamming mechanism successfully creates incentives on the labor supply side; ii) decision errors take time to decrease; iii) while subjects' average beliefs are remarkably consistent with play, a mild winner's curse arises on the labor demand side.

AbstractThis paper critically reviews the current economic models of climate change and policy options and examines smart adaptations as an alternative policy solution based on individual incentives. A variety of the models based on negative externality as well as catastrophe models of global warming are reviewed. This paper finds that the current models fail to account for disparate regional and private incentives under changing climates. We introduce the theory of the global commons (public goods) to illuminate the conflicts between individuals and the global objective. Smart adaptations are those that reduce the damage from global warming but also mitigate greenhouse gases at the same time. They are motivated by individuals, but supported by the public sector. Smart adaptation strategies include natural resource uses, land use changes, consumer actions, migration, population changes, alternative energy sources and technological advances. This paper discusses whether smart adaptations are sufficient to prevent climate catastrophe.

Abstract:This essay offers an account of feasible actions. It criticizes the conditional
account of feasibility and offers instead what I call the constrained account of
feasibility. The constrained account is superior, I argue, on account of how it
deals with the problem of motivational failure to act and with collective
action. According to the constrained account, roughly put, an action is feasible
when the agent or agents performing it know how to perform it and are
appropriately responsive to incentives. The essay shows that some collective
requirements for action that appear feasible are not in fact feasible.

This paper examines how different unionisation structures affect firms' innovation incentives and industry employment. We distinguish three modes of unionisation with increasing degree of centralisation: (1) 'Decentralisation' where wages are determined independently at the firm-level, (2) 'coordination' where one industry union sets individual wages for all firms, and (3) 'centralisation' where an industry union sets a uniform wage rate for all firms. While firms' investment incentives are largest under 'centralisation', investment incentives are non-monotone in the degree of centralisation: 'Decentralisation' carries higher investment incentives than 'coordination'. Labour market policy can spur innovation by decentralising unionisation structures or through non-discrimination rules.

This paper examines how different unionisation structures affect firms' innovation incen- tives and industry employment. We distinguish three modes of unionisation with increasing degree of centralisation: (1) "Decentralisation" where wages are determined independently at the firm-level, (2) "coordination" where one industry union sets individual wages for all firms, and (3) "centralisation" where an industry union sets a uniform wage rate for all firms. While firms'investment incentives are largest under "centralisation," investment incentives are non-monotone in the degree of centralisation: "Decentralisation" carries higher investment incentives than "coordination". Labour market policy can spur innovation by decentralising unionisation structures or through non-discrimination rules.

Are tax incentives the best way to encourage people to save for retirement? This publication assesses whether countries can improve the design of financial incentives to promote savings for retirement. After describing how different countries design financial incentives to promote savings for retirement in funded pensions, the study calculates the overall tax advantage that individuals may benefit from as a result of those incentives when saving for retirement. It then examines the fiscal cost of those incentives and their effectiveness in increasing retirement savings, and looks into alternative approaches to designing financial incentives. The study ends with policy guidelines on how to improve the design of financial incentives to promote savings for retirement, highlighting that depending on the policy objective certain designs of tax incentives or non-tax incentives may be more appropriate.

Measured inequality has increased tremendously between the
1960s and 1990s, not only in the United States but throughout
the majority of industrial nations. Wages among people of the
same race and gender have become less equal. The hours worked
by men have fallen, and the drop has been more pronounced among
those who earn lower wages—as a result, inequality in
labor income, which is the product of the wage rate and hours
worked, has increased relative to inequality in wage rates.
Moreover, among married couples, employment of the
wives of high-income men has increased until these wives are
approximately as likely to be employed outside the home as are
the wives of low-income men, who have always worked for wages.
In addition, due to assortative mating, wage rates of husbands
and wives are positively correlated, and it is clear that the
growth in inequality of labor incomes among families has
outstripped the growth in inequality in individual labor
income. Finally, only the highest-income families have savings
in excess of home equity and company-sponsored pensions, which
implies that inequality in wealth among families has been exacerbated
by the growth in stock prices.

We study the strategic incentives of regional governments to allocate their budget to public investment and to public consumption expenditures against the background of an incentive-compatible redistribution policy set by the central government. Regional investment changes the productivity distribution in the economy, which aects the design of the optimal tax-transfer system by the central government. The strategic incentives can dier between rich and poor regions depending on the nature of the investment. Rich and poor regions both have strategic incentives to reduce investment which increases the productivity of all individuals in a region. For investment which only increases the productivity of a part of the population, rich regions have reduced investment incentives, whereas poor regions have increased strategic incentives to invest. Our results hint at potential benets of appropriate dierentiation of matching grants.