This paper studies the role of social security in providing annuity insurance. I calculate the welfare cost of adverse selection in the annuity market using a life cycle model in which individuals have private information about their mortality. I calibrate the model to the current U.S. social security replacement ratio, fraction of annuitized wealth and mortality heterogeneity in the Health and...

The Transition from Welfare to Work and the Role of Potential Labor Income It is often argued that the high level of welfare claims in Germany causes little incentive for workers with low productivity to seek for a job. We examine the influence of the ratio between estimated potential labor income and the welfare payment level on the probability of leaving social welfare. Using the GSOEP, we es...

Marshallian consumer surplus (MCS) is generally an inaccurate measure of welfare change because it neglects income effects. Suppose these effects overturn the usual demand response to a price change. Then, the deadweight loss from a distortionary tax or subsidy has the wrong sign, that is, there is a spurious deadweight gain. JEL Classification: D11, D6.

This paper develops a simple model of piracy to analyze its effects on prices and welfare and to study the optimal enforcement policy. A monopolist produces an information good (involving a “large” development cost and a “small” reproduction cost) that is sold to two groups of consumers differing in their valuation of the good. We distinguish two settings: one in which the monopoly is regulated...

This paper is the first to study the effect of European antidumping policy on market structure. We analyze the incentives for firms to engage in a domestic or international cartel of implicit collusion in a multi-stage setting and concentrate on how European antidumping policy influences the incentives for firms to collude domestically or internationally. The question is tackled of whether anti...

This paper analyzes the welfare costs of business cycles when workers face uninsurable idiosyncratic labor income risk that has a cyclical component. In accordance with the previous literature, this paper decomposes individual labor income risk into an aggregate and an idiosyncratic component and assumes that these two components are stochastically independent. In contrast to the previous liter...

nowadays the phrase “social capital” has become one of the widely used general terms in social studies. the impact of social capital on economies and politics has expanded and has opened new venues for solving social and political malaise. one of the effects of social capital is its impact on personal welfare. in this article we have used a dynamic model containing two equations to study the im...

Whereas life expectancy continues to increase in most industrialized countries many developing and transition countries are today confronted with decreases in life expectancy. Usual measures employed to compare welfare over time and space fail to deal with such demographic change and may lead to the so-called ‘repugnant’ conclusion that lower life expectancy involves higher welfare per capita. ...

Is the observed large increase in consumer indebtedness since the 1980s beneficial for U.S. consumers? This paper quantitatively studies the macroeconomic and welfare implications of relaxing borrowing constraints when consumers exhibit a hyperbolic discounting preference. The model can capture two contrasting views: the positive view, which links increased indebtedness to financial innovation ...