Individual heterogeneity is an important source of variation in demand. Allowing for general heterogeneity is needed for correct welfare comparisons. We consider general heterogenous demand where preferences and linear budget sets are statistically independent. We find that the dimension of heterogeneity and the individual demand functions are not identified. We also find that the exact consume...

In the context of a costly-state-veri®cation model with a riskneutral agent having limited liability, it has been postulated that allowing stochastic auditing reduces the asymmetric information problem to a trivial one: i.e., the ®rst best can be approached arbitrarily closely with feasible contracts. This paper proves the postulate to be false: the surplus from feasible contracts is bounded st...

Motivated by high and rising sex ratios in countries such as India and China, we formulate a theoretical framework for analyzing the impact of economic development on parental sex choice when sons are culturally prized and children provide old age support. Two key assumptions drive our model. First, the cultural valuation of children vary not only with gender but also with marital status. In pa...

BACKGROUND Health workforce planning is based on estimates of future needs for and supply of health care services. Given the pipeline time lag for the training of health professionals, inappropriate workforce planning or policies can lead to extended periods of over- or under-supply of health care providers. Often these policy interventions focus on one determinant of supply and do not incorpor...

We develop and implement new tests for the completeness of rural labor markets. Our approach builds on the seminal work of Benjamin (1992) and requires panel data with changes in household labor endowments over time. We show how the possibility of asymmetric responses to increases and decreases in labor endowments leads to tests of necessary conditions for a shortage or surplus in the labor mar...

BACKGROUND Starting in the late 1980s, the Japanese government decreased the number of students accepted into medical school each year in order to reduce healthcare spending. The result of this policy is a serious shortage of doctors in Japan today, which has become a social problem in recent years. In an attempt to solve this problem, the Japanese government decided in 2007 to increase the med...

Measuring preferences via stated methods remains the only technique to obtain the total economic value of a non-marketed good or service. This study examines if alternative causes of an environmental problem affect individual statements of compensation demanded. Making use of a unique sample drawn from the Netherlands, we find that Hicksian equivalent surplus (ES) is not significantly affected ...