Social security incentives and human capital investment
In: Working paper series 438
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In: Working paper series 438
In: In book: Post-Apartheid Southern Africa: Economic Challenges and Policies for the Future, Chapter: Mozambique: Macroeconomic Performance and Critical Development Issues (chapter 14), Publisher: Routledge: London and New York, Editors: L. Petersson, pp.288-310, 1998
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We propose a dynamic general equilibrium model with human capital accumulation to evaluate the economic consequences of compulsory services (such as military draft or social services). Our analysis identifies a so far ignored dynamic cost arising from distortions in time allocation over the life-cycle. We provide conservative estimates for the excess burden that arises when the government relies on forced labor rather than on income taxation to finance public expenditures. Our results suggest that eliminating the draft could produce considerable dynamic gains, both in terms of GDP and lifetime utility.
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In: Journal of economic dynamics & control, Band 26, Heft 4, S. 577-609
ISSN: 0165-1889
In: Handbook of Experimental Economic Methodology, S. 296-338
In: American economic review, Band 92, Heft 5, S. 1606-1617
ISSN: 1944-7981
In: Journal of risk and uncertainty, Band 50, Heft 1, S. 35-54
ISSN: 1573-0476
In: IZA Discussion Paper No. 9387
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In: Economica, Band 80, Heft 320, S. 670-697
ISSN: 1468-0335
We evaluate the claim that individuals exhibit a magnitude effect in their discounting behaviour, where higher discount rates are inferred from choices made with lower principals, all else being equal. If the magnitude effect is quantitatively significant, it is not appropriate to use one discount rate that is independent of the scale of the project for cost–benefit analysis and capital budgeting. Using data from a field experiment in Denmark, we find statistically significant evidence of a magnitude effect that is much smaller than is claimed. This evidence surfaces only if one controls for unobserved individual heterogeneity in the population.
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Working paper
In: IZA Discussion Paper No. 9856
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