Frederick W. Derrick

Clothing Demand in the United States: A Cross‐Sectional Analysis

This paper examined factors influencing clothing expenditures by households in the United States. In particular, the impact of various household characteristics on clothing expenditures was investigated using data from the 1972–73 Bureau of Labor Statistics Consumer Ex penditure Survey. The results indicated that income plays a major role in concert with demographic characteristics in determining household expenditures on clothing and services. Expenditures were positively related to income and education and negatively related to age of household head. Households headed by blacks with wives in the labor force spent more on clothing than other households. Location also proved to be a significant variable with urban households spending more on clothing expenditures than rural households. The results should provide information concerning the demand for clothing under different economic and demographic conditions.

Sales tax equity: Who bears the burden?

The sales tax is assumed to be regressive as those with higher incomes spend a smaller portion of their incomes. This conclusion is based on the presumption that the sales tax is a broad-based consumer tax and that consumers bear the burden of the tax. In practice, the tax is neither broad-based nor the burden limited to consumers. In this paper, we evaluate the effect of the prior assumptions on sales tax incidence estimates and the robustness of the prior conclusions about sales tax incidence.

Prison's Dilemma: Do Education and Jobs Programmes Affect Recidivism?

This paper employs a hazard model to analyse the impact of education and two types of prison employment programmes on recidivism over a ten-year period for 4515 prisoners released from Ohio prisons in 1992. Estimations with a Weibull mixture model and propensity score approach provide two means for investigating self-selection bias. Selection bias is detected for participation in the most common prison job programme but has little effect on estimated marginal savings impacts of prison industry and education programmes. Estimates of the cost savings from postponing return to prison due to programme participation are provided. The potential for cost savings through decreasing or delaying return to prison is an important finding given the substantial and increasing cost of incarceration.

The Impact of Demographic Variables on Expenditures for Food Away From Home

Whereas considerable effort has been expended in prior research in discussing the appropriateness of alternative measures of income in expenditure studies, this paper looks in depth at the impact of incorporating a broad range of demographic variables in the expenditure analysis. Food expenditures away from home are used to analyze the additional gains in explanatory power and the impact of demographic variables on income elasticities. Considerable divergence of results is found under the alternative measures of income.

Labor Effects on the Unskilled Labor Market

This paper provides the first analytical estimates of the impact of prison labor on the market for non-prison, unskilled labor. Estimates of the impact of prison labor on employment and wages of non-prison employees are derived using a supply and demand model similar to that used in the immigration literature, and generally accepted estimates of the aggregate demand and supply elasticities. Our results suggest minimal impact, given the current level of prison employment, and even with a significant expansion to twenty five percent of all prisoners.

Businesses and the Incidence of Sales and Use Taxes

Sales taxes paid by businesses are buried in production costs and therefore hidden from consumers and policymakers. Final (tax included) prices are related to the number of taxable transactions that the good has undergone and who bears the tax as well as to resource costs. Thus the total sales tax embedded in final prices is obscured. This study investigates the level and the incidence of sales taxes applied to business transactions. An input-output model assuming a full pass forward of the tax is employed. The embedded sales tax is more regressive than the direct share paid by consumers and is found in most commodities including those exempted by legislation.

National health insurance: lessons from the United States experiment.

Medicares coverage of end-stage renal disease provides a 20-year experiment in national health insurance. Access, cost containment, and portability have been maintained while serious concerns have arisen over sustaining (and appraising) quality of care.

The Effects of Price Aggregation Bias in Systems of Demand Equations

This article illustrates the importance of maintaining consistent levels of aggregation between prices and quantities when estimating consumer demand functions. The impact of violating this condition is quantified by using summary performance measures and estimates of demand elasticity biases. Results derived from an application of 1972–1973 Consumer Expenditure Survey data and supported with a quasi-Monte Carlo experiment consistently indicate that the point estimates of demand elasticities are significantly biased. Thus the study indicates the importance of developing and maintaining price indexes disaggregated to the same level as the expenditure data in consumer expenditure and budget surveys.

Sales tax exemptions and credits: Time to reevaluate

The state sales tax is an inherently regressive source of revenue. This has given rise to attempts to counter the regressivity through adjustments to the basic sales tax structure through credits and exemptions. Two new alternatives appear to have both theoretical and practical advantages over simple credits and exemptions: the use of a debit card for delivering sales tax credits and a negative credit related to potential tax liability. They have the theoretical advantages of both the credit and the exemption while not having the administrative difficulties of the credit or the revenue loss of the exemption. Empirical analysis using the Consumer Expenditure Survey and the Maryland tax code indicates that the state can reduce regressivity and raise substantial revenue using either alternative. The proposed gains can be made with enhanced revenue stability, little administrative cost, and little impact on horizontal equity or efficiency.

Identifying Industries for Employment Development Using Input-Output Modeling: The Case of Prison Industry Employment

Economic development involves creating new jobs while retaining existing jobs in a defined region. The focus in this paper is to propose and illustrate a method for identifying sectors with net positive employment impacts on the relevant jurisdiction using input-output (I/O) analysis. This approach is in contrast to the traditional purpose of I/O models, which is to determine the total economic impact of given changes in final demand in specific industries. The emphasis on employment in this paper explicitly addresses the potential for new employment to replace (crowd out) existing employment. This paper provides a method for selecting industries that minimize crowding out. We illustrate the use of this method with prison industry choice aggregated at the local, state and national levels. We find that the net employment effect of creating a new job is an empirical question dependent upon the aggregation level chosen and the regions economy.