John Baffoe-Bonnie

The Dynamic Impact of Macroeconomic Aggregates on Housing Prices and Stock of Houses: A National and Regional Analysis

This article analyzes the dynamic effects of four key macroeconomic variables on the housing prices and the stock of houses sold on the national and regional levels using a nonstructural estimation technique. The impulse response functions derived from the VAR suggest that macroeconomic variables produce cycles in housing prices and houses sold. The housing market was found to be very sensitive to shocks in the employment growth and mortgage rate at both the national and regional levels. In particular, regional housing prices reflect regional employment growth, as well as national mortgage rates. The study also reveals that the economic variables have a different impact on the dynamic behavior of housing prices and the number of houses sold in different regions at different time periods and that these economic aggregates alone cannot explain the fluctuations in real estate values and construction levels that occurred in some regions.

Dynamic modelling of fiscal and exchange rates policy effects in a developing country: A non-structural approach

A non‐structural model is used to analyze the dynamic effects of fiscal and exchange rate policies on Ghanas economy. In particular, the paper sheds light on how these two key structural adjustment policy variables affect the short‐run and long‐run dynamics of inflation, output and exports. The general conclusion is that exchange rate changes have a moderate dynamic effect on inflation, output and exports. In contrast, government expenditures are less effective in influencing any of the above macroeconomic variables, either in the short‐run or in the long‐run. The impulse response functions derived from the VAR suggest that the impact of devaluation is strongly felt in either the third or the fourth year. The variance decompositions indicate that exchange rate changes account for about 30 percent, 7 percent and 27 percent in the variation of ouput, inflation and exports, respectively, in the ninth year. However, the percentage of the variation in the above variables owing to changes in government expenditures is very small. The implication of these results is that the structural adjustment policies in relation to changes in exchange rate and government expenditures may not be very effective as previously envisaged.

Family labour supply and labour market segmentation

This paper examines the differences in individuals’ labour supply decisions in different segments of the labour market. It tests one of the main hypotheses of the dual labour market theory that the labour market can be divided into at least two segments, and also whether the family labour supply decisions of individuals differ in the two segments. The possibility of individuals’ wage rates depending on the number of hours worked is recognized and a model is developed in which both the wage rates and hours of work of individuals are jointly determined, with the personal income tax system as an intervening variable since hours of labour supply depend on the post tax wage rate whereas if the marginal product of labour is a positive function of hours worked, this affects the pre-tax wage rates. Other alternative wage functions are specified and a simultaneous equations labour supply model using Three Stage Least Squares (3SLS) procedure is estimated. The results indicate that there was sample selectivity bias...

The Impact of Income Taxation on the Labor Supply of Part-time and Full-time Workers

This paper estimates the effect of income taxation on the labor supply of part-time and full-time workers in the United States. Using a model that incorporates the endogeneity of the net wage rate and the virtual income, and correcting for self-selection into part-time and full-time jobs, the results indicate that part-time workers are relatively more responsive to changes in income tax than full-time workers. Estimated wage elasticities are relatively larger for part-time than for full-time workers.The simulation results indicate that income tax has a disincentive effect on both part-time and full-time workers, with part-time and full-time workers reducing their labor supply by 0.87 and 0.58 hours, respectively, if a 5% tax is imposed. However, the percentage reduction in hours of work is very small, and a tax policy may have little effect on the labor supply of workers.The results seem to suggest that female and black part-time workers are more likely to drop out of the labor force at higher levels of income tax. It also tests the hypothesis that the labor supply behavior of parttime and full-time workers differs.The test results indicate that the determinants of the labor supply of part-time workers are different from those of full-time workers. It is noted that there is a significant difference between the labor supply of male part-time and female parttime workers, as well as between the black part-time and white part-time workers. In order to reduce voluntary unemployment in market activities among married females and blacks, the government can encourage part-time work by sponsoring legislation or instituting a scheme that will allow part-time workers to pay relatively less in payroll taxes.

Wage determination in agricultural labour markets under monopsonist labour-tying arrangements

There is need for a study of wage formation in agricultural labour markets which can simultaneously explain the existence of involuntary unemployment on the one hand, and responsiveness to market forces on the other. This paper offers an analysis and empirical study of wage determination in a typical rural agricultural setting, and finds that, based on the notion of efficiency wages, a two-tier situation explains why rural wage rates are known to vary widely among workers and across regions.

The Dynamic Implications For Wage Changes On Productivity, Prices, And Employment In A Developing Economy: A Structural Var Analysis

This study employs a Structural Vector Autoregression (SVAR) model to analyze the dynamic effects of wage changes on Ghanas economy. In particular, the paper sheds light on how changes in wages affect the short-run and long-run dynamics of labor productivity, employment and prices in the agricultural and the manufacturing sectors. The empirical results indicate that shocks to wages have no significant impact on employment in the two sectors. While a wage increase does not encourage workers in the agricultural sector to work more, such increase does induce manufacturing workers to increase their productivity in the short run. The empirical results also indicate that, persistent increases in wages may be price inflationary within industries and in the economy as a whole. Therefore a wage policy that moderately increases wages, especially in the manufacturing sector, may provide a partial solution to reduce poverty and increase the standard of living of workers in Ghana.

Work-Study: Time Use Tradeoffs, Student Work Hours and Implications for Youth Employment Policy

Does paid employment during high school and college displace the time students spend in educational activities? Most enrolled college students in the US now work in paid jobs, almost half of whom work 25 or more hours per week. An economic approach suggests that students consider the tradeoffs involved with work versus study time allocation in terms of both current income and future earnings capacity and well being. There may be some complementarity, not just substitutability, between work and education time, regarding educational outcomes. Previous research tends to find that when paid hours exceed some threshold level, typically somewhere between 15 and 25 hours per week, various indicators of students‘ academic performance are lower. Longer work hours also undermine certain aspects of mental health. This research applies the pooled 2003-2005 American Time Use Survey (ATUS) data (n=47k#) to empirically investigate four main questions: (1) Are paid work hours of students associated with time spent doing homework or research and/or attending class? (2) If so, at what threshold point of paid work hours are hours of student work displaced? (3) Are there differences between college and high school students in the above relationships? They are addressed with econometric analyses of the ATUS sample of college (n = 1,314, with 1,121 full-time) students and high school students. (4) Is student employment in certain industries or occupations associated with more time spent studying? Work hours are found to be inversely related to hours in educational activities among those aged 16-24. Moreover, there are nonlinearities by the number of actual hours. In contrast to previous studies and samples, students who work as little as 5 or more hours spend a statistically significant lesser amount of time studying than their cohorts who are not employed. The extent to which work displaces time spent studying is consistent across levels of weekly work hours, but becomes largest when hours are 40 or more, even when controlling for various demographic and occupational characteristics, but not time spent in class. The conclusion explores how to investigate whether students who work during the school year have a relatively lower well being, as indicated by available estimates of net affect associated with particular uses of time? It also explores implications for policies, such as extending youth employment regulatory protections to students if it is warranted by clear threats to their mental or physical well being.

Black–white wage differentials: duration and probability unemployment effects in a multiple of sample selection bias model

Abstract The extent to which probability and duration of unemployment affect the black–white wage differentials is examined in this paper. The paper simultaneously incorporates in the wage equation the multiple sample selection bias that occurs as a result of individuals’ propensity to be in the labor force, and the firm’s hiring decisions. The results reveal a substantial contribution of the duration of unemployment variable to the black–white wage differential, but a small portion of the differential is explained by the probability of unemployment. The results also indicate a sizeable difference between the contribution of the duration of unemployment variable to the male’s wage differentials (26%) and to the female’s (35%). The study finds that an individual’s labor force decision as well as a firm’s hiring decision are important in the wage determination process and that failure to account for the sample selectivity bias due to these two decisions will result in either underestimating or overestimating the wage differentials between black and white workers. At the macro level, the results seem to suggest that promotion of racial wage equality should be associated with policies that will minimize blacks’ incidence of unemployment and duration of unemployment spells.

The Dynamic Impact of Structural Adjustment Policies on Labour Market and Macroeconomic Aggregates in Sub-Saharan Africa

ABSTRACT This paper employs a nonstructural technique to analyze the dynamic effects of two key structural adjustment policy instruments on the economies of some African countries. In particular, the paper evaluates the policies in the labour market and on two important macroeconomic variables. The general conclusion is that the policies are not effective in influencing the labour market either in the short-run or in the long-run for most of the African countries. In contrast, the policies have a moderate dynamic effect on the macro-economic variables. The impulse response functions derived from the VAR suggest that the effects of the policies, if significant, are felt at different time periods. Also, different countries respond to these policies differently An Important implication of the results is that, these policies alone may not be able to significantly arrest the poverty problem which is inimical in African countries.

Definition of full-time and part-time employment, and distributional assumptions: the implications for the estimated full-time and part-time wage equations

Abstract This paper demonstrates that rejecting the standard definition of full-time and part-time workers, the estimated number of hours that an individual is likely to work as a full-time worker is a function of the type of distribution one assumes about the error term in the wage equation. Adopting a switching regression model with unknown sample selection, we have found that the normality assumption generates higher hours for full-timers in comparison with the non-normal distributions. We also noted that regardless of the distribution assumed, the hours differ from one industry to another. The implication is that the standard definition of full-time and part-time worker may not be appropriate for all firms irrespective of the distribution assumed. The paper also shows the sensitivity of parameter estimates to the distributional assumptions about the error term in the wage equation. The results indicate that the normal distribution wage equation estimates are relatively larger than the Weibull and exponential distributions. This finding is particularly important because such differences in estimated coefficients may have a direct wage influence on the wage gap between full-time and part-time workers across distributions.