Momi Dahan

Sibling Correlations and Social Mobility in Latin America

In this paper, social mobility is measured by looking at the extent to which family background determines socioeconomic success. Roughly speaking, social mobility can be measure by means of two distinct types of correlations: intergenerational correlations and sibling correlations.

Parental actions and sibling inequality

This paper sets forth a simple model of resource allocation within the family. The model is based on two main assumptions: there are non-convexities in human capital investments and parents cannot borrow to finance their childrens education. The model shows that poor and middle-income parents will often find it optimal to channel human capital investments into a few of their children, thus creating sizable inequalities among siblings. The predictions of the model are consistent with the available evidence for three Latin American countries.

The Fiscal Effects of Monetary Policy

This paper develops a simple framework to examine the budgetary implications of monetary policy measures. It further outlines, using this framework, the various channels of influence that tight monetary policy may have on the budget deficit. The cumulative effect might be quantitatively large although each effect might be small. Most of the effects tend to increase the budget deficit as result of tight monetary policy, but tight monetary policy causes a short-run decrease in the government debt. Thus, macroeconomic policy coordination should be considered.

Fiscal policy and saving under distortionary taxation

An empirical investigation of fiscal effects on saving is carried out with Israeli data, which disply large variability in both the saving rate and the fiscal variables.

Is Centralization a Solution to the Soft Budget Constraint Problem

This paper focuses on the centralization program implemented in Israel in 2004 to analyze whether the administrative subordination of municipalities is an effective policy to deal with problems related to soft-budget constraint of lower level governments. The results consistently show, for different specifications and samples of municipalities, that this program brought a substantial decrease of municipalities’ expenditures (mostly because of decreases on salary payments), and an increase of local property tax collection. Our analysis shows that all of the fiscal impact of the program is due to the appointment of an accountant that reports directly to the central government, a relatively mild form of administrative subordination. In contrast, more intrusive forms of subordination, like the central imposition of a recovery program, do not result in any substantial improvement of municipalities’ fiscal situation. This leads us to conclude that a mild form of administrative subordination is an effective tool to cope with problems related to soft-budget constraints, whereas political subordination is not an effective tool to reach that goal.

The Impact of the Economic Costs of Conflict on Individuals' Political Attitudes

Abstract A large number of studies show that war and terrorism have a significant effect on individuals’ political attitudes. Yet, this extensive literature does not inspect the mechanisms behind this effect. This paper concentrates on one possible mechanism, by differentiating between the human toll of terror and war and the economic costs they cause. For these purposes we focus on the Israeli-Palestinian conflict, and use variation in the level of violence across time and space together with localities’ different exposure to the tourism sector to estimate their respective effects on political attitudes. Our results suggest that whereas fatalities from the conflict make Israelis more willing to grant territorial concessions to the Palestinians, the associated economic costs of conflict do not have a consistent significant effect on individuals’ political attitudes.

Constitutional Commitment to Social Security and Welfare Policy

In this paper we explore whether the constitutional text has any practical meaning for welfare policy. To examine the empirical importance of the constitution, we first constructed for 68 countries an index of constitutional commitment to social security in five areas: Old Age, disability and survivors (OASDI), Unemployment, Sickness, Work Injury and Income Support. We find that the extent and coverage of social security laws is not sensitive to the degree of constitutional commitment to social security.