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During the 1790s Britain experienced a series of poor harvests which, given an expanding population and wartime disruption to the European grain trade, caused sudden and rapid increases in the domestic price of wheat. In modern discussion of Corn and Poor Laws the severity of these fluctuations has been obscured by the use of annual average grain prices, despite weekly county prices being available from 1771 as published in the London Gazette. We highlight the uncertainties of grain prices during the period 1794-96, drawing upon contemporary discussion published in the Annals of Agriculture of the problems arising from fluctuations in the price of wheat. Our purpose is to demonstrate that the tropes usually today associated with the Corn and Poor Laws – pauperism, a clash between merchant, manufacturing and landlord interests, population and impoverishment – are absent from discussion during this period. A doctrinaire “political economy” would develop in the early 1800s, but did not yet exist. Policy argument drew upon casuistic reasoning from circumstance and past experience. We also show in conclusion that Edmund Burke’s Thoughts and Details on Scarcity cannot be linked to “political economy”.

This paper develops a maximum likelihood (ML) bunching estimator of the elasticity of taxable income (ETI). Our structural approach provides a natural framework to simultaneously account for unobserved preference heterogeneity and optimization errors and for measuring their relative importance. We characterize the conditions under which the parameters of the model are identified and show that the ML estimator performs well in terms of bias and precision. The paper also contains an empirical application using Swedish data, showing that both the ETI and the standard deviation of the optimization friction are precisely estimated, albeit relatively small.

Reservation wages are part of the transmission mechanism between minimum wages and unemployment via the labour force participation decision. The limited available empirical evidence on the relationship between reservation wages and legal minimum wages suggest that individuals use minimum wages as benchmarks against which their reservation wages are set. This has a profound behavioural effect that may encourage individuals to either enter the labour force or price themselves out of potential employment. We employ a fuzzy regression discontinuity design to explore the influence of minimum wages on reservation wages. Our findings suggest that the behavioural response is too small to be extracted from the variability of the reservation wage data. For policy makers this finding is important. While minimum wages raise earnings and living standards, they can push some workers out of the labour force by increasing their reservation wage beyond the minimum. We do not find any evidence of such a response of the reservation wage of jobseekers to the minimum wage in the UK.

The elasticity of taxable income (ETI) is a central statistic for tax policy design. One purpose of the present paper is to use Monte Carlo simulation techniques to assess the bias and precision of the prevalent estimators in the literature, the IV-regression estimator and the bunching estimator. Thereby, we aim to provide arguments in favor of, or against, using these methods. Another is to suggest indirect inference estimation to improve the quality of the measurement of the ETI. While IV-regression estimators perform well in terms of bias under certain conditions, they are more variable than bunching estimators. We also find that bunching estimators can be biased downward. The estimators based on indirect inference principles are practically unbiased and more precise than the other estimators.

We propose a maximum likelihood method to improve the bunching approach of estimating the elasticity of taxable income (ETI), and derive estimators for several model settings such as bunching with optimization frictions, notches, and heterogeneity in the ETI. Modelling optimization frictions explicitly, our estimators fit the data of several published studies very well. In the presence of a notch, the results can differ substantially from those obtained using the polynomial approach. If there is heterogeneity in the ETI, the elasticity among those who bunch exceeds the average elasticity in the population.

Using unique data on Swedish households, we measure the price elasticity of electricity demand for households facing a mandatory non-linear distribution tariff, where households are charged based on their maximum consumption during a month, and where the marginal incentives are very large. We estimate the price elasticity using both 2SLS and bunching estimators, and we find that the price elasticity is smaller than what many previous studies on electricity demand have found.

We show that the 2SLS estimates are not robust to changes to the set of controls or to the sample definition, while the bunching estimates suggest that the price elasticity of electricity demand is small in response to the large marginal incentives.

Furthermore, we illustrate why charging households based on maximum consumption during a month leads to weak incentives in the end of the month, and discuss alternative tariff designs.

A multiple state model describes the transitions of the disability risk among the states of active, inactive and dead. Ideally, estimations of transition probabilities and transition intensities rely on longitudinal data; however, most of the national surveys of disability are based on cross-sectional data measuring the disabled status of an individual at one point in time. This paper aims to propose a generic method of the estimation of the expected transition probabilities when the model allows recovery from disability using the UK cross-sectional data. The disability prevalence rates are modelled by taking into consideration the effect of age and time. Under some plausible assumptions concerning the death rates among inactive and active people, the estimated prevalence rates of disability are used to decompose survival probabilities in each state.

Using unique data on Swedish households, we measure the price elas- ticity of electricity demand for households facing a mandatory non-linear distribution tariffs where households are charged based on their maximum consumption during a month, and where the marginal incentives are very large. We estimate the price elasticity using both 2SLS and bunching esti- mators, and we find that the price elasticity is smaller than what previous literature on electricity demand have found. Furthermore, we illustrate why charging households based on maxi- mum consumption during a month leads to weak incentives in the end of the month, and discuss alternative tariff designs.

In this paper, we explore how sensitive the timing of switches between electricity contracts is to current and past prices. We present a model for time series of individual binary decisions which depends on the history of past and present prices. The model is based on the Bayesian learning procedure which is at the core of sequential decision-making. Given a-priori distributions of the information conditional on the state of the world, we show that the model captures dependence on past prices in a straightforward fashion. We estimate by maximum likelihood the parameters of the model on a sample of Swedish households who decide over time between competing electricity price contracts. The estimated parameters suggest that households do respond to prices by switching between contracts and that the response to price can be sizeable for alternative price processes. Importantly, the model structure implies that in general, the response to a price change will not be immediate but delayed.

Purpose: The purpose of this paper is to examine the effect employed friends have on the probability of exiting unemployment of an unemployed worker according to his/her educational (skill) level.

Design/methodology/approach: In common with studies on unemployment duration, this paper uses a discrete-time hazard model.

Findings: The paper finds that the conditional probability of finding work is between 24 and 34 per cent higher per period for each additional employed friend for job seekers with intermediate skills.

Social implications: These results are of interest since they suggest that the reach of national employment agencies could extend beyond individuals in direct contact with first-line employment support bureaus.

Originality/value: Because of the lack of appropriate longitudinal information, the majority of empirical studies in the area assess the influence of social networks on employment status using proxy measures of social interactions. The current study contributes to the very limited empirical literature of the influence of social networks on job attainment using direct measures of social structures.