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RESEARCH ACTIVITIES This research page gives an overview of the recent research activities of the Working Group Public Economics. Studied topics include:
The research page is based on the annual research report of 2005 which is downloadable in PDF format. The annual research reports of 2000, 2001, 2002, 2003 and 2004 are also available. The measurement of inequality and welfare André Decoster and Peter Lambert (University of Oregon, USA) revisited the decomposition of the Gini coefficient into between-groups, within-groups and overlap terms in the context of two groups in which the incomes in one group may be scaled and that group's population weight modified. Erwin Ooghe and Peter Lambert analyzed an extension of the generalized Lorenz welfare criterion with bounded equivalence scales, proposed by Fleurbaey, Hagneré and Trannoy (FHT). Erwin Ooghe and André Decoster refined the FHT-criterion to an index test and used it to analyze the evolution of welfare in Russia in the post-communist era (1994-2001). Laurens Cherchye, Erwin Ooghe and Tom Van Puyenbroeck used the FHT criterion to test the United Nations’ “Human Development Index.” As expected, the UN’s ranking of countries is not robust, while the robustness of the UN’s country classification (in low, middle or highly developed countries) could not be rejected. Finally, Erwin Ooghe provides an alternative characterization of the sequential dominance criterion –– an extreme case of the FHT criterion –– in terms of weighted utilitarianism. In two contributions, Kristof Bosmans explored extremely egalitarian positions with respect to distributive justice. The first contribution (co-authored with Erwin Ooghe), provides a characterization of the maximin rule in the spirit of the seminal axiomatization of the leximin rule that uses the Hammond equity axiom. The second contribution generalizes the standard result that establishes the leximin rule as the extremely egalitarian member of the class of separable social welfare orderings using the conventional Arrow-Pratt theory of inequality/risk aversion. Kristof Bosmans also described the Lorenz dominance relationships that hold between several well-known rules for solving claims problems. Claims problems are distribution problems concerned with the allocation of an amount of money over a group of individuals with typically different entitlements such that the amount of money falls short of the sum of the entitlements. Koen Decanq investigated various multidimensional generalizations of the standard one-dimensional inequality measures. He focused on the generalization of the transfer principle, on the relation with mathematical majorization theory and on the copula function as a tool to model and to conceptualize dependence structures between the distributions of the dimensions. Together with Erik Schokkaert and André Decoster he studied the Human Development Index (HDI) as an operational multidimensional welfare index. Matching and micro simulation André Decoster, Kris De Swerdt, Kristian Orsini and Guy Van Camp continued their research on a joint project with the University of Antwerp and the University of Liège to construct a micro simulation model for Belgian social security and personal income tax reforms. The model, which has been baptised mimosis (MIcrosimulation MOdel for Belgian Social Insurance Systems) covers six policy domains: a) social security contributions, b) pension benefits, c) sickness and disability benefits, d) unemployment benefits, e) child allowances and f) personal income taxes (to calculate the “net” benefits). The particularity of mimosis lies in the fact that the underlying database is constructed from multiple administrative datasets, managed by the Crossroads Bank for Social Security. The available data mainly cover labour market data of employed and unemployed people. For each module a note was written, describing the calculation process for the tax benefit system of 2001 using the administrative data that are available to run the model. In 2005 they wrote the source code (in fortran95) for the different modules and integrated them into one single executable programme file (a mimosis.exe file). They are now in the process of validating the model and testing it with policy relevant simulations. Due to lack of data on its past history, the pension module has not yet been fully developed. Taxation and social security Kristian Orsini has continued his research on the labour supply effects of reforms in tax and benefit systems. During a visit to the German Institute for Economic Research in Berlin, he co-authored a study of the labour supply effect of reforms on the low wage sector in a rationed labour market. André Decoster and Guy Van Camp used administrative tax unit data on the personal income tax payments for 2001 to simulate a number of flat tax scenarios. They focused on the distributional and revenue impact of the different scenarios, leaving out possible incentive effects. The current proposals for a Belgian flat tax (i.e. a flat rate around 25%, without any base broadening) would probably lead to unacceptably high revenue losses. Moreover, compared to the current personal income tax system, the introduction of a “pure” flat tax, consisting only of a flat rate and exemptions at the bottom, is likely to have a very regressive impact. One of the most important elements in lessening this regressive impact would be tax credits for replacement incomes. Erik Schokkaert continued his research on the equity aspects of different pension systems. Taxation and the housing market Bart Capéau, André Decoster and Kris De Swerdt modelled the length of stay of homeowners in their current dwellings. Bart Capéau proposed an estimation procedure to deal with 100% right-censored data in a duration model, also allowing, to some extent, for time variation in explanatory variables. They used this model to assess the impact of lower transaction taxes on the household’s average length of stay in the same dwelling and on the additional yearly number of transactions this brings about on the secondary market. André Decoster and Kris De Swerdt presented a methodology to estimate a hedonic house price index for the Belgian housing market. To illustrate its potential, the proposed methodology was applied to data from the Belgian household budget survey. The comparison of the hedonic index with the current Belgian practice of basing the index on average sales prices highlighted the potential divergence between the two approaches in describing yearly house price evolutions. The foundations of the welfare state and the reduction of poverty Tom Truyts continued his research on interpersonally interdependent preferences, focusing on positional consumption commodities and related cases in which the symbolic meaning of a commodity is an important motivation for consumption. He explored the consequences of this phenomenon for the design of redistributive policies. Blanca Zuluaga is interested in education and poverty. She analyzed the influence of education on each of the dimensions of poverty, including the monetary dimension. Using Colombian data, she showed that the direct effect of education on poverty goes beyond the mere indirect impact through wages and income. During his stay in Leuven, Matteo Migheli (visiting researcher) worked on two topics. First, he analyzed the individual exogenous factors affecting decisions to invest in social capital; for this he used data from the World Values Survey. Second, he carried out an experiment with students to measure the influence of their individual social capital on their behaviour in a trust game. Health insurance Erik Schokkaert, Guy Van Camp, Carine Van de Voorde and Charlotte Verhelle worked under a contract with RIZIV/INAMI to propose a formula for the risk-adjusted distribution of the health care budget among the Belgian mutualities (national health insurance companies) . In 2005, a number of quality checks were executed on the health insurance data of insured individuals. These data have been used to estimate an update of the risk adjustment formula for distributing government subsidies in the system of supplementary insurance for the self-employed. It would be very useful to integrate diagnostic information in the risk adjustment formula; the various methodological and empirical issues raised by such an integration have been investigated. Erik Schokkaert and Carine Van de Voorde analyzed the theoretical aspects of risk adjustment and risk selection on the health insurance market. Carine Van de Voorde has been involved in an international team which focused more specifically on the structure of the markets for supplementary health insurance and on the interaction between the mandatory and the supplementary systems. Erik Schokkaert and Carine Van de Voorde explored the possibilities of an econometric analysis of the growth of health expenditures over time through the analysis of one specific category: consultations and visits of general practitioners and specialists. The results clearly show the effects of changes in the institutional setting and in the copayments to be paid by the patients. It is also illustrated how simulation techniques can be used to analyze the consequences of specific policy measures. Erik Schokkaert and Carine Van de Voorde have been responsible for the health and health insurance modules in the Belgian part of the overall SHARE project. This European project aims at collecting detailed and internationally comparable panel data on the living conditions of the elderly population. Composite performance indicators Wim Moesen, Laurens Cherchye, Nicky Rogge and Tom Van Puyenbroeck explored the construction of composite performance indicators with endogenous weights. This non-uniform weighting method may be labelled as ‘benefit-of-the-doubt’ weighting. It involves linear optimization techniques which allow countries to emphasize and prioritize those aspects on which they perform relatively well. They showed how such a synthetic performance indicator may be instrumental within the framework of benchmarking the performance of nations. They applied this procedure to the dynamic performance of the EU Internal Market, thereby highlighting its capacity to disaggregate member states’ observed performance shifts into changes relative to benchmarks and performance changes of the benchmarks (i.e. catching up versus genuine progress). Their results indicate that the latter factor is more important in explaining the observed progress. Within the framework of the KEI Project (Knowledge Economy Indicators) of the European Commission, the method has also been applied to the composite Technology Achievement Index. Wim Moesen and Harry Bowen applied a similar approach to data from the World Economic Forum to assess the competitiveness of nations. The resulting Revealed Competitiveness Index is then compared with the Growth Competitiveness Index of the World Economic Forum which utilizes a set of predetermined uniform weights. A study of the rank reversals suggests that some countries are better served (for example the United States) than others by the actual fixed weighting scheme of the World Economic Forum. As a further step, the economic performance of the World Economic Forum was complemented with two other dimensions: governance (data from the World Bank) and environmental sustainability (data from the Yale Center for Environmental Law and Policy and the Center for International Earth Science Information). Public finance Together with Kristof De Witte, Wim Moesen investigated the budgetary outcomes and wealth position of the Belgian municipalities. Paul Van Rompuy focused on the coordination of fiscal policies in Belgium. Nonparametric techniques for analyzing choice behaviour and for efficiency analysis Laurens Cherchye worked further on the development of nonparametric techniques for efficiency analysis. With various co-authors he analyzed the implications of imposing the Law of One Price and the possibilities of measuring profit (in)efficiency. The theoretical ideas were applied in various contexts, including the research efficiency of economics departments of Dutch universities and (in a joint paper with Tom Van Puyenbroeck) the profit efficiency of different German farm types. An alternative approach, requiring only ordinal information, was elaborated in a paper with Frederic Vermeulen to evaluate the performance of Tour de France racing cyclists. Laurens Cherchye (together with Bram De Rock and Frederic Vermeulen) developed a non-parametric testing procedure for the general collective consumption model with public consumption and externalities inside the household. Their application uses data from the Russia Longitudinal Monitoring Survey (RLMS); the panel structure of this data set allows non-parametric testing of the behavioural models without relying on preference homogeneity assumptions across similar individuals. The general collective model cannot be rejected by the data, while other, restricted, versions of the general model, including the unitary alternative, are rejected.
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Copyright ©2001
Katholieke Universiteit Leuven Comments for the author: Kristof Bosmans Last change of this page: June 2, 2006 http://www.econ.kuleuven.be/ew/academic/econover/research/default.htm |
