NBER Working Papers by Ping Wang

Part of the debate over the control of drug activity in cities is concerned with the effectiveness of implementing demand- versus supply-side drug policies. This paper is motivated by the relative lack of research providing formal economic underpinning for the implementation of either policy. We construct a simple model of drug activity, in which the drug price and the distribution of population in a community are determined according to a career choice rule and a predetermined drug demand. Three potential government objectives are considered. We find that both demand- and supply-side policies have theoretical support under different community conditions. While the demand-side policy discourages active drug sellers, the supply-side policy has an additional drug-dealing replacement effect o...

The main purpose of this research is to understand the patterns of consumption of addictive goods, their economic and welfare consequences for society and the long-run effect of tax policy in a dynamic general equilibrium model of rational addiction. In contrast to prior research, we allow individuals to make their consumption decisions simultaneous with savings and labor supply. When addictive goods have a stronger habit formation effect (an addiction effect'), individuals choose to save less due to the anticipated adverse health consequences of addiction (a detrimental health effect'). This is particularly important since total savings pins down future productivity in the economy. We also consider the role of peer influence in the choice of addiction and find that more peer pressure' ra...

We develop a tractable framework with a fully specified dynamic process of demographic and labor decisions over an individual female's life span to determine the timing of childbearing. Fertility affects women's behavior through three channels: its tradeoff with leisure, its interactions with human capital investment, and its cost in terms of lost market productivity. Instead of numerically solving a discrete-time version of the model, we propose an alternative solution technique that provides analytic, closed-form solutions for the continuous-time dynamic optimization problem with (discrete) time-line variables. The analytic results indicate that (i) increased impatience has an ambiguous effect on childbearing timing; (ii) the age at first birth rises at an increasing rate with the produc...

Alcohol abuse has important implications for the productivity of the US workforce. The lost earnings of workers suffering from alcohol problems have been estimated at $36.6 billion in 1990. After completing schooling, young workers face critical labor market choices with long-ranging consequences for future jobs and lifetime earnings, while many of them also drink alcohol to excess. In this paper, we provide evidence on whether the drinking choices of young adults also have long-ranging consequences for future jobs and lifetime earnings. In doing so we extend previous research on the productivity effects of alcohol to include non-wage job attributes as part of total employee compensation. The goal of this research is to establish benchmark empirical patterns describing relationships b...