Public Policy and the Welfare State
Michele Boldrin
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Intellectual Property

Social Security

European Regional Policies

For a slightly more mordacious approach to public policy discussion.........


Intellectual Property
People's Daily Interview on IP Link

Property Rights and Intellectual Monopoly (joint with David K.Levine). Frequently updated!
This links you to an interconnected series of pages debating innovation, IP, and related policy issues. Most of these pages "live" on David's server ... Maybe one day or another I catch up with him and start updating them myself ...

Intellectual Property (joint with David K. Levine). NEW!
Intellectual property refers to patents, copyrights, trademarks and other forms of ownership of ideas. It results in monopoly power that has significant consequences for discouraging as well as encouraging innovation and growth – the discouragement effect is especially important when ideas are used as building blocks for other ideas. The economics literature has examined the need for intellectual property; optimal systems of intellectual property; the optimal duration of intellectual property; how innovation takes place in the absence of intellectual property; and the rent-seeking behavior induced by intellectual property.
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Intellectual Property, International Trade and Economic Development (joint with David K. Levine). NEW!

This is a brief discussion, which appeared in chinese in The People's Daily in January 2005, of why the current TRIPS agreement, sponsored by the WTO and by western countries (USA and EU especially) within the WTO, is a very BAD agreement. It is bad for developing countries, as it forces them to give up competing with the advanced ones in goods that are protected by IP legislation, and for the people of the advanced countries as well, as it forces them to accept monopoly pricing, higher prices and less innovation. Basically, TRIPS is nothing but a huge income transfer (or subsidy) program from the citizens of the world to the monopolies protected by IP law.
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Why Napster is Right! (joint with David K. Levine).

Our original statement that IP protection is bad for society, and that Napster and P2P software are good for economic progress and not just for freedom of expression.

Retroactive Copyright Extension (joint with David K. Levine), NEW!

Where it is explained why the economic (and logical, indeed) foundations of Landes W.M. and R.Posner, The Economic Structure of Intellectual Property Law, Harvard U.P. 2003, are, to say the least, shaky. To be more specific, why the "economic structure" they allegedlly provide to contemporary intellectual property law would not pass the test of any economic theory prelim in any self-respected Economics Ph.D. program. An abdridged version of this paper has appeared in The Economists' Voice.
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Social Security

Assessing the Efficiency of Public Education and Pensions (with Ana Montes), mimeo, 2004. NEW!

Theory says that in an OLG context intergenerational transfer agreements either private or carried out via government intervention, are efficient if the induce equality between certain implicit rates of return. We apply this theory to the case of public education and pensions, where public education is a loan from middle age to young and, a period later, pensions are the repayment of this loan, plus interest, from middle age to old. We use micro and macro data from Spain to estimate how far actual arrangements are from the normative goal. When demographic stationarity is assumed, the results are surprisingly good. We also quantify the impact of undergoing demographic change on the implicit rates of return. The results are unsurprisingly bad. Our estimates point to dramatic changes in future generational rate of returns. Nevertheless, and contrary to earlier predictions in the generational accounting literature, our findings suggest that future generations are not necessarily going to be worse o than current ones.
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The Intergenerational State. Education and Pensions (with Ana Montes), NEW!
First version May 1997, this version appeared in the The Review of Economic Studies, 2005.


When credit markets to finance investment in the human capital of young people are missing, the competitive equilibrium allocation is inefficient. When generations overlap, this failure can be mitigated by properly designed social institutions such as Public Education and Public Pensions. We show that, when established jointly, they implement an intergenerational transfer scheme supporting the complete market allocation. Through the public financing of education, the young ``borrow'' from the middle age to invest in human capital. When employed, they ``pay back'' their debt via a social security tax, the proceedings of which finance pension payments to the now elderly lenders. We consider other, allocationally equivalent, financing schemes. In all cases, when the complete market allocation is achieved a certain equality should be observed among implicit rates of return and the market rate of return. We test this prediction by using micro and macro data from Spain. The results are surprisingly good. We also use the model to quantify the impact of undergoing demographic change on the implicit rates of return. The results point, unsurprisingly, to dramatic changes in generational rates of return. Contrary towhat predicted by earlier studies in the generational accounting tradition, our findings suggest that future generations are not necessarily going to be worse off than current ones.
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Micro Modeling of Retirement Behavior in Spain (with S. Jimenez and F. Peracchi), in J. Gruber and D. Wise (eds), Social Security Programs and Retirement Around the World. Micro-Estimation. The University of Chicago Press for the NBER, 2004.
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Evaluating Spanish Pension Expenditure Under Alternatve Reform Scenarios (With S. Jimenez), 2003. Forthcoming in J. Gruber and D. Wise (eds), Social Security Programs and Retirement Around the World. Fiscal Implications. The University of Chicago Press for the NBER, 2005. NEW!

In this paper we evaluate the quantitative impact that a number of alternative reform scenarios may have on the total expenditure for public pensions in Spain. We consider five scenarios, the first three are common also to the other countries considered in this volume, while the second two correspond to specific reforms adopted by the Spanish government, respectively, in 1997 and 2002. Our quantitative findings can be summarized in two sentences. For all the reforms considered, the financial impact of the mechanical effect is order of magnitudes larger than the behavioral impact. For the two Spanish reforms, we find once again that their effect on the outstanding liability of the Spanish Social Security System is negligible: neither the mechanical nor the behavioral effects amount to much for the 1997 reform, and amount to very little for the 2002 amendment.
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Assessing the Wellbeing of the Spanish Elderly (With S. Jimenez), 2005. NEW!

In this paper we use a variety of data sources, both micro and macro, time series, cross section, and panel data to provide an empirical evaluation of the current level of economic well being of the Spanish elderly, and of its determinants. We focus, in particular on the role played by the pension system.
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European Regional Policies

"Structural Policies and Growth," in A. Deardoff (ed.) The Past, Present, and Future of the European Union, Blackwell Publ. Co., for the International Economic Association, 2004. NEW!
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"Regional Policies and E.U. Enlargement," (with F. Canova) in B. Funck and L. Pizzati (eds.) European Integration, Regional Policy, and Growth, The World Bank, Washington, D.C., 2003.
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More valuable than our paper is Carole Garnier's discussion of it, which you can find here with (interspersed) some informal comments of mine. In 2002-2003, when the WB Conference for which this paper was written took place, Carole Garnier was Director for Regional and Structural Policies at the EC in Bruxelles. My comments are in red, the statements of Ms. Garnier that I find most interesting, are outlined in green.

Inequality and Convergence: Reconsidering European Regional Policies (with Fabio Canova) Economic Policy, 32 (2001), 207-253.



We discuss European Regional Policies arguing they make little sense in light of available economic theory and evidence. Using the Eurostat "Regio" data set, covering the 211 NUTS2 Regions of the EU15 over the period 1980-1996, we look for evidence of either a divergence or a convergence process in per capita income, labor productivity and unemployment rates. We find no evidence of either trend for regional per capita incomes. Exception made for the well understood Irish miracle and smaller ones in the Italian North-East and the Lisbon metropolitan area in Portugal, regional per capita income tends to grow at relatively common rates across Europe. We find a very tenuous evidence of convergence in labor productivity. Dispersion in unemployment rates is very large and varies widely over time, still also in this case we cannot find any evidence of a clear trend. We supplement this results by looking more carefully at the role that human capital, R&D, initial and geographical conditions play in determining growth rates. We find no evidence supporting the models of agglomeration and increasing returns upon which EU policies are constructed. We also study the evolution of capital/labor ratios and its impact upon measurable Total Factor Productivity. Also in this case, increasing returns and externality based theory are strongly rejected as all their predictions fail. We conclude our analysis by arguing that the current EU15 regional policies are not supported by a strong case for economic intervention but are, instead the outcome of redistributional and political motives.



November 11, 2006