NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

24 December 2014

Do Funds Earn Higher Returns When They Trade More?

Active mutual funds perform better after trading more, according to research by Lubos Pastor, Robert F. Stambaugh, and Lucian A. Taylor. This relationship between a fund's turnover and its subsequent benchmark-adjusted return is especially strong for small, high-fee funds. These results are consistent with high-fee funds having greater skill identifying time-varying profit opportunities and with small funds being more able to exploit such opportunities.

23 December 2014

Employment Cyclicality and Wage Levels

High-paying firms grow more quickly in booms and shrink more quickly in busts, while employment growth at low-paying firms is less cyclically sensitive, according to data analysis by Lisa B. Kahn and Erika McEntarfer. Workers at the lowest paying firms are 20 percent less likely to move to a higher-quality firm during an economic downturn than during an upswing.

22 December 2014

Local Media and Electoral Sanctioning of Mexican Politicians

Studying the effect of local media on political accountability in Mexico, Horacio A. Larreguy, John Marshall, and James M. Snyder, Jr. determine that voters punish the party of malfeasant mayors only in electoral precincts covered by local stations. An additional local outlet reporting corruption reduces the incumbent party’s vote by 1 percentage point; diverting funds from projects to benefit the poor reduces the vote by around two percentage points.

19 December 2014

Unemployment in the Great Recession: A Comparison of Germany, Canada and the United States

Unemployment rates did not change substantially in Germany, increased and remained relatively high in the United States, and increased moderately in Canada during and after the Great Recession of 2008-09. Florian Hoffmann and Thomas Lemieux offer two explanations for the weaker performance of the U.S. labor market: large employment swings in U.S. housing construction and a much greater drop in U.S. GDP compared with Germany.

18 December 2014

Are Public Sector Jobs Recession-Proof? Were They Ever?

In both recessionary and non-recessionary periods, the probability of job loss is higher for private sector workers than for public employees, Jason L. Kopelman and Harvey S. Rosen find. The probability of displacement for private sector workers increased during both the Great Recession and earlier recessions studied, while in the public sector job loss rates sometimes increased and sometimes decreased, and varied among federal, state, and local governments.

17 December 2014

How Does Tax Progressivity and Household Heterogeneity Affect Laffer Curves?

Hans A. Holter, Dirk Krueger, and Serhiy Stepanchuk characterize the labor income tax Laffer curve under the current choice of progressivity of the labor income tax code as well as under varying progressivities. They find that more-progressive labor income taxes significantly reduce tax revenues.

16 December 2014

Does Reading during the Summer Build Reading Skills?

Reading skills correlate strongly with the amount of reading students do outside of school, but there has been a lack of experimental testing of whether this relationship is causal -- perhaps students who are good readers also like to read. Jonathan Guryan, James S. Kim, and David M. Quinn report results from a randomized evaluation of a summer reading program that demonstrate that encouraging students to read more books generates increases in reading comprehension.

15 December 2014

Household Finance over the Life-Cycle: What does Education Contribute?

Education affects household finance mainly through increased average income, according to a study by Russell Cooper and Guozhong Zhu. They find that higher mean income translates into a higher rate of asset-market participation, higher stock share in wealth, a higher adjustment rate and a higher wealth-to-income ratio. They also find that more-educated groups discount the future less.

12 December 2014

Homophily, Group Size, and the Diffusion of Political Information in Social Networks: Evidence from Twitter

Social networks in general, and social media in particular, appear to increase differences in exposure to information between majority and minority groups and may also increase exposure to like-minded information for all groups, according to an analysis by Yosh Halberstam and Brian Knight. They examine nearly 500,000 communications in a social network of politically engaged Twitter users during the 2012 U.S. elections.

11 December 2014

Borrowing Costs are Higher After CEO Transitions

Uncertainty about management affects firms’ borrowing costs and financial policies, Yihui Pan, Tracy Yue Wang, and Michael S. Weisbach find. In a sample of S&P 1500 firms between 1987 and 2010, CDS spreads, loan spreads, and bond yield spreads all decline over the first three years of CEO tenure, holding other factors constant. The decline occurs regardless of the reason for the prior CEO’s departure.
 
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