13 November 2012

Housing Dynamics over the Business Cycle

Over the course of the business cycle, fluctuations in residential investment precede fluctuations in GDP in the United States and Canada, while these two economic variables move together in other developed economies. Fluctuations in nonresidential investment are the opposite, either following changes in GDP or occurring simultaneously with them. Finn Kydland, Peter Rupert, and Roman Sustek conclude that changes in interest rates in general and mortgage rates in particular help to explain these differences.

12 November 2012

Recent Tax Rate Changes by Skill and Marital Status

Casey Mulligan analyzes the labor market effects over time of recent changes in safety net programs. Because people from the middle and above-middle parts of the skill distribution can become eligible overnight for safety net programs such as unemployment insurance and SNAP (formerly known as food stamps) merely by becoming unemployed for a period of time, these safety net program rules even affect the incentives for skilled people to seek and retain work. Mulligan finds that wide swaths of the skill distribution saw their marginal tax rates increase by more than 5 percentage points between 2007 and 2009, and this increase was most dramatic for unmarried household heads.

9 November 2012

Uncertainty Shocks and Effective Demand

Using the Chicago Board Options Exchange Volatility Index (VIX) -- a forward-looking indicator of the expected volatility of the Standard and Poor's 500 Stock Index -- as a measure of aggregate uncertainty, Susanto Basu and Brent Bundick study how uncertainty affects aggregate economic activity. They conclude that increased uncertainty about the future may have played a role in worsening the Great Recession. The dramatic increase in uncertainty during the autumn of 2008 was one of the factors that contributed to the large and persistent decline in output starting at that time.

8 November 2012

Self-Help Groups and Peer Pressure as Savings Commitment Devices

Felipe Kast, Stephan Meier, and Dina Pomeranz conducted an experiment in Chile with 2,700 micro-entrepreneurs who were given the opportunity to open a formal savings account and then randomly assigned to one of three groups. In the control group, individuals received only the basic savings account; the "Self-Help Peer Group Treatment" gave participants the option to announce their savings commitment publicly, and then to be monitored in weekly meetings; a "High Interest Rate" group was offered a 5 percent real interest rate (instead of the 0.3 percent in the basic account). The researchers find that participants assigned to the Peer Group Treatment make deposits into their savings account 3.5 times more often, and their average savings balance is almost twice that of the control group. In a second related experiment in which participants were assigned to one of two types of weekly feedback text messages or to a control group, the results show that holding people accountable through the weekly feedback messages increases savings almost as much as self-help peer groups, even without any physical meetings.

7 November 2012

Export Networks and Cross-Border Mergers and Acquisitions

Bruce Blonigen, Lionel Fontagné, Nicholas Sly, and Farid Toubal find strong evidence from M&A activity in France over the period 1999-2006 that foreign multinationals seek firms with strong prior export behavior and recent productivity losses. Two seemingly opposing incentives simultaneously motivate global M&A activity: on one hand, in a world where trade costs vary across locations, the formation of export networks creates cost synergies between firms in different locations. Firms with high initial levels of productivity are better able to establish these costly export networks, which makes them more attractive targets for takeover by multinationals, especially those located far from the domestic market. On the other hand, firm productivities change over time, and when a domestic firm's performance suffers, it may be more profitable to transfer control of its assets to new management. Thus, productivity losses among target firms provide an opportunity for multinational acquirers to obtain desired assets at relatively lower costs.

6 November 2012

Pharmacy, a Family-Friendly Occupation

The profession of "pharmacist" is probably the most egalitarian of all U.S. professions today. More women than men now work as pharmacists; they are relatively well paid; and they experience only a small gender earnings gap and less earnings dispersion than in many other occupations. Using surveys of pharmacists for 2000, 2004, and 2009 and data from the American Community Surveys and the Current Population Surveys, economists Claudia Goldin and Larry Katz explore why the substantial entrance of women into this profession was associated with an increase in their earnings relative to male pharmacists. Their results suggest that the growth of large national pharmacy chains and hospitals, and the related decline in independent pharmacies, were keys to the profession becoming more family-and female-friendly.

5 November 2012

Smoking, Obesity, and Life Expectancy

Sam Preston, Andrew Stokes, Neil Mehta, and Bochen Cao project the combined effect of declining smoking and increasing obesity on U.S. mortality between 2010 and 2040. They conclude that for men, the reductions in smoking will have larger effects on mortality throughout the period than the rise in obesity: male life expectancy at age 40 is predicted to increase by almost one year because of these changes. Among women, though, the two effects largely offset one another, and a gain of only about three months of life is expected by 2040.

2 November 2012

Land and House Price Measurement in China

China is virtually unique globally in that transactions prices of vacant land are observed regularly there. When Yongheng Deng, Joe Gyourko, and Jing Wu construct land price indexes for 35 major Chinese cities, they find that average land values have skyrocketed in many markets, not just those near the coast, over the last nine years. Their estimates show double-digit compound average annual growth in real, constant-quality land values, with the period 2009-10 seeing even larger price increases. The amount of land coming to market for sale also has been increasing sharply in recent years.

1 November 2012

Duration Dependence and Labor Market Conditions

Kory Kroft, Fabian Lange, and Matthew Notowidigdo conducted an experiment in which fictitious resumes, which differed only in whether a job applicant was unemployed and for how long, were sent to real job postings in 100 U.S. cities. They found that the likelihood of receiving a callback for an interview decreased significantly with the length of a fictitious worker's unemployment spell, especially during the first eight months. That effect -- called duration dependence -- is stronger when the labor market is tighter. These results suggest that employers use the length of an unemployment spell as a signal of productivity, but that signal is less informative in weak labor markets.

31 October 2012

The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing

Using data from the 1972-1993 Annual Survey of Manufactures, researchers Michael Greenstone, John List, and Chad Syverson estimate the effects of air quality regulations on the total factor productivity (TFP) of manufacturing plants. They find that stricter air quality regulations are associated with a decline in TFP of roughly 2.6 percent: ozone regulations have particularly large negative effects on productivity, but carbon monoxide regulations appear to increase measured TFP, especially among refineries. After correcting for other influences -- including price increases, output declines, and sample selection of plants that survived over the entire period -- they estimate a 4.8 percent decline in TFP for polluting plants in regulated areas. In economic terms, this corresponds to an annual cost of roughly $21 billion, or nearly 9 percent of manufacturing sector profits in this period.
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us