18 December 2012

The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing

The Golden Quadrilateral (GQ) highway project upgraded the quality and width of 5,846 km of roads in India and sought to improve the connection of four major cities: Delhi, Mumbai, Chennai, and Kolkata. Ejaz Ghani, Arti Goswami, and Bill Kerr find that manufacturing firms located 0-10 km from GQ experienced increases in plant productivity, which was not the case for plants located 10-50 km from the road. They also show that the GQ project led to a stronger sorting of land-intensive industries from nodal districts to non-nodal districts located on the GQ network, and that it helped to spread economic activity to moderate-density districts and intermediate cities.

17 December 2012

The Rise of West German Wage Inequality

Over the past 25 years the structure of wages in West Germany has become more unequal. David Card, Jörg Heining, and Patrick Kline ask whether this change is attributable to greater variation in the "portable" person-specific component of wages, or to greater variation in the wage component that is associated with the firm for which a particular employee works. Their data reveal that both components have contributed to growing inequality: the gap between consistently high- and low-wage workers has grown, but the gap between good and bad jobs has also grown.

14 December 2012

The Employment-Population Reversal in the 2000s

Robert Moffitt finds that the employment-to-population ratio among those aged 16-64 declined from 74 percent in 2000 to less than 72 percent in 2007, an historic reversal from its upward trend over the prior 30 years. The decline was greater among younger and less educated men and women, and was especially pronounced among unmarried and childless women. Moffitt finds that about half of the change for men can be explained by declining wage rates and changes in non-labor income and family structure, but the decline among women is more difficult to explain.

13 December 2012

Affirmative Action and University Fit

Proposition 209 banned the use of racial preferences in admissions at California's public colleges and was followed by a 4.4 percent increase in minorities' graduation rates. Peter Arcidiacono, Esteban Aucejo, Patrick Coate, and Joseph Hotz find that Proposition 209 was associated with better matches between students and campuses, which explain about 20 percent of the overall graduation rate increase. They estimate that changes in the selectivity of enrolled students explain between 34 and 50 percent of the increase, while schools doing more to help retain students and see them graduate can explain between 30 and 46 percent.

12 December 2012

Understanding Resistance to Property Taxes

The property tax is the least popular tax in the United States and the only major tax whose revenues have declined as a share of income, perhaps because it is so salient. Marika Cabral and Caroline Hoxby show that in areas in which the property tax is less salient -- because a larger proportion of property owners are having taxes paid from escrow accounts, rather than being directly involved in the process of writing checks -- property taxes are higher, but property tax revolts are less likely to occur.

11 December 2012

Ethnic Inequality

Alberto Alesina, Stelios Michalopoulos, and Elias Papaioannou combine linguistic maps on the spatial distribution of groups within countries with satellite images of light density at night to construct estimates of inequality in well-being (and/or public goods provision) across ethnic lines for a large number of countries. They find that ethnic inequality is weakly correlated with the standard measures of income inequality and is strongly negatively correlated with per capita GDP across countries. When they analyze within-country, across-district variation in 17 Sub-Saharan countries, along with household survey data, they find that those from the same ethnic group report worse living conditions, lower levels of formal education, and inadequate access to basic public goods when they reside in districts characterized with a higher degree of ethnic group inequality.

10 December 2012

Do Parental Investments in College Affect Subsequent Cash Transfers?

Using unique data from a supplement to the Health and Retirement Study, Steven Haider and Kathleen McGarry find that parents appear to distribute college-based transfers relatively unequally across their children, typically contributing more to the education of older children than to their younger siblings. They find no evidence that parents use cash transfers later in life to offset these differences in college support.

7 December 2012

The Trade Effects of NAFTA

Since NAFTA took effect on January 1, 1994, trade between NAFTA members has increased considerably. Lorenzo Caliendo and Fernando Parro find that Mexico had the largest increase in exports and imports, followed by the United States and Canada. They estimate that 93 percent of the increase in Mexico's total trade-over-GDP ratio was a consequence of tariff reductions attributed to NAFTA.

6 December 2012

Analyzing the Long-Run Decline in Interstate Migration

Between 1991 and 2011, gross interstate migration in the United States declined by about 50 percent. Greg Kaplan and Sam Schulhofer-Wohl suggest that this is because of a combination of two factors: 1) a reduction in the geographic specificity of returns to different types of skills -- that is, it now matters less where your job is than what your job is; and 2) an increase in workers' information about how much they will enjoy living in alternative locations -- it's easier to use information technology and less expensive to travel, so workers can learn about other locations before they move there.

5 December 2012

Retirement Pay and Officer Retention

The U.S. military retirement system underwent substantial changes in 1986 with the passage of the Military Retirement Reform Act, and again in 2000 when key provisions of that bill were repealed. Jeff Smith and Jim West study rates of officer retention under more and less generous pension benefit regimes brought about by those changes and find that reductions in benefits significantly reduce the probability of officers remaining in the military. They estimate that a 20-percent reduction in the generosity of retirement benefits has roughly the same effect on the probability of remaining on active duty as a 0.27 percentage point reduction in the unemployment rate, or a roughly 2 percent increase in the GDP growth rate.
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