16 May 2013

Isolated Capital Cities and Accountability

Filipe Campante and Quoc-Anh Do find that more isolated U.S. state capitals are associated with greater levels of political corruption. Specifically, they show that the spatial distribution of a state's population relative to that of its capital affects certain accountability mechanisms, including newspaper coverage, voter knowledge and information, and voter turnout. They also find that isolated capitals are associated with more money raised and spent in state-level campaigns.

15 May 2013

The Relative Incomes of Husbands and Wives

Marianne Bertrand, Jessica Pan, and Emir Kamenica analyze U.S. Census data for 1970-2010 and find that a couple is less likely to get married if the woman's income exceeds the man's. Once married, the wife is less likely be in the labor force, and if she is working tends to earn less than would be predicted based on education and other attributes if her potential income exceeds her husband's. They also find that couples where the wife earns more than the husband are less satisfied with their marriages and are more likely to divorce.

14 May 2013

College Coaching

Scott Carrell and Bruce Sacerdote ask whether mentoring together with cash incentives provided to high school students late in their senior year can have a meaningful impact on their decision to attend college and whether they will stay in school once admitted. Based on an experiment conducted in New Hampshire, the researchers find evidence that women respond to these interventions, although not to the cash bonuses alone. They do not find any effects on men, and they speculate that this may be due to differences in the returns to education and training between men and women.

13 May 2013

Exchanging Delayed Social Security Benefits for Lump Sums

Jingjing Chai, Raimond Maurer, Olivia Mitchell, and Ralph Rogalla find that allowing people to receive a lump sum as a payment for delayed retirement, rather than an addition to their lifetime Social Security benefits, might boost their average retirement age by between one and a half and two years.

10 May 2013

Credit Lines Act as Monitored Liquidity Insurance

How do banks price lines of credit, and how do firms choose between obtaining a line of credit and holding cash in order to provide liquidity? Viral Acharya, Heitor Almeida, Filippo Ippolito, and Ander Perez suggest that banks may charge more to extend credit lines to firms with substantial liquidity risk, and they test this theory by studying the 2005 episode when bonds issued by General Motors and Ford were downgraded. That downgrade affected corporate bond prices in a number of industries and raised the liquidity risk among firms that relied on publicly-traded bonds for their financing. The researchers find that in the aftermath of this shock, firms shifted away from using lines of credit and toward holding cash, because the shock raised the cost of credit lines.

9 May 2013

The Impact of Chicago’s Small High School Initiative

The Chicago Public School district created 22 new small high schools in Chicago between 2002 and 2006. Lisa Barrow, Amy Claessens, and Diane Schanzenbach find that students attending those schools were more likely to graduate, but they do not find any effects on test scores. To avoid the challenges of simply comparing students who choose to attend a given school with others who do not, this study considers otherwise similar students who live different distances from a small high school, and therefore are more or less likely to attend one.

8 May 2013

The Effects of Welfare Reform on Women’s Crime

The welfare reform legislation enacted in the 1990s dramatically increased employment among women who had been at risk for relying on cash assistance, according to research by Hope Corman, Dhaval Dave, and Nancy Reichman. They find that welfare reform decreased female property crime arrests by 4–5 percent, but did not affect arrests for other types of crimes. The change in crime appears to have been stronger in states with lower welfare benefits.

7 May 2013

Migration and Wage Effects of Taxing Top Earners

In Denmark, a tax scheme introduced in 1991 allows new immigrants with high earnings to be taxed at a preferential flat rate for a period of three years. Henrik Kleven, Camille Landais, Emmanuel Saez, and Esben Schultz find that this scheme has led to a doubling of the number of highly paid foreigners living in Denmark relative to the number of slightly lower paid, and therefore ineligible, foreigners. However, they do not find that this influx of high-skilled foreigners has affected the earnings of highly paid natives.

6 May 2013

The Impact of City Contracting Set-Asides on Black Self-Employment and Employment

Aaron Chatterji, Kenneth Chay, and Robert Fairlie ask how programs reserving a proportion of government contracts for minority-owned businesses (set-asides) that many U.S. cities put in place during the 1980s affected employment and self-employment among African-Americans. They find that the black-white gap in business ownership rates fell 3 percentage points after the introduction of these programs. Blacks' gains in employment were concentrated in industries heavily affected by set-asides, and the programs mainly benefited those who were better educated.

3 May 2013

CEO Ability and Stock Return Volatility

Analyzing nearly 2,000 CEO turnovers in more than 1500 public U.S. firms between 1992 and 2006, Yihui Pan, Tracy Yue Wang, and Michael Weisbach find a strong relationship between CEO tenure and the firm’s stock return volatility. Volatility increases around the time of CEO turnover, and subsequently decreases. The researchers estimate that at the time of CEO turnover, uncertainty about management quality contributes to about 25 percent of the total stock return volatility.
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