13 June 2013

Juvenile Incarceration, Human Capital, and Future Crime

Based on data on more than 35,000 juvenile offenders followed over a 10-year period, Anna Aizer and Joe Doyle find that juvenile incarceration results in large decreases in the likelihood of completing high school and in large increases in the likelihood of incarceration as an adult. These results are in stark contrast to the small effects typically found for adult incarceration, but are consistent with the larger impacts of policies that are aimed at adolescents.

12 June 2013

The Effect of Medicare Advantage on Hospital Admissions and Mortality

Medicare Advantage (MA) is a privately-administered alternative to the government-run Medicare health insurance program. MA pays more to health plans operating in larger Metropolitan Statistical Area counties, and that difference in payment rates creates a greater incentive for such plans to increase the generosity of their benefits, thus enrolling more beneficiaries in MA. By comparing data from counties just above and just below the population cutoff, Christopher Afendulis, Michael Chernew, and Daniel Kessler find that the expansion of MA reduces beneficiaries' rates of hospitalization and mortality.

11 June 2013

The Wellbeing of the Elderly who Live with Children

Angus Deaton and Arthur Stone find that elderly Americans who live in households with people under age 18 are less content and more stressed, worried, and angry than older Americans who do not live with younger people. In parts of the world where fertility rates are higher and it is more common for the elderly to live in multigenerational households with people under age 18, the elderly are less unhappy than those in similar circumstances in the United States. It seems that in those countries, the elderly -- like their children -- experience both positive and negative emotions from time spent with the younger generation.

10 June 2013

The Cyclical Behavior of the Price-Cost Markup

Christopher Nekarda and Valerie Ramey find that markups -- the amount by which product prices exceed marginal cost -- are generally pro-cyclical or acyclical: that is, they hit troughs (lows) during recessions and reach peaks (highs) in the middle of expansions. Both monetary shocks and government spending shocks cause markups and output to move together and in the same direction.

7 June 2013

How Pro-Poor Growth Affects the Demand for Energy

Paul Gertler, Orie Shelef, Catherine Wolfram, and Alan Fuchs analyze the impact of increases in household income on energy use by looking at data for Mexico after the introduction of a conditional cash transfer program. They find that this transfer program had a large effect on the purchase of energy-using assets. When the researchers apply the lessons from this household analysis to aggregate energy forecasts and use country-level panel data, they conclude that existing forecasts could grossly underestimate future energy use in the developing world.

6 June 2013

The Importance of Patents to UK Firms

Bronwyn Hall, Christian Helmers, Mark Rogers, and Vania Sena note that in the United Kingdom only about 4 percent of innovating firms use patents because they don't consider patents as important as informal ways of protecting their inventions. Most of these innovating firms are small, many of their innovations are new to the firm but not to the market, and many of the sectors in which they operate are not active in patenting. The researchers do not find that patenting is linked to subsequent employment growth in the innovation sector.

5 June 2013

Does the Price of Charitable Giving Matter?

How does the price of giving - that is, the amount an individual must give for one dollar to accrue to the charitable activity itself - affect donor behavior? Jonathan Meer analyzes data from, an online platform that allows public school teachers to choose charitable projects for which they might raise funds, and which includes some data on the price of giving. He finds that the higher the price of giving, the less likely it is that a project will be funded. Increased competition between charities also reduces the likelihood of a project being funded.

4 June 2013

CEO Pay Tracks Firm Value

Xavier Gabaix, Augustin Landier, and Julien Sauvagnat study CEO compensation over the period 2004-2011 and find that it closely tracked average firm value. In the crisis years between 2007 and 2009, average total firm value decreased by 17 percent and CEO pay decreased by 28 percent. During the recovery in 2009-2011, firm value rebounded by 19 percent and CEO pay increased by 22 percent.

3 June 2013

Intergenerational Effects of Preschool

James Heckman and Lakshmi Raut conclude that a tax financed, free preschool program for poor children will result in higher average earnings and in higher levels of schooling completed. Analyzing data from the 1979 National Longitudinal Survey of Youth, they find that investing in preschool boosts children's cognitive and non-cognitive skills.

31 May 2013

Extended Unemployment Benefits and Unemployment Spells

Hank Farber and Rob Valletta find that providing extended unemployment insurance (UI) benefits, as many U.S. states did in 2009-12 and in the milder economic downturn in the early 2000s, resulted in a slight reduction in the number of workers leaving unemployment and a small increase in the average length of unemployment spells. They conclude that this is primarily the result of fewer exits from the labor force, not a decrease in the job finding rate.
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