9 August 2013

Untangling the Labor Market Effects of Trade and Technology

David Autor, David Dorn, and Gordon Hanson study how trade and technology affected employment patterns in U.S. local labor markets between 1990 and 2007. They find that the effect of trade competition has grown over time along with an increase in imports, especially from China. Labor markets affected by competition with Chinese imports have experienced significant reductions in employment, particularly in manufacturing and among workers with a college education. Over time, the effect of technology seems to have shifted away from the automation of production activities in the manufacturing sector towards computerization of information-processing tasks in the service sector. Employment in labor markets that are susceptible to computerization has shifted away from routine clerical and production occupations to more highly skilled managerial or professional occupations, and to lower skilled manual and service occupations.

8 August 2013

State-controlled Banks and the Effectiveness of Monetary Policy

Randall Morck, Deniz Yavuz, and Bernard Yeung assemble data on the largest banks in each of 40 economies for the period 2001 through 2011 and then construct a bank governance indicator variable so that they can classify each bank as state-controlled or private sector. They find that "state bank" lending is significantly more responsive to monetary policy than private bank lending. In countries where large banks are more likely to be state controlled, monetary policy is closely linked to growth in aggregate loans and growth in aggregate fixed capital investment, especially during periods of monetary expansion and slow GDP growth.

7 August 2013

Sales Mechanisms in Online Markets

Liran Einav, Chiara Farronato, Jonathan Levin, and Neel Sundaresan observe that the returns to online sellers who use auctions have diminished over time, and that there are now fewer auctions and more posted prices in online sales. They estimate that a shift in buyer demand away from auctions has been more important than a general narrowing of seller margins in explaining this shift over time to posted prices.

6 August 2013

Immigrants Help to Equilibrate Local Labor Markets

Brian Cadena and Brian Kovak find that low-skilled Mexican-born immigrants are more likely to move out of a region with declining economic prospects than are their native-born neighbors. Their out-migration reduces the excess supply of labor, and therefore reduces the wage drop for low-skill native workers when labor demand declines.

5 August 2013

Can Investment in Developing Nations Raise Violence?

Eli Berman, Joseph Felter, Ethan Kapstein, and Erin Troland study the links between investment and political violence in various regions of the Philippines. They find that the number of industrial building permits in a region, a signal of new investment, is positively related to both rebel- and government-initiated violence. They interpret this as a manifestation of "tax capture," a tendency of governments to expand their coercive enforcement activities when the revenue stakes increase.

2 August 2013

Off-Balance Sheet Federal Liabilities

James Hamilton estimates the value of federal implicit and explicit guarantees for housing support, loan guarantees, deposit insurance, Federal Reserve actions, and government trust funds. He concludes that these liabilities totaled $70 trillion in 2012, roughly six times the value of on-balance sheet federal debt.

1 August 2013

Economic Effects of Mandatory Auditor Rotation

Joseph Gerakos and Chad Syverson estimate the demand for audit services among publicly traded firms. They use their estimates to analyze the welfare effects of mandatory audit firm rotation, which can prevent firms from using their most-preferred auditor. They find a welfare loss of between $2.4 and $3.6 billion from requiring auditor rotation every ten years.

31 July 2013

Disability Rates are Falling

David Cutler, Kaushik Ghosh, and Mary Beth Landrum study disability rates using twenty years of data from the Medicare Current Beneficiary Survey. The data includes death dates, so for those who die during the sample period, it is possible to calculate their remaining years of life at earlier dates. The authors find that for individuals with a given number of years of remaining life, disability rates have declined in the past two decades, although disease rates have not.

30 July 2013

Market Evidence on Inflation Expectations

Matthias Fleckenstein, Francis Longstaff, and Hanno Lustig analyze the prices of inflation swaps and options to estimate the distribution of inflation expectations that is priced into these contracts. They find that expected inflation averages 2.5 percent over the next thirty years, but that the market assigns substantial probability to deflation over this period.

29 July 2013

Transmission of "Welfare Culture" Across Generations

Gordon Dahl, Andreas Kostol, and Magne Mogstad examine the relationship between a parent's receipt of disability insurance (DI) and the use of the same program by adult children. They use Norwegian data and focus on variation in parents' DI receipt that is due to variation in the DI system, rather than in the parents' conditions. Five years after a parent becomes a DI recipient, the probability that their adult child is also a DI recipient is six percentage points higher than that for adult children who do not have a parent receiving DI.
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