AN NBER PUBLICATION ISSUE: No. 5, May 2001

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Private religious schools reduce teen sexual activity, arrests, and cocaine use. Contrary to popular belief, private religious schools do not achieve these results by enrolling better-behaved students. In the heated debate over the effectiveness of private schooling, most of the attention has focused on whether private schooling improves academic outcomes. In Sex, Drugs, and Catholic Schools: Private Schooling and Non-Market Adolescent Behaviors (NBER Working Paper No...

Research Summaries

Article
Although the cost of executive compensation has grown measurably in recent years, after adjusting for the riskiness of equity-based compensation, pay increases (measured in terms of executive value) have arguably been much more modest. Between 1992 and 1998, median CEO pay levels in S&P 500 industrial companies increased nearly three-fold, from less than $2 million to over $5 million. That increase largely resulted from a dramatic growth in stock option grants,...
Article
Adjusting in this way for the selection bias of firms that go bankrupt, the mean return on VC investments is 57 percent per year, still very large but less dramatic that the 700 percent mean before correcting for selection bias. Venture capital (VC) investments carry more risk than most investments in the broad public market and their returns are much more modest than commonly thought, according to a new paper by NBER Research Associate John Cochrane. He concludes...
Article
Many emerging economies lack the institutions required to manage the dramatic inflows and outflows of investment that have become a matter of routine in today's markets. If there is one aspect of a globalized, borderless economy that has the capacity to rankle everyone from street protestors in Prague to finance ministers in Santiago, it is the notion that investors and their money should be able to move around markets like ancient Bedouins and their camel, freely...

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