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AN NBER PUBLICATION ISSUE: No. 12, December 2002

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
The reduction in marginal tax rates implied by the 2002 tax legislation may not decrease revenues as much as the 'static' methods used by government agencies to estimate revenue losses suggest. Washington is still debating the politics, economics, and merits of the substantial tax cut initiated by President George W. Bush and passed by Congress, with amendments, in 2001. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) reduces ordinary income tax burdens...

Research Summaries

Article
A key factor determining whether crisis-country firms benefit from devaluations is whether the cost advantage from cheaper labor outweighs the disadvantage from more expensive capital. During the late 1990s, the global economy witnessed a string of major currency devaluations and financial crises in Asia, South Africa, Russia, and Brazil. In Cheap Labor Meets Costly Capital: The Impact of Devaluations on Commodity Firms (NBER Working Paper No. 9053), author Kristin...
Article
More union involvement in wage setting significantly decreases the employment rate of young and older individuals relative to the prime-aged group. In 1973, unemployment in most European countries was modest, ranging between 2.0 and 3.2 percent, compared to 4.8 percent for the United States. By 1995, the unemployment situation for the European countries had changed dramatically, rising to an average of 10.7 percent. But in the United States, the unemployment rate rose...
Article
...For those black veterans more likely to be limited to the South in their collegiate choices, the G.I. Bill exacerbated rather than narrowed the economic and educational differences between blacks and whites. The unprecedented support for the education of returning World War II veterans provided by the G.I. Bill was notably race-neutral in its statutory terms. More than 1 million black men had served in the military during World War II and these men shared in...
Article
In poor countries, a move from the 25th to the 75th percentile of access to credit is associated with a 4.2 percentage point decrease in child labor. Child labor is a troubling phenomenon and the focus of an intense political and policy debate, with proposals ranging from legislative bans and schooling subsidies in poor countries to trade sanctions against countries where child labor exists. Now an NBER Working Paper by Rajeev Dehejia and Roberta Gatti draws attention...
Article
A 10 percent increase in unemployment insurance benefits is associated with about a 10 percent decline in work time. Social insurance programs have a more pronounced impact on labor supply decisions than do changes in wages and taxes, according to a new NBER Working Paper by Alan Krueger and Bruce Meyer. In Labor Supply Effects of Social Insurance (NBER Working Paper No. 9014) Krueger and Meyer survey the empirical evidence on the labor supply effects of social...

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