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AN NBER PUBLICATION ISSUE: No. 10, October 2003

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Teacher attendance did not improve, homework assignments did not increase, and pedagogy did not change. There is, however, evidence that teachers increased effort to raise short-run test scores by conducting more test preparation sessions. The test score gains evaporated after the end of the incentive program. Giving merit pay increases to teachers in U.S. schools with improved student scores on standardized tests has been promoted enthusiastically as one solution to...

Research Summaries

Article
The evergreening of bank loans for 'cosmetic purposes' was widespread, with banks more likely to increase loans to firms with weaker financial health. In Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan (NBER Working Paper No. 9643, commissioned for an NBER Project on Japan and originally presented at a conference in Tokyo), co-authors Joe Peek and Eric Rosengren investigate what they consider an important factor in the long-running...
Article
Their central estimates suggest that for each 10 percent that health insurance premiums were tax subsidized, take-up went up by only 0.2 percent, a very small reaction. In recent years, politicians have expressed concern with the growth over the past two decades in the number of people not covered by health insurance. About 41 million non-elderly Americans are without health insurance coverage, one 2002 study notes, despite efforts in the past 15 years to expand the...
Article
Layers of intervening management are being eliminated, and ... the CEO is coming into direct contact with more managers in the company. U.S. corporate hierarchies have become flatter over the past two decades, according to new research from the NBER by Raghuram Rajan and Julie Wulf. Chief Executive Officers (CEOs) are increasing the number of managers who report directly to the top while there has been a reduction in the ranks of middle managers. As organizations...
Article
Foreign-owned and subcontracting manufacturing firms in poor nations tend to pay higher wages than local firms, and ... export-oriented firms tend to pay higher wages. Do multinational firms exploit workers in poor nations? In The Effects of Multinational Production on Wages and Working Conditions in Developing Countries (NBER Working Paper No. 9669, originally presented at the 2002 NBER International Seminar on International Trade), authors Drusilla Brown, Alan...
Article
Lengthening the school year by one day would lead to a decrease of 0.29 property crimes and an increase of 0.25 violent crimes in a city with a population of 120,000. Juvenile crime affects millions of people in the United States each year, imposing substantial costs on society. In 1997, 2.8 million people under the age of 18 were arrested, accounting for approximately 20 percent of all arrests. Incarceration of a juvenile is associated with a 10-30 percent decrease...

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