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AN NBER PUBLICATION ISSUE: No. 10, October 2004

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
If the goal is to get more employees to open 401(k) plans, then employees should not be required to actively initiate participation. Rather, they should be enrolled automatically (while retaining the option to drop out). Employers can greatly increase both participation and investment in 401(k) retirement accounts by automatically enrolling employees in the plans, boosting the default contribution rate and the employer match, and allowing all departing employees to...

Research Summaries

Article
Part of the New Economy bubble might have arisen because investors overestimated the appropriability of innovations in that sector. With the sharp rise in productivity growth over the last decade, economists have been curious about the extent to which the fruits of higher productivity are captured by innovating firms. Is the rapid technological change in the New Economy - with double-digit rates of productivity growth in computers and a phenomenal increase in new...
Article
Parental preference affects divorce, child custody, marriage, shotgun marriage when the sex of the child is known before birth, child support payments, and the decision of parents not to have any more children. In Asia, the preference of many parents for sons over daughters has led to some 80 million girls "missing" from what should be the normal balance between men and women in a society, perhaps because they have been aborted, neglected, or directly killed. Yet...
Article
Capital income taxes seem to be passed on to workers and consumers through lower capital accumulation or higher price markups, or some combination thereof. In What Do Aggregate Consumption Euler Equations Say About the Capital Income Tax Burden? (NBER Working Paper No. 10262), author Casey Mulligan asks what effect U.S. capital income taxes have on consumption growth and on capital markets. He looks first at data from 1947 to 1997 on capital income tax revenue per...
Article
When de facto policies allow police to keep the assets they seize, they seize more. When local governments offset the value of those seizures in the budget allocations, the police seize less. Federal drug-related civil forfeiture law dates back to the Comprehensive Drug Abuse Prevention and Control Act of 1970. Since then, the authority of law enforcement agencies to seize assets has expanded greatly. This practice, known as drug-related civil asset forfeiture, has...
Article
Stock prices are undervalued when inflation is high, and can become overvalued when inflation falls. When examining the links between the U.S. economy and the stock market, many investment professionals rely on what is known as the "Fed model." The model assumes that bonds and equities compete for space in investment portfolios; if bond yields increase, then stock yields must also rise in order to remain competitive. Thus, the Fed model relates the yield on stocks (as...

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