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The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
Reminding shoppers of the tax at the time of purchase made for more cautious consumers, suggesting that most of them do not normally take into account the sales tax on such products. When analyzing tax policies, economists traditionally have assumed that individuals take maximum advantage of (that is, optimize fully with respect to) the incentives created by those policies. In Salience and Taxation: Theory and Evidence (NBER Working Paper No. 13330), Raj Chetty, Adam...

Research Summaries

Simple supply and demand specifications do a remarkable job explaining the long-run evolution of the college wage premium. The wage premium for workers in occupations requiring high levels of education was exceptionally high in 2005. But this is not the first time that the gap has been so wide. In 1915, for example, the premium for a college education was also large. In the decades in between, the United States saw the earnings gap between the more educated and the...
By isolating composition, return, and timing effects, the researchers determine that essentially no positive differential exists for portfolio securities. That is to say, the positive and negative differentials that do appear from year to year balance themselves out, so that the average differential is virtually zero. Conventional wisdom holds that the United States consistently earns more on its foreign investments than foreigners earn on their U.S. investments -...
Parents who received the information sheets increased their participation in the choice program by 23 percent relative to those who did not get the sheets. The sheets also increased the likelihood that parents would bid for choice schools with higher average test scores. Research on school choice suggests that parental choices have relatively large effects on outcomes, and that lower-income families attach less importance to academic quality. The question is whether...

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