AN NBER PUBLICATION ISSUE: No. 6, June 2014

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
...reservation wages decline at a modest rate over the unemployment spell... The pace at which unemployed workers adjust their reservation wage — the lowest wage they will accept at a new position — over a spell of unemployment is a potentially central determinant of whether, and how quickly, they find a job. Despite this, evidence on the behavior of reservation wages over the spell of unemployment remains scarce. It often relies on cross-sectional data, which may be...

Research Summaries

Article
...performance of a typical active mutual fund declines over time mostly because of the increasing scale of the fund industry. Financial economists and industry officials have long studied and debated the extent to which the performance of actively managed mutual funds is affected by their size and by the skills of their managers. In Scale and Skill in Active Management (NBER Working Paper No. 19891), Lubos Pastor, Robert Stambaugh, and Lucian Taylor find that the...
Article
Observable dimensions of high school quality explain approximately 20 percent of the variation in freshman GPA... To promote diversity in higher education, several states offer automatic admission to students who graduate at the top of their high school class. A new study, Can You Leave High School Behind? (NBER Working Paper No. 19842), exploits one such automatic admissions policy to study the effects of high school characteristics on college outcomes. The authors,...
Article
...a 10 percent decrease in TSPs in the year of birth is associated with a 1 percent increase in annual earnings at age 30. The 1970 Clean Air Act Amendments (CAAA) in the United States limited the maximum allowable concentration of airborne total suspended particulates (TSP). As a result, the Environmental Protection Agency designated counties, or more specifically, air regions, as having "nonattainment" status under the new regulations if the monitored TSP...
Article
...the EITC serves as an automatic stabilizer for married couples with children but not for households with a single parent and children... Subsidies to improve the welfare of low-income families in the United States increasingly take the form of transfers that are linked to employment. The Earned Income Tax Credit (EITC) is now the most important cash transfer program for lower income working families. In 2010, almost 20 percent of tax filers received the EITC, at a...
Article
...migrants tend to make social trust assessments that mainly reflect conditions in the country where they now live... Recent studies find that individuals' social norms, as evidenced by their opinions and behavior, as well as social trust, can be transmitted from one generation to the next within the same cultural setting. Many observers believe that this transmission process is based on parental socialization during childhood. However, there is also evidence that...

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