Archive
Experimental Evidence on the Effects of Home Computers on Academic Achievement among Schoolchildren
Experimental Evidence on the Effects of Home Computers on Academic Achievement among Schoolchildren
Source: National Bureau of Economic Research (via University of California, Santa Cruz)
Computers are an important part of modern education, yet many schoolchildren lack access to a computer at home. We test whether this impedes educational achievement by conducting the largest-ever field experiment that randomly provides free home computers to students. Although computer ownership and use increased substantially, we find no effects on any educational outcomes, including grades, test scores, credits earned, attendance and disciplinary actions. Our estimates are precise enough to rule out even modestly-sized positive or negative impacts. The estimated null effect is consistent with survey evidence showing no change in homework time or other "intermediate" inputs in education.
The great reversal in the demand for skill and cognitive tasks
The great reversal in the demand for skill and cognitive tasks (PDF)
Source: National Bureau of Economic Research
What explains the current low rate of employment in the US? While there has substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labour market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many re- searchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low- skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a ow. We show how such a model can explain the trends in the data that we present, and o ers a novel interpretation of the current employment situation in the US.
See; Freakonomics: It’s Crowded at the Top: A New Marketplace Podcast
Estimating Racial Price Differentials in the Housing Market
Estimating Racial Price Differentials in the Housing Market (PDF)
Source: National Bureau of Economic Research
This paper uses unique panel data covering over two million repeat-sales housing transactions from four metropolitan areas to test for the presence of racial price differentials in the housing market. Drawing on the strengths of these data, our research design controls carefully for unobserved differences in the quality of neighborhoods and the homes purchased by buyers of each race. We find that black and Hispanic homebuyers pay premiums of about three percent on average across the four cities, differences that are not explained by variation in buyer income, wealth or access to credit. Further, the estimated premiums do not vary significantly with the racial composition of the neighborhood; nor, strikingly, do they vary with the race of the seller. This latter finding suggests that racial prejudice on the part of sellers is not the primary explanation for the robust premiums we uncover. The results have implications for the evolution of racial differences in wealth and home ownership and the persistence of residential segregation.
Preventing Youth Violence and Dropout: A Randomized Field Experiment
Preventing Youth Violence and Dropout: A Randomized Field Experiment
Source: National Bureau of Economic Research
Improving the long-term life outcomes of disadvantaged youth remains a top policy priority in the United States, although identifying successful interventions for adolescents – particularly males – has proven challenging. This paper reports results from a large randomized controlled trial of an intervention for disadvantaged male youth grades 7-10 from high-crime Chicago neighborhoods. The intervention was delivered by two local non-profits and included regular interactions with a pro-social adult, after-school programming, and – perhaps the most novel ingredient – in-school programming designed to reduce common judgment and decision-making problems related to automatic behavior and biased beliefs, or what psychologists call cognitive behavioral therapy (CBT). We randomly assigned 2,740 youth to programming or to a control group; about half those offered programming participated, with the average participant attending 13 sessions. Program participation reduced violent-crime arrests during the program year by 8.1 per 100 youth (a 44 percent reduction). It also generated sustained gains in schooling outcomes equal to 0.14 standard deviations during the program year and 0.19 standard deviations during the follow-up year, which we estimate could lead to higher graduation rates of 3-10 percentage points (7-22 percent). Depending on how one monetizes the social costs of crime, the benefit-cost ratio may be as high as 30:1 from reductions in criminal activity alone.
Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment
Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment (PDF)
Source: National Bureau of Economic Research
Internet advertising has been the fastest growing advertising channel in recent years with paid advertisements on search platforms (e.g., Google and Bing) comprising the bulk of this revenue. We present results from a series of large-scale field experiments done at eBay that are designed to detect the causal effectiveness of paid search advertisements. Results show that brand-keyword ads have no short-term benefits, and that returns from all other keywords are a fraction of conventional estimates. We find that new and infrequent users are positively influenced by ads but that existing loyal users whose purchasing behavior is not influenced by paid search account for most of the advertising expenses, resulting in average returns that are negative. We discuss substitution to other channels and implications for advertising decisions in large firms.
Effects of Bicycle Helmet Laws on Children’s Injuries
Effects of Bicycle Helmet Laws on Children’s Injuries (PDF)
Source: National Bureau of Economic Research
Cycling is popular among children, but results in thousands of injuries annually. In recent years, many states and localities have enacted bicycle helmet laws. We examine direct and indirect effects of these laws on injuries. Using hospital-level panel data and triple difference models, we find helmet laws are associated with reductions in bicycle-related head injuries among children. However, laws also are associated with decreases in non-head cycling injuries, as well as increases in head injuries from other wheeled sports. Thus, the observed reduction in bicycle-related head injuries may be due to reductions in bicycle riding induced by the laws.
Simplifying Tax Incentives and Aid for College: Progress and Prospects
Simplifying Tax Incentives and Aid for College: Progress and Prospects (PDF)
Source: National Bureau of Economic Research
The application for federal student aid is longer than the tax returns filled out by the majority of US households. Research suggests that complexity in the aid process undermines its e ectiveness in inducing more students into college. In 2008, an article in this journal showed that most of the data items in the aid application did not a ect the distribution of aid, and that the much shorter set of variables available in IRS data could be used to closely replicate the existing distribution of aid. This added momentum to a period of discussion and activity around simpli cation in Congress and the US Department of Education. In this article, we provide a ve-year retrospective of what’s changed in the aid application process, what hasn’t, and the possibilities for future reform. While there has been some streamlining in the process of applying for aid, it has fallen far short of its goals. Two dozen questions were removed from the aid application and a dozen added, reducing the number of questions from 127 to 116. Funding for college has also been complicated by the growth of a parallel system for aid: the tax system. A massive expansion in federal tax incentives for college, in particular the American Opportunity Tax Credit, has led to millions of households completing paperwork for both the IRS and the US Department of Education in order to qualify for college funding.
Dimensions of Progress: Poverty from the Great Society to the Great Recession
Dimensions of Progress: Poverty from the Great Society to the Great Recession (PDF)
Source: National Bureau of Economic Research
Few measures of U.S. economic performance receive greater attention and scrutiny than the poverty rate. The official poverty rate in 2010 was more than 2 percentage points higher than the rate in 1970 despite a doubling of real GDP per capita and trillions of dollars spent on antipoverty programs. This paper considers the long run patterns of improved measures of poverty, examining the extent of material deprivation in the United States from the early 1960s to 2010. Our results contradict previous studies that have argued that poverty has shown little improvement over time, or that anti-poverty efforts have been ineffective. We show that trends for consumption based measures of poverty and broader income based measures differ considerably from the official measure. We emphasize consumption based measures because they are theoretically a better measure of well-being and because evidence suggests consumption is better reported than income by families with few resources. A consumption based poverty measure that adjusts for bias in price indices declines by 12.5 percentage points between 1972 and 2010. In addition, the composition of the consumption poor is very different from that of the income poor with the consumption poor being noticeably worse off. Over the past few decades, married parent families with children have fared less well while the aged have done better than income data indicate. Our analyses of potential explanations for these patterns indicate that some policy changes have been effective at reducing poverty, but changes in demographics are less important. Changes in tax policy explain a substantial part of the decline in income poverty particularly for families with children. Other than social security, cash and noncash government transfer programs have only a small impact on changes in poverty. Measurement error in income is likely to explain some of the most noticeable differences between changes in income and consumption poverty, but saving and dissaving do not appear to play a large role for most demographic groups.
Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and Ahead Cohorts
Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and Ahead Cohorts (PDF)
Many analysts have considered whether households approaching retirement age have accumulated enough assets to be well prepared for retirement. In this paper, we shift from studying household finances at the start of the retirement period, an ex ante measure of retirement preparation, to studying the asset holdings of households in their last years of life. The analysis is based on Health and Retirement Study with special attention to Asset and Health Dynamics Among the Oldest Old (AHEAD) cohort that was first surveyed in 1993. We consider the level of assets that households hold in the last survey wave preceding their death. We study how assets at the end of life depend on three family status pathways prior to death— (1) original one-person households in 1993, (2) persons in two-person household in 1993 with a deceased spouse in the last year observed, and (3) persons in two-person households in 1993 with the spouse alive when last observed. We find that a substantial fraction of persons die with virtually no financial assets—46.1 percent with less than $10,000—and many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support. In addition this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s. Yet with such low asset levels, they would have little capacity to pay for unanticipated needs such as health expenses or other financial shocks or to pay for entertainment, travel, or other activities. This raises a question of whether the replacement ratio is a sufficient statistic for the “adequacy” of retirement preparation.
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform (PDF)
Source: National Bureau of Economic Research (via Wharton School)
We model the labor market impact of the three key provisions of the recent Massachusetts and national \mandate-based” health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating di erential for employer-sponsored health insurance (ESHI) | the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of \sucient statistics” that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We nd that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating di erential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
Demand Spillovers, Combative Advertising, and Celebrity Endorsements
Demand Spillovers, Combative Advertising, and Celebrity Endorsements (PDF)
Source: Northwestern University and NBER (Garthwaite)
This paper studies the economic effects of endorsements. In the publishing sector, endorsements are found to be a business stealing form of advertising that raises title level sales without increasing the market size. The endorsements decrease aggregate adult fiction sales; likely as a result of the endorsed books being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found for non-endorsed titles by endorsed authors. These spillover demand estimates demonstrate a broad range of benefits from advertising for firms operating in a multiproduct brand setting.
Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service
Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service
Source: National Bureau of Economic Research
We study a recent recruitment drive for public sector positions in Mexico. Different salaries were announced randomly across recruitment sites, and job offers were subsequently randomized. Screening relied on exams designed to measure applicants’ intellectual ability, personality, and motivation. This allows the first experimental estimates of (i) the role of financial incentives in attracting a larger and more qualified pool of applicants, (ii) the elasticity of the labor supply facing the employer, and (iii) the role of job attributes (distance, attractiveness of the municipal environment) in helping fill vacancies, as well as the role of wages in helping fill positions in less attractive municipalities. A theoretical model guides each stage of the empirical inquiry. We find that higher wages attract more able applicants as measured by their IQ, personality, and proclivity towards public sector work – i.e., we find no evidence of adverse selection effects on motivation; higher wage offers also increased acceptance rates, implying a labor supply elasticity of around 2 and some degree of monopsony power. Distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities.
+ Full Paper (PDF)
Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment
Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment (PDF)
Source: Federal Reserve Bank of San Francisco/NBER
We examine the dynamic macroeconomic effects of public infrastructure investment both theoretically and empirically, using a novel data set we compiled on various highway spending measures. Relying on the institutional design of federal grant distributions among states, we construct a measure of government highway spending shocks that captures revisions in expectations about future government investment. We find that shocks to federal highway funding has a positive effect on local GDP both on impact and after 6 to 8 years, with the impact effect coming from shocks during (local) recessions. However, we find no permanent effect (as of 10 years after the shock). Similar impulse responses are found in a number of other macroeconomic variables. The transmission channel for these responses appears to be through initial funding leading to building, over several years, of public highway capital which then temporarily boosts private sector productivity and local demand. To help interpret these findings, we develop an open economy New Keynesian model with productive public capital in which regions are part of a monetary and fiscal union. We show that the presence of productive public capital in this model can yield impulse responses with the same qualitative pattern that we find empirically.
Fiscal Policy in a Depressed Economy
This paper examines logic and evidence bearing on the efficacy of fiscal policy in severely depressed economies. In normal times central banks offset the effects of fiscal policy. This keeps the policy-relevant multiplier near zero. It leaves no space for expansionary fiscal policy as a stabilization policy tool. But when interest rates are constrained by the zero nominal lower bound, discretionary fiscal policy can be highly efficacious as a stabilization policy tool. Indeed, under what we defend as plausible assumptions of temporary expansionary fiscal policies may well reduce long-run debt-financing burdens. These conclusions derive from even modest assumptions about impact multiplier, hysteresis effects, the negative impact of expansionary fiscal policy on real interest rates, and from recognition of the impact of interest rates below growth rates on the evolution of debt-GDP ratios. While our analysis underscores the importance of governments pursuing sustainable long run fiscal policies, it suggests the need for considerable caution regarding the pace of fiscal consolidation in depressed economies where interest rates are constrained by a zero lower bound.
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform
Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform (PDF)
Source: National Bureau of Economic Research (via Amanda E. Kowalski, Department of Economics, Yale University)
We model the labor market impact of the three key provisions of the recent Massachusetts and national “mandate-based” health reforms: individual and employer mandates and expansions in publicly-subsidized coverage. Using our model, we characterize the compensating di fferential for employer-sponsored health insurance (ESHI) — the causal change in wages associated with gaining ESHI. We also characterize the welfare impact of the labor market distortion induced by health reform. We show that the welfare impact depends on a small number of “Sufficient statistics” that can be recovered from labor market outcomes. Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We fi nd that jobs with ESHI pay wages that are lower by an average of $6,058 annually, indicating that the compensating di fferential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.
The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood
The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in AdulthoodSource: National Bureau of Economic Research (via Harvard University)
From Executive Summary (PDF):
Overall, our study shows that great teachers create great value and that test score impacts are helpful in identifying such teachers. However, more work is needed to determine the best way to use VA for policy. For example, using VA in teacher evaluations could induce counterproductive responses that make VA a poorer measure of teacher quality, such as teaching to the test or cheating. There will be much to learn about these issues from school districts that start using VA to evaluate teachers. Nevertheless, it is clear that improving the quality of teaching – whether using value-added or other tools – is likely to have large economic and social returns.
Aggregate Impacts of a Gift of Time
How would people spend additional time if confronted by permanent declines in market work? We examine the impacts of cuts in legislated standard hours that raised employers’ overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we show that these shocks were effective—per-capita hours of market work declined discretely. The economy-wide drops in market work were reallocated solely to leisure and personal maintenance. In the absence of changing household technology a permanent time gift leads to no increase in time spent in household production by the average individual.
How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?
This paper uses asset and labor market data from the Health and Retirement Study (HRS) to investigate how the recent “Great Recession” has affected the wealth and retirement of those in the population who were just approaching retirement age at the beginning of the recession, a potentially vulnerable segment of the working age population. The retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their wealth would have increased over these four years. Members of older cohorts accumulated an additional 5 percent of wealth over the same age span. To be sure, a part of their accumulation was the result of the upside of the housing bubble. The wealth holdings of poorer households were least affected by the recession. Relative losses are greatest for those who initially had the highest wealthwhen the recession began.
The adverse labor market effects of the Great Recession are more modest. Although there is an increase in unemployment, that increase is not mirrored in the rate of flow out of full-time work or partial retirement. All told, the retirement behavior of the Early Boomer cohort looks similar, at least so far, to the behavior observed for members of older cohorts at comparable ages.
Very few in the population nearing retirement age have experienced multiple adverse events. Although most of the loss in wealth is due to a fall in the net value of housing, because very few in this cohort have found their housing wealth under water, and housing is the one asset this cohort is not likely to cash in for another decade or two, there is time for their losses in housing wealth to recover.
The Impact of Voluntary Youth Service on Future Outcomes: Evidence from Teach For America
The Impact of Voluntary Youth Service on Future Outcomes: Evidence from Teach For America (PDF)
Source: Harvard University and National Bureau of Economic Research
Nearly one million American youth have participated in service programs such as Peace Corps and Teach For America. This paper provides the first causal estimate of the impact of service programs on those who serve, using data from a web-based survey of former Teach For America applicants. We estimate the effect of voluntary youth service using a sharp discontinuity in the Teach For America application process. Participating in Teach For America increases racial tolerance, makes individuals more optimistic about the life chances of poor children, and makes them more likely to work in education. We argue that these facts are broadly consistent with the “Contact Hypothesis,” which states that, under appropriate conditions, interpersonal contact can reduce prejudice.
Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition
Gauging the Generosity of Employer-Sponsored Insurance: Differences Between Households With and Without a Chronic Condition (PDF)
Source: National Bureau of Economic Research
We develop an empirical method to assess the generosity of employer-sponsored insurance across groups within the U.S. population. A key feature of this method is its simplicity – it only requires data on out-of-pocket (OOP) health care spending and total health care spending and does not require detailed knowledge of health insurance benefit design. We apply our method to assess whether households with a chronically ill member have more or less generous insurance relative to households with no chronically ill members. We find that the chronically ill have less generous insurance coverage than the non-chronically ill. Additional analyses suggest that the reason for this less generous coverage is not that households with a chronically ill member are in different, less generous plans, on average. Rather, households with a chronically ill member have higher spending on certain types of medical services (e.g., pharmaceutical drugs) that are covered less generously by insurance. Given recent work on value-based insurance design and coinsurance as an obstacle to medication adherence, our findings suggest that the current design of health plans may put the health and financial well-being of the chronically ill at risk.
