MetaTOC stay on top of your field, easily

Contemporary Economic Policy

Impact factor: 0.671 5-Year impact factor: 0.673 Print ISSN: 1074-3529 Online ISSN: 1465-7287 Publisher: Wiley Blackwell (Blackwell Publishing)

Subjects: Economics, Public Administration

Most recent papers:

  • Does Fiscal Decentralization Affect Infrastructure Quality? An Examination Of U.S. States.
    Monica Escaleras, Peter T. Calcagno.
    Contemporary Economic Policy. October 06, 2017
    A transportation network is vital to an economy. However, the U.S. highway infrastructure suffers from insufficient maintenance creating inefficiencies such as increased travel times and increase in accidents. The means to fund the infrastructure and their maintenance is a point of debate. In this paper, we examine the role of political institutions and decision‐making on the quality of highway infrastructure by focusing on the role of fiscal decentralization. Using generalized linear model estimation on state data from 1992 to 2012, we find evidence that fiscal decentralization improves infrastructure quality. These results are robust to the choice of control variables and method of estimation. (JEL D73, H42, H72)
    October 06, 2017   doi: 10.1111/coep.12258   open full text
  • An Examination Of Veteran Health Access Around The Medicare Eligibility Age.
    Amanda C. Stype.
    Contemporary Economic Policy. October 06, 2017
    Recent news reports suggest that veterans' health care may be inadequate. We use Health and Retirement Study data to compare utilization rates for preventative care by male veterans and nonveterans before and after the near‐universal health coverage at Medicare eligibility. Larger increases in utilization rates for preventative services upon reaching Medicare eligibility at age 65 are associated with less health care adequacy before Medicare eligibility. Results suggest that health care adequacy for male veterans between the ages of 56 and 64 is at least as good as that of nonveterans and may be better. (JEL I14, J14)
    October 06, 2017   doi: 10.1111/coep.12259   open full text
  • Small Business Borrowing And Peer‐To‐Peer Lending: Evidence From Lending Club.
    Adam Nowak, Amanda Ross, Christopher Yencha.
    Contemporary Economic Policy. September 28, 2017
    We investigate the ability of small business borrowers to signal to investors their credit worthiness through the use of text descriptions in the peer‐to‐peer lending market. Specifically, we examine the relationship between the loan description written by a borrower and whether or not the project is funded by investors. Using textual analysis, we find that small business loan descriptions can be used to predict the likelihood that the loan will be funded. We also find that an index, created from a textual analysis of the words used in the loan description, can forecast the performance of the loan, specifically whether or not the loan defaults. This index has the strongest impact when we focus on borrowers with low FICO scores, suggesting that for these individuals the description can signal information that standard measures used for lending purposes cannot. Overall, it appears as though investors are making investment decisions based on proper and relevant signals given by the borrowers through the loan description. (JEL D47, D53, D82, D83, G14, G21)
    September 28, 2017   doi: 10.1111/coep.12252   open full text
  • Social Security Dependent Benefits, Net Payroll Tax, And Married Women's Labor Supply.
    Hee‐Seung Yang.
    Contemporary Economic Policy. August 18, 2017
    This paper examines how Social Security dependent benefits impact the labor supply of married women aged 25–54. Specifically, I investigate whether the decrease in the rate of return to women's work discourages them from participating in the labor force by simulating expected net payroll tax rates and dependent benefits. Dependent benefits may reduce the net return to women's work, as they usually pay the full payroll tax without receiving marginal benefits for additional earnings if they claim benefits based on their husbands' earnings records. The results show that high net payroll tax rates reduce married women's work incentives, particularly those near retirement age. (JEL H24, H55, J22)
    August 18, 2017   doi: 10.1111/coep.12250   open full text
  • Do State Employment Eligibility Verification Laws Affect Job Turnover?
    Pia M. Orrenius, Madeline Zavodny, Emily Gutierrez.
    Contemporary Economic Policy. August 11, 2017
    State laws requiring employers to verify workers' employment eligibility may reduce employment and earnings among unauthorized workers and make it difficult for them to switch jobs. Using data from the 2005–2014 Quarterly Workforce Indicators, we find evidence of a reduction in employment and job turnover among Hispanics as a whole in states that require all employers to verify employment eligibility. These adverse effects become larger as the share of likely unauthorized Hispanic workers falls. The drop in job turnover may be due to the laws trapping some Hispanic workers in their jobs. There is little effect on employment or job turnover among non‐Hispanic whites or blacks. There is no effect on average pay for all groups of workers. (JEL J15, J61, J68)
    August 11, 2017   doi: 10.1111/coep.12251   open full text
  • Social Animal House: The Economic And Academic Consequences Of Fraternity Membership.
    Jack Mara, Lewis Davis, Stephen Schmidt.
    Contemporary Economic Policy. August 10, 2017
    We exploit changes in the residential and social environment on campus to identify the economic and academic consequences of fraternity membership at a small Northeastern college. Our estimates suggest that these consequences are large, with fraternity membership lowering student grade point average by approximately 0.25 points on the traditional 4‐point scale, but raising future income by approximately 36%, for those students whose decision about membership is affected by changes in the environment. These results suggest that fraternity membership causally produces large gains in social capital, which more than outweigh its negative effects on human capital for potential members. Alcohol‐related behavior does not explain much of the effects of fraternity membership on either the human capital or social capital effects. These findings suggest that college administrators face significant trade‐offs when crafting policies related to Greek life on campus. (JEL I23, J24, I12)
    August 10, 2017   doi: 10.1111/coep.12249   open full text
  • Class Tracks And Education Outcomes: Evidence From A Chinese University.
    Qiang Feng, Ming Li, Guangrong Ma.
    Contemporary Economic Policy. August 10, 2017
    This article investigates the effect of being assigned to different class tracks on education outcomes in higher education. We use administrative data from a Chinese university where students are assigned to two tracks of English education. Students in the high achieving track enjoy exposure to better peers, but receive less instruction time before taking a national English test. A regression discontinuity design establishes evidence that being assigned to the high achieving track has a negligible effect. Our analysis shows that the null impact is due to the offsetting effects of instruction time and peers. (JEL I21, I23)
    August 10, 2017   doi: 10.1111/coep.12248   open full text
  • Happy People Are Less Likely To Be Unemployed: Psychological Evidence From Panel Data.
    Dusanee Kesavayuth, Vasileios Zikos.
    Contemporary Economic Policy. July 25, 2017
    There is a large literature showing that unemployment reduces people's well‐being. Yet little is known about the reverse possibility, namely that well‐being itself may influence unemployment propensity. Understanding the potentials of human well‐being in relation to unemployment is important as many developed countries are currently facing high unemployment rates. As well‐being is likely to be endogenous, we use British panel data and implement Lewbel's novel empirical approach for identification. We show that higher well‐being implies a negative causal effect on the probability of being unemployed. The result holds for two very different well‐being measures: life satisfaction and a 12‐item scale of mental health. As such, it provides new empirical evidence on the causal link between well‐being and unemployment propensity. (JEL D03, I31)
    July 25, 2017   doi: 10.1111/coep.12244   open full text
  • Examining Regulatory Capture: Evidence From The Nhl.
    Gregory DeAngelo, Adam Nowak, Imke Reimers.
    Contemporary Economic Policy. July 21, 2017
    Regulatory capture has garnered significant attention, but poses a difficult empirical exercise since most relationships between regulators and regulated parties occur behind closed doors. In this research, we overcome this problem by analyzing an environment where the behavior of both the regulator and regulated parties are publicly available. Specifically, we utilize data from the National Hockey League (NHL) to examine the impact of general experience as a referee as well as experience refereeing a particular team on the assignation of penalties. We find that gaining general experience as a referee significantly reduces the number of penalties that a referee assigns. However, as a referee gains experience refereeing a specific team, they significantly reduce the number of penalties assessed to this team relative to teams that they have less experience refereeing, confirming that regulatory capture is observed among referees and teams in the NHL. (JEL G18, L51, K42)
    July 21, 2017   doi: 10.1111/coep.12240   open full text
  • Is The Revenue Allocation Scheme Of Formula One Motor Racing A Case For European Competition Policy?
    Oliver Budzinski, Anika Müller‐Kock.
    Contemporary Economic Policy. July 21, 2017
    Recent allegations from participants of the FIA Formula One World Championship (F1) suggest that its authorities violate European competition law in two ways. First, they allegedly abuse market power by forcing unfavorable contracts on media revenue allocation upon teams as a whole and on smaller teams in particular (vertical allocation of media revenue). Second, they allegedly form a cartel with selected teams to the detriment of smaller teams by providing unjustified extra payments to these teams (horizontal allocation of media revenues). In doing so, the cartel members allegedly secure supracompetitive rents from the authorities and cement an unfair competitive advantage over the outsider teams. Employing concentration measures from empirical economics, we present an assessment of whether the current antitrust allegations against F1 may be considered valid or not. We show that the allocation scheme employed in F1 considerably differs from those in other professional sports championships. We find the empirical picture to be consistent with an anticompetitive interpretation of F1 media revenue structures and policies. We conclude that there is merit in initiating an in‐depth antitrust investigation of Formula One motor racing. (JEL K21, L12, L40, L83, Z20)
    July 21, 2017   doi: 10.1111/coep.12247   open full text
  • Drivers Of Payment Patterns At The Point Of Sale: Stable Or Not?
    Carin van der Cruijsen, Mirjam Plooij.
    Contemporary Economic Policy. July 21, 2017
    This research shows that it is key to have up‐to‐date information on payment behavior per type of point of sale (POS) and on how this behavior is driven by sociodemographic factors and perceived payment instrument attributes. Based on 2004 and 2014 data of the Netherlands, we find substantial shifts in the drivers of payment behavior. The sociodemographic factors behind the adoption of the credit card and debit card have changed, especially for the latter payment card. In addition, there are substantial shifts in the effects of sociodemographic factors and perceived relative payment attributes on which payment instrument consumers most often use. Shifts in payment behavior depend on the type of POS. Overall, we find that safety has become more important for payment behavior. The extent to which payment behavior depends on user‐friendliness and speed has somewhat decreased. (JEL C25, D12, E42)
    July 21, 2017   doi: 10.1111/coep.12245   open full text
  • Umbrella Damages: Toward A Coherent Antitrust Policy.
    Roger D. Blair, Christine Piette Durrance.
    Contemporary Economic Policy. July 21, 2017
    Price‐fixing cartels usually do not involve all members of an industry. To the extent that the nonconspiring industry members set their prices under the price umbrella of the cartel, the customers of the nonconspiring firms suffer overcharges just like customers of the conspiring firms. Whether these so‐called umbrella plaintiffs have standing to sue for antitrust damages is an unresolved policy question, because the Supreme Court has not spoken on “umbrella damages.” In this article, we identify the judicial concerns regarding umbrella damage claims, which can be traced to Mid‐West Paper and Petroleum Products Antitrust Litigation. These decisions raise concerns that the fact of injury is conjectural and the measurement of the damages is speculative. We first review the divided judicial treatment of standing for umbrella plaintiffs. Next, we describe the economics of umbrella pricing, which reveals that umbrella claims are not inherently conjectural. We then examine the econometric analysis necessary to estimate damages, demonstrating that umbrella damage estimates are not inherently speculative. We also examine some difficulties that exist in damage estimation generally and for umbrella plaintiffs in particular. Finally, we argue that granting standing to umbrella plaintiffs is consistent with the goals of antitrust policy. (JEL L1, L4, K2)
    July 21, 2017   doi: 10.1111/coep.12246   open full text
  • It's About Time: Effects Of The Affordable Care Act Dependent Coverage Mandate On Time Use.
    Gregory Colman, Dhaval Dave.
    Contemporary Economic Policy. July 20, 2017
    We examine how the Affordable Care Act's dependent coverage mandate (DCM) affected young adults' time allocation. Exploiting more accurate measures from the American Time Use Surveys, we find that the DCM reduced labor supply. The question then arises, what have these adults done with the extra time? Estimates suggest a reduction in job‐lock, as well as in the duration of the average doctor's visit, including time spent waiting and receiving care. The latter effect is consistent with substitution from emergency‐department utilization toward more routine care. Estimates suggest that the extra time has gone into socializing, and into educational and job‐search activities. (JEL I1, J2, H0)
    July 20, 2017   doi: 10.1111/coep.12242   open full text
  • Bank Competition And Financial Stability: Liquidity Risk Perspective.
    Jeongsim Kim.
    Contemporary Economic Policy. July 18, 2017
    We study whether competition affects banks' liquidity risk‐taking, which was at the heart of the 2008 financial crisis. We find that banks with greater market power take more liquidity risk, implying that decreased competition leads to financial fragility. During a financial crisis, however, the effect of market power on liquidity risk varies across bank size. Small banks with greater market power reduce liquidity risk while large banks with greater market power do not change their liquidity risk‐taking behavior. This suggests that enhanced charter values due to reduced competition lowers small banks' risk‐shifting incentives when their default risk significantly increases during a crisis. (JEL G21, G28)
    July 18, 2017   doi: 10.1111/coep.12243   open full text
  • Employment Effects Of The Minimum Wage: Panel Data Evidence From Canadian Provinces.
    Kate Rybczynski, Anindya Sen.
    Contemporary Economic Policy. July 18, 2017
    Recent U.S. studies offer conflicting evidence on minimum wage impacts. This paper studies the effects of 185 amendments to minimum wage on employment rates using panel data across Canadian provinces from 1981 to 2011. Ordinary least squares and instrumental variables (IV) estimates imply a 10% increase in minimum wage is associated with a 1%–4% reduction to employment rates for both male and female teens. We also find that an increase in the minimum wage is associated with lower employment of prime‐aged immigrants. Our results are robust to a wide array of IV and the use of controls for spatial heterogeneity. (JEL J30, J71, J23)
    July 18, 2017   doi: 10.1111/coep.12241   open full text
  • Sweat The Small Stuff: Strategic Selection Of Pension Policies Used To Defer Required Contributions.
    Jeffrey Diebold, Vincent Reitano, Bruce McDonald.
    Contemporary Economic Policy. June 16, 2017
    The administrators of state‐sponsored defined benefit public pension plans have considerable discretion to determine the accounting and actuarial parameters used to calculate the normal cost contributions and amortization payments that, together, comprise the sponsoring state's annual required contribution amount. Using longitudinal data from the Public Pension Database and a fixed effects approach, we find evidence that suggests plan administrators decisions about cost and amortization methods are influenced by the normal cost and amortization payments, respectively. When these costs increase, administrators tend to use less prudent methods that defer, or keep low, the pension contributions required from the state while, simultaneously, and perversely, improving the appearance of the plan's funded status and the state's funding discipline. (JEL H75)
    June 16, 2017   doi: 10.1111/coep.12236   open full text
  • Health Insurance, Fertility, And The Wantedness Of Pregnancies: Evidence From Massachusetts.
    Maria Apostolova‐Mihaylova, Aaron Yelowitz.
    Contemporary Economic Policy. June 16, 2017
    Health insurance reform in Massachusetts lowered the cost of both pregnancy (by increased coverage of pregnancy‐related medical events) and pregnancy prevention (by increasing access to reliable contraception). We empirically examine fertility responses and find no overall effect from increased coverage due to the Massachusetts reform. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34—with high latent fertility and pregnancy wantedness—fertility increased by approximately 1%. For unmarried women in the same age range—for whom pregnancies are typically unwanted—fertility declined by 8%. (JEL I13, I18, J13)
    June 16, 2017   doi: 10.1111/coep.12235   open full text
  • Government Bond Yields At The Effective Lower Bound: International Evidence.
    Domenico Lombardi, Pierre L. Siklos, Samantha St. Amand.
    Contemporary Economic Policy. June 16, 2017
    Empirical evidence on the potential impact of central bank policies on government bond yields at the effective lower bound (ELB) is presented for nine economies. We quantify the content of central bank communications and consider international policy spillovers. Yields at the medium‐to‐longer end of the yield curve remain responsive to news for a few years after the ELB is reached. Yields become more sensitive to the content central bank communication at the ELB. Our results provide further evidence that central bank communication is an important element of monetary policy making when the interest rate tool loses efficacy. (JEL E52, E58, G12, F42)
    June 16, 2017   doi: 10.1111/coep.12238   open full text
  • Economic Integration And Trade Protection: Policy Issues For South Asian Countries.
    Mausumi Kar.
    Contemporary Economic Policy. June 16, 2017
    This article shows that economic integration acts as a viable instrument of protection for individual countries, when benefits of discriminatory protectionist policies like the multifiber arrangement are withdrawn. Using United Nations Conference on Trade and Development statistics for 1995–2013 and applying an extended version of the augmented gravity model, we show that the formation of a trade bloc like the South Asian Free Trade Area unambiguously promotes member countries' exports of textile and clothing at both intra‐bloc and extra‐bloc levels. The expansion of south‐south trade is facilitated by the growing intraregional trade in intermediate goods. The creation of a regional value chain can shield the smaller countries in the context of enhanced global competition. (JEL F14, F15, F13)
    June 16, 2017   doi: 10.1111/coep.12239   open full text
  • Globalization: Contents And Discontents.
    Orley Ashenfelter, Robert F. Engle, Daniel L. McFadden, Klaus Schmidt‐Hebbel.
    Contemporary Economic Policy. June 07, 2017
    William Shakespeare's Tragedy of King Richard III, written approximately in 1592, is the story of evil acts by the detested and misshapen hunchback, Richard, who plots to sow discontent among his brother, the King, and others, and has his brother murdered along with other wicked deeds in order to gain the throne. It opens with the line, “Now is the winter of our discontent” (p. 111, ed. Wright 1936). “The Winter of Our Discontent” is also the title of John Steinbeck's (1961) novel of a man who trades his moral convictions to reclaim lost family wealth. “Globalization and Its Discontents” is the title of Joseph Stiglitz's (2002) book that critiques rigid adherence by major economic institutions—such as the International Monetary Fund—to economic orthodoxy in the promotion of globalization. (JEL F6, D72, D3, O23, O24, L17, K33)
    June 07, 2017   doi: 10.1111/coep.12237   open full text
  • Identity Management: Worker Independence And Discrimination Against Gay Men.
    Michael E. Martell.
    Contemporary Economic Policy. May 23, 2017
    I build on a growing literature documenting wage differentials for gay men by showing that the wage differential gay men experience varies significantly across occupations with different levels of worker independence. The penalty is smallest in management and professional occupations, which involve a high level of worker independence. It is largest in service occupations, which include a lower level of independence. This distribution of earnings penalties is consistent with discrimination being the source of the gay wage penalty. The results support the conjecture that higher levels of independence allow gay men to more successfully manage the disclosure of sexual orientation and mediate the negative effects of discrimination. (JEL J3, J7, J15)
    May 23, 2017   doi: 10.1111/coep.12233   open full text
  • Efficiency And Equity Implications Of Charging Nonresidents Full‐Cost Tuitions.
    Gary Fethke.
    Contemporary Economic Policy. May 19, 2017
    With fixed costs and a break‐even constraint describing a public university, tuition and subsidy structures are endogenously determined that maximize constrained welfare, defined as students' value (net consumers' surplus) minus the taxpayer appropriation. Requiring nonresidents to pay full‐cost tuitions introduces relative deviations in demand that lead to efficiency losses and income transfers. To measure these effects, demand and cost expressions are developed to replicate standard decentralized budgeting frameworks for the University of Iowa and Iowa State University. Efficiency losses associated with requiring nonresidents to pay fully allocated costs are modest (2%–6%) compared to orders of magnitude larger distributional transfers from nonresidents to residents and taxpayers. (JEL I22, I28)
    May 19, 2017   doi: 10.1111/coep.12232   open full text
  • The Impact Of Exporting And Foreign Direct Investment On Product Innovation: Evidence From Chinese Manufacturers.
    Michael Olabisi.
    Contemporary Economic Policy. April 20, 2017
    To understand the drivers of product innovation at the firm level, I compare the effects of foreign direct investment (FDI) and exporting on product innovation using a rich firm‐level database of manufacturing and industrial enterprises. The article focuses on product innovation, as it is vital to economic development. Estimates from linear regressions and propensity score matching tests show that learning‐by‐exporting is a stronger predictor of product innovation. Firms that receive foreign investment also tend to engage in more product innovation, but not at the same level as the firms that export. Additional tests confirm that as they start and stop exporting, firms change their patterns of investment in the drivers of product innovation—fixed capital and research. (JEL D22, F14, F23, L25, O31)
    April 20, 2017   doi: 10.1111/coep.12227   open full text
  • Information And The Beauty Premium In Political Elections.
    Todd R. Jones, Joseph Price.
    Contemporary Economic Policy. April 19, 2017
    We use data on 800 candidates from the 2012 U.S. election cycle in U.S. and state congressional races to examine the degree to which beauty affects electoral outcomes. We find that a candidate that is one standard deviation more beautiful receives a 1.1 percentage point higher vote share and is 6.0 percentage points more likely to win the election. This beauty premium is larger in situations where voters are less likely to have more information about the candidate. The beauty premium is much smaller for U.S. congressional races than for state congressional races, and is also much smaller for incumbent candidates. In addition, we find a correlation that the beauty premium is lower when a candidate spends more money on the election. (JEL D72, J70)
    April 19, 2017   doi: 10.1111/coep.12231   open full text
  • Multiple Thresholds In The Nexus Between Working Hours And Productivity.
    Dongyeol Lee, Hyunjoon Lim.
    Contemporary Economic Policy. April 18, 2017
    Changes in working hours may have two contrasting effects on productivity: a “fatigue effect” and a “learning effect.” An increase in working hours may lead to the accumulation of workers' proficiency and skill in his or her job, while it may cause the level of workers' fatigue to increase. Our estimation results find multiple thresholds in the linkage between working time and productivity, supporting the existence of learning effect as well as fatigue effect from working time extension. The results of our study provide some implications for the recent discussion on reform of the working time system: for example, (i) the overall effects of changes in working time depend upon a variety of factors, such as the initial level of working hours and the features of the industry concerned; and (ii) job sharing may induce employers to substitute part‐timers for full‐time workers, thereby hindering workers' accumulation of skills. (JEL J24, D24, D92, O47)
    April 18, 2017   doi: 10.1111/coep.12230   open full text
  • On The Impact Of Public Debt On Economic Growth: Does Country Risk Matter?
    Yi‐Bin Chiu, Chien‐Chiang Lee.
    Contemporary Economic Policy. April 18, 2017
    This study examines the nonlinear impacts of four country risk indices on the debt‐growth nexus for 61 countries in a panel data framework. Our results show evidence of the different debt‐growth nexus under the different degrees of country risk. Under a high‐risk environment, a country's economic growth is harmed by raising its public debt. The negative effects public debt has on economic growth become weak under low political and financial‐risk environments, while an increase in public debt could help to stimulate economic growth under low composite and economic risk environments. In addition, the differences of countries' income and debt levels also lead country risks to have different effects on the debt‐growth nexus, suggesting that a country should borrow appropriately based on its current risk environments while improving economic performance. (JEL C33, E02, H63, O43)
    April 18, 2017   doi: 10.1111/coep.12228   open full text
  • Lifetime Taxpayer Contributions And Benefits Of Medicare And Social Security.
    Jing Guo, Marilyn Moon.
    Contemporary Economic Policy. March 31, 2017
    Many criticisms of Medicare and Social Security have suggested that beneficiaries get more than they paid into the system over their lifetimes and these entitlement programs may be unsustainable if they are insufficiently funded. But studies do not always use appropriate assumptions for estimating lifetime values. Our simulation model properly aligns the financing sources with the benefits received by making consistent comparisons and using a more appropriate inflation adjustment. Our study suggests that using different assumptions can dramatically change the balance between contributions and benefits as compared with other analyses. Choosing the appropriate assumptions is essential for a reasoned debate on the important issues about the future and financing of Medicare and Social Security. (JEL I13, H5, H24)
    March 31, 2017   doi: 10.1111/coep.12226   open full text
  • The Effect Of Casino Proximity On Lottery Sales: Evidence From Maryland.
    Will E. Cummings, Douglas M. Walker, Chad D. Cotti.
    Contemporary Economic Policy. March 29, 2017
    The continued expansion of the casino industry has caused increasing concern regarding the cannibalization of other industries, and in particular, state lotteries. For example, Maryland Lottery sales flattened shortly after casinos began opening in the state. Although previous papers have found that casinos and lotteries have a negative relationship with each other, no previous research has analyzed the impact of casino proximity on lottery sales or has examined the relationship between casinos and different types of lottery games. In this paper, we examine ZIP code‐level monthly lottery sales data from Maryland between July 2009 and February 2014, in order to test the impact of casino proximity on lottery sales, by type of game. Our findings indicate that aggregate lottery sales decline more in closer proximity to casinos, but that casinos affect different lottery products differently. We discuss the consumer behavior and public finance implications of the findings. (JEL H27, H4, L83)
    March 29, 2017   doi: 10.1111/coep.12225   open full text
  • Dynamics Of Knowledge Spillovers From Patents To Entrepreneurship: Evidence Across Entrepreneurship Types.
    Rajeev K. Goel, James W. Saunoris.
    Contemporary Economic Policy. March 28, 2017
    Using data across U.S. states over a recent decade, this paper uniquely uses three qualitatively different measures of entrepreneurship to examine the knowledge flows from patents, paying attention to the dynamic nature of such influences. We find that there are significant variations in the effects of knowledge flows across entrepreneurship types and, in general, these effects are not immediate. The greatest positive effect of knowledge spillovers is on startup entrepreneurship and the resulting magnitude grows somewhat over time. The spillovers are modest on overall entrepreneurship, while entrepreneurs who were previously employed see more immediate benefits. These findings are generally robust. (JEL L26, O33, O51, M21)
    March 28, 2017   doi: 10.1111/coep.12224   open full text
  • The Effects Of Young Adult‐Dependent Coverage And Contraception Mandates On Young Women.
    Jennifer Trudeau, Karen Smith Conway.
    Contemporary Economic Policy. March 16, 2017
    This research investigates two features of the Affordable Care Act that especially affect young adults, the young adult‐dependent coverage (YAD) mandate and the requirement to cover contraception (CM). Both mandates were first enacted at the state level but have been studied only in isolation. We estimate a wide range of models allowing these mandates to have joint effects on insurance coverage, health‐care access, health outcomes and fertility. We provide new evidence that helps settle the mixed findings from past state‐level YAD and CM research and suggests the two mandates may combine to improve the well‐being of young adults. (JEL I18, I12, H75)
    March 16, 2017   doi: 10.1111/coep.12223   open full text
  • “Pay It Forward” And Higher Education Subsidies: A Median Voter Model.
    Jennifer A. Delaney, Dhammika Dharmapala.
    Contemporary Economic Policy. March 06, 2017
    Since 2012, at least 24 states have considered legislation on Pay It Forward (PIF) models of higher education finance (which enable students to pay the price of college upon departure from an institution, as opposed to paying upfront tuition). This paper proposes a theoretical model of PIF policies within a framework in which voters belonging to different income groups vote over the level of subsidies to higher education. We analyze the impact of two types of potential PIF policies—a deferred tuition approach and an income share approach—on college access and on voting equilibria over subsidy levels. The results show that college access is enhanced by PIF policies. The equilibrium level of subsidies depends crucially on the pattern of income distribution, in particular on the relationship between mean income and the income of the median income group, and on whether higher education widens or narrows the distribution of income. We show that the equilibrium level of subsidies to higher education will not necessarily decline under PIF, and may increase in some circumstances due to changes in college access for low‐income groups. (JEL I22, I23)
    March 06, 2017   doi: 10.1111/coep.12222   open full text
  • Potential State‐Level Carbon Revenue Under The Clean Power Plan.
    Don Fullerton, Daniel H. Karney.
    Contemporary Economic Policy. March 02, 2017
    In 2015, the U.S. Environmental Protection Agency issued the Clean Power Plan under which each state can set a mass‐based target to meet its assigned electric power sector carbon dioxide emission reductions. If it proceeds, states can design policies to meet those requirements and also raise revenue via a carbon tax or cap‐and‐trade program with auctioned permits. We calculate each state's potential revenue and demonstrate its significance. In 13 states, carbon revenue could replace all of corporate tax revenue. In addition, we collect budget projections from six key states to determine if and how carbon revenue can substantially reduce deficits. While such revenue is not free money, we discuss its advantages over use of distortionary taxation. Finally, we consider distributional aspects and potential external fiscal effects on federal revenue. (JEL H2, H3, H7, Q5)
    March 02, 2017   doi: 10.1111/coep.12221   open full text
  • Wage Disparity, Team Performance, And The 2005 Nhl Collective Bargaining Agreement.
    Craig A. Depken, Jeff Lureman.
    Contemporary Economic Policy. February 28, 2017
    This paper provides an empirical analysis of salary disparity and team performance in the National Hockey League during the first decade of the twenty‐first century. We find that the 2005 Collective Bargaining Agreement (CBA) reduced average salaries immediately after it was introduced but did not change the trajectory of average salaries nor did it alter the salary disparity on the average team. Salary disparity harms overall team performance primarily through reduced defensive performance and this relationship was not altered by the 2005 CBA. (JEL J31, J42, L83)
    February 28, 2017   doi: 10.1111/coep.12220   open full text
  • What You Don't Know Can Hurt You: Knowledge Problems In Monetary Policy.
    Alexander W. Salter, Daniel J. Smith.
    Contemporary Economic Policy. February 24, 2017
    Many economists hold that monetary policy missteps played a role in causing or prolonging the 2007–2008 financial crisis. In light of the perceived failure of monetary orthodoxy, models are being theoretically refined and empirically recalibrated. Absent from these technical debates is a recognition of the immense knowledge burdens inherent in monetary policy. We argue that Fed authorities do not have the knowledge required to achieve their own monetary objectives, given their inability to approximately measure or predict changes in the demand for money. Finally, we evaluate the ability of free banking to overcome this knowledge problem. (JEL E42, E52, E58, E61, P16)
    February 24, 2017   doi: 10.1111/coep.12219   open full text
  • Salary Inequality, Team Success, League Policies, And The Superstar Effect.
    Philippe Cyrenne.
    Contemporary Economic Policy. February 20, 2017
    Using a simple model of a team's salary distribution and data from the recent Collective Bargaining Agreement between players and owners in the National Hockey League, I examine the relationship between a team's salary distribution and its winning percentage. I find that teams with higher relative payrolls and lower salary inequality have higher winning percentages. I also find evidence of a superstar effect, in that teams with a higher maximum player salary have higher winning percentages. The results are sensitive, however, to the particular measure of salary inequality used as well as the endogeneity of the salary distribution. (JEL Z22, L83, J52, C33, C26)
    February 20, 2017   doi: 10.1111/coep.12217   open full text
  • External Macroeconomic Imbalances And Foreign Direct Investment Inflows To Developing Countries.
    Andrew Ojede, Ruby Kishan.
    Contemporary Economic Policy. February 15, 2017
    We employ relative size of International Monetary Fund (IMF) credit as a proxy for interdependent macro variables that are associated with external macroeconomic imbalances or balance of payment (BOP) crisis to investigate how they impact foreign direct investment (FDI) inflows. Relative size of IMF credit as a share of gross domestic product sends two mixed signals to multinational enterprises (MNEs). First, it is a signal that a country is facing an actual or potential BOP crisis. Second, countries that seek IMF credit typically agree to implement a set of “IMF conditionality” before financial credit is disbursed. This may signal to MNEs that policy reforms that must accompany IMF financial credit may result in ex ante positive economic outlook and stability. We find that relative size of IMF credit is negatively (positively) correlated with FDI inflows to developing countries below (above) a threshold value of economic freedom. The main implication of these findings is that MNEs may view developing countries with below average index of economic freedom as lacking institutional capabilities to implement recommended IMF policy reforms when faced with an actual or potential BOP crisis. Our results are robust across alternative model specifications and consistent with the theory of catalytic finance. (JEL F21, F23, F33)
    February 15, 2017   doi: 10.1111/coep.12218   open full text
  • Fueling Job Engines: Impacts Of Small Business Loans On Establishment Births In Metropolitan And Nonmetro Counties.
    Tessa Conroy, Sarah A. Low, Stephan Weiler.
    Contemporary Economic Policy. February 13, 2017
    This study examines the effect of small business loans on subsequent establishment births in U.S. counties. Using an economic growth framework and cross‐sectional empirical model, we test the hypothesis that the establishment birth rate is higher in counties where the level and annual increase in lending is greater, controlling for community‐level characteristics affecting business and economic dynamics. We also consider the long‐term effect of small business lending and focus on establishing the appropriate lag structure. The results indicate that small business lending does generally have a positive effect on the employer establishment birth rate that is strongest in nonmetropolitan (rural) counties. (JEL L26, R11, M13)
    February 13, 2017   doi: 10.1111/coep.12214   open full text
  • Suicide And The Social Security Early Retirement Age.
    Jeffrey DeSimone.
    Contemporary Economic Policy. February 13, 2017
    Using a regression discontinuity framework, this paper documents a previously unnoticed drop of 7%–8% in the U.S. suicide rate upon reaching age 62 during 1990–2014. This decline is concentrated among men, nearly doubled in size over the most recent decade as the income gap between those just older and younger narrowed, and represents the only trend break among ages 45–79. These findings, along with the observed timing of retirement and benefit claims and research on how income affects suicide, suggest that the likely explanation is Social Security early retirement benefit eligibility rather than retirement per se. (JEL I12, H55)
    February 13, 2017   doi: 10.1111/coep.12215   open full text
  • Demonstrated Interest: Signaling Behavior In College Admissions.
    James A. Dearden, Suhui Li, Chad D. Meyerhoefer, Muzhe Yang.
    Contemporary Economic Policy. February 11, 2017
    In college admission decisions, important and possibly competing goals include increasing the quality of the freshman class and making the school more selective while attaining the targeted size of the incoming class. Especially for high‐quality applicants who receive multiple competing offers, colleges are concerned about the probability that these students accept the offers of admission. As a result, applicants' contacts with admissions offices, such as campus visits, can be viewed positively by the officers as demonstrated interest in the colleges. We provide empirical evidence on the effects of demonstrated interest on admission outcomes. Specifically, we use unique and comprehensive administrative data, which include all contacts made by each applicant to the admissions office of a medium‐sized highly selective university during two admission cycles. We find that an applicant who contacts the university is more likely to be admitted, and that the effect of the contact on the probability of admission is increasing in the applicant's Scholastic Assessment Test score, particularly when the contact is costly to make. We also use a numerical example to explore policies to reduce the inequity associated with the use of demonstrated interest in admission decisions, examining in particular the subsidization of costly demonstrated interest by low‐income students. (JEL D83, I23)
    February 11, 2017   doi: 10.1111/coep.12216   open full text
  • Wearing Out Your Welcome: Examining Differential Medicaid Eligibility Of New Entrants And Continuing Recipients.
    Sarah Hamersma, Burcin Unel.
    Contemporary Economic Policy. December 09, 2016
    Until recently, states were permitted to have different “new entrant” and “continuing recipient” income limits for parental Medicaid eligibility by implementing income disregards that changed with spell length. Some states utilized this option—either tightening income limits for the same family over time or loosening them. In this article, we construct a theoretical model of utility‐maximizing workers facing different time‐dependent eligibility thresholds to predict the Medicaid participation and employment behavior of workers with varying wage levels. The model reveals some inter‐temporally perverse incentives created by linking eligibility thresholds to Medicaid duration. Then, we empirically test these predictions using the Survey of Income and Program Participation and a unique compilation of state‐by‐family size Medicaid thresholds for both new and continuing recipients. We find that patterns of Medicaid participation and spell duration are consistent with the predictions of our model. There is also evidence that the individuals predicted by our model to lower their work hours may supply fewer hours of labor. As of January 2014, the Affordable Care Act disallows time‐varying income disregards; our findings suggest that states previously using this strategy will experience an adjustment in Medicaid caseloads and possibly labor market outcomes because of the change. (JEL H4, I1, J2)
    December 09, 2016   doi: 10.1111/coep.12212   open full text
  • Measuring Health Insurance Benefits: The Case Of People With Disabilities.
    Richard V. Burkhauser, Jeff Larrimore, Sean Lyons.
    Contemporary Economic Policy. December 05, 2016
    Since 2012, the Congressional Budget Office has included an estimate of the market value of government‐provided health insurance coverage in its measures of household income. We follow this practice for both public and private health insurance to capture the impact of greater access to government‐provided health insurance for working‐age people with disabilities, whose market value rose in 2010 dollars from $11.7 billion in 1980 to $114.3 billion in 2012. We then consider the more general implications of incorporating estimates of the market price of insurance, equivalent to that provided by the government, into policy analyses in a post‐Affordable Care Act world. (JEL D31, H24, I18, J31)
    December 05, 2016   doi: 10.1111/coep.12213   open full text
  • Life Insurance Holdings And Well‐Being Of Surviving Spouses.
    Timothy F. Harris, Aaron Yelowitz.
    Contemporary Economic Policy. November 18, 2016
    Premature death of a breadwinner can have devastating financial consequences on surviving dependents. This study investigates the role of life insurance in mitigating the long‐run financial consequences of spousal mortality. Using the Health and Retirement Study, we examine individuals whose spouses died during or soon after his or her peak earnings years. After controlling for socioeconomic status, we find that sizable lump‐sum life insurance payouts do not significantly influence spousal well‐being. (JEL D31, G22, I31, J32, J33, J38)
    November 18, 2016   doi: 10.1111/coep.12211   open full text
  • Do Institutions Mitigate The Risk Of Natural Resource Conflicts?
    Colin O'Reilly, Ryan H. Murphy.
    Contemporary Economic Policy. November 01, 2016
    The resource curse, as manifested by an increased likelihood of conflict over rents, can be mitigated by institutions. Lei and Michaels find that discoveries of “giant” oil fields increase the likelihood of violent conflict, but they find no evidence that democratic institutions mitigate this risk. We test whether institutions mitigate the resource curse by reducing the risk of natural resource conflicts. Our results indicate that high quality economic institutions reduce the likelihood of territorial (separatist) conflicts following natural resource rent windfalls. Highly autocratic and highly democratic institutions also reduce the likelihood of territorial conflict after natural resource rent windfalls. (JEL Q34, O13, P48, D74)
    November 01, 2016   doi: 10.1111/coep.12207   open full text
  • Does Athletic Success Influence Persistence At Higher Education Institutions? New Evidence Using Panel Data.
    Daniel C. Hickman, Andrew G. Meyer.
    Contemporary Economic Policy. November 01, 2016
    This study examines the relationship between athletic success and student persistence toward a degree. We build an updated panel of National Collegiate Athletic Association (NCAA) Division I institutions and utilize within‐institution variation to identify the effects of athletic success. Using a ranking of all institutions, we find that having more successful men's basketball and football teams has a significant positive effect on first‐year retention rates. We also find some evidence that improved basketball rankings increase graduation rates, and that success in the NCAA tournament may have a sizable impact on retention. Although the estimated effects are generally modest in scale, we find rather limited evidence of other institutional factors affecting persistence, suggesting that athletics can be one avenue for institutions of higher education to engage and retain students. (JEL I23, Z20, L83)
    November 01, 2016   doi: 10.1111/coep.12208   open full text
  • Income And Wealth Inequality: Evidence And Policy Implications.
    Emmanuel Saez.
    Contemporary Economic Policy. October 14, 2016
    Drawing on the author's work, this lecture presents evidence on U.S. income and wealth inequality. It presents series for top income and wealth shares, and the distribution of economic growth by income groups. It discusses the mechanisms behind the evolution of U.S. income and wealth inequality from historical and comparative perspectives. It analyzes the role of public policy and in particular taxation in the evolution of inequality. (JEL D31, F66, J24)
    October 14, 2016   doi: 10.1111/coep.12210   open full text
  • Questions And Answers: Income And Wealth Inequality—Evidence And Policy Implications.
    Emmanuel Saez.
    Contemporary Economic Policy. October 14, 2016
    Comments, questions and answers about inequality. (JEL D3)
    October 14, 2016   doi: 10.1111/coep.12209   open full text
  • The 80% Pension Funding Target, High Assumed Returns, And Generational Inequity.
    Robert M. Costrell.
    Contemporary Economic Policy. October 07, 2016
    Generational inequity in pension funding is highly sensitive to the lax policies of 80% funding targets and high assumed returns to investment. I develop a simple, powerful relationship between steady‐state (SS) inequity in contributions—the percent of extra contributions to fund prior cohorts—and the SS unfunded ratio. I then show how the SS unfunded ratio is governed by x% funding targets and the gap between assumed and true returns. The SS degree of inequity is over 60% under an 80% funding target and over 50% with a one‐point gap between assumed and true returns. (JEL H75)
    October 07, 2016   doi: 10.1111/coep.12200   open full text
  • Growth, Inequality, And Economic Freedom: Evidence From The U.S. States.
    Christian Bjørnskov.
    Contemporary Economic Policy. September 28, 2016
    This article returns to the discussion of how income inequality affects economic growth. The main argument of the article is that economic freedom is likely to mediate the association between inequality and growth. In a panel of 300 observations from six 5‐year periods across the 50 U.S. states, I employ five different measures of inequality. The results show that across measures, the growth effects of inequality turn more positive with more economic freedom. The moderating effects are mainly driven by measures of public sector consumption. (JEL O11, O38, O43, P48)
    September 28, 2016   doi: 10.1111/coep.12199   open full text
  • Electoral Rules And Public Spending Composition: The Case Of Italian Regions.
    Raffaella Santolini.
    Contemporary Economic Policy. September 28, 2016
    This study investigates the effects produced by the electoral system on expenditure composition by exploring the case of Italian regions over the period 1986–2009. Empirical analysis shows that the regional current transfers expenditure distributed to families and firms significantly decreases when the regional electoral system moves from being proportional to mixed. Particularly striking is the reduction in preelectoral years under the regional mixed regime. (JEL D72, H30, H72)
    September 28, 2016   doi: 10.1111/coep.12205   open full text
  • Nonlinear Autoregressive Distributed Lag Approach And Bilateral J‐Curve: India Versus Her Trading Partners.
    Mohsen Bahmani‐Oskooee, Sujata Saha.
    Contemporary Economic Policy. September 20, 2016
    The J‐curve studies related to India have mostly either used aggregate trade flows of India with the rest of the world or between India and its trading partners. They have all assumed exchange rate changes have symmetric effects on Indian trade balance. In this article, we use partial sum concept combined with the nonlinear autoregressive distributed lag approach of Shin et al. to show that indeed in some instances, there are evidences of asymmetry effects of currency depreciation. This new nonlinear approach provides more support for the J‐curve than the previous linear approaches. (JEL F31)
    September 20, 2016   doi: 10.1111/coep.12197   open full text
  • Turning Pink Slips Into Red Tape: The Unintended Effects Of Employment Protection Legislation.
    Harlan Holt, Joshua R. Hendrickson.
    Contemporary Economic Policy. September 20, 2016
    This article presents evidence on the link between employment protection legislation (EPL) and the rate of unemployment in a cross‐country panel dataset of Organisation for Economic Co‐operation and Development countries from 1985 to 2013. We use both a traditional panel specification with lags of the policy variable, and also a unique structural panel vector autoregression (PVAR) method to determine the long‐run dynamic interaction between EPL and unemployment. We confirm that more restrictive EPL for permanently employed workers causes a significant and persistent increase in unemployment, but the effect is only apparent at long‐lag lengths, some 2–5 years after the law has been implemented. (JEL J68, J65, J63)
    September 20, 2016   doi: 10.1111/coep.12198   open full text
  • Sleepwalking Through School: New Evidence On Sleep And Academic Achievement.
    Joseph J. Sabia, Kurt Wang, Resul Cesur.
    Contemporary Economic Policy. September 06, 2016
    Policymakers advocating for later school starting times argue that increased sleep duration may generate important schooling benefits. Using data from the National Longitudinal Study of Adolescent Health, this study examines the relationship between sleep duration and academic performance, while carefully controlling for difficult‐to‐measure characteristics at the family and individual levels. We find that increased sleep time is associated with improvements in classroom concentration as well as increased educational attainment. However, we also find evidence of diminishing returns to increased sleep. We estimate an “academic optimum” number of sleep hours of, on average, 8.5 hours per night. Turning to sleep quality, we find that the onset of insomnia‐like symptoms is associated with diminished contemporaneous academic concentration, but little change in long‐run educational attainment. (JEL I12)
    September 06, 2016   doi: 10.1111/coep.12193   open full text
  • The Effect Of The Business Cycle On Freshman Financial Aid.
    Elizabeth B. Clelan, Michael S. Kofoed.
    Contemporary Economic Policy. August 27, 2016
    When the economy slips into recession, more needy students enroll in college, increasing the need for financial aid while resources for aid become more scarce. We use “Freshman Survey” data from the Higher Education Research Institute to observe changes in financial aid composition from 1980 to 2000. We use state‐level tax revenues, unemployment rates, and personal income growth as macroeconomic indicators. During recessions, we find that the burden of financing a student's college education shifts from states and institutions to families and federal programs. We also show that these macroeconomic fluctuations are increasingly volatile for underrepresented minorities. (JEL I22, H52, E32)
    August 27, 2016   doi: 10.1111/coep.12192   open full text
  • Relative Teacher Salaries And The Decision To Teach.
    Dan S. Rickman, Hongbo Wang, John V. Winters.
    Contemporary Economic Policy. August 27, 2016
    Using the 3‐year microdata sample of the American Community Survey for 2009–2011, we examine the effect of state‐level public school teacher salaries relative to those of other college graduates in the state not employed in education on the decision to teach. We find that relative teacher salaries in the state positively affect the share of education majors that are employed as public school teachers at the time of the survey. The effect for males majoring in math, science, and computer education is largest among all estimated effects. A statistically significant effect is also found among females majoring in elementary education. (JEL H75, I20, R23)
    August 27, 2016   doi: 10.1111/coep.12195   open full text
  • The Relationship Between Economic Freedom And Economic Dynamism.
    Keith Barnatchez, Robert Lester.
    Contemporary Economic Policy. August 26, 2016
    We analyze the consequences of economic freedom on economic dynamism across U.S. states and over time. Using data from the Economic Freedom of North America index, we show that states with greater economic freedom have higher rates of gross and net job creation and establishment entry. The results are robust to the inclusion of many different control variables and alternative specifications, suggesting a connection between freedom and dynamism. This evidence supports theories in which government policies may impede business dynamism. (JEL 043, P16, R5)
    August 26, 2016   doi: 10.1111/coep.12194   open full text
  • Income Inequality, Media Fragmentation, And Increased Political Polarization.
    John V. Duca, Jason L. Saving.
    Contemporary Economic Policy. August 05, 2016
    The increasing polarization of congressional voting has been linked to legislators' inability to reach consensus on many pressing economic issues. We examine two potential factors driving polarization: greater income inequality and the increasingly fragmented state of American media. Using cointegration techniques, we find evidence indicating that media fragmentation has played a more important role than inequality. Periods of rising media fragmentation are followed by increased polarization. If recent patterns of media structure and income inequality persist, a polarized policymaking environment will likely continue to impede efforts to address major challenges, such as the long‐run fiscal imbalances facing the United States. (JEL D72, D31)
    August 05, 2016   doi: 10.1111/coep.12191   open full text
  • Economic Freedom & Happiness Inequality: Friends Or Foes?
    Daniel L. Bennett, Boris Nikolaev.
    Contemporary Economic Policy. August 04, 2016
    This article examines the relationship between economic freedom and happiness inequality for a large sample of countries. We find that economic freedom is negatively associated with happiness inequality and robust to several alternative measures of happiness inequality, including the standard deviation, mean absolute difference, coefficient of variation, and Gini coefficient. Among the economic freedom areas, legal system and sound money are negatively correlated with happiness inequality. Drawing on the Engerman‐Sokoloff hypothesis, we use a measure of factor endowments as an instrument for economic freedom to provide a further robustness test, finding a negative association between economic freedom and happiness inequality. (JEL D63, I31, P16)
    August 04, 2016   doi: 10.1111/coep.12190   open full text
  • Risks To The Returns To Medical Innovation: The Case Of Myriad Genetics.
    Jeffrey Clemens, Stan Veuger.
    Contemporary Economic Policy. June 29, 2016
    We describe the broad range of uncertainties faced by the developers of medical technologies. Empirically, we estimate the asset market incidence of two realizations of uncertainties we classify as ex post policy risks. The events we analyze concern the intellectual property of Myriad Genetics, Inc., an American molecular diagnostics firm. In June 2013, the Supreme Court invalidated several of Myriad's intellectual property claims. Subsequently, the Center for Medicare and Medicaid Services (CMS) re‐evaluated the reimbursements it pays for the services at issue in the Supreme Court's ruling. Each of these events moved Myriad's market capitalization by several hundred million dollars, or on the order of 20%. Myriad's exposure to the realization of these events reflected the concentration of its revenue streams among the affected services. We discuss the implications of the risks we analyze for the total volume of medical innovation and for its organization across firms. (JEL I18, O3, D8)
    June 29, 2016   doi: 10.1111/coep.12189   open full text
  • Trade‐Offs Between Civil Liberties And National Security: A Discrete Choice Experiment.
    Eric Andrew Finkelstein, Carol Mansfield, Dallas Wood, Brent Rowe, Junxing Chay, Semra Ozdemir.
    Contemporary Economic Policy. June 29, 2016
    We explore differences in perception of national security policies between self‐identified liberals, moderates, and conservatives from a national sample of U.S. adults. Using a discrete choice experiment, we also quantify each group's willingness to trade off select policies in exchange for reduced risk of a 9/11‐style terrorist attack. Relative to other groups, liberals are more likely to view such policies as ineffective and susceptible to government abuse. They also perceive a lower threat of terrorism. All groups are willing to make trade‐offs between civil liberties and risk of a terrorist attack. However, loss of civil liberties affects liberals more than conservatives. (JEL D61, H41, H56)
    June 29, 2016   doi: 10.1111/coep.12188   open full text
  • Income Instability And The Response Of The Safety Net.
    Bradley L. Hardy.
    Contemporary Economic Policy. June 28, 2016
    This paper examines the response of safety net transfer and tax programs to earnings and income shocks across recessions since the early 1980s. Safety net programs in the United States are designed to dampen economic instability and maintain basic needs for families. Such programs, including TANF, SNAP (food stamps), and the Earned Income Tax Credit (EITC), have been tested during and between recessions of the past 30 years, including the recent 2007–2009 Great Recession. I use matched data in the March Current Population Survey (CPS) from 1980 to 2012 to estimate pre‐ and post‐transfer income instability over the 1980s, 1990s, and 2000s, as well as across recessions. The results are disaggregated by family structure, race, income, and education. Transfer programs are associated with lowered instability levels and flatter trend growth from 1980 to 2012 among socioeconomically disadvantaged subgroups, while the tax system reduces income instability for families in the top 40th percentile of the income distribution. Although the largest instability reductions occur among the poor, since 1980 the safety net appears less responsive to instability for the bottom income quintile, female‐headed families, and black families. (JEL I38, J63)
    June 28, 2016   doi: 10.1111/coep.12187   open full text
  • Does The Right To Choose Matter For Defined Contribution Plans?
    Kin Ming Wong, Kwok Ping Tsang.
    Contemporary Economic Policy. June 21, 2016
    We find that sensitivity of fund flows and fund performance are both related to participants' right to choose their investments in defined contribution plans. Under the Mandatory Provident Fund system of Hong Kong, both employers and employees are required to contribute to a retirement account. Originally, employees' investment choices were restricted to a subset of funds chosen by their employers. The system was later modified so that employees are allowed to invest in any fund within the system. We present evidence that flows of fund have become more sensitive to past fund performance after this policy change, and that average fund performance in the system has also improved. Based on the improvement in fund performance, we estimate the accumulated cost of the lack of choice to be around 10% of the current total asset value of the system. (JEL G14, G18)
    June 21, 2016   doi: 10.1111/coep.12186   open full text
  • A Survey On The Output Effects Of Tax Reforms From A Policy Perspective.
    Richard Kneller, Florian Misch.
    Contemporary Economic Policy. May 24, 2016
    This study reviews the existing evidence on the effects of tax reforms on output levels and growth over the short and long run from different strands of the literature. It develops and applies criteria to evaluate the usefulness of ex‐post estimates to predict the effects of tax reforms ex ante. Based on these criteria, we present detailed tables summarizing and comparing ex‐post estimates of the effects of tax reforms. Overall, our review suggests that at least the direction of the short‐run and long‐run growth effects can be predicted with a reasonable degree of certainty, but there is disagreement with respect to the magnitude. Our review also suggests that depending on the tax change, trade‐offs between short‐run stabilization and long‐run growth may arise and that more research on this question is needed. (JEL E62, H20, O20)
    May 24, 2016   doi: 10.1111/coep.12172   open full text
  • Movies, Mass Consumers, And Critics: Economics And Politics Of A Two‐Sided Market.
    Brian Goff, Dennis Wilson, David Zimmer.
    Contemporary Economic Policy. May 09, 2016
    Most analyses of the film market treat it as a single entity where producers make films based on average consumer interest while critics serve as forecasters or signalers of film quality to these consumers. We describe the film market as two‐sided—a mass market (average consumer) side and a high quality/artistic (cineaste) side—that each influence film maker production decisions and critical reviews as critics balance the preferences of mass market consumers and their own more artistic inclination. Using 1,824 films released during 2000–2014, we examine determinants of box office revenues and critical reviews, while addressing the overlap between them. Our results indicate that consumers and critics respond differently not only to film rating but also to film budgets, story sources, genre, and political content. We then use the dichotomy between average and high quality, artistic film consumers as a basis for understanding the normative views of the film markets relative to other two‐sided markets as well as the political economy of film regulation. (JEL C30, D10, Z11)
    May 09, 2016   doi: 10.1111/coep.12180   open full text
  • The Impact Of Low‐Priority Laws On Criminal Activity: Evidence From California.
    Amanda Ross, Anne Walker.
    Contemporary Economic Policy. May 09, 2016
    We examine the impact of low‐priority initiatives on criminal activity. Low‐priority initiatives mandate that minor marijuana possession offenses be the lowest enforcement priority for police. Localities pass these laws because they believe if officers devote fewer resources toward minor marijuana crimes, more resources will be available to deter more serious crimes. Using data from California, we find that jurisdictions that adopted low‐priority laws experienced a reduction in arrests for misdemeanor marijuana offenses. However, we do not find evidence of a consistent effect of enacting a low‐priority initiative on the crime or clearance rate of other felonies. (JEL H1, H4, K4)
    May 09, 2016   doi: 10.1111/coep.12179   open full text
  • Output Growth And Structural Reform In Latin America: Have Business Cycles Changed?
    Sebastian Fossati.
    Contemporary Economic Policy. May 09, 2016
    This paper documents important changes in real gross domestic product (GDP) growth of six large Latin American countries. The main results can be summarized as follows. First, there is evidence of a structural break in real GDP toward stronger mean growth and a substantial reduction in volatility. Second, the timing of the breaks suggests that the important changes in economic policies of the 1980s and 1990s have been effective in permanently improving economic growth in the region. These changes in the growth processes imply recessions that are shorter in duration and milder in amplitude. The sustained increase in commodity prices observed in recent years explains an important share of growth in the region since 2003. But after accounting for the effect of commodity prices, there is even stronger evidence of a structural break in real GDP growth. (JEL E32)
    May 09, 2016   doi: 10.1111/coep.12178   open full text
  • The Impact Of Tax Price Changes On Charitable Contributions To The Needy.
    Ernest M. Zampelli, Steven T. Yen.
    Contemporary Economic Policy. April 20, 2016
    Eliminating or reducing the federal charitable deduction can have serious impacts on the level of charitable donations. Tax price elasticity estimates from a multivariate sample selection model indicate that changing the deduction to a 12% tax credit would have reduced individual donations in 2012 by 18.9% if applied to itemizing taxpayers and by 10.5% if extended to nonitemizers. Elimination of the deduction would have led to a 35% reduction in individual charitable donations. Even if coupled with cuts in marginal tax rates, eliminating the charitable deduction will still likely result in substantial reductions given the inelastic income elasticities of charitable donations. The estimates justify the ardent opposition of many in the nonprofit sector to the more radical proposals for changing the tax treatment of charitable contributions. (JEL D34, C34)
    April 20, 2016   doi: 10.1111/coep.12177   open full text
  • Did Foreign Ownership Of Korean Credit Rating Agencies Improve Their Ratings?
    Denis Yongmin Joe, Frederick Dongchuhl Oh.
    Contemporary Economic Policy. April 05, 2016
    In this study, we investigate whether foreign equity participation fostered the growth of Korea's credit rating industry during the 2002–2013 period. We find that the rating quality deteriorated steadily even though the foreign ownership of Korea's credit rating agencies increased: Rating levels went up. Our analysis indicates that the Korean government's policy of gradually relaxing the restrictions on foreign ownership of local credit rating agencies was ineffectual. (JEL G24, F21, F65, D43)
    April 05, 2016   doi: 10.1111/coep.12176   open full text
  • Job Reallocation, Financial Crises, And Policy Reforms: Evidence From Korea.
    Junghwan Hyun.
    Contemporary Economic Policy. March 09, 2016
    This article investigates the dynamic process of job reallocation across Korean firms from 1985 to 2013 focusing on how the 1997 Korean financial crisis and the subsequent reforms altered job flows. I find evidence that while job reallocation was moderate and acyclical before the crisis, after the crisis it substantially intensified and exhibited procyclicality. Particularly, the reshuffling of employment across firms from different industries and of different sizes significantly occurred during the crisis period. Examining job reallocation from a geographical perspective, I find that the driving forces of regional job reallocation rates depend on the local heterogeneity of industries and geography. (JEL J63, E32, R10)
    March 09, 2016   doi: 10.1111/coep.12174   open full text
  • A Note On The Nonlinear Effect Of Minimum Wage Increases.
    Aspen Gorry, Jeremy J. Jackson.
    Contemporary Economic Policy. March 09, 2016
    We use a labor search model with worker experience to assess the effects of minimum wage increases. Minimum wages can have nonlinear effects on unemployment as higher minimum wages become binding for larger portions of the underlying productivity distribution. The model is used to assess the increases proposed by the Obama Administration from $7.25 an hour to $9.00 and then to $10.10 per hour. We find that minimum wage increases have large effects on youth unemployment. These large effects cast doubt on using past empirical estimates of the effects of minimum wages that do not account for potential nonlinearities. (JEL E24, J08, J24, J64)
    March 09, 2016   doi: 10.1111/coep.12175   open full text
  • Economic Freedom And Growth In U.S. State‐Level Market Incomes At The Top And Bottom.
    Travis Wiseman.
    Contemporary Economic Policy. March 04, 2016
    This paper investigates the relationship between economic freedom and income growth and inequality across U.S. states over the period 1979–2011. The focus is on market income at the top and bottom of the income distribution. Results show that increases in overall freedom are associated with average income growth. When viewed separately, an increase in overall freedom is associated with larger income growth rates for income earners in the bottom 90% relative to the top 10%. Interestingly, results show that increases in overall economic freedom are related to larger relative growth rates for the top 10% incomes within high‐income states and larger relative growth rates for the bottom 90% incomes within low‐income states. Top‐to‐bottom income ratio regressions suggest a negative and statistically significant relationship between economic freedom and income inequality. (JEL D63, P16, R11)
    March 04, 2016   doi: 10.1111/coep.12173   open full text
  • Estimating The Effects Of Brownfields And Brownfield Remediation On Property Values In A New South City.
    Peter M. Schwarz, Gwendolyn L. Gill, Alex Hanning, Caleb A. Cox.
    Contemporary Economic Policy. March 02, 2016
    Using data from Charlotte, NC, a New South city without a legacy of heavily contaminated properties, we find the distance from unremediated brownfields—typically former industrial properties believed to have modest contamination—to have no effect on residential sales values, but proposed cleanup and actual remediation have positive, substantial, and significant effects especially within 0.5 miles of the brownfield. Our results are consistent whether we examine all property values within a given distance, such as 0.5 miles, or examine discrete distances, such as 0.3–0.5 miles. An estimate of the benefits is on the order of $4 million. (JEL Q51, Q24, Q28, R52)
    March 02, 2016   doi: 10.1111/coep.12171   open full text
  • Prepaid Electricity Plan And Electricity Consumption Behavior.
    Yueming Qiu, Bo Xing, Yi David Wang.
    Contemporary Economic Policy. February 22, 2016
    By using customer‐level residential billing data from 2008 to 2010 of a major utility company in Phoenix metropolitan area, this study adopts a matching approach and a difference‐in‐differences method to estimate empirically the impact of a prepaid electricity plan on residential electricity consumption, after correcting for selection bias. Results show that the prepaid program is associated with a 12% reduction in electricity usage, customers with lower level of wealth or those with higher amount of arrearage prior to switching to the prepaid program tend to save more electricity after switching, and prepaid customers save more electricity in the summer than winter. (JEL L94, Q41)
    February 22, 2016   doi: 10.1111/coep.12170   open full text
  • Voter Preferences, Institutions, And Economic Freedom.
    George R. Crowley, John A. Dove, Daniel Sutter.
    Contemporary Economic Policy. February 22, 2016
    The enormous impact that economic freedom can have on economic outcomes makes an understanding of the factors or forces affecting its level paramount. To what extent do citizen preferences regarding the role of government in the economy drive the level of or changes in economic freedom? We explore this question using a new index of voting in the U.S. Congress constructed consistent with the Fraser Institute indices of economic freedom. We use voting on national legislation to examine state‐level economic freedom to clearly separate the measurement of preferences from policies that at least partly reflect these preferences. We find that Congressional votes, both from the House and Senate, are related to increases in state economic freedom, and that the result is generally statistically and economically significant, and robust to inclusion of a variety of socioeconomic control variables. (JEL D72, H10, H50)
    February 22, 2016   doi: 10.1111/coep.12168   open full text
  • When Is A Good Time To Raise The Minimum Wage?
    Samuel M. Lundstrom.
    Contemporary Economic Policy. February 22, 2016
    I analyze changes in the target efficiency of the federal minimum wage over the past 25 years. Using static simulation methods I find that minimum wage target efficiency is currently close to its 25‐year peak—of the total monetary benefits generated by a 12% increase in the federal minimum wage, 16.8% would flow to workers in poverty. This exceeds the least target efficient year over this period by 4.7 percentage points and is only 0.6 percentage points below the peak. Furthermore, I find a very strong positive relationship between minimum wage target efficiency and the real federal minimum wage. The implication is that, from an efficiency standpoint, a good time to raise the minimum wage is when it is already high. This discovery raises the possibility that the minimum wage increases the employment of low‐skilled poor individuals relative to the employment of low‐skilled non‐poor individuals. Moreover, this discovery may bolster the rationale for an indexed minimum wage whereby it is prevented from falling to less efficient levels. (JEL J21, J31, J38)
    February 22, 2016   doi: 10.1111/coep.12169   open full text
  • How Does Skills Mismatch Affect Remittances? A Study Of Filipino Migrant Workers.
    James Ted McDonald, Maria Rebecca Valenzuela.
    Contemporary Economic Policy. February 19, 2016
    In this article, unit record data on Filipino migrants are used to analyze the issue of skills mismatch, its prevalence, and its impact on remittances sent back home. Results obtained using instrumental variable techniques reveal that significant proportions of highly educated Filipino workers are employed in low‐skilled jobs overseas, with systematic variation by gender and by country of work. We find that skills mismatch impacts significantly on the migrant's remittance behavior, with effects that are differentiated between genders. Specifically, where there is mismatch in the migrant's educational attainment and the migrant's job requirement, we find significant reductions in remittances for men but not for women. (JEL J240, J610, O150)
    February 19, 2016   doi: 10.1111/coep.12167   open full text
  • Political Institutions, Governance, And Consumption Expenditure In Developing Countries: A Panel Data Analysis.
    Abu S. Shonchoy.
    Contemporary Economic Policy. January 19, 2016
    This article aims at identifying the determinants of government expenditures of developing countries by placing emphasis on the political institutions and governance variables, which have not been addressed so much in the previous literature. Using a panel data analysis for 97 developing countries from the period 1984 to 2004, this study finds evidence that controlling for economic, social, and demographical factors, political institutional and governance variables significantly influence the consumption expenditure in developing countries. Political institutional variables such as the type of political ruling and political power in the parliament positively influence consumption expenditure; on the contrary, governance variables such as corruption influence negatively. Furthermore, we find that autocratic governments with military ruling are not particularly accommodative toward consumption expenditures as the public spending significantly shrinks under military dictatorship compared with other forms of governance. In order to check consistency of our findings, we ran alternative specifications as well as conducted extreme bound tests. Our results largely survived these tests showing robustness of our findings. (JEL E01, E02, E61, E62, H2, H4, H5, H6, O11, O5)
    January 19, 2016   doi: 10.1111/coep.12162   open full text
  • Does Education Loan Debt Influence Household Financial Distress? An Assessment Using The 2007–2009 Survey Of Consumer Finances Panel.
    Jesse Bricker, Jeffrey Thompson.
    Contemporary Economic Policy. January 18, 2016
    Families with student loans in 2007 have higher levels of financial distress than families without such loans, and these families also transitioned to financial distress at higher rates during the early stages of the Great Recession. This correlation persists once we control for a host of other demographic, work‐status, and household balance sheet measures. Families with an average level of student loans were 3.1 percentage points more likely to be 60 days late paying bills and 3 percentage points more likely to be denied credit. Families with other types of consumer debt were no more or less likely to be financially distressed. (JEL D14, H81, I22)
    January 18, 2016   doi: 10.1111/coep.12164   open full text
  • The Behavior Of U.S. Public Debt And Deficits During The Global Financial Crisis.
    Thanh Dat Nguyen, Sandy Suardi, Chew Lian Chua.
    Contemporary Economic Policy. January 13, 2016
    In this paper we test the sustainability of U.S. public debt for the period 1916–2012 by analyzing how the primary surplus to gross domestic product (GDP) responds to changes in the debt to GDP ratio in a time‐varying parameter model. Further, we determine the stationarity property of the debt/GDP ratio while accommodating possible breaks in the data caused by wars and economic crisis under both the null and alternative hypotheses of an endogenous unit root test. The results show that the U.S. public debt was sustainable until 2005 when the primary surplus to GDP reacted negatively to the debt/income ratio. This is further exacerbated during the global financial crisis when primary surpluses continued to fall with increased debt, thus jeopardizing the sustainability of fiscal policy. While the stationarity test shows that the U.S. fiscal debt/GDP ratio is sustainable, it fails to highlight the risk that its debt policy has been becoming unsustainable in recent years. (JEL H62, E62, C2)
    January 13, 2016   doi: 10.1111/coep.12166   open full text
  • Interest Rate Corridor, Liquidity Management, And The Overnight Spread.
    Hande Küçük, Pinar Özlü, İsmaİl Anil Talaslı, Deren Ünalmış, Canan Yüksel.
    Contemporary Economic Policy. December 21, 2015
    We analyze the determinants of the overnight spread (the spread between the Borsa Istanbul overnight repo interest rate and the average funding rate of the Central Bank of the Republic of Turkey [CBRT]) using data from both the conventional and the new monetary policy episodes. We empirically document that the overnight spread has recently been influenced by various factors that are directly or closely related to the liquidity policy of the CBRT. (JEL E43, E52, C24)
    December 21, 2015   doi: 10.1111/coep.12165   open full text
  • How Do Speed And Security Influence Consumers' Payment Behavior?
    Scott Schuh, Joanna Stavins.
    Contemporary Economic Policy. December 21, 2015
    The Federal Reserve named improvements in the speed and security of the payment system as two of its policy initiatives for 2012–2016. Using new data from the 2013 Survey of Consumer Payment Choice (SCPC) and models from earlier research, we estimate how various aspects of speed and security influence consumers' decisions to adopt and use payment instruments. Some aspects of speed and security have a statistically significant influence on the adoption and use of selected payment instruments, but not as much as other characteristics of payment instruments. Using econometric models to simulate selected policies proposed by the Fed, we show that faster speed of payment deduction for Automatic Clearing House (ACH) transactions would slightly increase consumers' adoption of ACH‐based payment methods, while enhanced security of payment cards would marginally increase the use of credit and debit cards. However, neither improvement is likely to increase consumer welfare much because consumer demand for payments is very inelastic with respect to speed and security. Our analysis focuses exclusively on consumers' behavior and does not include potential benefits of improvements to the payment system that would directly benefit businesses or financial institutions. In addition, preventing security breaches may preserve public confidence in the payment system, benefitting consumers even if they do not change their payment behavior. (JEL D12, D14, E58)
    December 21, 2015   doi: 10.1111/coep.12163   open full text
  • Old‐Age Pension And Extended Families: How Is Adult Children's Internal Migration Affected?
    Xi Chen.
    Contemporary Economic Policy. December 18, 2015
    This article makes use of the most recent social pension reform in rural China to examine whether receipt of the pension payment equips adult children of pensioners to migrate. Employing a regression discontinuity (hereafter RD) design to a primary longitudinal survey, this article overcomes challenges in the literature that households eligible for pension payment might be systematically different from ineligible households and that it is difficult to separate the effect of pension from that of age or cohort heterogeneity. Around the pension eligibility age cutoff, results reveal large and significant increase among adult sons (but not daughters) to migrate out of their home county. Meanwhile, adult children are more likely to migrate out if their parents are healthy. Our Fuzzy RD estimations survive a standard set of key placebo tests and robustness checks. (JEL H55, I38 J14, J22)
    December 18, 2015   doi: 10.1111/coep.12161   open full text
  • How Did Exchange Rates Affect Employment In U.S. Cities?
    Haifang Huang, Yao Tang.
    Contemporary Economic Policy. December 16, 2015
    We estimate the effects of exchange rate on U.S. employment, exploiting differences in industrial composition across major cities. We find that a 1% depreciation of export‐weighted real exchange rate has a positive 0.98% direct effect on manufacturing employment. Its indirect effect on local nonmanufacturing employment rises with the size of the local manufacturing sector, consistent with the hypothesis that there exists a local spillover from the tradable to the nontradable sector. In cities with heavy concentration of manufacturing employment, the indirect effect is statistically significant and about 60% as large as the direct effect measured by the number of jobs. (JEL F3, F1, J2)
    December 16, 2015   doi: 10.1111/coep.12159   open full text
  • Improving U.S. Transmission Expansion Policy Through Order No. 1000.
    Richard M. Benjamin.
    Contemporary Economic Policy. December 16, 2015
    This article examines the latest attempt of the United States' regulatory agency, the Federal Energy Regulatory Commission (FERC), to promote transmission expansion through the transmission planning and cost allocation principles contained in its recently issued Order No. 1000. It finds the level of detail contained in the order's cost allocation principles to be insufficient to achieve FERC's goals. It argues that the order does provide important principles for both transmission planning and expansion, though. It thus presents a cost allocation methodology which channels the order's strengths. Specifically, the methodology obtains an estimate of the benefits of a project and aligns the costs and benefits of the project accordingly. (JEL K23, Q48)
    December 16, 2015   doi: 10.1111/coep.12158   open full text
  • Effectiveness Of Monetary Policy In Sweden.
    Richhild Moessner, Jakob de Haan, David‐Jan Jansen.
    Contemporary Economic Policy. December 12, 2015
    We study whether the sensitivity of Swedish interest rates to domestic economic news was affected by the zero lower bound (ZLB) and forward guidance. We find that the sensitivity was reduced at the ZLB at short but not at longer maturities, suggesting that monetary policy remained effective at longer horizons. Moreover, it was unaffected during a later period of the ZLB/negative policy rates, suggesting that monetary policy remained effective at all horizons then. We also find that the sensitivity of interest rates to domestic news was unaffected by forward guidance, suggesting that market participants understood the conditionality of the forward guidance. (JEL E52, E58)
    December 12, 2015   doi: 10.1111/coep.12160   open full text
  • The Impact Of Inflation On Property Crime.
    John M. Nunley, Michael L. Stern, Richard A. Seals, Joachim Zietz.
    Contemporary Economic Policy. November 12, 2015
    Using U.S. data from 1950 to 2010, we analyze to what extent inflation raises the incidence of property crime. To match our theoretical predictions, we consider different types of property crime (larceny, burglary, motor vehicle theft, and robbery) and broad and narrow definitions of inflation separately. We control for the state of the business cycle and demographic changes over time explicitly. Unobserved or difficult‐to‐measure determinants of property crime are captured through a stochastic‐trend specification within a state‐space framework. We find a robust statistical link between inflation and each of the four property crime rates. Our findings are robust to alternative definitions of inflation and the inclusion or exclusion of different control variables. In terms of policy, our findings suggest that monetary policy that creates inflation has costly spillover effects. (JEL J10, J11)
    November 12, 2015   doi: 10.1111/coep.12156   open full text
  • The (Aggregate) Demand For State‐Lottery Tickets: What Have We Really Learned?
    Thomas A. Garrett.
    Contemporary Economic Policy. November 12, 2015
    Lottery‐demand models using aggregate data are often used to make inferences regarding individual behavior, the most important being the distributional burden of lottery‐ticket expenditures. It is shown here that estimates for the income elasticity and the cross‐price elasticity will only be representative of individual behavior under extremely restrictive assumptions. In fact, estimation of aggregate‐demand models presupposes that the income elasticity is equal to one. Cross‐sectional analyses using microlevel data face similar restrictions on consumer behavior. Remedies are discussed, but more conclusive evidence on the distributional burden of lotteries will remain elusive until better individual‐level data become available. (JEL D11, H71, H22)
    November 12, 2015   doi: 10.1111/coep.12155   open full text
  • Mass Layoffs, Manufacturing And State Business Climates: Does State Policy Matter?
    Christopher J. Surfield, C. Surender Reddy.
    Contemporary Economic Policy. November 12, 2015
    This study provides the first estimates on the relationship between state public policies and job losses in the manufacturing sector. In addition, spatial model estimation is adopted to identify any effect that state policies may have on the adopting state as well as upon neighboring states. We find evidence that favorable ratings regarding some elements of a state's business climate coincide with a lower incidence of job loss. This relationship holds beyond the adopting state and is correlated with lower job losses in contiguous states. (JEL J50, J60, M50)
    November 12, 2015   doi: 10.1111/coep.12157   open full text
  • Do Minimum Legal Tobacco Purchase Age Laws Work?
    Ceren Ertan Yörük, Barş K. Yörük.
    Contemporary Economic Policy. October 29, 2015
    This paper uses a regression discontinuity design to estimate the impact of the minimum legal tobacco purchase age (MLTPA) laws on smoking behavior among young adults. Using data from the confidential version of National Longitudinal Survey of Youth (1997 Cohort), which contains information on the exact birth date of the respondents, we find that the impact of the MLTPA on several indicators of smoking among youth is moderate but often statistically insignificant. However, for those who reported to have smoked before, we show that granting legal access to cigarettes and tobacco products at the MLTPA leads to an increase in several indicators of smoking participation, including up to a 5 percentage point increase in the probability of smoking. These results imply that policies that are designed to restrict youth access to tobacco may only be effective in reducing smoking behavior among certain groups of young adults. (JEL I10, I18, I19)
    October 29, 2015   doi: 10.1111/coep.12153   open full text
  • Factor Determinants Of Total Factor Productivity Growth For The Japanese Manufacturing Industry.
    Sangho Kim.
    Contemporary Economic Policy. October 23, 2015
    This study uses industrial panel data for Japanese manufacturing to estimate the sources of productivity growth by simultaneously considering embodied technical progress, spillover effects, and openness, after controlling for returns to scale, imperfect competition, and capacity utilization. Estimation results show the existence of considerable embodied technical progress and interindustry externalities of capital investments positively affecting productivity growth. Furthermore, embodied technical progress causes research and development (R&D) capital to affect productivity growth insignificantly, suggesting that the impact of R&D is realized only after being embodied into other capitals. From sector‐wise estimations, we notice differences in factors affecting productivity growth between the durable and nondurable manufacturing sectors. (JEL D24, O30)
    October 23, 2015   doi: 10.1111/coep.12152   open full text
  • Cryptocurrencies, Network Effects, And Switching Costs.
    William J. Luther.
    Contemporary Economic Policy. October 16, 2015
    Cryptocurrencies are digital alternatives to traditional government‐issued paper monies. Given the current state of technology and skepticism regarding the future purchasing power of existing monies, why have cryptocurrencies failed to gain widespread acceptance? I offer an explanation based on network effects and switching costs. In order to articulate the problem that agents considering cryptocurrencies face, I employ a simple model developed by Dowd and Greenaway (1993) (Dowd, K., and D. Greenaway. “Currency Competition, Network Externalities, and Switching Costs: Towards an Alternative View of Optimum Currency Areas.” The Economic Journal, 103(420), 1993, 1180–89). The model demonstrates that agents may fail to adopt an alternative currency when network effects and switching costs are present, even if all agents agree that the prevailing currency is inferior. The limited success of bitcoin—almost certainly the most popular cryptocurrency to date—serves to illustrate. After briefly surveying episodes of successful monetary transition, I conclude that cryptocurrencies like bitcoin are unlikely to generate widespread acceptance in the absence of either significant monetary instability or government support. (JEL E40, E41, E42, E49)
    October 16, 2015   doi: 10.1111/coep.12151   open full text
  • Would Australia–New Zealand Be A Viable Currency Union? Evidence From Interstate Risk‐Sharing Performances.
    Faisal Rana, Faruk Balli.
    Contemporary Economic Policy. October 16, 2015
    In this article, we first measure the potential welfare gains from perfect risk sharing among Australian states and New Zealand regions under possible unification. We show that New Zealand regions reap moderate gains from perfect risk sharing when they form a union with Australia, whereas for Australian states, the gains are somewhat similar to what they have attained at the intranational level. Second, we measure the extent of interstate risk sharing and intertemporal smoothing between the two countries. We are able to observe a substantial degree of intertemporal smoothing among Australian states and New Zealand regions, either alone or jointly, thus confirming the permanent income hypothesis. Further, unique to the risk‐sharing literature, we decompose the aggregate (nondiversifiable) output shocks into positive and negative components, in order to assess the strength of risk‐sharing mechanisms across business cycles. The study finds a virtual absence of risk sharing when Australia and New Zealand face negative aggregate fluctuations, raising doubts about the feasibility of the union, particularly during economic downturns. (JEL F41, F36)
    October 16, 2015   doi: 10.1111/coep.12130   open full text
  • Exercising Willpower: Differences In Willpower Depletion Among Athletes And Nonathletes.
    Adam Hoffer, Lisa Giddings.
    Contemporary Economic Policy. October 16, 2015
    This study presents the results from a controlled experiment designed to test for differences in willpower depletion between athletes and nonathletes. Individuals with more willpower are more likely to have high school and college degrees, higher earnings, better jobs, lower crime and poverty rates, and are less likely to be obese. Recent research has established that reserves of willpower get depleted, leaving individuals unable to carry out tasks that require further self‐control. The experimental results show that after administering a willpower‐draining task, athletes persisted for significantly longer—exhibited less willpower depletion—on an unsolvable puzzle than nonathletes. (JEL C91, J24)
    October 16, 2015   doi: 10.1111/coep.12150   open full text
  • Willingness‐To‐Pay For Sporting Success Of Football Bundesliga Teams.
    Pamela Wicker, John C. Whitehead, Bruce K. Johnson, Daniel S. Mason.
    Contemporary Economic Policy. October 16, 2015
    This study shows that fans and people living in the region of 28 Football Bundesliga teams from all three divisions are willing to support their team financially. Survey respondents were asked for their willingness‐to‐pay to avoid a negative outcome (e.g., relegation) and to achieve a positive outcome (e.g., promotion). Fan bonds are applied as an alternative payment vehicle within the contingent valuation method. The results show that different factors affect the decision to support the team and the actual amount of willingness‐to‐pay—for attendees and nonattendees. Public goods are particularly relevant for reporting a positive willingness‐to‐pay. (JEL Z23, L83, H41)
    October 16, 2015   doi: 10.1111/coep.12148   open full text
  • Should We Care About The Composition Of Tax‐Based Stimulus Packages?
    K. Peren Arin, Peter H. Helles, Murat Koyuncu, Otto F. M. Reich.
    Contemporary Economic Policy. October 16, 2015
    We investigate the effects of tax policy shocks on the U.S. economy over the 1972:3–2008:4 period within a structural vector autoregressive (SVAR) framework. Disaggregating tax shocks suggests that the positive output multipliers documented for total taxes by the previous literature are present only for indirect tax innovations. We also show that both labor and corporate taxes have similar effects on output, with labor tax multipliers being slightly larger in magnitude. The positive and negative responses of inflation following respectively corporate and labor tax shocks imply that former shocks work through aggregate supply, whereas the latter work predominantly through aggregate demand. (JEL C32, E62, H20)
    October 16, 2015   doi: 10.1111/coep.12131   open full text
  • The Risk Of Fire Sales In The Tri‐Party Repo Market.
    Brian Begalle, Antoine Martin, James McAndrews, Susan McLaughlin.
    Contemporary Economic Policy. August 26, 2015
    This paper studies the risk of “fire sales” in the tri‐party repo market, a large and important market where securities dealers find short‐term funding for a substantial portion of their own and their clients' assets. We distinguish between fire sales of assets by a dealer who, facing a run that could lead to default, sells securities to generate liquidity, and fire sales of assets by repo investors after a dealer's default has occurred. While fire sales do cause damage no matter how they arise, the tools available to lessen the harm from the two types of fire sales are different. We find that limited tools are available to mitigate the risk of predefault fire sales and that no established tools currently exist to mitigate the risk of postdefault sales. (JEL G01, G18)
    August 26, 2015   doi: 10.1111/coep.12126   open full text
  • Foreign Entry Into U.S. Service Industry By Takeovers And The Creation Of New Firms.
    Zadia M. Feliciano, Jing Sun.
    Contemporary Economic Policy. July 20, 2015
    We study the relation between foreign entry in U.S. service sector industries and the revealed comparative advantage of the investing country using U.S. Bureau of Economic Analysis firm‐level data on all foreign takeovers and new foreign‐owned firms from 1998 to 2008. We find foreign acquisitions in the service sector are in industries of U.S. comparative advantage while new foreign firms are in industries of investing country's comparative advantage. This suggests that foreign acquisitions in the service sector are not directly related to foreign investors' competitiveness in the industry of investment. In contrast foreign investors in new service sector firms come from countries with a competitive edge in the industries of investment. We also find that foreign investors of new service sector firms are from Organization for Economic Co‐operation and Development (OECD) countries with a comparative disadvantage in royalties and trademarks. (JEL F21, F23, G34)
    July 20, 2015   doi: 10.1111/coep.12121   open full text
  • Privatization In China: Technology And Gender In The Manufacturing Sector.
    Ana C. Dammert, Beyza Ural Marchand.
    Contemporary Economic Policy. May 20, 2014
    This paper examines the impact of privatization on gender discrimination in China across firms with different technology intensities. Using a comprehensive firm‐level survey, the paper identifies gender wage‐productivity differentials by directly estimating the relative productivity levels of workers from the production function of firms. The panel structure of the survey is taken advantage of by following firms that were fully state‐owned in the initial year, and distinguishing them from firms that were later privatized. The main results show that privatization was associated with an increase in relative productivity of female workers in high technology industries, and a reduction in relative productivity of female workers in low technology industries. Time varying coefficient results suggest that the improvements in gender outcomes in high technology industries may not be maintained in the long run as the relative wage and productivity ratios tend to deteriorate, potentially due to low supply of highly educated female workers. At the same time, outcomes in privatized low technology industries increase over time, lowering the wage and productivity gaps between male and female workers. (JEL J16, J31, P20)
    May 20, 2014   doi: 10.1111/coep.12071   open full text
  • State Income Taxes And Military Service Members' Legal Residency Choices.
    Whitney B. Afonso.
    Contemporary Economic Policy. May 18, 2014
    Using military residency data from 1998 to 2005 across all 50 states, I find that income taxes deter legal residencies and that the effect grows as income increases. My results indicate that states with no income tax or with exemptions for military wages experience 100% and 39% more service member residencies, respectively, than states with an income tax. The influence of state tax policy increases with higher pay and tenure. My findings are in keeping with economic theory, which suggests that high income workers will migrate out of high tax areas and be replaced by low income workers. (JEL H24, H71, J61)
    May 18, 2014   doi: 10.1111/coep.12072   open full text
  • Fiscal Convergence In The European Union Before The Crisis.
    Silvia Bertarelli, Roberto Censolo, Caterina Colombo.
    Contemporary Economic Policy. May 16, 2014
    This article investigates fiscal convergence attained by EU countries in the period 1991–2008, by employing β‐ and σ‐convergence techniques complemented by a time series analysis. Overall our results highlight a distinctive convergence pattern in the European Union. Fiscal discipline leading to a fast convergence of deficit/GDP ratio over the 1990s markedly weakened in the following decade. Nonetheless, after the Euro debut a pronounced convergence in total revenue and total government spending emerges, with different patterns characterizing each expenditure component. Despite this evidence of fiscal harmonization, European treaties failed to attract countries toward a common share of government debt over GDP. (JEL E61, H11, C23)
    May 16, 2014   doi: 10.1111/coep.12073   open full text
  • Effects Of China And India On Manufactured Exports Of The G7 Economies.
    Khuong M. Vu.
    Contemporary Economic Policy. May 13, 2014
    This article analyzes the effects of China and India on manufactured exports of the G7 economies. The following three findings stand out. First, the rivalry effect of China is robustly significant in all investigated markets, including the world and the G7 countries collectively and individually, while the rivalry effect of India is significant in the French, Italian, Japanese, and world markets but insignificant in other markets. Second, the rivalry effect of China in the world market is substantial in 13 of 22 manufacturing industries, and most pronounced for textiles, telecom equipment, fabricated metal products, computing machinery, and furniture, while this effect of India is significant only in one industry (basic metals). Third, Germany is the only G7 economy that appears not to be affected by China's rivalry effect. Germany has also been more successful than other G7 economies in penetrating the Chinese market. (JEL O4, F1)
    May 13, 2014   doi: 10.1111/coep.12069   open full text
  • Housing Markets And The Global Financial Crisis: The Complex Dynamics Of A Credit Shock.
    Arthur Grimes, Sean Hyland.
    Contemporary Economic Policy. May 12, 2014
    We analyze the multiple channels of influence that global financial crisis‐induced credit restrictions had on New Zealand's subnational housing markets. The dynamics caused by the credit shock are compared to those caused by a migration shock, a more common form of housing shock in New Zealand. We focus on the impacts on two outcome variables, house prices and housing supply, within a structural time series model of regional housing markets. Both shocks cause substantial and prolonged cyclical adjustments in each variable. Similar cyclical dynamics could complicate the conduct of macroprudential policies designed to affect bank credit allocation. (JEL E32, E44, R21)
    May 12, 2014   doi: 10.1111/coep.12070   open full text
  • Fiscal Multipliers During The Global Financial Crisis: Fiscal And Monetary Interaction Matters.
    Ju Hyun Pyun, Dong‐Eun Rhee.
    Contemporary Economic Policy. May 08, 2014
    This study investigates the fiscal multipliers of 21 Organization for Economic Co‐operation and Development countries during the global financial crisis using panel vector auto regression methodology. Our findings suggest that the 1‐year fiscal multiplier was greater than 1 during the crisis, whereas it was less than 1 before the crisis because of different fiscal and monetary interactions. The combination of expansionary monetary and fiscal policies during the crisis boosted gross domestic product more effectively through internal and external transmissions: investment crowding‐out was limited, and net exports were spurred by the policy interaction. In addition, our results are robust to various specifications. (JEL E61, E63, E65)
    May 08, 2014   doi: 10.1111/coep.12067   open full text
  • Why Do Charter Schools Fail? An Analysis Of Charter School Survival In New Jersey.
    Julia Schwenkenberg, James Vanderhoff.
    Contemporary Economic Policy. May 05, 2014
    Charter school competition can only work as a policy to improve public education if schools that do not contribute to this goal are allowed to fail. We estimate survival regressions to assess the effects of various factors on the probability of school failure. We find that students' test scores are the most important determinant of survival: a one standard deviation increase reduces the probability of failure by 76%. Higher expenditures per student and a longer wait list result in smaller, but significant, reductions. Enrollment, average performance in the host district, and student demographics do not significantly affect school survival. (JEL I21, H75)
    May 05, 2014   doi: 10.1111/coep.12068   open full text
  • Why Is Cash (Still) So Entrenched? Insights From Canadian Shopping Diaries.
    Carlos A. Arango, Dylan Hogg, Alyssa Lee.
    Contemporary Economic Policy. April 09, 2014
    One similarity among many developed economies is the predominance of cash over electronic payments in terms of payment frequency, especially for the low‐value transactions that are the bulk of retail payments. We use the Bank of Canada's 2009 Methods‐of‐Payment Survey, which collected information on consumers' payment choices through shopping diaries, to estimate a simple model of choice between cash and other payment methods. Results suggest that the main reasons cash is still a popular payment instrument in Canada, especially for low‐value transactions, are its wide acceptance among merchants compared with other alternatives, speed and ease of use, and low marginal cost when on hand. (JEL E41, D12, L81)
    April 09, 2014   doi: 10.1111/coep.12066   open full text
  • Early Withdrawals From Retirement Accounts During The Great Recession.
    Robert Argento, Victoria L. Bryant, John Sabelhaus.
    Contemporary Economic Policy. April 07, 2014
    Early withdrawals from retirement accounts are a double‐edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that preretirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower‐income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock. (JEL G23, H24, H31)
    April 07, 2014   doi: 10.1111/coep.12064   open full text
  • Repeal Of Prohibition: A Benefit‐Cost Analysis.
    Donald F. Vitaliano.
    Contemporary Economic Policy. April 07, 2014
    In spite of an estimated increase in annual alcohol‐related motor vehicle costs of $2.767 billion (1947 dollars), the net social benefit of repeal of alcohol Prohibition amounts to $432 million per annum in 1934–1937, about 0.33% of gross domestic product. Total benefits of $3.25 billion consist primarily of increased consumer and producer surplus, tax revenues, and reduced criminal violence costs. A Monte Carlo simulation shows the probability of negative net benefits is 16%. The estimated price elasticity of demand for spirits, beer, and wine are –.60, −.56, and –.51 respectively, which is consistent with the modern literature. (JEL D61, I18, K420, I120)
    April 07, 2014   doi: 10.1111/coep.12065   open full text
  • Economies Of Scale And Scope: The Case Of Specialty Hospitals.
    Kathleen Carey, James F. Burgess, Gary J. Young.
    Contemporary Economic Policy. April 03, 2014
    The recent growth of physician‐owned hospitals specializing in orthopedic and surgical specialty services in the United States has generated considerable controversy, yet there is little understanding of the economic logic of organizing hospital services around these single specialties. This article takes a multiple output hospital cost function approach to an empirical investigation of whether single specialty hospitals (SSHs) exhibit economies of scale and economies of scope as keys to new insights into that logic. We applied generalized estimating equation techniques to a sample of 80 SSHs and 883 general hospital competitors over the 1998–2008 period. Results indicated large underlying scale differences across the organizational types. Simulation analysis revealed the potential for exploitation of economies of scope gained from shifting output from SSHs to general hospitals. (JEL I18, L23)
    April 03, 2014   doi: 10.1111/coep.12062   open full text
  • Love, Toil, And Health Insurance: Why American Husbands Retire When They Do.
    Joshua Congdon‐Hohman.
    Contemporary Economic Policy. April 03, 2014
    The provision of health insurance has previously been shown to be an important determinant of retirement timing among older Americans, but the existing literature has largely ignored some aspects of the interspousal dependence of health insurance benefits. Specifically, the literature examines only how retirement may affect the health insurance available to the potential retiree but not how it might affect a spouse's options. Using data from the Health and Retirement Study, I find that the impact a husband's retirement might have on a wife's health insurance options has a statistically significant impact on a husband's rate of retirement that is independent of considerations of his own health insurance options. In households where the wife is the only one at risk of losing affordable health insurance if the husband retires, the husband is 30% less likely to retire than if neither spouse is at risk (a 5 percentage point decrease in the retirement rate). Based on these findings, prior research is missing one avenue that changes to the Medicare eligibility age and health insurance policy changes through the Affordable Care Act might impact the labor supply of older workers. (JEL I13, J26, J32)
    April 03, 2014   doi: 10.1111/coep.12060   open full text
  • Assessing Returns To Education And Labor Shocks In Mexican Regions After Nafta.
    AndrÉ Varella Mollick, RenÉ Cabral.
    Contemporary Economic Policy. April 03, 2014
    This article examines Mexico's (real) wage movements across its 32 subnational entities for post‐North American Free Trade Agreement years. Employing dynamic panel data methods, we obtain the following results. First, education (or labor productivity) has slightly higher wage effects in the Border‐North region. Second, allowing for foreign capital and labor to respond to wages, returns to education have higher effects in South‐Center Mexico, the region with (average) lower education levels. Third, convergence rates become lower with endogenous foreign capital and migration flows: wages move faster in the South‐Center region than in Border‐North. Overall, migration flows have greater effects on wages than foreign direct investment inflows. (JEL F15, F21, F22, F43, O47)
    April 03, 2014   doi: 10.1111/coep.12063   open full text
  • Comparing Federal And Private‐Sector Wages Without Logs.
    Justin R. Falk.
    Contemporary Economic Policy. April 03, 2014
    I use Current Population Survey data from 2005 through 2010 to compare the wages of federal employees and workers in the private sector who have similar observable characteristics. The distribution of wages differed drastically between the federal and private sectors. In particular, I find that federal employees with no more than a high school diploma earned 21% more, on average, than their private‐sector counterparts, whereas those with a professional degree or doctorate earned 23% less. Overall, the average of federal wages was about 2% higher than the average wage of similar private‐sector workers. Other researchers have found larger differences because they used log‐linearized models, which result in comparisons of geometric means. I show that arithmetic means are more relevant in the context of the relationship between a government's compensation policy and its budget. The discrepancy between differences in arithmetic and geometric means occurs because the wages of federal employees were much less dispersed than those of employees with similar characteristics in the private sector. (JEL J31, J38, J45)
    April 03, 2014   doi: 10.1111/coep.12061   open full text
  • Microeconomic Reform And Income Distribution: The Case Of Australian Ports And Rail Freight.
    George Verikios, Xiao‐Guang Zhang.
    Contemporary Economic Policy. April 03, 2014
    We analyze structural changes in the Australian ports and rail freight industries that were driven by microeconomic reform; we find such reforms may generate welfare gains with reduced inequality. We estimate the effects on household income groups of these industry changes by applying a computable general equilibrium model incorporating microsimulation behavior. The structural changes lead to a small increase in household welfare in most regions, with an overall increase of 0.18%, and a small decrease in inequality. Our analysis suggests that policy makers in Australia and other high‐income nations should give serious consideration to microeconomic reform of infrastructure industries. (JEL C68, C69, D31, L92)
    April 03, 2014   doi: 10.1111/coep.12059   open full text
  • Expansionary Versus Contractionary Government Spending.
    Anthony J. Makin.
    Contemporary Economic Policy. March 24, 2014
    This article theoretically examines the impact of different forms of government spending on national income in a financially open economy with a significant net international investment position the central bank of which sets domestic interest rates to target inflation. It shows that whether government spending is expansionary or contractionary ultimately depends on the productivity of that expenditure, a result that has major implications for the efficacy of fiscal policy deployed for either stimulus or austerity reasons. The key prediction of the model is that public consumption and unproductive public investment are procyclical, whereas only productive public investment is countercyclical. (JEL F41)
    March 24, 2014   doi: 10.1111/coep.12051   open full text
  • The Taylor Principle In The Long Run: An Empirical Perspective.
    Yu‐Hsi Chou, Jyh‐Lin Wu.
    Contemporary Economic Policy. March 20, 2014
    In this paper, we empirically assess the Taylor principle in the long run with a small‐scale, trivariate structural vector autoregression. Using U.S. data spanning the period from 1959Q1 to 2010Q2 and different measures of inflation and the output gap, we find that the Taylor principle is supported in the long run for the post‐1979 era, but the principle is unlikely to hold in the long run for the pre‐1979 era. (JEL E52, E58)
    March 20, 2014   doi: 10.1111/coep.12055   open full text
  • Are Television And Video Games Really Harmful For Kids?
    Makiko Nakamuro, Tomohiko Inui, Wataru Senoh, Takeshi Hiromatsu.
    Contemporary Economic Policy. March 20, 2014
    Are watching television (TV) and playing video games really harmful for children's development? By using a unique longitudinal dataset with detailed information on children's development and health, we examined the causal effect of hours of TV watched or of video games played on school‐aged children's problem behavior, orientation to school, and obesity. The results suggested that the answer to the question is yes, but the magnitude of the effect is sufficiently small to be considered as negligible. The results were robust to within‐twin‐fixed effects. (JEL I10, I20)
    March 20, 2014   doi: 10.1111/coep.12058   open full text
  • Leveraged Buybacks Of Sovereign Debt: A Model And An Application To Greece.
    Angelo Baglioni.
    Contemporary Economic Policy. March 17, 2014
    The model presented in this article shows that the outcome of a leveraged buyback of sovereign debt depends on the priority structure of the deal. If the institution lending the funds needed for the buyback is senior, the debtor country benefits from the deal: the government debt is reduced, implying a lower probability of default; at the same time, the deal makes the price of outstanding bonds go down, since their recovery rate declines. The opposite holds if the lending institution is junior. If the loan is underpriced, the implied subsidy is shared between the borrowing country and its bondholders, who can benefit from a price increase of their bonds. This is actually what happened with the buyback of Greek sovereign bonds in 2012, as it is shown in the empirical section. Those results do not depend on the share of country's endowment devoted to debt repayment, which instead plays a crucial role in shaping the outcome of unlevered buybacks. (JEL F34, H63)
    March 17, 2014   doi: 10.1111/coep.12053   open full text
  • All In: An Empirical Analysis Of Legislative Voting On Internet Gambling Restrictions In The United States.
    Dennis Halcoussis, Anton D. Lowenberg.
    Contemporary Economic Policy. March 13, 2014
    In 2006, the U.S. Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) which prohibited financial institutions from processing transactions arising from online gaming activities, thereby severely hindering U.S. residents from participating in online casino games, primarily poker. Enactment of this legislation followed lobbying and political pressure from a variety of interest groups. By examining House roll call votes, we identify empirically the sources of political influence that resulted in passage of the internet gambling legislation. We find that party affiliation was of primary importance, with Republicans more likely to vote in favor of the bill. The percentage of constituents who are Evangelical Christians and also the number of gambling establishments in the district were positively associated with votes for the bill. However, contributions from the gaming industry decreased the probability a congressman would vote for the bill. (JEL D72, L83)
    March 13, 2014   doi: 10.1111/coep.12054   open full text
  • Negotiated Settlement Under Mlb Final‐Offer Salary Arbitration System.
    J. Richard Hill, Nicholas A. Jolly.
    Contemporary Economic Policy. February 21, 2014
    This paper provides a detailed analysis of negotiated salaries under Major League Baseball's final‐offer arbitration process using data from the 2007–2010 seasons. There is a wage premium of 25% for hitters and 14% for pitchers filing for arbitration. Interestingly, there is an additional premium for exchanging offers for hitters but not for pitchers. The additional premium in salary for hitters who exchange offers with their clubs amounts to 7%. (JEL J31, J52)
    February 21, 2014   doi: 10.1111/coep.12048   open full text
  • Estimating Productivity Growth In The Korean Economy Without Restrictive Assumptions.
    Sangho Kim.
    Contemporary Economic Policy. February 21, 2014
    This study eliminates the effects of markup, returns to scale, and capital utilization from the Solow residual (SR) for Korea to derive an alternative measure for productivity. Empirical results show that markup generates significant bias in the SR, and that the alternative productivity measure is greater than the residual. Furthermore, money supply Granger‐causes the SR but does not Granger‐cause the alternative measure, suggesting that the new productivity measure is consistent with the neutrality of money. The results contradict the presumption that the SR with variable capital utilization represents true technology shocks because it is orthogonal to demand shocks.(JEL C32, E32, O47)
    February 21, 2014   doi: 10.1111/coep.12046   open full text
  • Do Actions Speak As Loud As Words? Commitments To “Going Green” On Campus.
    Philip Sirianni, Michael O’hara.
    Contemporary Economic Policy. February 21, 2014
    Signatories to the American College and University Presidents' Climate Commitment (ACUPCC) pledge to pursue a path toward carbon neutrality through the choice of a set of Tangible Actions (TAs). The actions can be chosen either because they will lead to reductions or because they are the easiest to achieve. By exploiting the variation in the TAs chosen by colleges, we find evidence for both of these motivations. We find evidence that schools focusing their efforts on improving energy efficiency have achieved swift reductions. Conversely, schools pledging to use green power are generally already utilizing it and therefore do not achieve additional reductions. We conclude with suggestions for improvement in the ACUPCC reporting system that would improve potential for analysis. (JEL Q01, Q40, Q56)
    February 21, 2014   doi: 10.1111/coep.12047   open full text
  • Taxes, Income, And Retirement Savings: Differences By Permanent And Transitory Income.
    Bradley T. Heim, Ithai Z. Lurie.
    Contemporary Economic Policy. July 05, 2013
    This article examines the determinants of and benefits from saving for retirement in tax‐preferred accounts by permanent and transitory income levels. We find that higher incomes (both permanent and transitory) are associated with a greater probability to contribute and larger contributions. We also find that tax benefits for retirement savings increase strongly with income, although the increase is slightly smaller when taxpayers are ranked by their permanent (rather than current) income. In addition, we find that a large portion of the benefits from the Saver's Credit go to taxpayers who would not be eligible based on their permanent income. Finally, we find that recent tax changes (including the introduction of the Saver's Credit) significantly increased contributions among low‐income households, although the effect was centered among those with only transitorily low income. (JEL H24, H31, E21)
    July 05, 2013   doi: 10.1111/coep.12030   open full text
  • Judging Bias In Competitive Academic Debate: The Effects Of Region, Side, And Sex.
    Clifford C. Henson, Paul R. Dorasil.
    Contemporary Economic Policy. July 04, 2013
    Debate is a “mind sport” that requires fair and impartial judging. This study examines debate rounds at the Tournament of Champions from 2004 to 2009. We use a binomial choice model to estimate the marginal effects of regional bias, sex bias, and side bias, using transitive predictions to control for idiosyncratic quality. We find evidence of region and side bias but not sex bias. These factors may explain the significant number of nontransitive outcomes in the data. Finally, we suggest some policy remedies to mitigate the impact of biases and further applications of our methodology. (JEL C25, J16, J52, J71, L83)
    July 04, 2013   doi: 10.1111/coep.12032   open full text
  • Undocumented Workers' Employment Across U.S. Business Cycles.
    J. David Brown, Serife Genc, Julie L. Hotchkiss, Myriam Quispe‐Agnoli.
    Contemporary Economic Policy. July 01, 2013
    Using matched employer‐employee data from the state of Georgia, this paper investigates how employment of undocumented workers varies along the business cycle and how it differs from the adjustment in employment of documented workers. The cyclical component of undocumented employment is found to be significantly more volatile than the cyclical component of documented employment. Simulation results indicate that complementarities between documented workers and capital account for almost 90% of the difference in measured volatility between documented and undocumented employment. (JEL E24, J21, J15)
    July 01, 2013   doi: 10.1111/coep.12026   open full text
  • For Better Or For Worse, But How About A Recession?
    Jeremy Arkes, Yu‐Chu Shen.
    Contemporary Economic Policy. July 01, 2013
    In light of the current economic crisis, we estimate hazard models of divorce to determine how state and national unemployment rates affect the likelihood of a divorce or separation. With data in the United States over the 1978–2008 period from the 1979 NLSY, we find some evidence indicating that a higher unemployment rate increases the risk of a marriage ending for couples in years 6–10 of marriage (suggesting counter‐cyclical divorce/separation probabilities) but has no significant effect for couples in years 1–5 of marriage and those married longer than 10 years. The estimates are generally stronger in magnitude when using national instead of state unemployment rates and when considering just divorces rather than the first observed divorce or separation. (JEL J12)
    July 01, 2013   doi: 10.1111/coep.12029   open full text
  • Economic Freedom And Labor Market Conditions: Evidence From The States.
    Lauren R. Heller, E. Frank Stephenson.
    Contemporary Economic Policy. July 01, 2013
    Using 1981–2009 data for the 50 states, this article examines the relationship between economic freedom and the unemployment rate, the labor force participation rate, and the employment‐population ratio. After controlling for a variety of state‐level characteristics, the results from most specifications indicate that economic freedom is associated with lower unemployment and with higher labor force participation and employment‐population ratios. (JEL J68, K31, O43)
    July 01, 2013   doi: 10.1111/coep.12031   open full text
  • The Instability In The Monetary Policy Reaction Function And The Estimation Of Monetary Policy Shocks.
    Narayan Kundan Kishor, Monique Newiak.
    Contemporary Economic Policy. June 27, 2013
    We extend Romer and Romer's (2004) analysis of the estimation and the effects of monetary policy shocks by controlling for (1) changes in the monetary policy reaction function and (2) changes in the response of output and prices over time with an extended data set. The results suggest that the post 1979 responses of output and prices to a monetary policy shock are significantly different from what has been reported for the whole sample: While output and prices respond significantly and negatively if their response is estimated for the whole sample period (1969–2005), the response of output is insignificant for the period of 1979–2005, and the response of prices is much weaker. The analysis of the changes in the monetary policy conducted over time allows us to partly attribute the diminished price and output responses to a successful monetary policy which led to a less volatile economy during the great moderation. (JEL E52, E32, C50)
    June 27, 2013   doi: 10.1111/coep.12024   open full text
  • All Economic Freedom Is Not Created Equal: Evidence From A Gravity Model.
    Robert J. Sonora.
    Contemporary Economic Policy. June 25, 2013
    This article analyzes the differential impacts of different types of economic freedom on bilateral trade flows between the United States and 122 countries over 10 years. A gravity model of trade is employed to investigate how various freedom indices assembled by the Fraser Institute impact the volume of trade, exports, and imports. The main findings of the article are that each of the freedom indices impact heterogeneously across the measure of trade flows, with the changes in Regulation having the biggest impact on trade. All combinations of freedom are used to find the mixture of freedom which yields the largest trade gains. The largest gains from trade generally combine Business Regulation in a variety of different configurations. The smallest gains, or losses, to trade arise with augmented monetary independence. (JEL D02, F14, F55)
    June 25, 2013   doi: 10.1111/coep.12023   open full text
  • Health Investment And Economic Output In Regional China.
    Gang Chen, Brett Inder, Bruce Hollingsworth.
    Contemporary Economic Policy. June 23, 2013
    Using a 29‐year (1978–2006) panel of provincial‐level data from China, this article investigates the role of health capital in a human capital model of economic output. Robust evidence is found through panel cointegration analysis that health capital has a significant and positive effect on the Gross Regional Product in China; the effect being stronger in the inland regions compared to the coastal areas based on estimates that account for regional heterogeneity. This article highlights and discusses the potential role of diminishing returns to health investment in this globally important area. (JEL I15, R11, C23)
    June 23, 2013   doi: 10.1111/coep.12022   open full text
  • The Two‐Way Relationship Between Government Spending And Corruption And Its Effects On Economic Growth.
    Ratbek Dzhumashev.
    Contemporary Economic Policy. June 23, 2013
    The existing empirical evidence suggests that in low‐income economies, an increase in government spending leads to a reduction of growth. This article aims to explain this empirical fact by considering a growth model that incorporates a two‐way relationship between corruption and government spending. That is, government spending gives rise to corruption and rent seeking, which feeds back by distorting the structure and size of government spending. In addition, the cost of corruption depends on the wage rate. Therefore, in low‐income economies, increases in government spending tend to generate larger social losses caused by a higher level of rent dissipation and a concomitant rise in corruption and government inefficiency. Consequently, in such economies, an increase in government spending is more likely to result in a decline of economic growth. (JEL H3, O11, O41)
    June 23, 2013   doi: 10.1111/coep.12025   open full text
  • Economic Freedom, Sport Policy, And Individual Participation In Physical Activity: An International Comparison.
    Jane E. Ruseski, Katerina Maresova.
    Contemporary Economic Policy. June 23, 2013
    Many countries promote participation in physical activity among its citizens. We undertake an international comparative analysis of participation using data from 34 countries in the 2007 International Social Survey Programme Leisure Time and Sports module, augmented with country‐specific characteristics capturing economic freedom and national sport policy. Gross domestic product per capita and economic freedom are associated with higher physical activity participation; past success of the national team in the Olympics is associated with lower participation, but hosting sports mega‐events is associated with higher participation. Our findings indicate that participation in sport and physical activity falls with age and rises with education and income. (JEL H59, I12, I18, J22, L83)
    June 23, 2013   doi: 10.1111/coep.12027   open full text
  • Sports, Exercise, And Length Of Stay In Hospitals: Is There A Differential Effect For The Chronically Ill People?
    Nazmi Sari.
    Contemporary Economic Policy. June 23, 2013
    This paper examines the effects of sports and exercise on hospital stays for males and females by various chronic conditions using a panel dataset from Canada. The results suggest that moderately active and active individuals have shorter hospital stays than inactive individuals. On average, individuals with moderate to higher amount of physical activity stay 36% to 39% less than inactive individuals. Physical activity has consistent impact on hospital stays for the entire population as well as subgroup of people with or without chronic conditions. However, its effect is substantially larger for people with chronic conditions, especially for those who have diabetes, cancer, high blood pressure, heart disease, and stroke. The paper also suggests that additional exercise once moderate level of exercise is achieved does not generate substantially large benefits in the form of shorter hospital stays. Hence, it provides additional evidence to support the recent physical activity guidelines for adults that highlight health benefits of moderate amount of regular physical activity. (JEL I1)
    June 23, 2013   doi: 10.1111/coep.12028   open full text
  • Stress And Smoking: Associations With Terrorism And Causal Impact.
    Michael F. Pesko.
    Contemporary Economic Policy. June 20, 2013
    This study analyzes the effects of the Oklahoma City bombing and 9/11 terrorist attacks on stress, smoking, and smoking quit attempts using 1,657,985 observations from the Behavioral Risk Factor Surveillance System. Regression discontinuity results suggest that, in the fourth quarter of 2001, stress increased by nearly an extra half day per 30 days (11.9%) among ever smoking adults. In the 2 years after 9/11, smoking prevalence increased by 1.1 percentage points (2.3%) among ever smoking adults, resulting in between 950,000 and 1,300,000 adult former smokers becoming smokers again because of terrorism. The net cost to the government was between $530 million and $830 million through the end of 2003. Adults reported disproportionate stress increases based on community military participation and education. Simultaneity between smoking and stress is addressed by an instrumental variables model, providing validity to the hypothesized causal pathway between terrorism, stress, and smoking. This model suggests that an extra day of stress per 30 days causes a 3.4 percentage point increase in smoking among ever smoking adults. Results help to quantify a hidden cost of terrorism and provide a better understanding of utility maximization during periods of high stress. (JEL I12, I18)
    June 20, 2013   doi: 10.1111/coep.12021   open full text
  • Regulatory Forbearance And Depositor Market Discipline: Evidence From Savings Banks In Korea.
    Hyosoon Choi, Wook Sohn.
    Contemporary Economic Policy. June 20, 2013
    This paper investigates whether regulatory forbearance for savings banks in Korea affects the market discipline of depositors using data from 2000 to 2010, which are characterized by a series of exits of savings banks. We find that depositors' sensitivity to the savings banks' asset quality decreases when there is regulatory forbearance for failing savings banks. This forbearance effect is also observed in the behavior of the depositors of the neighboring savings banks in the same business area. These results suggest that regulatory forbearance may cause depositors to misjudge bank risks, increasing the expected costs of bank failure. (JEL G21, G28)
    June 20, 2013   doi: 10.1111/coep.12020   open full text
  • The Effect Of Welfare Asset Rules On Auto Ownership, Employment, And Welfare Participation: A Longitudinal Analysis.
    Lorien Rice, Cynthia Bansak.
    Contemporary Economic Policy. May 19, 2013
    This paper investigates how asset tests for welfare eligibility affect auto ownership, employment, and welfare participation for single mothers without a college degree. We combine longitudinal data from the 1996 Survey of Income and Program Participation with data on state‐level welfare program rules from the Urban Institute and data on state‐level controls to test whether these single mothers were more likely to (1) own a car, (2) be employed, and (3) be off of welfare, depending on the welfare asset rules instituted in their state. We find evidence that, taken as a group, the asset rules have a statistically significant effect on the probability of car ownership. Ordinary least squares results and cross‐sectional two‐stage least squares (2SLS) results using the asset rules to instrument for car ownership show a large, positive, statistically significant effect of car ownership on employment. However, in 2SLS models controlling for prior car ownership and prior employment, the asset instruments are weaker and we do not find an effect of car ownership on employment. Of significance for policy makers, we find that the asset rules do not have a statistically significant joint effect on welfare participation, even after addressing possible endogeneity. (JEL I38, J68, J08)
    May 19, 2013   doi: 10.1111/coep.12019   open full text
  • Understanding Measures Of Nonmarital Fertility: The Roles Of Marriage And Access To Human Capital.
    Jo Anna Gray, Joe Stone.
    Contemporary Economic Policy. May 08, 2013
    This paper proposes an explanation for several decades of rising U.S. nonmarital birth rates and shares, and for cross‐sectional differences in black‐white fertility. Significantly, the explanation does not rely on changes over time or differences across races in individual fertility behavior. It is consistent with the rising nonmarital fertility measures observed in the United States since the mid‐1970s, higher measured fertility for unmarried blacks than whites, and differences across races in the timing of childbearing, despite nearly constant total fertility rates and increasingly similar target family sizes for blacks and whites. The explanation relies on a selection effect associated with changes in the marriage rate and on racial differences in access to human capital investment opportunities. We find strong support for the explanation using U.S. data over the period 1957–2002. Our findings suggest caution in interpreting the results of empirical studies of childbearing that examine marital and nonmarital fertility rates separately, as these studies typically ignore the selection effect of marriage. (JEL J12, J13, I38)
    May 08, 2013   doi: 10.1111/coep.12018   open full text
  • Persistent Effects Of Transitory Exchange Rate Shocks On Firm Dynamics.
    Jen Baggs, Eugene Beaulieu, Loretta Fung.
    Contemporary Economic Policy. May 03, 2013
    Recent evidence demonstrates that exchange rate movements can affect firm survival and entry. However, there is little evidence on whether there are asymmetric effects of an appreciation versus depreciation. This article uses firm‐level data over a period of a large currency appreciation followed by a large depreciation to examine possible asymmetries in firm survival and entry resulting in the endurance of exchange rate effects. We find that when real currency appreciations precede depreciations, appreciations reduce firm entry rates to a greater degree than depreciations increase that rate; but appreciations reduce the probability of firm survival at a magnitude not significantly different from the increase in probability that results from a depreciation. Taken together, we find that a 10% reciprocal episode of exchange rate appreciation and depreciation will result in 1,647 (5.2%) fewer firms compared with a regime with no change in the exchange rate. These results are consistent with exchange rate hysteresis whereby a transitory exchange rate shock has a permanent effect. (JEL F1)
    May 03, 2013   doi: 10.1111/coep.12015   open full text
  • Stadium Construction And Minor League Baseball Attendance.
    Seth R. Gitter, Thomas A. Rhoads.
    Contemporary Economic Policy. May 03, 2013
    The established literature shows that new stadium construction for major league baseball (MLB) teams can increase attendance, but there are limited studies at the minor league level. We use a data set encompassing all A, AA, and AAA minor league baseball teams from 1992 to 2006 to estimate the impact of stadium construction on minor league attendance. This data set includes almost 200 teams, over half of which constructed a new stadium during the 15‐year observation period. Over a 10‐year period our results show that new stadiums increase attendance by 1.2 million fans at the AAA level, 0.4 million at the AA and high A level, and 0.2 million at short season low A. A cost benefit analysis suggests that increased ticket sales do not offset the stadium costs, in line with previous works on MLB. (JEL H0, L83)
    May 03, 2013   doi: 10.1111/coep.12016   open full text
  • Right On Target: Exploring The Factors Leading To Inflation Targeting Adoption.
    Anna Samarina, Jakob De Haan.
    Contemporary Economic Policy. May 03, 2013
    This paper examines which economic, fiscal, external, financial, and institutional characteristics of countries affect the likelihood that they adopt inflation targeting (IT) as their monetary policy strategy. We estimate a panel binary response model for 60 countries and two subsamples consisting of Organization for Economic Cooperation and Development (OECD) and non‐OECD countries over the period 1985–2008. The findings suggest that past macroeconomic performance of a country, its fiscal discipline, exchange rate arrangements, as well as the structure and development of its financial system have a significant impact on the likelihood to adopt IT. However, the factors leading to IT adoption differ significantly between OECD and non‐OECD countries. (JEL E42, E52)
    May 03, 2013   doi: 10.1111/coep.12017   open full text
  • Regulatory Dealing: Technology Adoption Versus Enforcement Stringency Of Emission Taxes.
    Jessica Coria, Clara Villegas‐Palacio.
    Contemporary Economic Policy. April 03, 2013
    We analyze the role of targeted enforcement of emissions taxes when the regulator wants to minimize aggregate emissions via the adoption of new more environmentally friendly technology. The regulator wants to speed up the path of technology adoption generated by a policy of uniform enforcement (that monitors adopters and nonadopters with the same probability) by engaging in a regulatory deal where a reduced monitoring probability is granted in “exchange” for adoption of the new technology. We set up a theoretical model, characterize the circumstances in which such dealing minimizes aggregate emissions, and test our hypothesis using economic laboratory experiments. Our analytical and experimental results suggest that even though such a deal might imply an increased level of violation by adopters, such tolerance is rather an integral part of an overall enforcement strategy that minimizes aggregate emissions when the rate of adoption is endogenous. (JEL L51, Q53, Q55, Q58)
    April 03, 2013   doi: 10.1111/coep.12013   open full text
  • Do Chinese Unions Have “Real” Effects On Employee Compensation?
    Ying Ge.
    Contemporary Economic Policy. March 28, 2013
    In this article, we use enterprise population‐level data to investigate the effectiveness of Chinese unions in improving employee wage and nonwage compensation. We show that the effectiveness of Chinese unions stems from a “collective voice” face rather than from a “monopoly” face. The empirical findings on the effectiveness of unions are remarkable: unions in the workplace significantly improve employee wage and nonwage compensation, along with employee training. Moreover, the presence of unions within the same region and industry generates positive spillovers for employee compensation. The unions in China do have “real” effects. (JEL J30, J50, J51, K31)
    March 28, 2013   doi: 10.1111/coep.12012   open full text
  • Economic Freedom And Income Inequality Revisited: Evidence From A Panel Error Correction Model.
    Nicholas Apergis, Oguzhan Dincer, James E. Payne.
    Contemporary Economic Policy. March 28, 2013
    We investigate the causal relationship between income inequality and economic freedom using data from U.S. states over the period 1981 to 2004 within a panel error correction model framework. The results indicate bidirectional causality between income inequality and economic freedom in both the short and the long run. These results suggest that high income inequality may cause states to implement redistributive policies causing economic freedom to decline. As economic freedom declines, income inequality rises even more. In other words, it is quite possible for a state to get caught in a vicious circle of high income inequality and heavy redistribution. (JEL D63, H11)
    March 28, 2013   doi: 10.1111/j.1465-7287.2012.00343.x   open full text
  • Scale Effect Versus Induced Policy Response In The Environmental Kuznets Curve: The Case Of U.S. Water Pollution.
    Ching‐Yao Irene Lai, C.C. Yang.
    Contemporary Economic Policy. March 28, 2013
    The environmental Kuznets curve (EKC) could arise from the scale effect in abatement technology as emphasized by Andreoni and Levinson (2001) or from the induced policy response as suggested by Grossman and Krueger (1995). This paper incorporates these two contrary views into a model and quantitatively evaluates their relative importance in shaping the EKC of U.S. water pollution. Our main findings include: (a) some scale effect in abatement technology must exist, otherwise the turning point of the EKC will be unreasonably high; (b) the scale effect alone is not sufficient to explain the practical occurrence of the turning point of the EKC; and (c) the scale effect features critically in the induced policy response as well. (JEL H41, O40, Q20)
    March 28, 2013   doi: 10.1111/coep.12014   open full text
  • Economic Freedom Of The World: An Accounting Of The Literature.
    Joshua C. Hall, Robert A. Lawson.
    Contemporary Economic Policy. March 12, 2013
    The Economic Freedom of the World (EFW) index was first produced by Gwartney, Block, and Lawson (Economic Freedom of the World: 1975–1995; 1996) and has been updated annually since. During this period, the EFW index has been cited in hundreds of academic articles. Here, we provide an accounting and description of this literature. Of 402 articles citing the EFW index, 198 used the index as an independent variable in an empirical study. Over two‐thirds of these studies found economic freedom to correspond to a “good” outcome such as faster growth, better living standards, more happiness, etc. Less than 4% of the sample found economic freedom to be associated with a “bad” outcome such as increased income inequality. The balance of evidence is overwhelming that economic freedom corresponds with a wide variety of positive outcomes with almost no negative tradeoffs. (JEL P0, O43)
    March 12, 2013   doi: 10.1111/coep.12010   open full text
  • Hiring From High‐Risk Populations: Lessons From The U.S. Military.
    Lauren Malone.
    Contemporary Economic Policy. March 06, 2013
    In this study, we evaluate the performance of waivered recruits in the U.S. military. Unlike the private sector, the military has formal standards for identifying ideal recruits and uses a formal screening process to determine those within risky populations who are most likely to succeed. (Recruits who make it through the screening process are issued a waiver.) The military's establishment of waiver categories and its tracking of waiver status provide us with a case study for determining whether such risk‐identification strategies work. Using FY99–FY08 service‐level waiver and personnel data, we evaluate whether the military recruiting strategy has been successful and whether firms should consider adopting similar screening mechanisms. We estimate the effect of waiver status on attrition and promotion, our primary performance indicators, after controlling for other quality indicators. We find that waivered recruits, on the whole, are not particularly poor performers, although their inherent riskiness does vary by service and by waiver type. (JEL J45, M51, J23)
    March 06, 2013   doi: 10.1111/coep.12005   open full text
  • Tracing The Effects Of Guaranteed Admission Through The College Process: Evidence From A Policy Discontinuity In The Texas 10% Plan.
    Jason M. Fletcher, Adalbert Mayer.
    Contemporary Economic Policy. March 06, 2013
    The Texas 10% law states that students who graduated among the top 10% of their high school class are guaranteed admission to public universities in Texas. We estimate the causal effects of this admissions guarantee on a sequence of connected decisions: students' application behavior, admission decisions by the university, students' enrollment choices conditional on admission; as well as the resulting college achievement. We identify these effects by comparing students just above and just below the top 10% rank cut off. We assume that other student characteristics and incentives are continuous at this cut off. We find that students react to incentives created by the admissions guarantee—for example, by reducing applications to competing private universities. The effects of the admissions guarantee depend on the university and the type of students it attracts. The 10% law is binding and alters the decisions of the admissions committees. We find little evidence that the law increases diversity or leads to meaningful mismatch for the marginal student admitted. (JEL I23, I28)
    March 06, 2013   doi: 10.1111/coep.12011   open full text
  • Government Transparency And Expenditure In The Rent‐Seeking Industry: The Case Of Japan For 1998–2004.
    Eiji Yamamura, Haruo Kondoh.
    Contemporary Economic Policy. February 25, 2013
    Since the end of the 1990s, local governments in Japan have enacted Information Disclosure Ordinances, which require the disclosure of official government information. This article uses Japanese prefecture‐level data for the period 1998–2004 to examine how this enactment affected the rate of government construction expenditure. The Dynamic Panel model is used to control for unobserved prefecture‐specific effects and endogenous bias. The major finding is that disclosure of government information reduces the rate of government construction expenditure. This implies that information disclosure reduces losses from rent‐seeking activity, which is consistent with public choice theory. (JEL D73, D78, H79)
    February 25, 2013   doi: 10.1111/coep.12001   open full text
  • The Economic Effect Of Banning Smoking In Wisconsin's Bars And Restaurants.
    Joshua Glonek.
    Contemporary Economic Policy. February 25, 2013
    There is much debate as to whether or not the passage of no‐smoking laws has adverse consequences for businesses in the hospitality industry. In 2010, the state of Wisconsin implemented a law that banned smoking in all public places. Using a panel of county‐level employment data, I examine the relationship between the implementation of smoking bans in Wisconsin and the subsequent changes in bar and restaurant employment. Using variation in the timing of bans that occurred as a result of four counties that implemented local bans prior to the July 2010 statewide ban, I conduct a difference‐in‐differences analysis to measure the average treatment effect of implementing a smoking ban in Wisconsin. I find that restaurant employment is not affected and that bar employment is significantly reduced as a result of the smoking ban. I also find that counties with higher levels of smoking prevalence see greater reductions in bar employment when a smoking ban is enacted. Back‐of‐the‐envelope estimates suggest that even though there are employment losses, the benefits of the smoking ban outweigh the costs. (JEL L510, D780)
    February 25, 2013   doi: 10.1111/coep.12003   open full text
  • Are Disagreements Among Male And Female Economists Marginal At Best?: A Survey Of Aea Members And Their Views On Economics And Economic Policy.
    Ann Mari May, Mary G. Mcgarvey, Robert Whaples.
    Contemporary Economic Policy. February 25, 2013
    The authors survey economists in the United States holding membership in the American Economic Association (AEA) to determine if there are significant differences in views between male and female economists on important policy issues. Controlling for place of current employment (academic institution with graduate program, academic institution—undergraduate only, government, for‐profit institution) and decade of PhD, the authors find many areas in which economists agree. However, important differences exist in the views of male and female economists on issues including the minimum wage, views on labor standards, health insurance, and especially on explanations for the gender wage gap and issues of equal opportunity in the labor market and the economics profession itself. These results lend support to the notion that gender diversity in policy‐making circles may be an important aspect in broadening the menu of public policy choices. (JEL A11, J78, A14)
    February 25, 2013   doi: 10.1111/coep.12004   open full text
  • Restricting Employment Of Low‐Paid Immigrants: A General Equilibrium Assessment Of The Social Welfare Implications For Legal U.S. Wage‐Earners.
    Peter B. Dixon, Maureen T. Rimmer, Bryan W. Roberts.
    Contemporary Economic Policy. February 25, 2013
    This paper builds on earlier work that used a general‐equilibrium model to show that reducing employment of unauthorized immigrants in the United States through a tighter border‐security policy lowers the average income of legal residents. Here we exploit further the detail available in the general‐equilibrium model to look at distributional effects, recognizing that the policy increases wage rates for low‐paid legal workers. We assess the social welfare effect on legal workers using a constant elasticity of substitution social welfare function. We contrast our general‐equilibrium approach to immigration analysis with the more commonly used partial‐equilibrium, econometric approach. (JEL D63, J61, C68)
    February 25, 2013   doi: 10.1111/coep.12008   open full text
  • Beauty And Productivity: The Case Of The Ladies Professional Golf Association.
    Seung Chan Ahn, Young Hoon Lee.
    Contemporary Economic Policy. February 25, 2013
    There is evidence that attractive looking workers earn more than average looking workers, even after controlling for a variety of individual characteristics. The presence of such beauty premiums may influence the labor supply decisions of attractive workers. For example, if one unit of a product by an attractive worker is more rewarded than that by her less attractive coworker, the attractive worker may put more effort into improving her productivity. We examine this possibility by analyzing panel data for individual female golfers participating in the Ladies Professional Golf Association (LPGA) tour. We found that attractive golfers recorded lower than average scores and earn more prize money than average looking players, even when controlling for player experience and other variables related to their natural talents. This finding is consistent with the notion that physical appearance is associated with individual workers' accumulation of human capital or skills. If the human capital of attractive workers is at least partly an outcome of favoritism toward beauty, then the premium estimates obtained by previous studies may have been downwardly biased. (JEL J3, J7, L8)
    February 25, 2013   doi: 10.1111/coep.12009   open full text
  • School Choice: Supporters And Opponents.
    David M. Brasington, Diane Hite.
    Contemporary Economic Policy. February 25, 2013
    We examine the attitudes of Ohio homeowners about school choice, which includes open enrollment programs, school vouchers, tuition tax credits, and charter schools. Previous studies examine more limited forms of choice and investigate fewer possible influences. Overall we report at least five new findings and five findings that contradict previous studies. We find the strongest predictors of opposition for school choice are people having graduate degrees and living in high‐performing public school districts. We find people living in blue collar areas and using private schools to be the strongest predictors of support. Males tend to oppose choice and African Americans support it. We find no role for income, the convenience of alternative schools, or the protection of house values in support for school choice. Overall we report at least five new findings and five findings that contradict previous studies. (JEL H44, I22)
    February 25, 2013   doi: 10.1111/coep.12002   open full text
  • Gender Inequality In Education In China: A Meta‐Regression Analysis.
    Junxia Zeng, Xiaopeng Pang, Linxiu Zhang, Alexis Medina, Scott Rozelle.
    Contemporary Economic Policy. February 25, 2013
    Although there is evidence that there was gender inequality in China's education system in the 1980s, the literature in China has mixed evidence on improvements in gender inequality in educational attainment over the past three decades. Some suggest gender inequality is still severe; others report progress. We seek to understand the progress China has made (if any) in reducing gender inequality in education since the 1980s. To meet this goal, we use a meta‐analysis approach which provides a new quantitative review of a relatively large volume of empirical literature on gender educational differentials. This article analyzes differences across both time and space, and also across different grade levels and ethnicities. Our results indicate that gender inequality in educational attainment still exists, but it has been narrowing over time. Moreover, it varies by area (rural versus urban) and grade level. There is nearly no significant gender inequality in the case of girls in urban areas or in the case of the 9 years of compulsory education (primary school and junior high school). Girls, however, still face inequality in rural areas (although inequality is falling over time) and when they reach high school or beyond. (JEL I24)
    February 25, 2013   doi: 10.1111/coep.12006   open full text
  • Do Politics Cause Regime Shifts In Monetary Policy?
    Shiu‐Sheng Chen, Chun‐Chieh Wang.
    Contemporary Economic Policy. February 25, 2013
    Whether or not politics cause changes in monetary policy is controversial in the literature. This article re‐examines the link between politics and regime shifts in monetary policy using two alternative approaches. First, empirical results show that both the presidential and Federal Reserve Bank (Fed) chairmanship regimes do not influence monetary policy under the assumption that the Fed closely follows an interest rate rule. On the other hand, evidence also suggests that changes in political regimes are able to account for the deviations from the optimal Taylor rule. (JEL E52, E58, D78)
    February 25, 2013   doi: 10.1111/coep.12007   open full text
  • Macroeconomic Policy Reforms And Productivity Growth In African Agriculture.
    Andrew Ojede, Amin Mugera, Daigyo Seo.
    Contemporary Economic Policy. February 25, 2013
    This article employs a two‐stage procedure to investigate the impact of macroeconomic policy reforms on the agricultural productivity growth of 33 African countries from 1981 to 2001. In the first stage, we measure agricultural productivity using a nonparametric Malmquist productivity index. In the second stage, we build a generalized method of moments (GMM) model with a measure of structural adjustment program (SAP) intensity as a key instrument for macroeconomic policy reforms. We also control for the effects of globalization, civil violence, level of development of physical and financial infrastructure, and other economic variables as well as natural resource factors that directly affect agricultural productivity. Our results indicate a strong positive correlation between the extent of SAP intensity and agricultural productivity, suggesting that the macroeconomic policy reforms improved agricultural productivity growth in the sample countries. (JEL E6, O13, O41)
    February 25, 2013   doi: 10.1111/coep.12000   open full text
  • Assessing The Impacts Of Labor Market And Deterrence Variables On Crime Rates In Mexico.
    Yu Liu, Thomas M. Fullerton, Nathan J. Ashby.
    Contemporary Economic Policy. October 03, 2012
    Many studies examine the relationship between crime rates and various economic and/or sociodemographic variables in high income countries, but similar efforts for middle and low income countries are less common. Utilizing an 8‐year panel data sample for all 32 states in Mexico, this study assesses the impact of Mexican labor market and deterrence variables on various Mexican crime rates. The principal results indicate that: (1) State gross domestic product (GDP) per capita has ambiguous effect on crime rates under different conditions. Both wages and unemployment rates are negatively linked with crime rates. (2) Although the Mexican judicial and public security systems are widely believed to be ineffective, increased federal police forces and incarceration rates are associated with lower crime rates, but higher public security expenditure per capita is associated with higher crime rates. (3) The impacts from labor market and deterrence variables presented in (1) and (2) continue to hold under the Fox administration as well as for non‐border states. Their respective impacts diminish, however, under the Calderon administration as well as for border states because of the small number of observations. Overall, the results indicate that increasing average wages, federal police forces, and incarceration rates would have significant impacts on reducing crime rates in Mexican states. (JEL O54, K42)
    October 03, 2012   doi: 10.1111/j.1465-7287.2012.00339.x   open full text
  • Residential Photovoltaic Energy Systems In California: The Effect On Home Sales Prices.
    Ben Hoen, Ryan Wiser, Mark Thayer, Peter Cappers.
    Contemporary Economic Policy. October 03, 2012
    Relatively little research exists estimating the marginal impacts of photovoltaic (PV) energy systems on home sale prices. Using a large data set of California homes that sold from 2000 through mid‐2009, we find strong evidence, despite a variety of robustness checks, that existing homes with PV systems sold for a premium over comparable homes without PV systems, implying a near full return on investment. Premiums for new homes are found to be considerably lower than those for existing homes, implying, potentially, a trade‐off between price and sales velocity. The results have significant implications for homeowners, builders, appraisers, lenders, and policymakers. (JEL R31, D12, C33)
    October 03, 2012   doi: 10.1111/j.1465-7287.2012.00340.x   open full text
  • Renaissance Or Requiem: Is Nuclear Energy Cost Effective In A Post‐Fukushima World?
    Peter M. Schwarz, Joseph A. Cochran.
    Contemporary Economic Policy. October 03, 2012
    In the aftermath of Fukushima, decisions to slow or stop the future use of nuclear power have not been based on rational economic analysis. We find that there are cost‐effective technologies that would greatly mitigate future natural disasters. Even if the U.S. nuclear industry adopted new safety technologies and paid the full cost of insurance and borrowing, it is more efficient to continue to use existing nuclear plants than to replace them with new fossil fuel plants. However, new nuclear plant costs can exceed fossil fuel alternatives if the price of carbon emissions is below $118/ton. (JEL Q40, Q48, Q54)
    October 03, 2012   doi: 10.1111/j.1465-7287.2012.00341.x   open full text
  • A Warm Embrace Or The Cold Shoulder? Wage And Employment Outcomes In Ethnic Enclaves.
    Roberto Pedace, Stephanie Rohn Kumar.
    Contemporary Economic Policy. October 03, 2012
    This paper examines how immigrant enclaves influence labor market outcomes. We examine the effect of variation in ethnic concentration across counties and county subdivisions on both immigrant earnings and employment using the non‐public use, 1‐in‐6 sample of the 2000 U.S. Census. We find that there is heterogeneity in enclave impacts by ethnic group and skill composition of the enclave. While some groups tend to suffer from lower wages and employment propensities when residing in areas with larger ethnic concentrations, others have higher wages and improved employment opportunities in enclaves. (JEL J61, J15, R23)
    October 03, 2012   doi: 10.1111/j.1465-7287.2012.00342.x   open full text
  • Social Interactions And College Enrollment: Evidence From The National Education Longitudinal Study.
    Jason Fletcher.
    Contemporary Economic Policy. September 25, 2012
    This paper uses nationally representative data on high school students to test for several types of social influences on the decision to enroll in college. An instrumental variable strategy is used in order to manage the well‐known reflection problem in social interactions research. Additionally, I am able to incorporate several usually unavailable group‐level factors to reduce the possibility of important group‐level characteristics driving the relationships. I present evidence that a 10 percentage point increase in the proportion of high school classmates who attend college is predicted to increase an individual's probability of attending college by approximately 2–3 percentage points. (JEL I2, J24, J18)
    September 25, 2012   doi: 10.1111/j.1465-7287.2012.00335.x   open full text
  • Is Hispanic Population Dispersion Into Rural Counties Contributing To Local Economic Growth?
    Dennis Coates, T. H. Gindling.
    Contemporary Economic Policy. September 20, 2012
    In the 1990s, rural counties in the United States, which had been losing population, became the destinations for an increasing number of Hispanics, slowing and in some cases reversing population declines. In this paper, we examine whether faster growth in the Hispanic population is linked to faster growth in income per capita in rural counties. Our results indicate strong support for the hypothesis that population growth caused by the increase in Hispanics, whether from international immigrants, migrants from within the United States, or from natural growth in families, has fueled increased economic growth in those small, rural communities whose populations had been in decline during the 1970s or the 1980s. (JEL J15, J61, R11)
    September 20, 2012   doi: 10.1111/j.1465-7287.2012.00334.x   open full text
  • Measuring The Impact Of Valuing Health Insurance On Levels And Trends In Inequality And How The Affordable Care Act Of 2010 Could Affect Them.
    Richard V. Burkhauser, Jeff Larrimore, Kosali Simon.
    Contemporary Economic Policy. September 20, 2012
    A substantial part of the U.S. inequality literature focuses on yearly levels and trends in pre‐tax, post‐transfer cash income and its distribution over time and finds that median income appears to be stagnating, with income growth primarily coming at higher income levels. When we use data from the Current Population Survey for 1995–2008 and add the value of employer‐ and government‐provided health insurance coverage, not only does it increase the upward trend in the level of resources controlled by Americans, but also reduces the level of inequality in these resources and its upward trend. We then provide a highly stylized example of this broader income measure's value in capturing the impact of two key provisions of the Affordable Care Act of 2010—an expansion in Medicaid and the provision of subsidies to lower‐income families for purchasing private coverage on state‐run exchanges. Even though these incremental expansions build on existing systems of government‐provided health insurance, we find that the vast majority of the benefits would still accrue to the bottom three deciles of the income distribution when we include the value of employer‐ and government‐provided health insurance in our expanded yearly income measure. (JEL D31, H51, I14)
    September 20, 2012   doi: 10.1111/j.1465-7287.2012.00336.x   open full text
  • Trade, Structural Reform, And Institutions In Sub‐Saharan Africa.
    Djeto Assane, Eric P. Chiang.
    Contemporary Economic Policy. September 20, 2012
    Sub‐Saharan African countries have traditionally lagged the rest of the developing world in terms of overall trade relative to gross domestic product. But, there is growing interest among these countries to initiate trade policies and improve quality of institutions as a way to promote trade and boost foreign direct investment. This article extends the gravity model of trade to include proxies for trade reform policy and institutional quality among the 15 countries of the Economic Community of West African States (ECOWAS) for data spanning 1984–2006. Alternative methods of estimation based on ordinary least squares, Heckman two‐step procedure, and Poisson pseudo‐maximum likelihood produce predictions that are consistent with the standard gravity model. They further highlight the evidence of restrictive trade policies and weak institutions that contribute to the failure of ECOWAS countries to boost bilateral trade. (JEL F13, F15, O19, O55)
    September 20, 2012   doi: 10.1111/j.1465-7287.2012.00338.x   open full text
  • From Budgetary Forecasts To Ex Post Fiscal Data: Exploring The Evolution Of Fiscal Forecast Errors In The European Union.
    Roel Beetsma, Benjamin Bluhm, Massimo Giuliodori, Peter Wierts.
    Contemporary Economic Policy. September 20, 2012
    This paper splits the ex post error in the budget balance, defined as the final budget figure minus the planned figure, into implementation and revision errors, and investigates the determinants of these errors. The implementation error is the difference between the nowcast, published toward the end of the year of budget implementation, and the planned budget, while the revision error is the difference between the final figure and the nowcast. The split takes account of differences in reporting incentives at the different budgeting stages. The predictive content of fiscal plans is important, because it determines the reliability of the budget, while that of the nowcasts is important also because these figures are an input for the next budget and may contain important signals about the fiscal stance. Implementation and revision errors may arise for political and strategic reasons. Our results suggest that an improvement in the quality of institutions, whether measured by the tightness of national fiscal rules, the medium‐term budgetary framework or budgetary transparency, increases the quality of budgetary reporting at both the planning and the nowcast stage. This supports the recently adopted requirements on national fiscal frameworks. It also strengthens the case for a close monitoring by the European Commission of national budgeting. (JEL E6, H6)
    September 20, 2012   doi: 10.1111/j.1465-7287.2012.00337.x   open full text
  • Mega‐Events And Sectoral Employment: The Case Of The 1996 Olympic Games.
    Arne Feddersen, Wolfgang Maennig.
    Contemporary Economic Policy. July 03, 2012
    Using the data of the 1996 Olympic Games, this paper analyzes the economic impact of a mega‐sporting event. Earlier studies are extended in several ways. First, monthly rather than quarterly data are employed. Second, the impact is analyzed for 16 different sectors. Third, we use a nonparametric approach to flexibly isolate employment effects. Hardly any evidence for a persistent shift in the aftermath of or the preparation for the Olympic Games is supported. We find significant positive employment effects exclusively during the Olympic Games. These short‐term effects are concentrated in the sectors of “retail trade,”“accommodation and food services,” and “arts, entertainment, and recreation.” (JEL H54, R12, L83)
    July 03, 2012   doi: 10.1111/j.1465-7287.2012.00327.x   open full text
  • Local And Statewide Smoke‐Free Laws In Nebraska: The Effects On Keno Establishments.
    Bree L. Dority, Mary G. Mcgarvey, Eric C. Thompson, Jyothsna Sainath.
    Contemporary Economic Policy. May 31, 2012
    This study examines how smoke‐free laws influence cross‐border keno shopping in Nebraska. We exploit smoke‐free law variation in timing and location to identify keno revenue gains and losses between neighboring smoke‐free and smoke‐friendly areas. We find the Lincoln municipal smoke‐free law reduced keno revenue by 23.5% in Lincoln and increased keno revenue by 30.0% in smoke‐friendly Surrounding Lincoln counties. The Omaha municipal smoke‐free law reduced keno revenue by 14.8% in Omaha and increased keno revenue by 7.1% in smoke‐friendly Surrounding Omaha counties. Following the Nebraska statewide law, no Nebraska areas had a smoke‐friendly advantage and keno revenue fell by an insignificant 1.0% and 5.2% in the surrounding Lincoln and Omaha counties, respectively. Our results may be of interest to local policy makers interested in understanding the amount of business activity and tax revenue that may be migrating out of a community or even the state. (JEL l18, K32)
    May 31, 2012   doi: 10.1111/j.1465-7287.2012.00326.x   open full text
  • Savings And Personal Discount Rates In A Matched Savings Program For Low‐Income Families.
    Marieka M. Klawitter, C. Leigh Anderson, Mary Kay Gugerty.
    Contemporary Economic Policy. May 31, 2012
    The ability to save for future needs is critical to family well‐being and is especially challenging for low‐income families with little extra income and limited access to institutional structures like employment‐based retirement funds or low cost savings mechanisms. Many nonprofits and governments have created new savings vehicles to fill this void. The ability of families to succeed in these programs may depend on their personal discount rates (time preferences). In this paper, we use survey data from a matched savings program and factor analysis to characterize family time preferences in order to predict their influence on savings levels. We find that a single latent factor describing the level of discount rates (rather than other dimensions of time or amount inconsistency) best describes family differences and is significantly related to the ability of families to save within the program. (JEL D91, I30)
    May 31, 2012   doi: 10.1111/j.1465-7287.2012.00325.x   open full text
  • Understanding The Interstate Export Of Crime Guns: A Gravity Model Approach.
    Leo H. Kahane.
    Contemporary Economic Policy. May 24, 2012
    In 2009, the Bureau of Alcohol, Tobacco, Firearms and Explosives successfully traced over 145,000 guns recovered at crime scenes in the United States. Of these guns, more than 43,000 were originally sold in a different state from which they were recovered. What factors may explain the interstate movement of these crime guns? This article uses the well‐known gravity model of international trade to estimate interstate flow of crime guns. Empirical results show that, like trade of goods and services between nations, the traced movement of crime guns between states is proportionate to the economic sizes of trading partners and is inversely proportionate to the distance between them. In addition, the presence of gangs in one or both states tends to increase the flow of crime guns. Finally, differences in state gun laws tend to affect trade flows with crime guns flowing from states with “weak” gun laws to states with “strict” gun laws. (JEL K00, K42)
    May 24, 2012   doi: 10.1111/j.1465-7287.2012.00324.x   open full text
  • Does Advertising Matter? Estimating The Impact Of Cigarette Advertising On Smoking Among Youth In Developing Countries.
    Deliana Kostova, Evan Blecher.
    Contemporary Economic Policy. May 21, 2012
    The goal of this paper is to evaluate the impact of cigarette advertising on smoking among youth in developing countries. Using micro‐level data from 19 developing countries, we examine the structural relationship between smoking behavior and advertising exposure and the reduced‐form relationship between smoking and advertising bans. Instrumental variables are used to address the endogeneity of advertising exposure. Country‐specific unobserved heterogeneity is further reduced by controlling for measures of antismoking sentiment and cigarette prices. After accounting for the endogeneity of advertising, we find that the positive correlation between smoking and advertising exposure in our sample can be largely explained by the disproportionately higher propensity of smokers to observe advertising rather than a direct causal effect of advertising on smoking. (JEL I12, I18)
    May 21, 2012   doi: 10.1111/j.1465-7287.2012.00323.x   open full text
  • Fast Food Prices And Adult Body Weight Outcomes: Evidence Based On Longitudinal Quantile Regression Models.
    Euna Han, Lisa M. Powell.
    Contemporary Economic Policy. May 21, 2012
    With a parallel increase in the consumption of food away from home, particularly fast food, and the obesity prevalence in the United States, evidence on the potential effectiveness of fiscal pricing policies to curb obesity is needed. We estimate changes in the dispersion of the entire conditional distribution of body mass index (BMI) associated with changes in fast food prices for adults using the National Longitudinal Survey of Youth 1979 in cross‐sectional and longitudinal quantile regression models. We find that the ordinary least squares estimate for men underestimates the negative relationship of fast food prices with BMI at the 50th and upper quantiles in cross‐sectional models although the statistical significance disappears in the longitudinal individual fixed effects quantile regression. Among subpopulations, we find that a 10% increase in the price of fast food is associated with 0.9% and 0.7% lower BMI for low‐income women and women with any children, respectively, at the 90th quantile in a longitudinal individual fixed effects model. Our results imply that fiscal pricing policies such as fast food taxes might have a greater impact on the weight outcomes of low‐income women or women with children in the upper tail of the conditional BMI distribution (JEL I00, I19).
    May 21, 2012   doi: 10.1111/j.1465-7287.2012.00322.x   open full text
  • The Impact Of Hiv Education On Behavior Among Youths: A Propensity Score Matching Approach.
    D. Mark Anderson.
    Contemporary Economic Policy. May 08, 2012
    There has been a long‐standing debate as to whether sex or human immunodeficiency virus (HIV) education actually influences the way young people behave. To the extent these programs work, they represent a potential mechanism policy‐makers might use to reduce risky behavior among youths. This paper uses data from the 2009 Youth Risk Behavior Survey to examine if students who have received school‐based HIV instruction behave differently than those who have not. To address potentially endogenous exposure to HIV education, this paper considers a propensity score matching approach. Findings from the propensity score analysis suggest that standard ordinary least squares results are biased. Despite this, there remains some evidence that exposure to HIV education decreases risky sexual activity. Among male students, HIV education is also negatively related to the rate of using needles to inject illegal drugs into the body. The needle use results are robust to a sensitivity analysis, while the results for sexual behaviors are not. (JEL H75, I18, I28, K32)
    May 08, 2012   doi: 10.1111/j.1465-7287.2012.00320.x   open full text
  • Do Psychological Shocks Affect Financial Risk Taking Behavior? A Study Of U.S. Veterans.
    Vicki L. Bogan, David R. Just, Brian Wansink.
    Contemporary Economic Policy. May 08, 2012
    Traditional economic theories assume that individuals are endowed with certain risk preferences that are unaltered by experiences. However, recent evidence indicates that macroeconomic shocks do have an effect on an individual's willingness to take financial risks. In the context of investment decisions, we examine empirically whether an individual's risk preferences are affected by other types of traumatic life experiences. Using a unique proprietary data set, we investigate whether personal traumatic experiences—such as the combat experiences of veterans—have long‐term effects on financial risk‐taking behavior. We find that having experienced combat decreases the probability of investing in risky assets. Key policy implications are noted. (JEL G11, D14)
    May 08, 2012   doi: 10.1111/j.1465-7287.2012.00319.x   open full text
  • The Impact Of Tax Regimes On International Trade Patterns.
    Michael W Nicholson.
    Contemporary Economic Policy. May 08, 2012
    This paper discusses the trade implications of value‐added taxes (VATs) that refund domestic taxes paid by exporters of domestic production while imposing taxes on imports of foreign production. VATs are used by over 140 countries of the world, including every member of the Organisation for Economic Co‐operation and Development except the United States. An investigation of the implications of border‐adjustable taxes on the U.S. trade balance suggests that VATs positively affect trade competitiveness but with differing impacts by sector. These results do not necessarily extend to the conclusion that a U.S. VAT would increase U.S. exports; such a prediction requires economic forecasting and appropriate simulations. The present results do imply that the adoption of VATs by other countries appears to have benefited U.S. trade. Panel data over 20 years, 29 industries, and 145 countries is used to conduct the analysis. (JEL F10, H20, K34)
    May 08, 2012   doi: 10.1111/j.1465-7287.2012.00321.x   open full text
  • Population Characteristics And Price Dispersion In The Market For Prescription Drugs.
    Adrienne Ohler, Vincent Smith.
    Contemporary Economic Policy. April 24, 2012
    We examine the relationship between population characteristics and price dispersion for 75 prescription drugs in five markets. Based on models of price dispersion, we consider that search costs are likely lower for the elderly, who are repeat purchasers. Expected benefits from search are likely higher for low‐income households, who lack insurance. Our results are consistent with the hypothesis that for communities with a large percentage of elderly and poor population, search effort is greater for pharmaceutical drugs, causing lower price dispersion. By understanding the characteristics of who searches for low drug prices, we begin to identify the motives of consumers that might also lead to search for the lowest cost healthcare provider or lowest cost insurance. The results suggest that the Medicare legislation that attempts to close the pharmaceutical doughnut hole may reduce search by the elderly, increase price dispersion, and potentially increase the average price of prescription drugs. (JEL D12, D83, I1, I18)
    April 24, 2012   doi: 10.1111/j.1465-7287.2012.00318.x   open full text
  • Banking System Concentration And Labor Market Performance In Industrial Countries.
    Horst Feldmann.
    Contemporary Economic Policy. April 24, 2012
    Using data on 21 industrial countries from the period 1987 to 2009 and a large number of controls, this paper finds that a more concentrated banking sector is likely to raise the unemployment rate and reduce the employment rate. The magnitude of these effects appears to be moderate. The results are robust to potential endogeneity of the bank concentration variable as well as to numerous variations in specification. They are important because, as a consequence of the recent global financial crisis, many industrial countries have experienced both an increase in banking system concentration and a deterioration in labor market performance. (JEL E24, G21, J64, L16)
    April 24, 2012   doi: 10.1111/j.1465-7287.2012.00316.x   open full text
  • Bids And Costs In Combinatorial And Noncombinatorial Procurement Auctions—Evidence From Procurement Of Public Cleaning Contracts.
    Anders Lunander, Sofia Lundberg.
    Contemporary Economic Policy. March 28, 2012
    Combinatorial procurement auctions enable suppliers to pass their potential cost synergies on to the procuring entity and may therefore lead to lower costs and enhance efficiency. However, bidders might find it profitable to inflate their stand‐alone bids in order to favor their package bids. Using data from standard and combinatorial procurement auctions, we find that bids on individual contracts in simultaneous standard auctions without the option to submit package bids are significantly lower than the corresponding stand‐alone bids in combinatorial auctions. Further, no significant difference in procurer's cost as explained by auction format is found. (JEL D44, H57, L15)
    March 28, 2012   doi: 10.1111/j.1465-7287.2012.00317.x   open full text
  • Labor Market Discrimination And Capital: The Effects Of Fan Discrimination On Stadium And Arena Construction.
    Örn B. Bodvarsson, Brad R. Humphreys.
    Contemporary Economic Policy. December 28, 2011
    We investigate the possibility that labor market discrimination affects capital. Previous research indicates that discrimination affects wages and employment in labor markets. However, the effects of discrimination on other inputs to production are not known. We develop a model of the optimal capital stock in the presence of customer discrimination and test this model using data on sports facility construction. The empirical evidence suggests that teams in cities with a larger white population and more racial segregation put less capital in place, confirming the predictions of the model about the effect of customer discrimination on capital inputs. (JEL J7, D24, L83)
    December 28, 2011   doi: 10.1111/j.1465-7287.2011.00303.x   open full text