JANUARY 27 2012
Greg Ip, Free exchange blog: Perverse
austerity. Cut the deficit too aggressively, and the negative
impact on growth and the rise in the cost of debt service from higher spreads
could result in a higher, not lower, debt-to-GDP ratio. It is not clear if the
IMF thinks that has actually happened, and it recommends caution in
interpreting these results. The analysis examined behavior across countries
rather than across time, and thus the results may reflect circumstances unique
to 2011.Still, the findings are sobering and explain the IMF's advice that
countries that have not been cut off from the markets must avoid further
discretionary austerity. “Decreasing debt is a marathon, not a sprint,”
observed Olivier Blanchard, the fund’s chief economist. “Going too fast will
kill growth.”
Chris Dillow, Stumbling and Mumbling Blog:
Is there an austerity curve? Duncan’s
idea is an austerity curve: Ccutting government spending up to a certain point
leads to lower deficits but beyond a certain point, the impact of lower growth
and higher unemployment means that deficits get worse as the government cuts
more. But the response of economies to macro policies varies over time and
place, so that there are few stable coefficients. It is therefore simply not
possible to know the precisely correct macro policies. Which makes the debate
between big cutters and little cutters a little like arguments about how many
angels dance on the head of a pin.
Fareed Zakaria, CNN Blog: Post-Communist
lessons for the new Middle East. Perhaps the biggest reason for
poverty-stricken nations like Egypt to pay close attention to Poland is that it
is a very rare breed in today's world, especially in Europe. Poland has a
strong economy - the sixth biggest in the European Union now and the only
European Union country to avoid a recession altogether. None of its banks
needed to be rescued. Its economy grew 4% last year, and is on track to grow 3%
in 2012. Why, you'll ask. How did it survive the turmoil in the Euro Zone? One
answer is that it has strong domestic demand and has been pouring money into
infrastructure projects. But the real - and fortuitous - reason is that Poland
has yet to be allowed in to the Euro Zone - it continues to use zlotys instead
of the euro. So unlike Greece or Italy, it was able to devalue its currency to
stay competitive.
Gary Gorton, Andrew Metrick, Yale: Getting
up to Speed on the Financial Crisis: A One‐Weekend‐Reader’s Guide. All
economists should be conversant with “what happened?” during the financial
crisis of 2007‐2009. We select and summarize 16 documents, including
academic papers and reports from regulatory and international agencies. This
reading list covers the key facts and mechanisms in the build‐up of risk, the panics in short‐term‐debt
markets, the policy reactions, and the real effects of the financial crisis.
A.C.S, Free Exhange Blog: Heads I win, tails you pay. STATE
pensions in American are in trouble.
Just how underfunded they are depends on how you calculate their assets
and liabilities. Some estimates suggest the unfunded liability is several times
larger than all outstanding municipal debt. Many states assume that their
investments will generate about an 8% annual return. States justify this
assumption based on the fact that most of their assets, about 70%, are invested
in equity. But whether or not stocks will return 8% is uncertain. If you
invested in a well diversified equity fund over the last ten years you’d have
been lucky to average 2% annually. And so some critics argue that 8% is almost
certainly too high.
John Cochrane, The Grumpy Economist Blog:
Demographics and stock prices. See the graph to the left, taken
from the letter: M/O is the ratio of middle aged to old, and P/E is the stock
market price-earnings ratio. In the 1970s, there were relatively few prime-age
savers around to buy stocks, and the prices fell. Starting in the 1980s to late
1990s, boomers entered their prime saving years, bought stocks and drove the
prices up. And now that the boomers are retiring, they start selling, and watch
out for prices! Zheng and Mark make a pretty discouraging forecast. I'm still
not convinced, however, for a few reasons.
Robert Gebeloff, Shaila Dewan, NYT Blog:
What the Top 1% of Earners Majored In. Below is a chart showing the majors
most likely to get into the 1 percent (excluding majors held by fewer than
50,000 people in 2010 census data). The third column shows the percentage of
degree holders with that major who make it into the 1 percent. The fourth
column shows the percent of the 1 percent (among college grads) that hold that
major. The majors providing the best entree into the top income rank are
pre-med, economics, biochemistry, zoology and biology.
Justin Wolfers, Freakonomics blog: Is
Higher Income Inequality Associated with Lower Intergenerational Mobility? A lot of
our political debate boils down to questions about equality of outcomes versus
equality of opportunity. But it turns out that they’re pretty closely related.
Take a look at the chart below, which is from a terrific recent speech (with
charts!) by Alan Krueger. The horizontal axis shows the Gini coefficient, which
is a summary of the degree of income inequality for each country. I think of
this as a measure of inequality of outcomes. The United States sits out there
on the right, which says that we have high inequality, which I bet that doesn’t
surprise you.
Maes, Marjan, Hogeschool-Universiteit Brussel: The impact of (early)
retirement on the subsequent physical and mental health of the retired: a
survey among general practitioners in Belgium. The
objectives is to investigate, on the basis of the perceptions of general
practitioners (GPs) in Belgium ,
the impact of (early) retirement on subsequent physical and mental health. A
cross-sectional survey on the basis of a self-completed anonymous questionnaire
sent at random to 120 GPs in Flanders (Belgium )
to which 81 responded. According to GPs, the mere fact of retiring early may be
a (very) important cause of mental health problems, in particular depressions
(due to the disappearance of social networks) and deterioration of cognitive
capacities. GPs claim that most physical health problems that appear after
retirement, like obesity and cardiovascular diseases, are due to insufficient
adaptation (in terms of food consumption and physical activities) of the
retired to a new lifestyle.
Mette Gørtz, SFI Danmark: Early retirement
in the day-care sector: the role of working conditions and health. This
article studies the role of working conditions and health for elderly female
day-care teachers’ decision to enter early retirement. Entry into retirement is
analysed in a duration framework that allows for unobserved heterogeneity in
the baseline hazard. Data are from a Danish longitudinal data set based on
administrative register records for 1997–2006. Working conditions are measured
by four indicators. First, work pressure is measured by the child-to-teacher
ratio, which varies across municipalities and over time. Second, working
conditions are measured by the proportion of children with a problematic social
background. Third, the share of trained teachers is considered an indicator of
working conditions. And fourth, the size of the institution is assessed as an
indicator of working conditions. Regressions in a duration model framework show
that there is no significant relationship between the child-to-teacher ratio or
the size of the institution and early retirement. However, working conditions
measured by the social background of the children and the share of trained
day-care teachers have a significant effect on the probability of early
retirement. Finally, a poor health condition is associated with a higher
propensity to enter early retirement.
JANUARY 20 2012
Robert
J. Shiller, Project Syndicate: Does
Austerity Promote Economic Growth? In his classic Fable of the Bees: or, Private
Vices, Publick Benefits (1724), Bernard Mandeville, the Dutch-born British
philosopher and satirist, described – in verse – a prosperous society (of bees)
that suddenly chose to make a virtue of austerity, dropping all excess
expenditure and extravagant consumption. What then happened?
The Price of
Land and Houses falls;
Mirac’lous
Palaces, whose Walls,
Like those
of Thebes, were rais’d by Play
Are to be
let; . . . .
The building
Trade is quite destroy’d
Artificers
are not employ’d; . . .
Those, that
remain’d, grown temp’rate strive
Not how to
spend, but how to live . . .
Tim Duy, Fed Watch Blog: Is Europe About to
Unravel? Lacking currency devaluation as a tool to resolve
imbalances, European policymakers turned to fiscal austerity. That plan has
failed, pushing nation after nation into ever deepening recession. With Greece
going on its fifth year of recession, I imagine by now that Portugal, Spain,
and even Italy now see the writing on the wall for themselves. Sadly, however,
the alternative is exiting the Euro, which almost certainly means financial
chaos for the Continent as a whole. The Eurozone is like a roach motel. You can
get in, but you can't get out.
Sudeep Reddy, WSJ Blog: At One Think Tank,
Two Opposing Views on the Euro-Zone Outlook. Whichever
camp you’re in, the Peterson Institute for International Economics has
arguments to support your view. In presentations today, four economists at the
Washington think tank – two on each side – debated opposing scenarios for how
the crisis will play out. In one corner are Peter Boone and Simon Johnson, who
are bracing for a spectacularly ugly outcome. With a $211 trillion market for
interest-rate swaps in Europe under pressure, the euro faces the risk of a
serious breakdown, they say. In the other corner are Fred Bergsten and Jacob
Kirkegaard, who expect more turbulence ahead but remain optimistic about the ultimate
outcome. Europeans are committed to European integration, they say, and the
largest euro-zone member — Germany – will protect its economic interests by
keeping the currency bloc intact. (The one exception: Greece could still exit.)
That will prevent the apocalyptic scenarios, they say.
Ryan Avent, Free Exchange Blog: The hangover America is recovering from
the debt bust faster than European countries. Why? These
transatlantic differences stem from the trajectory of private debt. Government
borrowing soared everywhere after 2008 as government deficits ballooned. But in
America the swelling of the public balance-sheet has mirrored a shrinking of
private ones. Every category of private debt—financial, corporate and
household—has fallen as a share of GDP since 2008. The financial sector’s debt
is now at its 2000 level. Corporate indebtedness, never very high, has shrunk.
So, more importantly, has household debt. America’s ratio of household debt to
income is down by 15 percentage points from its peak in 2008, after rising by
over 30 percentage points in the eight preceding years. McKinsey reckons
America’s households are between a third and halfway through their
debt-reduction process. They think the household-debt hangover could end by
mid-2013.
Anginer, Deniz; Demirguc-Kunt, Asli, World
Bank: Has the global banking system become more fragile over time? This paper
examines time-series and cross-country variations in default risk co-dependence
in the global banking system. The authors construct a default risk measure for
all publicly traded banks using the Merton contingent claim model, and examine
the evolution of the correlation structure of default risk for more than 1,800
banks in more than 60 countries. They find that there has been a significant
increase in default risk co-dependence over the three-year period leading to
the financial crisis. They also find that countries that are more integrated,
and that have liberalized financial systems and weak banking supervision, have
higher co-dependence in their banking sector. The results support an increase
in scope for international supervisory co-operation, as well as capital charges
for "too-connected-to-fail" institutions that can impose significant
externalities.
Alan B. Krueger, CEA: The Rise and
Consequences of Inequality in the United States. The rise in
inequality in the United
States U.S.
Women
empowerment and economic development are closely related: in one direction,
development alone can play a major role in driving down inequality between men
and women; in the other direction, empowering women may benefit development.
Does this imply that pushing just one of these two levers would set a virtuous
circle in motion? This paper reviews the literature on both sides of the
empowerment-development nexus, and argues that the inter-relationships are
probably too weak to be self-sustaining, and that continuous policy commitment
to equality for its own sake may be needed to bring about equality between men
and women.
Rajashri Chakrabarti and Sarah Sutherland,
NY Fed: Precarious Slopes? The Great Recession, Federal Stimulus, and New
Jersey Schools. We exploit
unique panel-data and trend-shift analysis to analyze how New Jersey school
finances were affected during the Great Recession and the ARRA federal stimulus
period. Our results show strong evidence of downward shifts in both revenue and
expenditure following the recession. Federal stimulus seemed to have helped in
2010, however, both revenue and expenditure still declined. While total revenue
declined, the various components of revenue did not witness symmetric changes.
The infusion of funds with the federal stimulus occurred simultaneously with
statistically and economically significant cuts in state and local financing,
especially the former. Our results also show a compositional shift in
expenditures in favor of categories that are linked most closely to
instruction, while several noninstruction categories, including transportation
and utilities, declined. Interestingly, budgetary stress seems to have led to
significant layoffs for untenured teachers, leading to a rightward shift of the
teacher salary and experience distributions.
Alexander M. Gelber, Adam Isen, NBER:
Children's Schooling and Parents' Investment in Children: Evidence from
the Head Start Impact Study. Parents may have important effects
on their children, but little work in economics explores how children's
schooling opportunities impact parents' investment in children. We analyze data from the Head Start Impact
Study, in which a lottery granted randomly-chosen preschool-aged children the
opportunity to attend Head Start. We find
that Head Start causes a substantial and significant increase in parents'
involvement with their children--such as time spent reading to children, math
activities, or days spent with children by fathers who do not live with their
children--both during and after the period when their children are potentially
enrolled in Head Start. We discuss a
variety of mechanisms that are consistent with our findings, including a simple
model we present in which Head Start impacts parent involvement in part because
parents perceive their involvement to be complementary with child schooling in
the production of child qualities.
Sascha O Becker, Ludger Woessmann, VoxEU: Religion matters, in life and
death. Does religion affect suicide? This column presents new evidence from
19th century Prussia showing that suicide rates are much higher in Protestant
than in Catholic areas, and that this reflects a causal effect of
Protestantism. It also suggests that economic modelling can help understand why
this is so.
Stephen J. Dubner, Freakonomics Blog: What
Do Hand-Washing and Financial Illiteracy Have in Common? There’s something
in the human condition that somehow disconnects what is really good evidence
from personal choice and habit. And I don’t know why that is. I’m not a
psychiatrist; my field is internal medicine. I just have the observation. Physicians
are no different.
AGING AND RETIREMENT
Petter
Lundborg, Martin Nilsson, Johan Vikström, IZA: Socioeconomic Heterogeneity in the Effect of Health Shocks on Earnings:
Evidence from Population-Wide Data on Swedish Workers. In this
paper, we estimate socioeconomic heterogeneity in the effect of unexpected
health shocks on labor market outcomes, using register-based data on the entire
population of Swedish workers. We effectively exploit a
Difference-in-Difference-in-Differences design, in which we compare the change
in labor earnings across treated and control groups with high and low education
levels. If the anticipation effects are similar for individuals with high and
low education, any difference in the estimates across socioeconomic groups
could plausibly be given a causal interpretation. Our results suggest a large
amount of heterogeneity in the effects, in which individuals with a low
education level suffer relatively more from a given health shock. These results
hold across a wide range of different types of health shocks and become more
pronounced with age. Our results suggest that socioeconomic heterogeneity in
the effect of health shocks offers one explanation for how the socioeconomic
gradient in health arises.
Alan L. Gustman, Thomas Steinmeier, Nahid
Tabatabai, Michigan Retirement Research Center: How Did the Recession of
2007-2009 Affect the Wealth and Retirement of the Near Retirement Age
Population in the Health and Retirement Study? This paper
uses asset and labor market data from the Health and Retirement Study (HRS) to
investigate how the recent "Great Recession" has affected the wealth
and retirement of those in the population who were just approaching retirement
age at the beginning of the recession, a potentially vulnerable segment of the
working age population. The retirement wealth held by those ages 53 to 58
before the onset of the recession in 2006 declined by a relatively modest 2.8
percentage points by 2010. In more normal times, their wealth would have
increased over these four years. The adverse labor market effects of the Great
Recession are more modest. Although there is an increase in unemployment, that
increase is not mirrored in the rate of flow out of full-time work or partial
retirement. All told, the retirement behavior of the Early Boomer cohort looks
similar, at least so far, to the behavior observed for members of older cohorts
at comparable ages.
Tunga Kantarc, Arthur van Soest, Tilburg
University: Effects of Partial and No Retirement on Health in the United
States. Some studies find that retirement yields a loss in
cognitive skills while others find that retirement preserves physical health.
We study the amount of work hours that deteriorates or preserves the physical
or mental health conditions of the elderly between 50 and 75 years old in the
last eight waves (1994-2008) of the Health and Retirement Study. Deteriorating
health conditions can cause employees to work fewer hours and therefore bias the
effect of working part-time or full-time on health outcomes. Retirement
eligibility ages are used as instruments for part-time or full-time work
decisions. We also control for, possibly health related, unobserved
heterogeneity across the individuals. We find that part-time and full-time
workers report worse overall health and memory than full-time retirees. On the
other hand, part-time and full-time workers have a much lower body weight, and
part-time white collar workers have a much better word recall score. Part-time
and full-time workers are also less prone to depression. We also find that
health status of the elderly responds to working part-time much more than it
responds to working full-time. This result suggests that the effect of the
number of hours worked on health outcomes is nonlinear.
Mette Gørtz, EJA: Early retirement in the
day-care sector: the role of working conditions and health. This
article studies the role of working conditions and health for elderly female
day-care teachers’ decision to enter early retirement. Entry into retirement is
analysed in a duration framework that allows for unobserved heterogeneity in
the baseline hazard. Data are from a Danish longitudinal data set based on
administrative register records for 1997–2006. Working conditions are measured
by four indicators. First, work pressure is measured by the child-to-teacher
ratio, which varies across municipalities and over time. Second, working
conditions are measured by the proportion of children with a problematic social
background. Third, the share of trained teachers is considered an indicator of
working conditions. And fourth, the size of the institution is assessed as an
indicator of working conditions. Regressions in a duration model framework show
that there is no significant relationship between the child-to-teacher ratio or
the size of the institution and early retirement. However, working conditions
measured by the social background of the children and the share of trained
day-care teachers have a significant effect on the probability of early
retirement. Finally, a poor health condition is associated with a higher
propensity to enter early retirement.
JANUARY 13 2012
Satyajit Das, EconoMonitor: Europe’s Road
to Nowhere (Part 1). Financially futile, economically erroneous,
politically puzzling and socially irresponsible, the December 2011 European
summit was a failure. Only the attending leaders and their acolytes believe
otherwise. German Chancellor Angela Merkel’s post-summit homilies about the
“long run”, “running a marathon” and “more Europe” rang hollow. The proposed
plan is fundamentally flawed. It made no attempt to tackle the real issues –
the level of debt, how to reduce it, how to meet funding requirements or how to
restore growth. Most importantly there were no new funds committed to the
exercise.Stéphanie Guichard, Elena Rusticelli, OECD: Reassessing the NAIRUs after the Crisis. The financial crisis has resulted in a substantial increase in unemployment in the OECD. This paper shows that this increase has reversed the reduction in structural unemployment which has been estimated to have occurred in most OECD countries since the late 1990s. Structural unemployment is defined as a time-varying NAIRU derived from the information contained in a reduced Phillips curve equation (linking inflation to the unemployment gap) by means of a Kalman filter. The overall limited revisions in historical NAIRU estimated in 2008 after such a large labour market shock support the robustness of the OECD approach. This approach is therefore extended to almost all OECD countries. Alternative specifications of the Phillips curve are proposed for some specific groups of countries.
Waikei Raphael
Lam, Kiichi Tokuoka, IMF: Assessing the Risks to the Japanese Government Bond
(JGB) Market. Despite the
rise in public debt, Japanese Government Bond (JGB) yields have remained low
and stable, supported by steady inflows from the household and corporate
sectors, high domestic ownership of JGBs, and safe-haven flows from heightened
sovereign risks in Europe. Over time, however, the market’s capacity to absorb
new debt will likely shrink as population ages and risk appetite recovers. In
the short term, a decline in fund supply from the corporate sector, where
financial surpluses are abnormally high, and spillovers from global financial
distress could push up JGB yields. Fiscal reforms to reduce public debt more
quickly and lengthen the maturity of government bonds will help limit these
risks.
Eamonn Fingleton, NYT: The Myth of Japan’s
Failure. Despite some small signs of optimism about the United
States economy, unemployment is still high, and the country seems stalled. Time
and again, Americans are told to look to Japan as a warning of what the country
might become if the right path is not followed, although there is intense
disagreement about what that path might be. But that presentation of Japan is a
myth. By many measures, the Japanese economy has done very well during the
so-called lost decades, which started with a stock market crash in January
1990. By some of the most important measures, it has done a lot better than the
United States.
Carmen Reinhart, VoxEU: A Series of
Unfortunate Events: Common Sequencing Patterns in Financial Crises. We document
that the global scope and depth of the crisis that began with the collapse of
the subprime mortgage market in the summer of 2007 is unprecedented in the post
World War II era and, as such, the most relevant comparison benchmark is the
Great Depression (or the Great Contraction, as dubbed by Friedman and Schwartz,
1963) of the 1930s. Some of the similarities between these two global episodes
are examined but the analysis of the aftermath of severe financial crises is
extended to also include the most severe post-WWII crises as well. As to the
causes of these great crises, we focus on those factors that are common across
time and geography. We discriminate between root causes of the crises,
recurring crises symptoms, and common features (such as misguided financial
regulation or inadequate supervision) which serve as amplifiers of the
boom-bust cycle. There are recurring temporal patterns in the boom-bust cycle
and their broad sequencing is analyzed.
Steven J. Davis, Till M. von Wachter, NBER: Recessions and the Cost of
Job Loss. We develop new evidence on the cumulative earnings
losses associated with job displacement, drawing on longitudinal Social
Security records for U.S. workers from 1974 to 2008. In present value terms,
men lose an average of 1.4 years of pre-displacement earnings if displaced in
mass-layoff events that occur when the national unemployment rate is below 6
percent. They lose a staggering 2.8 years of pre-displacement earnings if
displaced when the unemployment rate exceeds 8 percent. These results reflect
discounting at a 5% annual rate over 20 years after displacement. We also
document large cyclical movements in the incidence of job loss and job
displacement and present evidence on how worker anxieties about job loss, wage
cuts and job opportunities respond to contemporaneous economic conditions.
Matthew Yglesias, Moneybox Blog: Mitt
Romney Says Concern About Inequality Is Just "Envy". Mitt Romney
explained that people talk about inequality because they're envious: “You know, I think it’s about envy. I think
it’s about class warfare. When you have a President encouraging the idea of
dividing America based on the 99 percent versus 1 percent—and those people who
have been most successful will be in the 1 percent—you have opened up a whole
new wave of approach in this country which is entirely inconsistent with the
concept of one nation under God. The American people, I believe in the final
analysis, will reject it.” Of course there is envy in America, but there's
also spite. And I think you see some of it in Romney's reply. He has a lot of
money, personally. That money is very useful to him in a number of ways.
Jérôme Adda, Christian Dustmann, Katrien Stevens, IZA:
The Career Costs of Children. This paper analyzes the life-cycle career costs
associated with child rearing and decomposes their effects into unearned wages
(as women drop out of the labor market), loss of human capital, and selection
into more child-friendly occupations. We estimate a dynamic life-cycle model of
fertility, occupational choice, and labor supply using detailed survey and
administrative data for Germany for numerous birth cohorts across different regions.
We use this model to analyze both the male-female wage gap as it evolves from
labor market entry onward and the effect of pro-fertility policies. We show
that a substantial portion of the gender wage gap is explainable by realized
and expected fertility and that the long-run effect of policies encouraging
fertility are considerably lower than the short-run effects typically estimated
in the literature.
Peder J.
Pedersen, IZA: Immigration and Welfare State Cash Benefits: The Danish Case. The
purpose in this paper is to summarize existing evidence on welfare dependence
among immigrants in Denmark and to supply new evidence with focus on the most
recent years. Focus is on immigrants from non-western countries. The paper
contains an overview of the background regarding immigration in recent decades
followed by a survey of relevant benefit programmes in the Danish welfare
state. Existing studies focus on both macro analyses of the overall impact from
immigration on the public sector budget and on micro oriented studies with
focus on specific welfare programs. Existing studies focus on the importance
for welfare dependence of demographic variables, on the big variation between
countries of origin and on the importance of cyclical factors at time of entry
and during the first years in the new country. Evidence from the most recent
years reinforce the importance of aggregate low unemployment in contrast to
fairly small effects found from policy changes intending to! influence the
economic incentives between welfare and a job for immigrants.
Marco
Caliendo, Steffen Künn, Ricarda Schmidl, IZA: Fighting Youth Unemployment: The
Effects of Active Labor Market Policies. We use administrative data on youth
unemployment entries in 2002 and analyze the short- and long-term impacts for a
variety of different programs. With informative data at hand we apply inverse
probability weighting, thereby accounting for a dynamic treatment assignment
and cyclical availability of programs. Our results indicate positive long-term
employment effects for nearly all measures aimed at labor market integration.
Measures aimed at integrating youths in apprenticeships are effective in terms
of education participation, but fail to show any impact on employment outcomes
until the end of our observation period. Public sector job creation is found to
! be harmful for the medium-term employment prospects and ineffective in the
long-run. Our analysis further indicates that the targeting of German ALMP
systematically ignores low-educated youths as neediest of labor market groups.
While no employment program shows a positive impact on further education
participation for any subgroup, the employment impact of participation is often
significantly lower for low-educated youths.
John P. Papay, Martin R. West, Jon B. Fullerton, Thomas J. Kane,
NBER: Does Practice-Based Teacher
Preparation Increase Student Achievement? Early Evidence from the Boston
Teacher Residency. The Boston Teacher Residency is an innovative
practice-based preparation program in which candidates work alongside a mentor teacher
for a year before becoming a teacher of record in Boston Public Schools. Initially,
BTR graduates for whom value-added performance data are available are no more
effective at raising student test scores than other novice teachers in English
language arts and less effective in math.
The effectiveness of BTR graduates in math improves rapidly over time,
however, such that by their fourth and fifth years they out-perform veteran
teachers. Simulations of the program's
overall impact through retention and effectiveness suggest that it is likely to
improve student achievement in the district only modestly over the long run.
Fernando Ferreira, Joseph Gyourko, NBER:
Does Gender Matter for Political Leadership? The Case of U.S. Mayors. What are
the consequences of electing a female leader for policy and political outcomes?
We answer this question in the context of U.S. cities, where women's
participation in mayoral elections increased from negligible numbers in 1970 to
about one-third of the elections in the 2000's. We use a novel data set of U.S.
mayoral elections from 1950 to 2005, and apply a regression discontinuity
design to deal with the endogeneity of female candidacy to city characteristics. In contrast to most research on the influence
of female leadership, we find no effect of gender of the mayor on policy outcomes
related to the size of local government, the composition of municipal spending
and employment, or crime rates. While
female mayors do not implement different policies, they do appear to have higher
unobserved political skills, as they have a 6-7 percentage point higher
incumbent effect than a comparable male.
But we find no evidence of political spillovers: exogenously electing a female mayor does not
change the long run political success of other female mayoral candidates in the
same city or of female candidates in local congressional elections.
Cahit
Guven, Wang-Sheng Lee, IZA: Height and Cognitive Function among Older
Europeans: Do People from "Tall" Countries Have Superior Cognitive
Abilities? Previous research has found that height is correlated
with cognitive functioning at older ages. It therefore makes sense to ask a
related question: do people from countries where the average person is
relatively tall have superior cognitive abilities on average? Using data from
the Survey of Health, Ageing, and Retirement in Europe (SHARE), we find
empirical evidence that this is the case, even after controlling for
self-reported childhood health, self-reported childhood abilities, parental
characteristics and education. We find that people from countries with
relatively tall people, such as Denmark and the Netherlands, have on average
superior cognitive abilities compared to people from countries with relatively
shorter people, such as Italy and Spain. We exploit variations in height trends
due to nutritional deprivation in World War II in Europe and use an
instrumental variable analysis to further estimate the potential impact of
height on cognitive function. We find some suggestive evidence that a causal
link from height to cognitive outcomes could be operating via nutrition and not
via educational attainment.
AGING AND RETIREMENT
Damian Paletta, Dionne Searcey, WSJ:
Jobless Tap Disability Fund. The prolonged economic slump has
fueled a surge in applications for Social Security disability benefits, with
many desperate Americans seeking refuge in the program as a last resort after
their unemployment insurance and savings run out. Two new studies, one of them
co-authored by the White House's top economist, show a correlation between when
people seek Social Security disability payments and when their unemployment
benefits are exhausted. Some economists say that connection shows many people
now view the system as an extended unemployment program
Eva Garcia-Moran, Zoe Kuehn, European University Institute: With Strings
Attached: Grandparent-Provided Child care, Fertility, and Female Labor Market
Outcomes. Grandparents are an important source of child care.
According to data from the 2nd wave of the Survey of Health, Ageing
and Retirement in Europe (SHARE), between 23% (Denmark) and 70% (Italy) of
grandparents take care of their grandchildren age ten or younger on a daily or
weekly basis. In the Netherlands, Belgium, and Switzerland more than 40% of
grandparents take care of their small grandchildren each week, while in Italy, Greece,
and Poland more than 40% of grandparents provide daily care for grandchildren age
ten or younger. Similar to any other form of child care, availability of
grandparent-provided child care affects fertility and labor market decisions of
women positively. We find that women in Germany, residing close to parents or
in-laws are more likely to have children and that as mothers they are more
likely to hold a regular part-or fulltime job.
Benoit
Dostie, Pierre Thomas Léger, IZA: Firm-Sponsored Classroom Training: Is It
Worth It for Older Workers? We use longitudinal linked
employer-employee data and find that the probability of participating in
firm-sponsored classroom training diminishes rapidly for workers aged 45 years
and older. Although the standard human capital investment model predicts such a
decline, we also consider the possibility that returns to training decline with
age. Taking into account endogenous training decisions, we find that the training
wage premium diminishes only slightly with age. However, estimates of the
impact of training on productivity decrease dramatically with age, suggesting
that incentives for firms to invest in classroom training are much lower for
older workers.
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