Money, Political Ambition, and the Career Decisions of Politicians

By Michael P. Keane and Antonio Merlo

American Economic Journal: Microeconomics, August 2010

We assess the impact of a variety of policies that may influence the career decisions of members of the US Congress. These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, non-pecuniary rewards ...

Retrospectives: Pareto's Law

By Joseph Persky

Journal of Economic Perspectives, Spring 1992

Vilfredo Pareto, using data for England, a number of Italian cities, several German states, Paris, and Peru, plotted cumulative distributions of income for these countries on double logarithmic paper. He claimed that in each case the result was a straight...

Present Bias: Lessons Learned and to Be Learned

By Ted O'Donoghue and Matthew Rabin

American Economic Review, May 2015

While present bias is an old idea, it only took hold in economics following David Laibson's (1994) dissertation. Over the past 20 years, research has led to a much better theoretical understanding of present bias, when and how to apply it, and which ancil...

Resource Allocation and Organizational Form

By Guido Friebel and Michael Raith

American Economic Journal: Microeconomics, May 2010

We develop a theory of firm scope and structure in which merging two firms allows the integrated firm's top management to allocate resources that are costly to trade. However, information about their use resides with division managers. We show that establ...

Land and Power: Theory and Evidence from Chile

By Jean-Marie Baland and James A. Robinson

American Economic Review, December 2008

Many employment relationships concede rents to workers. Depending on the political institutions, the presence of such rents allows employers to use the threat of withdrawing them to control their workers' political behavior, such as their votes in the ...

The Evolution of Value Systems: A Review Essay on Ian Morris's Foragers, Farmers, and Fossil Fuels

By Alberto Bisin

Journal of Economic Literature, September 2017

Foragers, Farmers, and Fossil Fuels: How Human Values Evolve is a large-scale history of the world through the different modes of production humanity has adopted over time and their implications in terms of moral values. Morris argues that the pred...

Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data

By Niklas Engbom and Christian Moser

American Economic Review, May 2017

We use administrative US matched employer-employee data merged with detailed information on individuals' academic records to assess the extent to which returns to education are mediated by the sorting of workers across firms. We present three results. Fir...

Giffen Behavior and Subsistence Consumption

By Robert T. Jensen and Nolan H. Miller

American Economic Review, September 2008

This paper provides the first real-world evidence of Giffen behavior, i.e., upward sloping demand. Subsidizing the prices of dietary staples for extremely poor households in two provinces of China, we find strong evidence of Giffen behavior for rice in...

Did Fair-Value Accounting Contribute to the Financial Crisis?

[Symposium: Financial Plumbing]

By Christian Laux and Christian Leuz

Journal of Economic Perspectives, Winter 2010

The recent financial crisis has led to a major debate about fair-value accounting. Many critics have argued that fair-value accounting, often also called mark-to-market accounting, has significantly contributed to the financial crisis or, at least, exace...

Regulation, Ownership, and Costs: A Historical Perspective from Indian Railways

By Dan Bogart and Latika Chaudhary

American Economic Journal: Economic Policy, February 2012

This paper studies the relationship between operational costs and state ownership in Indian railways between 1874 and 1912. We find the move to state ownership significantly decreased working expenses. The cost declines are not driven by anticipation effe...

Measuring the Environmental Benefits of Wind-Generated Electricity

By Joseph Cullen

American Economic Journal: Economic Policy, November 2013

Production subsidies for renewable energy, such as solar or wind power, are rationalized by their environmental benefits. Subsidizing these projects allows clean, renewable technologies to produce electricity that otherwise would have been produced by ...

The Macroprudential Role of International Reserves

By Olivier Jeanne

American Economic Review, May 2016

There has been a lot of interest since the global financial crisis in policies allowing emerging market economies to smooth the effects of the global financial cycle. Although the literature has focused mostly on capital controls emerging market governmen...

Pricing Institutions and the Welfare Cost of Adverse Selection

By E. Glen Weyl and André Veiga

American Economic Journal: Microeconomics, May 2017

To mitigate adverse selection in insurance markets, individuals are often mandated to buy at least a baseline plan, but may choose to opt into a premium plan. In some markets, such as US health exchanges, each plan is responsible for the full expenses of ...

Inflation Illusion and Stock Prices

By John Y. Campbell and Tuomo Vuolteenaho

American Economic Review, May 2004

Local Multipliers

By Enrico Moretti

American Economic Review, May 2010

Tracing Value-Added and Double Counting in Gross Exports

By Robert Koopman, Zhi Wang, and Shang-Jin Wei

American Economic Review, February 2014

This paper proposes an accounting framework that breaks up a country's gross exports into various value-added components by source and additional double-counted terms. Our parsimonious framework bridges a gap between official trade statistics (in gross ...

Optimal Allocation with Ex Post Verification and Limited Penalties

By Tymofiy Mylovanov and Andriy Zapechelnyuk

American Economic Review, September 2017

Several agents with privately known social values compete for a prize. The prize is allocated based on the claims of the agents, and the winner is subject to a limited penalty if he makes a false claim. If the number of agents is large, the optimal mechan...

Taking Stock: A Critical Assessment of Recent Research on Inventories

By Alan S. Blinder and Louis J. Maccini

Journal of Economic Perspectives, Winter 1991

Empirical and theoretical aspects of inventory behavior became hot topics in the 1950s and early 1960s. No one seemed to notice the tension that was developing between the emerging macroeconomic and microeconomic views of inventories. Macroeconomists rout...

The Effect of Credit Constraints on the College Drop-Out Decision: A Direct Approach Using a New Panel Study

By Ralph Stinebrickner and Todd Stinebrickner

American Economic Review, December 2008

A serious difficulty in determining the importance of credit constraints in education arises because standard data sources do not provide a direct way of identifying which students are credit constrained. This paper differentiates itself from previous wor...

Offshoring, Transition, and Training: Evidence from Danish Matched Worker-Firm Data

By David Hummels, Jakob R. Munch, Lars Skipper, and Chong Xiang

American Economic Review, May 2012

We combine matched Danish worker-firm-trade data with detailed individual-worker training data. We find: 1) workers displaced from offshoring firms take up more vocational-training and have a harder time getting re-attached to the labor-force than other d...