Organizing to Adapt and Compete

By Ricardo Alonso, Wouter Dessein, and Niko Matouschek

American Economic Journal: Microeconomics, May 2015

We examine the relationship between the organization of a multi-divisional firm and its ability to adapt production decisions to changes in the environment. We show that even if lower-level managers have superior information about local conditions, and in...

Tax Reform: Theory and Practice

[Symposium: Tax Reform]

By Joseph A. Pechman

Journal of Economic Perspectives, Summer 1987

The Tax Reform Act of 1986 is the most significant piece of tax legislation enacted since the income tax was converted to a mass tax during World War II. After decades of erosion, the individual and corporate income tax bases were broadened and the revenu...

Worker Heterogeneity and Endogenous Separations in a Matching Model of Unemployment Fluctuations

By Mark Bils, Yongsung Chang, and Sun-Bin Kim

American Economic Journal: Macroeconomics, January 2011

We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations ...

On the Evolution of Firm Size Distributions

By Paolo Angelini and Andrea Generale

American Economic Review, March 2008

We study the impact of financial constraints on firm size distribution (FSD). We find that financially constrained firms, identified using various proxies, are smaller than the others (their FSD is more skewed to the right). However, among OECD countries,...

Crime, the Criminal Justice System, and Socioeconomic Inequality

[Symposium: Inequality Beyond Income]

By Magnus Lofstrom and Steven Raphael

Journal of Economic Perspectives, Spring 2016

Crime rates in the United States have declined to historical lows since the early 1990s. Prison and jail incarceration rates as well as community correctional populations have increased greatly since the mid-1970s. Both of these developments have disprop...

Man-Bites-Dog Business Cycles

By Kristoffer P. Nimark

American Economic Review, August 2014

The newsworthiness of an event is partly determined by how unusual it is and this paper investigates the business cycle implications of this fact. Signals that are more likely to be observed after unusual events may increase both uncertainty and disagreem...

Exchange Asymmetries Incorrectly Interpreted as Evidence of Endowment Effect Theory and Prospect Theory?

By Charles R. Plott and Kathryn Zeiler

American Economic Review, September 2007

Systematic asymmetries in exchange behavior have been widely interpreted as support for "endowment effect theory," an application of prospect theory positing that loss aversion and utility function kinks set by entitlements explain observed asymmetries. W...

Optimal Defaults

By James J. Choi, David Laibson, Brigitte C. Madrian, and Andrew Metrick

American Economic Review, May 2003

The Role of Entrepreneurship in US Job Creation and Economic Dynamism

[Symposium: Entrepreneurship]

By Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda

Journal of Economic Perspectives, Summer 2014

An optimal pace of business dynamics—encompassing the processes of entry, exit, expansion, and contraction—would balance the benefits of productivity and economic growth against the costs to firms and workers associated with reallocation of pr...

The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks

By Christina D. Romer and David H. Romer

American Economic Review, June 2010

This paper investigates the impact of tax changes on economic activity. We use the narrative record, such as presidential speeches and Congressional reports, to identify the size, timing, and principal motivation for all major postwar tax policy actions...

Intergenerational Transfers and Savings

[Symposium: Explaining Savings]

By Laurence J. Kotlikoff

Journal of Economic Perspectives, Spring 1988

What is the main explanation for savings? Is it primarily accumulation for retirement as claimed by Albert Ando, Richard Brumberg, and Franco Modigliani in their celebrated Life Cycle Model of Savings? Is it primarily intentional accumulation for intergen...

The Impact of the Great Migration on Mortality of African Americans: Evidence from the Deep South

By Dan A. Black, Seth G. Sanders, Evan J. Taylor, and Lowell J. Taylor

American Economic Review, February 2015

The Great Migration–the massive migration of African Americans out of the rural South to largely urban locations in the North, Midwest, and West–was a landmark event in US history. Our paper shows that this migration increased mortality of African Ame...

Trends in Quality-Adjusted Skill Premia in the United States, 1960-2000

By Pedro Carneiro and Sokbae Lee

American Economic Review, October 2011

This paper presents new evidence that increases in college enrollment lead to a decline in the average quality of college graduates between 1960 and 2000, resulting in a decrease of 6 percentage points in the college premium. A standard demand and supply...

A New Method of Estimating Risk Aversion

By Raj Chetty

American Economic Review, December 2006

I show existing evidence on labor supply behavior places an upper bound on risk aversion in the expected utility model. I derive a formula for the coefficient of relative risk aversion (γ) in terms of the ratio of the income elasticity of labor supply to...

Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry

By Tasneem Chipty

American Economic Review, June 2001

I examine the effects of vertical integration between programming and distribution in the cable television industry. I assess the effects of ownership structure on program offerings, prices, and subscriptions, and I compare consumer welfare across integra...

The Cyclicality of Skill Acquisition: Evidence from Panel Data

By Fabio Méndez and Facundo Sepúlveda

American Economic Journal: Macroeconomics, July 2012

This paper presents new empirical evidence regarding the cyclicality of skill acquisition activities. The paper studies both training and schooling episodes at the individual level using quarterly data from the NLSY79 for a period of 19 years. We find tha...

Classroom Games: Speculation and Bubbles in an Asset Market

By Sheryl B. Ball and Charles A. Holt

Journal of Economic Perspectives, Winter 1998

This paper describes a classroom exercise in which students trade assets of uncertain value in a sequence of market periods. Assets pay one-dollar dividends at the end of each period, but once the dividend is paid there is fixed probability that the asset...

The Long-Term Effects of the Printing Press in Sub-Saharan Africa

By Julia Cagé and Valeria Rueda

American Economic Journal: Applied Economics, July 2016

This article investigates the long-term consequences of the printing press in the nineteenth century sub-Saharan Africa on social capital nowadays. Protestant missionaries were the first to import the printing press and to allow the indigenous population ...

The Role of Government Reimbursement in Drug Shortages

By Ali Yurukoglu, Eli Liebman, and David B. Ridley

American Economic Journal: Economic Policy, May 2017

Beginning in the mid-2000s, the incidence of drug shortages rose, especially for generic injectable drugs such as anesthetics and chemotherapy treatments. We examine whether reimbursement changes contributed to the shortages, focusing on a reduction in Me...

Pass-Through of Emissions Costs in Electricity Markets

By Natalia Fabra and Mar Reguant

American Economic Review, September 2014

We measure the pass-through of emissions costs to electricity prices. We perform both reduced-form and structural estimations based on optimal bidding in this market. Using rich micro-level data, we estimate the channels affecting pass-through in a flexib...