The Earned Income Tax Credit and Infant Health Revisited — by Daniel L. Dench, Theodore J. Joyce

Hoynes, Miller and Simon (2015), henceforth HMS, report that the national expansion of the Earned Income Tax Credit (EITC) is associated with decreases in low birth weight. We question their findings. HMS’s difference-in-differences estimates are unidentified in some comparisons, while failed placebo tests undermine others. Their effects lack a plausible mechanism as the association between … Read moreThe Earned Income Tax Credit and Infant Health Revisited — by Daniel L. Dench, Theodore J. Joyce

How do Hospitals Respond to Payment Incentives? — by Gautam Gowrisankaran, Keith A. Joiner, Jianjing Lin

A literature has found that medical providers inflate bills and report more conditions given financial incentives. We evaluate whether Medicare reimbursement incentives are driven more by bill inflation or coding costs. Medicare reformed its payment mechanism for inpatient hospitalizations in 2007, increasing coding costs. We first examine whether increased extra reimbursements from reporting more diagnoses … Read moreHow do Hospitals Respond to Payment Incentives? — by Gautam Gowrisankaran, Keith A. Joiner, Jianjing Lin

Recruit to Reject? Harvard and African American Applicants — by Peter Arcidiacono, Josh Kinsler, Tyler Ransom

Over the past 20 years, elite colleges in the US have seen dramatic increases in applications. We provide context for part of this trend using detailed data on Harvard University that was unsealed as part of the SFFA v. Harvard lawsuit. We show that Harvard encourages applications from many students who effectively have no chance … Read moreRecruit to Reject? Harvard and African American Applicants — by Peter Arcidiacono, Josh Kinsler, Tyler Ransom

Economic Consequences of Housing Speculation — by Zhenyu Gao, Michael Sockin, Wei Xiong

By exploiting variation in state capital gains taxation as an instrument, we analyze the economic consequences of housing speculation during the U.S. housing boom in the 2000s. We find that housing speculation, anchored, in part, on extrapolation of past housing price changes, led not only to greater price appreciation, economic expansions, and housing construction during … Read moreEconomic Consequences of Housing Speculation — by Zhenyu Gao, Michael Sockin, Wei Xiong

Nonbank Lending — by Sergey Chernenko, Isil Erel, Robert Prilmeier

We provide novel systematic evidence on the extent and terms of direct lending by nonbank financial institutions, and explore whether banks are still special in lending to informationally opaque firms. Analyzing hand-collected data for a random sample of publicly-traded middle-market firms during the 2010-2015 period, we show that nonbank lending is widespread, with 32% of … Read moreNonbank Lending — by Sergey Chernenko, Isil Erel, Robert Prilmeier

Some Contributions of Economics to the Study of Personality — by James J. Heckman, Tomáš Jagelka, Timothy D. Kautz

This paper synthesizes recent research in economics and psychology on the measurement and empirical importance of personality skills and preferences. They predict and cause important life outcomes such as wages, health, and longevity. Skills develop over the life cycle and can be enhanced by education, parenting, and environmental influences to different degrees at different ages. … Read moreSome Contributions of Economics to the Study of Personality — by James J. Heckman, Tomáš Jagelka, Timothy D. Kautz

Does The Market Reward Quality?: Evidence from India — by Zachary Wagner, Somalee Banerjee, Manoj Mohanan, Neeraj Sood

There are two salient facts about health care in low and middle-income countries; 1) the private sector plays an important role and 2) the care provided is often of poor quality. Despite these facts we know little about what drives quality of care in the private sector and why patients continue to seek care from … Read moreDoes The Market Reward Quality?: Evidence from India — by Zachary Wagner, Somalee Banerjee, Manoj Mohanan, Neeraj Sood

A Global View of Creative Destruction — by Chang-Tai Hsieh, Peter J. Klenow, Ishan B. Nath

In the wake of the U.S.-Canada Free Trade Agreement, both the U.S. and Canada experienced a sustained increase in job reallocation, including firms moving into exporting. The change involved big firms as much as small firms. To mimic these patterns,we formulate a model of innovation by both domestic and foreign firms. In the model, trade … Read moreA Global View of Creative Destruction — by Chang-Tai Hsieh, Peter J. Klenow, Ishan B. Nath

Do Minimum Wages Reduce Employment in Developing Countries? A Survey and Exploration of Conflicting Evidence — by David Neumark, Luis Felipe Munguia Corella

Evidence from studies of the employment effects of minimum wages in developing countries is mixed. One interpretation is that there is simply no clear evidence of disemployment effects in developing countries. Instead, however, we find evidence that the heterogeneity is systematic, with estimated effects more consistently negative when institutional factors or the competitive model predict … Read moreDo Minimum Wages Reduce Employment in Developing Countries? A Survey and Exploration of Conflicting Evidence — by David Neumark, Luis Felipe Munguia Corella

The Surrogate Index: Combining Short-Term Proxies to Estimate Long-Term Treatment Effects More Rapidly and Precisely — by Susan Athey, Raj Chetty, Guido W. Imbens, Hyunseung Kang

A common challenge in estimating the long-term impacts of treatments (e.g., job training programs) is that the outcomes of interest (e.g., lifetime earnings) are observed with a long delay. We address this problem by combining several short-term outcomes (e.g., short-run earnings) into a surrogate index,” the predicted value of the long-term outcome given the short-term … Read moreThe Surrogate Index: Combining Short-Term Proxies to Estimate Long-Term Treatment Effects More Rapidly and Precisely — by Susan Athey, Raj Chetty, Guido W. Imbens, Hyunseung Kang

The Welfare Magnet Hypothesis: Evidence From an Immigrant Welfare Scheme in Denmark — by Ole Agersnap, Amalie Sofie Jensen, Henrik Kleven

We study the effects of welfare generosity on international migration using a series of large changes in welfare benefits for immigrants in Denmark. The first change, implemented in 2002, lowered benefits for immigrants from outside the EU by about 50%, with no changes for natives or immigrants from inside the EU. The policy was later … Read moreThe Welfare Magnet Hypothesis: Evidence From an Immigrant Welfare Scheme in Denmark — by Ole Agersnap, Amalie Sofie Jensen, Henrik Kleven

Redeemable Platform Currencies — by Yang You, Kenneth S. Rogoff

Can massive online retailers such as Amazon and Alibaba issue digital tokens that potentially compete with bank debit accounts? We explore whether a large platform’s ability to guarantee value and liquidity by issuing prototype digital tokens for in-platform purchases constitutes a significant advantage that could potentially be leveraged into wider use. Our central finding is … Read moreRedeemable Platform Currencies — by Yang You, Kenneth S. Rogoff

Selection with Variation in Diagnostic Skill: Evidence from Radiologists — by David C. Chan Jr, Matthew Gentzkow, Chuan Yu

Physicians, judges, teachers, and agents in many other settings differ systematically in the decisions they make when faced with similar cases. Standard approaches to interpreting and exploiting such differences assume they arise solely from variation in preferences. We develop an alternative framework that allows variation in both preferences and diagnostic skill, and show that both … Read moreSelection with Variation in Diagnostic Skill: Evidence from Radiologists — by David C. Chan Jr, Matthew Gentzkow, Chuan Yu

Trade Wars, Technology and Productivity — by Ching-mu Chen, Wan-Jung Cheng, Shin-Kun Peng, Raymond Riezman, Ping Wang

If international trade is strictly trade in intermediate goods, would the common presumption, that small, less developed economies (the South) lose from trade wars still be true? We address this question by constructing a dynamic general equilibrium model in which the North and the South trade technology-embodied intermediate goods. We show that the detrimental effects … Read moreTrade Wars, Technology and Productivity — by Ching-mu Chen, Wan-Jung Cheng, Shin-Kun Peng, Raymond Riezman, Ping Wang

Endogenous Leverage and Default in the Laboratory — by Marco Cipriani, Ana Fostel, Daniel Houser

We study default and endogenous leverage in the laboratory. To this purpose, we develop a general equilibrium model of collateralized borrowing amenable to laboratory implementation and gather experimental data. In the model, leverage is endogenous: agents choose how much to borrow using a risky asset as collateral, and there are no ad-hoc collateral constraints. When … Read moreEndogenous Leverage and Default in the Laboratory — by Marco Cipriani, Ana Fostel, Daniel Houser

Innovation, Growth, and Dynamic Gains from Trade — by Wen-Tai Hsu, Raymond G. Riezman, Ping Wang

How large are the welfare gains from trade? Would such gains be significantly amplified in the long run when productivity is endogenously enhanced? To address these questions, we focus on the dynamic effect of trade, in particular, how trade affects the incentives for technological advancement. We construct an innovation-based endogenous growth model of North-South trade. … Read moreInnovation, Growth, and Dynamic Gains from Trade — by Wen-Tai Hsu, Raymond G. Riezman, Ping Wang

Monetary Easing, Leveraged Payouts and Lack of Investment — by Viral V. Acharya, Guillaume Plantin

This paper studies a model in which a low monetary policy rate lowers the cost of capital for entrepreneurs, potentially spurring productive investment. Low interest rates, however, also induce entrepreneurs to lever up so as to increase payouts to equity. Whereas such leveraged payouts privately benefit entrepreneurs, they come at the social cost of reducing … Read moreMonetary Easing, Leveraged Payouts and Lack of Investment — by Viral V. Acharya, Guillaume Plantin

Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits — by Mark Shepard, Katherine Baicker, Jonathan S. Skinner

There is increasing interest in expanding Medicare health insurance coverage in the U.S., but it is not clear whether the current program is the right foundation on which to build. Traditional Medicare covers a uniform set of benefits for all income groups and provides more generous access to providers and new treatments than public programs … Read moreDoes One Medicare Fit All? The Economics of Uniform Health Insurance Benefits — by Mark Shepard, Katherine Baicker, Jonathan S. Skinner

A Theory of Economic Unions — by Gino Gancia, Giacomo A. M. Ponzetto, Jaume Ventura

After decades of successful growth, economic unions have recently become the focus of heightened political controversy. We argue that this is partly due to the growth of trade between countries that are increasingly dissimilar. We develop a theoretical framework to study the effects on trade, income distribution and welfare of economic unions that differ in … Read moreA Theory of Economic Unions — by Gino Gancia, Giacomo A. M. Ponzetto, Jaume Ventura

Beveridgean Unemployment Gap — by Pascal Michaillat, Emmanuel Saez

This paper measures the unemployment gap (the difference between actual and efficient unemployment rates) using the Beveridge curve (the negative relationship between unemployment and job vacancies). We express the unemployment gap as a function of current unemployment and vacancy rates, and three sufficient statistics: elasticity of the Beveridge curve, recruiting cost, and nonpecuniary value of … Read moreBeveridgean Unemployment Gap — by Pascal Michaillat, Emmanuel Saez

Shrinking the Tax Gap: Approaches and Revenue Potential — by Natasha Sarin, Lawrence H. Summers

Between 2020 and 2029, the IRS will fail to collect nearly $7.5 trillion of taxes it is due. It is not possible to calculate with precision how much of this “tax gap” could be collected. This paper offers a naïve approach. The analysis suggests that with feasible changes in policy, the IRS could aspire to … Read moreShrinking the Tax Gap: Approaches and Revenue Potential — by Natasha Sarin, Lawrence H. Summers

Consumption Insurance Against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation — by Chunzan Wu, Dirk Krueger

We show that a calibrated life-cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as estimated empirically by Blundell, Pistaferri and Saporta-Eksten (2016) in U.S. data. In the model, 35% of male and 18% of female permanent wage shocks pass through to … Read moreConsumption Insurance Against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation — by Chunzan Wu, Dirk Krueger

The Effect of Changes in the Skill Premium on College Degree Attainment and the Choice of Major — by Ran Abramitzky, Victor Lavy, Maayan Segev

We study the impact of financial incentives on higher education decisions and the choice of major. We rely on a reform whereby Israeli kibbutzim shifted from their traditional policy of equal sharing to productivity-based wages. We use for identification the staggered implementation of this reform in different kibbutzim. In this setting of very low initial … Read moreThe Effect of Changes in the Skill Premium on College Degree Attainment and the Choice of Major — by Ran Abramitzky, Victor Lavy, Maayan Segev

MS-13 Gang Member Sentenced to 20 Years in Machete Attack Case

An MS-13 gang member was sentenced to 20 years in federal prison for his role in a brutal machete attack at a park just outside Dallas, Texas, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Erin Nealy Cox for the Northern District of Texas. Please follow and … Read moreMS-13 Gang Member Sentenced to 20 Years in Machete Attack Case

Sixth and Final Defendant Pleads Guilty to Participating in Sophisticated International Cellphone Fraud Scheme

A citizen and resident of the Dominican Republic pleaded guilty today in Miami, Florida, to multiple criminal charges in connection with a sophisticated global cellphone fraud scheme that involved compromising cellphone customers’ accounts in the United States and “cloning” their phones to make fraudulent international calls. Please follow and like us:

Deputy Attorney General Jeffrey A. Rosen Delivers Remarks on the Review of Market-Leading Online Platforms at the American Bar Association’s 2019 Antitrust Fall Forum

Good morning. Thank you, Svetlana [Gans], for that kind introduction. I want to congratulate you, your co-chair Maureen Ohlhausen, and Section Chair Brian Henry for assembling an excellent program for today’s Tech Summit. I appreciate the opportunity to be with you today, and to share how the Department of Justice is thinking about the intersection … Read moreDeputy Attorney General Jeffrey A. Rosen Delivers Remarks on the Review of Market-Leading Online Platforms at the American Bar Association’s 2019 Antitrust Fall Forum

Big bank CEOs Deny ‘Loyalty Tax’ Accusations

The chief executives of the big four banks have doubled down in defence of their mortgage pricing decisions after being accused of profiting off a “loyalty tax” imposed on customers. Via The Adviser. Appearing before the House of Representatives standing committee on economics on Friday (15 November), NAB chairman Philip Chronican and ANZ CEO Shayne … Read moreBig bank CEOs Deny ‘Loyalty Tax’ Accusations

Illegal cancer drugs from Bangladesh flood local market

Studies undertaken by experts, and confirmed by companies, suggest a thriving ‘grey’ market of fake and unapproved copies of Big Pharma’s oncology and hepatology medicines, and some under patent protection. Since these medicines are smuggled, exact numbers are unavailable, but estimates suggest this grey market could be over Rs 300 crore for just oncology drugs. … Read moreIllegal cancer drugs from Bangladesh flood local market

The Groyper Wars On Immigration Are the Debate That American Nationalism Needs, by Washington Watcher II

Will the GOP fight to preserve the Historic American Nation, or will it blithely submit to demographic change? That’s the fundamental question animating the “Groyper Wars” against Conservative Inc. For the past two months, young patriots—who’ve adopted as their symbol the Please follow and like us:

Why Sweden’s Central Bank Dumped Australian Bonds

Suddenly, at the level of central banks, Australia is regarded as an investment risk. Via The Conversation. On Wednesday Martin Flodén, the deputy governor of Sweden’s central bank, announced that because Australia and Canada were “not known for good climate work”. As a result the bank had sold its holdings of bonds issued by the … Read moreWhy Sweden’s Central Bank Dumped Australian Bonds