Knowledge that Transforms

Neil Cummins of London School of Economics reviews “As Gods Among Men: A History of the Rich in the West” by Guido Alfani. The Econlit abstract of this book begins: “Explores the role and significance of the Western rich and superrich in history, detailing important aspects of their behavior to pinpoint patterns representing elements of continuity or change.”

Dominika Langenmayr of KU Eichstatt-Ingolstadt, WU Vienna, and CESifo reviews “The Golden Passport: Global Mobility for Millionaires” by Kristin Surak. The EconLit abstract of this book begins: “Examines the global citizenship market, chronicling the emergence of golden passport schemes, investigating the countries, brokers, and wealthy investors that make up the citizenship by investment (CBI) market, and offering the perspectives of locals and investors in golden passport countries.”

Alberto Bisin of New York University reviews “Modeling Social Behavior: Mathematical and Agent-Based Models of Social Dynamics and Cultural Evolution” by Paul E. Smaldino. The Econlit abstract of this book begins: “Explores ways of thinking about and studying complex social systems using mathematical and computational models, focusing on relatively simple dynamic models to aid in the study of social organisms and what they do together.”

Satyajit Chatterjee of Federal Reserve Bank of Philadelphia reviews “When Nations Can't Default: A History of War Reparations and Sovereign Debt” by Simon Hinrichson. The Econlit abstract of this book begins: “Promotes the argument that war reparations are unlike other sovereign debt because the repayment is enforced by military and political force, exploring how debtor countries end up in suboptimal economic situations that do not occur during normal sovereign debt management.”

Kevin Hjortshoj O'Rourke of NYU Abu Dhabi reviews “Against the World: Anti-Globalism and Mass Politics between the World Wars” by Tara Zahra. The Econlit abstract of this book begins: “Explores the development of nationalism in the twentieth century after World War I, discussing significant events that contributed to the rise of anti-globalization policies and social movements.”

Doug Elmendorf of Harvard University reviews “The Crisis of Democratic Capitalism” by Martin Wolf. The EconLit abstract of this book begins: “Promotes the argument that economic disappointment is one of the chief explanations for the rise of left- and right-wing populism in high-income democracies, focusing on what can be done to restore the relationship between capitalism and democracy.”

Abstract Thanks to standardized work protocol and technology of McDonald's restaurants, the hourly wage of McDonald's Basic Crew enables wage comparisons under near-identical skill inputs and hedonic job conditions. McWages capture labor costs in entry-level jobs, while the Big Macs (earned) Per Hour (BMPH) index measures corresponding purchasing power of wages. We document large and growing geographical wage differences in standardized jobs using data covering most U.S. counties during 2016-2023. Before the Covid-19 pandemic, there was no BMPH growth where minimum wages stayed constant, but the pandemic wage increase, which diminished the importance of minimum wages, was stronger in these areas.

Abstract We study self-organized teams in dynamic contests. Using data from Kaggle, we document that teams outperform solo players, but few players choose to form teams. Every new team alters the composition of players, discouraging less productive solo players to make submissions. We estimate the structural parameters of a dynamic contest model, including the team formation and submission costs. We find that team formation incentives diminish with the number of teams, as do the incentives to make submissions. We empirically evaluate the productivity-discouragement tradeoff caused by teamwork and discuss implications for contest design, including facilitating teamwork and hosting open competitions.

Abstract Previously, identification of triangular random coefficient models required a restriction on the dimension of the first stage heterogeneity or independence assumptions across the different sources of the heterogeneity. This note proposes a new identification strategy that does not rely on either of these restrictions but rather assumes conditional means have a conditional linear projection representation in order to construct “correction functions” to address endogeneity and gain identification of the average partial effect. This identification strategy allows for both continuous and discrete instruments. Finally, the proposed identification method is illustrated in estimating the returns to education.

Abstract We study the effects of uncertainty on time use and their macroeconomic implications. Employing data from the American Time Use Survey and the Bureau of Labor Statistics, we document that heightened uncertainty increases housework and reduces market hours, mildly impacting leisure. We then propose a model that quantitatively accounts for these estimates. We show that substitution between market and housework provides self-insurance to households, weakening precautionary motives. However, it also reduces aggregate demand, ultimately amplifying uncertainty's recessionary impact. Time reallocation can lead to higher inflation, particularly when uncertainty is coupled with policies redirecting time use towards housework (e.g., lockdown restrictions).