Knowledge that Transforms

have provided us with a wealth of information about the newest products of U.S. Ph.D. programs. Among the notable facts are the continuing decline in the share of U.S. natives among these new graduates, their continued success at landing academic and other professional jobs, and their high level of professional fulfillment, in terms of both job satisfaction and outcomes measuring up to expectations. There are also a variety of intriguing results. For example, (from their table 5) students completing the top Ph.D. programs were younger, less likely to be married, and more likely to be foreign than those in the overall sample. Perhaps most disturbing, (from their table 6) median starting full-time academic salaries were lowest in public economics, a result that cannot be accounted for in salary regressions with other covariates. This clearly is an inversion of the appropriate ranking. In my comments, I will focus on two selected aspects of Ph.D. programs and the Ph.D. job market.

The 3 July 2002 issue of the Chronicle of Higher Education described the matter we are discussing today in these words: "Taken together. African-Americans and persons of Hispanic origin represent only 8 percent of full-time faculty nation-wide, and while 5 percent are African-American, half of them work at historically black institutions. The proportion of black faculty members at white institutions is 2.3 percent, virtually the same as it was 20 years ago." We are privileged to have the opportunity to explore this issue from two different perspectives. The first contends that unless major changes occur, the number of minority students interested in and prepared for faculty positions will remain dreadfully insufficient and that, furthermore, affirmative action has been a culprit in this process and leads many of these students into higher educational environments in which they do not perform well enough to even seriously consider or be considered for careers in academe. The other position says that, although the supply of minority faculty candidates is admittedly small, the relatively low level of commitment from higher educational institutions to recruit, hire, and promote minority candidates and the salary disparity between academe and industry lead to a problem of demand that must be appreciated and addressed. Furthermore, it argues, affirmative action has been beneficial in increasing minority faculty presence

In Burnside and Dollar (2000) we used standard regression techniques from the growth literature to measure the effect of foreign aid on growth. The main finding in our paper was that the effect of foreign aid on growth depended on the macroeconomic policies of recipient countries. In this issue, William Easterly et al. (2004), challenge the robustness of our result to new data. Before commenting on their findings it is useful to review the basis of our original findings. Our paper focused on three versions of a panel growth regression, estimated using data for 51 countries, and six four-year periods, from 1970 to 1993. These regressions may be summarized as:

It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes. Among other things, the model explains why trade credit has short maturity, why trade credit is more prevalent in less developed credit markets, and why accounts payable of large unrated firms are more countercyclical than those of small firms.

Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty: Comment by Antonio Ciccone. Published in volume 94, issue 3, pages 785-795 of American Economic Review, June 2004

I assess the magnitude of human capital spillovers by estimating production functions using a unique firm-worker matched data set. Productivity of plants in cities that experience large increases in the share of college graduates rises more than the productivity of similar plants in cities that experience small increases in the share of college graduates. These productivity gains are offset by increased labor costs. Using three alternative measures of economic distance—input-output flows, technological specialization, and patent citations—I find that within a city, spillovers between industries that are economically close are larger than spillovers between industries that are economically distant.

Many countries strive to attract foreign direct investment (FDI) hoping that knowledge brought by multinationals will spill over to domestic industries and increase their productivity. In contrast with earlier literature that failed to find positive intraindustry spillovers from FDI, this study focuses on effects operating across industries. The analysis, based on firm-level data from Lithuania, produces evidence consistent with positive productivity spillovers from FDI taking place through contacts between foreign affiliates and their local suppliers in upstream sectors. The data indicate that spillovers are associated with projects with shared domestic and foreign ownership but not with fully owned foreign investments.

Bank for providing research funding and support. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Non-Technical Summary Product variety plays an important role in the theoretical work on monopolistic competition and trade, and recent empirical work has begun to quantify this for aggregate and disaggregate import demands. The objective of this paper is to discuss the measurement of product variety in trade, using a broad cross-section of advanced and developing countries and disaggregating across sectors. We calculate the export variety of countries in their sales to the United States, and relate the export variety indexes to country productivities. We confirm that countries with greater product variety in exports also have higher productivity. This may be due to their own development of, and access to, these products. 2 1.

The conventional wisdom is that African-Americans, Hispanics, and American Indians are underrepresented among faculty in postsecondary institutions because they are underrepresented among Ph.D. recipients. Thus, the putative solution to the problem of minority faculty underrepresentation is to increase the supply of minority Ph.D.’s. In our book, Faculty of Color in Academe: Bittersweet Success (Turner and Myers, 2000) we point out that the supply-side argument has several flaws. In this and a companion paper (Myers and Turner, 2003) we replicate and update the analysis performed in Chapter 7 of our book using more recent census data and a larger sample for 1990. Once again, we demonstrate that an autonomous increase in the Ph.D. supply, uniform across all groups, would leave the representation of African-American and Hispanic faculty largely unchanged. This conclusion challenges the view that the underrepresentation of minority faculty is solely a supply-side phenomenon that can be addressed primarily by increasing the pipeline for new minority Ph.D.’s. Although a strong case can be made for increasing the minority pipeline, the pipeline itself does not appear to be the central cause of the continued underrepresentation of minority faculty. I. The Problem: At every point in the educational pipeline from the Bachelor’s degree to the doctoral degree, African-Americans, Hispanics, and American Indians are substantially underrepresented.

Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change by Iris Bohnet and Steffen Huck. Published in volume 94, issue 2, pages 362-366 of American Economic Review, May 2004