Knowledge that Transforms

We quantify the disincentive effects of elements of joint taxation in the labor income tax codes of 17 European countries and the US. We analyze the extent to which hours worked of married men and women would change if each country switched to a system of separate taxation of married couples. In this hypothetical tax reform, we keep the average tax burden of married households constant. With the exception of four countries featuring already a system of separate taxation, the model predicts that married women's hours worked increase on average by 115 hours, or 10.5 percent, through this reform.

Between 1990 and 2015, Indonesia lost nearly 25 percent of its forests, largely due to intentional burning to clear land for cultivation of palm oil and timber plantations.1 The neighboring "victim countries" experienced severe deteriorations in air quality as a result of these fires. For example, Singapore experienced record air pollution levels in June of 2013 and again in September of 2015 as a result of the Indonesian forest fires.2 This air pollution is associated with increased incidences of upper respiratory tract infections, acute conjunctivitis, lung disease, asthma, bronchitis, emphysema, and pneumonia, among other ailments.2 Quantifying the impact of air pollution on health outcomes is challenging because pollution levels are often nonrandom for a variety of reasons, including policy endogeneity and sorting (Dominici, Greenstone, and Sunstein 2014). In this paper we offer the first causal analysis of the transboundary health effects of the Indonesian forest burning. The Indonesian fires induce exogenous variation in Singaporean air quality. We take advantage of this by using satellite fire data to instrument for changes in Singaporean air quality. Since Singapore is only 277.6 square miles in area (two-thirds the size of New York City), air pollution resulting from the fires is homogeneously spread so that sorting is less likely to be an issue. Using a two-stage least squares approach, we find that from 2010 through mid-2016, the Indonesian fires caused a statistically significant increase in pollution levels in Singapore. Our study also provides evidence that polyclinic attendances for acute respiratory tract infections and acute conjunctivitis in Singapore increased as a result of the deterioration in air quality. The reduced form estimates show that a one standard deviation increase in our measure of fires causes a 0.7 standard deviation increase in polyclinic attendances for each of these illnesses. These findings provide causal evidence of the transboundary pollution and health impacts of the Indonesian forest burning on neighboring Singapore.

We use new and comprehensive data on the security holdings of euro-area investors to document facts about the ongoing quantitative easing program. The holdings of purchase-eligible government bonds have strong home bias not only for banks but also for insurance companies, pension funds, and mutual funds, especially in the vulnerable countries. In response to the program, foreign investors sold most of the purchase-eligible government bonds. Banks also sold purchase-eligible government bonds to a lesser extent, but insurance companies and pension funds bought them. Thus, quantitative easing may have reduced the duration mismatch for these institutions.

Alan Garber and Jonathan Skinner (2008) famously conjectured that the US health care system was “uniquely inefficient” relative to other countries. We test this idea using cross-country data on prescription drug sales newly linked with an arguably objective measure of relative therapeutic benefits, or drug quality. Specifically, we investigate how higher and lower quality drugs diffuse in the US relative to Australia, Canada, Switzerland, and the UK. Our tabulations suggest that lower quality drugs diffuse more in the US relative to high quality drugs compared to each of our four comparison countries--consistent with Garber and Skinner's conjecture.

Although economics' share of Bachelor's degrees awarded in the United States has been flat for over a decade, its share of second majors is growing. This paper documents trends and correlations in disciplines' shares of first and second majors for Bachelor's degrees conferred in the United States during 2001-2014. First majors in math, engineering, computer science, and technology and in the life and medical sciences (now the modal major among female students) are complements to second majors in economics. Encouraging double majoring in economics among students in these disciplines could grow and diversify the economics discipline while also benefiting graduates.

Articulating thoughtful learning outcome statements for courses and majors improves teaching and learning and satisfies accreditation requirements. After reading this paper, economists will be able to construct learning outcome statements that guide and enhance teaching and learning in their courses and programs. We present a framework for developing learning outcomes based on a set of five fundamental competencies in economics. We then provide another public good, offering a complete set of learning outcomes for an introductory microeconomics course, which instructors can include in their syllabi. For additional guidance, we construct examples of lesson-specific learning outcomes as well.

The regulation of many activities depends on whether societies consider them morally controversial or “repugnant.” Not only have regulation and related ethical concerns changed over time, but there is also heterogeneity across countries at a given time. We provide evidence of this heterogeneity for three morally contentious activities, abortion, prostitution, and gestational surrogacy, and explore the relationship between a country's economic conditions and how these activities are regulated. We propose a conceptual framework to identify mechanisms that can explain our findings (including the role of non-economic factors), and indicate directions for future research.

This paper documents that in the US, men are more likely than women to work in both high-wage firms and high-wage industries. I then ask why this sorting occurs. I consider two main explanations: men and women have different preferences, and men and women have different opportunities. Through the lens of a simple random search model, I find that the dominant explanation for sorting is differences in opportunities. One implication of this result is that women are at firms that offer better nonpay characteristics, and this plays an important role in explaining the gender earnings gap.

Across human societies, one sees many examples of deeply rooted and widely held beliefs that are almost certainly untrue. Examples include beliefs about witchcraft, magic, ordeals, and superstitions. Why are such incorrect beliefs so prevalent and how do they persist? We consider this question through an examination of superstitions and magic associated with conflict in the Eastern Democratic Republic of the Congo. Focusing on superstitions related to bullet-proofing, we provide theory and case-study evidence showing how these incorrect beliefs persist. Although harmful at the individual-level, we show that they generate Pareto efficient outcomes that have group-level benefits.