The Net Effect of an Alcohol Tax Increase on Death Rates in Middle Age by Philip J. Cook, Jan Ostermann and Frank A. Sloan. Published in volume 95, issue 2, pages 278-281 of American Economic Review, May 2005
Fellowship Stipend Support and the Supply of Science and Engineering Students: NSF Graduate Research Fellowships by Richard B. Freeman. Published in volume 95, issue 2, pages 61-65 of American Economic Review, May 2005
Understanding the nature and sources of human identity is an important objective in the study of a variety of social problems. Scholarly and popular writing on the cultural determinants of economic disadvantage underscores this point. Some analysts (e.g., Edward Banfield, 1970; Thomas Sowell, 1994; John McWhorter, 2000; John Ogbu, 2003) have hypothesized that a causal connection exists between the poor social performance of a group of people and their “culture.” That disadvantaged people harbor “dysfunctional” notions about identity has been offered as an explanation of a group’s welfare dependency, or its low academic proficiency. It has been said, for instance, that people fare poorly because they focus overly much on their own victimization, or because they disassociate themselves from their more successful fellows, and so on. At the root of such cultural criticism lies the presumption that the disadvantaged should “reform” themselves: If those people would only see themselves differently, the critics hint, they could be so much better off. This mode of social explanation easily accommodates racial overtones. With the present paper we intend to raise serious doubts about such normative criticisms of the poor when applied to their conceptions of identity. We show that the identities adopted by a group of people can be perfectly consistent with rational individual choices, even though feasible alternative configurations may exist under which everyone would be better off. Indeed, we argue that identity choice by interactive agents with ongoing economic relations has a “tragedy of the commons” quality about it: the profile of dominant strategies for the agents can yield a Pareto-inferior collective outcome. Preaching “identity reform” to such people is a bit like trying to counter an overfishing problem by lecturing fishermen on the moral need for forbearance! We wish to be explicit and clear at the outset about what we have in mind when using the term “identity.” Human identity includes both a personal and a social aspect. Social identity deals with how an individual is perceived and categorized by others (e.g., Erving Goffman, 1963). In contrast, personal identity, which is the subject of this paper, and which psychologists sometimes call “ego identity,” deals with a person’s answer to the question: “Who am I?” Our proposed model of personal identity posits that, to answer this question, an agent must provide a “narrative” about her personal history. That is, she has to summarize her life experiences. Because a full personal history is (necessarily) a very complex object, and since their cognitive capacities are limited, answering the “Who Am I?” question requires agents to project elaborate personal accounts onto manageable categories of self-description. We think of an agent’s identity as the mechanism she uses to convert complex personal history into a more simplified account of herself. A group’s “collective identity” is any self-representational mode of this sort which has been adopted in common by (most of) the agents in that group. We formalize the problem of selective selfrepresentation and use the resulting framework to study the efficiency implications of the “identity” choices people make. This, we believe, is one way that economic analysis can contribute to the study of identity-related issues.
We measure the impact of China's decision to open its economy in 1980 on outsourcing from Hong Kong and the relative demand for less-skilled workers. We show that the relative demand for skilled workers in Hong Kong increased at the same time outsourcing to China began to increase. The reallocation of workers from manufacturing to “outsourcing services” can account for 15 percent, and increased utilization of skilled workers within manufacturing industries for 30 percent, of the aggregate relative demand shift. In addition, the rate of skill upgrading has been greater in manufacturing industries that have seen a greater degree of outsourcing to China.
This paper analyzes optimal monetary policy in a sticky price model with Calvo-type staggered price-setting. In the paper, the optimal monetary policy maximizes the expected utility of a representative household without having to rely on a set of linearly approximated equilibrium conditions, given the distortions associated with the staggered price-setting. It shows that the complete stabilization of the price level is optimal in the absence of initial price dispersion, while optimal inflation targets respond to changes in the level of relative price distortion in the presence of initial price dispersion.
Explaining the Short Careers of High-Achieving Teachers in Schools with Low-Performing Students by Donald Boyd, Hamilton Lankford, Susanna Loeb and James Wyckoff. Published in volume 95, issue 2, pages 166-171 of American Economic Review, May 2005
U.S. research universities are increasingly populated by postdoctoral fellows. Two dimensions of the postdoctoral training have led to this increase. One is the increasing number of new Ph.D. s taking a first postdoc position, and the other involves a lengthening of the duration of an individual’s postdoc experience. In this paper, we examine factors contributing to both of these trends. We find that the increased propensity to take a postdoctoral position can be attributed to the increased proportion of Ph.D.s being awarded in the life sciences and the increased proportion of temporary and permanent residents in the graduate population. The increased propensity to take a postdoc position also relates to adverse job market conditions experienced by Ph.D. s during the period. Our postdoc duration results suggest that increased duration can be explained in part by the increasing proportion of Ph.D. s awarded to temporary residents and the increased number of degrees being awarded in the life sciences. Adverse job market conditions also appear to play a role. We also find the duration of the postdoc experience to be positively related to the provision of fringe benefits. We would like to thank Grant Black of the Andrew Young School for his assistance. We also thank Science Resources Statistics, National Science Foundation for providing U.S. access to the Survey of Doctorate Recipients and the Survey of Earned Doctorates. We have benefited from the comments of Robert Clark, Richard Freeman, Bill Amis, Michael Rothchild and participants at the November 2004 NBER Education meeting. Stephan would like to acknowledge the financial support provided by the TIAA-CREF Institute for this project and from the Andrew W. Mellon Foundation for support of work with the Survey of Earned Doctorates.
The Sensitivity of Long-Term Interest Rates to Economic News: Evidence and Implications for Macroeconomic Models by Refet S. Gürkaynak, Brian Sack and Eric Swanson. Published in volume 95, issue 1, pages 425-436 of American Economic Review, March 2005
Since 1950, housing prices have risen regularly by almost two percent per year. Between 1950 and 1970, this increase reflects rising housing quality and construction costs. Since 1970, this increase reflects the increasing difficulty of obtaining regulatory approval for building new homes. In this paper, we present a simple model of regulatory approval that suggests a number of explanations for this change including changing judicial tastes, decreasing ability to bribe regulators, rising incomes and greater tastes for amenities, and improvements in the ability of homeowners to organize and influence local decisions. Our preliminary evidence suggests that there was a significant increase in the ability of local residents to block new projects and a change of cities from urban growth machines to homeowners' cooperatives.
State "Currencies" and the Transition to the U.S. Dollar: Reply-Including a New View from Canada by Farley W. Grubb. Published in volume 95, issue 4, pages 1341-1348 of American Economic Review, September 2005