Do Conditional Cash Transfers Improve Child Health? Evidence from PROGRESA's Control Randomized Experiment by Paul Gertler. Published in volume 94, issue 2, pages 336-341 of American Economic Review, May 2004
Was Electricity a General Purpose Technology? Evidence from Historical Patent Citations by Petra Moser and Tom Nicholas. Published in volume 94, issue 2, pages 388-394 of American Economic Review, May 2004
support, and Kent Smetters and Julie Collins for comments. A central point in the recent debate about Social Security in the United States has been the extent to which the federal government should take significant positions in the equity market. But, as this paper shows, the government already has a much more significant, if implicit position in the U.S. equity market through its claim to future tax revenues. Using estimates of the sensitivity of federal tax revenues to stock market returns, I calculate the implicit equity position of the federal government, defined as the equity position that would be as sensitive to the stock market as the present value of federal revenues. Although standard errors are large, point estimates indicate that the implicit federal equity position exceeds the size of the stock market itself, a result that is consistent with the fact that revenues from all sources, not just taxes on corporate source income, are responsive to stock market returns.
Gender gaps may be observed in a variety of economic and social environments. One of the possible determining factors is that men are more competitive than women and so, when the competitiveness of the environment increases, the performance of men increases relative to that of women. We test this hypothesis in a field study conducted with 9-year old children, running on a track. They first run alone and then in pairs over a short distance with different gender composition of the pairs. The results support the hypothesis that performance in competition varies according to gender. When children ran alone, there was no difference in performance. In competition boys, but not girls, improved their performance. This finding relates to the discussion regarding single sex schools: the outcomes of examinations in a mixed sex school can show a gender gap in favor of boys, even when this gap does not reflect actual abilities. Girls who are as talented as boys will end up performing worse just because they are not as competitive, and will not achieve as high scores in examinations as boys.
This paper analyzes Pareto-efficient international tax regimes. Because every country faces its own national budget constraint, the Diamond-Mirrlees production-efficiency theorem, which underlies key tenets of policy advice in international taxation—the desirability of destination basis for commodity taxation, of the residence principle for capital income taxation, and of free trade—does not apply. The paper establishes conditions—relating to the availability of explicit or implicit devices for reallocating tax revenues across countries—under which production efficiency is nevertheless desirable, and characterizes the precise ways in which Pareto-efficient international taxation may require violation of established tenets.
Are deflation and depression empirically linked? No, concludes a broad historical study of inflation and real output growth rates. Deflation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link.
Design Choices in Privatized Social-Security Systems: Learning from the Swedish Experience by Henrik Cronqvist and Richard H. Thaler. Published in volume 94, issue 2, pages 424-428 of American Economic Review, May 2004
We investigate the effect of scale on performance in the active money management industry. We first document that fund returns, both before and after fees and expenses, decline with lagged fund size, even after accounting for various performance benchmarks. We then explore a number of potential explanations for this relationship. This association is most pronounced among funds that have to invest in small and illiquid stocks, suggesting that these adverse scale effects are related to liquidity. Controlling for its size, a fund's return does not deteriorate with the size of the family that it belongs to, indicating that scale need not be bad for performance depending on how the fund is organized. Finally, using data on whether funds are solo-managed or team-managed and the composition of fund investments, we explore the idea that scale erodes fund performance because of the interaction of liquidity and organizational diseconomies.