Knowledge that Transforms

For a cluster-robust t-statistic under cluster heterogeneity we establish that the cluster-robust t-statistic has a gaussian asymptotic null distribution and develop the effective number of clusters, which scales down the actual number of clusters, as a guide to the behavior of the test statistic. The implications for hypothesis testing in applied work are that the number of clusters, rather than the number of observations, should be reported as the sample size, and the effective number of clusters should be reported to guide inference. If the effective number of clusters is large, testing based on critical values from a normal distribution is appropriate.

Developing democracies are experiencing unprecedented increases in primary and secondary schooling. To identify education's long-run political effects, we use a difference-in-differences design that leverages variation across local government areas and gender in the intensity of Nigeria's 1976 universal primary education reform—one of Africa's largest ever educational expansions—to instrument for education. We find large increases in basic civic and political engagement: better educated citizens are more attentive to politics, more likely to vote, and more involved in community associations. The effects are largest among minority groups and in fractionalized areas, without increasing support for political violence or own-group identification.

Job search is a key choice variable in theories of labor markets but is difficult to measure directly. We develop a job search activity index based on Google search data, the Google Job Search Index (GJSI). We validate the GJSI with both survey- and web-based measures of job search. Unlike those measures, the GJSI is high frequency, geographically precise, and available in real time. We demonstrate the GJSI’s utility by using it to study the effects of unemployment insurance policy changes between 2008 and 2014. We find no evidence of an economically meaningful effect of these changes on aggregate search.

We explore how examiner behavior is altered by the time allocated for reviewing patent applications. Insufficient examination time may hamper examiner search and rejection efforts, leaving examiners more inclined to grant invalid applications. To test this prediction, we use application-level data to trace the behavior of individual examiners over the course of a series of promotions that carry with them reductions in examination time allocations. We find evidence demonstrating that such promotions are associated with reductions in examination scrutiny and increases in granting tendencies, as well as evidence that those additional patents being issued on the margin are of below-average quality.

We study gender spillovers in career advancement using eleven years of employer-employee matched data on white-collar workers at over 4, 000 private sector workplaces in Norway. Our data allow us to define seven hierarchical ranks that are consistent across plants and over time and track promotions even for individuals who change employers. We find positive spillovers across ranks (flowing from higher-ranking to lower-ranking women) but negative spillovers within ranks. The finding of narrower gender gaps in promotions for workers with more female bosses suggests that policies that increase female representation in corporate leadership can have spillover benefits to women in lower ranks.

Following the enactment of reforms in the mid-1990s, China's state-owned enterprises (SOEs) became more profitable. Using theoretical insights from Azmat, Manning, and Van Reenen (2012) and Karabarbounis and Neiman (2014) and econometric methods in De Loecker andWarzynski (2012), this paper finds that SOE restructuring was nevertheless limited. This is because SOE profitability gains in part reflect that they were under less political pressure to hire excess labor and also their cost of capital fell and their capital-labor elasticity of substitution generally exceeded unity. Moreover, SOE productivity lagged that of foreign and private firms.

Here, I study the effect of state enactment of the Uniform Trade Secrets Act (UTSA) on R&D among U.S. businesses between 1979 and 1998. Using a new index of the legal protection of trade secrets, I find that the UTSA was associated with higher R&D among larger companies and those in high-tech industries. For the average company in the respective industry, the UTSA was associated with 3.2% more R&D in pharmaceuticals and 3.1% more R&D in computers and office equipment, as contrasted with no significant change in soaps and cleaners, and industrial machinery and equipment.

We conduct a series of field experiments to evaluate the quality of advice provided by life insurance agents in India. Agents overwhelmingly recommend unsuitable, strictly dominated products that provide high commissions to the agent. Agents cater to the beliefs of uninformed consumers, even when those beliefs are wrong. We also find that agents appear to focus on maximizing the amount of premiums (and therefore their commissions) that customers pay, as opposed to focusing on how much insurance coverage customers need. A natural experiment requiring disclosure of commissions for a specific product results in agents recommending alternative products with high commissions but no disclosure requirement. A follow-up agent survey sheds light on the extent to which poor advice reflects both the commission incentives and agents’ limited product knowledge.

In macroeconomic models, the elasticity of substitution between clean and dirty energy inputs within the energy aggregate is a central parameter in assessing the necessary conditions for long-run green growth. Using new sectoral data in a panel of 26 countries, we formulate specifications of nested constant elasticity of substitution production functions that allow estimating this parameter for the first time. We present evidence that it significantly exceeds unity, a favorable condition for promoting green growth.

We exploit historical data on planned highways, railroads, and exploration routes as sources of exogenous variation in order to estimate the effect of interstate highways on regional innovation: a 10% increase in a region's stock of highways causes a 1.7% increase in regional patenting over a five-year period. In terms of the mechanism, we report evidence that roads facilitate local knowledge flows, increasing the likelihood that innovators access knowledge inputs from local but more distant neighbors. Thus, transportation infrastructure may spur regional growth above and beyond the more commonly discussed agglomeration economies predicated on an inflow of new workers.