Knowledge that Transforms

We take advantage of a natural experiment in the state of Indiana to estimate the effect of daylight saving time (DST) on residential electricity consumption. Our main finding is that, contrary to the policy's intent, DST increases electricity demand. The findings are consistent with simulation results that identify a trade-off between reducing demand for lighting and increasing demand for heating and cooling. We estimate a cost to Indiana households of $9 million per year in increased electricity bills. We also estimate social costs of increased pollution emissions between $1.7 to $5.5 million per year.

We compare the finite-sample performance of impulse response confidence intervals based on local projections (LPs) and vector autoregressive (VAR) models in linear stationary settings. We find that in small samples, the asymptotic LP interval often is less accurate than the bias-adjusted bootstrap VAR interval, notwithstanding its excessive average length. Although the asymptotic LP interval has adequate coverage in sufficiently large samples, its average length still far exceeds that of bias-adjusted bootstrap VAR intervals with comparable accuracy. Bootstrap LP intervals (with or without bias correction) and asymptotic VAR intervals are shorter on average, but they often lack coverage accuracy in finite samples.

Where does adaptation to innovation take place? I present evidence on the role of agglomeration economies in the application of new knowledge to production. All else equal, workers are more likely to be observed in new work in locations initially dense in college graduates and industry variety. This pattern is consistent with economies from the geographic concentration of factors and markets related to technological adaptation. A main contribution is a new measure, based on revisions to occupation classifications, that characterizes cross-sectional differences across cities in technological adaptation. Worker-level results also provide new evidence on the skill bias of recent innovations.

Using data for six Asian miracle economies over the period from 1953 to 2006, this paper examines the extent to which growth has been driven by R&D and tests which second-generation endogenous growth model is most consistent with the data. The results give strong support to Schumpeterian growth theory but only limited support to semi-endogenous growth theory. Furthermore, it is shown that R&D has played a key role for growth in the Asian miracle economies.

Employing droughts and floods to proxy for changes in precipitation, this paper shows nomadic incursions into settled Han Chinese regions over a period of more than two thousand years—the most enduring clash of civilizations in history—to be positively correlated with less rainfall and negatively correlated with more rainfall. Consistent with findings that economic shocks are positively correlated with conflicts in modern sub-Saharan Africa when instrumented by rainfall, our reduced-form results extend this relationship to a very different temporal and geographical context, the Asian continent, and long historical period.

We build a new concordance between the NBER Patent Data and U.S. Census microdata and use it to examine what happens when firms patent. We find strong evidence that increases in patent stock are associated with increases in firm size, scope, and skill and capital intensity. We find somewhat weaker evidence that changes in patenting are positively correlated with changes in total factor productivity. We also analyze first-time patentees and find similar effects following initial patent application. Together, these results suggest that patenting is indeed associated with real changes within firms, in particular with growth through increases in scope.

Over the past several decades, the HIV/AIDS epidemic has dramatically altered patterns of morbidity and mortality in sub-Saharan Africa, with potential consequences for human capital investment and economic growth. Using data from Demographic and Health Surveys for fifteen countries in sub-Saharan Africa, I estimate the relationship between regional HIV prevalence and the change in individual human capital investment over time. Consistent with a simple model of human capital investment incorporating mortality risk, I find that areas with higher levels of HIV experienced relatively larger declines in schooling.

We use a migration lottery program to overcome the double-selectivity problems posed by migration. We compare a wide range of outcomes for the remaining household members of Tongan emigrants with those of members of similar households who were unsuccessful in the lottery, with the policy rules determining which household members can move. Multiple hypothesis testing procedures are used to examine robustness. The overall impact on households left behind is largely negative in terms of resource availability, and both sources of selectivity matter, leading studies that fail to address them adequately to misrepresent the impact of migration on households.

This paper uses restricted census microdata to examine housing values and rents for neighborhoods in the United States where power plants were opened during the 1990s. Compared to neighborhoods with similar housing and demographic characteristics, neighborhoods within 2 miles of plants experienced 3%–7% decreases in housing values and rents, with some evidence of larger decreases within 1 mile and for large-capacity plants. In addition, there is evidence of taste-based sorting, with neighborhoods near plants associated with modest but statistically significant decreases in mean household income, educational attainment, and the proportion owner-occupied.

Using firm-level data collected by the U.S. Bureau of Economic Analysis, we estimate the impact on U.S. manufacturing employment of changes in foreign affiliate wages. We show that the motive for offshoring and, consequently, the location of offshore activity, significantly affects the impact of offshoring on parent employment. In general, offshoring to low-wage countries substitutes for domestic employment. However, for firms that do significantly different tasks at home and abroad, foreign and domestic employment are complements. These offsetting effects may be combined to show that offshoring by U.S.-based multinationals is associated with a quantitatively small decline in manufacturing employment.