Knowledge that Transforms

Within economics, there has been a recent effort to better understand the notion of culture, typically defined as beliefs, values, and norms held by individuals. Empirical work has focused on identifying systematic cultural differences between individuals from different ethnic and national backgrounds. More recently, attention has turned to the historical origins of cultural differences (e.g., Luigi Guiso, Paolo Sapienza, and Luigi Zingales 2008; Nathan Nunn and Leonard Wantchekon 2009). Colonial Africa provides a natural laboratory to examine how an external intervention can have lasting impacts on people’s beliefs and values. This study examines the effect of European missionary activities in colonial Africa on the subsequent evolution of culture, as measured by religious beliefs. The empirical results show that descendants of ethnic groups that experienced greater missionary contact are today more likely to self-identify as Christian. This correlation provides evidence that foreign missionaries altered the religious beliefs of Africans, and that these beliefs persist as they are passed on from parents to children. Put differently, the results show that historic events can have a lasting impact on culture. The findings also provide rare empirical evidence of the historical determinants of longrun religious conversion. Studies of conversion typically focus on contemporary determinants (see Jason Hwang and Robert Barro 2007 and the references therein). Although a number of studies have examined the long-term impacts of missionary activities, they have not considered their long-run impacts on religious beliefs and values (e.g., Robert D. Woodberry 2004). One of the few papers that consider a historical determinant of long-run conversion is by Murat Religious Conversion in Colonial Africa

Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes by Jeffrey Frankel and Daniel Xie. Published in volume 100, issue 2, pages 568-72 of American Economic Review, May 2010

As health care reform moves forward in the United States, one common feature of virtually all proposals is to expand coverage for low income populations not through a traditional public insurance model, but rather through a “defined contribution exchange” mechanism. Under this approach, low income individuals would have a choice of a number of options for their insurance coverage. Individuals would receive a subsidy to purchase insurance that was tied to the lowest-cost plan (or some index of low-cost plans) and would pay some part of the difference if they chose a more expensive plan. This major departure from the traditional free/single-choice public payer model raises a number of important questions, but the key initial question is: How price-sensitive will lowincome consumers be in choosing across plans? While there is now a sizable literature evaluating plan choice in the context of employerprovided insurance, there are no previous studies of how these very low income populations will respond to choice in publicly financed insurance programs. In this paper, we study the plan choice of low-income enrollees in Massachusetts’ Commonwealth Care program that was established as part of the state’s health reform in April 2006. Enrollees in Commonwealth Care were given a choice of up to four Medicaid Managed The MassachuseTTs healTh Insurance experIMenT: early experIences †

Earnings losses of Connecticut workers affected by mass layoff are calculated using administrative data. Estimated reductions are initially more than 30 percent and six years later, as much as 15 percent. The Connecticut estimates are smaller than comparable ones from Pennsylvania administrative data but similar to those from the Panel Study of Income Dynamics (PSID) and Department of Workforce Services (DWS). Earnings reductions in Connecticut and Pennsylvania are concentrated among Unemployment Insurance recipients. An unusually high proportion of Unemployment Insurance beneficiaries in Pennsylvania explains the larger estimated losses relative to other studies. Fixed-effects, random growth, and matching estimators produced similar earnings loss estimates suggesting each is relatively unbiased in this context.

During the 1990s, anti-sweatshop activists campaigned to improve conditions for workers in developing countries. This paper analyzes the impact of anti-sweatshop campaigns in Indonesia on wages and employment. Identification is based on comparing the wage growth of workers in foreign-owned and exporting firms in targeted regions or sectors before and after the initiation of anti-sweatshop campaigns. We find the campaigns led to large real wage increases for targeted enterprises. There were some costs in terms of reduced investment, falling profits, and increased probability of closure for smaller plants, but we fail to find significant effects on employment.

We analyze how contractibility affects contract design. A major concern when designing research agreements is that researchers use their funding to subsidize other projects. We show that, when research activities are not contractible, an option contract is optimal. The financing firm obtains the option to terminate the agreement and, in case of termination, broad property rights. The threat of termination deters researchers from cross-subsidization, and the cost of exercising the termination option deters the financing firm from opportunistic termination. We test this prediction using 580 biotechnology research agreements. Contracts with termination options are more common when research is non-contractible.

The 1960s ushered in a new era in US demographic history characterized by significantly lower fertility rates and smaller family sizes. What catalyzed these changes remains a matter of considerable debate. This paper exploits idiosyncratic variation in the language of "Comstock" statutes, enacted in the late 1800s, to quantify the role of the birth control pill in this transition. Almost 50 years after the contraceptive pill appeared on the US market, this analysis provides new evidence that it accelerated the post-1960 decline in marital fertility.

We propose a theoretically motivated procedure for measuring heterogeneity in firms’ growth opportunities and document its empirical properties. The term “growth opportunities” refers to the component of a firm’s market value that cannot be attributed to its assets in place. This decomposition of firm value underpins many of the theoretical models describing cross-sectional differences in firms’ investment and stock return behavior. However, successful applications of such models depend on the quality of empirical measures of growth opportunities. Our procedure identifies economically significant differences in firms’ growth opportunities which are not captured by the commonly used empirical measures.

Heterogeneity is an important determinant of the shape of optimal tax schemes. This is shown here in a model à la Mirrlees. The agents differ in their productivities and opportunity costs of work, but their labor supplies depend only on a given unidimensional combination of these two characteristics. Conditions are provided under which marginal tax rates are everywhere nonnegative. This is the case when work opportunity costs are distributed independently of income. But one can also get negative marginal tax rates, in particular at the bottom of the income distribution. A numerical illustration is given, based on UK data.

The Effect of Migration on Wages: Evidence from a Natural Experiment by Dakshina G. De Silva, Robert P. McComb, Young-Kyu Moh, Anita R. Schiller and Andres J. Vargas. Published in volume 100, issue 2, pages 321-26 of American Economic Review, May 2010