Knowledge that Transforms

What determines human beings' political preferences? Using nationally representative longitudinal data, we show that having daughters makes people more likely to vote for left-wing political parties. Having sons leads people to favor right-wing parties. The paper checks that our result is not an artifact of family stopping rules, discusses the predictions from a simple economic model, and tests for possible reverse causality.

Does international financial integration boost economic growth? The empirical literature has not yet established a robust link between openness to the international capital market and economic growth. In this paper, we turn to the economic history of the first era of financial globalization (1880–1914) for new insights. Using identical empirical models and techniques as contemporary studies, we find a significant growth effect in the historical period. A key difference between now and then is that opening up to the international market led to net capital movements and higher investment in the historical period, but it no longer does so today.

This paper examines matched point and density forecasts of inflation from the Survey of Professional Forecasters to analyze the relationships among expected inflation, disagreement, and uncertainty. We undertake the empirical analysis within a seemingly unrelated regression framework and derive measures of uncertainty using a decomposition proposed by Wallis (2004, 2005) and by drawing on the concept of entropy. The results offer little evidence that disagreement is a useful proxy for uncertainty and mixed evidence that increases in expected inflation are accompanied by heightened uncertainty. Conversely, we document a quantitatively and statistically significant positive association between disagreement and expected inflation. © 2010 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

This paper provides new evidence on how wealth shocks influence retirement behavior. Economic theory generally posits that leisure is a normal good, yet it is difficult to obtain reliable empirical estimates of the wealth effect because wealth is correlated with numerous unobservable characteristics that affect labor supply. We use inheritance receipt as a wealth shock and find that it is associated with a significant increase in the probability of retirement, especially when the inheritance is unexpected. This evidence has important implications for how public policies, such as pension or tax reform, may influence retirement behavior through the wealth effect.

This paper investigates whether one of the most important U.S. policies toward Africa of the past few decades achieved its desired result. In 2000, the United States dropped trade restrictions on a broad list of products through the African Growth and Opportunity Act (AGOA). Since the act was applied selectively to both countries and products, we can estimate the impact with a triple difference-in-differences estimation, controlling for both country and product-level import surges at the time of onset. This approach allows us to better address the endogeneity-of-policy critique of standard difference-in-differences estimation than if either a country- or a product-level analysis was performed separately. Despite the fact that the AGOA product list was chosen to not include import-sensitive products and despite the general challenges of transaction costs in African countries, we find that AGOA had a large and robust impact on apparel imports into the United States, as well as on the agricultural and manufactured products covered by AGOA. These import responses grew over time and were the largest in product categories where the tariffs removed were large. AGOA did not result in a decrease in exports to Europe in these product categories, suggesting that the AGOA exports were not merely diverted from other destinations. We discuss how the effects vary across countries and the implications of these findings for aggregate export volumes.

We consider the effect of geography on wages using individual data from 56 Chinese cities. We present a simple new economic geography model that links wages to individual characteristics and market access. The latter is calculated as a transport cost weighted sum of surrounding locations' market capacity. After controlling for individual skills and local factor endowments, we find that a significant fraction of the interindividual differences in returns to labor can be explained by the geography of market access. We further find greater wage sensitivity to market access for highly skilled workers and for workers in private and, particularly, foreign-owned firms.

Between 1972 and 1978 U.S. high schools rapidly increased their female athletic participation rates in order to comply with Title IX. This paper examines the causal implications of this expansion by using variation in the level of boys' athletic participation across states before Title IX to instrument for change in girls' athletic participation. Analysis of differences in outcomes across states in changes between pre- and postcohorts reveals that a 10 percentage point rise in state-level female sports participation generates a 1 percentage point increase in female college attendance and a 1 to 2 percentage point rise in female labor force participation.

Between 1863 and 1890, phylloxera destroyed 40% of French vineyards. Using the regional variation in the timing of this shock, we identify and examine the effects on adult height, health, and life expectancy of children born in the years and regions affected by the phylloxera. The shock decreased long-run height, but it did not affect other dimensions of health, including life expectancy. We find that those born in affected regions were about 1.8 millimeters shorter than others at age 20, a significant effect since average heights grew by only 2 centimeters in the entire nineteenth century.

Higher education has increasingly relied on part-time, adjunct instructors. Critics argue that adjuncts reduce educational quality because they often have less education than full-time professors. On the other hand, by specializing in teaching or being concurrently employed, adjuncts could enhance learning experiences. This paper quantifies how adjuncts affect subsequent student interest and course performance relative to full-time faculty using an instrumental variable strategy that exploits variation in the composition of a department's faculty over time. The results suggest that adjuncts often have a small, positive effect on enrollment patterns, especially in fields related to particular occupations.