Knowledge that Transforms

A critical question for Social Security policy is how program incentives affect retirement behavior. We use the Health and Retirement Survey (HRS) to examine the impact of Social Security incentives on male retirement. We implement forward-looking models whereby individuals consider the incentives to work in all future years. We find that forward-looking incentive measures for Social Security are significant determinants of retirement. We also find that private pension incentives have roughly similar effects. Our findings suggest that Social Security policies that increase the incentives to work at older ages can significantly reduce the labor force exit rate of older workers.

This paper finds that the use of price controls has a statistically and quantitatively important effect on the extent and timing of the launch of new drugs. Firms headquartered in countries that regulate price reach fewer markets than those in countries without price controls. Companies avoid price-controlled markets, and are less likely to introduce products in additional markets after entering a price-controlled country. Launches into low-price European countries are further delayed following legalization of parallel imports. The results suggest that price regulation in one country affects entry into other countries, and may affect the strategies of domestic firms.

Plant shutdowns shape industry productivity, the dynamics of employment, and industrial restructuring. Plant closures account for more than half of gross job destruction in U.S. manufacturing. This paper examines the effects of firm structure on U.S. manufacturing plant closures. Plants belonging to multiplant firms and those owned by U.S. multinationals are less likely to exit. However, the superior survival chances are due to the characteristics of the plants rather than the nature of the firms. Controlling for plant and industry attributes, we find that plants owned by multiunit firms and U.S. multinationals are much more likely to close.

In this paper we develop and estimate a model to explain variations in immigration to the United States by source country since the early 1970s. The explanatory variables include ratios to the United States of source country income and education as well as relative inequality. In addition, we incorporate the stock of previous immigrants and a variety of variables representing different dimensions of the immigration quotas set by policy. We use the results to shed light on the impact of policy by simulating the effects of the key changes in immigration policy since the late 1970s. We also examine the factors that influenced the composition of U.S. immigration by source region over the entire period.

This paper examines the relationship between workforce demographics and aggregate productivity. Changes in the age structure of the workforce are found to be significantly correlated with changes in aggregate productivity. Different demographic structures may be related to almost one-quarter of the persistent productivity gap between the OECD and low-income nations as well as part of the productivity divergence between 1960 and 1990.

Using a normalized CES function with factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that may have occurred in earlier studies and putting a high emphasis on data consistency, we obtain robust results not only for the aggregate elasticity of substitution but also for the parameters of labor and capital augmenting technical change. We find that the elasticity of substitution is significantly below unity and that technical progress shows an asymmetrical pattern where the growth of labor-augmenting technical progress is exponential, while that of capital is hyperbolic or logarithmic.

This paper shows that the United Kingdom since 1975 has exhibited a pattern of job polarization with rises in employment shares in the highest- and lowest-wage occupations. This is not entirely consistent with the idea of skill-biased technical change as a hypothesis about the impact of technology on the labor market. We argue that the “routinization” hypothesis recently proposed by Autor, Levy, and Murnane (2003) is a better explanation of job polarization, though other factors may also be important. We show that job polarization can explain one-third of the rise in the log(50/10) wage differential and one-half of the rise in the log(90/50).

In this paper, we describe the results of a study assessing the relationship between the certification of teachers by the National Board for Professional Teaching Standards (NBPTS) and elementary-level student achievement. We examine whether NBPTS assesses the most effective applicants, whether certification by NBPTS serves as a signal of teacher quality, and whether completing the NBPTS assessment process serves as a catalyst for increasing teacher effectiveness. We find consistent evidence that NBPTS is identifying the more effective teacher applicants and that National Board Certified Teachers are generally more effective than teachers who never applied to the program. The statistical significance and magnitude of the “NBPTS effect,” however, differs significantly by grade level and student type. We do not find evidence that the NBPTS certification process itself does anything to increase teacher effectiveness.

This paper uses Consumer Expenditure Survey data and a seminonparametric statistical model to estimate life-cycle profiles of consumption, controlling for demographics, cohort, and time effects. We construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables. Special emphasis is placed on the comparison of different approaches to control for changes in demographics over the life cycle. We find significant humps over the life cycle for total, nondurable, and durable expenditures. Changes in household

This paper presents theory and evidence on the relationship between inequality and institutional quality. We exhibit a model in which the two may dynamically reinforce each other and set to test this relationship with a broad array of institutional measures. The double causality between institutional strength and a more equal distribution of income is empirically established using dynamic panel and linear feedback analysis.