Knowledge that Transforms

The typical Mincerian wage equation examines wages in relation to the education, potential experience, and other personal characteristics of job incumbents. These characteristics serve as proxies for the job holder’s skill level, but do not indicate what specific skills are being rewarded. A number of recent papers make use of data on occupational skill requirements, which have proven useful for understanding shifts in labor demand (see, for example, David Autor, Frank Levy, and Richard Murnane 2003; Maarten Goos and Alan Manning 2007) as well as for understanding the relationship between wages and specific job skills (see, for example, Beth Ingram and George Neumann 2006; Autor and Michael Handel 2008). To the extent that the labor market does a good job of matching individuals to jobs for which they are well suited, such analyses can shed new light on how workers’ job skills are valued in the labor market. Studies that focus on job skills generally begin with data from the Current Population Survey (CPS) or another household survey that contains information on the detailed occupation in which people work. Information on required job skills is attached to the survey records according to reported occupation. There is considerable evidence, however, of significant errors in the coding of occupation in household survey data. Wesley Mellow and Hal Sider (1983) find disagreements between the occupation recorded in CPS data compared to that based on information supplied by individuals’ employers for 19 percent of jobs at the major occupation level and 42 percent at the detailed occupation level. Nancy Mathiowetz (1992) reports similar findings for the employees of a large manufacturing firm. Comparisons of aggregate data on the number of jobs in each of 19 broad occupations from the New Evidence on the Returns to Job Skills

We present the results of an experiment that attempts to measure the social value of groups. In the experiment, group membership is induced artificially: subjects interact with insiders and outsiders in trust games and periodically enter markets where they can trade group membership. We find that trust falls with groups because of negative discrimination against outsiders. Against this, however, there is evidence that group membership provides a psychological benefit, albeit one that may induce social inertia. Overall, the welfare effects of groups are at best neutral and could be negative. (JEL: D17, Z13)

In the past decade Americans have increasingly turned their attention to nonlocal information sources, raising concerns about disengagement from local communities. Regulation sometimes seeks to curtail the integration of media markets through the promotion of “localism.” This paper examines the role of local media. We make use of the rapid growth of Hispanic communities in the United States to test whether the presence of local television news affects local civic behavior. We find that Hispanic voter turnout increased by 5 to 10 percentage points, relative to non-Hispanic turnout, in markets where Spanish-language local television news became available. (JEL D72, J15, L82)

This note responds to Christian Bayer (2009). Cooper and Willis (2004), hereafter CW, find the aggregate nonlinearities reported in Ricardo Caballero and Eduardo Engel (1993) and Caballero, Engel, and John Haltiwanger (1997) reflect mismeasurement of the employment gap, not nonlinearities in plant-level adjustment. Bayer concludes the CW result is not robust to alternative aggregate shock processes. We concur, but argue that the nonlinearity created by mismeasurement does not disappear. Instead, it is directly related to the level of the aggregate shock. The CW findings are robust for the natural case of unobserved gaps. (JEL E24, J23)

Integrated GDP-Productivity Accounts by Michael J. Harper, Brent R. Moulton, Steven Rosenthal and David B. Wasshausen. Published in volume 99, issue 2, pages 74-79 of American Economic Review, May 2009

Approaches to Estimating the Health State Dependence of the Utility Function by Amy Finkelstein, Erzo F. P. Luttmer and Matthew J. Notowidigdo. Published in volume 99, issue 2, pages 116-21 of American Economic Review, May 2009

In April 2006, Massachusetts enacted a comprehensive health care reform bill that seeks to move the state to near universal insurance coverage. The bill included expanded eligibility for public coverage, subsidized insurance, market reforms, requirements for employers, and, most controversial, an individual mandate. A study of the early impacts of the state's initiative found evidence of a substantial drop in uninsurance--from 13 to 7 percent for nonelderly adults (Long 2008). Because that study relied on a simple pre-post comparison, it is possible that the estimates of the impact of health reform reflect both the changes under health reform and factors beyond health reform that changed over the same period, leading to biased estimates of the impacts of reform (Lawrence B. Mohr 1995). This paper expands on the earlier work to estimate the impacts of health reform in Massachusetts using new data and a stronger research design. Specifically, we rely on data over time for Massachusetts and other states from the Current Population Survey (CPS) to estimate difference-in-differences (DD) models (Jeffrey M. Wooldridge 2002).

The textbook version of the life-cycle permanent income hypothesis with no liquidity constraints predicts that consumption should react very little to transitory shocks to income and very strongly to permanent shocks. This prediction has important policy implications, i.e., to understand the response of consumers to tax rebates or increases that are made for stabilization purposes. In recent years there has been a resurgence of interest in estimating these important parameters, either using quasi-experimental data (such as randomization of the timing when tax rebate checks are received by households, see Christian Broda and

We present a laboratory experiment that measures the effects of induced group identity on social preferences. We find that when participants are matched with an ingroup member, they show a 47 percent increase in charity concerns and a 93 percent decrease in envy. Likewise, participants are 19 percent more likely to reward an ingroup match for good behavior, but 13 percent less likely to punish an ingroup match for misbehavior. Furthermore, participants are significantly more likely to choose social-welfare-maximizing actions when matched with an ingroup member. All results are consistent with the hypothesis that participants are more altruistic toward an ingroup match. (JEL C91, D03, Z13)

The design of the New York City (NYC) high school match involved trade-offs among efficiency, stability, and strategy-proofness that raise new theoretical questions. We analyze a model with indifferences—ties—in school preferences. Simulations with field data and the theory favor breaking indifferences the same way at every school—single tiebreaking—in a student-proposing deferred acceptance mechanism. Any inefficiency associated with a realized tiebreaking cannot be removed without harming student incentives. Finally, we empirically document the extent of potential efficiency loss associated with strategy-proofness and stability, and direct attention to some open questions. (JEL C78, D82, I21)