Using micro-data from 48 developing countries, this article studies changes in cross-sectional patterns of fertility and child investment over the demographic transition. Before 1960, children from larger families obtained more education, in large part because they had richer and more educated parents. By century's end, these patterns had reversed. Consequently, fertility differentials by income and education historically raised the average education of the next generation, but they now reduce it. Relative to the level of average education, the positive effect of differential fertility in the past exceeded its negative effect in the present. While the reversal of differential fertility is unrelated to changes in GDP per capita, women's work, sectoral composition, or health, roughly half is attributable to rising aggregate education in the parents' generation. The data are consistent with a model in which fertility has a hump-shaped relationship with parental skill, due to a corner solution in which low-skill parents forgo investment in their children. As the returns to child investment rise, the peak of the relationship shifts to the left, reversing the associations under study.

We find that PIPE issues that do not provide any protections to investors convey positive information about the firm and result in positive announcement period returns. However, PIPE issues that provide protections do not convey any new information about the firm and hence do not result in significant positive or negative announcement period returns. PIPE issuers that offer no protections to investors outperform their matched portfolios for up to 9 months after the issue. PIPE issuers that offer protections underperform their matched portfolios for 18 to 36 months after the issue.

This article shows that improving financial efficiency may reduce real efficiency. While the former depends on the total amount of information available, the latter depends on the relative amounts of hard and soft information. Disclosing more hard information (e.g., earnings) increases total information, raising financial efficiency and reducing the cost of capital. However, it induces the manager to prioritize hard information over soft by cutting intangible investment to boost earnings, lowering real efficiency. The optimal level of financial efficiency is non-monotonic in investment opportunities. Even if low financial efficiency is desirable to induce investment, the manager may be unable to commit to it. Optimal government policy may involve upper, not lower, bounds on financial efficiency.

We show how optimal household decisions regarding work, retirement, saving, portfolio allocations, and life insurance are shaped by the complex financial options embedded in U.S. Social Security rules and uncertain family transitions. Our life cycle model predicts sharp consumption drops on retirement, an age-62 peak in claiming rates, and earlier claiming by wives versus husbands and single women. Moreover, life insurance is mainly purchased on men's lives. Our model, which takes Social Security rules seriously, generates wealth and retirement outcomes that are more consistent with the data, in contrast to earlier and less realistic models.

Using a large dataset of hand-collected information on activist interventions from 2008 to 2014, we examine why certain hedge funds succeed in the face of competition. We document that the top hedge funds succeed, not merely because of how they select targets, but because they acquire a reputation for what we label “clout and expertise.” These hedge funds do not intervene more frequently; to the contrary, activists with more interventions are associated with lower returns. Instead, top activists have a demonstrated ability to succeed in difficult interventions by targeting large firms, launching successful proxy fights, filing and winning lawsuits, pressuring target boards through the media, overcoming anti-takeover defenses, and replacing board members. These activists' successes appear to result more from board representation, improved performance, and monitoring management than from capital structure or dividend policy changes.

We consider the link between parents’ influence over the preferences of children, parental investments in children’s human capital, and children’s support of elderly parents. It may pay for parents to spend resources to “manipulate” children’s preferences in order to induce them to support their parents in old age. Since parents invest more in children when they expect greater support, manipulation of child preferences may end up helping children and parents. A new result, which we call the “Rotten Parent Theorem,” demonstrates that if children are altruistic, then even selfish parents will make the optimal investment in their children’s human capital.

In recent years, the relationship between income distribution and the process of development has come under increasing scrutiny. Much of the debate has focused on the hypothesis, originally advanced by Simon Kuznets, that the secular behavior of inequality follows an inverted U-shaped pattern with inequality first increasing and then decreasing with development. This hypothesis has become so much a part of the conventional wisdom on this subject that it has generated considerable skepticism about the welfare implications of the development process. Indeed, on some interpretations, developing countries face the grim prospect not just of increasing relative inequality, but also of declining absolute incomes for the lower income groups.

This paper measures effects of in local government hierarchies on local public sector size. This sector shrinks if decentralization encourages competition among governments. It expands if decentralization sacrifices scale economies. In a sample of 3,022 counties, larger county governments reduce competition and increase aggregate local public sector size, relative to aggregate county income. More cities and towns increase competition and reduce its size. More special and school districts sacrifice scale economies and increase it. Two recent articles have attempted to identify the effects of in state and local government on the size of the state and local public sector. Wallace Oates (1985) finds no important effects. Michael Nelson (1987) finds modest evidence that increased competition among government units reduces the size of the public sector. This article demonstrates that the effects of are important and complex. Decentralization which encourages competition reduces the size of the local public sector. Decentralization which discourages scale economies increases it.