Aggregate consumption Euler equations fit financial asset return data poorly. But they fit the return on the capital stock well, which leads us to three empirical findings relating to the capital income tax burden. First, capital taxation drives a wedge between consumption growth and the expected pre-tax capital return. Second, capital taxation is the major distortion in the capital market, in the sense that most of the medium and long run deviations between expected consumption growth and the expected pre-tax capital return are associated with capital taxation. Third, consumption growth appears to be pretty elastic to the after-tax capital return (i.e., capital is elastically supplied), even while it appears inelastic to returns on various financial assets. Capital income taxes are passed on through reduced capital accumulation, or higher markups, or some combination.

Opioid mortality increases have been linked to both lax and restrictive opioid prescription regulations. Modeling choice between prescription and illicitly manufactured opioid sources helps reconcile the apparently contradictory empirical findings. It also identifies groups responding opposite of the average and applies previous studies to new supply conditions. Organized around the two supply channels, a policy database is assembled that reveals distinct pricing phases during 1999–2021. Consistent with the model, during the later phases the relationship between the opioid fatality rate (measured from death certificates) and its composition changes sign, minors’ fatality rates trend opposite of adults’, and the black-white gap changes sign.

A century ago, Francis Galton proposed a simple yet powerful model of inheritance. Gary Backer's human capital model is often used to analyze important empirical and policy questions, but does it dominate Galton's from a positive point of view? I derive nine implicatiions of the human capital approach that are distinct from Galton's. Evidence from the PIS, SCF, and NLSY micro data sets as well as results reported in previous literatures suggest that four of the unique implications are refuted. two implications are verified, and mixed results are obtained for three others. Some extensions of economics recently developed by Becker and others, when applied to inheritance, may improve economics' predictions.

It is argued that changes in workers' budget sets cannot explain the dramatic increases in civilian work in the United States during World War II. Although money wages grew during the period, wartime after‐tax real wages were lower than either before or after the war. Evidence from the 1940s also appears to be inconsistent with other pecuniary explanations such as wealth effects of government policies, intertemporal substitution induced by asset prices, unfulfilled expectations, and changes in the nonmarket price of time. Although untested and relatively undeveloped, nonpecuniary models of behavior are tempting explanations for wartime work.

COMPUSTAT data on 12,000 firms for the years 1961-92 indicate that large firms hold less cash as a percentage of sales than small ones. Whether comparisons are made within or across industries, the elasticity of cash balances with respect to sales is about 0.8. Firms headquartered in countries with high wages hold more money for a given level of sales, a finding consistent with the idea that time can substitute for money in the provision of transactions services. The estimates are consistent with both scale economies in the holding of money and secular declines in velocity.

In theory, growing wage inequality within gender should cause women to invest more in their market productivity and should differentially pull able women into the workforce. Our paper uses Heckman's two-step estimator and identification at infinity on repeated Current Population Survey cross sections to calculate relative wage series for women since 1970 that hold constant the composition of skills. We find that selection into the female full-time full-year workforce shifted from negative in the 1970s to positive in the 1990s, and that the majority of the apparent narrowing of the gender wage gap reflects changes in female workforce composition. We find the same types of composition changes by measuring husbands' wages and National Longitudinal Survey IQ data as proxies for unobserved skills. Our findings help to explain why growing wage equality between genders coincided with growing inequality within gender.

We argue that the relevant monetary decision for the majority of U.S. households is not the fraction of assets to be held in interest‐bearing form, but whether to hold any such assets at all (we call this “the decision to adopt” the financial technology). We show that the key variable governing the adoption decision is the product of the interest rate times the total amount of assets. This implies that the interest elasticity of household money demand at low interest rates can be estimated from the variation in asset holdings in a cross section of households rather than historical interest rate variations. We do so with the 1989 Survey of Consumer Finances. We find that (a) the elasticity of money demand is very small when the interest rate is small, (b) the probability that a household holds any amount of interest‐bearing assets is positively related to the level of financial assets, and (c) the cost of adopting financial technologies is negatively related to participation in a pension program. At interest rates of 5 percent, roughly one‐half of the elasticity can be attributed to the Allais‐Baumol‐Tobin or intensive margin and half to the new adopters or extensive margin. The intensive margin is less important at lower interest rates and more important at higher interest rates. Finally, we argue that ignoring extensive margins may lead to an empirically important overestimation of the cost of inflation at low interest rates.