American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Editor's Note Alan J.AuerbachU CA, Berkeley iii iii http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.iii 10.1257/pol.1.1.iii American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Optimal Tax Design and Enforcement with an Informal Sector RobinBoadwayQueen's U, Kingston MotohiroSatoHitotsubashi U 1 27 An optimal commodity tax approach is taken to compare trade taxes and VATs when some commodities are produced informally. Trade taxes apply to all imports and exports, including intermediate goods, while the VAT applies only to sales by the formal sector and imports. The VAT achieves production efficiency within the formal sector, but, unlike trade taxes, cannot indirectly tax profits. Making the size of the informal sector endogenous in each regime is potentially decisive. The ability of the government to change the size of the informal sector through costly enforcement may also tip the balance in favor of the VAT. (JEL E26, H21, H25) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.1 10.1257/pol.1.1.1 American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article A Theory of Urban Squatting and Land-Tenure Formalization in Developing Countries Jan K.BruecknerU CA, Irvine HarrisSelodWorld Bank and CREST 28 51 This paper offers a new theoretical approach to urban squatting, reflecting the view that squatters and formal residents compete for land within a city. The key implication is that squatters "squeeze" the formal market, raising the price paid by formal residents. The squatter organizer ensures that squeezing is not too severe, since otherwise, the formal price will rise to a level that invites eviction by landowners. Because eviction is absent in equilibrium, the model differs from previous analytical frameworks, where eviction occurs with some probability. It also facilitates a general equilibrium analysis of squatter formalization policies. (JEL O15, Q15, R14) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.28 10.1257/pol.1.1.28 American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Technology's Edge: The Educational Benefits of Computer-Aided Instruction LisaBarrowFederal Reserve Bank of Chicago LisaMarkmanPrinceton U Cecilia ElenaRousePrinceton U 52 74 We present results from a randomized study of a well-defined use of computers in schools, a popular instructional computer program for pre-algebra and algebra. We primarily assess the program using a test designed to target pre-algebra and algebra skills. Students randomly assigned to computer-aided instruction score significantly higher on a pre-algebra and algebra test than students randomly assigned to traditional instruction. We hypothesize that this effectiveness arises from increased individualized instruction as the effects appear larger for students in larger classes and in classes with high student absentee rates. (JEL H75, I21) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.52 10.1257/pol.1.1.52 http://www.aeaweb.org/aej/pol/data/2007-0082_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Housing, Health, and Happiness Matias D.CattaneoU MI SebastianGalianiWashington U in St Louis Paul J.GertlerU CA, Berkeley SebastianMartinezWorld Bank RocioTitiunikU CA, Berkeley 75 105 We investigate the impact of a large-scale Mexican program to replace dirt floors with cement floors on child health and adult happiness. We find that replacing dirt floors with cement significantly improves the health of young children measured by decreases in the incidence of parasitic infestations, diarrhea, and the prevalence of anemia, and an improvement in children's cognitive development. Additionally, we find significant improvements in adult welfare measured by increased satisfaction with their housing and quality of life, as well as by lower scores on depression and perceived stress scales. (JEL I12, I31, J13, O15) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.75 10.1257/pol.1.1.75 http://www.aeaweb.org/aej/pol/data/2007-0024_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Greenhouse Gas Reductions under Low Carbon Fuel Standards? Stephen P.HollandU NC, Greensboro Jonathan E.HughesInstitute of Transportation Studies, U CA, Davis Christopher R.KnittelU CA, Davis 106 46 A low carbon fuel standard (LCFS) seeks to reduce greenhouse gas emissions by limiting the carbon intensity of fuels. We show this decreases high carbon fuel production but increases low carbon fuel production, possibly increasing net carbon emissions. The LCFS cannot be efficient, and the best LCFS may be nonbinding. We simulate a national LCFS on gasoline and ethanol. For a broad parameter range, emissions decrease, energy prices increase, abatement costs are large ($80–$760 billion annually), and average abatement costs are large ($307–$2,272 per CO2 metric ton). A cost effective policy has much lower average abatement costs ($60–$868). (JEL Q54, Q58) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.106 10.1257/pol.1.1.106 http://www.aeaweb.org/aej-policy/data/2007-0021_data.zip http://www.aeaweb.org/aej-policy/app/2007-0021_app.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article An Empirical Framework for Large-Scale Policy Analysis, with an Application to School Finance Reform in Michigan Maria MartaFerreyraCarnegie Mellon U 147 80 In this paper, I develop an empirical framework for the analysis of large-scale policies, and apply it to study the effects of school finance reform on the Detroit metropolitan area. Exploiting school finance reform in Michigan in 1994, I estimate a general equilibrium model of multiple jurisdictions with 1990 data from Detroit, predict the 2000 equilibrium, and compare this prediction with 2000 data to validate the model. I conduct counterfactual simulations using the estimates. According to my analysis, feasible revenue-based reforms that ensure spending equity or adequacy have little impact on school quality or household demographics in Detroit. (JEL H75, I22) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.147 10.1257/pol.1.1.147 http://www.aeaweb.org/aej/pol/data/2007-0019_data.zip http://www.aeaweb.org/aej/pol/app/2007-0019_app.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Domestic Effects of the Foreign Activities of US Multinationals Mihir A.DesaiHarvard U C. FritzFoleyHarvard U James R.HinesU MI 181 203 Do firms investing abroad simultaneously reduce their domestic activity? This paper analyzes the relationship between the domestic and foreign operations of US manufacturing firms between 1982 and 2004 by instrumenting for changes in foreign operations with GDP growth rates of the foreign countries in which they invest. Estimates produced using this instrument indicate that 10 percent greater foreign investment is associated with 2.6 percent greater domestic investment, and 10 percent greater foreign employee compensation is associated with 3.7 percent greater domestic employee compensation. These results do not support the popular notion that expansions abroad reduce a firm's domestic activity, instead suggesting the opposite. (JEL F23, H25, L25) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.181 10.1257/pol.1.1.181 http://www.aeaweb.org/aej/pol/data/2007-0031_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Details Matter: The Impact of Presentation and Information on the Take-Up of Financial Incentives for Retirement Saving EmmanuelSaezU CA, Berkeley 204 28 We examine the effects of presentation and information on the take-up of financial subsidies for retirement saving in a large randomized experiment carried out with H&R Block. The subsidies raise take-up and contributions with larger effects when the subsidy is characterized as a matching contribution rather than an equivalent-value tax credit (or cash back), and when filers are informed before the tax season about the subsidy. The results imply that both pure incentives and the presentation of those incentives affect consumer choices. (JEL D14, H24, H31, J26) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.204 10.1257/pol.1.1.204 http://www.aeaweb.org/aej-policy/data/2007-0046_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Who Misvotes? The Effect of Differential Cognition Costs on Election Outcomes KellyShueHarvard U Erzo F. P.LuttmerHarvard U and IZA 229 57 If voters have negligible cognition costs, ballot layout should not affect election outcomes. We explore deviations from rational voting using quasi-random variation in candidate name placement on ballots from the 2003 California recall election. We find that minor candidates' vote shares almost double when their names are adjacent to the names of major candidates. All else equal, vote share gains are larger in precincts with higher percentages of poorly educated, poor, or third-party voters. A major candidate that disproportionally attracts voters from such precincts faces an electoral disadvantage. We also explore which voting technology platforms and brands mitigate misvoting. (JEL D72) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.229 10.1257/pol.1.1.229 http://www.aeaweb.org/aej-policy/data/2007-0065_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Altruism and the Child Cycle of Alumni Donations JonathanMeerStanford U Harvey S.RosenPrinceton U 258 86 We study alumni contributions to an anonymous research university. If alumni believe donations will increase the likelihood of their child's admission, and if this belief helps motivate their giving, then the pattern of giving should vary systematically with the ages of their children, whether the children ultimately apply to the university, and the admissions outcome. We call this pattern the child cycle of alumni giving. The evidence is consistent with the child-cycle pattern. Thus, while altruism drives some giving, the hope for a reciprocal benefit also plays a role. We compute rough estimates of the proportion of giving due to selfish motives. (JEL D91, D64, I21) http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.258 10.1257/pol.1.1.258 http://www.aeaweb.org/aej-policy/data/2007-0081_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article AEJ: Economic Policy Annual Report Statistics JonathanMeerStanford U Harvey S.RosenPrinceton U 287 287 http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.87 10.1257/pol.1.1.87 American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 1 1 February 2009 http://www.aeaweb.org/issue.php?journal=POL&volume=1&issue=1 Journal Article Front Matter i ii http://www.aeaweb.org/articles.php?doi=10.1257/pol.1.1.i 10.1257/pol.1.1.i