American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Front Matter i vi http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.i 10.1257/pol.4.4.i American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Late Budgets Asger LauAndersenDanmarks Nationalbank David DreyerLassenU Copenhagen Lasse Holboll WesthNielsenGoldman Sachs International 1 40 The budget forms the legal basis for government spending, and timely budgets, enacted before the new fiscal year, are an integral part of good governance. This paper examines the causes of late budgets using a unique dataset of budget completion dates for US state governments 1988-2007, constructed from news reports and state budget office surveys. We find 23 percent of state budgets to be late. We show that changing economic circumstances and divided government are the driving forces behind late budgets, which is consistent with a war-of-attrition bargaining model featuring budget baselines and preferences over deviations from such baselines. (JEL C78, D72, H61, H72) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.1 10.1257/pol.4.4.1 http://www.aeaweb.org/aej/pol/data/2010-0229_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age LucBehaghelParis School of Economics David M.BlauOH State U and IZA, Bonn 41 67 We use a US Social Security reform as a quasi-experiment to provide evidence on framing effects in retirement behavior. The reform increased the full retirement age (FRA) from 65 to 66 in two-month increments per year of birth. We find strong evidence that the spike in the benefit claiming hazard at 65 moved in lockstep along with the FRA. Results on self-reported retirement and exit from employment go in the same direction. The responsiveness to the new FRA is stronger for people with higher cognitive skills. We interpret the findings as evidence of reference dependence with loss aversion. (JEL D91, H55, J14, J26) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.41 10.1257/pol.4.4.41 http://www.aeaweb.org/aej/pol/data/2011-0094_data.zip http://www.aeaweb.org/aej/pol/app/2011-0094_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Happiness on Tap: Piped Water Adoption in Urban Morocco FlorenciaDevotoParis School of Economics EstherDufloMIT PascalineDupasStanford U WilliamParienteIRES, Catholic U Louvain VincentPonsMIT 68 99 Connecting private dwellings to the water main is expensive and typically cannot be publicly financed. We show that households' willingness to pay for a private connection is high when it can be purchased on credit, not because a connection improves health but because it increases the time available for leisure and reduces inter- and intra-household conflicts on water matters, leading to sustained improvements in well-being. Our results suggest that facilitating access to credit for households to finance lump sum quality-oflife investments can significantly increase welfare, even if those investments do not result in any health or income gains. (JEL D12, I31, O12, O13, O18, Q25) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.68 10.1257/pol.4.4.68 http://www.aeaweb.org/aej/pol/data/2011-0076_data.zip http://www.aeaweb.org/aej/pol/app/2011-0076_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Poverty Alleviation and Child Labor Eric V.EdmondsDartmouth College NorbertSchadyInter-American Development Bank 100 124 Poor women with children in Ecuador were selected at random for a cash transfer that is less than 20 percent of median child labor earnings. Poor families with children in school at the time of the award use the transfer to postpone the child's entry into the labor force. Students in families induced to take up the transfer by the experiment reduce paid employment by 78 percent and unpaid economic activity inside their home by 32 percent. Time in unpaid household services increases, but overall time spent working declines. (JEL I32, I38, J13, J22, J82, O12) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.100 10.1257/pol.4.4.100 http://www.aeaweb.org/aej/pol/data/2010-0165_data.zip http://www.aeaweb.org/aej/pol/app/2010-0165_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Innovation and Climate Change Policy Joshua S.GansU Toronto 125 45 This paper examines whether climate change policies will induce innovation in environmentally friendly technologies. The model demonstrates that a tighter emissions cap will reduce the scale of fossil fuel usage and that this will diminish incentives to improve fossil fuel efficiencies. In addition, such policies may stimulate the relative demand for innovations that improve the efficiency of alternative energy but carbon scarcity may diminish innovation incentives overall. Only for technologies that directly abate carbon pollution will there be an unambiguously positive impact on innovation. These results have implications for climate change targets and the design of climate change policy. (JEL O31, Q54, Q55, Q58) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.125 10.1257/pol.4.4.125 American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Discrimination in Grading Rema N.HannaHarvard U Leigh L.LindenU TX 146 68 We report the results of an experiment that was designed to test for discrimination in grading in India. We recruited teachers to grade exams. We randomly assigned child "characteristics" (age, gender, and caste) to the cover sheets of the exams to ensure that there is no relationship between these observed characteristics and the exam quality. We find that teachers give exams that are assigned to be lower caste scores that are about 0.03 to 0.08 standard deviations lower than those that are assigned to be high caste. The teachers' behavior appears consistent with statistical discrimination. (JEL I21, J13, O15, O17, Z13) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.146 10.1257/pol.4.4.146 http://www.aeaweb.org/aej/pol/data/2010-0209_data.zip http://www.aeaweb.org/aej/pol/app/2010-0209_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article The Heterogeneous Geographic and Socioeconomic Incidence of Cigarette Taxes: Evidence from Nielsen Homescan Data MatthewHardingStanford U EphraimLeibtagUSDA Michael F.LovenheimCornell U 169 98 We use Nielsen Homescan data to examine who bears the economic burden of cigarette taxes. We find cigarette taxes are less than fully passed through to consumer prices, suggesting consumers and producers split the excess burden of these taxes. Using information on consumer location, we show the availability of lower-tax goods across state borders creates significant differences in the pass-through rate. Tax avoidance opportunities also have a sizable effect on purchasing behavior by altering consumer search, prices paid and quantities purchased. Finally, we demonstrate that the incidence of cigarette taxes and the border effect varies by household income and education. (JEL D12, H22, H25, H26, H71, L66) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.169 10.1257/pol.4.4.169 http://www.aeaweb.org/aej/pol/data/2010-0253_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Spatial Competition and Cross-Border Shopping: Evidence from State Lotteries BrianKnightBrown U NathanSchiffU British Columbia 199 229 This paper investigates competition between jurisdictions in the context of cross-border shopping for state lottery tickets. Our theoretical model, in which consumers consider both travel costs and lottery payoffs, predicts that per-resident sales should be more responsive to prices in small states with densely populated borders. Using weekly sales data from US lotteries and drawing identification from the rollover feature of jackpots, we estimate this responsiveness and find large effects that vary significantly across states. Using these estimates, we show that competitive pressures from neighboring states may lead to substantially lower optimal prices. (JEL H27, H71, H73, R51) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.199 10.1257/pol.4.4.199 http://www.aeaweb.org/aej/pol/data/2011-0039_data.zip American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article The Impact of Year-Round Schooling on Academic Achievement: Evidence from Mandatory School Calendar Conversions Steven C.McMullenCalvin College Kathryn E.RouseElon U 230 52 In 2007, 22 Wake County, North Carolina traditional calendar schools were switched to year-round calendars, spreading the 180 instructional days evenly across the year. This paper presents a human capital model to illustrate the conditions under which these calendars might affect achievement. We then exploit the natural experiment to evaluate the impact of year-round schooling on student achievement using a multi-level fixed effects model. Results suggest that year-round schooling has essentially no impact on academic achievement of the average student. Moreover, when the data are broken out by race, we find no evidence that any racial subgroup benefits from year-round schooling. (JEL H75, I21, I28, J24) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.230 10.1257/pol.4.4.230 http://www.aeaweb.org/aej/pol/data/2011-0038_data.zip http://www.aeaweb.org/aej/pol/app/2011-0038_app.pdf American Economic Association Nashville, TN 1945-7731 1945-774X American Economic Journal: Economic Policy http://www.aeaweb.org/aej-pol/ 4 4 November 2012 http://www.aeaweb.org/issue.php?journal=POL&volume=4&issue=4 Journal Article Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program RyanSandlerUS Federal Trade Commission 253 81 Vehicle retirement programs have become popular tools of public policy for reducing pollution. The efficacy of these programs is difficult to measure, as it is difficult to tell how much a vehicle would have polluted otherwise. I estimate that counterfactual using data from a long-running local program in California. I utilize the universe of emissions inspections from the California Smog Check Program to construct vehicle usage histories of retired cars and similar vehicles which did not retire early. I find that the program's cost-effectiveness steadily declined over time because of the depreciation of the vehicle fleet, while adverse selection remained a problem throughout. (JEL D82, Q53, Q58, R48) http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.253 10.1257/pol.4.4.253 http://www.aeaweb.org/aej/pol/data/2011-0112_data.zip http://www.aeaweb.org/aej/pol/app/2011-0112_app.pdf