American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Markets and Diversity SherwinRosen 1 15 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=1&issue_date=March 2002 10.1257/000282802760015577 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Racial Integration as an Innovation: Empirical Evidence from Sports Leagues Brian L.GoffDepartment of Economics, Western Kentucky University, Bowling Green, KY 42101, US Robert E.McCormickDepartment of Economics, Clemson University, Clemson, SC 29634, US Robert D.TollisonDepartment of Economics, University of Mississippi, University, MS 38677, US 16 26 This paper treats racial integration as an innovation in economic process in which economic entities find it advantageous to utilize potentially more productive inputs previously unavailable due to law, custom, or managerial discretion. Data on the racial integration of Major League Baseball and Atlantic Coast Conference basketball are employed to address this issue. The central question examined is which type of team integrated first—losers or winners? The results strongly support the idea that entrepreneurship trumps competitive rivalry; that is, winning teams led the process of racial integration. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=2&issue_date=March 2002 10.1257/000282802760015586 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust DanBlackCenter for Policy Research, 426 Eggers Hall, Syracuse University, Syracuse, NY 13244, US KermitDanielThe Monitor Company, 650 Madison Avenue, 9th Floor, New York, NY 10022, US SethSandersDepartment of Economics, 3105 Tydings Hall, University of Maryland, College Park, MD 20742, US 27 50 We examine the impact of the coal boom of the 1970's and the coal bust of the 1980's on disability program participation. These shocks provide clear evidence that as the value of labor-market participation increases, disability program participation falls. For the Disability Insurance program, the elasticity of payments with respect to local earnings is between –0.3 and –0.4 and for Supplemental Security Income the elasticity is between –0.4 and –0.7. Consistent with a model where qualifying for disability programs is costly, the relationship between economic conditions and program participation is much stronger for permanent than for transitory economic shocks. (JEL, J0, H0) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=3&issue_date=March 2002 10.1257/000282802760015595 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Insuring Consumption Against Illness PaulGertlerHaas School of Business, University of California, Berkeley, CA 94720, US JonathanGruberDepartment of Economics, E52-355, Massachusetts Institute of Technology, 50 Memorial Drive, Cambridge, MA, 02142, US 51 70 One of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness. We investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from Indonesia that combines excellent measures of health status with consumption information. We find that there are significant economic costs associated with major illness, and that there is very imperfect insurance of consumption over illness episodes. These estimates suggest that public disability insurance or subsidies for medical care may improve welfare by providing consumption insurance. (JEL O0, H1) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=4&issue_date=March 2002 10.1257/000282802760015603 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Endogenous Federal Grants and Crowd-out of State Government Spending: Theory and Evidence from the Federal Highway Aid Program BrianKnightFederal Reserve Board, Washington DC, 20551, US 71 92 Contrary to simple theoretical predictions, existing evidence suggests that federal grants do not crowd out state government spending. A legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods; this correlation has likely biased existing work against measuring crowd-out. To correct for such endogeneity, the model motivates instruments based on the political power of state congressional delegations. Exploiting this exogenous variation in grants, the instrumental variables estimator reports crowd-out that is statistically and economically significant. This endogeneity may explain the flypaper effect, a nonequivalence between grant receipts and private income. (JEL D70, H40, H77) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=5&issue_date=March 2002 10.1257/000282802760015612 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Increasing Returns and All That: A View from Trade WernerAntweilerFaculty of Commerce and Business Administration, University of British Columbia, 2053 Main Mall, Vancouver, British Columbia, V6T 1Z2, Canada DanielTreflerDepartment of Economics, University of Toronto, 140 St. George Street, Suite 707, Toronot, Ontario, M5S 3G6, Canada 93 119 Do scale economies help to explain international trade flows? Using a large database on output, trade flows, and factor endowments, we find that allowing for the presence of increasing returns to scale in production significantly increases our ability to predict international trade flows. In particular, using trade data, we find that a third of all goods-producing industries are characterized by increasing returns to scale. Thus, scale economies are a quantifiable and important source of comparative advantage. (JEL F11, F12, D2) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=6&issue_date=March 2002 10.1257/000282802760015621 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Geographic Localization of International Technology Diffusion WolfgangKellerDepartment of Economics, University of Texas, Austin, TX 78712, US 120 142 Income convergence across countries turns on whether technological knowledge spillovers are global or local. I estimate the amount of spillovers from R&D expenditures on a geographic basis, using a new data set which encompasses most of the world's innovative activity between 1970 and 1995. I find that technology is to a substantial degree local, not global, as the benefits from spillovers are declining with distance. The distance at which the amount of spillovers is halved is about 1,200 kilometers. I also find that over time, technological knowledge has become considerably more global. Moreover, language skills are important for spillover diffusion. (JEL F0, O1, O3) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=7&issue_date=March 2002 10.1257/000282802760015630 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article When Do Research Consortia Work Well and Why? Evidence from Japanese Panel Data Lee G.BranstetterColumbia Business School, Uris Hall, 3022 Broadway, New York, NY 10027 and National Bureau of Economic Research MarikoSakakibaraAnderson Graduate School of Management, University of California, Los Angeles, 110 Westwood Plaza, Los Angeles, CA 90095, US 143 159 We examine the impact of a large number of Japanese government-sponsored research consortia on the research productivity of participating firms by measuring their patenting in the targeted technologies before, during, and after participation. Consistent with the predictions of the theoretical literature on research consortia, we find consortium outcomes are positively associated with the level of potential R&D spillovers within the consortium and (weakly) negatively associated with the degree of product market competition among consortium members. Furthermore, our evidence suggests that consortia are most effective when they focus on basic research. (JEL O32, O31, L52) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=8&issue_date=March 2002 10.1257/000282802760015649 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Induced Innovation and Energy Prices DavidPoppDepartment of Public Administration, Center for Environmental Policy Administration, the Maxwell School, Syracuse University, 400 Eggers Hall, Syracuse, NY13244, US 160 180 I use U.S. patent data from 1970 to 1994 to estimate the effect of energy prices on energy-efficient innovations. Using patent citations to construct a measure of the usefulness of the existing base of scientific knowledge, I consider the effect of both demand-side factors, which spur innovative activity by increasing the value of new innovations, and supply-side factors, such as scientific advancements that make new innovations possible. I find that both energy prices and the quality of existing knowledge have strongly significant positive effects on innovation. Furthermore, I show that omitting the quality of knowledge adversely affects the estimation results. (JEL O31, Q40, Q42) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=9&issue_date=March 2002 10.1257/000282802760015658 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Plant-Level Irreversible Investment and Equilibrium Business Cycles Marcelo L.VeraciertoEconomic Research Department, Federal Reserve Bank of Chicago, 230 South La Salle Street, Chicago, IL 60604, US 181 197 This paper evaluates the importance of microeconomic irreversibilities for aggregate dynamics using a real-business-cycle (RBC) model characterized by investment irreversibilities at the establishment level. The main finding is that investment irreversibilities do not play a significant role in an otherwise standard realbusiness-cycle model: Even though investment irreversibilities are crucial for establishment-level dynamics, aggregate fluctuations are basically the same under fully flexible or completely irreversible investment. (JEL E22, E32) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=10&issue_date=March 2002 10.1257/000282802760015667 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article How Important Is Human Capital for Development? Evidence from Immigrant Earnings LutzHendricksDepartment of Economics, Arizona State University, P.O Box 873806, Tempe AZ 85287, US 198 219 This paper offers new evidence on the sources of cross-country income differences. It exploits the idea that observing immigrant workers from different countries in the same labor market provides an opportunity to estimate their human-capital endowments. These estimates suggest that human and physical capital account for only a fraction of cross-country income differences. For countries below 40 percent of U.S. output per worker, less than half of the output gap relative to the United States is attributed to human and physical capital. (JEL O15, O41, F22) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=11&issue_date=March 2002 10.1257/000282802760015676 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Sources of U.S. Economic Growth in a World of Ideas Charles I.JonesDepartment of Economics, University of California-Berkeley, Berkeley, CA 94720, US 220 239 Rising educational attainment and research intensity in recent decades suggest that the U.S. economy is far from its steady state. This paper develops a model reconciling these facts with the stability of U.S. growth rates. In the model, long-run growth arises from the worldwide discovery of ideas, which depends on population growth. Nevertheless, constant growth can temporarily proceed at a faster rate, provided research intensity and educational attainment rise steadily over time. Growth accounting reveals that these factors explain 80 percent of recent U.S. growth, with less than 20 percent coming from world population growth. (JEL O40, E10) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=12&issue_date=March 2002 10.1257/000282802760015685 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Machiavellian Privatization BrunoBiaisUniversité de Toulouse and IDEI, Place Anatole, France, 31000, Toulouse, France, and CEPR EnricoPerottiDepartment of Financial Management, Universirt of Amsterdam, Roeterstraat 11, 1018 WB Amsterdam, The Netherlands, and CEPR 240 258 We analyze politically motivated privatization in a bipartisan environment. When median-class voters a priori favor redistributive policies, a strategic privatization program allocating them enough shares can induce a voting shift away from left-wing parties whose policy would reduce the value of shareholdings. To induce median-class voters to buy enough shares to shift political preferences, strategic rationing and underpricing is often necessary. In the extreme, this may lead to free share distribution and voucher privatization. Shifting voting preferences becomes impossible when strong ex ante political constraints require large upfront transfers to insiders or when social inequality is extreme. (JEL D72, L33, P16, P35) http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=13&issue_date=March 2002 10.1257/000282802760015694 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Journal Pricing and Mergers: A Portfolio Approach Mark J.McCabeSchool of Economics, Georgia Institute of Technology, 781 Marietta Street NW, Atlanta, GA 30318, US 259 269 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=14&issue_date=March 2002 10.1257/000282802760015702 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Do Women Pay More for New Vehicles? Evidence from Transaction Price Data David W.Harless George E.HofferDepartment of Economics, Virginia Commonwealth University, Box 844000, Richmond, VA 23284, US 270 279 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=15&issue_date=March 2002 10.1257/000282802760015711 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Did Community Rating Induce an Adverse Selection Death Spiral? Evidence from New York, Pennsylvania, and Connecticut ThomasBuchmuellerGraduate School of Management, University of California-Irvine, Irvine, CA 92697, US and National Bureau of Economic Research JohnDinardoDepartment of Economics and Ford School of Public Policy, University of Michigan, Ann Arbor, MI 48109, US and National Bureau of Economic Research 280 294 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=16&issue_date=March 2002 10.1257/000282802760015720 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article The Rise in Old-Age Longevity and the Market for Long-Term Care DariusLakdawallaRAND, 1700 Main Street, Santa Monica, CA 90407, and National Bureau of Economic Research TomasPhilipsonHarris School of Public Policy, Department of Economics, and The Law School, University of Chicago, 1155 E. 60th Street, Chicago, IL 60697, US 295 306 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=17&issue_date=March 2002 10.1257/000282802760015739 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Public Schooling for Young Children and Maternal Labor Supply Jonah B.GelbachDepartment of Economics, University of Maryland, College Park, Maryland, 20742, US 307 322 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=18&issue_date=March 2002 10.1257/000282802760015748 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Does Increasing Women's Schooling Raise the Schooling of the Next Generation? Jere R.Behrman Mark R.RosenzweigDepartment of Economics, 160 McNeal, University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104, US 323 334 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=19&issue_date=March 2002 10.1257/000282802760015757 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Intergenerational Income Mobility Among Daughters LauraChadwickU.S. Department of Health and Human Services, 200 Independence Avenue, SW Room 404E, Washington DC, 20201, and Department of Economics, University of Michigan GarySolonDepartment of Economics, Lorch Hall, University of Michigan, 611 Tappan Street, Ann Arbor, MI 48109, US 335 344 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=20&issue_date=March 2002 10.1257/000282802760015766 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Owner-Occupied Housing and the Composition of the Household Portfolio MarjorieFlavinDepartment of Economics, University of California, San Diego, CA 92093, US and National Bureau of Economic Research TakashiYamashitaDepartment of Economics, University of Nevada, Las Vegas, NV 89154, US 345 362 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=21&issue_date=March 2002 10.1257/000282802760015775 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Does Federalism Lead to Excessively High Taxes? Michael J.KeenInternational Monetary Fund, Washington DC, 20431, Department of Economics, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ, England, ChristosKotsogiannisDepartment of Economics, School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter EX4 4PU, England 363 370 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=22&issue_date=March 2002 10.1257/000282802760015784 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article Charitable Giving, Income, and Taxes: An Analysis of Panel Data Gerald E.AutenU.S. Treasury Department, Office of Tax Analysis, 150 Pennsylvania Avenue, NW, Washington DC, 20220, US HolgerSiegGSIA, Carnegie Mellon University, Pittsburgh, PA 15213, and National Bureau of Economic Research Charles T.ClotfelterDuke University, Sanford Institute for Public Policy, Box 90245, Durham, NC 27708, US and National Bureau of Economic Research 371 382 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=23&issue_date=March 2002 10.1257/000282802760015793 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article A Century of Missing Trade? AntoniEstevadeordalInter-American Development Bank, 1300 New York Avenue NW, Washington DC 20577 Alan M.TaylorDepartment of Economics, University of California, One Shields Avenue, Davis, CA 95616, and National Bureau of Economic Research 383 393 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=24&issue_date=March 2002 10.1257/000282802760015801 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article The Case of the Missing Trade and Other Mysteries: Comment Patrick J.ConwayDepartment of Economics, University of North Carolina, Chapel Hill, NC 27599, US 394 404 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=25&issue_date=March 2002 10.1257/000282802760015810 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 92 1 March 2002 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=92&issue=1&issue_date=March 2002 Journal Article The Case of the Missing Trade and Other Mysteries: Reply DanielTreflerDepartment of Economics, University of Toronto, 140 St George Street, Suite 707, Toronto, Canada M5S 3G6, Canada, and Canadian Institute for Advanced Research 405 410 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=92&issue=1&article=26&issue_date=March 2002 10.1257/000282802760015829