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This paper marshals available evidence from both the U.S. and other countries on the effects of private schools, peer effects, and competition to demonstrate that that any gains in overall student achievement from a large scale voucher program are at best likely to be small. Moreover, given the tendency of parents to judge schools in part by the characteristics of a school's students, a universal voucher system would undoubtedly harm large numbers of disadvantaged students. Although the case for a small means tested voucher program is somewhat stronger, it will do little to improve education for low-performing students.

Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price
Ernst R. Berndt

Abstract

The U.S. pharmaceutical industry has again become the focus of considerable controversy. In understanding the economics underlying this industry, distinctions between short, medium and long-run costs are critical, as is that between economic and accounting costs. Consumers' heterogeneous valuations create strong incentives for non-uniform pricing and targeted marketing. The conflict between static efficiency (price new drugs low, near short-run marginal cost) and dynamic efficiency (price new drugs high, maintain incentives for innovation) is deep and enduring. This trade-off is becoming more severe as the relative costs of bringing new drugs to market have increased sharply.

Pharmaceuticals have greatly improved health in developing countries, but many people in developing countries do not obtain even inexpensive pharmaceuticals and little pharmaceutical R&D is oriented toward products needed by developing countries, such as a malaria vaccine. Access to existing products could be improved by facilitating differential pricing, for example by subsidizing donation programs, and reforming health care delivery. R&D incentives could be improved if rich countries or international organization committed to purchase needed products when they are developed and make them available to the poor.

The Promise and Pitfalls of Using Imprecise School Accountability Measures
Thomas J. Kane and Douglas O. Staiger

Abstract

In recent years, most states have constructed elaborate accountability systems using school-level test scores. However, because the median elementary school contains only 69 children per grade level, such measures are quite imprecise. We evaluate the implications for school accountability systems. For instance, rewards or sanctions for schools with scores at either extreme primarily affect small schools and provide weak incentives to large ones. Nevertheless, we conclude that accountability systems may be worthwhile. Even in states with aggressive financial incentives, the marginal reward to schools for raising student performance is a small fraction of the potential labor market value for students.

The NAIRU in Theory and Practice
Laurence Ball and N. Gregory Mankiw

Abstract

This paper discusses the NAIRU--the non-accelerating inflation rate of unemployment. It first considers the role of the NAIRU concept in business cycle theory, arguing that this concept is implicit in any model in which monetary policy influences both inflation and unemployment. The exact value of the NAIRU is hard to measure, however, in part because it changes over time. The paper then discusses why the NAIRU changes and, in particular, why it fell in the United States during the 1990s. The most promising hypothesis is that the decline in the NAIRU is attributable to the acceleration in productivity growth.

Trends in Aggregate Concentration in the United States
Lawrence J. White

Abstract

I assemble two rarely used data sets to measure aggregate concentration in the U.S. in the 1980s and 1990s. Despite the merger waves of those decades, aggregate concentration declined in the 1980s and the early 1990s, but rose modestly in the late 1990s. The levels at the end of the decade were at or below the levels of the late 1980s or early 1990s. The average size of firm and the relative importance of larger size classes of firms increased, however. Gini coefficients for employment and payroll shares of companies showed moderate but steady increases from 1988 through 1999.

Productivity Growth in World Agriculture: Sources and Constraints
Vernon W. Ruttan

Abstract

During the last half-century, advances in crop production came from expansion in areas irrigated from more intensive application of fertilizers and crop protection chemicals, and from crop varieties that were more responsive to technical inputs and management. Advances in animal production came from genetic improvements and advances in animal nutrition. Differences among developed and developing countries in output per hectare and per worker have widened. If these gaps are to be narrowed agricultural research capacity in developing countries will have to be substantially strengthened.

In this paper we note that the institutional context (and therefore the structure of incentives and organization) in developing and transition economies is quite different from those in advanced industrial economies, and this necessitates the literature on decentralization in the context of development to go beyond the traditional fiscal federalism literature. We review some of the existing theoretical work and empirical case studies of decentralization from the point of view of delivery of public services and of conditions for local business development, and point to ways of going forward in research.

Retrospectives: Economists and the Fed: Beginnings
Perry Mehrling

Abstract

As usually understood, the significant debate over the founding of the Fed was between advocates of the real bills doctrine and advocates of the quantity theory of money. This understanding however conflates two different distinctions: one between the banking principle and the currency principle, and one between self-regulation and active management. It also fails to take seriously both the context of practical experience with the national banking system and the developing practical experience inside the Fed. I propose a new interpretation focused mainly on the contributions of four economists: J. Laurence Laughlin, Irving Fisher, Paul Warburg and Benjamin Strong.

The Journal of Economic Perspectives
Vol. 16, No. 4, Fall 2002

Contents


	AEAweb: JEP: Contents: Previous Issues

The Journal of Economic Perspectives Vol. 16, No. 4, Fall 2002

Contents

The Journal of Economic Perspectives
Vol. 16, No. 4, Fall 2002