Spatial Development

By Klaus Desmet and Esteban Rossi-Hansberg

American Economic Review, April 2014

We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially. We apply the model t...

Unintended Effects of Anonymous Résumés

By Luc Behaghel, Bruno Crépon, and Thomas Le Barbanchon

American Economic Journal: Applied Economics, July 2015

We evaluate an experimental program in which the French public employment service anonymized résumés for firms that were hiring. Firms were free to participate or not; participating firms were then randomly assigned to receive either anonymous résumés...

Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age

By Luc Behaghel and David M. Blau

American Economic Journal: Economic Policy, November 2012

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 tha...

The Currency of Reciprocity: Gift Exchange in the Workplace

By Sebastian Kube, Michel André Maréchal, and Clemens Puppe

American Economic Review, June 2012

What determines reciprocity in employment relations? We conducted a controlled field experiment to measure the extent to which monetary and nonmonetary gifts affect workers' performance. We find that nonmonetary gifts have a much stronger impact than mon...

Real and Money Wage Rates

By John T. Dunlop

Journal of Economic Perspectives, Spring 1998

In the General Theory, John Maynard Keynes held money and real wage rates move in opposite directions. In expansion, prices increase faster because of increasing costs and a rise in the proportion of product going to profits. Neoclassical economists held ...

Poverty Alleviation and Child Labor

By Eric V. Edmonds and Norbert Schady

American Economic Journal: Economic Policy, November 2012

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...

Gross Worker Flows over the Business Cycle

By Per Krusell, Toshihiko Mukoyama, Richard Rogerson, and Ayşegül Şahin

American Economic Review, November 2017

We build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states: employment, unemployment, and nonpa...

Understanding the Gains from Wage Flexibility: The Exchange Rate Connection

By Jordi Galí and Tommaso Monacelli

American Economic Review, December 2016

We study the gains from increased wage flexibility using a small open economy model with staggered price and wage setting. Two results stand out: (i) the effectiveness of labor cost reductions as a means to stimulate employment is much smaller in a curren...

Civic Virtue and Labor Market Institutions

By Yann Algan and Pierre Cahuc

American Economic Journal: Macroeconomics, January 2009

We argue civic virtue plays a key role in explaining the design of public insurance against unemployment risks by solving moral hazard issues which hinder the efficiency of unemployment insurance. We show, in a simple model, that economies with stronge...

Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession

By Brian C. Cadena and Brian K. Kovak

American Economic Journal: Applied Economics, January 2016

This paper demonstrates that low-skilled Mexican-born immigrants' location choices respond strongly to changes in local labor demand, which helps equalize spatial differences in employment outcomes for low-skilled native workers. We leverage the substanti...

The Top 1 Percent in International and Historical Perspective

[Symposium: The Top 1 Percent]

By Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez

Journal of Economic Perspectives, Summer 2013

The top 1 percent income share has more than doubled in the United States over the last 30 years, drawing much public attention in recent years. While other English-speaking countries have also experienced sharp increases in the top 1 percent income sha...

Transfer Payments and the Macroeconomy: The Effects of Social Security Benefit Increases, 1952-1991

By Christina D. Romer and David H. Romer

American Economic Journal: Macroeconomics, October 2016

This paper uses Social Security benefit increases from 1952 to 1991 to investigate the macroeconomic effects of changes in transfers. It finds a large, immediate, and significant positive response of consumption to permanent benefit increases. The respons...

The Economic Aftermath of Hurricane Katrina

By Jacob Vigdor

Journal of Economic Perspectives, Fall 2008

On August 29, 2005, Hurricane Katrina swept into Louisiana and New Orleans, a city built largely on land reclaimed from swamp, witnessed massive failures in its levees. Much of the city and its surrounding suburbs were inundated; those residents of the ci...

Building State Capacity: Evidence from Biometric Smartcards in India

By Karthik Muralidharan, Paul Niehaus, and Sandip Sukhtankar

American Economic Review, October 2016

Antipoverty programs in developing countries are often difficult to implement; in particular, many governments lack the capacity to deliver payments securely to targeted beneficiaries. We evaluate the impact of biometrically authenticated payments infrast...

Internal Geography, International Trade, and Regional Specialization

By A. Kerem Coşar and Pablo D. Fajgelbaum

American Economic Journal: Microeconomics, February 2016

We introduce an internal geography to the canonical model of international trade driven by comparative advantages to study the regional effects of external economic integration. The model features a dual-economy structure, in which locations near internat...

Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946

[Symposium: Fifty Years of the Council of Economic Advisers]

By J. Bradford De Long

Journal of Economic Perspectives, Summer 1996

The Employment Act of 1946 created the Council of Economic Advisers (CEA)--and served as a convenient marker of the government's acceptance of the burden of stabilizing the macroeconomy. The willingness of post-WWII governments to let automatic stabilizer...

Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry

By Leemore Dafny, Mark Duggan, and Subramaniam Ramanarayanan

American Economic Review, April 2012

We examine whether and to what extent consolidation in the US health insurance industry has contributed to higher employer-sponsored insurance premiums. We exploit the differential impact across local markets of a national merger of two insurers to identi...

Employment and Unemployment in the 1930s

[Symposium: The Great Depression]

By Robert A. Margo

Journal of Economic Perspectives, Spring 1993

Recent research on labor markets in the 1930s has shifted attention from aggregate to disaggregate time series and towards microeconomic evidence. The paper begins by reviewing the conventional statistics of the United States labor market during the Great...

The NAIRU, Unemployment and Monetary Policy

[Symposium: The Natural Rate of Unemployment]

By Douglas Staiger, James H. Stock, and Mark W. Watson

Journal of Economic Perspectives, Winter 1997

This paper examines the precision of conventional estimates of the NAIRU and the role of the NAIRU and unemployment in forecasting inflation. The authors find that, although there is a clear empirical Phillips relation, the NAIRU is imprecisely estimated,...

Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

By Lukas Inderbitzin, Stefan Staubli, and Josef Zweimüller

American Economic Journal: Economic Policy, February 2016

We explore how extended unemployment insurance (UI) benefits for older workers affect early retirement and welfare. We argue that extending UI benefits generates program complementarity (more labor market exits and disability benefit take-up in the future...