On the Simple Economics of Advertising, Marketing, and Product Design

By Justin P. Johnson and David P. Myatt

American Economic Review, June 2006

We propose a framework for analyzing transformations of demand. Such transformations frequently stem from changes in the dispersion of consumers' valuations, which lead to rotations of the demand curve. In many settings, profits are a U-shaped function...

Exclusive Dealing and Entry, when Buyers Compete

By Chiara Fumagalli and Massimo Motta

American Economic Review, June 2006

Rasmusen et al. (1991) and Segal and Whinston (2000) show that an incumbent monopolist might prevent entry of a more efficient competitor by exploiting externalities among buyers. We show that their results hold only when downstream competition among buye...

Investment Behavior, Observable Expectations, and Internal Funds

By Jason G. Cummins, Kevin A. Hassett, and Stephen D. Oliner

American Economic Review, June 2006

We use earnings forecasts from securities analysts to construct a new measure of the neoclassical fundamentals that drive investment spending. We find that investment responds significantly to our new measure of fundamentals but is insensitive to cash fl...

General versus Specific Skills in Labor Markets with Search Frictions and Firing Costs

By Etienne Wasmer

American Economic Review, June 2006

Human capital investments are not independent of the aggregate state of labor markets: frictions and slackness of the labor market raise the returns to specific human capital investments relative to general investments. We build a macroeconomic model with...

Training and Lifetime Income

By Burhanettin Kuruscu

American Economic Review, June 2006

This paper challenges the notion that on-the-job training investments are quantitatively important for workers' welfare and argues that on-the-job training may not increase lifetime income by more than 1 percent. I argue that it is very difficult to recon...

Long-Term Educational Consequences of Secondary School Vouchers: Evidence from Administrative Records in Colombia

By Joshua Angrist, Eric Bettinger, and Michael Kremer

American Economic Review, June 2006

Colombia's PACES program provided over 125,000 poor children with vouchers that covered the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, pro...

Incarceration Length, Employment, and Earnings

By Jeffrey R. Kling

American Economic Review, June 2006

This paper estimates effects of increases in incarceration length on employment and earnings prospects of individuals after their release from prison. I utilize a variety of research designs including controlling for observable factors and using instrumen...

Will International Rules on Subsidies Disrupt the World Trading System?

By Kyle Bagwell and Robert W. Staiger

American Economic Review, June 2006

We provide a first formal analysis of the international rules that govern the use of subsidies to domestic production. Our analysis highlights the impact of the new subsidy disciplines that were added to GATT rules with the creation of the WTO. While GATT...

Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States

By Nuno Limao

American Economic Review, June 2006

Most countries are members of preferential trade agreements (PTAs). The effect of these agreements has attracted much interest and raised the question of whether PTAs promote or slow multilateral trade liberalization, i.e., whether they are a "building bl...

Auditors' Report/Audited Financial Statements

American Economic Review, June 2006

The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links

[Symposium: American Employment]

By Steven J. Davis, R. Jason Faberman, and John Haltiwanger

Journal of Economic Perspectives, Summer 2006

New data sources and products developed by the Bureau of Labor Statistics and the Bureau of the Census highlight the fluid character of U.S. labor markets. Private sector job creation and destruction rates average nearly 8 percent of employment per quarte...

Changes in Labor Force Participation in the United States

[Symposium: American Employment]

By Chinhui Juhn and Simon Potter

Journal of Economic Perspectives, Summer 2006

The labor force participation rate in the United States increased almost continuously for two-and-a-half decades after the mid-1960s, pausing only briefly during economic downturns. The pace of growth slowed considerably during the 1990s, however, and aft...

Unemployment Insurance: Strengthening the Relationship between Theory and Policy

[Symposium: American Employment]

By Walter Nicholson and Karen Needels

Journal of Economic Perspectives, Summer 2006

Ever since the U.S. federal-state system of unemployment insurance was founded in the 1930s, it has provided partial, temporary replacement of wages to eligible workers who lose jobs -- through no fault of their own -- (as determined by state-level regula...

The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding

[Symposium: American Employment]

By David H. Autor and Mark G. Duggan

Journal of Economic Perspectives, Summer 2006

The U.S. Social Security Disability Insurance (DI) program has grown dramatically over the last 20 years in size and expense. This growth poses significant risks to the finances of the DI program and the broader Social Security system, and raises troublin...

The Determinants of Mortality

[Symposium: Disease and Development]

By David Cutler, Angus Deaton, and Adriana Lleras-Muney

Journal of Economic Perspectives, Summer 2006

The pleasures of life are worth nothing if one is not alive to experience them. Through the twentieth century in the United States and other high-income countries, growth in real incomes was accompanied by a historically unprecedented decline in mortality...

The Economics of HIV/AIDS in Low-Income Countries: The Case for Prevention

[Symposium: Disease and Development]

By David Canning

Journal of Economic Perspectives, Summer 2006

There are two approaches to reducing the burden of sickness and death associated with the human immunodeficiency virus (HIV), which leads to acquired immunodeficiency syndrome (AIDS): treatment and prevention. Despite large international aid flows for HIV...

Initial Labor Market Conditions and Long-Term Outcomes for Economists

[Symposium: The Market for Economists]

By Paul Oyer

Journal of Economic Perspectives, Summer 2006

Each year, graduate students entering the academic job market worry that they will suffer due to uncontrollable macroeconomic risk. Given the importance of general human capital and the relative ease of publicly observing productivity in academia, one mig...

Does the Academic Labor Market Initially Allocate New Graduates Efficiently?

[Symposium: The Market for Economists]

By Valérie Smeets, Frédéric Warzynski, and Tom Coupé

Journal of Economic Perspectives, Summer 2006

It is not surprising that economics graduate students from elite and very good schools find better jobs after completion of their Ph.D. degree, on average, than do candidates from less prestigious universities. Yet the job market outcome for candidates fr...

An Economic Evaluation of the Moneyball Hypothesis

By Jahn K. Hakes and Raymond D. Sauer

Journal of Economic Perspectives, Summer 2006

Michael Lewis's book, Moneyball, describes how an innovative manager working for the Oakland Athletics successfully exploited an inefficiency in baseball's labor market over a prolonged period of time. We evaluate Lewis's claims by applying standar...

Retrospectives: The Coining of "Privatization" and Germany's National Socialist Party

By Germá Bel

Journal of Economic Perspectives, Summer 2006

The concept of privatization attracted much attention in the late 1970s and early 1980s, as Margaret Thatcher's privatization policies were implemented in the United Kingdom. My goal here is not to comment on the merits of privatization as a policy, but r...