Output Spillovers from Fiscal Policy

By Alan J. Auerbach and Yuriy Gorodnichenko

American Economic Review, May 2013

For a large number of OECD countries we estimate the cross-country spillover effects of government purchases on output. Following the methodology in Auerbach and Gorodnichenko (2012a, b), we allow these multipliers to vary smoothly according to the state ...

Forecasting the Recovery from the Great Recession: Is This Time Different?

By Kathryn M. E. Dominguez and Matthew D. Shapiro

American Economic Review, May 2013

This paper asks whether the slow recovery of the US economy from the trough of the Great Recession was anticipated, and identifies some of the factors that contributed to surprises in the course of the recovery. We construct a narrative using news reports...

Extreme Wage Inequality: Pay at the Very Top

By Brian D. Bell and John Van Reenen

American Economic Review, May 2013

We provide new evidence on the growth in pay at the very top of the wage distribution in the United Kingdom. Sectoral decompositions show that workers in the financial sector have accounted for the majority of the gains at the top over the last decade. Ne...

Family, Education, and Sources of Wealth among the Richest Americans, 1982-2012

By Steven N. Kaplan and Joshua D. Rauh

American Economic Review, May 2013

We examine characteristics of the 400 wealthiest individuals in the United States over the past three decades as tabulated by Forbes Magazine, and analyze which theories of increasing inequality are most consistent with these data. The people of the Forbe...

Bailouts and the Optimal Taxation of Bonus Pay

By Timothy Besley and Maitreesh Ghatak

American Economic Review, May 2013

This paper argues that the possibility of bailouts to financial intermediaries distorts the supply price of capital and creates an argument for taxing financial bonuses separately from other sources of income. We develop a model of financial contracting w...

Income Inequality, Mobility, and Turnover at the Top in the US, 1987-2010

By Gerald Auten, Geoffrey Gee, and Nicholas Turner

American Economic Review, May 2013

While cross-sectional data show increasing income inequality in the United States, it is also important to examine how incomes change over time. Using income tax data, this paper provides new evidence on long-term and intergenerational mobility, and persi...

Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income

By Philip Armour, Richard V. Burkhauser, and Jeff Larrimore

American Economic Review, May 2013

Recent research on levels and trends in the United States in income inequality vary substantially in how they measure income. We show the sensitivity of alternative income measures in capturing income trends using a unified data set. Focusing solely on ma...

Consumption and Income Inequality and the Great Recession

By Bruce D. Meyer and James X. Sullivan

American Economic Review, May 2013

We examine changes in consumption and income inequality between 2000 and 2011. During the most recent recession, unemployment rose and asset values declined sharply. We investigate how the recession affected inequality while addressing concerns about unde...

Measuring the Trends in Inequality of Individuals and Families: Income and Consumption

By Jonathan D. Fisher, David S. Johnson, and Timothy M. Smeeding

American Economic Review, May 2013

We present evidence on the level of and trend in inequality from 1985-2010 in the United States, using disposable income and consumption for a sample of individuals from the Consumer Expenditure (CE) Survey. Differing from the findings in other recent res...

The Scale and Selectivity of Foreign-Born PhD Recipients in the US

By Jeffrey Grogger and Gordon Hanson

American Economic Review, May 2013

We study the scale and selectivity of foreign-born PhD students in science and engineering. We focus on students from China, India, Korea, and Taiwan, which together account for most roughly one-third of science and engineering PhD students in the United ...

Immigration and Employer Transitions for STEM Workers

By Sari Pekkala Kerr and William R. Kerr

American Economic Review, May 2013

The firm is almost entirely absent from models of immigration, and yet firms play a central role for high-skilled immigration. The H-1B visa program, for example, is a firm-sponsored entry where firms are responsible for every stage: from identifying the ...

Why Do Programmers Earn More in Houston Than Hyderabad? Evidence from Randomized Processing of US Visas

By Michael A. Clemens

American Economic Review, May 2013

Why do workers earn so much more in the United States than in India? This study compares the earnings of workers in the two countries in a unique setting. The product is perfectly tradable (software), technology differences are nil (they are members of th...

Pathways to Adjustment: The Case of Information Technology Workers

By John Bound, Breno Braga, Joseph M. Golden, and Sarah Turner

American Economic Review, May 2013

One long-standing hypothesis about science and engineering labor markets is that the supply of highly skilled workers is likely to be inelastic in the short run. We consider the market for computer scientists and electrical engineers (IT workers) and the ...

A Trapped-Factors Model of Innovation

By Nicholas Bloom, Paul M. Romer, Stephen J. Terry, and John Van Reenen

American Economic Review, May 2013

We explain a counterintuitive empirical finding: Firms facing more import competition do more innovation. In our model, factors are trapped inside a firm. An increase in import competition encourages a firm to innovate by reducing the opportunity cost of ...

Sources of Wage Inequality

By Anders Akerman, Elhanan Helpman, Oleg Itskhoki, Marc-Andreas Muendler, and Stephen Redding

American Economic Review, May 2013

Recent theories of firm heterogeneity emphasize between-firm wage differences as a new mechanism through which trade can affect wage inequality. Using linked employer-employee data for Sweden, we show that many of the stylized facts about wage inequality ...

The Geography of Trade and Technology Shocks in the United States

By David H. Autor, David Dorn, and Gordon H. Hanson

American Economic Review, May 2013

This paper explores the geographic overlap of trade and technology shocks across local labor markets in the United States. Regional exposure to technological change, as measured by specialization in routine task-intensive production and clerical occupatio...

Long-Term Neighborhood Effects on Low-Income Families: Evidence from Moving to Opportunity

By Jens Ludwig, Greg J. Duncan, Lisa A. Gennetian, Lawrence F. Katz, Ronald C. Kessler, Jeffrey R. Kling, and Lisa Sanbonmatsu

American Economic Review, May 2013

We examine long-term neighborhood effects on low-income families using data from the Moving to Opportunity (MTO) randomized housing-mobility experiment. This experiment offered to some public-housing families but not to others the chance to move to less-d...

Achieving Escape Velocity: Neighborhood and School Interventions to Reduce Persistent Inequality

By Roland G. Fryer Jr. and Lawrence F. Katz

American Economic Review, May 2013

This paper reviews the evidence on the efficacy of neighborhood and school interventions in improving the long-run outcomes of children growing up in poor families. We focus on studies exploiting exogenous sources of variation in neighborhoods and schools...

Place Based Policies with Unemployment

By Patrick Kline and Enrico Moretti

American Economic Review, May 2013

We develop a stylized model of frictional local labor markets with the goal of studying the efficiency of unemployment differences across areas. The model adapts the widely used Diamond-Mortensen-Pissarides framework to a local labor market setting with a...

Career, Family, and the Well-Being of College-Educated Women

By Marianne Bertrand

American Economic Review, May 2013

I report on measures of life satisfaction and emotional well-being across groups of college-educated women, based on whether they have a career, a family, both, or neither. The biggest premium to life satisfaction is associated with having a family. While...