The Intergenerational Correlation of Consumption Expenditures

By Kerwin Kofi Charles, Sheldon Danziger, Geng Li, and Robert Schoeni

American Economic Review, May 2014

Using data recently collected by the Panel Study of Income Dynamics, we find that the intergenerational correlation in expenditures is no larger than that in income, suggesting limited intra-family risk-sharing. On the other hand, even after controlling f...

Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility

By Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner

American Economic Review, May 2014

We present new evidence on trends in intergenerational mobility in the United States using administrative earnings records. We find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971–1993 bi...

How Risky Are Recessions for Top Earners?

By Fatih Guvenen, Greg Kaplan, and Jae Song

American Economic Review, May 2014

How sensitive to business cycles are the earnings of top earners? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On ave...

Year-End Tax Planning of Top Management: Evidence from High-Frequency Payroll Data

By Claus Thustrup Kreiner, Søren Leth-Petersen, and Peer Ebbesen Skov

American Economic Review, May 2014

Using Danish high-frequency payroll data and tax reform variation, we detect year-end tax avoidance among top managers. Five to seven percent of top managers exploit year-end tax planning strategies to save taxes. Around 30 percent of the top managers eng...

Macro-perspective on Asset Grants Programs: Occupational and Wealth Mobility

By Francisco J. Buera, Joseph P. Kaboski, and Yongseok Shin

American Economic Review, May 2014

We provide a simple quantitative general equilibrium model of occupational choice with credit market frictions to analyze the aggregate and distributional effects of asset transfer programs. Asset transfer programs have a positive but transient effect on ...

Agricultural Productivity Differences across Countries

By Douglas Gollin, David Lagakos, and Michael E. Waugh

American Economic Review, May 2014

Recent studies argue that cross-country labor productivity differences are much larger in agriculture than in the aggregate. We reexamine the agricultural productivity data underlying this conclusion using new evidence from disaggregate sources. We find t...

The Aggregate Impact of Household Saving and Borrowing Constraints: Designing a Field Experiment in Uganda

By Joseph P. Kaboski, Molly Lipscomb, and Virgiliu Midrigan

American Economic Review, May 2014

We develop a model of households with multiple needs (smoothing shocks, financing investment) and constraints (limited credit, self-control issues) in order to examine the nature of household's financing constraints in a developing country, and the impact...

A Reassessment of Real Business Cycle Theory

By Ellen R. McGrattan and Edward C. Prescott

American Economic Review, May 2014

During the downturn of 2008–2009, output and hours fell significantly, but labor productivity rose. These facts have led many to conclude that there is a significant deviation between observations and current macrotheories that assume business cycle...

Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?

By François Gourio and Leena Rudanko

American Economic Review, May 2014

Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangib...

The Value and Ownership of Intangible Capital

By Andrea L. Eisfeldt and Dimitris Papanikolaou

American Economic Review, May 2014

Intangible capital which relies on essential human inputs, or "organization capital," presents a unique challenge for measurement. Organization capital cannot be fully owned by firms' financiers, because it is partly embodied in key labor inputs. Instead,...

Weak Identification in Maximum Likelihood: A Question of Information

By Isaiah Andrews and Anna Mikusheva

American Economic Review, May 2014

In this paper we connect the discrepancy between two estimates of Fisher information, one based on the quadratic variation of the score and the other based on the negative Hessian of the log-likelihood, to weak identification. Classical asymptotic approxi...

Physician Payment Reform and Hospital Referrals

By Kate Ho and Ariel Pakes

American Economic Review, May 2014

Commercial health insurers in California use provider capitation payments to different extents. These are similar to arrangements introduced by the recent health reforms to give physicians incentives to control costs. In a previous paper we showed that pa...

Estimation of an Education Production Function under Random Assignment with Selection

By Eleanor Jawon Choi, Hyungsik Roger Moon, and Geert Ridder

American Economic Review, May 2014

This paper estimates an education production function using data on the College Scholastic Ability Test score and high school characteristics from Seoul, Korea, where, on entering high school, students are randomly assigned to schools within each school d...

Treatment Effects and Informative Missingness with an Application to Bank Recapitalization Programs

By Angela Vossmeyer

American Economic Review, May 2014

This article develops a Bayesian framework for estimating multivariate treatment effect models in the presence of sample selection. The methodology is applied to a banking study that evaluates the effectiveness of lender of last resort (LOLR) policies and...

The Determinants of the Macroeconomic Implications of Aging

By Louise Sheiner

American Economic Review, May 2014

The aging of the US population undoubtedly will be associated with macroeconomic changes. In particular, some combination of lower consumption growth and increased labor input will ultimately be required. But, the timing of these changes can have importan...

Aging in Europe: Reforms, International Diversification, and Behavioral Reactions

By Axel Börsch-Supan, Klaus Härtl, and Alexander Ludwig

American Economic Review, May 2014

The extent of demographic changes in Europe is much more drastic than in the United States. This paper studies the effects of population aging on the interactions between economic growth and living standards in Europe with labor market and pension reform,...

The Growing Gap in Life Expectancy: Using the Future Elderly Model to Estimate Implications for Social Security and Medicare

By Dana P. Goldman and Peter R. Orszag

American Economic Review, May 2014

Mortality gradients by education and income have been rising in the United States and elsewhere. However, their impact on Social Security progressivity has received relatively little attention, and the impact on Medicare has received effectively none. Thi...

Macroeconomic Consequences of Population Aging in the United States: Overview of a National Academy Report

By Ronald D. Lee

American Economic Review, May 2014

The US population will age rapidly for several decades and then more slowly, with less aging than most rich nations. Health of the elderly has greatly improved, but disability stagnated after 2000. Retirement age reversed its decline in the mid-1990s and ...

Disparities in Wealth Accumulation and Loss from the Great Recession and Beyond

By Signe-Mary McKernan, Caroline Ratcliffe, Eugene Steuerle, and Sisi Zhang

American Economic Review, May 2014

Using over two decades of Survey of Consumer Finances data and a pseudo-panel technique, we measure the impact of the Great Recession on US family wealth relative to the counterfactual of what wealth would have been given wealth accumulation trajectories....

Gender and Business Outcomes of Black and Hispanic New Entrepreneurs in the United States

By Marie T. Mora and Alberto Dávila

American Economic Review, May 2014

In light of the growing numbers of women of color in the entrepreneurial sector in the United States, employing public-use microdata from the 2007 Survey of Business Owners, this study finds that new firms owned by black and Hispanic women were more likel...