Does the US Labor Market Reward International Experience?

By Susan Pozo

American Economic Review, May 2014

A typical strategy for measuring the returns to international experience—comparing the earnings of returning migrants to comparable non-migrants—has been criticized for not adequately accounting for self-selection. I suggest an alternative, te...

Entrepreneurial Innovation: Killer Apps in the iPhone Ecosystem

By Pai-Ling Yin, Jason P. Davis, and Yulia Muzyrya

American Economic Review, May 2014

The mobile applications (apps) industry has exhibited rapid entry and growth in the midst of a recession. Using unique data from the iPhone application ecosystem, we examine how the development of "killer apps" (apps appearing in the top grossing rank) va...

Learning from the Doers: Developing Country Lessons for Advanced Economy Growth

By Anusha Chari and Peter Blair Henry

American Economic Review, May 2014

From 1980 to 1992, emerging and developing countries grew by 3.4 percent per year. Their annual rate of growth increased to 5.4 percent between 1993 and 2012. No such increase occurred for advanced nations, whose average growth from 1980 to 2012 was rough...

Forty Years of Leverage: What Have We Learned about Sovereign Debt?

By Peter Boone and Simon Johnson

American Economic Review, May 2014

Financial crises frequently increase public sector borrowing and threaten some form of sovereign debt crisis. Until recently, high income countries were thought to have become less vulnerable to severe banking crises that have lasting negative effects on ...

Demand and Defective Growth Patterns: The Role of the Tradable and Non-tradable Sectors in an Open Economy

By Sandile Hlatshwayo and Michael Spence

American Economic Review, May 2014

This paper examines the underlying structural elements of US growth patterns, pre- and post-crisis. Prior to the recession, the US economy exhibited a defective growth pattern driven by outsized domestic demand. As domestic aggregate demand retreats to mo...

Rainfall Forecasts, Weather, and Wages over the Agricultural Production Cycle

By Mark R. Rosenzweig and Christopher Udry

American Economic Review, May 2014

We look at the effects of rainfall forecasts and realized rainfall on equilibrium agricultural wages over the course of the agricultural production cycle. We show theoretically that a forecast of good weather can lower wages in the planting stage, by lowe...

Dynamics of Demand for Index Insurance: Evidence from a Long-Run Field Experiment

By Shawn Cole, Daniel Stein, and Jeremy Tobacman

American Economic Review, May 2014

This paper estimates how experimentally-manipulated experiences with a novel financial product, rainfall index insurance, affect subsequent insurance demand. Using a seven-year panel, we develop three main findings. First, recent experience matters for de...

Bundling Health Insurance and Microfinance in India: There Cannot Be Adverse Selection If There Is No Demand

By Abhijit Banerjee, Esther Duflo, and Richard Hornbeck

American Economic Review, May 2014

Microfinance institutions have started to bundle their basic loans with other financial services, such as health insurance. Using a randomized control trial in Karnataka, India, we evaluate the impact on loan renewal from mandating the purchase of actuari...

Together at Last: Trade Costs, Demand Structure, and Welfare

By Monika Mrázová and J. Peter Neary

American Economic Review, May 2014

We show that relaxing the assumption of CES preferences in monopolistic competition has surprising implications when trade is restricted. Integrated and segmented markets behave differently, the latter typically exhibiting reciprocal dumping. Globalizatio...

Monopolistic Competition and Optimum Product Selection

By Antonella Nocco, Gianmarco I. P. Ottaviano, and Matteo Salto

American Economic Review, May 2014

We provide novel insights on the decentralization of optimal outcomes under monopolistic competition with nonseparable utility, variable demand elasticity, and endogenous firm heterogeneity. Relative to the unconstrained optimum, equilibrium firm selectio...

Welfare and Trade without Pareto

By Keith Head, Thierry Mayer, and Mathias Thoenig

American Economic Review, May 2014

Quantifications of gains from trade in heterogeneous firm models assume that productivity is Pareto distributed. Replacing this assumption with log-normal heterogeneity retains some useful Pareto features, while providing a substantially better fit to sal...

Missing Gains from Trade?

By Marc J. Melitz and Stephen J. Redding

American Economic Review, May 2014

In a class of trade models which satisfy a constant elasticity gravity equation, the welfare gains from trade can be computed using the open economy domestic trade share and a constant trade elasticity. The measured welfare gains from trade from this quan...

The Impact of Medicaid on Labor Market Activity and Program Participation: Evidence from the Oregon Health Insurance Experiment

By Katherine Baicker, Amy Finkelstein, Jae Song, and Sarah Taubman

American Economic Review, May 2014

In 2008, a group of uninsured low-income adults in Oregon was selected by lottery for the chance to apply for Medicaid. Using this randomized design and 2009 administrative data, we find no significant effect of Medicaid on employment or earnings. Our 95 ...

Disability Insurance and Health Insurance Reform: Evidence from Massachusetts

By Nicole Maestas, Kathleen J. Mullen, and Alexander Strand

American Economic Review, May 2014

As health insurance becomes available outside of the employment relationship as a result of the Affordable Care Act (ACA), the cost of applying for Social Security Disability Insurance (SSDI)–potentially going without health insurance coverage durin...

The Accelerated Benefits Demonstration: Impacts on the Employment of Disability Insurance Beneficiaries

By Michelle Stegman Bailey and Robert R. Weathers II

American Economic Review, May 2014

We use data from the Accelerated Benefits demonstration to estimate the impacts of providing newly entitled disability insurance (DI) beneficiaries with health insurance and additional services during the DI program's 24-month Medicare waiting period. Whi...

Unilateral Divorce, the Decreasing Gender Gap, and Married Women's Labor Force Participation

By Raquel Fernández and Joyce Wong

American Economic Review, May 2014

Married women's labor force participation (LFP) increased dramatically in the United States between the 1940 and 1960 cohort. The two cohorts lived under different divorce regimes (unilateral divorce rather than mutual consent). The 1960 cohort also had a...

Marry Your Like: Assortative Mating and Income Inequality

By Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos

American Economic Review, May 2014

Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating ...

Labor Supply and Household Dynamics

By Maurizio Mazzocco, Claudia Ruiz, and Shintaro Yamaguchi

American Economic Review, May 2014

Using the Panel Study of Income Dynamics, we provide evidence that to understand household decisions and evaluate policies designed to affect individual welfare, it is important to add an intertemporal dimension to the by-now standard static collective mo...

The Myth of Immigrant Women as Secondary Workers: Evidence from Canada

By Alícia Adserà and Ana M. Ferrer

American Economic Review, May 2014

We use the confidential files of the Canadian Census 1991–2006, combined with information from O*NET on the skill requirements of jobs, to show that the labor market patterns of female immigrants do not fit the profile of secondary workers, but rath...

All for One? Family Size and Children's Educational Distribution under Credit Constraints

By Jeanne Lafortune and Soohyung Lee

American Economic Review, May 2014

This paper examines the possibility that a child's years of schooling could increase in the number of siblings, instead of being diminished by competition for parents' resources: if unable to finance the education of their younger children, parents may do...