Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation

[Symposium: Middle East]

By Timur Kuran

Journal of Economic Perspectives, Summer 2004

Although a millennium ago the Middle East was not an economic laggard, by the 18th century it exhibited clear signs of economic backwardness. The reason for this transformation is that certain components of the region's legal infrastructure stagnated as t...

The Opt-In Revolution? Contraception and the Gender Gap in Wages

By Martha J. Bailey, Brad Hershbein, and Amalia R. Miller

American Economic Journal: Applied Economics, July 2012

Decades of research on the US gender gap in wages describes its correlates, but little is known about why women changed their career paths in the 1960s and 1970s. This paper explores the role of "the Pill" in altering women's human capital investments an...

Selection, Agriculture, and Cross-Country Productivity Differences

By David Lagakos and Michael E. Waugh

American Economic Review, April 2013

Cross-country labor productivity differences are larger in agriculture than in non-agriculture. We propose a new explanation for these patterns in which the self-selection of heterogeneous workers determines sector productivity. We formalize our theory...

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...

Inducing Leaders to Take Risky Decisions: Dismissal, Tenure, and Term Limits

By Philippe Aghion and Matthew O. Jackson

American Economic Journal: Microeconomics, August 2016

How can a principal (employer or voter) induce an agent (worker or politician) to choose the "right" actions if risky actions reveal the agent's decision making competence and only dismissal can be used as an incentive instrument? We first show that if th...

Government Transfers and Political Support

By Marco Manacorda, Edward Miguel, and Andrea Vigorito

American Economic Journal: Applied Economics, July 2011

This paper estimates the impact of a large anti-poverty cash transfer program, the Uruguayan PANES, on political support for the government that implemented it. Using the discontinuity in program assignment based on a pretreatment eligibility score, we f...

Behavioral Macroeconomics and Macroeconomic Behavior

By George A. Akerlof

American Economic Review, June 2002

Loss Leading as an Exploitative Practice

By Zhijun Chen and Patrick Rey

American Economic Review, December 2012

We show that large retailers, competing with smaller stores that carry a narrower range, can exercise market power by pricing below cost some of the products also offered by the smaller rivals, in order to discriminate multistop shoppers from one-stop ...

Understanding the Increase in Disability Insurance Benefit Receipt in the United States

[Symposium: Disability Insurance]

By Jeffrey B. Liebman

Journal of Economic Perspectives, Spring 2015

The share of working-age Americans receiving disability benefits from the federal Disability Insurance (DI) program has increased significantly in recent decades, from 2.2 percent in the late 1970s to 3.6 percent in the years immediately preceding the 200...

How Digitization Has Created a Golden Age of Music, Movies, Books, and Television

By Joel Waldfogel

Journal of Economic Perspectives, Summer 2017

Digitization is disrupting a number of copyright-protected media industries, including books, music, radio, television, and movies. Once information is transformed into digital form, it can be copied and distributed at near-zero marginal costs. This chang...

Adolescence and the Path to Maturity in Global Retail

[Symposium: The Future of Retail]

By Bart J. Bronnenberg and Paul B. Ellickson

Journal of Economic Perspectives, Fall 2015

We argue that, over the past several decades, the adoption and diffusion of "modern retailing technology" represents a substantial advance in productivity, providing greater product variety, enhanced convenience, and lower prices. We first describe ...

Prefunding Medicare

By Martin Feldstein

American Economic Review, May 1999

Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model

By Rüdiger Bachmann, Ricardo J. Caballero, and Eduardo M. R. A. Engel

American Economic Journal: Macroeconomics, October 2013

The sensitivity of US aggregate investment to shocks is procyclical. The response upon impact increases by approximately 50 percent from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lum...

Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China

By Zhangkai Huang, Lixing Li, Guangrong Ma, and Lixin Colin Xu

American Economic Review, August 2017

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the ...

Interjurisdictional Spillovers, Decentralized Policymaking, and the Elasticity of Capital Supply

By Thomas Eichner and Marco Runkel

American Economic Review, August 2012

This paper points to the important role that the elasticity of aggregate capital supply with respect to the net rate of return to capital plays for the efficiency of policymaking in a decentralized economy with mobile capital and spillovers among jurisdic...

Gender Differences in Wealth at Retirement

By Urvi Neelakantan and Yunhee Chang

American Economic Review, May 2010

Can Portfolio Rebalancing Explain the Dynamics of Equity Returns, Equity Flows, and Exchange Rates?

By Harald Hau and Hélène Rey

American Economic Review, May 2004

Optimal Contracting with Endogenous Social Norms

By Paul Fischer and Steven Huddart

American Economic Review, September 2008

Research in sociology and ethics suggests that individuals adhere to social norms of behavior established by their peers. Within an agency framework, we model endogenous social norms by assuming that each agent’s cost of implementing an action depend...

Price Reaction to Information with Heterogeneous Beliefs and Wealth Effects: Underreaction, Momentum, and Reversal

By Marco Ottaviani and Peter Norman Sørensen

American Economic Review, January 2015

This paper analyzes how asset prices in a binary market react to information when traders have heterogeneous prior beliefs. We show that the competitive equilibrium price underreacts to information when there is a bound to the amount of money traders are ...

Stakes Matter in Ultimatum Games

By Steffen Andersen, Seda Ertaç, Uri Gneezy, Moshe Hoffman, and John A. List

American Economic Review, December 2011

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that eli...