Results for “becker”
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What I’ve been reading

1. Danielle Dreilinger, The Secret History of Home Economics: How Trailblazing Women Harnessed the Power of Home and Changed the Way We Live.  A pathbreaking book that unearths and presents part of the “hidden” history of economics, in this case as practiced largely by women, and often black women at that.  Think of it as the science and craft of Beckerian household production but with a managerial emphasis.  If you like books on paths not taken, this one is for you.

2. David M. Carballo, Collision of Worlds: A Deep History of the Fall of Aztec Mexico and the Forging of New Spain.  I never tire of books on this topic, but that should tell you something about the topic, right?  This one is written by an archaeologist, and you can think of it as unearthing the different layers of Aztec culture more effectively than most competitor books.

3. Avi Loeb, Extraterrestrial: The First Sign of Intelligent Life Beyond Earth.  The Oumuamua book, by the former chair of the Harvard astronomy department.  I am not able to judge the scientific claims about comets, light refraction, travel spin, and the like, but too much of the book felt like “argument from elimination” to me.  “Well it can’t be this, and can’t be that, and thus it is likely to be…”  That works well for phenomena we understand!  But it can lead you into dangerous traps when you apply it to mysteries.  I get nervous when I read sentences like “Shmuel and I went down a logical path.”  The book is well-written and plenty clear, and can be usefully supplemented with this podcast with the author.  In any case, I find alien origin unlikely, but still see a one percent chance as more than sufficient to justify this entire line of inquiry.

4. Bryn Rosenfeld, The Autocratic Middle Class: How State Dependency Reduces the Demand for Democracy.  When is it the middle class that contributes to the resilience of autocracy, rather than its breakdown?  A very interesting book, highly relevant to China among other places.

Where do economics journal editors live and work?

Over half the journals we consider have over two thirds of their editorial power located in the USA. A large majority of journals have a tiny editorial contribution from academics located outside of North America and Europe. Any one of the states of California, Massachusetts and Illinois has more power than the four continents of Asia, South America, Africa and Australasia combined.

That is from a new paper by Simon D. Angus, Kadir Atalay, Jonathan Newton, and David Ubilava.  Here is a useful visual showing the actual distribution.

Wednesday assorted links

1. Russian billionaire wants to buy cancelled Confederate statues.

2. “Nursing homes have new COVID-19 tests that are fast and cheap. So why won’t N.J. allow them to be used?

3. Where are the missing right-wing firms?  And Arnold.

4. The vaccine protocols.

5. The world forager elite.

6. An evidence-based return to work plan.

7. The nasal spray, which will be entering clinical trials.

8. On the Abraham Accords.

Underpoliced and Overprisoned, revisited

I’ve been writing for years that the United States is underpoliced and overprisoned. Time for a review:

NYTimes: “The United States today is the only country I know of that spends more on prisons than police,” said Lawrence W. Sherman, an American criminologist on the faculties of the University of Maryland and Cambridge University in Britain. “In England and Wales, the spending on police is twice as high as on corrections. In Australia it’s more than three times higher. In Japan it’s seven times higher. Only in the United States is it lower, and only in our recent history.”

…Dr. Ludwig and Philip J. Cook, a Duke University economist, calculate that nationwide, money diverted from prison to policing would buy at least four times as much reduction in crime. They suggest shrinking the prison population by a quarter and using the savings to hire another 100,000 police officers.

Here’s a graph from Daniel Bier on the ratio of police to prison spending comparing the United States to Europe. The US spends relatively less on police and more on prisons than any European country.

And here’s a graph from President Obama’s CEA report on incarceration and the criminal justice system. The graph shows that the United States employs many more prison guards per-capita than does the rest of the world. Given our prison population that isn’t surprising. What is surprising is that on a per-capita basis we employ 35% fewer police than the world average. That’s crazy.

polce v prison

Our focus on prisons over police may be crazy but it is consistent with what I called Gary Becker’s Greatest Mistake, the idea that an optimal punishment system combines a low probability of being punished with a harsh punishment if caught. That theory runs counter to what I have called the good parenting theory of punishment in which optimal punishments are quick, clear, and consistent and because of that, need not be harsh.

Increasing the number of police on the street, for example, would increase capture rates and deter crime and by doing so it would also reduce the prison population. Indeed, in a survey of crime and policing that Jon Klick and I wrote in 2010 we found that a cost-benefit analysis would justify doubling the number of police on the street. We based our calculation not only on our own research from Washington DC but also on the research of many other economists which together provide a remarkably consistent estimate that a 10% increase in policing would reduce crime by 3 to 5%. Using our estimates, as well as those of some more recent papers, the Council of Economic Advisers also estimates big benefits (somewhat larger than ours) from an increase in policing. Moreover, what the CEA makes clear is that a dollar spent on policing is more effective at reducing crime than a dollar spent on imprisoning.

Can we increase the number of police? Not today but in recent years large majorities of blacks, hispanics and whites have said that they support hiring more police. It is true that blacks are more skeptical than whites of police and have every reason to be. Some of the communities most in need of more police are also communities with some of the worst policing problems. Better policing and more policing, however, complement one another. Demilitarize the police, end the war drugs, regulate people less, restrain police unions and eliminate qualified immunity so that police brutality can be punished and the bad apples removed and the demand for police will soar.

As we reform and unbundle policing let us remember that lower crime has been one of the greatest benefits to African American men over the past 30 years.

…the most disadvantaged people have gained the most from the reduction in violent crime.

Though homicide is not a common cause of death for most of the United States population, for African-American men between the ages of 15 and 34 it is the leading cause, which means that any change in the homicide rate has a disproportionate impact on them. The sociologist Michael Friedson and I calculated what the life expectancy would be today for blacks and whites had the homicide rate never shifted from its level in 1991. We found that the national decline in the homicide rate since then has increased the life expectancy of black men by roughly nine months.

…The everyday lived experience of urban poverty has also been transformed. Analyzing rates of violent victimization over time, I found that the poorest Americans today are victimized at about the same rate as the richest Americans were at the start of the 1990s. That means that a poor, unemployed city resident walking the streets of an average city today has about the same chance of being robbed, beaten up, stabbed or shot as a well-off urbanite in 1993. Living in poverty used to mean living with the constant threat of violence. In most of the country, that is no longer true.

More police on the street is one cause, among many, of lower crime. Chicago just had a horrendous day with 18 innocent people murdered in mostly random drive-by shootings, in part because the police were occupied with protests and riots. As we reform, unbundle, and reimagine, let’s be careful not to reverse nearly thirty years of falling crime which has produced a tremendous increase in the standard of living of the poorest Americans.

We need better policing so that we can all be comfortable with more policing.

Communism still matters liberty still matters

Those who grew up in East Germany seem to have a harder time cottoning to the realities of capitalism:

We analyze the long-term effects of living under communism and its anticapitalist doctrine on households’ financial investment decisions and attitudes towards financial markets. Utilizing comprehensive German brokerage data and bank data, we show that, decades after Reunification, East Germans still invest significantly less in the stock market than West Germans. Consistent with communist friends-and-foes propaganda, East Germans are more likely to hold stocks of companies from communist countries (China, Russia, Vietnam) and of state-owned companies, and are unlikely to invest in American companies and the financial industry. Effects are stronger for individuals exposed to positive “emotional tagging,” e.g., those living in celebrated showcase cities. Effects reverse for individuals with negative experiences, e.g., environmental pollution, religious oppression, or lack of (Western) TV entertainment. Election years trigger further divergence of East and West Germans. We provide evidence of negative welfare consequences due to less diversified portfolios, higher-fee products, and lower risk-adjusted returns.

That is from a new NBER paper by Christine Laudenbach, Ulrike Malmendier, and Alexandra Niessen-Ruenzi.

But if you are looking for a contrary point of view, consider this new paper by Sascha O. Becker, Lukas Mergele, and Ludger Woessmann:

German separation in 1949 into a communist East and a capitalist West and their reunification in 1990 are commonly described as a natural experiment to study the enduring effects of communism. We show in three steps that the populations in East and West Germany were far from being randomly selected treatment and control groups. First, the later border is already visible in many socio-economic characteristics in pre-World War II data. Second, World War II and the subsequent occupying forces affected East and West differently. Third, a selective fifth of the population fled from East to West Germany before the building of the Wall in 1961. In light of our findings, we propose a more cautious interpretation of the extensive literature on the enduring effects of communist systems on economic outcomes, political preferences, cultural traits, and gender roles

That said, I still believe that communism really matters, and durably so, even if the longer history matters all the more so.  And now there is yet another paper on East Germany and political path dependence, by Luis R. Martinez, Jonas Jessen, and Guo Xu:

This paper studies costly political resistance in a non-democracy. When Nazi Germany surrendered in May 1945, 40% of the designated Soviet occupation zone was initially captured by the western Allied Expeditionary Force. This occupation was short-lived: Soviet forces took over after less than two months and installed an authoritarian regime in what became the German Democratic Republic (GDR). We exploit the idiosyncratic line of contact separating Allied and Soviet troops within the GDR to show that areas briefly under Allied occupation had higher incidence of protests during the only major episode of political unrest in the GDR before its demise in 1989 – the East German Uprising of 1953. These areas also exhibited lower regime support during the last free elections in 1946. We argue that even a “glimpse of freedom” can foster civilian opposition to dictatorship.

I take the core overall lesson to be that the eastern parts of Germany will experience significant problems for some time to come.

And speaking of communist persistence, why is it again that Eastern Europe is doing so well against Covid-19?  Belarus is an extreme case, with hardly any restrictions on activity, and about 14,000 cases and 89 deaths.  You might think that is a cover-up, but the region as a whole has been quite robust and thus it is unlikely to be a complete illusion.  And no, it doesn’t seem to be a BCG effect.

Does communism mean there is less of a culture of consumption and thus people find it easier to just stay at home voluntarily?  Or have all those weird, old paranoid communist pandemic ministries persisted and helped with the planning?  Or what?

Double credit on this one to both Kevin Lewis and Samir Varma, neither less excellent in his conjunction with the other.

Thursday assorted links

1. Why is the Eastern European response better? (WSJ)  And how are Swedish hospitals doing?

2. Further doubts on the LOA and Santa Clara serology stories, it now seems they really do not establish any particular results.

3. Why a vaccine will be tough, a depressing thread.  And are China’s early patients shedding coronavirus?

4. Ezra Klein on why we can’t build things.

5. Why two decades of pandemic planning failed.

6. New Joshua Gans book, Economics in the Age of Covid-19, MIT Press.

7. Hollis Robbins on why some saw this coming before others.

8. New Becker-Friedman Center podcast on Pandemic Economics.

9. Various forms of presenting state-level data.  What exactly is going on with Ohio?

10. Are we prepping for vaccine state capacity?

11. Department of Why Not?: “Former Labradoodle breeder tapped to lead U.S. pandemic task force.

12. The couple that meets on the German-Danish border during lockdown (NYT).

13. The Fed and saving cities (NYT).

Monday assorted links

1. 2007 Thomas A. Garett piece on the economics of the 1918 flu pandemic.  What else has been written on the macro side?

2. The economic impact of the 1918 flu on Brazil.

3. John Gray being John Gray (but “Second Life”??).

4. Economists studying the coronavirus (NYT).  and 2009 Becker-Posner short essay on the economics of pandemics.

5. Why Veneto did better than Lombardy (FT, less hospitalization is one reason).

6. Covid requests for everything: “Kaddish will be said by a group of people who currently have a mild case of Coronavirus and are together at the Prima Palace Hotel in Jerusalem (they are the only people who are legally able to Daven with a Minyan right now.”

7. Scott Adams, Covid-19 forecaster.

8. How Chinese apps handled Covid-19, excellent post.

9. The Covid culture that is middle-aged Pink Floyd fans from New Jersey.  You know you want to read this one.

10. MIT economics paper on ventilator rationing schemes, offers concrete proposals, not just BS.

11. “It’s not clear to me whether the divergent dynamics of epidemics will outweigh the homeostatic effect of human behavior.

12. Covid-19 has disrupted the progressives’ “organizing juggernaut.”

13. A South Korean exam with social distancing.

14. New NBER paper on Covid-19 and stock returns, and another.  And the curve is already flattening in NYC.

15. Japan finally declares state of emergency.  By the way, the mounds of evidence (testing data, not all public) are piling up against the “so many of us already have been exposed” theories.

16. Henry reviews the new William Gibson book.

Why is Physician Pay Being Cut In a Crisis?

One of the craziest unforeseen consequences of the crisis is that many people are delaying medical care but in places without a lot of coronavirus cases that’s creating a big hit on revenues.

ProPublica: Most ER providers in the U.S. work for staffing companies that have contracts with hospitals. Those staffing companies are losing revenue as hospitals postpone elective procedures and non-coronavirus patients avoid emergency rooms. Health insurers are processing claims more slowly as they adapt to a remote workforce.

“Despite the risks our providers are facing, and the great work being done by our teams, the economic challenges brought forth by COVID-19 have not spared our industry,” Steve Holtzclaw, the CEO of Alteon Health, one of the largest staffing companies, wrote in a memo to employees on Monday.

The memo announced that the company would be reducing hours for clinicians, cutting pay for administrative employees by 20%, and suspending 401(k) matches, bonuses and paid time off. Holtzclaw indicated that the measures were temporary but didn’t know how long they would last.

…Tenet Healthcare, a Dallas-based publicly traded company that runs 65 hospitals, said it would postpone 401(k) matches and tighten spending on contractors and vendors. Emergency room doctors at Boston’s Beth Israel Deaconess Medical Center have been told some of their accrued pay is being held back, according to The Boston Globe. More than 1,100 staffers at Atrius Health in Massachusetts are facing reduced paychecks or unpaid furloughs, and raises for medical staff at South Shore Health, another health system in Massachusetts, are being delayed. Several other hospitals have also announced furloughs.

The CARES bill has billions for hospitals but there seems to be a gap between funding sources that hasn’t been bridged. It’s peculiar that ER physicians often don’t work for the hospitals where they work.

Special hat tip: the excellent Kevin Lewis.

My spring 2020 Industrial Organization reading list and syllabus

It is long, do note that many topics are covered in the other half of the class, I tried to put this beneath the fold, but today WordPress software is not cooperating…

  1. Productivity

American Economic Review Symposium, May 2010, starts with “Why do Firms in Developing Countries Have Low Productivity?” runs pp.620-633.

Nicholas Bloom, Raffaella Sadun, and John Van Reenen, “Recent Advances in the Empirics of Organizational Economics,” http://cep.lse.ac.uk/pubs/download/dp0970.pdf.

Serguey Braguinsky, Lee G. Branstetter, and Andre Regateiro,The Incredible Shrinking Portuguese Firm,” http://papers.nber.org/papers/w17265#fromrss. 

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. “Management as a Technology?” National Bureau of Economic Research working paper 22327, June 2016.

David Lagakos, “Explaining Cross-Country Productivity Differences in Retail Trade,” Journal of Political Economy, April 2016, 124, 2, 1-49.

Dani Rodrik, “A Surprising Convergence Result,” http://rodrik.typepad.com/dani_rodriks_weblog/2011/06/a-surprising-convergence-result.html, and his paper here http://www.hks.harvard.edu/fs/drodrik/Research%20papers/The%20Future%20of%20Economic%20Convergence%20rev2.pdf

Tyler Cowen, The Complacent Class, chapter four, “Why Americans Stopped Creating,” 2017.

Ufuk Akcigit and Sina T. Ates, “Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory,” NBER working paper 25755, April 2019.

Syerson, Chad “What Determines Productivity?” Journal of Economic Literature, June 2011, XLIX, 2, 326-365. 

Michael Kremer, “The O-Ring Theory of Economic Development,” Quarterly Journal of Economics, August 1993, 108, 3, 551-575.

Song, Jae, David J. Price, Fatih Guvenen, and Nicholas Bloom. “Firming Up Inequality,” Federal Reserve Bank of Minneapolis working paper 750, April 2018.  Do not bother with the very long appendix.

Nicholas Bloom, Raffaella Sadun, and John Van Reenen, the slides for “Americans do I.T. Better: US Multinationals and the Productivity Miracle,” http://www.people.hbs.edu/rsadun/ADITB/ADIBslides.pdf, the paper is here http://www.stanford.edu/~nbloom/ADIB.pdf but I recommend focusing on the slides. 

Tyler Cowen and Ben Southwood, “Is the rate of scientific progress slowing down?”, https://docs.google.com/document/d/1cEBsj18Y4NnVx5Qdu43cKEHMaVBODTTyfHBa8GIRSec/edit 

Patrick Collison and Michael Nielsen, “Science is Getting Less Bang for its Buck,” Atlantic, November 16, 2018, https://www.theatlantic.com/science/archive/2018/11/diminishing-returns-science/575665/ 

Decker, Ryan and John Haltiwanger, Ron S. Jarmin, and Javier Miranda. “Where Has all the Skewness Gone?  The Decline in High-Growth (Young) Firms in the U.S. National Bureau of Economic Research working paper 21776, December 2015.

Furman, Jason and Peter Orszag. “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality.” October 16, 2015.

 

2. Competition and monopoly

Bresnahan, Timothy F. “Competition and Collusion in the American Automobile Industry: the 1955 Price War,” Journal of Industrial Economics, 1987, 35(4), 457-82.

Asker, John, “A Study of the Internal Organization of a Bidding Cartel,” American Economic Review, (June 2010), 724-762.

Tim Sablik and Nicholas Trachter, “Are Markets Becoming Less Competitive?” Economic Brief, Federal Reserve Bank of Richmond, June 2019.

Susanto Basu, “Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence,” Journal of Economic Perspectives, Summer 2019, 33, 3, 3-22.

Esteban Rossi-Hansberg, Pierre-Daniel Sarte, and Nicholas Trachter, “Diverging Trends in National and Local Concentration,” NBER Working Paper 25066, Septemmber 2018.

David Autor, David Dorn, Lawrence Katz, Christina Patterson, John Van Reenen, “The Fall of the Labor Share and the Rise of Superstar Firms,” https://economics.mit.edu/files/12979, make sure you get the Oct. 2019 version, not the earlier NBER paper.

Whinston, Michael D., “Antitrust Policy Toward Horizontal Mergers,” Handbook of Industrial Organization, vol.III, chapter 36, see also chapter 35 by John Sutton.

Jan De Loecker and Jan Eeckhout, “The Rise of Market Power and its Macroeconomic Implications,” http://www.janeeckhout.com/wp-content/uploads/RMP.pdf.  My comment on it is here: https://marginalrevolution.com/marginalrevolution/2017/08/rise-market-power.html and see also me on intangible capital, https://marginalrevolution.com/marginalrevolution/2017/09/intangible-investment-monopoly-profits.html.

Chang-Tai Hsieh and Esteban Rossi-Hansberg, “The Industrial Revolution in Services, September 20, 2019, on-line.

Klein, Benjamin and Leffler, Keith. “The Role of Market Forces in Assuring Contractual Performance.”  Journal of Political Economy 89 (1981): 615-641.

Breit, William. “Resale Price Maintenance: What do Economists Know and When Did They Know It?” Journal of Institutional and Theoretical Economics (1991).

Bogdan Genchev, and Julie Holland Mortimer. “Empirical Evidence on Conditional Pricing Practices.” NBER working paper 22313, June 2016.

Sproul, Michael.  “Antitrust and Prices.”  Journal of Political Economy (August 1993): 741-754.

McCutcheon, Barbara. “Do Meetings in Smoke-Filled Rooms Facilitate Collusion?”  Journal of Political Economy (April 1997): 336-350.

Crandall, Robert and Winston, Clifford, “Does Antitrust Improve Consumer Welfare?: Assessing the Evidence,”  Journal of Economic Perspectives (Fall 2003), 3-26, available at http://www.brookings.org/views/articles/2003crandallwinston.htm.

FTC, Bureau of Competition, website, http://www.ftc.gov/bc/index.shtml, an optional browse, perhaps read about some current cases and also read the merger guidelines.

Parente, Stephen L. and Prescott, Edward. “Monopoly Rights: A Barrier to Riches.”  American Economic Review 89, 5 (December 1999): 1216-1233.

Demsetz, Harold.  “Why Regulate Utilities?”  Journal of Law and Economics (April 1968): 347-359.

Armstrong, Mark and Sappington, David, “Recent Developments in the Theory of Regulation,” Handbook of Industrial Organization, chapter 27, also on-line.

Shleifer, Andrei. “State vs. Private Ownership.” Journal of Economic Perspectives (Fall 1998): 133-151.

Xavier Gabaix and David Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,”http://papers.ssrn.com/sol3/papers.cfm?abstract_id=728545.

Strictly optional, most of you shouldn’t read this: Ariel Pakes and dynamic computational approaches to modeling oligopoly:

http://www.economics.harvard.edu/faculty/pakes/files/Pakes-Fershtman-8-2010.pdf

http://www.economics.harvard.edu/faculty/pakes/files/handbookIO9.pdf

 

III. Economics of Tech

 

Farrell, Joseph and Klemperer, Paul, “Coordination and Lock-In: Competition with Switching Costs and Network Effects,” Handbook of Industrial Organization, vol.III, chapter 31, also on-line.

Weyl, E. Glenn. “A Price Theory of Multi-Sided Platforms.” American Economic Review, September 2010, 100, 4, 1642-1672.

Gompers, Paul and Lerner, Josh. “The Venture Capital Revolution.” Journal of Economic Perspectives (Spring 2001): 145-168.

Paul Graham, essays, http://www.paulgraham.com/articles.html, to browse as you find useful or not.

Acemoglu, Daron and Autor, David, “Skills, Tasks, and Technologies: Implications for Employment and Earnings,” http://econ-www.mit.edu/files/5607

Robert J. Gordon and Ian Dew-Becker, “Unresolved Issues in the Rise of American Inequality,” http://www.people.fas.harvard.edu/~idew/papers/BPEA_final_ineq.pdf

Browse through the first issue of Nakamoto.com on blockchain governance, read (or not) as you find useful.

 

IV. Organization and capital structure

 

Ronald Coase and Oliver Williamson on the firm, if you haven’t already read them, but limited doses should suffice.

Gibbons, Robert, “Four Formal(izable) Theories of the Firm,” on-line at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=596864.

Van den Steen, Eric, “Interpersonal Authority in a Theory of the Firm,” American Economic Review, 2010, 100:1, 466-490.

Lazear, Edward P. “Leadership: A Personnel Economics Approach,” NBER Working Paper 15918, 2010.

Oyer, Paul and Schaefer, Scott, “Personnel Economics: Hiring and Incentives,” NBER Working Paper 15977, 2010.

Tyler Cowen chapter on CEO pay in big Business, to be distributed.

Ben-David, Itzhak, and John R. Graham and Campbell R. Harvey, “Managerial Miscalibration,” NBER working paper 16215, July 2010.

Glenn Ellison, “Bounded rationality in Industrial Organization,” http://cemmap.ifs.org.uk/papers/vol2_chap5.pdf 

Miller, Merton, and commentators.  “The Modigliani-Miller Propositions After Thirty Years,” and comments, Journal of Economic Perspectives (Fall 1988): 99-158.

Myers, Stewart. “Capital Structure.” Journal of Economic Perspectives (Spring 2001): 81-102.

Hansemann, Henry.  “The Role of Non-Profit Enterprise.” Yale Law Journal (1980): 835-901.

Kotchen, Matthew J. and Moon, Jon Jungbien, “Corporate Social Responsibility for Irresponsibility,” NBER working paper 17254, July 2011.

Strictly optional but recommended for the serious: Ponder reading some books on competitive strategy, for MBA students.  Here is one list of recommendations: http://www.linkedin.com/answers/product-management/positioning/PRM_PST/20259-135826

Furman, Jason. ”Business Investment in the United States: Facts, Explanations, Puzzles, and Policy.” Remarks delivered at the Progressive Policy Institute, September 30, 2015, on-line at https://m.whitehouse.gov/sites/default/files/page/files/20150930_business_investment_in_the_united_states.pdf.

Scharfstein, David S. and Stein, Jeremy C.  “Herd Behavior and Investment.”  American Economic Review 80 (June 1990): 465-479.

Stein, Jeremy C. “Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior.” Quarterly Journal of Economics 104 (November 1989): 655-670.

 

V. Sectors: finance, health care, education, international trade, others 

Gorton, Gary B. “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1401882, published on-line in 2009. 

Erel, Isil, Nadault, Taylor D., and Stulz, Rene M., “Why Did U.S. Banks Invest in Highly-Rated Securitization Tranches?” NBER Working Paper 17269, August 2011. 

Healy, Kieran. “The Persistence of the Old Regime.” Crooked Timber blog, August 6, 2014.

More to be added here, depending on your interests.

The United States as a Developing Nation

In the decades between 1850 and 1950, the United States decisively transformed its place in the world economic order. In 1850, the US was primarily a supplier of slave-produced cotton to industrializing Europe. American economic growth thus remained embedded in established patterns of Atlantic commerce. One hundred years later, the same country had become the world’s undisputed industrial leader and hegemonic provider of capital. Emerging victorious from the Second World War, the US had displaced Britain as the power most prominently situated — even more so than its Cold War competitor — to impress its vision of a global political economy upon the world. If Britain’s industrial revolution in the late eighteenth century marked the beginning of a ‘Great Divergence’ (Pomeranz) of ‘the West’ from other regions around the world, American ascendance in the decades straddling the turn of the twentieth century marked a veritable ‘second great divergence’ (Beckert) that established the US as the world’s leading industrial and imperial power.

That is an excerpt from a new essay in Past and Present by Stefan Link and Noam Maggor.  (You’ll find the best summary of the actual thesis in the last few pages of the piece, not in the beginning.)  It is one of the more interesting economic history pieces I have read in some time.  The pointer is from Pseudoerasmus, who also has been doing some running commentary on the article in his afore-linked Twitter feed.

The Long-Term Effects of California’s 2004 Paid Family Leave Act on Women’s Careers

It is not obviously a winner policy, at least not from the point of view of boosting women’s labor market opportunities.  In fact it seems to harm them:

This paper uses IRS tax data to evaluate the short- and long-term effects of California’s 2004 Paid Family Leave Act (PFLA) on women’s careers. Our research design exploits the increased availability of paid leave for women giving birth in the third quarter of 2004 (just after PFLA was implemented). These mothers were 18 percentage points more likely to use paid leave but otherwise identical to multiple comparison groups in pre-birth demographic, marital, and work characteristics. We find little evidence that PFLA increased women’s employment, wage earnings, or attachment to employers. For new mothers, taking up PFLA reduced employment by 7 percent and lowered annual wages by 8 percent six to ten years after giving birth. Overall, PFLA tended to reduce the number of children born and, by decreasing mothers’ time at work, increase time spent with children.

That is from a new NBER working paper by Martha J. Bailey, Tanya S. Byker, Elena Patel, and Shanthi Ramnath.  And are you wondering why the number of children falls as a response?  Because the mother ends up staying home with them?  Or do mothers invest more in child quality, thereby lower quantity, as in a Becker model?  In any case a good question.

The real China shock came to Mexico

Mexican manufacturing job loss induced by competition with China increases cocaine trafficking and violence, particularly in municipalities with transnational criminal organizations. When it becomes more lucrative to traffic drugs because changes in local labor markets lower the opportunity cost of criminal employment, criminal organizations plausibly fight to gain control. The evidence supports a Becker-style model in which the elasticity between legitimate and criminal employment is particularly high where criminal organizations lower illicit job search costs, where the drug trade implies higher pecuniary returns to violent crime, and where unemployment disproportionately affects low-skilled men.

That is from a recent paper by Melissa Dell, Benjamin Feigenberg, Kensuke Teshima, forthcoming in AER: Insights.

Saturday assorted links

1. The public sector lobotomy.

2. No food desert in this gas station.

3. Maybe Canada does not want drug importation from the United States.

4. Marxism and Progress Studies.  A thread.

5. Forthcoming: “Towards an Economics of Natural Equals: A Documentary History of the Early Virginia School,” by David M. Levy and Sandra Peart.

6. Zeke Emanuel: Democrats should focus on health care affordability (NYT).

7. Regulatory reform in Ohio (WSJ).