Publications by Topic

Economics of Crime, and Law & Economics

In most countries, Parliamentary immunity protects lawmakers from civil or criminal charges while in office, and it shields them from prosecution for their political speech or political actions. This paper presents the first empirical analysis in the literature of the impact of Parliamentary immunity on the behavior and performance of politicians. Leveraging a Constitutional Amendment, the adoption of which lifted the immunity of 24 percent of the Members of the Turkish Parliament (MPs), we find that losing immunity from prosecution pacifies the MPs of the opposition parties, who become less diligent in the Parliament (drafting fewer pieces of legislation, initiating fewer investigation inquiries, delivering fewer and shorter speeches) and become less aggressive (interrupting other MPs less frequently). They also reduce their tendency to cast dissenting votes against the government. These MPs are less likely to get re-nominated by their parties in the next election, and they are less likely to get re-elected. The loss of immunity has no impact on government MPs. There is no evidence that the MPs, who retained immunity, have increased their Parliamentary efforts in reaction to their same-party colleagues losing immunity. We find that laws are passed faster after the Constitutional Amendment was adopted, possibly as a consequence of reduced opposition and deliberation. We find that an individual’s trust in the Parliament is lower or higher based on whether an MP from the individual’s province lost immunity and if that MP subscribes to the same or opposing ideology as the individual.

We present the first analysis of the effect of grade retention on adult criminal convictions, exploiting test cutoffs for ninth-grade promotion in Louisiana. Eighth-grade retention increases the likelihood of violent crime conviction by 1.05 percentage points (58.44%) and increases the number of violent crime convictions at first conviction. The effects are likely driven by declines in high school peer quality and reduced educational investments that result in lower noncognitive skill acquisition. Extrapolating effects away from the cutoff shows that our results are generalizable to a larger group of low-performing students and are evident for both property and drug crimes.

We filmed videos of criminal trials using three-dimensional virtual reality (VR) technology, prosecuted by actual prosecutors and defended by actual defense attorneys in a real courtroom. This is the first paper that utilizes VR technology in a non-computer-animated setting. We alter only the race of the defendants, holding all activity in the courtroom constant, to create arguably perfect counterfactuals. Law students and economics students made conviction and sentencing decisions in these trials that differed only in defendants’ race. White evaluators are harsher toward minority defendants in both conviction and sentencing. Minority evaluators are harsher toward minorities in conviction but more lenient in assigning prison terms. This pattern of behavior leads to significant bias against minorities at all stages conviction, prison sentence, and fine which is partly a reflection of the numerical majority of the evaluators being white. The same racial bias is observed in the decisions of practicing attorneys.

This paper contributes to the debate on the impact of juvenile crime punishment on high school completion and adult recidivism using
administrative data from a southern U.S. state. We exploit random assignment of cases to judges and use idiosyncratic judge stringency in imprisonment to estimate the causal effect of incarceration. We find that juvenile incarceration increases the propensity of being convicted for a drug offense in adulthood while it lowers the propensity to be convicted of a property crime. Juvenile incarceration has also a detrimental effect on high school completion for earlier cohorts, but it has no impact on later cohorts.

India started the implementation of a rural public works program in 2006, covering all districts of the country within 3 years. The program guarantees 100 days of employment per year at minimum wage to each rural household, with the goal of reducing joblessness and poverty. We exploit the design and implementation of this program to investigate its employment impact on various types of crimes to provide rare evidence on the employment–crime relationship in a developing country context. We find that employment generated by the program has a negative impact on both property crime and violent crime. The same conclusion is reached when we analyze the impact of the program using its staggered rollout structure as the source of identification in a difference-in-difference analysis. Although crime elasticities with respect to employment are small, this finding represents another dimension of the social benefit generated by the program.

We investigate the extent to which quality of judicial institutions has an impact on individuals’ propensity for criminal and dishonest behavior and on their views regarding the acceptability of dishonesty and law-breaking. We use micro data on residents of 25 European countries and employ alternative measures of judicial quality as perceived by the residents of these countries. As an instrument for judicial quality we employ the procedures with which prosecutors and judges are appointed to their posts in each country. As alternative instruments, we employ an index of de jure institutional quality as well as its components, which provide similar results. The findings show that an increase in the perception of the quality of judicial institutions, such as an improvement in judicial independence or the impartiality of the courts, has a deterrent effect on dishonest and criminal acts. A higher perceived quality of the judicial system also makes individuals less likely to find acceptable a variety of dishonest and illicit behaviors, suggesting that institutions help shape the beliefs of the society. We obtain the same results when we analyze the sample of immigrants, whose cultural attributes should be (more) related to their countries of origin, rather than their countries of residence, and thus should be arguably uncorrelated with the factors that can impact the instrument. We show that people’s beliefs in the importance of the family, in the fairness of others, and the importance of being rich are not impacted by judicial quality, suggesting that judicial quality is not a blanket representation of underlying cultural norms and beliefs in the society.

Employing the universe of juvenile court decisions in a US state between 1996 and 2012, we analyze the effects of emotional shocks associated with unexpected outcomes of football games played by a prominent college team in the state. We find that unexpected losses increase sentence lengths assigned by judges during the week following the game. Unexpected wins, or losses that were expected to be close contests ex ante have no impact. The effects of these emotional shocks are asymmetrically borne by black defendants. The impact of upset losses on sentence lengths is larger for defendants if their cases are handled by judges who received their bachelor’s degrees from the university with which the football team is affiliated.
Different falsification tests and a number of auxiliary analyses demonstrate the robustness of the findings. These results provide evidence for the impact of emotions in one domain on decisions in a completely unrelated domain among a uniformly highly educated group of individuals (judges) who make decisions after deliberation that involve high stakes (sentence lengths). They also point to the existence of a subtle and previously unnoticed capricious application of sentencing. (JEL D83, I23, J13, J15, K42, L83, Z21)

We investigate the existence of in-group bias (preferential treatment of one’s own group) in court decisions. Using the universe of juvenile-court cases in a US state between 1996 and 2012 and exploiting random assignment of juvenile defendants to judges, we find evidence for negative racial in-group bias in judicial decisions. All else being equal, black (white) juveniles who are randomly assigned to black (white) judges are more likely to be placed in custody, as opposed to being placed on probation, and they receive longer sentences. Although observed in experimental settings, this is the first empirical evidence of negative in-group bias based on a randomization design outside the lab. We provide explanations for this finding.

This paper investigates the impact of unskilled workers’ earnings on crime. We create indexes of skill-biased technological change which vary by state and year, or by state, year, and industry. These indexes are used as instruments for earnings in crime regressions. We analyze US state panels, and also run structural crime equations using micro panel data from NLSY97. Estimated elasticities are markedly larger than those obtained by previous studies. Considering technology being adopted at the regional level does not alter the results appreciably. We also find evidence for asymmetric impact of unskilled workers’ earnings on crime.

This paper investigates the relationship between alcohol consumption, deterrence, and crime for New York City. We use monthly time-series data from 1983 to 2001 to analyze the impacts of variations in both alcohol consumption and deterrence on seven “index” crimes. We tackle the endogeneity of arrests and the police force by exploiting the temporal independence of crime and deterrence in these high-frequency data, and we address the endogeneity of alcohol by using instrumental variables where alcohol sales are instrumented with city and state alcohol taxes and minimum drinking age. We find that alcohol consumption is positively related to assault, rape, and larceny crimes but not murder, robbery, burglary, or motor vehicle theft. We find strong deterrence for all crimes except assault and rape. Generally, deterrence effects are stronger than alcohol effects.

The United States Supreme Court ruled in May 2011 that prison overcrowding in California constituted cruel and unusual punishment. This decision revived a long-standing debate among scholars and policy makers as to whether courts should intervene to protect the well-being of the disfranchised, by forcing states to improve schools, prisons, and mental institutions. We use data that span 1951–2006 to examine the impact of federal court orders condemning prison crowding, and the impact of states’ releases from these court orders. We find that these interventions are associated with lower inmate mortality rates and fewer prisoners per capita. Correctional expenditures increase and welfare cash expenditures decrease while states are under court order, suggesting that the burden of improved prison conditions is borne by welfare recipients. Furthermore, states do not alter correctional spending and welfare cash payments spending after their release from court order, making the original changes in spending permanent. (JEL H7, I38, K4)

We report results from economic experiments of decisions that are best described as petty larceny, with high school and college students who can anonymously steal real money from each other. Our design allows exogenous variation in the rewards of crime, and the penalty and probability of detection. We find that the probability of stealing is increasing in the amount of money that can be stolen, and that it is decreasing in the probability of getting caught and in the penalty for getting caught. Furthermore, the impact of the certainty of getting caught is larger when the penalty is bigger, and the impact of the penalty is bigger when the probability of getting caught is larger.

Recent theoretical models underscore the potential asymmetric response of various behaviors, ranging from criminal activity to smoking. In this paper, we use state-level panel and individual-level panel data to document the previously unnoticed asymmetric response of crime to changes in the unemployment rate. The results have policy implications, and they have potentially widespread ramifications because similar asymmetries may also be prevalent in other domains, ranging from the relationship between income and health to peer quality and student outcomes.

Being very attractive reduces a young adult’s propensity for criminal activity and being unattractive increases it. Being very attractive is also positively associated with wages and with adult vocabulary test scores, which implies that beauty may have an impact on human capital formation. The results suggest that a labor market penalty provides a direct incentive for unattractive individuals toward criminal activity. The level of beauty in high school is associated with criminal propensity seven to eight years later, which seems to be due to the impact of beauty in high school on human capital formation, although this avenue seems to be effective for females only.

A sizable literature has emerged recently to examine factors that impact the level of corruption across countries. For example, Ades and Di Tella (1999) found that corruption is higher in countries where domestic firms are sheltered from foreign competition. Graeff and Mehlkop (2003) documented the relationship between a country’s economic freedom and its level of corruption. Brunetti and Weder (2003) found that higher freedom of the press is associated with less corruption. Van Rijckeghem and Weder (2001) showed that the higher the ratio of government wages to manufacturing wages, the lower is corruption in a country.

Using a nationally representative panel data set of U.S. high school students, this paper investigates the effect of gun availability at home on robbery, burglary, theft, and property damage for juveniles. Controlling for a very large number of personal and family characteristics and exploiting the time variation in criminal activity and gun availability, we show that gun availability at home is positively related to the propensity to commit crime for juveniles. It is unlikely that gun availability is merely a measure of the unobserved home environment because it does not influence other behaviors of juveniles such as drinking and fighting, being expelled from school, and having sex. No support is found for the hypothesis that gun availability decreases the propensity for being victimized.

This paper presents a dynamic model of criminal activity. Individuals are endowed with legal and criminal human capital. Potential incomes in legal and criminal sectors depend on the level of the relevant human capital, the rate of return and random shocks. Human capital can be enhanced by participating in both sectors. Legal human capital can also be enhanced through investment. Human capital is subject to depreciation. Individuals maximize expected discounted lifetime utility, which depends on consumption. The model allows analyses of the effects of recessions, imprisonment/rehabilitation scenarios, sanctions and returns to human capital. New insights, such as hysteresis in criminal behaviour, are obtained.

Using data from the U.S. National Longitudinal Study of Adolescent Health, this chapter investigates the impact of individual drug use on robbery, burglary, theft, and damaging property for juveniles. Using a variety of fixed-effects models that exploit variations over time and between siblings and twins, the results indicate that drug use has a significant impact on the propensity to commit crime. We find that the median impact of cocaine use on the propensity to commit various types of crimes is 11 percentage points. The impact of using inhalants or other drugs is an increase in the propensity to commit crime by 7 percentage points, respectively.

This article investigates the determinants of criminal activity among juveniles in the United States. It uses a survey of U.S. high school students conducted in 1995, which provides detailed information on offenses; personal, family, and neighbor-hood characteristics; as well as deterrence measures. The determinants of selling drugs and committing assault, robbery, burglary, and theft are analyzed separately for males and females. The results provide some evidence that juveniles respond to incentives and sanctions. Employment opportunities and policies designed to increase the probability of arrest may be effective tools for reducing juvenile crime.

This paper investigates the effect of economic conditions (carrots) and sanctions (sticks) on murder, assault, robbery, burglary, motor vehicle theft, grand larceny, and rape in New York City, using monthly time-series data spanning 1974–99. Carrots are measured by the unemployment rate and the real minimum wage; sticks are measured by the number of felony arrests, size of the police force, and number of New York City residents in prison. In addition, the paper tests the validity of the “broken windows” hypothesis. Consistent with its implementation by the New York Police Department, we use misdemeanor arrests as a measure of broken-windows policing. The broken-windows hypothesis has validity in the case of robbery, motor vehicle theft, and grand larceny. While both economic and deterrence variables are important in explaining the decline in crime, the contribution of deterrence measures is larger than those of economic variables.

Using data on the entire population of prisoners under a sentence of death in the United States between 1977 and 1997, this paper investigates the probability of transition from death row to various possible outcomes (execution, death by other causes, commutation, and overturned sentence or conviction) in any given year, as well as the probability of commutation when reaching the end of death row. The analyses control for personal characteristics and previous criminal record of death row inmates and a number of characteristics of the state where the inmate is in custody, including variables that measure the degree to which the political process enters into the final outcome in a death penalty case. The results show that who lives and who dies on death row depends on the race and gender of the inmate, the race and political affiliation of the governor, and whether the governor is a lame duck.

This paper merges a state-level panel data set that includes crime and deterrence measures and state characteristics with information on all death sentences handed out in the United States between 1977 and 1997. Because the exact month and year of each execution and removal from death row can be identified, they are matched with state-level criminal activity in the relevant time frame. Controlling for a variety of state characteristics, the paper investigates the impact of the execution rate, commutation and removal rates, homicide arrest rate, sentencing rate, imprisonment rate, and prison death rate on the rate of homicide. The results show that each additional execution decreases homicides by about five, and each additional commutation increases homicides by the same amount, while an additional removal from death row generates one additional murder. Executions, commutations, and removals have no impact on robberies, burglaries, assaults, or motor-vehicle thefts.

Since Gary S. Becker's (1968) groundbreaking work on the economics of crime, economists have expanded upon both the theory and the empirical analysis of crime (e.g., Isaac Ehrlich, 1973; M. K. Block and J. M. Weineke, 1975; Ehrlich, 1975; Ann Dryden Witte, 1980). According to the standard theoretical framework, optimizing individuals engage in criminal activities depending upon the expected payoffs of the criminal activity, the return to legal labormarket activity, tastes, and the costs of criminal activity, such as those associated with apprehension, conviction, and punishment. Excellent reviews of the literature appear in Daniel Nagin (1978), Sharon Long and Witte (1981), Richard Freeman (1983), and Theodore G. Chiricos (1987). While some studies reported evidence that increases in criminal-justice sanctions recluce criminal activity (Ehrlich, 1975; Witte, 1980; Stephen K.Layson, 1985; Jeffrey Grogger, 199 1; Steven D. kevitt, 1997), others found either a weak relationship, or none at all between the two (Samuel L.Myers, Jr., 1983; James Peery Cover and Paul D. Thistle, 1988; Christopher Cornwell and William N. Trumbull, 1994).

Interplay between Culture, Institutions and Economic Behavior

At least one of every five marriages is consanguineous (between couples who are second cousins or closer) in the Middle East and North Africa, and the rate is higher than 50 percent in some parts of the world. Consanguineous marriage generates serious health problems for the offspring and constitutes an economic problem with its associated medical costs and the impact on human capital. The prevalence of consanguineous marriage and the resultant kinship networks can shape various dimensions of the society ranging from institutional structure to attitudes such as trust, individualism, and nepotism. Using data from Turkey and leveraging an education reform which increased mandatory schooling by three years, we find that the reform made women less likely to find consanguineous marriage as an acceptable practice, and that the reform reduced women’s propensity to marry a first cousin or a blood relative. Exposure to the reform altered women’s preferences in favor of personal autonomy. Women who are exposed to the reform are more likely to have met their husbands outside of family networks, they are less likely to get forced into marriage against their consent, and they are less likely to agree that only a son can ensure the continuation of the family blood line. These results indicate that educational attainment can alter behaviors and attitudes which may be rooted in culture.

In China, those who have a dragon zodiac sign are believed to be destined for greatness. We find that if Chinese students are born in a dragon year, they are more likely to have a college degree and receive higher university entrance exam scores. Similarly, Chinese middle school dragon students have higher test scores. The “dragon effect” on test scores is eliminated when we account for parents’ expectations of their children. Dragon parents have higher expectations, and they invest more in their children. Although dragon children are not inherently different, the belief in the prophecy of success and the ensuing investment become self-fulfilling.

We investigate the extent to which quality of judicial institutions has an impact on individuals’ propensity for criminal and dishonest behavior and on their views regarding the acceptability of dishonesty and law-breaking. We use micro data on residents of 25 European countries and employ alternative measures of judicial quality as perceived by the residents of these countries. As an instrument for judicial quality we employ the procedures with which prosecutors and judges are appointed to their posts in each country. As alternative instruments, we employ an index of de jure institutional quality as well as its components, which provide similar results. The findings show that an increase in the perception of the quality of judicial institutions, such as an improvement in judicial independence or the impartiality of the courts, has a deterrent effect on dishonest and criminal acts. A higher perceived quality of the judicial system also makes individuals less likely to find acceptable a variety of dishonest and illicit behaviors, suggesting that institutions help shape the beliefs of the society. We obtain the same results when we analyze the sample of immigrants, whose cultural attributes should be (more) related to their countries of origin, rather than their countries of residence, and thus should be arguably uncorrelated with the factors that can impact the instrument. We show that people’s beliefs in the importance of the family, in the fairness of others, and the importance of being rich are not impacted by judicial quality, suggesting that judicial quality is not a blanket representation of underlying cultural norms and beliefs in the society.

This paper uses micro data from the European Social Survey to investigate the impact of culture of leisure and taxes on labor force participation and hours worked of second-generation immigrants who reside in 26 European countries. These individuals are born in Europe, and they have been exposed to institutional, legal and labor market structures of their countries, including the tax rates. Their fathers are first-generation immigrants who migrated from 47 different countries. I construct measures of “taste for leisure” in the country of origin of each immigrant father. I employ average and marginal tax rates for each country of residence, and control for individual characteristics, in addition to a large set of attributes of the country of residence and country of origin. I demonstrate that systematic selection of first-generation immigrants (the fathers of the individuals analyzed) to countries of destination based on the tax rates is unlikely. The results show that for women, both taxes and culture of leisure impact labor force participation and hours worked. For men, taxes influence labor supply both at the intensive and the extensive margins, but culture of leisure has no impact. The results are insensitive to the omission of immigrants from Muslim countries.

Using a unique survey of adults in Turkey, we find that an increase in educational attainment, due to an exogenous secular education reform, decreased women’s propensity to identify themselves as religious, lowered their tendency to wear a religious head cover (head scarf, turban, or burka) and increased the tendency for modernity. We also find that education has a negative impact on women’s propensity to vote for Islamic parties. The effect of female education on religiosity is driven by those who reside in urban areas. There is no statistically significant impact of education on male religiosity and tendency to vote for Islamic parties. Increased education does not influence the propensity to cast a vote in national elections for either men or women.

We use data from Sierra Leone where a substantial education program provided increased access to education for primary-school age children but did not benefit children who were older. We exploit the variation in access to the program generated by date of birth and the variation in resources between various districts of the country. We find that an increase in schooling, triggered by the program, has an impact on women’s attitudes toward matters that impact women’s health and on attitudes regarding violence against women. An increase in education reduces the number of desired children by women and increases their propensity to use modern contraception and to be tested for AIDS. While education makes women more intolerant of practices that conflict with their well-being, increased education has no impact on men’s attitudes toward women’s well-being. Thus, it is unclear whether the change in attitudes would translate into behavioral changes. Consistent with this finding, education (on this margin) has no impact on women’s propensity to get married, their age at first marriage or age at first birth.

We exploit information on compulsory schooling reforms in 14 European countries, implemented mostly in the 1960s and 70s, to identify the impact of education on religious adherence and religious practices. Using micro data from the European Social Survey, conducted in various years between 2002 and 2013, we find consistently negative effects of schooling on religiosity, social religious acts (attending religious services), as well as solitary religious acts (the frequency of praying). We also use data from European Values Survey to apply the same empirical design to analyze the impact of schooling on superstitious beliefs. We find that more education, due to increased mandatory years of schooling, reduces individuals’ propensity to believe in the power of lucky charms and the tendency to take into account horoscopes in daily life.

The fear and hatred of others who are different has economic consequences because such feelings are likely to translate into discrimination in labor, credit, housing, and other markets. The implications range from earnings inequality to intergenerational mobility. Using German data from 1996 and 2006, we analyze the determinants of racist and xenophobic feelings towards foreigners in general, and against specific groups such as Italians, Turks, and Asylum Seekers. We also analyze racist and anti-Semitic feelings towards German citizens who differ in ethnicity (Aussiedler from Eastern Europe) or in religion (German Jews). Individuals’ perceived (or actual) economic well-being is negatively related to the strength of these feelings. Education, and having contact with foreigners mitigate racist, antiSemitic and xenophobic feelings. People who live in states which had provided above-median support of the Nazi party in the 1928 elections have stronger antiSemitic feelings today. The results are not gender-driven. They are not an artifact of economic conditions triggering feelings about job priority for German males, and they are not fully driven by fears about foreigners taking away jobs. The results of the paper are consistent with the model of Glaeser (Q J Econ 120(1):45–86, 2005) on hate, and with that of Akerlof and Kranton (Q J Econ 105(3):715–753, 2000; J Econ Perspect 19(1):9–32, 2005) on identity in the utility function.

This paper investigates the extent of vengeful feelings and their determinants using data on more than 116,000 individuals from 66 countries. Country characteristics as well as personal attributes of the individuals influence vengeful feelings. The magnitude of vengeful feelings is greater for people in countries with low levels of education, low-income countries, and interrupted democracies. Personal education has an impact on vengeful feelings in lower-income countries. The results suggest that some puzzles about individual choice can best be explained by considering the interplay of personal and economic factors.

Using micro data on more than 130,000 individuals from 69 countries, we analyze the extent to which joblessness of the individuals and the prevailing unemployment rate in the country impact perceptions of the effectiveness of democracy. We find that personal joblessness experience translates into negative opinions about the effectiveness of democracy and it increases the desire for a rouge leader. Evidence from people who live in European countries suggests that being jobless for more than a year is the source of discontent. We also find that well educated and wealthier individuals are less likely to indicate that democracies are ineffective, regardless of joblessness. People’s beliefs about the effectiveness of democracy as a system of governance are also shaped by the unemployment rate in countries with low levels of democracy. The results suggest that periods of high unemployment and joblessness could hinder the development of democracy or threaten its existence.

Health Economics

Although the impact of education on health is important for public policy everywhere, the overwhelming majority of research identifying the health returns to education has focused on developed countries. We use data from multiple waves of nationally-representative Health and Tobacco Surveys in Turkey, and exploit an education reform that increased the mandatory years of schooling from 5 to 8 years in 1997. Using exposure to the reform as an instrument for completing at least eight years of schooling, we examine the impact of education on health indicators and smoking among young adults.

We find that extending schooling on this margin impacts men and women differently. Our results indicate that while a one-year of extra schooling increases the likelihood of being obese among males by 9.9 percentage points, the same increase in schooling improves the probability of women being in the healthy weight range by 15.5 percentage points. Consistent with this result, an extra year of education increases women’s propensity to self-evaluate their health as excellent by 4.3 percentage points.

Additional analyses reveal that education makes men (but not women) more likely to spend time on computers, using the internet, and to spend time on social media, suggesting that differential time allocation between men and women, triggered by enhanced education, maybe a mechanism behind the differential results between the sexes. Education has no impact on smoking for men or women regardless of the measure of smoking.

We use data from Sierra Leone where a substantial education program provided increased access to education for primary-school age children but did not benefit children who were older. We exploit the variation in access to the program generated by date of birth and the variation in resources between various districts of the country. We find that an increase in schooling, triggered by the program, has an impact on women’s attitudes toward matters that impact women’s health and on attitudes regarding violence against women.

An increase in education reduces the number of desired children by women and increases their propensity to use modern contraception and to be tested for AIDS. While education makes women more intolerant of practices that conflict with their well-being, increased education has no impact on men’s attitudes toward women’s well-being. Thus, it is unclear whether the change in attitudes would translate into behavioral changes. Consistent with this finding, education (on this margin) has no impact on women’s propensity to get married, their age at first marriage or age at first birth.

Naturally-occurring Yellow Dust outbreaks, which are produced by winds flowing to Korea from China and Mongolia, create air pollution. Although there is a seasonal pattern of this phenomenon, there exists substantial variation in its timing, strength, and location from year to year. To warn residents about air pollution in general and about these dust storms in particular.

Korean authorities issue different types of public alerts. Using birth certificate data on more than 1.5 million babies born between 2003 and 2011, we investigate the impact of air pollution, and the avoidance behavior triggered by pollution alerts on various birth outcomes. We show that air pollution rises during Yellow Dust outbreaks and that exposure to air pollution during pregnancy has a significant negative impact on birth weight, the gestation weeks of the baby, and the propensity of the baby being born low weight. Public alerts about air quality during pregnancy help mitigate the adverse effect of pollution on fetal health.

The results provide evidence for the effectiveness of pollution alert systems in promoting public health. They also underline the importance of taking into account individuals’ avoidance behavior when estimating the impact of air quality on birth outcomes. We show that when the preventive effect of public health warnings is not accounted for, the estimated relationship between air pollution and infant health is reduced by more than fifty percent. In summary, air pollution has a deteriorating impact on newborns’ health, and public alerts that warn individuals about increased air pollution help alleviate the negative impact.

This paper investigates the impact of mothers’ earnings on birth weight and gestational age of infants in the U.S. It also analyzes the impact of earnings on mothers’ consumption of prenatal medical care, and their propensity to smoke and drink during pregnancy. The paper uses census division-year-specific skill-biased technology shocks as an instrument for mothers’ earnings and employs a two-sample instrumental variables strategy.

About 14 million records of births between 1989 and 2004 are used from the Natality Detail files along with the CPS Annual Demographic Files from the same period. The results reveal that an increase in weekly earnings prompts an increase in prenatal care of low-skill mothers (those who have at most a high school degree) who are not likely to be on Medicaid, and that earnings have a small positive impact on birth weight and gestational age of the newborns of these mothers.

Specifically, if a mother’s earnings double, this produces a weight gain of the newborn by about 100 g and an increase in gestational age by 0.7 weeks. An increase in earnings does not influence the health of newborns of high-skill mothers (those with at least some college education). Variations in earnings have no impact on birth weight for mothers who are likely to be on Medicaid.

Using data from NLSY97, we analyze the impact of education on health behavior. Controlling for health knowledge does not influence the impact of education on health behavior, supporting the productive efficiency hypothesis. Accounting for cognitive ability does not significantly alter the relationship between education and health behavior.

Similarly, the impact of education on health behavior is the same between those with and without a learning disability, suggesting that cognition is not likely to be a significant factor in explaining the impact of education on health behavior.

The theory on the demand for health suggests that schooling causes health because schooling increases the efficiency of health production. Alternatively, the allocative efficiency hypothesis argues that schooling alters the input mix chosen to produce health. This suggests that the more educated have more knowledge about the health production function and they have more health knowledge. This paper uses data from the 1997 and 2002 waves of the NLSY97 to conduct an investigation of the allocative efficiency hypothesis by analyzing whether education improves health knowledge.

The survey design allows us to observe the increase in health knowledge of young adults after their level of schooling is increased by differential and plausibly exogenous amounts. Using nine different questions measuring health knowledge, we find weak evidence that an increase in education generates an improvement in health knowledge for those who ultimately attend college. For those with high school as the terminal degree, no relationship is found between education and health knowledge. These results imply that the allocative efficiency hypothesis may not be the primary reason for why schooling impacts health outcomes.

This paper investigates the causal effect of high school curriculum on various student outcomes including academic performance at university, happiness, physical and mental health, self-confidence, confidence in academic ability, and attitudes towards studying and learning. We exploit a curriculum reform in China, the implementation of which started in 2004, but rolled out in different years in different provinces. The new curriculum pivoted away from the old lock-step course structure where all students had to take the same courses and only those subjects that were covered in the national university entrance exam were considered important. In contrast, the new curriculum introduced a course credit system, changed textbooks, and provided flexibility in course selection. It also introduced elective courses and made such courses as arts and physical education mandatory, and a graduation requirement. Using survey data on university students and employing a difference-in-difference approach, we find that the students who were exposed to the new curriculum in high school have better academic performance in university. They are happier, and their physical and mental wellbeing is better. These students are more likely to have positive attitudes towards themselves and they are more involved in student clubs. They have more confidence in their academic ability, they have more positive attitudes towards studying, and they have more general self-confidence. These results indicate that the reform had a significant impact on students’ academic success and well-being, arguably by allowing them to focus on subject matters in which they are interested, and by reducing undue stress of a regimented curriculum.

Adolescents with mental health problems have much higher rates of smoking than those without such problems. Although a large body of evidence suggests that higher cigarette prices reduce smoking prevalence and the quantity smoked, little is known about the interaction between mental health or behavioral problems and tobacco consumption in the general population or among adolescents.

Using a national representative sample of adolescents from the National Longitudinal Study of Adolescent Health and employing validated psychiatric measures of emotional distress and behavioral problems, we estimate the price elasticity of cigarette demand for adolescents who have behavioral or emotional problems. The results indicate that these adolescents are at least as responsive to cigarette prices as adolescents with no emotional or behavioral problems.

The total value of life lost due to death because of waiting for an organ transplant was close to $5 billion in 2006 in the United States, and the excess demand for organs has been increasing over time. To shed light on the factors that impact the willingness to donate an organ, we analyze individual-level data from the United States and the European Union collected in 2001–2002. The rate of willingness to donate an organ is 38% among young adults in the US, and it is 42% in Europe. Interesting similarities emerge between the US and Europe regarding the impact of gender, political views and education on the willingness to donate an organ. In the US, Blacks, Hispanics and Catholics are less likely to donate.

In Europe, individuals who reveal that they are familiar with the rules and regulations governing the donation and transplantation of human organs are more likely to donate. In both data sets, individuals who had some encounter with the health care sector—either through a recent emergency room visit (in the US), or perhaps because of a long-standing illness (in the EU), are more likely to become organ donors. Mother’s education has a separate positive impact. These results point to some avenues through which organ donation propensities can be enhanced and organ shortages can be alleviated.

The link between health and productivity on the one hand, and the growing demand for health services and the shortage of funds to finance the health care system on the other hand pose a major challenge for developing countries. This paper uses a data set that consists of detailed characteristics of 6,407 urban households from People’s Republic of China to investigate the determinants of the demand for medical care.

A two-part model and a discrete factor model are used in the estimation. Income elasticity is around 0.3, indicating medical care is a necessity. Medical care demand is price inelastic, and price elasticity is larger in absolute value for poorer households. This suggests that while total revenue from provision of health care can be increased by raising the price of care in the inelastic segment of the demand curve, this would increase the inequality in access to medical care.

As the use of illicit drugs persists as a major social problem facing urban America, the clinical evidence linking prenatal exposure to illicit drugs, in particular cocaine, and adverse birth outcomes has been mounting rapidly [8; 21; 38]. Newborns exposed prenatally to cocaine appear to be more likely to suffer intrauterine growth retardation, low birth weight and preterm delivery than infants unexposed. All three outcomes are strongly linked to infant mortality and excess morbidity [16; 22].

Furthermore, low birth weight infants who survive are more likely to experience serious developmental, health and learning problems later in life. The marginal costs of treating exposed as compared with unexposed infants has been estimated at between $9,313 and $13,225 in 1993 dollars for the initial hospitalization only [1, 29].

The relationship between unemployment and health continues to absorb social scientists. The primary reason is the potential significance of an association. If a substantial deterioration in aggregate health is related to economic downturns, then the cost of a recession may be much greater than the foregone output. Another reason is that the evidence of a causal relationship between unemployment and health has been strongly contested, which has stimulated the search for better data and more rigorous tests.

Of all the predictors of neonatal and infant morbidity and mortality, none is more powerful than birthweight. Reflecting characteristics of the newborn’s genetic endowment, gestational age, and intrauterine environment, birthweight explains more of the variation in health status over the first 12 months of life than any other single factor.

We use a pooled time-series cross-section of live births in New York City between 1980 and 1989 to investigate the dramatic rise in low birthweight, especially among Blacks, that occurred in the mid 1980s. After controlling for other risk factors, we estimate that the number of excess low birthweight births attributable to illicit substance abuse over this period ranged from approximately 1,482 to 3,359. The increase represents between 3.2 and 7.3”$ of all LBW over the period resulting in excess neonatal admission costs of between $18 and $41 million.

This paper uses vector-autoregressions to gain insights into the dynamic relationships between age at marriage, divorce, fertility, and labor force participation of women. The use of vector-autoregressions let us circumvent the statistical problems faced by previous studies. Age at marriage, fertility, the divorce rate, and the labor force participation rate are permitted to depend on the past values of each other. The impulse response simulations allowed us to observe the short-run reactions of the variables to the unexpected perturbations in the system. Contrary to the evidence presented by cross-sectional analyses, no significant influence of young marriages on the divorce rate is found: A positive shock to the proportion of young marriages did not generate an increase in the divorce rate. On the other hand, young marriages and the divorce rate simultaneously increased or decreased when there were increases in the fertility or the labor force participation rates. This outcome implied that the inverse association between age at marriage and divorce is not a causal relationship; rather divorces and marriages co-vary due to changes in labor force participation and fertility. The results hold when we use the unemployment rate for women as the labor market variable.

In this paper, we estimate the impact on adolescent childbearing of the liberalization of the New York State abortion law in 1970. Using Box-Jenkins time series techniques to analyze monthly data on the number of births to White and Black adolescents from January 1963 to December 1987, we found that the level of births to Black adolescents living in New York City fell 18.7 percent, approximately 142 fewer births per month, after the law became effective; the level of White births fell 14.1 percent, approximately 111 fewer births per month. Projections based on the fitted model suggest that a ban on legalized abortion today would have a major impact on adolescent childbearing in New York City as well as other parts of the country, although the magnitude of the change would vary according to local conditions. (Am J Public Health 1990; 80:273-278.)

Using recent developments in time-series econometrics, this paper investigates the behavior of fertility over the business cycle. The sex-specific unemployment rates, the divorce rate and the fertility rate are shown to be governed by stochastic trends. Furthermore, fertility is determined to be cointegrated with the divorce rate.

In the bivariate vector-autoregressions between fertility and unemployment, an increase in the female or male unemployment rates generate a decrease in fertility, which is consistent with the findings of previous time-series research concerning the procyclical behavior of fertility. However, when the models include the divorce rate and the proportion of young marriages as additional regressors, shocks to the unemployment rates bring about an increase in fertility, implying the countercyclicality of fertility. This outcome holds for the time period 1948-1982, as well as 1972-1982.

The Market for Child Care

This paper tests adverse selection in the market for child care. A unique data set containing quality measures of various characteristics of child care provided by 746 rooms in 400 centers, as well as the evaluation of the same attributes by 3,490 affiliated consumers (parents) in the U.S., is employed. Comparisons of consumer evaluations of quality to actual quality show that after adjusting for scale effects, parents are weakly rational. The hypothesis of strong rationality is rejected, indicating that parents do not utilize all available information in forming their assessment of quality. The results demonstrate the existence of information asymmetry and adverse selection in the market, which provide an explanation for low average quality in the U.S. child care market.

This paper uses a rich employer–employee matched data set to investigate the existence and the extent of nonprofit and part-time wage and compensation differentials in child care. The empirical strategy adjusts for workers’ self-selection into the for-profit or the nonprofit sector and into full-time or part-time work, as well as for unobserved worker heterogeneity, using a discrete factor model. We find differences between the regimes (full-time for-profit, full-time nonprofit, part-time for-profit, part-time nonprofit) in the manner in which human capital characteristics of the workers are rewarded. There is substantial variation in wages as a function of employee characteristics, and there is variation in wages within sectors. The results indicate that part-time jobs are good jobs in center-based child care, and there exist nonprofit wage and compensation premia, which support the property-rights hypothesis.

We use data from a sample of child care centers to estimate the relationships between cost and child care quality, and between revenue and quality. We use a measure of child care quality, designed by developmental psychologists, that is positively associated with child development. Taking the estimated cost-quality and revenue-quality relationships as given, we estimate the objective functions of firms and compute the quality supply function. The results indicate that the supply of quality is moderately elastic with respect to price and the wages of child care center workers. Implications of the results for child care policy are discussed.

Using a new data set, this paper finds that there is no quality difference between nonprofit and for-profit day care centers, and with the exception of one segment of the nonprofit sector, there is no efficiency difference. The cost of increasing the quality from mediocre to good is between 12 and 16 cents per child-hour.
Centers have inelastic demand for workers. Child care workers with 13 to 15 years of education and workers with more than 16 years of education are substitutes; workers with more than 16 years of education are complements to workers with 12 or fewer years of education. There are economies of scale and scope in production.

In 1990, there were 27.6 million U.S. households with children under age 13, and in these households there were 47.7 million children. The primary child-care arrangement for 6.2 million of these children was center-based day care. Although most nonworking mothers care for their children themselves, nearly one out of every three nonworking mothers relies on center-based programs for 3-4-year-old children (Sandra Hofferth et al., 1991). The U.S. Department of Commerce reported that families with employed women spent an estimated $21 billion on child care in 1988, and women in poverty pay approximately 21 percent of their family income for child care (U.S. Department of Commerce, 1992).

Miscellaneous Topics

Before July 2009, salaries of the Members of the European Parliament (MEPs) were paid by their home country, and there were substantial salary differences between MEPs representing different countries. Starting in July 2009, salaries are pegged to 38.5% of a European Court judge’s salary, paid by the European Union. This created an exogenous change in salaries, the magnitude and direction of which varied substantially. Using information on each MEP between 2004 and 2011, we show that an increase in salaries decreases attendance at plenary sessions and reduces the number of questions asked but it has no impact on other job-related activities.

Although there is a sizeable literature on the effect of private school attendance on academic student outcomes, the number of studies that investigate the impact of school sector on nonacademic outcomes is limited. Using a rich data set, we analyze the impact of Catholic school attendance on the likelihood that teenagers use or sell drugs, commit property crime, have sex, join gangs, attempt suicide, or run away from home. We employ propensity score matching methods to control for the endogeneity of school choice. Catholic school attendance reduces the propensity to use cocaine and to have sex for female students. However, it increases the propensity to use and sell drugs for male students.

This is the first study that decomposes unemployment into its structural and cyclical components and investigates their impact on income distribution, controlling for the influence of inflation. Increases in structural unemployment have a substantial aggravating impact on income inequality. Inflation has a progressive impact, which is due to the unexpected component. The study demonstrates that previous work failed to take into account the stochastic trend behavior of the variables. Consequently, specifications used by previous research cannot predict the behavior of income shares after 1983, whereas the specification used by this paper generates accurate forecasts. The results also indicate that a sustained GNP growth is not necessarily associated with an improvement in income inequality, because sustained GNP growth can coexist with increased structural unemployment.

This paper examines discrimination in mortgage lending in the United States over three decades in 1960 to 1990. We focus on whether deregulation, increased Federal oversight and enhanced competition reduce discrimination as Becker's theory suggests (Becker, 1971). We find that discrimination is evident over the three decades taken together, is prevalent from 1960 to 1980, but is absent in the data from 1980 to 1990. This finding strongly supports Becker's hypothesis. Preferences for discrimination appear to be offset by the higher costs of engaging in them after 1980.

A number of cross-sectional studies have examined the impact of labor market conditions on the decision to drop out of school. However, results from these studies have been mixed. In this paper the authors use panel data estimation methods in order to avoid potential omitted variable problems. The results suggest a negative relationship between the unemployment rate and the proportion of a district's high school students who drop out in a given year. Educational inputs such as teacher experience and education do not seem to be reliable predictors of district dropout rates. The results underline the importance of controlling for unobservable district characteristics. [JEL I21] ©1997 Elsevier Science Ltd. All rights reserved

Using a new panel data set, this paper employs a random effects model to investigate the determinants of General Fund Revenue forecast errors of state Legislative Fiscal offices. Employing exclusively judgmental methods increases the forecast error. The use of cross-sectional data, in addition to time-series, increases the accuracy. The forecast error is not influenced by the existence of a dominant political party or the existence of another official forecast. If the forecasts are obtained less frequently than monthly or bi-monthly, forecast errors become smaller. Grants from federal government have a small worsening effect. If the predictions of the national (state) economic trends that are used in forecasting are obtained from the state government, forecasts become less (more) accurate. The forecasts are free of systematic under or over-prediction, but they can be improved by using available information more efficiently.

To avoid the controversy surrounding the Dickey—Fuller tests for unit roots, this paper estimates a flexible trend model for U.S. GNP. Four different data sets that span the years 1869—1991 are used. For all sub-periods, and for all series there is strong evidence of a stochastic trend.

with William H. Kaempfer, Anton D. Lowenberg and Lynne Bennett; in Justice Without Violence, Paul Wehr, Heidi Burgess and Guy Burgess (eds.) Lynne Rienner Publishers, Inc.; Boulder, Colorado; 1994, pp. 191-215.

The standard Keynesian macro model attributes business cycles to demand disturbances and predicts that real wages are countercyclical given a stable labour demand curve in the short-run, under the assumption of sticky nominal wages. Early empirical tests, however, did not support the Keynesian prediction of countercyclical real wage behaviour. Dunlop (1938) and Tarshis (1939) provided evidence of procyclical real wages, and Bodkin (1969) found that the data cannot reject the hypothesis that real wages and employment are statistically independent over the business cycle.

The behaviour of real wages over the business cycle has received increasing attention in recent years. The cyclicality of real wages constitutes an important aspect of recent models of the business cycle. However, empirical studies undertaken to determine whether real wages are procyclical or countercyclical have reported conflicting findings. In this paper we use vector-autoregressions to analyse the cyclicality of real wages. We find that the source of the disturbance plays a decisive role in the cyclical behaviour of real wages. In particular, we demonstrate that a suppy shock generates procyclical real wages, whereas a demand shock yields countercyclicality.