education poverty and terrorism is there a causal connection the paper investigates whether there is a connection between poverty or low education and terrorism we review evidence on hate crimes which are closely related to terrorism the occurrence of hate crimes is largely independent of economic conditions we analyze data on support for attacks against israeli targets from public opinion polls conducted in the west bank and gaza strip support for violent attacks does not decrease among those with higher education and higher living standards the core contribution of the paper is a statistical analysis of the determinants of participation in hezbollah militant activities having a living standard above the poverty line or a secondary or higher education is positively associated with participation in hezbollah we also find that israeli jewish settlers who attacked palestinians in the west bank in the early 1980s were overwhelmingly from high paying occupations although our results are tentative and exploratory they suggest that neither poverty nor education has a direct causal impact on terrorism

approval of social security disability appeals analysis of judges decisions this article is an empirical analysis of decisions by judges regarding requests by individuals for disability benefits applicants for disability benefits who are twice denied through the normal process can appeal to one of the social security administration s administrative law judges who hold appointed positions the data for this study are taken from decisions made by approximately 1000 judges for cases heard from 2010 through 2012 using each judge as a unit of observation the data reveal the number of cases heard and the number of approvals granted we augmented the data with additional information on the presiding judge and with data from the state in which the court resides the purpose of the study is to determine whether a simple model can explain first the volume of decisions rendered at the judge level and second the proportion of approvals results indicate that the volume of decisions can be explained in part by the judge s recent record of leniency evidence also supports the hypothes

inventory dynamics and business cycles what has changed to what extent can information technology led improvements in inventory management account for the apparent moderation of economic fluctuations in the united states since the mid 1980s we argue that changes in inventory dynamics played a reinforcing rather than a leading role in the reduction of output volatility since the mid 1980s inventory dynamics have changed in a manner consistent with a faster resolution of inventory imbalances however these changes appear to be a consequence of changes in the response of industry level sales and aggregate economic activity to monetary policy shocks our results suggest that it is the interaction between the changes in inventory behavior at the industry level and the macroeconomic environment where the latter likely includes changes in the conduct of monetary policy and the responses of the economy to policy disturbances rather than any single factor that has contributed importantly to the observed decline in economic volatility

the less volatile u s economy a bayesian investigation of timing breadth and potential explanations using a bayesian model comparison strategy we search for a volatility reduction in u s real gross domestic product gdp growth within the postwar sample we find that aggregate real gdp growth has been less volatile since the early 1980s and that this volatility reduction is concentrated in the cyclical component of real gdp sales and production growth in many of the components of real gdp display similar reductions in volatility suggesting the aggregate volatility reduction does not have a narrow source we also document structural breaks in inflation dynamics that occurred over a similar time frame as the gdp volatility reduction

international political system supreme values and terrorism terrorism is becoming a weapon of ever increasing importance to reach certain ends given the potential of mass destruction available to leading international powers and the rise of one superpower dominating the international system in most cases terrorism is driven by an ideology comprising a world view with supreme values since these values are absolutely true to believers they have to be preferred to everything so that terrorists are required to sacrifice not only the lives of others but also their own it is therefore difficult to prevent this kind of terrorism but the threatening damages can be mitigated by economic technological and political decentralization in the long run it is even more important to win the spiritual fight this can be done by starting from the fact that believers in ideologies whose supreme values are conflicting can only live together peacefully if they accept that each individual has the right to choose his or her own belief a corresponding education has to prevent fundamentalist instruction and to inculcate the basic rules of a free society

interpreting the great moderation changes in the volatility of economic activity at the macro and micro levels most advanced economies have experienced a striking decline in the volatility of aggregate economic activity since the early 1980s volatility reductions are evident for output and employment at the aggregate level and across most industrial sectors and expenditure categories inflation and inflation volatility have also declined dramatically previous studies offer several potential explanations for this great moderation we review evidence on the great moderation in conjunction with evidence about volatility trends at the micro level we combine the two types of evidence to develop a tentative story for important components of the aggregate volatility decline and its consequences the key ingredients are declines in firm level volatility and aggregate volatility most dramatically in the durable goods sector surprisingly this has occurred without a decline in household consumption volatility and individual earnings uncertainty our explanation for the aggregate volatility decline stresses improved supply chain management particularly in the durable goods sector and less important a shift in production and employment from goods to services we provide evidence that better inventory control made a substantial contribution to declines in firm level and aggregate volatility consistent with this view if we look past the turbulent 1970s and early 1980s much of the moderation reflects a decline in high frequency short term fluctuations while these developments represent efficiency gains they do not imply nor is there evidence for a reduction in economic uncertainty faced by individuals and households

the labor market four years into the crisis assessing structural explanations four years after the beginning of the great recession the labor market remains historically weak many observers have concluded that structural impediments to recovery bear some of the blame the author reviews such structural explanations but after analyzing u s data on unemployment and productivity he finds there is little evidence supporting these hypotheses he finds that the bulk of the evidence is more consistent with the hypothesis that continued poor performance is primarily attributable to shortfalls in the aggregate demand for labor

historical monetary policy analysis and the taylor rule this study examines the usefulness of the taylor rule framework as an organizing device for describing the policy debate and evolution of monetary policy in the united states monetary policy during the 1920s and since the 1951 treasury federal reserve accord can be broadly interpreted in terms of this framework with rather surprising consistency in broad terms during these periods policy has been generally formulated in a forward looking manner with price stability and economic stability serving as implicit or explicit guides as early as the 1920s measures of real economic activity relative to normal or potential supply appear to have influenced policy analysis and deliberations confidence in such measures as guides for activist monetary policy proved counterproductive at times resulting in excessive activism such as during the great inflation and at the brink of the great depression policy during the past two decades is broadly consistent with natural growth targeting variants of the taylor rule that exhibit less activism

how financial incentives induce disability insurance recipients to return to work using a local randomized experiment that arises from a sharp discontinuity in disability insurance di policy in norway we provide transparent and credible identification of how financial incentives induce di recipients to return to work we find that many di recipients have considerable capacity to work that can be effectively induced by providing financial work incentives we further show that providing work incentives to di recipients may both increase their disposable income and reduce program costs our findings also suggest that targeted policies may be the most effective in encouraging di recipients to return to work

geopolitics and international organizations an empirical study on imf facilities there is growing awareness that the distribution of imf facilities may not be influenced only by the economic needs of borrowers this paper focuses on the fact that the imf may favour geopolitically important countries in the distribution of imf loans differentiating between concessional and non concessional facilities to carry out the empirical analysis we construct a new database that compiles a wide array of proxies for geopolitical importance for 107 imf countries over 1990 2003 focusing on emerging and developing economies we use a factor analysis to capture the common underlying characteristic of countries geopolitical importance as well as a potential analysis since we also want to account for the geographical situation of the loan recipients while controlling for economic and political determinants our results show that geopolitical factors influence notably lending decisions when loans are non concessional whereas results are less robust and in opposite direction for concessional loans this study provides empirical support to the view that geopolitical considerations are an important factor in shaping imf lending decisions potentially affecting the institution s effectiveness and credibility

family welfare cultures strong intergenerational correlations in various types of welfare use have fuelled a long standing debate over whether welfare receipt in one generation causes welfare participation in the next generation some claim a causal relationship in welfare receipt across generations has created a culture in which welfare use reinforces itself through the family others argue the determinants of poverty or poor health are correlated across generations so that children s welfare participation is associated with but not caused by parental welfare receipt however there is little empirical evidence to sort out these claims in this paper we investigate the existence and importance of family welfare cultures in the context of norway s disability insurance di system to overcome the challenge of correlated unobservables across generations we take advantage of random assignment of judges to di applicants whose cases are initially denied some appeal judges are systematically more lenient which leads to random variation in the probability a parent will be allowed di using this exogenous variation we find strong evidence that welfare receipt in one generation causes welfare participation in the next generation when a parent is allowed di their adult child s participation over the next five years increases by 6 percentage points this effect grows over time rising to 12 percentage points after ten years while these findings are specific to our setting they serve to highlight that welfare reforms can have long lasting effects on program participation since any original effect on the current generation could be reinforced by changing the participation behavior of their children as well the detailed nature of our data allows us to compare the intergenerational transmission with spillover effects in other networks and to explore mechanisms our findings point to a special link between parents and their children with little impact due to close neighbors di participation we find suggestive evidence that what may change as a result of a parent being allowed di is their children s beliefs about the efficacy of trying to get on to the di program or their attitudes about di participation and its stigma

monetary policy shifts and the term structure we estimate the effect of shifts in monetary policy using the term structure of interest rates in our no arbitrage model the short rate follows a version of the taylor s 1993 discretion versus policy rules in practice carnegie rochester conference series on public policy 39 195 214 rule where the coefficients on the output gap and inflation vary over time the monetary policy loading on the output gap has averaged around 0 4 and has not changed very much over time the overall response of the yield curve to output gap components is relatively small in contrast the inflation loading has changed substantially over the last 50 years and ranges from close to zero in 2003 to a high of 2 4 in 1983 long term bonds are sensitive to inflation policy shifts with increases in inflation loadings leading to higher short rates and widening yield spreads

earnings inequality and mobility in the united states evidence from social security data since 1937 this paper uses social security administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the united states annual earnings inequality is u shaped decreasing sharply up to 1953 and increasing steadily afterward short term earnings mobility measures are stable over the full period except for a temporary surge during world war ii virtually all of the increase in the variance in annual log earnings since 1970 is due to increase in the variance of permanent earnings as opposed to transitory earnings mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s long term mobility among all workers has increased since the 1950s but has slightly declined among men the decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long term mobility among all workers

monetary policy trend inflation and the great moderation an alternative interpretation with positive trend inflation the taylor principle does not guarantee a determinate equilibrium we provide new theoretical results on determinacy in new keynesian models with positive trend inflation and new empirical findings on the federal reserve s reaction function before and after the volcker disinflation to find that i while the fed likely satisfied the taylor principle before volcker the us economy was still subject to self fulfilling fluctuations in the 1970s ii the us economy switched to determinacy during the volcker disinflation and iii the switch reflected changes in the fed s response to macroeconomic variables and the decline in trend inflation jel e12 e23 e31 e32 e52

earnings disposable income and consumption of allowed and rejected disability insurance applicants ticipation rate has increased from less than 1 percent to over 5 percent of the adult population in many european countries the increases are even more striking from 1 percent to 7 percent in the united kingdom and from 2 percent to almost 10 percent in norway two key questions in thinking about the size and growth of the di program are to what extent it discourages work and how valuable the insur ance is to individuals and families these questions motivate our paper we begin by describing the earnings disposable income and consumption of awarded and rejected di applicants before and after the disability onset and the allowance decision next we discuss alternative interpretations of these descriptive results either through the lens of the approach taken in bound

inflation dynamics when inflation is near zero this paper discusses the likely evolution of u s inflation in the near and medium term on the basis of 1 past u s experience with very low levels of inflation 2 the most recent japanese experience with deflation and 3 recent u s micro evidence on downward nominal wage rigidity our findings question the view that stable long run inflation expectations and downward nominal wage rigidity will provide sufficient support to prices such that deflation can be avoided we show that an inflation model fitted on japanese data over the past 20 years which accounts for both short and long run inflation expectations matches the recent u s inflation experience quite well while the model indicates that u s inflation might be subject to a lower bound it does not rule out a prolonged period of mild deflation going forward in addition our micro evidence on wages suggests no obvious downward rigidity in the firm s wage costs downward rigidity in individual wages notwithstanding as a consequence downward nominal wage rigidity may provide little offset to deflationary pressures in the current u s situation despite some circumstantial evidence that this channel might have been at work in the past

the impact of medicaid on labor market activity and program participation evidence from the oregon health insurance experiment united states dept of health and human services assistant secretary for planning and evaluation

temporary disability and economic incentives we investigate the impacts of economic incentives on the duration and outcome of temporary disability insurance tdi spells the analysis is based on a large quasi experiment taking place in norway involving a complete overhaul of the tdi benefit system our findings show that the labour supply of tdi claimants does respond to both the benefit level and the level of local labour demand the estimated elasticity of the transition rate to employment with respect to the benefit level is 0 33 we also find that the tdi benefit level significantly affects the transition rate to alternative social insurance programmes

earnings losses of displaced workers revisited recent literature reviews conclude that job displacement results in sustained earnings losses bruce c fallick 1996 lori g kletzer 1998 and that estimates of the size of those reductions vary with the type of data used in the analysis the industry within which displacement occurs and business cycle conditions the largest estimated losses were obtained using administrative data from pennsylvania during the 1970s and 1980s louis s jacobson robert j lalonde and daniel g sullivan 1993a the data covered a period of high unemployment in a heavily indus trialized state characterized by disproportionate job losses in manufacturing thus the ability to generalize those results to more favorable economic times and states with a greater reliance on service sector employment has been questioned to address these issues administrative data are used to similarly examine the impact of job displacement on earnings losses of workers in connecticut from 1993 to 2004 the work of jacobson lalonde and sullivan jls also provided important methodologi cal advancement by adapting analytical techniques developed for program evaluation james j heckman and v joseph hotz 1989 to the context of job displacement the same techniques fixed effects and time trend estimators as those used in the original jls publication are initially employed here then the methods are extended to include matching estimators developed since their publication both nearest neighbor estimators of average treatment on the treated att and differenced average treatment on the treated datt are adapted to the context of this study heckman hidehiko ichimura and petra todd 1997 heckman et al 1998 and rajeev h dehejia and sadek wahba 1999 2002 the results presented here for connecticut differ in some ways from those found in the work of jls using data from pennsylvania in the period immediately following job loss regardless of the technique employed earnings reductions for workers displaced through mass layoff range from 32 percent to 33 percent jls reported immediate losses of more than 40 percent six years later using the same estimators as jls earnings reductions in connecticut range from 13 percent to 15 percent they report sustained losses in pennsylvania of 25 percent the smaller long term impacts in connecticut demonstrate that under more ordinary economic times esti mated losses from administrative data lie within the range observed using other data sources this finding resolves a long standing conflict among the results of high quality studies that have used differing data sources to study earnings reductions following job loss 1 using two different matching estimators earnings losses six years after mass layoff are 12 percent the matching estimators compare those who experienced mass layoff to compari sons with the same ex ante probability of the event these smaller losses are consistent with the

the rise in the disability rolls and the decline in unemployment between 1984 and 2001 the share of nonelderly adults receiving social security disability insurance income di rose by 60 percent to 5 3 million beneficiaries rapid program growth despite improving aggregate health appears to be explained by reduced screening stringency declining demand for less skilled workers and an unforeseen increase in the earnings replacement rate we estimate that the sum of these forces doubled the labor force exit propensity of displaced high school dropouts after 1984 lowering measured u s unemployment by one half a percentage point steady state calculations augur a further 40 percent increase in the rate of di receipt

explaining the decline in the u s employment to population ratio a review of the evidence this paper first documents trends in employment rates and then reviews what is known about the various factors that have been proposed to explain the decline in the overall employment to population ratio between 1999 and 2018 population aging has had a large effect on the overall employment rate over this period but within age group declines in employment among young and prime age adults also have played a central role among the factors with effects that we can quantify based on existing evidence labor demand factors in particular increased import competition from china and the penetration of robots into the labor market are the most important drivers of observed within group declines in employment labor supply factors most notably increased participation in disability insurance programs have played a less important but not inconsequential role increases in the real value of state minimum wages and in the share of individuals with prison records also have contributed modestly to the decline in the aggregate employment rate in addition to the factors whose effects we roughly quantify we identify a set of potentially important factors about which the evidence does not yet allow us to draw clear conclusions these include the challenges associated with arranging child care improvements in leisure technology changing social norms increased use of opioids the growth in occupational licensing and declining labor market fluidity our evidence driven ranking of factors should be useful for guiding future discussions about the sources of decline in the aggregate employment to population ratio and consequently the likely efficacy of alternative policy approaches to increasing employment rates

does the federal reserve care about the rest of the world many economists are accustomed to thinking about federal reserve policy any economists are accustomed to thinking about federal reserve policy in terms of the institution s dual mandate which refers to price stability in terms of the institution s dual mandate which refers to price stability and high employment and in which the exchange rate and other interand high employment and in which the exchange rate and other international variables matter only insofar as they infl uence infl ation and the output national variables matter only insofar as they infl uence infl ation and the output gap which is to say not very much gap which is to say not very much in fact this conventional view is heavily shaped by the distinctive and pecuin fact this conventional view is heavily shaped by the distinctive and peculiar circumstances of the last three decades when the infl uence of international liar circumstances of the last three decades when the infl uence of international considerations on fed policy has been limited in this paper i will discuss how the considerations on fed policy has been limited in this paper i will discuss how the federal reserve paid signifi cant attention to international considerations in its fi rst federal reserve paid signifi cant attention to international considerations in its fi rst two decades followed by relative inattention to such factors in the two plus decades two decades followed by relative inattention to such factors in the two plus decades that followed then back to renewed attention to international aspects of monetary that followed then back to renewed attention to international aspects of monetary policy in the 1960s before the recent period of benign neglect of the international policy in the 1960s before the recent period of benign neglect of the international dimension this longer perspective is a reminder that just because the fed has not dimension this longer perspective is a reminder that just because the fed has not attached priority to international aspects of monetary policy in the recent past we attached priority to international aspects of monetary policy in the recent past we have no guarantee that it will not do so in the future indeed i will argue in the have no guarantee that it will not do so in the future indeed i will argue in the conclusion that in the next few decades international aspects are likely to play a conclusion that in the next few decades international aspects are likely to play a larger role in federal reserve policy making larger role in federal reserve policy making 1

employment time and the cyclicality of earnings growth abstract we study how the distribution of earnings growth evolves over the business cycle in italy we distinguish between two sources of annual earnings growth changes in employment time number of weeks of employment within a year and changes in weekly earnings changes in employment time generate the tails of the earnings growth distribution and account for its procyclical skewness in contrast the distribution of weekly earnings growth is close to symmetric and stable over the cycle this suggests that studies of earnings risk should carefully model the employment margin to avoid erroneous conclusions on the nature and magnitude of risks underlying individual earnings we show that the combination of simple employment and wage processes is enough to capture the complex features of the earnings growth distribution

a rehabilitation of monetary policy in the 1950 s monetary policy in the united states in the 1950s was remarkably modern analysis of federal reserve records shows that policymakers had an overarching aversion to inflation and were willing to accept significant costs to prevent it from rising to even moderate levels this aversion to inflation was the result of policymakers beliefs that higher inflation could not raise output in the long run that the level of output that would trigger increases in inflation was only moderate and that inflation had large real costs in the medium and long runs furthermore both narrative and empirical analysis indicates that policymakers were not wedded to free reserves or other faulty indicators in their implementation of policy empirical estimates of a forward looking taylor rule show that policymakers in the 1950s raised nominal interest rates more than one for one with increases in expected inflation and suggests that monetary policy in the 1950s was more similar to policy in the 1980s and 1990s than to that in the late 1960s and 1970s one implication of these findings is that the inflation of the late 1960s and 1970s must have been the result of a change in the conduct of policy this abstract was borrowed from another version of this item

the growth in the social security disability rolls a fiscal crisis unfolding the u s social security disability insurance di program has grown dramatically over the last 20 years in size and expense this growth poses significant risks to the finances of the di program and the broader social security system and raises troubling questions as to whether the program is being misused by claimants this article first provides an overview of the disability insurance program describing who qualifies for the program how an individual applies for benefits and how the level of benefits is determined next we summarize the factors responsible for the growth in the di rolls and discuss how the characteristics of di recipients have changed as a result we then explore the extent of moral hazard in the di program and the effectiveness of the screening process in distinguishing meritorious from nonmeritorious claims finally we identify the challenges that the di program creates for social security finances and social security reform and discuss potential reforms to the di program

the health and earnings of rejected disability insurance applicants applicants for social security disability benefits who fail to pass the medical screening form a natural control group for beneficiaries data drawn from the 1972 and 1978 surveys of the disabled done for the social security administration show that fewer than 50 percent of rejected male applicants work typical earnings of those that do are less than 59 percent of median earnings for other men their age these data cast doubt on recent econometric work that suggests that the disincentive effects of the social security disability program have been substantial copyright 1989 by american economic association

the case for presenteeism evidence from norway s sickness insurance program can a work first strategy control moral hazard problems in temporary disability insurance and accelerate recovery based on empirical analysis of norwegian data we show that it can activation requirements not only bring down benefit claims they also reduce the likelihood that long term sickness absence leads to inactivity our findings show that absentees who are assigned graded partial absence certificates by their physician have shorter absences and higher subsequent employment rates than they would have had on regular sick leave we conclude that the activation strategies that in recent years have permeated european and us welfare policy may fruitfully be carried over to sick leave insurance for temporary disabled workers

disability earnings income and consumption using longitudinal data for the period 1968 2005 for a sample of male household heads we determine the prevalence of disability during the working years and examine how the extent of disability affects a range of outcomes including earnings income and consumption we have seven main findings first disability rates are high we divide the disabled along two dimensions based on the persistence and severity of their work limiting condition we estimate that a person reaching age 56 has a 53 percent chance of having been disabled at least once during his working years and a 19 percent chance that he has begun a chronic and severe disability second the economic consequences of disability are frequently profound ten years after disability onset a person with a chronic and severe disability on average experiences a 68 percent decline in earnings a 32 percent decline in after tax income a 22 percent decline in food and housing consumption and a 21 percent decline in food consumption third the various economic consequences differ sharply across disability groups the outcome declines for those with a chronic and severe disability are often more than twice as large as those for the average disabled fourth our findings show the partial and incomplete roles that individual savings family support and social insurance play in reducing the consumption drop that follows disability only about half of this most disabled group reports receiving social security disability insurance or supplemental security income fifth we find a noticeable fall in earnings and income prior to the onset of a reported disability consumption also falls somewhat suggesting that future disability is partially but incompletely predictable in the short run sixth time use and detailed consumption data further indicate that disability is associated with a decline in well being seventh the quantities we have estimated combined with elasticities from the literature allow us to examine the optimality of current compensation for the disabled we find that the current compensation for our most disabled group appears to be lower than is optimal

trends in employment and earnings of allowed and rejected applicants to the social security disability insurance program since the early 1980s changes in the economic environment and in the process for determining eligibility for the social security disability insurance di program have had significant effects on the program first the economic situation and labor force opportunities for lower skilled people continued to decline leading to lower rates of participation in the labor force for less educated men second changes in the eligibility process made it easier to obtain di benefits based on conditions difficult to clearly identify on medical terms alone such as back pain or depression 1 those two factors have likely contributed to a substantial increase in the number of individuals receiving di as well as a significant change in the characteristics of applicants and new beneficiaries over the same period both applicants and new beneficiaries have become younger longer lived more likely to apply because of nonterminal conditions such as back pain or mental health and more likely to be female 2 as a result recent work projects a rapid increase in program costs as greater numbers of beneficiaries stay on the program for more years e g david h autor and duggan 2006 the concurrent developments in the economy and eligibility rules have also fueled the concern that the generosity of di increasingly induces low income workers to apply for and sometimes receive benefits and that some of those beneficiaries would be able to work in the absence of the program indeed a growing body of research suggests that some workers in difficult economic conditions exit the labor force to

do professional forecasters trust in taylor type rules evidence from the wall street journal poll this article uses the monthly wall street journal poll between 2002 and 2010 to analyse whether professional economic forecasters believe in and thus apply taylor type rules for their own forecasts using their forecasts for the federal funds rate the inflation rate and capacity utilization we estimate whether these are internally consistent with the message of taylor type rules we find that the expectation formation can indeed be described by taylor type rules

oaxaca blinder as a reweighting estimator the classic regression based estimator of counterfactual means studied by ronald oaxaca 1973 and alan blinder 1973 is shown to constitute a propensity score reweighting estimator based upon a linear model for the conditional odds of being treated

explaining social policy preferences evidence from the great recession to what extent do personal circumstances as compared to ideological dispositions drive voters preferences on welfare policy addressing this question is difficult because a person s ideological position can be an outcome of material interest rather than an independent source of preferences the article deals with this empirical challenge using an original panel study carried out over four years tracking the labor market experiences and the political attitudes of a national sample of americans before and after the eruption of the financial crisis the analysis shows that the personal experience of economic hardship particularly the loss of a job had a major effect on increasing support for welfare spending this effect was appreciably larger among republicans than among democrats a result that was not simply due to a ceiling effect however the large attitudinal shift was short lived dissipating as individuals employment situations improved the results indicate that the personal experience of an economic shock has a sizable yet overall transient effect on voters social policy preferences

the long run impact of cash transfers to poor families lleras muney we estimate the long run impact of cash transfers to poor families on children s longevity educational attainment nutritional status and income in adulthood to do so we collected individual level administrative records of applicants to the mothers pension program the first government sponsored welfare program in the united states 1911 1935 and matched them to census wwii and death records male children of accepted applicants lived one year longer than those of rejected mothers they also obtained onethird more years of schooling were less likely to be underweight and had higher income in adulthood than children of rejected mothers jel i12 i14 i18 i32 i38 j16 n32

regime switches agents beliefs and post world war ii u s macroeconomic dynamics the evolution of inflation and output over the last 50 years is examined through the lens of a micro founded model that allows for changes in the behavior of the federal reserve and in the volatility of structural shocks agents are aware of the possibility of regime changes and their beliefs have an impact on the law of motion underlying the macroeconomy the results support the view that there were regime switches in the conduct of monetary policy however the behavior of the federal reserve is identified by repeated fluctuations between a hawk and a dove regime instead of by the traditional pre and post volcker structure counterfactual simulations show that if agents had anticipated the appointment of an extremely conservative chairman inflation would not have reached the peaks of the late 70s and the inflation output trade off would have been less severe these beliefs counterfactuals are new in the literature finally the paper provides a bayesian algorithm to handle the technical difficulties that arise in a rational expectations model with markov switching regimes

income and substitution effects of a disability insurance reform abstract disability insurance di systems are widely criticized for their inherent work disincentives this paper evaluates the effects of a swiss di reform that aims to lower di benefits for a group of existing di beneficiaries and introduces an additional level to the di benefit schedule the reform has only modest effects on earnings and employment but increases the disability degree of those threatened by a di benefit decline we estimate bounds on the income and substitution effects by employing the principal stratification framework the income effect is quantitatively important whereas the substitution effect is smaller and has bounds that include zero the evidence suggests that caseworkers helped the insured with low labor market attachment to maintain a full di benefit

the longitudinal structure of earnings losses among work limited disabled workers this paper asks what are the dynamic effects of disability on earnings unlike most of the previous literature it uses panel data and fixed effects methods are used to assess how the earnings of disabled workers depart from expected levels over many years before and after the date of onset of their disability the paper also examines how worker characteristics affect earnings losses from disability with particular attention paid to the age at which the person suffers onset disabled men are found to experience sharp drops in earnings that predate the measured date of onset earnings recover rapidly soon after onset with much of the immediate reduction made up in the first two post onset years a modest downward trendfollows resulting in significant long term losses in expected annual earnings of about 12 percent per year being older at onset nonwhite more chronically disabled and less educated cause the losses from disability to be larger and the recovery smaller a large portion of these differences across groups appear to derive from industry affiliation after onset the paper argues the facts are all consistent with a simple human capital explanation of the disability process

a tale of two effects abstract this paper investigates the relationship between nominal interest rates and prices using nearly two centuries of data from ten industrial countries both a positive relationship between interest rates and price levels that is a positive gibson effect and a negative relationship between interest rates and subsequent price changes that is a negative fama fisher effect prevailed until world war i we propose a simple explanation wherein this doubly paradoxical juxtaposition of effects arises when money is supplied inelastically and prices are flexible this double paradox disappeared after world war ii when economies became mostly characterized by elastic money and sticky prices during that period a positive fama fisher effect emerged while the gibson effect largely dissipated

does disability insurance receipt discourage work using examiner assignment to estimate causal effects of ssdi receipt abstract we present the first causal estimates of the effect of social security disability insurance benefit receipt on labor supply using all program applicants we use administrative data to matc

how do patents affect follow on innovation evidence from the human genome we investigate whether patents on human genes have affected follow on scientific research and product development using administrative data on successful and unsuccessful patent applications submitted to the us patent and trademark office we link the exact gene sequences claimed in each application with data measuring follow on scientific research and commercial investments using this data we document novel evidence of selection into patenting patented genes appear more valuable prior to being patented than non patented genes this evidence of selection motivates two quasi experimental approaches both of which suggest that on average gene patents have had no quantitatively important effect on follow on innovation

do old habits die hard central banks and the bretton woods gold puzzle abstract we assess the importance of individual and institutional experience in shaping macroeconomic policy by studying the persistence of gold standard monetary practices in the bretton woods system using new data from the imf archives we show that although they were not required to countries continued to back currency in circulation with gold the longer an institution spent in the gold standard and the older the policymakers the tighter the link between gold and currency such old habits prevented dollars and gold from working as perfect substitutes and ultimately contributed to the demise of the bretton woods system our findings highlight the persistence of past practices even in the face of radical institutional change and its consequences on the international monetary system

a century of us central banking goals frameworks accountability several key episodes in the 100 year history of the federal reserve have everal key episodes in the 100 year history of the federal reserve have been referred to in various contexts with the adjective great attached to been referred to in various contexts with the adjective great attached to them the great experiment of the federal reserve s founding the great them the great experiment of the federal reserve s founding the great depression the great infl ation and subsequent disinfl ation the great moderation depression the great infl ation and subsequent disinfl ation the great moderation and the recent great recession here i ll use this sequence of great episodes and the recent great recession here i ll use this sequence of great episodes to discuss the evolution over the past 100 years of three key aspects of federal to discuss the evolution over the past 100 years of three key aspects of federal reserve policymaking the goals of policy the policy framework and accountability reserve policymaking the goals of policy the policy framework and accountability and communication the changes over time in these three areas provide a useful and communication the changes over time in these three areas provide a useful perspective i believe on how the role and functioning of the federal reserve have perspective i believe on how the role and functioning of the federal reserve have changed since its founding in 1913 as well as some lessons for the present and for changed since its founding in 1913 as well as some lessons for the present and for the future the future

how do unemployment insurance benefits affect the decision to apply for social security disability insurance this paper examines whether unemployment insurance ui benefits affect the decision to apply for social security disability insurance di using data from the survey of income and benefits matched to administrative records on di applications i find that higher ui benefits reduce applications for di this substitution effect is imprecisely estimated but economically significant implying that a 1 00 increase in ui benefits reduces di expenditures by 15 cents recognizing this cost saving effect would increase the optimal ui benefit level by more than 20 percent for coefficients of relative risk aversion ranging from two to five

a unified welfare analysis of government policies we conduct a comparative welfare analysis of 133 historical policy changes over the past half century in the united states focusing on policies in social insurance education and job training taxes and cash transfers and in kind transfers for each policy we use existing causal estimates to calculate both the benefit that each policy provides its recipients measured as their willingness to pay and the policy s net cost inclusive of long term impacts on the government s budget we divide the willingness to pay by the net cost to the government to form each policy s marginal value of public funds or its mvpf comparing mvpfs across policies provides a unified method of assessing their impact on social welfare our results suggest that direct investments in low income children s health and education have historically had the highest mvpfs on average exceeding 5 many such policies have paid for themselves as governments recouped the cost of their initial expenditures through additional taxes collected and reduced transfers we find large mvpfs for education and health policies amongst children of all ages rather than observing diminishing marginal returns throughout childhood we find smaller mvpfs for policies targeting adults generally between 0 5 and 2 expenditures on adults have exceeded this mvpf range in particular if they induced large spillovers on children we relate our estimates to existing theories of optimal government policy and we discuss how the mvpf provides lessons for the design of future research

earnings of rejected applicants to the social security disability insurance program abstract this study bounds the potential earnings of accepted disability applicants by the post application earnings of rejected applicants compositional differences between the two groups are addressed using a reweighting estimator as shown the bound on earnings is similar regardless of weighting

disability insurance and the dynamics of the incentive insurance trade off we provide a life cycle framework for comparing insurance and disincentive effects of disability benefits the risks that individuals face and the parameters of the disability insurance di program are estimated from consumption health disability insurance and wage data we characterize the effects of disability insurance and study how policy reforms impact behavior and welfare di features high rejection rates of disabled applicants and some acceptance of healthy applicants despite worse incentives welfare increases as programs become less strict or generosity increases disability insurance interacts with welfare programs making unconditional means tested programs more generous improves disability insurance targeting and increases welfare

unemployment insurance and disability insurance in the great recession social security disability insurance ssdi awards rise during recessions if marginal applicants are able to work but unable to find jobs countercyclical unemployment insurance ui benefit extensions may reduce ssdi uptake exploiting ui extensions in the great recession as a source of variation we find no indication that expiration of ui benefits causes ssdi applications and can rule out effects of meaningful magnitude a supplementary analysis finds little overlap between the two programs recipient populations only 28 of ssdi awardees had any labor force attachment in the prior calendar year and of those only 4 received ui

preference modification vs incentive manipulation as tools of terrorist recruitment the role of culture terrorism is a tactic much more likely to be used when combatants have asymmetric numerical strength and weaponry only if one side is comparatively very weak will it use terror tactics this weakness requires a means of controlling strong incentives for free riding or defection from the weaker side there are two nonexclusive answers 1 atttract or inculcate recruits with an innate preference for cooperation even if it results in the recruit s own death 2 create a set of incentives that reward loyalty by giving access to excludable near public club goods culture is the key to achieving either of these solutions culture is defined here as the set of inherited beliefs attitudes and moral strictures that a people use to distinguish outsiders to understand themselves and to communicate with each other the primary question is whether culture creates a preference for cooperation as a primitive or accommodates incentives such as excludable club goods that can only be obtained by cooperation the difference between the two accounts matters greatly for determining the correct strategy to fight terrorism if terrorists are selected for having unusual cooperative from the perspective of the terror group preferences then recruitment must be disrupted somehow if on the other hand terrorists allow themselves to be recruited to gain access to club goods then the intervention strategy must be the disruption of social networks that credibly guarantee access to those club goods

choosing the federal reserve chair lessons from history stable noninflationary growth has been the goal of monetary policymakers since the inception of the modern federal reserve in the mid 1930s policymakers however have come closer to achieving this goal in some eras than in others under chairmen william mcchesney martin jr in the 1950s and early 1960s and alan greenspan in the late 1980s and beyond the federal reserve presided over decades of low inflation and mild real fluctuations under paul volcker in the 1980s the federal reserve oversaw a significant recession but one that returned the american economy to near price stability and steady growth in contrast under marriner eccles in the late 1930s the federal reserve triggered a recession that was second in severity only to the great depression and that resulted in severe deflation and under arthur burns and g william miller in the 1970s the u s economy experienced high and rising inflation and painfully variable real growth an obvious question is why monetary policy has been so much more successful under some federal reserve chairmen than others this question has taken on new urgency because current chairman alan greenspan will need to be replaced in the near future it is crucial to understand what has determined policy success in the past and to identify factors that help predict success only by learning the lessons of history will we be able to choose a new federal reserve chair who is likely to replicate our policy triumphs and avoid our policy failures this paper demonstrates that the key determinants of policy success have been policymakers views about how the economy works and what monetary policy can

the impact of economic conditions on participation in disability programs evidence from the coal boom and bust abstract we examine the impact of the coal boom of the 1970 s and the coal bust of the 1980 s on disability program participation these shocks provide clear evidence that as the value of labor market participation increases disability program participation falls for the disability insurance program the elasticity of payments with respect to local earnings is between 0 3 and 0 4 and for supplemental security income the elasticity is between 0 4 and 0 7 consistent with a model where qualifying for disability programs is costly the relationship between economic conditions and program participation is much stronger for permanent than for transitory economic shocks

does welfare inhibit success the long term effects of removing low income youth from the disability rolls i estimate the effects of removing low income youth with disabilities from supplemental security income ssi on their earnings and income in adulthood using a regression discontinuity design based on a 1996 policy change in age 18 medical reviews i find that youth who are removed from ssi at age 18 recover one third of the lost ssi cash income in earnings ssi youth who are removed and stay off ssi earn on average 4 400 annually and they lose 76 000 in present discounted observed income over the 16 years following removal relative to those who do not receive a review jel i30 i38 j14 supporters of welfare programs defend them as vital lifelines for those who face barriers to work while critics charge that these programs create perverse incentives to qualify and perpetuate dependency encapsulating this debate is the controversy over the us supplemental security income ssi program a program that provides cash payments and medicaid eligibility to low income children and adults with disabilities and the aged elderly after three decades of rapid expansion ssi is now the largest nonwork based cash welfare program in the united states paying about 50 billion each year to 8 million recipients including 1 3 million children 1 ssi has been singled out by policymakers and the media for potential perverse incentives

monetary policy rules under heterogeneous inflation expectations this paper evaluates the role of inflation forecast heterogeneity in u s monetary policymaking the deviation between private and central bank inflation forecasts is identified as a significant explanatory factor behind the fed s monetary policy decisions a discretionary policy rule that includes the forecast deviation as an additional argument is estimated empirically for the period 1975 2009 covering the chairmanships of arthur burns george miller paul volcker alan greenspan and the beginning of ben bernanke s term by using inflation forecasts obtained from the federal open market committee s greenbook and the survey of professional forecasters and real time estimates of the output gap the estimated rule appears to provide a consistent description of the fed s policy during the sample period presenting an alternative perspective regarding the key drivers of the high inflation phase in the 1970s as well as of the successful volcker disinflation in the early 1980s and the gradual transition to a regime of lower inflation and high policy credibility that has increasingly characterized monetary policy over the past two decades jel e50 e52 e58

the employment effects of terminating disability benefits abstract few social security disability insurance di beneficiaries return to the labor force making it hard to assess their likely employment in the absence of benefits using administrative data i examine the employment of individuals who lost di eligibility after the 1996 removal of drug and alcohol addictions as qualifying conditions approximately 22 started working at levels that would have disqualified them for di an employment response that is large relative to their work histories those who received di for 2 3 years had the largest response suggesting that a period of public assistance may maximize the employment of some disabled individuals

asset accumulation and labor force participation of disability insurance applicants abstract this paper provides empirical evidence of the existence of forward looking asset accumulation behavior among disability insurance applicants previously examined only in the theoretical literature using panel data from the rand health and retirement study i show that rejected applicants for social security disability insurance ssdi possess significantly more assets than accepted applicants immediately prior to application and exhibit lower attachment to the labor force these empirical results are consistent with the theoretical prediction in diamond and mirrlees 1978 and golosov and tsyvinski 2006 that certain individuals with high unwillingness to work maximize utility by planning in advance for their future disability insurance application because the existing empirical literature on disability insurance does not account for this intertemporal channel it may underestimate the total work disincentive effect of ssdi

the more things change the more they stay the same the safety net and poverty in the great recession much attention has been given to the large increases in safety net spending during the great recession we examine the relationship between poverty the safety net and business cycles historically and test whether there has been a significant change in this relationship we find that post welfare reform temporary assistance for needy families did not respond during the great recession and extreme poverty is more cyclical than in prior recessions food stamps and unemployment insurance are providing more protection or no less protection in the great recession and there is some evidence of less cyclicality for 100 poverty