Global sourcing is on the rise. Recent estimates suggest that intermediate input flows account for about two-thirds of the volume of world trade (Johnson and Noguera, 2012). Boeing’s production of the 787 Dreamliner exemplifies the growing involvement of foreign suppliers in U.S. manufacturing: 70 percent of the Dreamliner’s parts are sourced from 50 suppliers located in 9 countries. Meanwhile, during the last U.S. presidential election, we saw a backlash against international trade. Research, too, documents negative effects of increased trade integration. However, most of this evidence comes from trade in final goods. This paper examines the question: how do we analyze the phenomenon of firms increasingly sourcing intermediate inputs?
In the US, most criminal cases are resolved before trial through plea bargain agreements. Given the extent to which cases are settled before trial, the impact of sentencing reforms will depend largely on how they affect these agreements as opposed to the outcome of cases argued in court. Therefore, the current debate over criminal justice must consider the role of plea bargaining. By adapting and applying a theoretical model of litigation to data on violent crime cases filed in North Carolina’s superior court system, this article attempts to examine the potential impact of several hypothetical policy interventions on the outcome of criminal cases. This provides a helpful tool for understanding the potential ramifications of sentencing reform.
Japan’s nineteenth century opening to world commerce after a long period of economic self-sufficiency provides a natural experiment to test the theory of comparative advantage and the gains from trade that it predicts. Drawing on a wide range of historical sources for data on prices, output and trade flows, this research finds that the country benefited from a significant boost to GDP in the years following its forced reintegration with the global economy. The evidence constitutes a strong indication of the potential costs of rejection of today’s open system of world trade.
More than 100 countries have a gender quota, or an effort to increase gender equality and representation, in their political system. Many opponents of gender quotas argue that women elected via quotas are not always the most qualified candidates; the quotas may displace qualified men; and the quotas are not compatible with meritocratic principles and incentives. However, despite the years of debate, exactly how gender quotas affect the competence of elected officials – whether women or men – has rarely been studied.
Immigration policy continues to be a hotly debated issue in many developed countries around the world. A contentious point cited by many policymakers relates to the high crime rates of immigrants relative to the native population. How does work status and legal access to the labor market affect the crime rates of immigrants? This article summarizes recent research from Pinotti (2017) on the Italian immigration system and finds that a lack of legal work opportunities for immigrants contributes to higher rates of immigrant crime.
Since the 1990s, many countries have deregulated their electricity markets. Electricity producers and distributors participate in auctions in forward and spot markets, which determine production allocation and wholesale prices. A key policy question for the United States and the rest of the world is whether financial traders should be allowed to participate in the auctions to arbitrage differences between forward and spot prices. Does arbitrage benefit consumers? Does it lead to more efficient allocation of production resources? This article summarises Ito and Reguant (2016), and address those questions from theoretical and empirical perspectives by examining the Iberian electricity market.
Students who attend charter schools tend to outperform students enrolled in traditional schools on state-mandated measures of student achievement. But critics claim this is because charter schools “teach to the test,” something they have an incentive to do since charter schools can be closed if their students do poorly on the state tests. This research uses a “natural experiment” in Boston schools to examine whether charter school students do better than traditional students on other measures of achievement that are correlated with long-term success. We find that the gains on state tests carry over to these additional measures, an indication that charter schools add value that extends beyond improved scores on state tests.
In evaluating health insurance mergers recently proposed in the U.S., regulators have grappled with the costs and benefits of reduced insurer competition. Our study examines the direct and indirect effects that a reduction in the number of insurers has on premiums, provider reimbursement rates, and consumer welfare. Using detailed health and enrollment data and focusing on a part of the commercial health care market, we examine whether consumers are typically harmed when an insurer is removed from the market. Absent premium setting constraints, we find that premiums typically rise, and consumers are generally harmed as they suffer from having fewer options. However, we also find that the reimbursement rates negotiated by hospitals need not always increase, and in many cases, can actually fall.
Pharmacy is among the most highly paid professions in the United States today; it is also one of the most egalitarian. Analysing extensive survey data on pharmacists and the general population, this research reveals how as the profession has become more flexible and the fraction of women has grown to a majority, pharmacy has become more highly paid relative to comparable occupations. The variance of pay has also declined and the relative hourly pay of women has risen. Technological changes that increased substitutability among pharmacists, the growth of pharmacy employment in retail chains and hospitals, and the related decline of independent pharmacies have all contributed to these outcomes.
This paper shows that taxes affect the international location decisions of the best “superstar” inventors. Higher tax rates lead to a significantly lower share of superstar inventors remaining in their home country and a lower share of foreign superstar inventors who move to the country. This may have significant fiscal and innovation costs for a country that should be taken into account when setting tax policy.