What Goes Up May Not Come Down: Asymmetric Incidence of Value-Added Taxes

Evidence from Finland indicates that prices, and profits, respond more strongly to a VAT increase than a VAT decrease—and that short-term policy changes can have longer-term effects Our analysis relies on two main approaches. First, we analyze the effect of a large VAT decrease in the hairdressing sector in Finland, which was later reversed. This […]

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Age of marriage, weather shocks, and the direction of marriage payments

Child marriage, defined as marriage before the age of 18, is a widespread phenomenon in many parts of the world. About half of all prime-aged women living today in South Asia and in Sub-Saharan Africa were married as children (UNICEF 2014). Child marriage has been associated with a wide array of poor economic, social, and […]

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Innovation in the global firm

Multinational corporations are among the most innovative firms – and they account for the majority of the investment in innovation made around the world. Yet compared with the fragmentation of multinationals’ production across countries, investment in innovation by these firms is typically concentrated in one ‘headquarters’ country.  The potential geographical mismatch between where knowledge is […]

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More Precise Regulation can Lower Pollution in India

Today’s large developing countries have perhaps the highest levels of air pollution recorded in human history. The World Health Organization (WHO) sets an air quality standard of 10 micrograms per cubic meter for fine particles, PM2.5. In the United States, air pollution is worse than the WHO standard in 73 counties, home to 36 million […]

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How acquisitions affect firm behavior and performance: Evidence from the dialysis industry

Health care markets have become increasingly concentrated through mergers and acquisitions. Proponents of this consolidation cite several potential benefits, including lower costs due to economies of scale and better patient outcomes through coordinated care. Greater concentration may also result in higher prices or lower quality, however. In a recent paper, funded in part by a […]

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The Return to Protectionism

After more than a half-century of leading efforts to lower international trade barriers, the United States enacted several waves of tariff increases on specific products and countries in 2018 and 2019. Overall, the U.S. implemented tariffs on 17.6% of its 2017 imports, primarily from China, raising tariffs on targeted imports from an average of 3.7% […]

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What Medicare Part D Teaches Us About Social Insurance Markets

Social insurance programs, such as health insurance and social security, have traditionally been paid for and provided by the government. However, more recently, there have been a number of high-profile initiatives to replace government-provided services with private provision via regulated competition. The motivation for these programs is if incentives are set up in the right […]

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Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviors

Wealth is highly correlated between parents and their children; however, little is known about what drives this relationship. Is it that children of wealthy parents are inherently more talented, and that is what shapes their later success? Or is it that children had parents who gave them more opportunities because they themselves had more wealth? […]

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Who Profits from Patents? Rent-Sharing at Innovative Firms

Measuring the extent to which firms pass changes in their performance through to worker earnings is challenging. Our work uses US patent allowance decisions as “natural experiments” that lift a company’s labor productivity. We find robust evidence that variability in firm performance is an important causal determinant of worker pay in our sample of small […]

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Improved allocation of talent boosts US economic growth

In 1960, 94% of American doctors and lawyers were white men: by 2010, the fraction was just 62%. Similar changes in other high-skilled occupations have occurred throughout the US economy over the last 60 years. Given that the innate talent for these professions is not likely to be any different across groups, the change in […]

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