Exploring the Ways in Which Tax Policy Affects
Inventor Migration and Human Capital Investment

Tax policy influences a wide variety of personal behaviors, such as where to live and whether to make human capital investments. Stefanie Stantcheva of Harvard University focuses on optimal design of the tax system. Some of her research explores the degree to which the tax rate affects the mobility of superstar inventors and the type of tax structure that could best encourage human capital investment.

New NBER Research

20 April 2018

Financial Effects of Cyberattacks on Target Firms

Cyberattacks in which consumer financial information is appropriated are associated with a significant negative stock market reaction, an increase in leverage following greater debt issuance, a deterioration in credit ratings, and an increase in cash flow volatility, Shinichi Kamiya, Jun-Koo Kang, Jungmin Kim, Andreas Milidonis, and René M. Stulz find.

19 April 2018

Investment Subsidies versus Output Subsidies:
Implications for Encouraging Wind Farm Development

When wind farm developers were given a choice of receiving an investment subsidy or an output subsidy, those who claimed the investment subsidy produced about 10 percent less power than those claiming the output subsidy, a study by Joseph E. Aldy, Todd D. Gerarden, and Richard L. Sweeney shows.

18 April 2018

Short-Run Pain, Long-Run Gain?
Recessions and Technological Transformation

Since adopting new technology disrupts production, firms prefer to do so in recessions, when profits are low, modeling by Alexandr Kopytov, Nikolai Roussanov, and Mathieu Taschereau-Dumouchel shows. Similarly, workers tend to learn new skills during downturns. These findings suggest that recessions may be deeper during periods of technological transition, but they also speed up adoption of the new technology.
More Research

New from the Studies in Income and Wealth Series:
Measuring and Modeling Health Care Costs

Health care costs represent a nearly 18 percent of U.S. gross domestic product and 20 percent of government spending. While there is detailed information on where these health care dollars are spent, there is much less evidence on how this spending affects health.

The research in Measuring and Modeling Health Care Costs seeks to connect what is known about expenditures with measurable results to probe questions of methodology, changes in the pharmaceutical industry, and the shifting landscape of physician practice. Studies in this volume investigate, for example, obesity's effect on health care spending, the effect of generic pharmaceutical releases on the market, and the disparity between disease-based and population-based spending. Researchers apply a range of economic tools to the analysis of health care and health outcomes.

Practical and descriptive, this latest volume in the Studies in Income and Wealth series is full of insights relevant to health policy students and specialists alike.

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This Week's Working Papers

The NBER Digest

If U.S. Disengages from International Security Alliances,
Long-Term Domestic Interest Rates Could Increase

Military alliances as well as financial considerations influence the composition of nations' foreign currency reserves, researchers find in a working paper featured in the current edition of The NBER Digest, suggesting that if the United States were to pull back from its leading role in global geopolitical affairs, foreign demand for dollars might decline, leading ultimately to higher long-term interest rates. Other working papers featured in this month's Digest gauge the impacts of Fair Trade certification on coffee-growing communities, probe the ways entrepreneurs are guided by their fathers, estimate the contributions of international trade to U.S. GDP, investigate intergenerational impacts of disability insurance policies, and test the effectiveness of a large workplace wellness program.

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The NBER Reporter

What Works to Help the Poorest Escape Poverty?
A Grant, a Savings Account, and 2 Years of Training

A team of researchers in the NBER’s Development Economics Program finds that an integrated program of material assistance, training, and coaching created by the NGO BRAC — the former Bangladesh Rural Advancement Committee — has been a stunning success, transforming the lives of the poorest residents not just in one small area but across vastly different settings over three continents. The findings, and other research in development economics, are featured in the new issue of The NBER Reporter. Also in this edition of the quarterly, economists write about their work on the origins of urban segregation in America, the potential of digital currency and blockchains, the motives for charitable giving to higher education, and the advantages of using consumption rather than income levels to measure inequality.

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The NBER Bulletin on Aging and Health

Smoke-Free Laws Don’t Just Benefit Smokers;
Infants and Children Have Better Health Outcomes Too

The positive effects of smoking bans are well documented for smokers, but the spillover effects that reducing environmental tobacco smoke may have on infants and children is relatively unknown. A study of 100 percent smoke-free laws, summarized in the latest issue of the NBER's Bulletin on Aging and Health, finds that expectant mothers living in areas covered by smoke-free laws have a 3.3 percent associated decline in the probability of their baby being born with low birth weight — one of a host of positive infant and child health outcomes.

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On the News

As the Possibilities of a Trade War Wax and Wane,
Many Agree that China’s Practices Are Predatory

"If there's a trade war between the U.S. and China, don't blame Donald Trump," Greg Ip, The Wall Street Journal's chief economics commentator, wrote recently. "China started it long before he became president. Even free traders and internationalists agree China's predatory trade practices - which include forcing U.S. business to transfer valuable technology to Chinese firms and restricting access to Chinese markets - are undermining both its partners and the trading system."

The research:
A leading voice in his story was Dartmouth College Professor and NBER Research Associate Douglas Irwin,
author of the NBER book Clashing over Commerce: A History of U.S. Trade Policy.

Related work by other NBER researchers is here, here and here.

Related work by Irwin is here.

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