Journal of Economic Literature

doi: 10.1257/jel.60.4.1pmid: N/A

Ruhm, Christopher J.

doi: 10.1257/jel.20211638pmid: N/A

AbstractThis essay reviews Deaths of Despair and the Future of Capitalism (hereafter, DEATHS) by Anne Case and Angus Deaton, a fascinating account of life and death in the United States during the late twentieth and early twenty-first centuries. While primarily targeted toward a popular audience, the volume will be of interest to many economists and other social scientists. It postulates how American capitalism run amok—combined with and partially causing the declining economic circumstances of the less educated—has increased mortality from drugs, suicide, and chronic liver disease. After describing the material in DEATHS in considerable detail, I suggest a variety of research questions that need to be answered to confirm or refute Case and Deaton’s arguments and describe challenges to their key hypotheses. Among the latter are the ability of the postulated relationships to explain the sharply differing mortality trajectories of non-Hispanic Whites, compared with other groups, and the timing of the observed mortality changes. Along the way, I raise doubts about the usefulness of the “deaths of despair” conceptualization, with its strong implications about causality. (JEL I12, I14, I18, J11, J18)

Bolotnyy, Valentin; Basilico, Matthew; Barreira, Paul

doi: 10.1257/jel.20201555pmid: N/A

AbstractWe study the mental health of graduate students at eight top-ranked economics PhD programs in the United States using clinically validated surveys. We find that 24.8 percent experience moderate or severe symptoms of depression or anxiety—more than two times the population average. Though our response rate was 45.1 percent and sample selection concerns exist, conservative lower bounds nonetheless suggest higher prevalence rates of such symptoms than in the general population. Mental health issues are especially prevalent at the end of the PhD program: 36.7 percent of students in years 6+ of their program experience moderate or severe symptoms of depression or anxiety, versus 21.2 percent of first-year students. Of economics students with these symptoms, 25.2 percent are in treatment, compared to 41.4 percent of graduate students in other programs. A similar percentage of economics students (40–50 percent) say they cannot honestly discuss mental health with advisers as say they cannot easily discuss nonacademic career options with them. Only 26 percent find their work to be useful always or most of the time, compared to 70 percent of economics faculty and 63 percent of the working age population. We provide recommendations for students, faculty, and administrators on ways to improve graduate student mental health. (JEL A23, I12, I18, I23)

Schennach, Susanne

doi: 10.1257/jel.20211355pmid: N/A

AbstractEconomic models often depend on quantities that are unobservable, either for privacy reasons or because they are difficult to measure. Examples of such variables include human capital (or ability), personal income, unobserved heterogeneity (such as consumer “types”), et cetera. This situation has historically been handled either by simply using observable imperfect proxies for each of the unobservables, or by assuming that such unobservables satisfy convenient conditional mean or independence assumptions that enable their elimination from the estimation problem. However, thanks to tremendous increases in both the amount of data available and computing power, it has become possible to take full advantage of recent formal methods to infer the statistical properties of unobservable variables from multiple imperfect measurements of them. The general framework used is the concept of measurement systems in which a vector of observed variables is expressed as a (possibly nonlinear or nonparametric) function of a vector of all unobserved variables (including unobserved error terms or “disturbances” that may have nonadditively separable affects). The framework emphasizes important connections with related fields, such as nonlinear panel data, limited dependent variables, game theoretic models, dynamic models, and set identification. This review reports the progress made toward the central question of whether there exist plausible assumptions under which one can identify the joint distribution of the unobservables from the knowledge of the joint distribution of the observables. It also overviews empirical efforts aimed at exploiting such identification results to deliver novel findings that formally account for the unavoidable presence of unobservables. (JEL C30, C55, C57, D12, E21, E23, J24)

Hadfield, Gillian K.

doi: 10.1257/jel.20201330pmid: N/A

AbstractThe existence of an effective legal system is assumed throughout economic analysis, and yet there has been little study of the economics of legal markets themselves. Research to date has focused narrowly on the economics of markets for lawyers. In this review, I distinguish legal markets from the market for lawyers and show how excessive regulation of our legal markets—by lawyers themselves—distorts economic activity and growth. It does so primarily by inhibiting investment in the legal and regulatory technologies needed to respond to the transformation of the economy wrought by globalization, digitization, aspirations for inclusion, and the coming of artificial intelligence. (JEL J44, K00, K40, L84)

Barrett, Christopher B.; Reardon, Thomas; Swinnen, Johan; Zilberman, David

doi: 10.1257/jel.20201539pmid: N/A

AbstractAgri-food value chains (AVCs) intermediate the flow of products between largely rural farmers, fisherfolk, or herders and increasingly urban consumers. The theoretical models that historically structured research on the economic development process assumed away AVC functions, however, and AVC firms and workers were necessarily omitted from the household data that generated most empirical findings in the agricultural and development economics literatures. As a result, the discipline has somewhat overlooked the rapid growth and structural change in AVCs over the past few decades that turned AVCs into major employers and sources of value addition, as well as key loci for technology transfer and foreign investment. This paper offers an integrated, structured, empirical narrative of how and why AVC revolutions occur in developing countries, the impacts of those changes, and the abundant economic research opportunities these structural changes afford economists. (JEL L14, L81, O13, O33, Q12, Q13, Q17)

Agrawal, David R.; Hoyt, William H.; Wilson, John D.

doi: 10.1257/jel.20201490pmid: N/A

AbstractThis paper critically surveys the growing literature on the policy choices of local governments. First, we identify various reasons for local government policy interactions, including fiscal competition, bidding for firms, yardstick competition, expenditure spillovers, and Tiebout sorting. We discuss theoretically what parameters should be estimated to determine the reason for competition among local governments. We emphasize how the policy outcomes emerging from this competition are affected by the presence of constraints imposed by higher-level governments. Second, we integrate theoretical and empirical analyses on the effects of fiscal decentralization on mobility, spillovers, fiscal externalities, economic outcomes, and distributional issues. Third, we identify key issues that arise in the empirical estimation of strategic interactions among local governments and highlight recent quasi-experimental evidence that has attempted to identify the mechanism at work. Finally, a synthesis model, containing multiple mechanisms and fiscal instruments, resolves some puzzles and provides guidance for future research. (JEL D72,H20, H71, H72, H73, H77, R51)

Timilsina, Govinda R.

doi: 10.1257/jel.20211560pmid: N/A

AbstractThere is a growing interest in using carbon taxes to reduce greenhouse gas emissions, not only in industrialized economies but also in developing economies. Many countries have considered carbon pricing, including carbon taxes, as policy instruments to meet their emission reduction targets set under the Paris Climate Agreement. However, policy makers, particularly from developing countries, are seeking clarity on several issues—particularly the impacts of carbon taxes on the economy, the distribution of these impacts across households, carbon tax design architectures, the effects of carbon taxes on the competitiveness of carbon-intensive industries, and comparison of carbon taxes with other policy instruments for climate change mitigation. This paper aims to offer insights on these issues by synthesizing the literature available since the 1970s, when the concept of carbon tax was first introduced. This paper also identifies the areas where further investigations are needed. (JEL H23, Q35, Q38, Q54, Q58)

Chari, V. V.

doi: 10.1257/jel.20221515pmid: N/A

AbstractLaurence Ball argues that the Federal Reserve (the Fed) could—and should—have bailed out Lehman Brothers so that it did not have to declare bankruptcy. He presents compelling evidence that it could have. I argue that the view that the Fed should not bail out Lehman is reasonable under the circumstances the Fed was in at the time. The Lehman bankruptcy is a case study in bailouts and the attendant moral hazard problem that expectations of bailouts create. The lessons learned imply a clear case for appropriate regulatory intervention to solve the problems created when governments cannot commit themselves to not undertake bailouts. (JEL D72, E32, E58, E63, G01, G24, G33)

doi: 10.1257/jel.60.4.1509.r1pmid: N/A

AbstractRajshri Jayaraman of ESMT Berlin and University of Toronto reviews “Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy” by Elizabeth Popp Berman. The Econlit abstract of this book begins: “Discusses the rise of the ‘economic style of reasoning’ about policy, examining its origins, how it was popularized and became politically institutionalized, and its political ramifications.”