Department of Economics

We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a cross-sectional time series of 50 US states plus the District of Columbia from 1966 to 2001. Our method accounts for endogenous changes of fuel efficiency in response to regulation, prices, and other factors, it incorporates a measure of the stringency of the corporate average fuel economy (CAFE) standards, it distinguishes between autocorrelation and lagged effects, and it allows the rebound effect to depend on levels of income and of urbanization. We find that the endogeneity correction strongly reduces the estimated rebound effect, that the long-run effect is substantially larger than the short-run effect, and that the rebound effect declines with income. Our preferred (3SLS) estimate of the rebound effect at sample averages of income and urbanization is 5.2% for the short run and 24% for the long run. We also find that CAFE regulations have a moderate effect on fuel efficiency of new passenger vehicles, which began immediately upon their implementation and peaked in 1984.

School starting age/date rules mean that there is a continuum of ages within each starting class – with the “oldest” children being approximately twenty percent older than the “youngest” children at school entry. We provide substantial evidence that these initial maturity differences have long lasting effects on student performance across OECD countries. In particular, the oldest students score 3-14 percentiles higher than the youngest students in grade four, and 3-9 percentiles higher in grade eight, depending upon the country. In fact, data from Zealand shows that the oldest children are even more likely to complete college. Taken together, these findings point to important early relative maturity effects that propagate themselves into adulthood through the structure of education systems.

We analyze how economy-wide forces (i.e.shocks to terms of trade, technology and endowments) affect the intensity of social conflict. We see conflict phenomena such as crime and civil war as involving resource appropriation activities. We show that not all shocks that could make society richer will reduce conflict. Positive shocks to labor intensive industries will diminish social conflict, while positive shocks to capital intensive industries will increase it. The key requirement is that appropriation activities be more labor intensive than the economy. Our model can explain the positive association between crime and inequality, and the curse of natural resources; it predicts that aid in kind to war-ridden societies will have perverse effects, and offers guidance on how to integrate international trade policy and peacekeeping efforts. Including appropriation activities into a canonic general equilibrium model introduces a social constraint to policy analysis. Thus, we can also account for populist policies, apparently inefficient redistribution and “national development strategies”.

This study uses a new dataset combining survey and administrative data to investigate the longitudinal effects of subsidized housing on a broad range of outcomes relating to dependency. Given a household's assistance status in 1996, it examines outcomes over the subsequent three years. The aim is to produce an excellent comparison group by matching on the same variables (measured in an earlier period) as the outcomes to be examined. The main findings are that housing subsidy programs reduce individual earnings by roughly 15% and household size by 5-10%. Although these programs are found to affect neighborhood choice, neighborhood poverty rates explain little of the impact on individual earnings.

In this paper we estimate the causal effect of children on the labor supply of women using panel data on women from the 1979 National Longitudinal Survey of Youth (NLSY79). We examine the effect of children both prior to and after birth as well as how the effect of children varies with the number of children. We also decompose the total effect of children into the direct and indirect components and separately examine the dynamics of these components. Sequential participation decisions for four levels of labor market involvement and fertility decisions are jointly modeled. We allow decisions to be correlated in a general fashion both across time and across choices. The estimation is performed using Markov chain Monte Carlo methods. We find that children have a strong effect on a women’s labor market behavior in the post-birth period and that differences in expected fertility have a strong effect on labor market behavior in the pre-birth period. We also find that both the direct and indirect effects are large immediately after the birth of a child but that the indirect effect declines quickly over time. The effects of children vary by education and race.