Economic Network

American Economic Journal:

Applied Economics

Vol. 8, Issue 4 — October 2016

 

Buy the Book? Evidence on the Effect of Textbook Funding on School-Level Achievement (#5)
Kristian L. Holden
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Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Welfare? Evidence from Cigarette Tax Hikes (#6)
David Simon
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Habit Formation in Voting: Evidence from Rainy Elections (#7)
Thomas Fujiwara, Kyle Meng and Tom Vogl
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Patents as a Spur to Subsequent Innovation? Evidence from Pharmaceuticals (#8)
Duncan S. Gilchrist
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Iron Deficiency and Schooling Attainment in Peru (#9)
Alberto Chong, Isabelle Cohen, Erica Field, Eduardo Nakasone and Maximo Torero
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The Impact of High School Financial Education: Evidence from a Large-Scale Evaluation in Brazil (#10)
Miriam Bruhn, Luciana de Souza Leão, Arianna Legovini, Rogelio Marchetti and Bilal Zia
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(1) Front Matter
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(2) The Long-Run Effects of Labor Migration on Human Capital Formation in Communities of Origin
Taryn Dinkelman and Martine Mariotti
We provide new evidence of one channel through which circular labor migration has long-run effects on origin communities: by raising completed human capital of the next generation. We estimate the net effects of migration from Malawi to South African mines using newly digitized census and administrative data on access to mine jobs, a difference-in-differences strategy, and two opposite-signed and plausibly exogenous shocks to the option to migrate. Twenty years after these shocks, human capital is 4.8-6.9 percent higher among cohorts who were eligible for schooling in communities with the easiest access to migrant jobs.
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(3) The Long-Run Economic Consequences of High-Stakes Examinations: Evidence from Transitory Variation in Pollution
Avraham Ebenstein, Victor Lavy and Sefi Roth
Cognitive performance during high-stakes exams can be affected by random disturbances that, even if transitory, may have permanent consequences. We evaluate this hypothesis among Israeli students who took a series of matriculation exams between 2000 and 2002. Exploiting variation across the same student taking multiple exams, we find that transitory PM2.5 exposure is associated with a significant decline in student performance. We then examine these students in 2010 and find that PM2.5 exposure during exams is negatively associated with postsecondary educational attainment and earnings. The results highlight how reliance on noisy signals of student quality can lead to allocative inefficiency.
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(4) What Does Debt Relief Do for Development? Evidence from India’s Bailout for Rural Households
Martin Kanz
This paper studies the impact of debt relief, using a natural experiment arising from India’s „Agricultural Debt Waiver and Debt Relief Scheme,“ one of the largest household-level debt relief initiatives in history. I find that debt relief has a substantial impact on household balance sheets, but does not affect savings, consumption and investment, as predicted by theories of debt overhang or balance sheet distress. Instead, debt relief leads to greater reliance on informal credit, reduced investment, and lower agricultural productivity. Consistent with moral hazard generated by the bailout, beneficiaries are significantly less concerned about the reputational consequences of future default.
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(5) Buy the Book? Evidence on the Effect of Textbook Funding on School-Level Achievement
Kristian L. Holden
This paper considers the effect of textbook funding on school-level test performance by using a quasi-experimental setting in the United States. I consider a lawsuit in California that provided a one-time payment of $96.90 per student for textbooks if schools fell below a threshold of academic performance. Exploiting this variation with a regression discontinuity (RD) design, I find that textbook funding has significant positive effects on school-level achievement in elementary schools and has a high benefit-per-dollar. In contrast to elementary schools, I find no effect in middle and high schools though these estimates are very imprecise.
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(6) Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Welfare? Evidence from Cigarette Tax Hikes
David Simon
Evidence suggests that excise taxes on tobacco improve fetal health. However, it remains unknown if smoke exposure in early life causes lasting harm to children. I find that in utero exposure to a dollar increase in the state cigarette tax causes a 10 percent decrease in sick days from school and a 4.7 percent decrease in having two or more doctor visits. I present additional evidence for decreases in hospitalizations and asthma. This supports the hypothesis that exposure to cigarette smoke in utero and infancy carries significant medium-term costs, and that excise taxes can lead to lasting intergenerational improvements in well-being.
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(7) Habit Formation in Voting: Evidence from Rainy Elections
Thomas Fujiwara, Kyle Meng and Tom Vogl
We estimate habit formation in voting–the effect of past on current turnout–by exploiting transitory voting cost shocks. Using county-level data on US presidential elections from 1952-2012, we find that rainfall on current and past election days reduces voter turnout. Our estimates imply that a 1-point decrease in past turnout lowers current turnout by 0.6-1.0 points. Further analyses suggest that habit formation operates by reinforcing the direct consumption value of voting and that our estimates may be amplified by social spillovers.
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(8) Patents as a Spur to Subsequent Innovation? Evidence from Pharmaceuticals
Duncan S. Gilchrist
This paper examines how an incumbent’s patent protection acts as an implicit subsidy toward non-infringing substitutes. I analyze whether classes of pharmaceuticals whose first entrant has a longer period of market exclusivity (time between approval and generic entry) see more subsequent entry. Instrumenting for exclusivity using plausibly exogenous delays in the development process, I find that a one-year increase in the first entrant’s market exclusivity increases subsequent entry by 0.2 drugs. The effect is stronger for subsequent entrants that are lesser clinical advances, suggesting it is driven primarily by imitation.
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(9) Iron Deficiency and Schooling Attainment in Peru
Alberto Chong, Isabelle Cohen, Erica Field, Eduardo Nakasone and Maximo Torero
Do nutritional deficiencies contribute to the intergenerational persistence of poverty by reducing the earnings potential of future generations? To address this question, we made available supplemental iron pills at a health center in rural Peru and encouraged adolescents to take them via media messages. School administrative data provide novel evidence that reducing iron deficiency results in a large and significant improvement in school performance and aspirations for anemic students. Our findings demonstrate that combining low-cost outreach efforts and local supplementation programs can be an affordable and effective method of reducing rates of adolescent iron deficiency anemia.
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(10) The Impact of High School Financial Education: Evidence from a Large-Scale Evaluation in Brazil
Miriam Bruhn, Luciana de Souza Leão, Arianna Legovini, Rogelio Marchetti and Bilal Zia
We study the impact of a comprehensive high school financial education program spanning 6 states, 892 schools, and approximately 25,000 students in Brazil through a randomized control trial. The program increased student financial proficiency by a quarter of a standard deviation and raised grade-level passing rates. Short-term financial behaviors, however, show mixed results with significant improvements in students‘ savings and budgeting as well as positive spillovers to parents, but also an increase in students‘ use of expensive credit to make consumer purchases.
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