Evaluating Public Programs with Close Substitutes: The Case of Head Start

An interesting paper from Pat Kline and Chris Walters:

This paper empirically evaluates the cost-effectiveness of Head Start, the largest early- childhood education program in the United States. Using data from the randomized Head Start Impact Study (HSIS), we show that Head Start draws a substantial share of its participants from competing preschool programs that receive public funds. This both attenuates measured experimental impacts on test scores and reduces the program’s net social costs. A cost-benefit analysis demonstrates that accounting for the public savings associated with reduced enrollment in other subsidized preschools can reverse negative assessments of the program’s social rate of return. Estimates from a semi-parametric selection model indicate that Head Start is about as effective at raising test scores as competing preschools and that its impacts are greater on children from families unlikely to participate in the program. Efforts to expand Head Start to new populations are therefore likely to boost the program’s social rate of return, provided that the proposed technology for increasing enrollment is not too costly.

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Capital Taxation in the 21st Century

From Alan Auerbach and Kevin Hassett for their upcoming AEA talk. The session looks interesting.

Jan 03, 2015 8:00 am, Sheraton Boston, Independence Ballroom
American Economic Association

A Discussion of Thomas Piketty’s “Capital in the 21st Century” (D3)
PresidingN. GREGORY MANKIW (Harvard University)
Capital and Wealth in the 21st Century

DAVID N. WEIL (Brown University)

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Capital Taxation in the 21st Century

ALAN J. AUERBACH (University of California-Berkeley)
KEVIN HASSETT (American Enterprise Institute)

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Yes, r>g. So what?

N. GREGORY MANKIW (Harvard University)

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About Capital in the 21st century

THOMAS PIKETTY (Paris School of Economics)
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Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality

From Chad Jones:

Since the early 2000s, research by Thomas Piketty, Emmanuel Saez, and their coathors has revolutionized our understanding of income and wealth inequality. In this paper, I highlight some of the key empirical facts from this research and comment on how they relate to macroeconomics and to economic theory more generally. One of the key links between data and theory is the Pareto distribution. The paper describes simple mechanisms that give rise to Pareto distributions for income and wealth and considers the economic forces that influence top inequality over time and across countries. For example, it is in this context that the role of the famous r-g expression is best understood.

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Mr. Brownback’s solution to fill the current $200M budget hole

From NYTimes:

Most of Mr. Brownback’s solution to fill the current hole comes through transferring more than $200 million from various state funds, such as one for highway projects and another for early-childhood education programs, into the state general fund. He also ordered a 4 percent budget cut to many, though not all, state agencies. He spared things like classroom funding and Medicaid, which would have sparked a lot of controversy if they were cut.

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How Gary Becker saw the scourge of discrimination

From Kevin Murphy:

In the 1950s, few economists thought of phenomena such as racial discrimination as under their purview. That changed in 1957, when Gary S. Becker, Professor of Economics and of Sociology at the University of Chicago and at Chicago Booth before his death in 2014, published The Economics of Discrimination, a book based on his 1955 PhD thesis.

Becker’s analysis would extend the reach of economics, and completely reshape the field—and social-science research in general, but it took decades to do so. “For several years it had no visible impact on anything,” he later recalled. “Most economists did not think racial discrimination was economics, and sociologists and psychologists generally did not believe I was contributing to their fields.”

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How to do a Job Market Spiel? Be Justin Wolfers

Originally posted on owenzidar:

I was looking up a paper on declining labor shares to prepare for interviews and came across these 90 second paper pitches by Justin Wolfers and realized that they are great demonstrations of how to do a job market spiel (see herehere, or here for more job market materials)

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Who Pays for the Minimum Wage?

From Attila Lindner and  Péter Harasztosi:

This paper analyzes the effects of a large (~60%) and persistent increase in the minimum wage instituted in Hungary in 2001. We propose a new approach to estimating the employment effects of a minimum wage increase that exploits information on the distribution of wages before and after the policy change. We infer the number of jobs destroyed by comparing the number of pre-reform jobs below the new minimum wage to the excess number of jobs paying at (and above) the new minimum wage. Our estimates imply that the higher minimum wage had at most a small negative effect on employment, and so the main effect was pushing up wages. We then use data on a large panel of firms to evaluate the economic incidence of the minimum wage increase. Contrary to theoretical models that attribute the small employment effects of minimum wage changes to monopsonistic wage setting, we find no evidence that the rise in the minimum wage led to lower profitability among low-wage employers. Instead, we find that the costs of the minimum wage were largely passed through to consumers.

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