TRADE LIBERALIZATION AND RACIAL ANIMUS

Since the year 2000, the number of recorded hate groups in the United States has increased by more than 50 %. Some argue that the strain caused by unemployment or other socioeconomic stressors can play a critical role in the prevalence of extremist groups and crimes. We examine whether a change in U.S. policy to normalize trade relations with China, which fueled a surge in import competition that led to higher levels of unemployment, affected the presence of hate crimes. Using a difference‐in‐differences model and an event‐study framework, we find that areas most exposed to import competition experienced an increase in the number of anti‐Black hate crimes. We also find a qualitatively similar effect on the number of active hate groups in response to import competition. This result holds pre‐ and post‐the Great Recession and is consistent across levels of aggregation. The results are consistent and robust to various controls and specifications. (JEL F13, F16, Z13)     

Status‐Seeking in Criminal Subcultures and the Double Dividend of Zero‐Tolerance

This paper offers a new argument for why a more aggressive enforcement of minor offenses (zero‐tolerance) may yield a double dividend in that it reduces both minor offenses and more severe crime. We develop a model of criminal subcultures in which people gain social status among their peers for being “tough” by committing criminal acts. As zero‐tolerance keeps relatively “gutless” people from committing a minor offense, the signaling value of that action increases, which makes it attractive for some people who would otherwise commit more severe crime. If social status is sufficiently important in criminal subcultures, zero‐tolerance reduces crime across the board.     

TAXES,INCOME, AND RETIREMENT SAVINGS: DIFFERENCES BY PERMANENT AND TRANSITORY INCOME

This article examines the determinants of and benefits from saving for retirement in tax‐preferred accounts by permanent and transitory income levels. We find that higher incomes (both permanent and transitory) are associated with a greater probability to contribute and larger contributions. We also find that tax benefits for retirement savings increase strongly with income, although the increase is slightly smaller when taxpayers are ranked by their permanent (rather than current) income. In addition, we find that a large portion of the benefits from the Saver's Credit go to taxpayers who would not be eligible based on their permanent income. Finally, we find that recent tax changes (including the introduction of the Saver's Credit) significantly increased contributions among low‐income households, although the effect was centered among those with only transitorily low income. (JEL H24, H31, E21)     

The effects of gun control on crimes: a spatial interactive fixed effects approach

This paper examines the effect of right-to-carry laws on crimes. We relax the assumption that unobserved time effects have homogeneous impacts on states; therefore, states with right-to-carry laws may follow different time trends which might be stronger or weaker than those of other states including states with no right-to-carry laws. The heterogeneous time trends are modeled by a factor structure where time factors represent time-varying unobservables, and factor loadings account for their heterogeneous impacts across states. No assumption is imposed on the shape of the time trend. Crime statistics exhibit spatial dependence, and a state’s adoption of right-to-carry law may have external effects on its neighboring states. Using a dynamic spatial panel model with interactive effects, we find positive spatial spillovers in crime rates. Depending on a crime category, an average \(1\%\) reduction in crime rates in neighboring states can decrease crime rates by 0.069–0.287%, with property crimes exhibiting higher degrees of spatial dependence than violent crimes. We find that although the passage of right-to-carry laws has no significant effects on the overall violent or property crime rates, they lead to short-term increases in robbery and medium-term decreases in murder rates. The results are robust to the number of factors, a different sample ending point, and some alternative spatial weights matrices and model specifications.     

How Effective Are Non‐Monetary Instruments for Safe Driving? Panel Data Evidence on the Effect of the Demerit Point System in Denmark

Using unusually rich longitudinal data on traffic offenses, this paper exploits a reform that introduced a point‐recording scheme in Denmark to estimate the behavioral responses of drivers to a non‐monetary penalty based on demerit points. We find that drivers exhibited substantial behavioral responses to each demerit point assigned to their driving licenses. We also find that drivers’ efforts, and hence responses, increased with the number of demerit points they accumulated. Depending on the number of demerit points accumulated, drivers with one or more demerit points reduced their frequency of traffic offenses by 9–34 percent.     

HOW RELIABLE ARE CYCLICALLY ADJUSTED BUDGET BALANCES IN REAL TIME?

Cyclically adjusted budget balances (CABs) are often used to provide an indication of the structural state of public finances. This paper analyzes the reliability of these figures in real time. In a test of the ability to forecast the “final data,” we find that real‐time CABs are outperformed by a simpler methodology. Furthermore, we find that real‐time CABs have low power in detecting fiscal slippages and in correctly identifying fiscal improvements. Finally, we find that CABs are systematically less reliable under conditions of poor or deteriorating public finances, which means they are at their most unreliable precisely when they are needed most. (JEL H62, H87)     

Marijuana and alcohol: Evidence using border analysis and retail sales data

We use retail scanner data on purchases of alcoholic beverages across US counties for 2006 to 2015 to study the link between medical marijuana laws (MMLs) and alcohol consumption. To do this, we exploit differences in the timing of marijuana laws among states and find that they are substitutes. We show that unlike traditional national-level analysis, focusing on contiguous-border county pairs provides unbiased estimates of the effect of MMLs on alcohol sales. Specifically, alcohol sales in counties located in MML states decreased by 12.4%. Results are robust to including placebo effective dates for MMLs in treated states.     

Trade and the Recognition of Commercial Lingua Francas: Russian Language Laws in Post‐Soviet Countries

Trade has the potential to influence a wide range of political and social outcomes. Using the post‐Soviet context, we examine how language policies – vital components for how minorities are treated with far‐reaching economic consequences – are influenced by trade. We argue that while ethnic politics and colonial legacies are both important in shaping language laws, it is important to recognize that the Russian language remains a significant commercial lingua franca in the region. When economic exchanges between Russia and other post‐Soviet republics are frequent, governments are more likely to adopt pro‐Russian language laws as a practicality and to maintain favor with the Russian government and Russian‐speaking businesses. Using an original dataset covering all Russian language‐related laws in the former Soviet states from 1992 to 2009, we find a significant and positive relationship between trade and pro‐Russian language laws. These results are robust even when we (1) instrument for Russian import levels and (2) consider the Baltic effect, spillovers from cultural affinity, and the uniqueness of fuel exports.     

Keeping up by robbing the Joneses

In this article, we find evidence of a ‘keeping up with the Joneses’ effect in the relationship between inequality and crime in Italy. We use data on minor and major crimes in the 20 Italian regions in the years 2004–2015 and show that for higher (lower) income levels, inequality leads individuals to commit major (minor) crimes to try to keep up with richer people.     

THE EFFECT OF MARIJUANA DISPENSARY OPENINGS ON HOUSING PRICES

We evaluate the effect of medical and recreational dispensary openings on housing prices in Denver, Colorado. Using an event study approach, we find that the introduction of a new dispensary within a half‐mile radius of a new home increases home prices by approximately 7.7% on average. The effect diminishes for homes further from new dispensaries but is consistent over time. Our results provide important and timely empirical evidence on the socioeconomic impacts of marijuana legalization. (JEL R32, R38, R5)     

Strategic Interaction Among Local Governments in Japan: An Application to Cultural Expenditure

In the context of limited local government resources, cultural expenditures are often targeted for reduction. In Japan in particular, with its aging population, cultural expenditures have low priority. This paper examines whether or not local governments strategically influence each other with respect to cultural spending, using data from Japanese local governments. By estimating the reaction functions for local cultural expenditures, we find that there exists free‐rider behaviour between local cultural expenditures that produce beneficial spillover effects. We also find a larger free‐rider incentive the shorter the distance between neighbouring regions, the shorter the travel time between neighbouring regions, and the larger the neighbouring region's population. Furthermore, our results reveal that the provision of cultural services through intergovernmental strategic behaviours is more elastic with respect to the relative change of the distance or the travel time among neighbouring regions than to that of the population size among neighbouring regions.     

MEASURING THE IMPACT OF VALUING HEALTH INSURANCE ON LEVELS AND TRENDS IN INEQUALITY AND HOW THE AFFORDABLE CARE ACT OF 2010 COULD AFFECT THEM

A substantial part of the U.S. inequality literature focuses on yearly levels and trends in pre‐tax, post‐transfer cash income and its distribution over time and finds that median income appears to be stagnating, with income growth primarily coming at higher income levels. When we use data from the Current Population Survey for 1995–2008 and add the value of employer‐ and government‐provided health insurance coverage, not only does it increase the upward trend in the level of resources controlled by Americans, but also reduces the level of inequality in these resources and its upward trend. We then provide a highly stylized example of this broader income measure's value in capturing the impact of two key provisions of the Affordable Care Act of 2010—an expansion in Medicaid and the provision of subsidies to lower‐income families for purchasing private coverage on state‐run exchanges. Even though these incremental expansions build on existing systems of government‐provided health insurance, we find that the vast majority of the benefits would still accrue to the bottom three deciles of the income distribution when we include the value of employer‐ and government‐provided health insurance in our expanded yearly income measure. (JEL D31, H51, I14)     

Is property crime caused by drug use or by drug enforcement policy?

The relationships among drug offenses, prorperty crime, and the allocation of police resources are investigated in a structural model using data from Florida countries. Law enforcement resources are scarce, and as efforts to combat drug crime increase the amount of these resources allocated to property crime is reduced. This reallocation of police resources results in reduced deterrence for property crime and, as a result, an increase in these crimes. The evidence presented suggests that rising property crimes in Florida are at least partially the result of drug enforcement policy.     

Trade-offs in the allocation of prosecution resources: an opportunity cost of overcriminalization

One in every five citizens has a criminal record in Korea. Scarce prosecution resources have been severely skewed toward prosecuting more ‘legislated crime’ than ‘conventional crime’. We estimate the opportunity cost of this prosecutory pattern in terms of spillovers to conventional crimes. The cost was found to be substantial. For example, in 2003, the total spillovers accounted for approximately 25% of the increase in conventional crimes for 3 years from 2000 because of the disproportionate prosecutory focus on legislated crimes compared with that of the 1990s. This article has relevance to those countries with an overcriminalizing trend for legislated crimes.     

THE EFFECT OF THE BUSINESS CYCLE ON FRESHMAN FINANCIAL AID

When the economy slips into recession, more needy students enroll in college, increasing the need for financial aid while resources for aid become more scarce. We use “Freshman Survey” data from the Higher Education Research Institute to observe changes in financial aid composition from 1980 to 2000. We use state‐level tax revenues, unemployment rates, and personal income growth as macroeconomic indicators. During recessions, we find that the burden of financing a student's college education shifts from states and institutions to families and federal programs. We also show that these macroeconomic fluctuations are increasingly volatile for underrepresented minorities. (JEL I22, H52, E32)     

MEDIA ADVERTISING AND BALLOT INITIATIVES: THE CASE OF ANIMAL WELFARE REGULATION

Spending on political advertising increases with every election cycle, not only for congressional or presidential candidates, but also for state‐level ballot initiatives. There is little research in marketing, however, on the effectiveness of political advertising at this level. In this study, we conduct an experimental analysis of advertisements used during the 2008 campaign to mandate new animal welfare standards in California (Proposition 2). Using subjects' willingness‐to‐pay for cage‐free eggs as a proxy for their likely voting behavior, we investigate whether advertising provides real information to likely voters, and thus sharpens their existing attitudes toward the issue, or whether advertising can indeed change preferences. We find that advertising in support of Proposition 2 was more effective in raising subjects' willingness‐to‐pay for cage‐free eggs than ads in opposition were in reducing it, but we also find that ads in support of the measure reduce the dispersion of preferences and thus polarize attitudes toward the initiative. More generally, political ads are found to contain considerably more “hype” than “real information” in the sense of Johnson and Myatt [Johnson, J. P., and D. P. Myatt. “On the Simple Economics of Advertising, Marketing and Product Design.” American Economic Review, 96, 2006, 756–84]. (JEL D12, D72, K32, L66, M37)     

FOREIGN DIRECT INVESTMENT IN MEXICO,CRIME, AND ECONOMIC FORCES

This paper re‐examines inflows of foreign direct investment (FDI) in the 32 subnational Mexican states based on quarterly data from 2005 to 2015, which includes rising drug‐related crimes. We estimate our models using panel data methods by type of crime, state‐level indicators (real wages and electricity consumption), macroeconomic forces (the real exchange rate and interest rate), and a dummy variable for the financial crisis of 2008–2009. We employ a flexible lag‐length method and find that homicides and thefts have negative and statistically significant effects on FDI, while other crimes have no effects. Subsample work suggests higher negative effects in the most violent states. (JEL F15, F21, F23, F36)     

“COERCIVE COOPERATION”? ONTARIO'S PAY EQUITY ACT OF 1988 AND THE GENDER PAY GAP

Evaluating the effect of pay‐equity laws is important and yet difficult as one needs to deduce what would have occurred without the policy intervention. We use a new tool, synthetic‐control method, to examine the effects of Ontario's Pay Equity Act on the gender pay gap. This tool enables us to create a “Synthetic” Ontario, which resembles Ontario more closely than does any other single province. Using Synthetic Ontario to compare what actually happened in Ontario to what would have happened, we find that the act has had little or no effect on the female‐male wage gap in Ontario. (JEL J7, J3)     

AN EVALUATION OF FINANCIAL INCENTIVE POLICIES FOR ORGAN DONATIONS IN THE UNITED STATES

This paper examines the association between financial incentives and organ donations. Although the National Organ Transplant Act of 1984 prohibits financial compensation for organs for transplant, we focus on the impact of laws that influence the relative cost of deceased and live organ donations on the supply of organs for transplant. First, we hypothesize that states that have relatively stringent funeral regulations, which have been associated with higher whole‐body donations, will have fewer organ donations. Second, we examine the impact of two common state laws that offer financial compensation to live donors: one that allows a tax deduction for costs incurred and the other which entitles government employees up to 30 days of paid leave. We find no evidence to support that these laws affect organ donations. (JEL I11, I18)     

GROWTH AND VARIABILITY OF SCHOOL DISTRICT INCOME TAX REVENUES: IS TAX BASE DIVERSIFICATION A GOOD IDEA FOR SCHOOL FINANCING?

School districts in Ohio have the option of diversifying their revenue base by adopting income taxes. Using a panel of Ohio school districts that adopted a local income tax from 1990 to 2008, we find that revenues are procyclical and fluctuate only mildly. The estimated short‐ and long‐run income elasticity of school district income tax revenues is 1.05 and 1.04, respectively. We also find that the school district tax base fully adjusts to its long‐run equilibrium within 2 years. Finally, we show that school district income tax adoption does not provide more stability to total school district tax revenues in the short or the long run. (JEL H71, H75)