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Reporter NATIONAL BUREAU of ECONOMIC RESEARCH NBER Reporter NATIONAL BUREAU OF ECONOMIC RESEARCH Reporter OnLine at: www.nber.org/reporter 2011 Number 1 Program Report IN THIS ISSUE Program Report Economics of Education Economics of Education 1 Research Summaries Caroline M. Hoxby* Urban Growth and Climate Change 6 Reducing the Risks of Catastrophes 9 Trade Agreements as Incomplete Contracts 12 The Economics of Education Program is both exciting and productive, The Impact of Employee Pension Promises 15 currently adding new Working Papers at the rate of 7.5 per month — a 50 percent increase from the rate at the time of my last program report in fall NBER Profiles 18 2006. The number of papers submitted for a typical Program Meeting is Conferences 20 often ten times the number of available slots, and attendance at those meet- NBER News 21 ings is high. Program and Working Group Meetings 25 I am particularly proud of three aspects of the Program. The first is Bureau Books 30 the quality of the research being produced and the methods used by mem- bers, including some of the latest, most rigorous methods in applied micro- econometrics. The second is the fact that members use some of the richest, most comprehensive datasets in economics — many of these datasets were initially compiled by schools or school-related organizations, and program members deserve enormous credit for their resourcefulness in making them useful for economic research by establishing strong, collegial relationships with data providers, convincing schools to conduct randomized and other policy experiments, matching data from diverse sources, and themselves surveying or testing people when data otherwise would be missing. Third, program members produce research that is policy relevant, credible to policymakers, and grounded in economic logic. The NBER’s Higher Education Working Group was integrated into the Economics of Education Program in 2009. We made the integration an occasion to celebrate the leadership of Charles T. Clotfelter, director of that working group, who oversaw an immense improvement in the quality of research on the economics of higher education. Although the practical policy questions differ across the two levels of education, all of the meth- ods, much of the data, and much of the deep economic logic are shared. *Hoxby is the Director of the NBER’s Program on Economics of Education and the Scott and Donya Bommer Professor of Economics at Stanford University. The numbers in parends throughout this report refer to NBER Working Papers. A complete list of NBER Education Working Papers can be found at: www.nber.org/papersbyprog/ED.html NBER Reporter • 2011 Number 1 Areas of Continuing Interest NBER Reporter and New Interest In my last review, I focused on three areas in which research was advancing particularly rap- idly: the analysis of peer effects; the estimation of teachers’ effects on achievement; and mak- The National Bureau of Economic Research is a private, nonprofit research orga- nization founded in 1920 and devoted to objective quantitative analysis of the ing sense of students’ college choices (not just American economy. Its officers and board of directors are: whether to attend college in the first place, but President and Chief Executive Officer — James M. Poterba which schools to attend and whether to persist Controller — Kelly Horak at each school). These three areas continue to be highly productive. For instance, Elias Bruegmann BOARD OF DIRECTORS and C. Kirabo Jackson (15202) demonstrate that, Chairman — John S. Clarkeson when a teacher whose own effect on achievement Vice Chairman — Kathleen B. Cooper Treasurer — Robert Mednick is strongly positive moves into a new school, her new colleagues improve. They further show that DIRECTORS AT LARGE the colleagues’ improved ability to raise achieve- Peter Aldrich Jessica P. Einhorn Michael H. Moskow ment is attributable to their changing, not merely Elizabeth E. Bailey Mohamed El-Erian Alicia H. Munnell to selection. That is, incumbent teachers in the Richard Berner Jacob A. Frenkel Robert T. Parry John Herron Biggs Judith M. Gueron James M. Poterba new school raise their performance. For another John S. Clarkeson Robert S. Hamada John S. Reed example, we now have substantial evidence on Don R. Conlan Peter Blair Henry Marina v. N. Whitman what happens to a student who goes to a school Kathleen B. Cooper Karen N. Horn Martin B. Zimmerman Charles H. Dallara John Lipsky where other students are high-achieving: his own George C. Eads Laurence H. Meyer achievement rises. This evidence relies on regres- sion discontinuity methods, that is, on compar- DIRECTORS BY UNIVERSITY APPOINTMENT ing the later achievement of students who are just George Akerlof, California, Berkeley Mark Grinblatt, California, Los Angeles above and just below some admissions thresh- Jagdish W. Bhagwati, Columbia Marjorie B. McElroy, Duke Glen G. Cain, Wisconsin Joel Mokyr, Northwestern old, where the threshold is not known to stu- Alan V. Deardorff, Michigan Andrew Postlewaite, Pennsylvania dents when they apply. Christian Pop-Eleches Ray C. Fair, Yale Uwe E. Reinhardt, Princeton and Miguel Urquiola (16886) study this situation Franklin Fisher, MIT Craig Swan, Minnesota John P. Gould, Chicago David B. Yoffie, Harvard in Romania; Damon Clark (“Elite Schools and Academic Performance”, presented at the spring DIRECTORS BY APPOINTMENT OF OTHER ORGANIZATIONS 2007 Program Meeting) studies this situation in Jean Paul Chavas, Agricultural and Applied Economics Association England; and C. Kirabo Jackson (16598) studies Martin Gruber, American Finance Association this situation in Trinidad and Tobago. Turning to Ellen Hughes-Cromwick, National Association for Business Economics college-going behavior, some of the most inter- Arthur B. Kennickell, American Statistical Association Thea Lee, American Federation of Labor and esting new research provides rigorous evidence Congress of Industrial Organizations on how students respond to scholarships and William W. Lewis, Committee for Economic Development other financial aid designed to improve their col- Robert Mednick, American Institute of Certified Public Accountants Alan L. Olmstead, Economic History Association lege outcomes. Aimee Chin and Chinhui Juhn John J. Siegfried, American Economic Association (15932) show that allowing undocumented stu- Gregor W. Smith, Canadian Economics Association dents to pay in-state tuition (usually just one-third Bart van Ark, The Conference Board to one-half of out-of-state tuition) has no statis- The NBER depends on funding from individuals, corporations, and private foun- tically significant effect on their college atten- dations to maintain its independence and its flexibility in choosing its research activities. Inquiries concerning contributions may be addressed to James M. dance. Stephens Desjardins and Brian McCall Poterba, President & CEO, NBER 1050 Massachusetts Avenue, Cambridge, MA (“The Impact of the Gates Millenium Scholars 02138-5398. All contributions to the NBER are tax deductible. Program”, presented at the spring 2008 Program The Reporter is issued for informational purposes and has not been reviewed by Meeting) show that Gates Scholarships very mod- the Board of Directors of the NBER. It is not copyrighted and can be freely repro- estly improved persistence among the low-income duced with appropriate attribution of source. Please provide the NBER’s Public Information Department with copies of anything reproduced. minority students eligible for them. Since my last report, several new themes Requests for subscriptions, changes of address, and cancellations should be sent also have emerged in Economics of Education to Reporter, National Bureau of Economic Research, Inc., 1050 Massachusetts Avenue, Cambridge, MA 02138-5398. Please include the current mailing label. research. Two notable ones are the importance of information and the role of incentives for stu- 2 NBER Reporter • 2011 Number 1 dents, teachers, and schools. Because any Oreopoulos, and Lisa Sanbonmatsu when viewed against the background of program review is necessarily selective, I (15361) designed an experiment in coordi- family income or the potential returns to focus here mainly on illustrating these new nation with the tax preparer H&R Block. college attendance. Yet, the policy change themes. Some families with college-aged children caused about 40 percent of students to were randomly assigned to be given infor- send their scores to an additional school. The Importance of Information mation on their child’s eligibility for gov- This generated some additional informa- ernment-based financial aid and on local tion for students because, when a student Much of the existing research on edu- college-going options. Some families also who is a plausible applicant sends his scores cation concerns the change in some con- were randomly assigned to receive help to a school, that school responds with bro- crete resource: a salary increase for teach- in filing the federal application for finan- chures and other materials describing its ers; a reduction in class size; a scholarship cial aid (“FAFSA”). The results, which offerings. It is striking that such a modest or other financial aid for students; the are highly credible owing to the random- change in information produced such siz- extension of compulsory schooling; or ized design, suggest that the intervention able effects on behavior. the opening of a program. Although such that combined information and FAFSA Avery and Turner (“Playing the resource changes often
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