Every Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong). But they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers.
Title: “The Skill Complementarity of Broadband Internet”
Authors: Anders Akerman, Ingvil Gaarder, Magne Mogstad
What they found: The introduction of broadband Internet in Norway enhanced the productivity of businesses by boosting the work of skilled employees, but it made unskilled workers less valuable.
Why it matters: Some politicians, including President Obama, tout the benefits of broadband Internet — they say it will create jobs and spur innovation by enabling businesses to harness a better Internet infrastructure and to be more competitive. Economists are a bit skeptical. To isolate broadband’s effect on productivity, the authors of this paper looked to Norway. Between 2001 and 2007, the country built public infrastructure to support broadband Internet. The service was made available at different “access points” at different times. Firms near the access points saw significant productivity gains. And, furthermore, the program had a polarizing effect on workers: The most-skilled saw their productivity and their earnings boosted; but the unskilled had worse labor market outcomes, as broadband made automating their jobs easier.
Key quote: “Taken together, our findings have important implications for the debate about the role of government policies in the expansion of broadband infrastructure. Our estimates suggest that policy increasing the broadband penetration rates can be important in enhancing firm productivity. … Examining who wins, who loses, and by how much could inform about the nature of these barriers and how to design compensation schemes.”
Data they used: Firm, worker and Internet data from Statistics Norway and verified by the Norwegian Tax Authority.
Title: “The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms”
Authors: C. Kirabo Jackson, Rucker C. Johnson, Claudia Persico
What they found: Increases in per-pupil school spending lead to higher graduation rates and, when the students become adults, greater earnings and fewer cases of poverty. The benefits were particular large for low-income students.
Why it matters: On the surface, there seems to be no positive relationship between more school spending and better student achievement. But such surface-level summaries do not account for the complexities of how school funding is allotted. For instance, school districts with lots of low-income students are mandated by law to receive more funding. Tracking students born between 1955 and 1985, the researchers isolated the districts where court-mandated reforms would affect spending at those students’ schools; next, they compared those students’ achievement to similar students’ progress in districts that did not receive greater funding. The effects they found were huge and likely causal: A 10 percent increase in per-pupil spending led to higher graduation rates, nearly 10 percent higher earnings in adulthood, and fewer incidents of poverty later in life. The researchers found small effects on students from affluent families but huge effects on poor students.
Key quote: “Accordingly, our findings provide compelling evidence that money does matter and that better school resources can meaningfully improve the long-run outcomes of recently educated children. At the same time, our results also suggest that money alone might not improve outcomes because the effect of any spending increases will depend on exactly how funds are spent.”
Data they used: Longitudinal data on more than 15,000 children born between 1955 and 1985 and followed into adulthood, from the Panel Study of Income Dynamics.
Title: “Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs”
Authors: Julio J. Elias, Nicola Lacetera, Mario Macis
What they found: Individuals became significantly more likely to support a system legalizing payments for human organs after presented with information about such a system.
Why it matters: In the U.S., more than 120,000 people are on a waiting list for an organ transplant; every year more than 10,000 die waiting for a transplant. To fix the supply shortage, economists argue that would-be donors (of a kidney, for example) might be nudged to give their organs in greater numbers if they were offered money. But a significant number of people find this objectionable. Not just practically objectionable — would such a system be susceptible to abuse, with poor individuals coerced by economic circumstance into donating? — but morally objectionable. The researchers behind this paper devised an experiment to test whether moral resistance to payments for organs would respond to new information — like details about the organ supply shortage in the U.S., and proposals and studies arguing for payments-based solutions. They interviewed more than 3,000 subjects. The experiment revealed that 52 percent of respondents were tolerant of a market for organs, but when presented with information outlining the case for an organ market, this number jumped to 72 percent.
Key quote: “Our findings provide insights into the role of information and scientific evidence in how people perceive activities and transactions that are morally charged and the importance of the choice set in individuals decisions; supplying evidence and promoting studies on a number of sensitive topics might therefore lead to greater awareness and improved policy design based on the actual preferences of a population. In the case of introducing regulated payments for organ donors and their families in particular, the evidence is particularly strong that informing society about the potential benefits of economic incentives does impact the acceptability of this transaction.”
Data they used: Online survey experiment of 3,417 individuals living in the United States.