AEA Research Highlights

In the fifteen years following the end of World War II, Western Europe's capital account surpluses were not sufficient to finance its trade deficit with the United States. Charles Kindleberger of MIT, who helped assemble the Marshall Plan , defined this gap as the "dollar shortage" and argued that it was a structural problem rooted in Europe's lagging productivity, one that could only be fixed by...

Since the 1990s, developers in Florida who want to build on wetlands have been required to buy offset credits from "wetland mitigation banks," private restoration projects that convert degraded land, often former pasture, back into functioning wetland elsewhere in the same region. Like other environmental offset markets, the program has proved controversial. In a  paper in the American Economic Re...

The place where a child grows up in America shapes their economic future to a significant degree . One long-suspected explanation is racial segregation, but proving whether segregation actually causes worse outcomes—rather than just correlating with them—has been challenging for economists. In a  paper in the American Economic Journal: Applied Economics , authors Eric Chyn , Kareem Haggag , and Br...

More than two billion people around the world do not have safe drinking water at home. Piped water infrastructure remains out of reach for much of the developing world, and cheaper alternatives like chlorine tablets have low take-up rates even when given away for free.  In a  paper in the American Economic Review , authors Fiona Burlig , Amir Jina , and Anant Sudarshan explore a third option. Work...

Asian Americans are the fastest-growing racial group in the United States and are on track to become the largest immigrant group by 2050. Yet, researchers have devoted much less attention to this population than to other immigrant groups. In a  paper in the Journal of Economic Perspectives , author Hannah M. Postel helps to fill that gap. She traces Asian immigration to the United States across th...

W. E. B. Du Bois is remembered as a civil rights leader, sociologist, and author of The Souls of Black Folk. But before he became famous for his empirical studies of Black life in America, Du Bois was a graduate student at Harvard studying cutting-edge economic theory. In 1891, at age 23, he submitted a 158-page manuscript entitled A Constructive Critique of Wage Theory to a Harvard prize competit...

Guidance counselors generally advise college applicants to diversify their applications across schools they believe to be safeties, matches, and reaches. Yet, prevailing economic theories of school choice suggest that such hedging strategies are suboptimal and that applicants should focus on applying to the best schools they have a chance of getting into. In a  paper in the American Economic Revie...

Between 1997 and 2011, opioid dispensing in the United States more than tripled, fueling what would become the deadliest drug epidemic in American history. This surge in the supply of opioids was concentrated among a small subset of doctors: roughly 1 percent of the doctors who prescribed opioids accounted for almost 50 percent of all domestic opioid doses prescribed. In a  paper in the American E...

The launch of Sputnik by the Soviet Union in October 1957 led to a geopolitical crisis that reshaped American science policy. Within months, Congress established NASA, and by 1961, President Kennedy committed the nation to landing a man on the moon before the decade's end. The resulting investment was massive, and the program still serves as a model of government spending for advocates of public R...

Most Americans agree that housing costs are too high, often blaming developers and landlords.  Many feel that the problem can be solved with price controls, development restrictions, and mandates on providing below-market-rate units. But these ideas are at odds with standard economic policy prescriptions, which suggest that the way to bring down costs is by increasing the housing supply. In a  pap...

Despite decades of civil rights legislation, many Black and White Americans, as well as other minorities, continue to live in racially homogeneous neighborhoods, with significant implications for access to quality schools, jobs, healthcare, and economic opportunities. In a  paper in the Journal of Economic Literature , authors Trevon D. Logan and John M. Parman examine the complexities of measurin...

For decades, the United States enjoyed what some called an exorbitant privilege—the ability to spend more than it earned without accumulating much debt to the rest of the world. But that privilege has ended. In a  paper in the American Economic Review , authors Andrew Atkeson , Jonathan Heathcote , and Fabrizio Perri found that the United States started accumulating significant liabilities to fore...

US household income has grown significantly, but much of that growth seems to be at the very top of the distribution. Just how much inequality has increased and why it is growing is a topic of debate among economists. Part of the challenge lies in a seemingly basic question: what exactly counts as income? In a  paper in the Journal of Economic Perspectives , author Matthieu Gomez disentangles the...

Drug prices have become a hot-button issue in the United States, with politicians across the spectrum agreeing that American consumers pay too much for prescription medications. But bringing down drug prices raises fundamental economic challenges that affect innovation, access, and healthcare costs worldwide. In a  paper in the Journal of Economic Perspectives , author Margaret K. Kyle examines ho...

Civil conflict has plagued much of Africa, with ethnically diverse countries experiencing particularly high rates of violence. Yet within these nations, patterns vary, leading to questions of why some groups rebel while others do not and why a given group rebels at certain times but not at other times. In a  paper in the American Economic Review , author Eleonora Guarnieri untangles the factors th...

The Clean Air Act has been an essential tool for reducing air pollution in the United States. But standard estimation methods may overstate its impact, according to a paper in the American Economic Journal: Economic Policy . Authors  Lutz Sager and Gregor Singer reexamined the 2005 regulations targeting fine particulate matter (PM2.5) and found that improvements in air quality were closer to a 3 p...

The patchwork nature of America's public safety net has evolved over centuries, shaped by political winds and changing views on poverty. Understanding this complicated history may help shed light on the core tensions that continue to define debates about who deserves assistance and how it should be provided. In a  paper in the Journal of Economic Perspectives , author Christopher Howard explored h...

Between 2006 and 2013, China's government poured enormous resources into its shipbuilding industry through various subsidies—from providing free coastal land to offering financing assistance for ship buyers. But estimating the true scale and impact of these policies is challenging, as governments are often opaque about their industrial support programs. In a  paper in the Journal of Economic Persp...

A growing number of US households hire advisers to assist with major financial decisions, such as planning life events or making portfolio choices for retirement. But some advisers exploit the inherent complexity of these decisions and the lack of sophistication of their clients to benefit themselves. In a  paper in the Journal of Economic Perspectives , Mark Egan , Gregor Matvos , and Amit Seru s...

In 2017, then-President Trump signed into law the Tax Cut and Jobs Act, which was arguably the largest corporate tax cut in US history. The TCJA significantly lowered the statutory rate that corporations pay in taxes and reshaped numerous tax rules. Proponents said it would boost US competitiveness on the international stage and juice business investment. But its overall effects are still being de...

A half a century ago, new high-yield varieties of crops were introduced to India, and it transformed the country's farming. This so-called "Green Revolution" significantly boosted agricultural output, allaying concerns about famine and food security. But it may have had some unanticipated consequences for long-term health outcomes. In a  paper in the American Economic Journal: Applied Economics ,...

Qualitative accounts of anthropologists indicate that social structure plays an important role in how resources are shared in society. But quantitative evidence measuring the impacts of social organization on financial ties and transfers has been lacking. In a  paper in the American Economic Review , authors Jacob Moscona and Awa Ambra Seck helped to fill that gap. They found that in East Africa,...

The Paycheck Protection Program (PPP) was launched at the height of the COVID-19 pandemic in the hopes that it would keep businesses from laying off workers during government shutdown measures taken to contain the spread of the disease. Initial estimates of the direct impacts have been mixed, with  some studies suggesting that the cost was hundreds of thousands of dollars per job saved. But a  pap...

In 2005, Austria's most prominent far-right party proclaimed a "Third Turkish Siege of Vienna." The campaign warned voters that, like their ancestors who were almost overrun by the Ottoman Empire four centuries ago, they were being culturally invaded by Muslims. The campaigners hoped to use long-past historical events to shape the behavior and sentiments of modern-day voters. But did it work? The...