Winter 2024 Journal of Economic Perspectives Free Online

I have been the Managing Editor of the Journal of Economic Perspectives since the first issue in Summer 1987. The JEP is published by the American Economic Association, which decided more than a decade ago–to my delight–that the journal would be freely available online, from the current issue all the way back to the first issue. You can download individual articles or entire issues, and it is available in various e-reader formats, too. Here, I’ll start with the Table of Contents for the just-released Winter 2024 issue, which in the Taylor household is known as issue #147. Below that are abstracts and direct links for all of the papers. I will probably blog more specifically about some of the papers in the few weeks, as well.

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Symposium on the Global Market for Talent

“Skilled Immigrants, Firms, and the Global Geography of Innovation,” by Britta Glennon

This article begins with an overview of the policy environment in the United States and abroad for skilled immigration, with a particular focus on “supply-driven” versus “demand-driven” systems. The overview emphasizes that firms play a central role in the skilled immigration process in most countries. I then survey the ample evidence that skilled immigrants have a strong positive effect on firm outcomes, followed by a discussion of the many margins of adjustment that firms have when their access to skilled immigrants is affected by national immigration policy. Finally, given such margins of adjustment and the importance of skilled immigrants to firms, I consider how the policies that affect skilled migration shape the global geography and quality of innovation. I conclude by discussing policy implications and open questions. In particular, I emphasize that evaluations of the impact of skilled immigration should not be constrained within borders: immigration flows and national immigration policies affect the global geography of innovation and investment.

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“Migration and Innovation: Learning from Patent and Inventor Data,” by Francesco Lissoni and Ernest Miguelez

Research on international migration and innovation relies heavily on inventor and patent data, with “migrant inventors” attracting a great deal of attention, especially for what concerns their role in easing the international transfer of knowledge. This hides the fact that many of them move to their host country before starting their inventive career or even before completing their education. We discuss the conceptual and practical difficulties that stand in the way of investigating other likely channels of influence of inventor’s migration on innovation, namely the easing of skill shortages and the increase of variety in inventive teams, firms, and location.

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Symposium on Taxation and Developing Countries

Tax Equity in Low- and Middle-Income Countries,” by Pierre Bachas ⓡ Anders Jensen ⓡ Lucie Gadenne

Income inequality is high and persistent in developing countries. In this paper, we ask what role taxation can or might play in reducing inequality in low and middle-income countries. Drawing on the recent literature, three findings emerge. Due to both structural factors and limited enforcement capacity, the effective distributional impacts of taxes often deviate from their ‘statutory’ objectives, in ways that are hard to predict based on evidence from high-income countries. Moreover, administrative reforms which are meant to be distributionally neutral end up having significant equity impacts because of the practical realities of implementation. Finally, the global challenges which tax authorities face to tax the very top of the income distribution appear to be even more pronounced in developing countries. We conclude by offering thoughts on future research and emphasize the need to carefully study equity characteristics of taxes at each stage of a country’s development path.

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“How Can Lower-Income Countries Collect More Taxes? The Role of Technology, Tax Agents, and Politics,” by Oyebola Okunogbe and Gabriel Tourek

Increasing tax revenues is a major policy goal in many low- and lower-middle-income countries. While economic growth is an important determinant of taxation, available evidence indicates that it does not automatically increase taxation. Rather, countries must make targeted investments in their tax capacity. In this paper, we examine the rapidly growing body of evidence on different interventions to improve tax capacity and increase tax revenues in lower income countries, with a focus on two key inputs: information technology and tax officials. We examine the role and limitations of digitization for identifying taxable entities, verifying tax liabilities, and ensuring collection of tax owed. We also consider how the deployment and incentives of tax officials shape their performance, and the interplay between them and technology tools. Lastly, we emphasize the importance of political incentives and consider the conditions under which governments choose to invest in tax capacity and expand tax collection.

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“Does the Value-Added Tax Add Value? Lessons Using Administrative Data from a Diverse Set of Countries,” by Anne Brockmeyer ⓡ Giulia Mascagni ⓡ Vedanth Nair ⓡ Mazhar Waseem ⓡ Miguel Almunia

The value-added tax (VAT) is a cornerstone of the modern tax system. It has many desirable properties in theory: it does not distort firms’ production decisions, it is difficult to evade, and it generates a substantial amount of revenue. Yet, in many countries there are discrepancies between the textbook model of the VAT and its practical implementation. Where the VAT implementation diverges from its textbook model, the tax may lose its desirable properties. We draw on firm-level administrative VAT records from 11 countries at different income levels to examine the functioning of real-world VAT systems. We document four stylized facts that capture departures from the textbook VAT model which are particularly pronounced in lower-income countries. We discuss the effects on VAT performance and simulate a counterfactual retail sales tax and a turnover tax. Despite its shortcomings, we conclude that the real-world VAT is superior to the alternatives.

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Articles

“The Failure of Silicon Valley Bank and the Panic of 2023,” by Andrew Metrick

The failure of Silicon Valley Bank on March 10, 2023 brought attention to significant weaknesses across the banking system, leading to a panic that spread to other vulnerable banks. With subsequent failures of Signature Bank and First Republic Bank, the United States had three of the four largest bank failures in its history occur over a two-month period. Several features of the Silicon Valley Bank failure make it an ideal teaching case for explaining the underlying economics of banking (in general) and banking crises (specifically). This paper tries to do that.

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“Is Pay Transparency Good?” by Zoë Cullen

Countries around the world are enacting pay transparency policies to combat pay discrimination. Since 2000, 71 percent of OECD countries have done so. Most are enacting transparency horizontally, revealing pay between coworkers doing similar work within a firm. While these policies have narrowed coworker wage gaps, they have also led to counterproductive peer comparisons and caused employers to bargain more aggressively, lowering average wages. Other pay transparency policies, without directly targeting discrimination, have benefited workers by addressing broader information frictions in the labor market. Vertical pay transparency policies reveal to workers pay differences across different levels of seniority. Empirical evidence suggests these policies can lead to more accurate and more optimistic beliefs about earnings potential, increasing employee motivation and productivity. Cross-firm pay transparency policies reveal wage differences across employers. These policies have encouraged workers to seek jobs at higher paying firms, negotiate higher pay, and sharpened wage competition between employers. We discuss the evidence on effects of pay transparency, and open questions.

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“Immigration and Crime: An International Perspective,” by Olivier Marie and Paolo Pinotti

The association between immigration and crime has long been a subject of debate, and only recently have we encountered systematic empirical evidence on this issue. Data shows that immigrants, often younger, male, and less educated compared to natives, are disproportionately represented among offenders in numerous host countries. However, existing research, inclusive of our analysis of new international data, consistently indicates that immigration does not significantly impact local crime rates in these countries. Furthermore, recent studies underscore that obtaining legal status diminishes immigrants’ involvement in criminal activities. Finally, we discuss potential explanations for the apparent incongruity between immigrants’ overrepresentation among offenders and the null effect of immigration on crime rates.

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“Care Provision and the Boundaries of Production,” by Nancy Folbre

Whether or not they provide subjective satisfaction to providers, unpaid services and non-market transfers typically contribute positively to total output, living standards, and the social climate. This essay describes some quantitative dimensions of care provision and reviews their implications for the measurement of economic growth and the explanation of relative earnings, including the gender wage differential. It also calls attention to under-explored aspects of collective conflict over legal rules and public policies that shape the distribution of the net costs of care provision.

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“Job Training and Job Search Assistance Policies in Developing Countries,” by Eliana Carranza and David McKenzie

Governments around the developing world face pressure to intervene actively to help jobseekers find employment. Two of the most common policies used are job training, based on the idea that many of those seeking jobs lack the skills employers want, and job search assistance, based on the possibility that even if workers have the skills demanded, search and matching frictions make it difficult for workers to be hired in the jobs that need these skills. However, reviews of the first generation of evaluations of these programs found typical impacts to be small, casting doubt on the usefulness and cost-effectiveness of these programs. This paper re-examines the arguments for whether, when, and how, developing country governments should undertake job training and job search assistance policies. We use our experience with policy implementation, and evidence from recent impact evaluations, to argue that there is still a role for governments in using these programs. However, success depends critically on program design and delivery elements that can be difficult to scale effectively, and in many cases the binding constraint may be a lack of firms with job openings, rather than a lack of workers with the skills to fill these openings.

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“Recommendations for Further Reading,” by Timothy Taylor

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