Wednesday, May 9, 2012

Spring 2012 Journal of Economic Perspectives

The Spring 2012 issue of my own Journal of Economic Perspectives is now freely available on-line, along with earlier issues back to 1994, courtesy of the American Economic Association. It's the 100th issue, and thus a bit of a landmark for the journal and for me personally, because I've been the Managing Editor since the journal began. I'll blog about some of the individual papers in the next week or so. Here, I'll just provide the "Table of Contents" at the top, abstracts below, and links to the papers.  

 Symposium: 100 Issue of JEP

 The Journal of Economic Perspectives at 100 (Issues)
David Autor
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The Journal of Economic Perspectives and the Marketplace of Ideas: A View from the Founding
Joseph E. Stiglitz
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From the Desk of the Managing Editor
Timothy Taylor
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Symposium: International Trade

The Rise of Middle Kingdoms: Emerging Economies in Global Trade
Gordon H. Hanson
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 Putting Ricardo to Work
Jonathan Eaton and Samuel Kortum
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Gains from Trade When Firms Matter
Marc J. Melitz and Daniel Trefler
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Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts

Jonathan Haskel, Robert Z. Lawrence, Edward E. Leamer and Matthew J. Slaughter
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Articles

Why Is the Teen Birth Rate in the United States So High and Why Does It Matter?
Melissa S. Kearney and Phillip B. Levine
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Why Was the Arab World Poised for Revolution? Schooling, Economic Opportunities, and the Arab Spring
Filipe R. Campante and Davin Chor
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Using Internet Data for Economic Research
Benjamin Edelman
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Jonathan Levin: 2011 John Bates Clark Medalist
Liran Einav and Steve Tadelis
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Features

Retrospectives: The Introduction of the Cobb-Douglas Regression
Jeff Biddle
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Recommendations for Further Reading
Timothy Taylor
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The Journal of Economic Perspectives at 100 (Issues) 
David Autor
When I was a graduate student, I discovered that the Journal of Economic Perspectives embodied much of what I love about the field of economics: the clarity that pierces rhetoric to seek the core of a question; the rigor to identify the causal relationships, tradeoffs, and indeterminancies inherent in a problem; the self-assurance to apply the disciplinary toolkit to problems both sacred and profane; and the force of logic to reach conclusions that might be unexpected, controversial, or refreshingly bland. It never occurred to me in those years that one day I would edit the journal. While doing so is a privilege and a pleasure, I equally confess that it's no small weight to be the custodial parent of one of our profession's most beloved offspring. No less intimidating is the task of stipulating what this upstart youth has accomplished in its first 25 years and 100 issues in print. Like any empiricist, I recognize that the counterfactual world that would exist without the JEP is unknowable, but my strong hunch is that our profession would be worse off in that counterfactual world. In this essay, I reflect on the journal's accomplishments and articulate some of my own goals for the JEP going forward.
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The Journal of Economic Perspectives and the Marketplace of Ideas: A View from the Founding Joseph E. Stiglitz
I welcome the opportunity to join in the celebration of the twenty-fifth birthday of the Journal of Economic Perspectives. It is wonderful to see how this "baby," which I, along with Carl Shapiro and Timothy Taylor, nurtured through its formative years—from 1984 (three years before the first issue in 1987) until I left in 1993—has grown up and become an established part of the economics profession. In founding the journal, we had many objectives, hopes, and ambitions. We were concerned about the increasing specialization within the economics profession. We sought to have complex and sometimes arcane or highly mathematical ideas translated into plain English, or at least that dialect of the language known as "Economese"—and in a way that was not only informative but engaging. We were worried too about a growing distance between economics and policy. At least a portion of economic research should be related to ideas that were, or should or would be, part of the national and global policy debates. We began with an explicit commitment to present a diversity of viewpoints, hence the word "perspectives" in the title. One of the goals we set out for ourselves was to disseminate developments within economics more rapidly. We never shied away from controversy at the journal, but we tried to ensure that the discussion was balanced.
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From the Desk of the Managing Editor 
Timothy Taylor
Editing isn't "teaching" and it isn't "research," so in the holy trinity of academic responsibilities it is apparently bunched with faculty committees, student advising, and talks to the local Kiwanis club as part of "service." Yet for many economists, editing seems to loom larger in their professional lives. After all, EconLit indexes more than 750 academic journals of economics, which require an ever-shifting group of editors, co-editors, and advisory boards to function. Roughly one-third of the books in the annotated listings at the back of each issue of the Journal of Economic Literature are edited volumes. Here is one take on the enterprise of editing from someone who has been sitting in the Managing Editor's chair for all 100 issues of the Journal of Economic Perspectives since before the first issue of the journal mailed in Summer 1987.
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The Rise of Middle Kingdoms: Emerging Economies in Global Trade 
Gordon H. Hanson
In this paper, I examine changes in international trade associated with the integration of low- and middle-income countries into the global economy. Led by China and India, the share of developing economies in global exports more than doubled between 1994 and 2008. One feature of new trade patterns is greater South-South trade. China and India have booming demand for imported raw materials, which they use to build cities and factories. Industrialization throughout the South has deepened global production networks, contributing to greater trade in intermediate inputs. A second feature of new trade patterns is the return of comparative advantage as a driver of global commerce. Growth in low- and middle-income nations makes specialization according to comparative advantage more important for the global composition of trade, as North-South and South-South commerce overtakes North-North flows. China's export specialization evolves rapidly over time, revealing a capacity to speed up product ladders. Most developing countries hyper-specialize in a handful of export products. The emergence of low- and middle-income countries in trade reveals significant gaps in knowledge about the deep empirical determinants of export specialization, the dynamics of specialization patterns, and why South-South and North-North trade differ.
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Putting Ricardo to Work
Jonathan Eaton and Samuel Kortum
David Ricardo (1817) provided a mathematical example showing that countries could gain from trade by exploiting innate differences in their ability to make different goods. In the basic Ricardian example, two countries do better by specializing in different goods and exchanging them for each other, even when one country is better at making both. This example typically gets presented in the first or second chapter of a text on international trade, and sometimes appears even in a principles text. But having served its pedagogical purpose, the model is rarely heard from again. The Ricardian model became something like a family heirloom, brought down from the attic to show a new generation of students, and then put back. Nearly two centuries later, however, the Ricardian framework has experienced a revival. Much work in international trade during the last decade has returned to the assumption that countries gain from trade because they have access to different technologies. These technologies may be generally available to producers in a country, as in the Ricardian model of trade, our topic here, or exclusive to individual firms. This line of thought has brought Ricardo's theory of comparative advantage back to center stage. Our goal is to make this new old trade theory accessible and to put it to work on some current issues in the international economy. Full-Text Access | Supplementary Materials

Gains from Trade When Firms Matter
Marc J. Melitz and Daniel Trefler
The rising prominence of intra-industry trade and huge multinationals has transformed the way economists think about the gains from trade. In the past, we focused on gains that stemmed either from endowment differences (wheat for iron ore) or inter-industry comparative advantage (David Ricardo's classic example of cloth for port). Today, we focus on three sources of gains from trade: 1) love-of-variety gains associated with intra-industry trade; 2) allocative efficiency gains associated with shifting labor and capital out of small, less-productive firms and into large, more-productive firms; and 3) productive efficiency gains associated with trade-induced innovation. This paper reviews these three sources of gains from trade both theoretically and empirically. Our empirical evidence will be centered on the experience of Canada following its closer economic integration in 1989 with the United States—the largest example of bilateral intra-industry trade in the world—but we will also describe evidence for other countries.
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Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts 
Jonathan Haskel, Robert Z. Lawrence, Edward E. Leamer and Matthew J. Slaughter
This paper seeks to review how globalization might explain the recent trends in real and relative wages in the United States. We begin with an overview of what is new during the last 10-15 years in globalization, productivity, and patterns of U.S. earnings. To preview our results, we then work through four main findings: First, there is only mixed evidence that trade in goods, intermediates, and services has been raising inequality between more- and less-skilled workers. Second, it is more possible, although far from proven, that globalization has been boosting the real and relative earnings of superstars. The usual trade-in-goods mechanisms probably have not done this. But other globalization channels—such as the combination of greater tradability of services and larger market sizes abroad—may be playing an important role. Third, seeing this possible role requires expanding standard Heckscher-Ohlin trade models, partly by adding insights of more recent research with heterogeneous firms and workers. Finally, our expanded trade framework offers new insights on the sobering fact of pervasive real-income declines for the large majority of Americans in the past decade.
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Why Is the Teen Birth Rate in the United States So High and Why Does It Matter? 
Melissa S. Kearney and Phillip B. Levine
Why is the rate of teen childbearing is so unusually high in the United States as a whole, and in some U.S. states in particular? U.S. teens are two and a half times as likely to give birth as compared to teens in Canada, around four times as likely as teens in Germany or Norway, and almost ten times as likely as teens in Switzerland. A teenage girl in Mississippi is four times more likely to give birth than a teenage girl in New Hampshire—and 15 times more likely to give birth as a teen compared to a teenage girl in Switzerland. We examine teen birth rates alongside pregnancy, abortion, and "shotgun" marriage rates as well as the antecedent behaviors of sexual activity and contraceptive use. We demonstrate that variation in income inequality across U.S. states and developed countries can explain a sizable share of the geographic variation in teen childbearing. Our reading of the totality of evidence leads us to conclude that being on a low economic trajectory in life leads many teenage girls to have children while they are young and unmarried. Teen childbearing is explained by the low economic trajectory but is not an additional cause of later difficulties in life. Surprisingly, teen birth itself does not appear to have much direct economic consequence. Our view is that teen childbearing is so high in the United States because of underlying social and economic problems. It reflects a decision among a set of girls to "drop-out" of the economic mainstream; they choose nonmarital motherhood at a young age instead of investing in their own economic progress because they feel they have little chance of advancement.
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Why Was the Arab World Poised for Revolution? Schooling, Economic Opportunities, and the Arab Spring 
Filipe R. Campante and Davin Chor
What underlying long-term conditions set the stage for the Arab Spring? In recent decades, the Arab region has been characterized by an expansion in schooling coupled with weak labor market conditions. This pattern is especially pronounced in those countries that saw significant upheaval during the first year of the Arab Spring uprisings. We argue that the lack of adequate economic opportunities for an increasingly educated populace can help us understand episodes of regime instability such as the Arab Spring.
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Using Internet Data for Economic Research
Benjamin Edelman
The data used by economists can be broadly divided into two categories. First, structured datasets arise when a government agency, trade association, or company can justify the expense of assembling records. The Internet has transformed how economists interact with these datasets by lowering the cost of storing, updating, distributing, finding, and retrieving this information. Second, some economic researchers affirmatively collect data of interest. For researcher-collected data, the Internet opens exceptional possibilities both by increasing the amount of information available for researchers to gather and by lowering researchers' costs of collecting information. In this paper, I explore the Internet's new datasets, present methods for harnessing their wealth, and survey a sampling of the research questions these data help to answer. The first section of this paper discusses "scraping" the Internet for data—that is, collecting data on prices, quantities, and key characteristics that are already available on websites but not yet organized in a form useful for economic research. A second part of the paper considers online experiments, including experiments that the economic researcher observes but does not control (for example, when Amazon or eBay alters site design or bidding rules); and experiments in which a researcher participates in design, including those conducted in partnership with a company or website, and online versions of laboratory experiments. Finally, I discuss certain limits to this type of data collection, including both "terms of use" restrictions on websites and concerns about privacy and confidentiality.
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Jonathan Levin: 2011 John Bates Clark Medalist 
Liran Einav and Steve Tadelis
Jonathan Levin, the 2011 recipient of the American Economic Association's John Bates Clark Medal, has established himself as a leader in the fields of industrial organization and microeconomic theory. Jon has made important contributions in many areas: the economics of contracts and organizations; market design; markets with asymmetric information; and estimation methods for dynamic games. Jon's combination of breadth and depth is remarkable, ranging from important papers in very distinct areas such as economic theory and econometric methods to applied work that seamlessly integrates theory with data. In what follows, we will attempt to do justice not only to Jon's academic work, but also try to sketch a broader portrait of Jon's other contributions to economics as a gifted teacher, dedicated advisor, and selfless provider of public goods.
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Retrospectives: The Introduction of the Cobb-Douglas Regression
Jeff Biddle
At the 1927 meetings of the American Economic Association, Paul Douglas presented a paper entitled "A Theory of Production," which he had coauthored with Charles Cobb. The paper proposed the now familiar Cobb-Douglas function as a mathematical representation of the relationship between capital, labor, and output. The paper's innovation, however, was not the function itself, which had originally been proposed by Knut Wicksell, but the use of the function as the basis of a statistical procedure for estimating the relationship between inputs and output. The paper's least squares regression of the log of the output-to-capital ratio in manufacturing on the log of the labor-to-capital ratio—the first Cobb-Douglas regression—was a realization of Douglas's innovative vision that a stable relationship between empirical measures of inputs and outputs could be discovered through statistical analysis, and that this stable relationship could cast light on important questions of economic theory and policy. This essay provides an account of the introduction of the Cobb-Douglas regression: its roots in Douglas's own work and in trends in economics in the 1920s, its initial application to time series data in the 1927 paper and Douglas's 1934 book The Theory of Wages, and the early reactions of economists to this new empirical tool.
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Recommendations for Further Reading 
Timothy Taylor
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