DEPARTMENT OF ECONOMICS

The recession that broke out with the onset of the coronavirus pandemic lasted just two months, officially ended in April 2020. That makes it the shortest downturn on record, according to the committee of economists that determines when recessions begin and end. The U.S. economy reached a peak in February 2020, the National Bureau of Economic Research’s Business Cycle Dating Committee said Monday. The recession began the following month and ended in April.

The COVID-19 crisis has been devastating for much of the global economy. Yet while the effects on established markets have been well-documented, less is known about the pandemic's impacts on low- and middle-income countries, which account for the majority of the world's population. This is partly because official statistics generally fail to capture the impact on informal markets, such as street-vendor sales, in which large sections of those economies participate. So Kellogg finance professor Dean Karlan and Northwestern professor of economics Chris Udry, along with more than 20 collaborators, set out to measure the pandemic's economic impact in low- and middle-income countries.

We hope you enjoy reading the Summer 2021 edition of our Newsletter. This edition includes a Q&A with our Director of Undergraduate Studies, Mark Witte, book recommendations, new faculty updates, and more!

There is an ongoing debate over what kinds of investment in human capital — roughly the knowledge, skills, habits, abilities, experience, intelligence, training, judgment, creativity and wisdom possessed by an individual — contribute most to productivity and life satisfaction.

The work of the IPCC has highlighted the role of human activities in climate change and the importance of acting now to limit the rise in temperatures to less than 2°C compared to the pre-industrial era. With this objective in mind, and following the signing of the Paris Agreement in 2015, France has set itself the objective of being carbon neutral by 2050. By committing today to ambitious policies and setting clear and credible milestones, France and Europe can play a leading role in international climate action. The commission, led by Mar Reguant, Associate Professor of Economics at Northwestern University, Illinois, and Christian Gollier, Professor and Director General of the Toulouse School of Economics (TSE), presented an analytical framework and proposals to accelerate the achievement of these goals.

“On some days everything gets totally out of hand,” sighs Katharina Boesche, a German self-employed lawyer and mother of three. Fourteen months of closures and semi-closures of her daughters’ schools have taken a toll. She mostly works late at night or between 4am and 8am—when the house is quiet. The girls have coped with online learning, she says, but the seven-year-old needs a lot of supervision. Their school, like most in Germany, is only welcoming them back part-time. Mrs Boesche is stressed and exhausted.

A new research paper from Northwestern University and the University of Kent claims that, on average, workers become more productive over their working life, as they’re able to learn by doing and accordingly should pay a higher rate of tax as they become older.

Can targeting information to network-central farmers induce more adoption of a new agricultural technology? By combining social network data and a field experiment in 200 villages in Malawi, we find that targeting central farmers is important to spur the diffusion process. We also provide evidence of one explanation for why centrality matters: a diffusion process governed by complex contagion. Our results are consistent with a model in which many farmers need to learn from multiple people before they adopt themselves. This means that without proper targeting of information, the diffusion process can stall and technology adoption remains perpetually low. Co-authored with Ariel BenYishay, Jeremy Magruder, and Ahmed Mushfiq Mobarak.

Join us in congratulating Federico Bugni, Ben Golub, Walker Hanlon, Elisa Jácome, Annie Liang, Sidonia McKenzie, and Silvia Vannutelli, who have accepted positions in the department after a very successful hiring season.

To understand gender differences in the job search process, we collect rich information on job offers and acceptances from past and current undergraduates of Boston University's Questrom School of Business. We document two novel empirical facts: (1) there is a clear gender difference in the timing of job offer acceptance (2) the gender earnings gap in accepted offers narrows in favor of women over the course of the job search period. We develop a job search model that incorporates these gender differences in risk aversion and (over)optimism about prospective offers. Co-authored with Patricia Cortés, Jessica Pan, and Laura Pilossoph.

Gender differences in professional networks have been shown to contribute to men and women's disparate labor market outcomes. This gap could be due to differences in network access, differences in network usage, or both. Using novel administrative data from a student-alumni professional networking website, we study gender differences in student network usage, holding network access fixed. Focusing on messages sent by students to alumni, we document that male and female students network similarly, in terms of both the number of messages sent and the specific questions asked. Furthermore, there are only small gender differences in question tone. Co-authored with Melanie Wasserman.

Governments taxing carbon emissions within their jurisdiction can impose a commensurate tax on emissions embodied in imports in order to mitigate emissions leakage. California offers a rare opportunity to investigate how such a border carbon adjustment (BCA) is working in practice. Experience to date highlights important tensions between greenhouse gas accounting accuracy, market efficiency, and concerns about trade protectionism. We simulate electricity market outcomes under BCA designs that differ in terms of how the carbon intensity of imports is assessed. Simulations suggest significant potential for leakage via resource shuffling. Realized emissions outcomes indicate that this potential has not been fully realized. Co-authored with Meredith Fowlie.

The Symposium will be held virtually Wednesday, May 26th at 8:30am through Thursday, May 27th at 5pm.

The Review of Economic Studies May Meetings have been held annually since 1989. Every year, in line with the Review’s tradition of encouraging the work of young economists, some of the most promising graduating doctoral students in economics and finance in the world are selected to present their research to audiences in Europe. This year, the Restud Tour will be held from May 17-21 and streamed live on youtube, hosted jointly by Paris School of Economics (Paris, PSE), New Economic School (Moscow, NES), and University of Manchester (Manchester, UoM).

Economists love technological change because it translates into increased productivity. Rising productivity can then be measured, albeit imperfectly, and feeds directly into economic growth. However, while we can use standard measures to observe some forms of economic progress, other technological and scientific advances do things for humanity that the usual measures of output fail to reflect.

NET hosted its fourth annual tournament from April 9-11, 2021. NET 2021 adopted an entirely virtual format, becoming the first ever international online economics competition. This year, 19 teams from 8 states and 4 countries attended a weekend full of speaking events from Northwestern faculty and graduate students, plus the classic Power Round and Econ Bowl competitive events.

How will the U.S. economy emerge from the ongoing COVID-19 pandemic? Will it struggle to return to prior levels of employment and activity, or will it come roaring back as soon as vaccinations are widespread and Americans feel comfortable travelling and eating out? Co-authored with Florin Bilbiie, Gauti Eggertsson, and Andrea Tambalotti

The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Paul R. Milgrom and Robert B. Wilson for “improvements to auction theory and inventions of new auction formats.” In this survey article, we review the contributions of the laureates, emphasizing the subtle interplay between deep theoretical questions and practical design challenges that resulted in one of the most successful fields of economics. Co-authored with Alexander Teytelboym, Shengwu Li, Scott Duke Kominers and Mohammad Akbarpour.

The coronavirus pandemic has had a dramatic effect on the status of women in the workforce, or perhaps more accurately out of the workforce. The labor participation rate for women was 55.8% last month, its lowest level since 1987. More women than men lost their jobs from February to May in 2020, as the nation locked down to contain the new virus, 11.5 million to 9 million, according to a report from the Pew Research Center. Pew notes that is in marked contrast to the Great Recession of 2007 to 2009, when 5.5 million men became unemployed compared with 2.5 million women.

William P. Rogerson and Howard Shelanski write about "Antitrust Enforcement, Regulation, and Digital Platforms." They raise the concern that the tools of antitrust may not be well-suited to some of the competition issues posed by big digital firms. For example, if Alphabet was forced to sell off Google, or some other subsidiaries, would competition really be improved? What would it even mean to, say, try to break Google's search engine into separate companies? When there are "network economies," where many agents want to be on a given website because so many other players are on the same website, perhaps a relatively small number of firms is the natural outcome.

The need for Northwestern’s new Womxn in Economics organization was proven in its creation. Weinberg senior Eliana Buckner said she met more female economics majors on the group’s executive board than she had since transferring to the University in 2018. The group, which is backed by the economics department, aims to support female-identifying economics students, although students of all gender identities are able to join. It also intends to inform members about the major’s various career applications through alumni interviews and a mentorship program.

For this edition of Forecast Direct, we talk with Professor Robert Gordon, from Northwestern University, about his book “Rise and Fall of American Growth” and what he sees as the likelihood for faster productivity and economic growth in the coming decades. Be sure to listen to the end, where Professor Gordon talks about the best ways to ensure faster growth going forward, through more early-childhood education, more immigration, and affirmative action policies to level the playing field so our society can benefit from the full potential of all individuals.

The Department of Labor reported some bad news—861,000 Americans filed for unemployment benefits last week. The recent trend shows that the job market is still in bad shape. To put things into context, prior to the pandemic, the highest level of unemployment claims was roughly 700,000 during the financial crisis in 2008. The United States has been hitting these figures—and higher—for a while now. Thursday’s report indicated that “18.3 million people were receiving unemployment aid as of January 30.” A large portion of Americans out of work are long-term unemployed, which means that they have been out of a job for over six months.

When students seek information from business professionals about careers, female students receive substantially more information on work/life balance relative to male students; in contrast, professionals mention workplace culture to male and female students at similar rates.

Seema Jayachandran planned a career in theoretical physics when she graduated from MIT in electrical engineering and finished her master’s in physics and philosophy at Oxford University. Harvard offered her a spot in its selective doctoral physics program. But coffee conversations with an acquaintance changed her life.

Womxn in Economics (WiE) is a group of undergraduate students interested in and/or pursuing a degree in economics. WiE seeks to encourage female-identifying members of the community to pursue their interests in economics through a variety of events and learning opportunities.

The use of order-flow information by financial firms has come to the forefront of the regulatory debate. Should a dealer who acquires information by taking client orders be allowed to use or share that information? We explore how information sharing affects dealers, clients, and issuer revenues in US Treasury auctions, in a model calibrated to auction results data, which we use to quantify counterfactuals. Sharing information reduces uncertainty about future value. With less uncertainty, risk-averse bidders bid more. For investors, the welfare effects of information sharing depend on how information is shared and how it affects asymmetry. The model shows that investors can benefit when dealers share information with each other, not when they share more with clients.

We develop a new short survey module for measuring women’s agency by combining mixed-methods data collection and machine learning. We select the best five survey questions for the module based on how strongly correlated they are with a “gold standard” measure of women’s agency. For a sample of 209 women in Haryana, India, we measure agency, first, through a semi-structured in-depth interview and, second, through a large set of close-ended questions. We use qualitative coding methods to score each woman’s agency based on the interview, which we treat as her true agency. Co-authored with Monica Biradavolu and Jan Cooper.

Ethics in social science experimentation and data collection are often discussed but rarely articulated in writing as part of research outputs. Although papers typically reference human subjects research approvals from relevant institutional review boards, most recognize that such boards are not comprehensive ethical assessments. We propose a structured ethics appendix to provide details on the following: policy equipoise, role of the researcher, potential harms to participants and nonparticipants, conflicts of interest, intellectual freedom, feedback to participants, and foreseeable misuse of research results. We discuss each of these, and some of the norms and challenging situations of each. Co-authored with Edward Asiedu and Monica P. Lambon-Quayefio.

Shortly after beginning her career as a management consultant, Rachel Xanttopoulos realized that the job wasn’t a great fit for her long-term. After mentioning to a colleague she’d love to work for the New York Times, she landed in the NYT strategy group and rose up the ranks for a few years before deciding to return to school to earn her MBA at Kellogg, with the intention of starting her own business.

We hope you enjoy reading the Winter 2021 edition of our Newsletter. This edition includes an update from our Chair, a thank you to our wonderful donors, faculty podcast recommendations, alumni spotlights and more!

Interview with Colton Horn and Dr. Gerald Horn, the Co-Founders of Breinfuel, a Chicago Founder Institute portfolio company that has developed a scientifically-derived performance beverage formula from coffees, teas, collagen, and antioxidants: https://www.breinfuel.com/. Watch to learn the metabolic science behind how Breinfuel's unique formulation works to reduce oxidative stress while recharging the brain.

We study the causal impact of religiosity through a randomized evaluation of an evangelical Protestant Christian values and theology education program delivered to thousands of ultrapoor Filipino households. Six months after the program ended, treated households have higher religiosity and income; no statistically significant differences in total labor supply, consumption, food security, or life satisfaction; and lower perceived relative economic status. Exploratory analysis suggests that the income treatment effect may operate through increasing grit. Thirty months after the program ended, significant differences in the intensity of religiosity disappear, but those in the treatment group are less likely to be Catholic and more likely to be Protestant, and there is some mixed evidence that their consumption and perceived relative economic status are higher.

For many who crossed the digital divide this year, there will be no going back. The Covid-19 pandemic forced Americans to collectively swap the physical for the digital world in a matter of months. As retailers learn to operate without stores, business travelers without airplanes, and workers without offices, much of what started out as a temporary expedient is likely to become permanent.

With a dangerous winter ahead, containing the pandemic is crucial. One innovation worth trying in the months before vaccinations are widespread is to pay college students to be careful and remain free of the coronavirus.

We study search, evaluation, and selection of candidates of unknown quality for a position. We examine the effects of "soft" affirmative action policies increasing the relative percentage of minority candidates in the candidate pool. We show that, while meant to encourage minority hiring, such policies may backfire if the evaluation of minority candidates is noisier than that of nonminorities. This may occur even if minorities are at least as qualified and as valuable as nonminorities. The results provide a possible explanation for why certain soft affirmative action policies have proved counterproductive, even in the absence of (implicit) bias.

A growing number of American children are exposed to gun violence at their schools, but little is known about the impacts of this exposure on their human capital attainment and economic well-being. This paper studies the causal effects of exposure to shootings at schools on children’s educational and economic outcomes, using individual-level longitudinal administrative data from Texas. We analyze the universe of shootings at Texas public schools that occurred between 1995 and 2016, and match schools that experienced shootings with observationally similar control schools in other districts. Co-authored with Marika Cabral, Bokyung Kim, Maya Rossin-Slater and Hannes Schwandt.

The European Research Council (ERC) has awarded a Consolidator Grant to Mar Reguant (Northwestern University). The five-year project is called “Understanding the Energy Transition with a Machine Learning Toolbox,” and the Barcelona Graduate School of Economics will be the host institution.

Two fellowships were awarded to honor the late faculty member and AEA President Robert Eisner. For 2020-21, the Fellowships were awarded to Joao Guerreiro and Udayan Vaidya. The fellowship or fellowships are awarded annually to fourth-year students who have distinguished themselves in both teaching and research.

Two fellowships were awarded to honor the late faculty member and AEA President Robert Eisner. For 2020-21, the Fellowships were awarded to Joao Guerreiro and Udayan Vaidya. The fellowship or fellowships are awarded annually to fourth-year students who have distinguished themselves in both teaching and research.

The Susan Bies awards are given to the best public policy papers presented as part of the Economics 501 seminar. The winners for 2019-20 were Eilidh Geddes for "Insurer Competition and Rating Areas on the ACA Exchanges" and Nicole Ozminkowski for "Rent Control and Domestic Violence" (joint with Eilidh Geddes). The prizes were generously donated by alumna Susan Schmidt Bies (PhD, 1972).

We propose an overlapping-generations model in which established researchers evaluate the research of new researchers. All researchers are differentially endowed with equally desirable research characteristics and belong to two groups, M or F, which have identical ex-ante productivity distributions. Evaluations are group-blind. Yet, when research is evaluated on many characteristics, evaluators' self-image bias and mild between-group heterogeneity lead the initially larger group, say M, to dominate indefinitely. M-researchers only accept the research of young scholars with characteristics close to theirs. Promoted F-researchers are thus few and "similar" to M-researchers, perpetuating the asymmetry. This talent loss is exacerbated by candidates' career concerns and institutions' focus on hiring faculty whose research will be approved by established researchers.

central question in economics is how people respond to risk – specifically, how they respond to low-probability events. This column uses the COVID-19 pandemic as a natural experiment to answer this question. Studying the consumption behaviour of Portuguese public sector workers, whose income was likely unaffected by the crisis, they find that older workers reduced their consumption of high-contact goods by much more than younger workers. As the likelihood for dying from COVID-19 is increasing in age, these results suggest that workers’ responses are commensurate with the risk they face.

Northwestern’s Institute for Policy Research hosted a post-election panel Monday where professors discussed how polarization, misinformation, the economy and social movements impacted the election and will continue to influence politics.

Intercollegiate amateur athletics in the US largely bars student-athletes from sharing in any of the profits generated by their participation, which creates substantial economic rents for universities. These rents are primarily generated by men’s football and men’s basketball programs. We characterize these economic rents using comprehensive revenue and expenses data for college athletic departments between 2006 and 2019, and we estimate rent-sharing elasticities to measure how rents flow to women’s sports and other men’s sports and lead to increased spending on facilities, coaches’ salaries, and other athletic department personnel.

The global economy is now in its worst downturn since the Great Depression. One of the unique aspects of the current recession is the way it’s impacting women: though men are more likely to die of Covid-19, the pandemic’s toll on employment is heavier for women. Unlike other modern recessions, the pandemic recession has led to more job losses among women than among men. While the 1970s marked the start of ‘mancession’ periods in industries like construction, the current ‘shecession’ is heavily affecting sectors like hospitality and retail.

Women have taken an outsize share of home responsibilities since the outbreak, but fathers have stepped up, too; five dads on what they’ve learned as primary caregivers

For her groundbreaking insights into the history of the American economy, the evolution of gender roles and the interplay of technology, human capital and labor markets. Claudia Goldin is the Henry Lee Professor of Economics at Harvard University. She was the director of the NBER’s Development of the American Economy program from 1989 to 2017 and was recently appointed as co-director of the NBER’s group on Gender in the Economy.

Heller received a bachelor’s degree in economics and computer studies from Northwestern and an MBA from Kellogg. In 2019, Heller received the Northwestern Alumni Medal, the highest honor bestowed by the Northwestern Alumni Association.

Zhou, currently a senior at Northwestern University, leads Mock On, an online mock trial academy for high schoolers. As a collegiate mock trial competitor himself and the president of Northwestern's Mock Trial team, he knows the ins and out of the activity. But when Covid-19 hit, his mock trial season was cut short. Knowing that other students were facing the same issue, he launched Mock On in May and has since hosted two online Zoom camps. More than 50 students from around the U.S. have signed up and learned about the mock trial process.

The U.S. unemployment rate fell to 7.9 percent last month, a substantial improvement from the nearly 15 percent mark it hit in April, but significantly worse than other advanced economies around the world. Germany’s comparable unemployment rate, for example, peaked at 4.4 percent. For years, economists have debated whether the United States does enough to help its unemployed. The pandemic recession — the worst downturn the world has seen in nearly a century — has given a new sense of urgency to the discourse.

When meeting people freshman fall, we all get pretty good at the quick introduction of names and major. I kept getting the same follow-up question: “Oh, you’re a neuro major. Are you pre-med?” I could have just said yes and left it at that, I suppose.

Women helped pull the U.S. economy out of the last recession. This time around they are falling behind. The pandemic is disproportionately affecting women and threatening to wipe out decades of their economic progress. As the crisis drags on, some of the biggest pain points are among women of color and those with young children. These setbacks — characterized by some economists as the nation’s first female recession — stand in sharp contrast to the dramatic progress women made in the expansion following the last financial crisis. The jobs, income and promotions that women lose as a result of the coronavirus could hold back economic growth and sideline an entire generation of women.

This is a follow-up to her PNAS paper on the mental health impacts of school shootings called "Local exposure to school shootings and youth antidepressant use"

In the 18th century, something sparked a wave of technological innovation and economic growth that has transformed the world for the better. Economists have argued about what that something was ever since. Our guest today, Professor Joel Mokyr, argues that it was a change in western European cultural attitudes that provided that spark. Enlightenment curiosity fomented a belief that practical knowledge could improve the world in tangible and permanent ways. Do we assume that progress will always happen? What threatens the concept of progress?

In the last two decades, over 240,000 American students were on school grounds when a gunman opened fire at their school. While public attention often focuses on the victims who were killed, less is known about the impacts of school shootings on surviving youth. This study represents the largest analysis to date of the effects of school shootings on an important indicator of youth mental health: the use of prescription antidepressants. We find that local exposure to fatal school shootings leads to persistent and significant increases in youth antidepressant use. These impacts are smaller in areas with a higher density of mental health providers who focus on behavioral interventions.

The September jobs numbers, released by the Labor Department on Friday, confirmed what economists and experts had feared: The recession unleashed by the pandemic is sidelining hundreds of thousands of women and wiping out the hard-fought gains they made in the workplace over the past few years. While the U.S. unemployment rate dropped to 7.9 percent in September, far below the record high of nearly 15 percent in April, a large part of that drop was driven not so much by economic growth — though there were some job gains — but by hundreds of thousands of people leaving the job market altogether. A majority of those dropping out were women. Of the 1.1 million people ages 20 and over who left the work force (neither working nor looking for work) between August and September, over 800,000 were women, according to an analysis by the National Women’s Law Center.

Seven months into a pandemic that has turned work and home life upside down, working women are confronting painful choices that threaten to unravel recent advances in gender equity—in pay, the professional ranks and in attaining leadership positions. Women have already lost a disproportionate number of jobs. That is partly because of a segregated workforce in many fields in which women make up more of the lower-income service and retail jobs that vanished as Covid-19 gripped the economy. While women are 47% of the U.S. labor force, they accounted for 54% of initial coronavirus-related job losses and still make up 49% of them, according to McKinsey & Co.

The benefits of the ‘ICT revolution’ are readily seen in labour productivity statistics for the US, but a similar acceleration of productivity growth was not seen in Western Europe. This column argues that most of the 1995-2005 US productivity growth revival was driven by ICT-intensive industries producing market services and computer hardware. In contrast, the EU10 experienced a 1995-2005 growth slowdown due to a paucity of ICT investment, a failure to capture the efficiency benefits of ICT, and performance shortfalls in specific industries. After 2005 both the US and the EU10 suffered a growth slowdown, indicating that the benefits of the ICT revolution were temporary rather than providing a new permanent era of faster productivity growth.

U.S. inflation used to rise during economic booms, as businesses charged higher prices to cope with increases in wages and other costs. When the economy cooled and joblessness rose, inflation declined. This pattern changed around 1990. Since then, U.S. inflation has been remarkably stable, even though economic activity and unemployment have continued to fluctuate. For example, during the Great Recession unemployment reached 10 percent, but inflation barely dipped below 1 percent. More recently, even with unemployment as low as 3.5 percent, inflation remained stuck under 2 percent. What explains the emergence of this disconnect between inflation and unemployment? This is the question we address in “What’s Up with the Phillips Curve?,” published recently in Brookings Papers on Economic Activity.

The decisions of judges, lenders, journal editors, and other gatekeepers often lead to disparities in outcomes across affected groups. An important question is whether, and to what extent, these group-level disparities are driven by relevant differences in underlying individual characteristics, or by biased decision makers. Becker (1957) proposed an outcome test for bias leading to a large body of related empirical work, with recent innovations in settings where decision makers are exogenously assigned to cases and vary progressively in their decision tendencies. We carefully examine what can be learned about bias in decision making in such settings. Our results call into question recent conclusions about racial bias among bail judges, and, more broadly, yield four lessons for researchers considering the use of outcome tests of bias.

The emergence of the discipline of economics in the 18th century was the result of people trying to explain something that had never happened before. At the time a handful of countries were becoming fabulously rich, while others remained dirt-poor. In 1500 the world’s richest country was twice as well-off as the poorest one; by 1750 the ratio was five to one. It is no coincidence that the most famous book in economics, published in 1776, inquired into “the Nature and Causes of the Wealth of Nations”.

Why is modern society capable of cumulative innovation? In A Culture of Growth: The Origins of the Modern Economy, Joel Mokyr persuasively argues that sustained technological progress stemmed from a change in cultural beliefs. The change occurred gradually during the seventeenth and eighteenth centuries and was fostered by an intellectual elite that formed a transnational community and adopted new attitudes toward the creation and diffusion of knowledge, setting the foundation for the ethos of modern science. The book is a significant contribution to the growing literature that links culture and economics. This review discusses Mokyr’s historical analysis in relation to the following questions: What is culture and how should we use it in economics? How can culture explain modern economic growth? Will the culture of growth that caused modern prosperity persist in the future?

Each year, the Associated Student Government (ASG) collected nominations for the Faculty and Administrator Honor Roll from the student body during the spring ASG election. Nearly 200 students participated in 2019-20, writing thorough and complex portraits for their small, medium, and large class professors and administrators and staff members who make Northwestern the institution that it is. ASG wishes to honor the work of the faculty and administrators whose dedication and care for students led to their inclusion on this list. Here is your 2019-2020 Faculty and Administrator Honor Roll.

Jennifer Haynes didn’t just fall through cracks in the country’s social safety net. In her case, it’s been more like a chasm. Haynes, 42, a self-employed chef and single mother living in Rancho Cucamonga, California, had been getting $167 a week in unemployment benefits and an extra $600 a week from the federal government. The aid was enough to catch up on a few months of bills and feed her 11-year-old twin boys.

Coronavirus put the issue center stage – and both Republicans and Democrats are touting plans to solve the problem.

Standard measures of productivity display enormous dispersion across farms in Africa. Crop yields and input intensities appear to vary greatly, seemingly in conflict with a model of efficient allocation across farms. In this paper, we present a theoretical framework for distinguishing between measurement error, unobserved heterogeneity, and potential misallocation. Using rich panel data from farms in Tanzania and Uganda, we estimate our model using a flexible specification in which we allow for several kinds of measurement error and heterogeneity. We find that measurement error and heterogeneity together account for a large fraction of the dispersion in measured productivity.

School of Education and Social Policy and Department of Economics faculty member Kirabo (“Bo”) Jackson has received the David N. Kershaw Award from the Association for Public Policy Analysis and Management for his path-breaking work on school finance reform and teacher effectiveness.