Volume 14, Issue 1 -

Using data obtained from the United States Sentencing Commission’s records, we examine the extent to which the Federal Criminal Sentencing Guidelines curbed judicial sentencing preferences based on gender, race, and ethnicity. Our structural utility maximization model of judicial sentencing and a new generalized nonlinear decomposition methodology allow us to conduct a counterfactual exercise examining the impact of the guidelines on sentences during our period of study. Our results indicate that under the guidelines, and after controlling for circumstances such as the severity of the offense and past criminal history, judicial preferences strongly favor women while also disadvantaging Black men. In most of our estimates, we find that in the absence of the guidelines, judicial preferences would have increased the unexplained gap. Our findings stand up to a wide variety of robustness checks.

This article presents a model that analyzes the effects of redistribution on the occupational choices of entrepreneurs. Entrepreneurs can either engage in costly search for projects and produce or become rent-seekers who collect rents for reversing redistribution. The model illustrates that redistribution of aggregate output is possible until a tipping point is reached. Higher levels of redistribution decrease entrepreneurship, employment, and aggregate income. Which level of redistribution is too much depends on the degree of inequality inherent in the firm quality distribution and on the power of rent-seekers to alter redistributive outcomes. An exogenous increase in the ratio of average realized output to output produced at the lowest-productivity firm reduces the gains from entrepreneurship relative to rent-seeking. This happens because entrepreneurs expend search costs to find those high-quality projects that drive up the average production value, but only a few entrepreneurs can realize these big hits. Wages and rent-seeker pay-offs, on the other hand, depend on average realized production. An increase in the power of rent-seekers further reduces the government’s options. The model implies that the government’s ability to redistribute might be declining when inequality rises.

In this article, I analyze the determinants of research production by higher education institutions in the US. I use four measures to build an index of top-level academic research production. I show that it is important to account for the presence of outliers in both dimensions ( X and Y axes) and that most top-ranked institutions can be considered outliers. I find that university income, the share of income devoted to research expenses, and faculty size significantly increase the ability of an institution to produce top-level academic research. I also show that the relationship between average professor quality (proxied by salary) and the production of research is U-shaped, with a significant share of institutions located on the decreasing part of the curve.

This article uses an audit sample and a consumer survey to study the intriguing market of online prescription drugs facing US customers and assesses the role that certification agencies play in online drug markets. On the supply side, we acquire samples of five popular brand-name prescription drugs from three types of online pharmacies: tier 1 are US-based and certified by the National Association of Boards of Pharmacy (NABP) or LegitScript.com, tier 2 are certified by PharmacyChecker.com or the Canadian International Pharmacy Association but not by NABP or LegitScript, and tier 3 are not certified by any of the four agencies. Most tier-2 and tier-3 websites are foreign. We find that 37 of the 365 delivered samples are different from the products we ordered and, therefore, non-testable. Conditional on testable samples, Raman spectrometry test finds no failure of authenticity except for eight Viagra samples from tier-3 websites. After controlling for testability and authenticity, tier-2 websites are 49.2% cheaper ( p <0.01) and tier-3 websites are 54.8% cheaper ( p < 0.01) than tier-1 sites. These differences are driven by non-Viagra drugs. For Viagra, failing samples are cheaper, but there is no significant price difference across tiers once we condition on testability and authenticity. To study the demand side, we designed a survey that was distributed by RxRights. Among the 2,522 respondents who have purchased prescription medication and are concerned about the price of US pharmaceuticals, results show that 61.54% purchase drugs online and mostly from foreign websites, citing cost saving as the leading reason. Conditional on shopping online, 41.11% check with a credentialing agency. Both samples convey a consistent message that certification agencies deliver useful information for foreign websites and online consumers. Further, while these findings confirm the Food and Drug Administration warning against rogue websites, they do suggest that a blanket ban against all foreign websites may deny consumers substantial savings from certified tier-2 websites.

This article investigates determinants of the number of four-year colleges to which students apply and how the number of applications affects their probabilities of enrollment. To estimate the effect on enrollment, I use a novel instrument: the adoption rate of the Common Application near a student’s home. I find that applying to one additional college increases students’ likelihood of enrollment, but only for those applying to very few colleges. Going from one to two applications and two to three applications increases students’ probabilities of enrollment by 40% and 10%, respectively. This is partially due to the increase in the probability of being accepted to some college but also due to the increase in the probability of choosing to enroll, conditional on being accepted.

We show that incomplete cartels in quantity-setting oligopolies may increase welfare, without any efficiencies or synergies being internalized by cartel formation. The main intuition is that the cartel has an incentive to contract output and that the firms outside the cartel react to this by expanding output. If the outsiders are more efficient than the cartel firms, average production costs go down. We model collusion in a market structure with imperfect substitute goods. Even for relatively moderate differences in efficiency, total welfare may increase due to this market-induced rationalization, whereas the cartel remains profitable. We discuss why the effect can be relevant for sectors where new, superior products are developed. Because anti-cartel enforcement is costly, it is important for competition authorities to realize that not all cartels lead to a welfare loss.

We study the factors associated with food insecurity and participation in the Supplemental Nutrition Assistance Program (SNAP) in Mexican immigrant families in the US. Estimates from analyses that control for a rich set of economic, demographic, and geographic variables show that children in Mexican immigrant families are more likely to be food insecure than children in native families, but are less likely to participate in SNAP. Further, more vulnerable groups such as the first-generation Mexican immigrant families, families in the US for less than 5 years, and families with non-citizen children – that are at a higher risk of food insecurity are the least likely to participate in SNAP. Our analysis suggests that the US Department of Agriculture outreach initiative and SNAP expansion under the American Recovery and Reinvestment Act increased SNAP participation of the mixed-status Mexican families, and there is some evidence that food insecurity declined among children in low-educated mixed status families. We do not find any evidence that the outreach and ARRA expansion increased SNAP receipt among Mexican immigrant families with only non-citizen members who are likely to be undocumented.

Promoting competition between brand-name and generic drugs has long been recognized as an approach adopted to save on health care costs. However, there are substantial variations in the extent of the generic competition across countries. This study empirically estimates the determinants of the generic market share in Taiwan, where medical providers are in a position to profit directly from the sale of prescription drugs. Our empirical results point out that the profit-seeking behavior of medical providers plays an important and dominant role behind generic competition in the pharmaceutical market. As a result, there is a positive association between the generic-to-brand price ratio and the generic market share in Taiwan’s pharmaceutical market, which contrasts with the conventional empirical finding that the relationship between the generic-to-brand price ratio and generic market share is negative. An important implication of our study is that the profit-seeking behavior of medical providers undermines the policy effectiveness of using generic competition as the cost containment strategy in the health care market.

In simple exchange experiments, participants have been reported to trade their endowments with similar objects less frequently than predicted by the neoclassical demand theory. Recent research has indicated that the experimental support for exchange asymmetry is fragile in alternative environments. In this article, we report an environment which is different from all other environments previously known in which exchange asymmetry is not observed. In this environment, participants knew at the time of making exchange decisions that they will have an opportunity to reverse their decisions. We find significant differences in exchange asymmetry in this environment, and an environment in which exchange decisions were final. Such differences suggest that anticipated regret theory provides an adequate explanation for exchange asymmetry which is often reported in the laboratory experiments. Our results underscore the importance of careful design for testing theories in the laboratory experiments.

The UK was one of only three countries that granted free movement of workers to accession nationals following the enlargement of the European Union in May 2004. The resulting migration inflow, which was substantially larger and faster than anticipated, arguably corresponds more closely to an exogenous supply shock than most migration shocks studied in the literature. We evaluate the impact of this migration inflow – one of the largest in British history – on the UK labour market. We use new monthly micro-level data and an empirical approach that investigates which of several particular labour markets in the UK – with varying degrees of natives’ mobility and migrants’ self-selection – may have been affected. We found little evidence that the inflow of accession migrants contributed to a fall in wages or a rise in claimant unemployment in the UK between 2004 and 2006.