We use data on Latino children in the United States who have been randomly assigned calculation tests in English or Spanish to check for the so-called bilingual advantage, the notion that knowing more than one language improves individuals’ other cognitive skills. After controlling for different characteristics of children and their parents, as well as children's time in the US, we find a bilingual advantage among children who read or write in English and Spanish but not for those who only speak or understand both languages. In particular, bilingual readers or writers perform one-fourth to one-third of a standard deviation better than monolingual children, equal to learning gains of an additional school year. Applying the Oster test, we find that selection on unobservables would need to be 3–4 times stronger than selection on observables to explain away our results. The bilingual advantage is stronger among children in two-parent households with siblings and for those at the upper end of the ability distribution.

Although fertility is typically regarded as a unitary family decision, a meaningful degree of disagreement in fertility willingness exists within households, especially for having two or more children. As China transitioned from a one-child to multiple-child policy, understanding how such disagreement affects fertility decisions is crucial. Using household data from the 2016 China Labor-force Dynamic Survey, we analyze fertility willingness in married couples. We find that over 10% of families disagree on having two or more children. Disagreement negatively impacts plans to have more children: only the husband wanting two children significantly reduces fertility plans compared to mutual agreement, while only the wife wanting two children does not suppress the plan. This is consistent with the wife's veto power in fertility decisions. Heterogeneity analyses reveal that more equal gender role and higher bargaining power contribute to the wife's veto power, offering insights into the mechanism of intra-household fertility decisions.

Using a unique data set of firms listed on China’s Shenzhen Stock Exchange, we show that investors’ corporate site visits convey information about future stock returns. Firms with abnormally frequent investor visits predictably outperform firms with abnormally infrequent investor visits by approximately 70-to-100 basis points per month. This return predictability concentrates on neglected firms with low trading volumes and when investors incur higher travel costs. Abnormally frequent investor visits accompany increased holdings among visiting institutions and predict improvements in firms’ fundamental performance, consistent with institutions using visits to gain an information advantage regarding underpriced firms.

Embedding mandatory investment guarantees in individual retirement accounts (IRAs) can protect workers from equity market shortfalls, but policymakers must understand the economic costs of such guarantees as well as their incidence. Using a life cycle model calibrated for Germany, where investors have access to stocks, bonds, and tax-qualified IRAs, we show that abandoning the guarantee could enhance old-age consumption for over 75% of retirees without harming pre-retirement consumption. Investors averse to equity losses accumulate only moderately more in guaranteed accounts, as these offer only limited protection against market crashes.

We study how managers react to shareholder empowerment that makes votes on shareholder proposals binding. We empirically exploit staggered legislative changes that introduce such empowerment for proposals regarding majority voting in director elections. We find that managers become more responsive to shareholder requirements by initiating majority voting through either management proposals or governance guidelines. This early action crowds out shareholder proposals. Further results suggest compromised implementation: Managers adopt provisions that give them greater control over the channel of implementation and allow them to retain directors who fail in elections. Our results suggest that managers retain substantial discretion to modulate shareholder requirements. This article was partially completed when Wu was at Fudan University. Any errors are attributable solely to the authors.

This study investigates the contribution of financial frictions in term premiums on long-term bonds within a production economy. We consider a New Keynesian model, featuring an agency problem between financial intermediaries and their private creditors and generalized recursive preferences. The model predicts that financial frictions that amplify the impact of structural shocks on key macroeconomic variables increase term premiums under our baseline calibration. Furthermore, financial frictions produce a larger term premium when monetary policy is geared toward output over inflation stability. The novel mechanism that financial frictions increase term premiums are associated with the bank balance sheet channel of monetary policy.

We investigate the direct effect of the oldest spouse’s statutory retirement age on the retirement behavior of couples. We find a positive direct effect of the statutory retirement age on the labor participation and hours worked of both partners. In particular, we find that younger partners decrease their participation by up to almost 2 percentage points once the oldest spouse reaches the statutory retirement age. Male younger partners are twice as responsive than women. The responsiveness is also about twice as strong in high-income households than in low-income households.

This article explores the dynamics of court practice with regard to mercantile preinsolvency in later nineteenth- and early twentieth-century Belgium. In 1883, the Belgian legislature introduced the proceeding of concordat préventif, making it possible for insolvent entrepreneurs to remain outside the liquidation-oriented procedure of faillite. Instead, they could declare their financial problems and propose a scheme of payment to their creditors. Despite this goal, however, the 1883 law, along with subsequent laws of 1885 and 1887, imposed high majority voting requirements. Accordingly, in the Antwerp commercial court, the shortcomings of the legislation were amended to ameliorate its procedural and judicial practice. The new practices of the court resulted in higher rates of acceptance of applications. However, these success ratios were not evenly distributed among the groups of debtors who applied. Perceptions shared by both creditors and judges may have advantaged merchants, brokers, and entrepreneurs who belonged to the higher strata of the city’s business world.

Healthcare technologies are often appraised under considerable ambiguity over the size of incremental benefits and costs, and thus how decision-makers combine unclear information to make recommendations is of considerable public interest. This paper provides a conceptual foundation for such decision-making under ambiguity, formalizing and differentiating the decision problems of a representative policy-maker reviewing the results from an economic evaluation. A primary result is that presenting information to regulators in an incremental cost-effectiveness ratio or cost-effectiveness analysis (CEA) format instead of a net monetary benefit or cost–benefit analysis (CBA) framework may induce errors in decision-making when there exists ambiguity in incremental benefits and decision-makers use well-known decision rules to combine information. Ambiguity in incremental costs or the value of the cost-effectiveness threshold does not distort decision-making under these rules. In reasonable contexts, I show that the CEA framing may result in the approval of fewer technologies relative to CBA framing. I interpret these results as predictions on how the presentation of information from economic evaluations to regulators may frame and distort recommendations. All the results extend to non-healthcare contexts.

In this article, I argue that leaders of the U.S. Department of War and U.S. Army developed the organizational form and management practices of the modern corporation, decades before the advent of the railroads. Following Mark R. Wilson’s call to “bring the military in” to organizational analysis, I show how leaders of the U.S. military developed modern management practices and organizational structures as a way of maintaining control over officers, soldiers, and workers over long distances, as they provided the organized violence necessary for domestic imperialist expansion. By the time that elite merchants and real estate interests in the Atlantic port cities of the U.S. became interested in building railroads, in the late 1820s and 1830s, the U.S. Army already evidenced the key characteristics of modern business enterprise as defined by Alfred Chandler: a multi-unit organization coordinated by a hierarchy of professional, salaried, career-oriented middle and top managers. All the characteristic coordination mechanisms of the corporation: staff and line hierarchies, divisional and departmental structure, and bureaucratic systems of information gathering, surveillance, and control, were developed by the state in the course of building a continental empire.

We propose a framework for institutional change in the ‘rules-in-equilibrium’ tradition and introduce the term institutional incompleteness. Institutions are incomplete when their constituent rules fail to induce behavioural beliefs about the strategies of others and hence fail to achieve an equilibrium. Even with deliberate preparation ex-ante, there will always be unanticipated situations not covered by the rules that can only be settled ex-post, especially in a complex and changing environment. At this crux, people creatively invoke focal point generating ideas. Ideas act as guides for coordination where rules cannot. If no focal points can form, further institutional collapse occurs. To understand which ideas guide better, economists will have to investigate an idea’s content. Our theory offers a way to look at institutional change due to incompleteness while also allowing the requisite room for ideas in explaining the patterned yet indeterminate trajectory of humanity.

This paper addresses the conceptual gap between the expected benefits of federalism in managing ethnicity-based conflict and its actual governance outcomes in the African context. One of the main reasons for this gap is the conflation of federalism with decentralization. In response, we develop and configure polycentric federalism as a praxis-oriented framework with three institutional parameters, administrative devolution, peaceful competition among governance units, and individual choice of alternating governance structures. Through this framework, we analyse federal institutional design in Nigeria and Ethiopia to illustrate why federalism fails to effectively manage ethnicity-based conflict in African states. Despite the varying approaches to federalism in the two cases, institutional design falls far short of achieving the parameters of polycentric federalism, a necessary condition for effectively managing diversity through federalism. Beyond the policy implications, our analysis contributes to institutional economics by illustrating how federal institutional design affects identity-based group dynamics in conflict-ridden multiethnic polities.

DNA databases are useful tools for improving public safety. While past research examines the effects of national- or state-level databases, little is known about the distinct benefits of a local, District Attorney-run DNA database. Two key advantages of a local database are that (i) more local criminals submit a sample as part of a plea agreement (submission is not restricted to certain crimes and mandatory) and (ii) response times for identifying reoffenders from DNA evidence are shorter. This report performs a retrospective benefit–cost analysis on the Orange County District Attorney’s DNA database. The analysis is run on administrative records that provide costs, entries into the DNA database, and matches that occur between samples taken from a crime scene and individual profiles in the database. We also estimate the deterrence effect of entry into the database with defendant-case-level data. We find that, for every dollar spent on operating the database over the last 10 years, $1.71 is saved due to the estimated reduction in future offenses.

Precarious work, the problems it poses in terms of labour standards/regulation, and remedies to this, have sparked considerable attention from researchers and policy-makers over the past three decades. This paper examines industrial relations (IR) legislation introduced by the Australian Labor government elected in 2022, and which, amongst other things, has addressed precarious work. These initiatives are placed in historical context, noting how essentially similar problems shaped IR regulation a century earlier. The article also examines the more immediate precursors to the legislation, by reviewing state and federal inquiries into precarious work and related issues in Australia from the 1990s onwards. Placing the new legislation into historical context enhances our understanding of the law and surrounding policy debates. The Albanese federal Labor government package of industrial relations laws introduced between 2022 and 2024 marked a paradigm shift from earlier measures. While these reforms are rooted in Australian institutions, law and industrial relations history, they provide an alternative policy template for addressing the problems wrought by neoliberalism on labour standards, especially if accompanied by synergistic reforms in other areas, such as immigration and economic policies promoting manufacturing.

Some Americans prepare for unanticipated adverse economic events, plan for the future, and keep their debt at manageable levels, but others do not. Using four waves of the Understanding America Study during the pandemic period, we compare middle-aged and older Black, Hispanic, and White Americans’ financial resilience from 2020 to 2024. After uncovering significant initial differences in their financial preparedness at the outset of the pandemic, we confirm that greater financial resilience enhanced peoples’ chances of realizing better economic outcomes when confronting adverse economic shocks. The 2024 wave shows systematic differences in financial resilience across the demographic groups and indicates how greater resilience affects financial satisfaction.

This paper critically assesses Rizzo and Whitman’s theory of inclusive rationality in light of the ongoing cross-disciplinary debate about rationality, welfare analyses and policy evaluation. The paper aims to provide three main contributions to this debate. First, it explicates the relation between the consistency conditions presupposed by standard axiomatic conceptions of rationality and the standards of rationality presupposed by Rizzo and Whitman’s theory of inclusive rationality. Second, it provides a qualified defence of the consistency conditions presupposed by standard axiomatic conceptions of rationality against the main criticisms put forward by Rizzo and Whitman. And third, it identifies and discusses specific strengths and weaknesses of Rizzo and Whitman’s theory of inclusive rationality in the context of welfare analyses and policy evaluation.