(IT Support) (IT Support) Tue, 20 Feb 2018 02:19:49 EST Department of Economics, University of Toronto en-ca 720 Research U of T: Economics: Working Papers Working Papers U of T: Economics: Working Papers Misallocation and Aggregate Productivity across Time and Space by Diego Restuccia, Thu, 8 Feb 2018 00:00:00 EST Productivity is at the core of the large differences in per-capita income across countries. What accounts for international productivity differences? I discuss the possible cross-country differences in the allocation of inputs across heterogeneous production units---misallocation---as a factor in accounting for aggregate productivity. The policies and institutions generating misallocation are prevalent in poor and developing countries, and may also be responsible for differences in the selection and technology use of operating producers, contributing substantially to per-capita income differences across countries. Violence, Psychological Stress and Educational Performance during the "War on Drugs" in Mexico by Maren M. Michaelsen, Paola Salardi, Wed, 3 Jan 2018 00:00:00 EST We provide evidence that violence in Mexico related to the "war on drugs" from 2006-2011 had a significant negative impact on educational performance that is primarily attributable to acute psychological stress among students in the immediate aftermath of local violence. Using geographically and temporally disaggregated data we demonstrate that the largest impacts of violence on educational performance result from homicides committed within the vicinity of schools during the week immediately prior to national standardized tests. This short-term impact increases with geographic proximity and levels of violence, and dramatically exceeds the effects of longer-term violence spread over a full school year. Education Reform in General Equilibrium: Evidence from California’s Class Size Reduction by Mike Gilraine, Hugh Macartney, Rob McMillan, Tue, 2 Jan 2018 00:00:00 EST This paper sheds new light on general equilibrium responses to major education reforms, focusing on a sorting mechanism likely to operate whenever a reform improves public school quality significantly. It does so in the context of California’s statewide class size reduction program of the late-1990s, and makes two main contributions. First, using a transparent differencing strategy that exploits the grade-specific roll-out of the reform, we show evidence of general equilibrium sorting effects: Improvements in public school quality caused marked reductions in local private school shares, consequent changes in public school demographics, and significant increases in local house prices – the latter indicative of the reform’s full impact. Second, using a generalization of the differencing approach, we provide credible estimates of the direct and indirect impacts of the reform on a common scale. These reveal a large pure class size effect of 0.11σ (in terms of mathematics scores), and an even larger indirect effect of 0.16σ via induced changes in school demographics. Further, we show that both effects persist positively, giving rise to an overall policy impact estimated to be 0.4σ higher after four years of treatment (relative to none). The analysis draws attention, more broadly, to conditions under which the indirect sorting effects of major reforms are likely to be first order.