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Are Charters the Best Alternative?
(Private Enterprise Research Center, Texas A&M University, 2016-01-01) Gronberg, Timothy; Jansen, Dennis; Taylor, Lori
Texas has been part of the charter school movement since 1995, when the 74th Texas Legislature authorized the State Board of Education to establish open enrollment (OE) charter schools in the state. According to the Texas Education Agency, in 2010-11 there were 199 OE charter districts operating 482 campuses in Texas, serving 133,697 students, nearly 3% of public school students in the state. Despite the growing role of these alternative schools in the U.S. edcucational system, they are seldom studied. In Working Paper 1606, we provide the first careful empirical study of the costs of alternative education. Their results show charters to be more cost-efficient in providing alternative education compared to traditional public school districts.
Power to Choose? An Analysis of Consumer Intertia in the Residential Electricity Market
(Private Enterprise Research Center, Texas A&M University, 2016-01-01) Hortacsu, Ali; Madanizadeh, Seyed Ali; Puller, Steven L.; Meer, Jonathan; Lim, Jaegeum
The Impact of Teacher-Student Gender Matches: Random Assignment Evidence from South Korea
(Private Enterprise Research Center, Texas A&M University, 2016-01-01) Meer, Jonathan; Lim, Jaegeum
Subject-specific gender disparities appear and widen as students advance through school. In PERC Working Paper 1509, PERC Professor Jonathan Meer and Jaegeum Lim examine test scores for South Korean middle school students to investigate how teacher-student gender matches affect classroom achievement. To identify causal effects, the authors exploit random assignment of students into clsasrooms. Findings indicate that female students are positively influenced by a female teacher and that female students are significantly less likely to interact and participate in class activities when the teacher is male.
Migration Nation
(Private Enterprise Research Center, Texas A&M University, 2016-01-01) Rettenmaier, Andrew J.; Saving, Thomas R.
Every year thousands of Americans move across county lines. In general, non-migrants experience higher average incomes than their migrant counterparts. This issue of PERCspectives on Policy explores how migrants and non-migrants incomes are distributed for a sample of the largest counties and suggests that the growth in counties' per capita income is due to both the potential of immigrants and composition of the workforce.
Does Fundraising Create New Giving?
(Private Enterprise Research Center, Texas A&M University, 2016-02-01) Meer, Jonathan
Despite an extensive literature on the impacts of a variety of charitable fundraising tech-niques, little is known about whether these activities increase overall giving or merely cause donors to substitute away from other causes. Using detailed data from Donorschoose.org, an online plat-form linking teachers with prospective donors, the author examines the extent to which matching grants for donations to certain requests affect giving to others. Eligibility for matches is determined in entirely by observable attributes of the request, providing an exogenous source of variation in incentives to donate between charities. Findings show that, while matches increase giving to eligible requests, they do not appear to crowd out giving to similar ones, either contemporaneously or over tim
The Higher Costs of Doing Business in China: Minimum Wages and Firms' Export Behavior
(Private Enterprise Research Center, Texas A&M University, 2016-02-01) Gan, Li; Hernandez, Manuel A.; Ma, Shuang
This paper examines the relationship between changes in the minimum wage and firmsâ€™ export behavior in China using detailed firm-level data of medium and large manufacturing enterprises between 1998 and 2007. We find that a 10% increase in the minimum wage is associated with a 0.9 percentage-points decrease in the probability of exporting goods and a 0.9% decline in export sales, conditional on exporting. These findings are generally robust to alternative estimation methods and data sources. We further observe a larger decline among firms with lower average wages and a lower capital-labor ratio. The results suggest that Chinese exports and comparative advantage in international markets are not negligibly affected by higher local labor costs and regulations measured through raises in minimum wage standards.
Statistics of Income County-to-County Migration Data: An Overview
(Private Enterprise Research Center, Texas A&M University, 2016-03-01) Narkiewicz, Adam
The aim of this document is to present some basic information and general trends in the data used to create the PERC county-to-county migration overview map. As such, the analysis is limited only to variables used on the map: namely, non-migrant population, immigration and emigration rates, exemptions per return, and average incomes. The document contains possible explanations and interpretations of certain features exhibited by the data. I analyze counties using four basic dimensions: (1) population, (2) income per capita, (3) population growth, and (4) income per capita growth. For each dimension I investigate how the situation evolved over time and how a given dimension relates to other variables in the dataset. These data reveal trends occurring in the US economy and shed light on how the economic situation of particular counties fits in the bigger picture.
Paying for Medicare Now and in the Future
(Private Enterprise Research Center, Texas A&M University, 2016-03-01) Rettenmaier, Andrew J.; Saving, Thomas R.
Medicare celebrated its golden anniversary this past year. The program now provides insurance coverage for over 50 million Americans, and accounts for 20 percent of the nation's health care spending. Its shares of the nation's output and total health care spending have grown significantly over its first 50 years. Here we note how Medicare spending is projected to grow based on several alternative forecasts. We then estimate how lifetime Medicare benefits, taxes, and premiums are distributed across and within generations. Our estimates show that Medicare is progressive within generations. We also show that that across generations the program has, up to now, provided increasing replacement rates relative to pre-retirement earnings. Accounting for all lifetime taxes and premium payments in support of the program, we estimate that net benefits for medium earning workers will remain positive even for today's new labor force entrants. Though the program is progressive within generations, each generation's retirement benefits are paid in part by higher taxes on succeeding generations. Moving toward equalizing the tax burden across generations can be accomplished by constraining the tax financed portion of Medicare so that per capita spending grows at the same rate as per capita GDP. We outline four alternative ways to recast the program's financing and insurance structure so as to constrain the tax-financed portion of retiree health care spending.
Is Social Security Wealth?
(Private Enterprise Research Center, Texas A&M University, 2016-04-01) Rettenmaier, Andrew J.
Wealth inequality has grown significantly over the last three decades and there are growing concerns about the diminishing wealth share of the middle class. Standard wealth definitions require that individuals possess a legal claim to any assets included as wealth. Consequently, accrued Social Security benefits are not considered wealth because workers and retirees lack a legal claim to receipt of those benefits. However, as of 2014 these accrued benefits were estimated to be $31 trillion, or over 40% the size of conventional measures of household wealth. Though they do not meet the formal definition of wealth, the existence of these benefits affected the lifecycle savings behavior of current recipients and will affect the savings behavior of current workers. This study identifies Social Security wealth as the accrued benefits based on past participation in the program. This definition is similar accrued pension wealth associated with defined benefit plans. The distributions of accrued Social Security benefits for the years 1985 to 2006 are derived from individual earnings record available in the Social Security Administrationâ€™s 2006 Earnings Public Use File. The estimated accrued Social Security benefits are much more evenly distributed than are the estimates of savings wealth. Individuals in the top 10% of the estimated wealth distribution, excluding Social Security, held 70% of wealth as of 2006, but only 33% of accrued Social Security benefits. Once accrued Social Security benefits are included in a total wealth measure, the percent of the total attributable to the top 10% declines to between 55% and 62%.
Is Social Security Wealth?
(Private Enterprise Research Center, Texas A&M University, 2016-05-01) Rettenmaier, Andrew J.
Rising income inequality in recent years has been linked to a rise in wealth inequality. However, in many studies, anticipated retirement benefits such as Social Security are often not included in wealth calculations. In PERC Working Paper #1602, Andrew Rettenmaier, Executive Associate Director at PERC, estimates how the inclusion of accrued Social Security benefits affects the distribution of wealth. Findings indicate that the accrued benefits are much more equally distributed than are the conventional wealth measures that exclude them. For example, the top 10% of individuals held 70% of potential savings wealth, but this number falls to between 55% and 63% when Social Security is included in a total wealth measure.
Does Funding Create New Giving?
(Private Enterprise Research Center, Texas A&M University, 2016-05-01) Meer, Jonathan
Despite an extensive literature on the impacts of a variety of charitable fundraising tech-niques, little is known about whether these activities increase overall giving or merely cause donors to substitute away from other causes. Using detailed data from Donorschoose.org, an online plat-form linking teachers with prospective donors, I examine the extent to which matching grants for donations to certain requests affect giving to others. Eligibility for matches is determined in entirely by observable attributes of the request, providing an exogenous source of variation in incentives to donate between charities. I find that, while matches increase giving to eligible requests, they do not appear to crowd out giving to similar ones, either contemporaneously or over time.
Is the Federal Reserve Independent?
(Private Enterprise Research Center, Texas A&M University, 2016-05-09) Saving, Thomas R.
The power to coin money and regulate the value thereof is constitutionally delegated to Congress, preventing true Federal Reserve independence. This issue of PERCspectives on Policy, by PERC Director Thomas Saving, discusses Federal Reserve independence through the lens of Great Recession and Great War deficits to analyze how the Federal Reserve has historically contributed to Treasury financing of fiscal deficits. At first glance it seems that the Federal Reserve was a partner to the Treasury by financing more than half of the Recession debt in recent years. However, the lack of inflation that would be expected is a result of the Federal Reserve sterilizing much of its asset expansion by paying interest on excess reserves.
The Federal Reserve, the Great Recession and the Lost Inflation
(Private Enterprise Research Center, Texas A&M University, 2016-07-01) Saving, Thomas R.
Ever since the Federal Reserve began its series of Quantitative Easing, traditional monetary economists have been predicting levels of inflation that would rival the inflation of the late 1970â€™s and early 1980â€™s. The three QEs resulted in a more than quadrupling in the level of Federal Reserve assets in the fiscal years 2009-2015. During this seven-year period, Federal Reserve assets grew at an astounding annual rate of about 21%. Our usual pre-Great Recession theory of the money supply and prices would have suggested that a greater than 20% growth in Federal Reserve assets would result in at least double digit inflation. But none of our dire predictions about inflation happened. In fact, the two measures of inflation, the CPI and the GDP deflator, grew at surprisingly low rates of 1.2% and 1.4% respectively. The question is why did the predicted inflation not occur? There are at least two potential answers. One, everything we thought we knew about money and prices suddenly became irrelevant. Or, two, we were just ignoring things that made what has happened perfectly consistent with what we used to know.
The Corporate Financing Effects of the Temporary Tax Deduction for Repatriated Dividends
(Private Enterprise Research Center, Texas A&M University, 2016-07-01) Newhard, Joseph
With the intent of stimulating domestic investment and employment, the American Jobs Creation Act of 2004 included a provision under section 965 that allowed for a one-time tax deduction on repatriated dividends. In accordance with the law, qualifying repatriated funds were to be allocated to specific types of investment-related expenditures. However, since money is fungible, there is a question as to whether the law increased domestic investment spending or simply freed up cash that was to be allocated to investment, allowing corporations to increase other types of expenditures instead which were unrelated to capital investment and labor demand. Drawing from the 10-k filings of about 60 repatriating corporations, this paper analyzes the effect of the tax deduction on five types of corporate expenses, only three of which were permitted uses of qualifying funds. I find that the temporary tax deduction coincided with an increase in share repurchases and dividend payments to shareholders, both expressly unpermitted uses of qualifying repatriations. I find no evidence of a boost to the approved expenses of research and development, capital investment, or long term debt repayments. This suggests that the Act was ineffective at stimulating domestic investment, merely freeing up cash for other uses.
A Primer on Measures of Government Financing Shortfalls and Liabilities
(Private Enterprise Research Center, Texas A&M University, 2016-08-01) Liu, Liqun; Rettenmaier, Andrew J.; Saving, Thomas R.
This note presents measures of financing shortfalls and liabilities, both for an individual government program such as Social Security and for government financing as a whole. At the level of individual programs, the widely accepted measure of financing shortfall is the (infinite horizon) unfunded obligation, which is the present value of scheduled future benefits less the present value of the dedicated future tax revenues. At the aggregate level, a measure of financing shortfall is the fiscal imbalance, which is the total unfunded obligation of all government programs plus the debt held by the public. At the aggregate level, there is also a relative measure of financing shortfall, the fiscal gap. It is basically the fiscal imbalance divided by the present value of all of the future GDP. At both the individual and the aggregate level, a portion of the corresponding financing shortfall measure is due to past actions, and the rest is contingent on the continuation of the current policies in the future. The portion of the financing shortfall measure that is due to past actions provides a measure of liabilities for an individual program or the government financing as a whole.
Vehicle Miles (Not) Traveled: Fuel Economy Requirements, Vehicle Characteristics, and Household Driving
(Private Enterprise Research Center, Texas A&M University, 2016-08-01) Hoekstra, Mark; Puller, Steven L.; West, Jeremy; Meer, Jonathan
Simply put, the less Americans drive, the less gas they use. More driving, more gas. The negative effects of gasoline consumption are well-documented, ranging from local effects of automobile pollution on individuals' health to the global impact of vehicle emissions on climate change. So what makes households drive less? In Working Paper 1607, PERC's Rex Grey Professor Mark Hoekstra, PERC's Professor of Free Enterprise Steven L. Puller, UC Santa Cruz's Jeremy West, and Texas A&M University's Jonathan Meer, examine the effects of drivers' behaviors on gasoline consumption.
Rethinking Federal Debt: What Do We Really Owe?
(Private Enterprise Research Center, Texas A&M University, 2016-08-01) Saving, Thomas R.
Ever since the Federal Reserve began its series of Quantitative Easing Federal Reserve assets have increased fourfold. During this same period federal deficits have increased the level of publicly held debt by 260%. There is an important relation between these two seemingly independent events because increases in Federal Reserve asset holdings have a direct impact on the cost of servicing the federal debt as all Federal Reserve profits belong to the Treasury. The measured publicly held federal debt nets out debt held by government agencies. In these calculations the Federal Reserve is not considered a government agency even though all profits of the Federal Reserve, $97.7 billion in 2015, are transferred to the Treasury. The Federal Reserve is in a very important in sense owned by the United States Treasury, and this ownership must be accounted in the debt burden. There are two ways to account for this Treasury Federal Reserve connection as it applies to measuring the taxpayer burden of federal debt: (i) a flow or income statement approach and (ii) a stock or balance sheet approach. From an income statement perspective the Federal Reserve's 2015 transfer to the Treasury of $97.7 Billion reduces federal debt by just over 43%. From a balance sheet perspective, using all assets and liabilities of the Federal Reserve, the publicly held federal debt is reduced by 11%.
Federal Liabilities: 2016 Update
(Private Enterprise Research Center, Texas A&M University, 2016-08-01) Liu, Liqun; Rettenmaier, Andrew J.; Saving, Thomas R.
The 2015 Financial Report of the United States Government (FRUSG) identifies total federal liabilities of $21.5 trillion as of September 30, 2015. The debt held by the public, $13.2 trillion, comprises 61% of these liabilities. Federal employees' accrued benefits make up another 31%, and various other categories round out the remainder. Absent from the official liabilities is a measure of current retirees' expected Social Security and Medicare benefits even though these elderly entitlement benefits are conceptually equivalent to federal employees' accrued benefits. The Social Security and Medicare benefits payable to retirees do appear in the FRSUG's Statements of Social Insurance, but not as liabilities. We suggest adding these portions of the elderly entitlement programs' obligations - net benefits payable to current retirees - to the official liabilities of the federal government. Social Security and Medicare benefits payable to current retirees produces an additional liability of $18.5 trillion, an amount that exceeds the debt held by the public and that is 86% of the size of the official liability measure. Together the official liabilities and the Social Security and Medicare benefits to be received by current retirees total $39.9 trillion, or 222% of GDP. The liability measure presented here, based on past actions, combined with the forward-looking fiscal gap and unfunded obligation measures provide policymakers with a comprehensive set of metrics that allows them to distinguish between federal government commitments that have already been made and those that are contingent on continuing programs in their current forms
The Long-Run Effects of Disruptive Peers
(Private Enterprise Research Center, Texas A&M University, 2016-08-09) Hoekstra, Mark; Carrell, Scott; Kuka, Elira
There's a great deal of research on how classmates can affect test scores and discipline in school, but what about later in life? In Working Paper 1605, the authors look at the long-term impact of childhood peers, particularly with respect to labor market outcomes in adulthood.
Illegal Immigration, State Law, and Deterrence
(Private Enterprise Research Center, Texas A&M University, 2016-09-01) Hoekstra, Mark; Orozco-Aleman, Sandra
Can state and federal policies deter undocumented workers from entering the U.S.? In Working Paper 1604, PERC's Rex Grey Professor Mark Hoekstra, and Sandra Orozco-Aleman, address this timely and critical immigration policy question. Focusing on Arizona SB 1070, arguably the most restrictive and controversial immigration bill ever passed by a state, the authors examine whether the law deterred unauthorized entry into Arizona. They find the passage and announcement of SB 1070 significantly reduced the flow of undocumented workers into Arizona (relative to other states) from Mexico, suggesting that undocumented workers are responsive to changes in state immigration policy.

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