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Microcredit – joint-liability loans to the poorest of the poor – has been touted as a powerful approach for combatting global poverty, but sustainability varies dramatically across banks. Efforts to improve the sustainability of microcredit have assumed defaults are caused by free-riding. Here, we point out that the response of other group members to delinquent groupmates also plays an important role in defaults. Even in the absence of any free-rider problem, some people will be unable to make their payments due to bad luck. It is other group members’ unwillingness to pitch in extra – due to, among other things, not wanting to have less than other group members – that leads to default. To support this argument, we utilize the Ultimatum Game (UG), a standard paradigm from behavioral economics for measuring one's aversion to inequitable outcomes. First, we show that country-level variation in microloan default rates is strongly correlated (overall r = 0.81) with country-level UG rejection rates, but not free-riding measures. We then introduce a laboratory model ‘Microloan Game’ and present evidence that defaults arise from inequity-averse individuals refusing to make up the difference when others fail to pay their fair share. This perspective suggests a suite of new approaches for combatting defaults that leverage findings on reducing UG rejections.

In this article we present new evidence that the capacity of households to cover earnings lost during spells of unemployment through a combination of drawing down of wealth and receipt of unemployment insurance and other transfer payments is very limited and has deteriorated since the 1980s. Since 2006, most households have not had nearly enough financial wealth to smooth their consumption over more than a very short spell of unemployment. Individuals experiencing involuntary job loss also tend to experience substantial earnings reductions upon reemployment, resulting in longer-term deterioration in household finances. Wealth inadequacy to cover lost earnings and the earnings reduction upon reemployment are both especially acute in long unemployment spells, such as those that were prevalent in the aftermath of the Great Recession.

The Louisville Twin Study is one of the most intensive twin studies of cognitive ability. The repeated measurements of the twins are ideal for testing developmental twin models that allow for the accumulation of gene-environment correlation via a phenotype to environment (P=>E) transmission process to explain twins’ divergence in mean ability level over time. Using full-scale IQ scores from 566 pairs of twins (MZ=278; DZ=288), we tested whether a P=>E transmission model provided better representation of actual developmental processes than a genetic simplex model. We also addressed whether the induced gene-environment correlation alters the meaning of the latent nonshared environmental factors with a simple numerical method for interpreting nonshared environmental factors in the context of P=>E transmission. The results suggest that a P=>E model provided better fit to twins’ FSIQ data than a genetic simplex model and the meaning of the nonshared environment was preserved in the context of P=>E.

Objective To evaluate the impact – on diagnosis and treatment of malaria – of introducing rapid diagnostic tests to drug shops in eastern Uganda. Methods Overall, 2193 households in 79 study villages with at least one licensed drug shop were enrolled and monitored for 12 months. After 3 months of monitoring, drug shop vendors in 67 villages randomly selected for the intervention were offered training in the use of malaria rapid diagnostic tests and – if trained – offered access to such tests at a subsidized price. The remaining 12 study villages served as controls. A difference-in-differences regression model was used to estimate the impact of the intervention. Findings Vendors from 92 drug shops successfully completed training and 50 actively stocked and performed the rapid tests. Over 9 months, trained vendors did an average of 146 tests per shop. Households reported 22 697 episodes of febrile illness. The availability of rapid tests at local drug shops significantly increased the probability of any febrile illness being tested for malaria by 23.15% (P = 0.015) and being treated with an antimalarial drug by 8.84% (P = 0.056). The probability that artemisinin combination therapy was bought increased by a statistically insignificant 5.48% (P = 0.574). Conclusion In our study area, testing for malaria was increased by training drug shop vendors in the use of rapid tests and providing them access to such tests at a subsidized price. Additional interventions may be needed to achieve a higher coverage of testing and a higher rate of appropriate responses to test results.

Segmented labor market models gained popularity in economics during the late 1960s and early 1970s but fell fairly rapidly into disrepute following criticisms by Cain (1976) and Wachter (1974). At about this time, sociologists, drawing on the work of Averitt (1968) of segmented labor market theorists, developed a theory of a dual or segmented economy.’ The sociological theory is portrayed as corrective of the labor-supply-side and individualistic orientation of human capital and status attainment theory.

Microcredit—the distribution of small, uncollateralized but jointly liable loans to the poorest of the poor—has been touted as a powerful approach for combatting global poverty. While some microcredit programs enjoy high repayment rates, others face unsustainably high default rates. Efforts to improve the sustainability of microcredit by reducing default rates have typically focused on increasing the likelihood that individuals repay their share of the loan by applying lessons from social dilemmas research. Here, we argue that defaults are driven more by the response of other group members to delinquent groupmates. Even in the absence of any free-rider problem, some people will be unable to make their payments on any given occasion due to bad luck. It is other group members’ unwillingness to pitch in extra that leads to default. To support this argument, we utilize the Ultimatum Game (UG), behavioral economics’ standard paradigm for measuring one’s aversion to inequitable outcomes. First, we show that country-level variation in microloan default rates is strongly correlated (overall r = 0.81) with country-level UG rejection rates observed in a recent meta-analysis of cross-cultural UG experiments from 13 countries (but not correlated with various measures related to free-riding). We then introduce a laboratory model “Microloan Game,” and present evidence that defaults arise from inequity averse individuals refusing to make up the difference when others fail to pay their fair share. This perspective suggests a suite of new approaches for combatting defaults that leverage findings on reducing UG rejections, rather than deterring free-riding.

We present a new, high resolution (300 m) bathymetric grid of the continental shelf surrounding the South Orkney Islands, northeast of the Antarctic Peninsula. The new grid, derived from a compilation of marine echo-sounding data, improves previous regional bathymetric representations and helps to visualize the morphology of the shelf in unrivalled detail. The compilation forms important baseline information for a range of scientific applications and end users including oceanographers, glacial modelers, biologists, and geologists. In particular, due to the limited understanding of glacial history in this region, the bathymetry provides the first detailed insights into past glacial regimes. The continental shelf is dominated by seven glacially eroded troughs, marking the pathways of glacial outlets that once drained a former ice cap centered on the South Orkney Islands. During previous glacial periods, grounded ice extended to the shelf edge north of the islands. A large, ∼250 km long sediment depocenter, interpreted as a maximum former ice limit of one or more Cenozoic glaciations, suggests that ice was only grounded to the ∼300–350 m contour in the south. Hypsometric analyses support this interpretation, indicating that a significant proportion of the shelf has been unaffected by glacial erosion. Using these observations, we propose a preliminary ice cap reconstruction for maximum glaciation of the South Orkney plateau, suggesting an ice coverage of about ∼19,000 km2. The timing of maximum ice extent, number of past advances and pattern of subsequent deglaciation(s) remain uncertain and will require further targeted marine geological and geophysical investigations to resolve.

IntroductionInsufficient or no health insurance creates financial access barriers to healthcare services, especially for vulnerable populations. The Green Card scheme, a non-contributory government-funded health insurance scheme for the poor in Turkey, was expanded in 2003–2006 and has provided citizens with extended benefits. We study the effects of this expansion of the Green Card scheme on out-of-pocket healthcare expenditures for low-income households.MethodsWe use difference-in-differences study design to examine the causal impact of having a Green Card on financial protection in terms of out-of-pocket health expenditures and catastrophic expenditures for the poor in Turkey. In addition, we implement quantile regression analysis to examine how the benefits expansion affects the poor who have the largest out-of-pocket expenditures and are in the upper tail of the health spending distribution.ResultsWe find that the expansion of benefits coverage leads to significant reductions in annualised out-of-pocket healthcare expenditures for dental care, diagnostics services, pharmaceuticals and total medical spending. We show that the decline in spending by Green Card beneficiaries corresponds to about 33% as per cent of total per-household medical spending. Quantile regression analysis shows that the scheme is even more effective at reducing expenditures for those people facing large health expenditures. The scheme reduces the incidence of catastrophic expenditures by nearly 50% among those with the largest annual out-of-pocket expenditures.ConclusionsIncreasing benefits coverage for a non-contributory insurance programme leads to financial protection for the poor by reducing out-of-pocket and catastrophic health expenditures. It is even more effective at reducing out-of-pocket health spending for those whose health expenditures that lie on the high end of healthcare spending distribution.

Early Paleoindians often are described as highly mobile hunter–gatherers who employed lithic technologies designed to minimize stone transport costs. We experimentally reduced blade and bifacial cores and found both reduction strategies to be equally efficient for the production of useable flake blanks. Further, when compared to similar core reduction experiments, the results of this study showed no significant differences in core efficiency between bifacial, prismatic blade, and wedge-shaped blade core reduction. Biface and blade cores with initial weights greater than 1000 g produced useable flakes as efficiently as informal cores. However, bifacial and blade core efficiency decreased with initial core weight. When considered in terms of Early Paleoindian technological organization, differences in core efficiencies suggest that Folsom groups employed core reduction strategies designed to minimize stone transport costs, but Clovis groups did not.

THE RETIREMENT OF GEORGE Perry and William Brainard as editors of the Brookings Papers gives us an opportunity to say publicly what we have often said privately: the Brookings Papers is an important national institution. It is important because it has set the right tone for U.S. macro-economic policy. George and Bill are both Keynesians, not just in the narrow tradition of IS-LM models with Phillips curves, but also in their broader methodological approach to macroeconomics. The Brookings Papers has always reflected their view that macroeconomics should be a pragmatic and judicious mixture of theory and common sense, informed by statistical analysis. That of course reflects the methodology of Keynes, throughout his life and especially in The General Theory. We think that U.S. macroeconomic policy has benefited enormously from such a balanced pragmatic-empirical approach. Anyone who doubts the benefits of such an approach to macroeconomics needs only look to the north--to Canada--where doctrinaire use of an extreme form of natural rate theory in the 1990s led policymakers to push inflation too low, resulting in an unusually wide unemployment gap relative to the United States. This is just one example where a more empirical, more nuanced macroeconomics--such as presented for the last thirty years in the Brookings Papers--has implications for national welfare. Macroeconomic policy, as no one appreciated better than Keynes, often even makes the difference between prosperity and depression. It will be a hard task for the new editors to take the place of George and Bill, and we wish them luck. Neither this Bill nor this George has ever envied George and Bill their difficult job. They have edited the Brookings Papers the hard way. The easy way is to trawl the conferences and the economics department hallways for the best of what already exists. Instead, for the most part, George and Bill recruited people to push forward their pragmatic agenda for macroeconomic research. The influence of George and Bill, even in the late stages of producing these papers, is clear to all members of the Brookings Panel. We have continued to be amazed at how George and Bill could take the meeting drafts, which were not always in the best of shape, and quickly tuna them into interesting, readable gems. In short, they have done the impossible: admittedly with some very good help from their authors, they have produced something like eight to twelve significant and relevant new papers on macroeconomics per year, year after year. Some Background on This Paper This volume in honor of George Perry and William Brainard is an opportunity to reflect back on the two Brookings Papers we wrote with Perry (with comments and occasional help from Brainard) on the macroeconomics of low inflation. (1) Although they took somewhat different approaches, these two papers had similar policy implications. Both found a significant cost of permanently low inflation in terms of permanently high unemployment. Each paper examined the effects of a different type of money illusion. The earlier paper, "The Macroeconomics of Low Inflation," examined the consequences of downward nominal wage rigidity, or resistance to nominal wage cuts. "Near-Rational Wage and Price Setting" examined the consequences of people thinking in nominal rather than in real terms when inflation is very low. When this happens, a trade-off will emerge between inflation and unemployment--not just in the short run, but also in the long run when actual inflation and expected inflation are equal. Although the existence of such a trade-off was previously well known, its magnitude was not. Both papers found surprisingly large long-run increases in unemployment from permanent reductions in inflation to zero. For example, in the benchmark simulation in the first paper, with limited nominal wage cuts for continuing workers, we found that a permanent reduction in annual inflation from 2 percent to zero would increase unemployment by 1. …

The Infant Behavior Record (IBR) from the Bayley Scales of Infant Development has been used to study behavioral development since the 1960s. Matheny (1983) examined behavioral development at 6, 12, 18, and 24 months from the Louisville Twin Study (LTS). The extracted temperament scales included Task Orientation, Affect-Extraversion, and Activity. He concluded that monozygotic twins were more similar than same-sex dizygotic twins on these dimensions. Since this seminal work was published, a larger LTS sample and more advanced analytical methods are available. In the current analyses, Choleksy decomposition was applied to behavioral data (n = 1231) from twins 6 - 36 months. Different patterns of genetic continuity vs genetic innovations were identified for each IBR scale. Single common genetic and shared environmental factors explained cross-age twin similarity in the Activity scale. Multiple shared environmental factors and a single genetic factor coming on line at age 18 months contributed to Affect-Extraversion. A single shared environmental factor and multiple genetic factors explained cross-age twin similarity in Task Orientation.

Biometric latent growth curve models were applied to data from the LTS in order to replicate and extend Wilson's (Child Dev 54:298-316, 1983) findings. Assessments of cognitive development were available from 8 measurement occasions covering the period 4-15 years for 1032 individuals. Latent growth curve models were fit to percent correct for 7 subscales: information, similarities, arithmetic, vocabulary, comprehension, picture completion, and block design. Models were fit separately to WPPSI (ages 4-6 years) and WISC-R (ages 7-15). Results indicated the expected increases in heritability in younger childhood, and plateaus in heritability as children reached age 10 years. Heritability of change, per se (slope estimates), varied dramatically across domains. Significant genetic influences on slope parameters that were independent of initial levels of performance were found for only information and picture completion subscales. Thus evidence for both genetic continuity and genetic innovation in the development of cognitive abilities in childhood were found.

Background: In Uganda, as in most other malaria-endemic countries, presumptive treatment for malaria based on symptoms without a diagnostic blood test is still very common. While diagnostic testing in public sector facilities is increasing, many people in Uganda who suspect malaria visit private sector outlets to purchase medications. Increasing the availability and uptake of rapid diagnostic tests (RDTs) for malaria in private outlets could help increase diagnostic testing for malaria but raises questions about the patient demand for and valuation of testing that are less critical for public sector introduction. Methods: In preparation for a behaviour change campaign to encourage and sustain the demand for RDTs in drug shops, eight focus group discussions with a total of 84 community members were conducted in six districts across Uganda’s Eastern Region in November-December 2011. Focus groups explored incentives and barriers to seeking diagnosis for malaria, how people react to test results and why, and what can be done to increase the willingness to pay for RDTs. Results: Overall, participants were very familiar with malaria diagnostic testing and understood its importance, yet when faced with limited financial resources, patients preferred to spend their money on medication and sought testing only when presumptive treatment proved ineffective. While side effects did seem to be a concern, participants did not mention other potential costs of taking unnecessary or ineffective medications, such as money wasted on excess drug so r delays in resolution of symptoms. Very few individuals were familiar with RDTs. Conclusion: In order to boost demand, these results suggest that private sector RDTs will have to be made convenient and affordable and that targeted behaviour change campaigns should strive to increase the perceived value of diagnosis.

It is often asserted that Black Americans have made no IQ gains on White Americans. Until recently, there have been no adequate data to measure trends in Black IQ. We analyzed data from nine standardization samples for four major tests of cognitive ability. These data suggest that Blacks gained 4 to 7 IQ points on non-Hispanic Whites between 1972 and 2002. Gains have been fairly uniform across the entire range of Black cognitive ability.

Generalized estimating equations were used to examine the relation of low birthweight, an indicator of adverse perinatal events, and social disadvantage to IQ changes during the period of school attendance. Data are from a longitudinal study of low birthweight and normal birthweight children in two disparate communities, an inner-city and near-by suburbs in southeast Michigan (n=773). Wechsler intelligence tests were administered at ages 6, 11 and 17. Low birthweight-related deficits (vs. normal birthweight) detected at the start of schooling were about 5 IQ points and these remained constant up to age 17. Initial IQ deficits associated with urban environment (vs. suburban) increased significantly from age 6 to 11, but no further by age 17. These trends were independent of one another: The low birthweight deficit was constant across social environments; the social disadvantage deficit was uniform across birthweight groups. The finding that the urban–suburban gap did not continue to widen after age 11 probably resulted from an atypical IQ decline of suburban children. The causes of this unexpected finding are unclear.

The author considers whether differences in genetic endowment may account for racial and ethnic differences in school readiness. While acknowledging an important role for genes in explaining differences within races, he nevertheless argues that environment explains most of the gap between blacks and whites, leaving little role for genetics. Based on a wide range of direct and indirect evidence, particularly work by Klaus Eyferth and James Flynn, the author concludes that the black-white gap is not substantially genetic in orgin. In studies in 1959 and 1961, Eyferth first pointed to the near-disappearance of the black-white gap among children of black and white servicemen raised by German mothers after World War II. In the author's view, Flynn's exhaustive 1980 analysis of Eyferth's work provides close to definitive evidence that the black disadvantage is not genetic to any important degree. But even studies showing an important role for genes in explaining within-group differences, he says, do not rule out the possibility of improving the school performance of disadvantaged children through interventions aimed at improving their school readiness. Such interventions, he argues, should stand or fall on their own costs and benefits. And behavioral genetics offers some lessons in designing and evaluating interventions. Because normal differences in preschool resources or parenting practices in working- and middle-class families have only limited effects on school readiness, interventions can have large effects only if they significantly change the allocation of resources or the nature of parenting practices. The effects of most interventions on cognitive ability resemble the effect of exercise on physical conditioning: they are profound but short-lived. But if interventions make even small permanent changes in behavior that support improved cognitive ability, they can set off multiplier processes, with improved ability leading to more stimulating environments and still further improvements in ability. The best interventions, argues the author, would saturate a social group and reinforce individual multiplier effects by social multipliers and feedback effects. The aim of preschool programs, for example, should be to get students to continue to seek out the cognitive stimulation the program provides even after it ends.

Subglacial and ice-marginal landforms produced during the Last Glacial Maximum and subsequent regional deglaciation become progressively more buried, especially when postglacial sedimentation rates are high. Sub-bottom profiling is usually used to examine the stratigraphy of submarine glacial deposits, but is only rarely exploited to visualize the topography beneath postglacial infill. By picking and gridding the basal reflector from a relatively dense network (spacing of

Jessica L. Cohen and William T. Dickens* The core theory of behavior in Economics, which structures inquiry and provides a framework for empirical analysis, is largely responsible for the success of the discipline. Behavioral Economics (BE) challenges this theory, but has failed to provide a coherent alternative. Consequently the influence of BE has been limited. In what follows we argue that Evolutionary Psychology (EP), suitably adapted, can provide at least a partial foundation for BE. Its methods offer a way of generating theories of the origins of anomalous behaviors and of testing those theories.

Some argue that the high heritability of IQ renders purely environmental explanations for large IQ differences between groups implausible. Yet, large environmentally induced IQ gains between generations suggest an important role for environment in shaping IQ. The authors present a formal model of the process determining IQ in which people's IQs are affected by both environment and genes, but in which their environments are matched to their IQs. The authors show how such a model allows very large effects for environment, even incorporating the highest estimates of heritability. Besides resolving the paradox, the authors show that the model can account for a number of other phenomena, some of which are anomalous when viewed from the standard perspective.

OVER THIRTY YEARS ago, in his presidential address to the American Economic Association, Milton Friedman asserted that in the long run the Phillips curve was vertical at a natural rate of unemployment that could be identified by the behavior of inflation.(1) Unemployment below the natural rate would generate accelerating inflation, and unemployment above it, accelerating deflation. Five years later the New Classical economists posed a further challenge to the stabilization orthodoxy of the day. In their models with rational expectations, not only was monetary policy unable to alter the long-term level of unemployment, it could not even contribute to stabilization around the natural rate.(2) The New Keynesian economics has shown that, even with rational expectations, small amounts of wage and price stickiness permit a stabilizing monetary policy.(3) But the idea of a natural unemployment rate that is invariant to inflation still characterizes macroeconomic modeling and informs policymaking. The familiar empirical counterpart to the theoretical natural rate is the nonaccelerating-inflation rate of unemployment, or NAIRU. Phillips curves embodying a NAIRU are estimated using lagged inflation as a proxy for inflationary expectations. NAIRU models appear in most textbooks, and estimates of the NAIRU--which is assumed to be relatively constant--are widely used by economic forecasters, policy analysts, and policymakers. However, the inadequacy of such models has been demonstrated forcefully in recent years, as low and stable rates of inflation have coexisted with a wide range of unemployment rates. If there were a single, relatively constant natural rate, we should have seen inflation slowing significantly when unemployment was above that rate, and rising when it was below. Instead, the inflation rate has remained fairly steady, with annual inflation as measured by the urban consumer price index (CPI-U) ranging from 1.6 to 3.0 percent since 1992, while the unemployment rate has ranged from 6.8 to 3.9 percent. In this paper we present a model that can accommodate relatively constant inflation over a wide range of unemployment rates. Another motivation is a recent finding by William Brainard and George Perry.(4) Estimating a Phillips curve in which all the parameters are allowed to vary over time, they find that the coefficient on the proxy for expected inflation in the Phillips curve has changed considerably, while other parameters of that model have been relatively constant. In particular, Brainard and Perry found that the coefficient on expected inflation was initially low in the 1950s and 1960s, grew in the 1970s, and has fallen since then. The model we present can explain both why the coefficient on expected inflation might be expected to change over time and, to some extent, the time pattern of changes observed by Brainard and Perry. Our paper also allows an interpretation of the findings of Robert King arm Mark Watson and of Ray Fair.(5) Both find a long-run trade-off between inflation and unemployment. In addition, King and Watson find that the amount of inflation that must be tolerated to obtain a given reduction of unemployment rose considerably after 1970. Our model allows a trade-off, but only at low rates of inflation such as those that prevailed in the 1950s, 1960s, and 1990s. At higher rates of inflation, the trade-off is reduced, and at high enough rates of inflation, it disappears. Much of the empirical controversy surrounding the relationship between inflation and unemployment has focused on how people form expectations. This may be neither the most important theoretical nor the most important empirical issue. Instead, this paper suggests that it is not how people form expectations but how they use them--and even whether they use them at all--that is the issue. Economists typically assume that economic agents make the best possible use of the information available to them. But psychologists who study how people make decisions have a different view. …

Herrnstein and Murray assume that test score gaps between blacks and whites attending the same schools or in the same jobs must result from the application of different selection criteria to blacks and whites. To the contrary, we show that race-blind screening processes normally will produce large gaps between the test scores of blacks and whites.

To determine the effect of the Affordable Medicines Facility for malaria (AMFm) launched in April 2011 in Uganda on the use of Artemisinin Combination Therapies (ACTs) for malaria treatment.2398 households across six districts in Eastern Uganda were monitored through monthly survey visits from April 2011 to April 2012. During each visit, health seeking modules were completed for any morbidity episode reported by the household. Additional surveys were conducted with 114 licensed drug shops in the same districts in April 2011 and April 2012. Changes in drug shops' stocking and pricing of ACTs, as well as changes in households' treatment behaviour and drug usage were analysed.The fraction of licensed drug shops reporting that an ACT was one of their top five bestselling antimalarial drugs increased from 32% to 84% (Δ=0.517, 95% Confidence Intervals (CI) [0.407, 0.628], P0.001). The fraction of children under the age of 5 with fevers getting an ACT increased from 37% to 47% (Δ=0.103, 95% CI [0.070, 0.136], P0.001), and the fraction of ACT treatments among patients getting any antimalarial increased from 51% to 65% (Δ=0.145, 95% CI [0.121, 0.169], P0.001). The observed changes were particularly large among poorer households, and were smallest for households from the highest wealth quintile.The study results suggest that, during its first year of implementation in Uganda, the AMFm achieved its main objective of increasing the availability and use of ACTs. Estimates of the impact of the AMFm on ACT use for children under 5 imply that the program should be considered highly cost-effective under current World Health Organization (WHO) guidelines. The overall results look promising, but larger and longer term studies will be needed to assess the health impact and cost-effectiveness of the program.

Brookings Institution. In addition, GEORGE AKERLOF is Professor of Economics at University of California, Berkeley; WILLIAM DICKENS is a Research Associate at the National Bureau of Economic Research; and GEORGE PERRY is Editor of the Brookings Papers. 1992 consumer price inflation has not been higher than 3 percent a year a lower rate than at any time since the mid-1960s. In fact, worries about price increases apparently have fallen completely off the public's radar screen. In a recent poll, only 1 percent of respondents listed inflation or the cost of living as one of the most important problems facing the country today. But inflation is still on the screen

Sri Lanka has a significant chronic unemployment problem. Depending on time period and the definition of unemployment it varies from the low teens to over twenty percent. Nearly all of this unemployment is concentrated among young people who are looking for their first job. Unemployment duration is very long with typical spells lasting four years or more. Although past authors have blamed unemployment on over education, a closer examination shows that once sex, sector and age are controlled for the relation between education and unemployment disappears for urban youth and is significantly weakened for rural youth. We believe that unemployment is generated in part by queuing for high-wage government jobs. We suggest that one reason the unemployed do not take other employment while queuing may be a perceived or real government preference for hiring the unemployed. If our interpretation is correct, replacing government's hiring preference for the unemployed with a normal preference for workers who have demonstrated ability in previous work experience would reduce unemployment. A substantial fraction of the currently unemployed youth would begin actively seeking employment which would supply them with the requisite job experience to obtain government employment.

BACKGROUND: Despite the benefits of malaria diagnosis, most presumed malaria episodes are never tested. A primary reason is the absence of diagnostic tests in retail establishments, where many patients seek care. Malaria rapid diagnostic tests (RDTs) in drug shops hold promise for guiding appropriate treatment. However, retail providers generally lack awareness of RDTs and training to administer them. Further, unsubsidized RDTs may be unaffordable to patients and unattractive to retailers. This paper reports results from an intervention study testing the feasibility of RDT distribution in Ugandan drug shops. METHODS AND FINDINGS: 92 drug shops in 58 villages were offered subsidized RDTs for sale after completing training. Data on RDT purchases, storage, administration and disposal were collected, and samples were sent for quality testing. Household surveys were conducted to capture treatment outcomes. Estimated daily RDT sales varied substantially across shops, from zero to 8.46 RDTs per days. Overall compliance with storage, treatment and disposal guidelines was excellent. All RDTs (100%) collected from shops passed quality testing. The median price charged for RDTs was 1000USH ($0.40), corresponding to a 100% markup, and the same price as blood slides in local health clinics. RDTs affected treatment decisions. RDT-positive patients were 23 percentage points more likely to buy Artemisinin Combination Therapies (ACTs) (p = .005) and 33.1 percentage points more likely to buy other antimalarials (p

The effect of the Great Recession on the U.S. labor market will likely persist even after economic output has recovered. Although the recession did not greatly change the relative probabilities of job loss for different types of workers, the long-run impact will vary by worker characteristics. Workers who lost long-term jobs during the Great Recession are at increased risk of future job loss due to the loss of protection afforded by long-term job tenure, and older displaced workers are at a relatively high risk of prolonged spells of unemployment and premature retirement. The recent increase in the job vacancy rate with relatively little change in the unemployment rate suggests a decrease in the efficiency of job matching and an increase in the NAIRU. However, this phenomenon may pass once aggregate demand has increased enough to bring vacancy rates back within their normal range and extended unemployment insurance programs have expired.

We review new findings and new theoretical developments in the field of intelligence. New findings include the following: (a) Heritability of IQ varies significantly by social class. (b) Almost no genetic polymorphisms have been discovered that are consistently associated with variation in IQ in the normal range. (c) Much has been learned about the biological underpinnings of intelligence. (d) "Crystallized" and "fluid" IQ are quite different aspects of intelligence at both the behavioral and biological levels. (e) The importance of the environment for IQ is established by the 12-point to 18-point increase in IQ when children are adopted from working-class to middle-class homes. (f) Even when improvements in IQ produced by the most effective early childhood interventions fail to persist, there can be very marked effects on academic achievement and life outcomes. (g) In most developed countries studied, gains on IQ tests have continued, and they are beginning in the developing world. (h) Sex differences in aspects of intelligence are due partly to identifiable biological factors and partly to socialization factors. (i) The IQ gap between Blacks and Whites has been reduced by 0.33 SD in recent years. We report theorizing concerning (a) the relationship between working memory and intelligence, (b) the apparent contradiction between strong heritability effects on IQ and strong secular effects on IQ, (c) whether a general intelligence factor could arise from initially largely independent cognitive skills, (d) the relation between self-regulation and cognitive skills, and (e) the effects of stress on intelligence.

The Beveridge curve — the empirical relationship between unemployment and job vacancies — is thought to be an indicator of the efficiency of the functioning of the labor market. Normally, when job vacancies rise, unemployment falls, following a curved path that typically remains stable over long periods of time. When vacancies rise and unemployment does not fall (or falls too slowly) this may be an indication of problems of structural mismatch in the labor market leading to an increase in the lowest unemployment rate that can be maintained without increasing inflation (the NAIRU or nonaccelerating inflation rate of unemployment). Such a change in the vacancy-unemployment relationship occurred once in the 1970s and persisted through the late 1980s, and we have recently observed a similar change.This policy brief explores the nature of the recent change in the vacancy-unemployment relationship by disaggregating the data by industry, age, education, and duration of unemployment, and by examining blue- and white-collar groups separately.The plots presented here reveal a similar pattern of increasing vacancies with little or no change in unemployment in the recovery from the most recent recession across all categories except one: short-term unemployment. The relationship between short-term unemployment and vacancies is unchanged. Thus, all of the increase in vacancies relative to unemployment has taken place among the long-term unemployed.This situation contrasts with the change in the Beveridge curve relationship in the 1970s, when an increase in the level of vacancies without a decline in unemployment affected both the long- and short-term unemployed. Further, in the 1970s the outward shift of the Beveridge curve was largely concentrated among blue-collar workers, whereas the recent shift seems to have affected both blue- and white-collar workers. Finally, the shift in the 1970s took place over several years, while the current shift seems to have taken less than six months. Thus, there is reason to believe that the current shift may not have the persistence or the effects on the NAIRU that the shift of the 1970s had.Considering all the evidence together, we conclude that the current outward shift of the Beveridge curve is likely being driven by something other than a mismatch between workers’ skills and the demands of available jobs.

Plans for the wide-scale distribution and subsidy of artemisinin combination therapies (ACTs), an antimalarial treatment, pose two problems for public health planning. First, many people seeking malaria treatment do not have the disease. If ACT subsidies could be targeted toward those with malaria, the cost of subsidies could fall. Second, the inappropriate use of antimalarial drugs may contribute to the emergence of drug-resistant parasites. Rapid diagnostic tests (RDTs) for malaria could help with both problems, but drug shop owners may have few financial incentives to sell them, given profits from overtreatment for malaria. A model of the provision of RDTs by profit-maximizing drug shops shows that if all parties know the probability of having malaria and if there are no subsidies for drugs and no external costs to inappropriate treatment, both monopolistic and competitive drug shop owners will provide RDTs under the same circumstances that a social welfare maximizing planner would. However, since drugs will be subsidized, customers overestimate their likelihood of having malaria, and since there are external costs to the misuse of antimalarials, profit-maximizing drug shops will likely underprovide RDTs. We show that a subsidy for RDTs can increase provision and, under adequate competition, induce everyone to use RDTs optimally. The results also highlight the importance of educating customers about the true prevalence of malaria and promoting competition among drug providers.

NAIRU estimates are obtained from estimates of the Phillips curve – the relationship between the inflation rate on the one hand, and the unemployment rate, measures of inflationary expectations and variables representing supply shocks on the other.

Researchers estimating models with grouped data typically weight each observation by the square root of group size assuming that the model error term in the individual data is independently and identically distributed so that the error in the grouped data is heteroskedastic with variance proportional to group size. I argue that individual error terms are likely to be correlated due to group specific error component so weighting by the square root of group size is inappropriate. Tests for the presence of group error components and methods for obtaining efficient estimates of the parameters and consistent estimates of their standard errors are presented. Copyright 1990 by MIT Press.

How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals’ earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries. JEL Classification: E3, J3, J5

Inflation can “grease” the wheels of economic adjustment in the labor market by relieving the constraint imposed by downward nominal wage rigidity, but not if there is also substantial downward real wage rigidity. At the same time, inflation can throw “sand” in the wheels of economic adjustment by degrading the value of price signals. A number of recent studies suggest that wage rigidity is much more important for business cycles and monetary policy than previously believed (see Erceg, Henderson and Levin, 2000, Smets and Wouters, 2003, and Hall, 2005). Thus, our results on how wage rigidity and other labor market imperfections vary between countries and how they are affected by the rate of inflation should be of considerable value in formulating monetary policy and conducting related research.

How do the complex institutions involved in wage setting affect wage changes? The International Wage Flexibility Project provides new microeconomic evidence on how wages change for continuing workers. We analyze individuals' earnings in 31 different data sets from sixteen countries, from which we obtain a total of 360 wage change distributions. We find a remarkable amount of variation in wage changes across workers. Wage changes have a notably non-normal distribution; they are tightly clustered around the median and also have many extreme values. Furthermore, nearly all countries show asymmetry in their wage distributions below the median. Indeed, we find evidence of both downward nominal and real wage rigidities. We also find that the extent of both these rigidities varies substantially across countries. Our results suggest that variations in the extent of union presence in wage bargaining play a role in explaining differing degrees of rigidities among countries.

We analyze race discrimination in labor markets in which wage offers are posted. If employers with job vacancies receive multiple applicants, they choose the most qualified but may choose arbitrarily among equally qualified applicants. In the model, firms post wages, workers choose where to apply, and firms decide which workers to hire. Labor-market frictions greatly amplify racial disparities, so mild discriminatory tastes or small productivity differences can produce large wage differentials between the races. Compared with the nondiscriminatory equilibrium, the discriminatory equilibrium features lower net output, lower wages for both white and black workers and greater profits for firms.(This abstract was borrowed from another version of this item.)

This paper summarizes the results of our efforts to broaden the theory of the Phillips curve and to explain the joint evolution of inflation and unemployment in the United States and Canada since 1930.

Rushton and Jensen (2006, this issue) concede that the magnitude of the Black-White IQ gap is not immutable, but could have narrowed by as much as 3.44 IQ points, or 0.23 White standard deviations. They concur that the Black-White IQ gap rises with age. Using Shuey’s 1966 data, Jensen (1998) estimated a gap of 0.70 standard deviations in early childhood, 1.00 standard deviations in middle childhood, and 1.20 standard deviations in early adulthood. Our current estimates are 0.31 (age 4), 0.63 (age 12), and 0.87 (age 18). Comparison of Jensen’s pre-1966 values and our current values yields a Black IQ gain of 0.33 to 0.39 standard deviations. This equals 5.0 to 5.5 IQ points, close to the midpoint of our estimate that Blacks gained 4 to 7 points. Therefore, unless Rushton and Jensen question our current values, our main contention is also conceded. All that is at stake is the timing of the steps by which Blacks progressed from Jensen’s values to ours, something we grant to be problematic. And yet, Rushton and Jensen never challenge our values for current Black IQ. They do argue that we exaggerate the qualitative difference between samples we consider suspect and samples we favor, namely, those used to standardize the Wechsler Intelligence Scale for Children (WISC), Wechsler Adult Intelligence Scale (WAIS), Stanford-Binet (SB), and Armed Forces Qualification Test (AFQT). They note that the samples we used were selected to be representative of Americans in general, but not the Black and White subpopulations. First, this is untrue of the sample used to norm the AFQT, as that sample is designed to give the military accurate data on the performance of various ethnic groups. Second, the samples we rejected all have the same defect, plus a host of others. To set the record straight, our argument (scorned) that the 1983 sample for the Kaufman Assessment Battery for Children suffered from excessive variance is in fact not ours, but borrowed from Jensen (1984). Also, with respect to the Woodcock-Johnson, the following sentence should have been included in our Appendix B (Dickens & Flynn, 2006, this issue): Wicherts’s (2005) analysis of the subsample of the research sample shows that it is not representative of the U.S. population and that the subsample with data on all tests is a nonrandom subset of the research sample. Rushton and Jensen call for values based on the totality of the evidence. We anticipated this objection by analyzing the samples we think flawed. These analyses are contained in our Appendix B, and every one of them confirms our projections for Black IQ in 2002. Rushton and Jensen do not dispute this contention. Rather, they cite Roth, Bevier, Bobko, Switzer, and Tyler (2001), who found a gap of 1.1 standard deviations based on 6,246,729 individuals from military, corporate, and highereducation samples. This massive meta-analysis does not challenge our main contention. If GRE (Graduate Record Exam) results are treated as a single source, almost 60% of the studies Roth et al. analyzed refer to pre-1980 data. As for the gap of 1.1 standard deviations, the median age in the meta-analysis of Roth et al. would not be under 24. Our Figure 3 projected to age 24.7 gives a current IQ for Blacks of 83.5, or exactly 1.1 standard deviations below Whites. Rushton and Jensen quote Roth et al. (2001) as concluding that there has been no Black gain. However, Roth et al. explicitly stated that their own data left them ‘‘unable to assess the influence of time on standardized ethnic group differences’’ (p. 323). Instead, they directed the reader to three sources that they thought might be illuminating: Lynn (1998), which is a study of vocabulary scores and not IQ; Wonderlic data, which we have already analyzed in Appendix B; and Nyborg and Jensen (2000), in which there is no attempt to measure trends over time and which Jensen himself has not cited against us. If Rushton and Jensen wish to make a case based on analysis of these three sources, they should do so. Citing the conclusion of Roth et al. is simply an appeal to authority, and to imply that the conclusion of Roth et al. is based on the data that they analyzed is unhelpful. Rushton and Jensen say they have applied simple arithmetic to our Table A1 and derived a prerise value for Black IQ of 86.44 and a postrise value of 89.88. Table A1 contains raw data that must be adjusted, particularly for the fact that the data sets range from covering a full 30 years (the WISC) to covering only 16 years (the SB). It is fortunate we have no data set covering a period of 1 year, or simply averaging it in would tend to drag gains down toward zero. Address correspondence to James R. Flynn, Department of Political Studies, University of Otago, Dunedin, New Zealand, e-mail: jim. flynn@stonebow.otago.ac.nz. PSYCHOLOGICAL SCIENCE

Several efficiency wage theories of wage determination have the property that identical workers are more productive in high wage industries and that the promotion of employment in high wage industries can increase GDP (and some measures of welfare). I argue that while policies to favor high wage industries may increase productivity, the effects in developed economies are likely to be very small. This is mainly because the workers who fill the high wage vacancies will come from fairly high wage jobs.

Since applying for jobs is costly, workers prefer applying where their employment probability is high and, therefore, to jobs attracting fewer higher quality applicants. Since creating vacancies is expensive, firms create more vacancies when job-seeking is high. Our model captures these ideas and accounts for worker heterogeneity by assuming three types of nearly identical workers. These infinitesimal quality differences generate a discrete wage distribution. For some parameter values lower quality workers have discretely lower wages and higher unemployment than better workers. Moreover, increasing the number of the lowest quality workers can make all workers better off.

Since applying for jobs is costly, workers prefer applying where their employment probability is high and, therefore, to jobs attracting fewer higher quality applicants. Since creating vacancies is expensive, firms create more vacancies when job-seeking is high. Our model captures these ideas and accounts for worker heterogeneity by assuming three types of nearly identical workers. These infinitesimal quality differences generate a discrete wage distribution. For some parameter values lower quality workers have discretely lower wages and higher unemployment than better workers. Moreover, increasing the number of the lowest quality workers can make all workers better off.

When asking questions about the labor market, particularly earnings determination, human capital theory is the most important tool in the economist’s toolbox. However, there is an alternative—labor market segmentation theory. Labor market segmentation was advanced as an alternative to human capital theory by several authors in the early 1970s. After a brief period of popularity, it faded after influential critiques suggested that existing evidence did not differentiate between labor market segmentation and standard human capital theory Wachter 1974; Cain 1976. In the last decade several important theoretical and empirical developments have generated a resurgence of interest in the theory.