FROM MAIZE TO HAZE: AGRICULTURAL SHOCKS AND THE GROWTH OF THE MEXICAN DRUG SECTOR

Understanding how economic incentives affect illegal drug production is essential for crafting policies in response to the international drug trade. Policymakers typically face a choice between two strategies: targeting criminal groups via law enforcement, and offering producers incentives to engage in alternate activities. Yet, little is known about how the returns to alternate legal activities affect drug supply. We contribute to this literature by examining how shocks to legal commodity prices affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in US maize‐growing regions, as well as exports of other major maize producers. Using data on over 2200 municipios spanning 1990–2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize. We also find impacts on downstream drug‐trade outcomes, including drug cartel operations and killings perpetrated by these groups. Our findings demonstrate that maize price changes contributed to the burgeoning drug trade in Mexico, and point to the violent consequences of an expanding drug sector.     

Emergence of entrepreneurial behaviour: The role of age-based self-image

This study introduces an individual’s perception of their entrepreneurial potential in terms of their age (age-based self-image) to complement chronological age as a predictor of entrepreneurial behaviour. The principal hypothesis is that a positive age-based self-image enhances the likelihood of individuals turning their intention to start a business into actual behaviour. The empirical analysis based on data collected on the general adult population of Finland in 2011 and 2012 (n = 672) supports this hypothesis. The analysis further shows that this positive effect is independent of the individual’s chronological age, and it is thus applicable to both age groups that are under-represented in entrepreneurship: ‘youngsters’ and ‘seniors’. Promoting the development of a positive age-based self-image is a prospective policy option for fostering entrepreneurship among younger and older age groups. More in-depth research, especially concerning the antecedents of positive age-based self-image, is required for the effectiveness of such policy interventions.     

Welfare generosity, pregnancies and abortions among unmarried AFDC recipients

Even before the 1996 overhaul of the U.S. welfare system, a number of states had ended the practice of paying extra benefits to families who have additional children while receiving welfare. Proponents believe that this reform can reduce births to recipients, however many worry that it may encourage women to obtain abortions. Using a sample of unmarried AFDC recipients from the NLSY, we estimate a bivariate probit model of pregnancy and, conditional on becoming pregnant, the probability of abortion. Our results lend some support for the proposition that reducing incremental AFDC benefits will decrease pregnancies without increasing abortions. Received: 16 April 1998/Accepted: 11 March 1999     

The macroeconomics of fertility in small open economies: A test of the Becker-Barro model for The Netherlands and New Zealand

Becker and Barro (1988) formulated a theoretical model which identified a range of macroeconomic variables which can temporarily or permanently affect fertility in small open economies. This article tests the Becker-Barro model with relevant data which covers most of the 20th century for two small open economies, namely The Netherlands and New Zealand. The results show that government subsidies for having children have a strong positive effect on fertility, while the provision of public pensions has a strong negative effect. The degree of intergenerational altruism appears to have been declining. Moreover, there is only weak support for the hypothesis that real interest rates positively influence fertility. Received: 2 March 1998/Accepted: 1 September 1999     

A comparison of approaches for estimating the effect of women's education on the probability of using modern contraceptive methods in Malawi

The aim of this study is to estimate the effect of education on the probability of married Malawian women using modern contraceptive methods by accounting for both observed and unobserved confounders. We conduct a sensitivity analysis and compare the results of naive models with instrumental variable models to account for the potential endogeneity of education. Our findings demonstrate conflicting results between the two modelling approaches. The naive models report smaller education effects on the probability of using modern contraceptive methods compared to instrumental variable models. We also find that by relaxing the functional form assumption on the effect of continuous covariates, using a flexible instrumental variable model, the education's effect follows a positive, nonlinear pattern. This finding is not observed with a classic instrumental variable model.     

How do policy levers shape the quality of a national health system?

Poor quality of care may have a detrimental effect on access and take-up and can become a serious barrier to the universality of health services. This consideration is of particular interest in view of the fact that health systems in many countries must address a growing public-sector deficit and respond to increasing pressures due to COVID-19 and aging population, among other factors. In line with a rapidly emerging literature, we focus on patient satisfaction as a proxy for quality of health care. Drawing on rich longitudinal and cross-sectional data for Spain and multilevel estimation techniques, we show that in addition to individual level differences, policy levers (such as public health spending and the patient-doctor ratio, in particular) exert a considerable influence on the quality of a health care system. Our results suggest that policymakers seeking to enhance the quality of care should be cautious when compromising the level of health resources, and in particular, health personnel, as a response to economic downturns in a sector that traditionally had insufficient human resources in many countries, which have become even more evident in the light of the current health crisis. Additionally, we provide evidence that the increasing reliance on the private health sector may be indicative of inefficiencies in the public system and/or the existence of features of private insurance which are deemed important by patients.     

Credit access,macroprudential rules and policy interventions: Lessons for potential first time buyers

Given the increased popularity of macroprudential measures in the aftermath of the great financial crisis (GFC), a key policy question to arise in certain mortgage markets is whether a significant access to credit issue exists amongst prospective homeowners because of these new policies. In this paper we assess whether such a problem arises in the context of the Irish mortgage market – a market particularly adversely impacted by the GFC. We use a microsimulation model to estimate the level of latent credit demand that could be serviced by the market given prudent credit risk assessment and the current macroprudential regulations. We then compare this demand to current market provision to explore whether a credit gap exists. Finally, we simulate how a public mortgage credit scheme or equity “help-to-buy” type instrument may help credit access. We find both instruments to be effective but would lead to somewhat higher house prices.     

Effects of urbanization on trust: Evidence from an experiment in the field

I conducted a trust game in the field within a natural experiment paradigm to test the effects of urbanization on both in- and out-group trust. I found that urbanization has a larger positive effect on out-group trust than on in-group trust. My findings provide new knowledge to the literature on the intricacy of the urbanization-trust relationship and contribute to the ongoing discourse on the different foundations underpinning in-group and out-group trust.     

Birth order effects on young students’ academic achievement

We examine birth order effects on academic achievement for ten-year-old students using data for the entire population of fifth graders in Norway 2007/2008. The analysis thus adds to a thin empirical literature focusing on birth order effects among young children. We find that being firstborn confers a significant advantage in families with two, three and four children. The analysis makes two other contributions. First, we provide evidence that unless mother's age at childbirth is included among the control variables, only small and imprecise birth order effects are revealed in families with low socioeconomic status. Second, we provide some evidence that the birth order effects differ across families with highly educated and less educated mothers, which lend support to the resource dilution model over the confluence model.     

Are people in the South less intelligent than in the North? IQ and the North–South disparity in Italy

Socioeconomic disparity between North and South Italy has been recently explained by Lynn (2010) as the result of a lower intelligence quotient (IQ) of the Southern population. The present article discusses the procedure followed by Lynn, supplementing his data with new information on school assessments and per head regional income. Genetic North–South differences are then discussed on the basis of the most recent literature on the subject. The results do not confirm the suggested IQ-economy causal link.