Eli Berman’s current research touches on development from a number of unconventional angles. He is investigating to what extent the tendency of new technologies to complement educated workers (“skill-biased” technological change) can explain why income in poorer countries has failed to catch up with that in the developed world. Another project explores the effect of radical Islam on fertility and how subsidies to radical religious groups can reverse fertility transitions. Other work includes an investigation (with Zaur Rzakhanov) of whether immigrants move for the sake of their children, and what effect the resulting self-selection has on fertility. In collaboration with Kevin Lang and Erez Siniver he is also studying the complementarity of skills and language in the labor productivity of immigrants.

Maristella Botticini is a John M. Olin Junior Faculty Fellow for the current academic year 2000-2001. Her recent publications include: “The Choice of Agrarian Contracts in Early Renaissance Tuscany: Risk Sharing, Moral Hazard, or Capital Market Imperfections?,” Explorations in Economic History 37 (July 2000): 241–57, with Daniel A. Ackerberg, and “A Tale of ‘Benevolent’ Governments: Private Credit Markets, Public Finance, and the Role of Jewish Lenders in Medieval and Renaissance Italy,” Journal of Economic History 60 (March 2000): 165–89. Her manuscript The Price of Love: Marriage Markets and Intergenerational Transfers in Comparative Perspective will be published by Princeton University Press. The book will offer a comparative analysis of marriage markets and intergenerational transfers by merging original research on medieval and Renaissance Florence with secondary literature on dowries, bride prices, marriage markets, and bequests in past and contemporary societies, such as ancient Greece, the Roman empire, the Byzantine empire, China, India, and African societies.

In “A Human Capital Interpretation of the Economic History of the Jews” with Zvi Eckstein (Tel Aviv University) she addresses the extent to which a human capital model of occupational choice can explain the trends in Jewish population and the transition from agriculture to crafts and trade in the first millennium. They argue that migrations, expulsions, and taxation are not sufficient to explain these changes and emphasize instead the role of religion and human capital accumulation. In additional research, she uses tax records and census data to reconstruct wealth distribution and inequality in Florence from 1250 to 1450 to study the effect of demographic shocks (plagues) on wealth distribution and growth and together with Aldo Rustichini (University of Minnesota), she is studying the determinants of biased sex ratios in medieval Florence.

Peter Doeringer’s book on organizational strategies and economic performance of “new economy” manufacturing plants, Startup Factories: High Performance Management, Job Quality, and Regional Advantage (with David Terkla and Christine Evans-Klock), has been accepted for publication by Oxford University Press. He is working on a comparative study on “The International Transferability of Workplace Practices by Japanese Multinationals” (with Edward Lorenz, David G. Terkla, and Christine Evans-Klock) and is continuing his research on the small enterprise networks and global commodity chains in Europe.

During the last year Jonathan Eaton and Samuel Kortum completed their paper “Trade in Capital Goods,” IED Discussion Paper 109, summarized on page 6, which is scheduled to appear in the European Economic Review this summer. “Technology, Trade, and Growth: A Unified Framework,” IED Discussion Paper 110, summarized on page 6, is to appear in the European Economic Review Papers and Proceedings this summer. They are continuing to pursue research on the connections between trade and innovation. This work is supported by a grant to the IED from the National Science Foundation.

In another set of projects, Eaton and Kortum have been studying international trade at the level of individual producers. Their work with Andrew Bernard and J. Bradford Jensen, “Plants and Productivity in International Trade,” IED Discussion Paper 105, summarized in last year’s Research Review, dealt with exports of U.S. manufacturing plants. Recently, they joined forces with Francis Kramarz of INSEE-CREST to study exporting and importing patterns of French firms to and from individual foreign countries. The French data provide a means of analyzing the individual export destinations of producers.

Kortum and Tor Jakob Klette (University of Oslo) are developing a dynamic model of heterogeneous firms interacting in a market. The objective of this work is to understand the links between firm-level R&D, firm-level patenting, firm growth, and the size distribution of firms within an industry. An early version of their paper “Innovating Firms: Evidence and Theory” has been presented at the Productivity Group of the National Bureau of Economic Research and at the International Conference on Technological Policy and Innovation, in Paris. Klette has visited the IED for extended periods on two different occasions as part of this collaboration.

In October 2000 Jonathan Eaton presented a paper on developing country debt (co-authored with Ken Kletzer of the University of California-Santa Cruz) at the meetings of the Latin American and Caribbean Economics Association in Rio de Janeiro. His work with Kortum was presented at the International Seminar on Macroeconomics in Helsinki, at the Summer Meetings of the International Trade and Investment Group of the National Bureau of Economic Research, at a conference organized by the Center for Economic Policy Research at the University of Copenhagen, at a conference on globalization at the Bavarian-American Academy in Munich, and at the Murray S. Johnson Conference at the University of Texas.

Eaton also served as a consultant for the European Commission on technology policy for Europe. Kortum has contributed to The National Academy’s initiative on Intellectual Property in the Knowledge-Based Economy.

in the U.S. and abroad. Ellis helped develop the payment formula that is currently being used by the U.S. Medicare program to pay managed care health plans for all managed care enrollees. Several other countries are interested in the same payment approach. During the past year he has presented talks in Alberta, Canada on risk adjustment, and in Marseille, France on hospital payment reform.

Simon Gilchrist was a visiting scholar at the Federal Reserve Bank of Boston for the 2000-2001 academic year, and at the Bank of England (December, 2000) and University of Paris I: Pantheon-Sorbonne (November, 2000, May, 2001). During that time, “Putty-clay and Investment: A Business Cycle Analysis” was published in The Journal of Political Economy, Oct. 2000 (with John Williams), IED Discussion Paper 113, summarized on page 3, was presented at the Bank of England, NYU, Rochester, Federal Reserve Bank of Minnesota, the Federal Reserve Bank of New York, the Federal Reserve Bank of Boston and the NBER Economic Fluctuations and Growth conference and will be presented at the NBER Summer Institute program for Economic Growth. “External Constraints on Monetary Policy and the Financial Accelerator” (with Mark Gertler and Fabio Natalucci), which examines the benefits of fixed versus flexible exchange rates in the presence of a financial accelerator mechanism, was presented at two conferences: “Monetary Policy and Asset Prices” organized by the Rijksbank, Stockholm, Sweden June 1999 and at the SEPR Conference on Monetary Policy, Stanford University, March 2000. “Productivity and the PC Revolution” (with Vijay Gurbaxani and Robert Town) examining the productivity benefits of personal computers in U.S. manufacturing was presented at the Conference on Advances in the Measurement of Intangible (Intellectual) Capital at NYU.

Laurence Kotlikoff has been working on the economics of demographic change using a sophisticated life-cycle multi-period general equilibrium model, which permits one to analyze alternative reforms to government pension systems, including privatization. He has also been studying how the process of leaving bequests to the next generation on an involuntary basis (due to the absence of well functioning annuity markets) affects the distribution of wealth. Finally, together with economists at The World Bank, he has been co-running an international workshop on pension reform that draws participants from all over the globe.

During the past year, Kevin Lang has completed “Language-Skill Complementarity: Returns to Immigrant Language Acquisition,” with Eli Berman and Erez Siniver (College of Management, Israel) which examines the effect of learning Hebrew on the earnings of Russian immigrants to Israel. He is collaborating with Berman and Siniver in examining the effect of English knowledge on the earnings of Russian immigrants to Israel and with Siniver to study the extent of and causes of differences in earnings and test performance between students who attend colleges and those who attend university in Israel.

Glenn Loury’s book The Anatomy of Racial Inequality is scheduled for a February 2002 publication date by Harvard University Press. “Social Exclusion and Ethnic Groups: the Challenge to Economics” was published in the Annual World Bank Conference on Development Economics: 1999, Boris Plekovic and Joseph E. Stiglitz (eds.), Washington, D.C.: World Bank (2000).

Robert Lucas continued his work on several aspects of population migration. His chapter on designing household surveys to collect migration data appeared in a World Bank volume during 2000, and a paper on the interaction between geographic poverty traps and gravity migration models is forthcoming in the Journal of Economic Geography. Lucas is currently writing a paper on migration of highly skilled workers between East Asia and the OECD countries, and the role that these movements are playing in development patterns in East Asia. A paper on industrial pollution by plant size in Brazil and Mexico (co-authored with Susmita Dasgupta and David Wheeler of The World Bank) is forthcoming in Environment and Development Economics, and on the impact of the East Asia and Tequila financial crises on labor markets and household incomes (co-authored with Peter Fallon of The World Bank) is forthcoming in the World Bank Research Observer. Lucas is also working with Sari Pekkala, a former visitor to the IED, on intergenerational transmission of inequality in Finland, using a large data set covering a 45 year period during which Finland was transformed from a predominantly agrarian society to a high-tech industrial economy.

Dilip Mookherjee is conducting research (funded by the National Science Foundation and the MacArthur Foundation) with Jean-Marie Baland, Pranab Bardhan, Sanghamitra Das, and Rinki Sarkar on determinants of firewood collection by rural households in the Himalayan regions of Nepal and India (Himachal Pradesh and Uttaranchal). Their aim is to identify the relative validity of alternative hypotheses concerning deforestation based respectively on poverty, population pressure, commercialization, property rights, forest management and collective action in local communities. Research in Nepal has been based on World Bank LSMS data for 1995-96, and a first draft of the paper will become available this summer. Data collection in India is still under way. Mookherjee is also collaborating with Sanghamitra Das on a project identifying sources of productivity differences between farmer cooperatives and privately owned sugar firms in India, and with Pranab Bardhan on the effects of land reforms and decentralization of farm input delivery to local governments in West Bengal since the late 1970s. Mookherjee won a Guggenheim fellowship for the next academic year to work on the West Bengal project, and plans to be on sabbatical in Spring 2002. Other research activities include theoretical analysis of hierarchies and decentralization in collaboration with Masatoshi Tsumagari, and the dynamics of inequality with Debraj Ray. Mookherjee and Ray recently edited Readings in the Theory of Economic Development, and have plans for a graduate textbook in development based on courses taught at Boston University.