NBER Working Papers Summary

This study leverages exogenous variation from a secondary school stipend program for female students in rural Bangladesh to estimate the causal effect of maternal education on early childhood development. Using data from the 2019 Bangladesh Multiple Indicator Cluster Survey, we find that the five years of stipend eligibility increase mothers' schooling by about one year. Instrumental variable estimates show that an additional year of maternal education improves early childhood development scores by 0.5 points on a scale of 0-10, with gains in overall developmental readiness (7.5 percentage points) and in the literacy–numeracy (7.7 percentage points) and physical (1.9 percentage points) domains. The results are robust across specifications. We also estimate the effects of maternal education on potential mechanisms, including children's nutrition, home learning environment, parenting practices, and use of early childhood education and care. The findings show that improvements in maternal education increase weight-for-age Z-scores, reduce stunting, improve the probability of having toys from shops, and increase the likelihood of an adult household member playing with the child. The positive effects of maternal education on children's developmental outcomes imply the importance of investment in improving educational attainment, particularly for females in low- and middle-income countries.

Inflation expectations derived from financial markets exhibited unprecedented dynamics in 2025: the correlation between one-year inflation swaps and one-year-ahead one-year forward rates turned significantly negative for the first time on record. We show that this decoupling occurred primarily on days when tariff news dominated market pricing, using a two-stage event classification validated by Bloomberg news trends. Standard small open-economy New Keynesian models in which tariffs generate a one-time price-level increase imply positive comovement across horizons and cannot explain this pattern. We explain these occurrences through the lens of an amended small open-economy New Keynesian model. Three ingredients prove critical for reproducing the observed negative conditional correlation between spot and forward inflation after tariff shocks: targeting year-on-year inflation, substantial interest-rate inertia, and persistent tariffs. Under empirically plausible calibrations, the model generates a negative correlation conditional on tariff shocks while preserving a positive unconditional correlation, suggesting that the 2025 twist in the term structure reflects expectations of a persistent policy response to trade shocks.

How damaging is a “trade war” compared to a “military war” or a “war of words”? Aggregate conflict indicators cannot say, because they treat missile strikes, sanctions, and diplomatic protests as equivalent. We build a monthly bilateral indicator from GDELT event data, calibrated against human-curated ground truth, that decomposes hostility into four layers: kinetic fighting (“military war”), military posture, sanctions-context tensions (“trade war”), and routine diplomacy. The decomposed panel reveals a secular shift: over the past decade, governments have steadily substituted economic coercion for military confrontation, nearly doubling the trade-weighted share of hostility channelled through sanctions contexts. In a gravity trade model, the aggregate indicator is negative, large, and statistically significant, but the decomposition reveals that only two layers drive the result. Kinetic conflict and trade-context hostility are both economically large and precisely estimated; routine diplomacy, despite dominating measured hostility, has no trade effect at all. The directed structure uncovers a retaliation channel that compounds trade losses over several months. Our measure remains a robust determinant of international trade in a horse race against closest alternative bilateral indicators. Relative to a pre-escalation baseline, the geopolitical deterioration of the past decade has put roughly $334 billion of bilateral trade at risk, with the US–China pair accounting for half.

This paper investigates the causal impact of international trade on interstate military conflicts using global bilateral data from 1962 to 2014. To address endogeneity concerns, we exploit exogenous spatial-temporal variation in international trade stemming from technological advances in air relative to maritime transport. Empirical results demonstrate a strong “peace dividend” of international trade: that is, increased trade significantly reduces the probability and intensity of conflicts between nations. This effect remains robust across specifications and withstands a wide range of potential confounders. Such findings highlight how economic interdependence shapes international conflict—a relationship that is especially relevant amid escalating geopolitical tensions and the global shift toward “decoupling”, “de-risking”, and greater trade protectionism.

How have universities managed to survive and evolve over almost 1,000 years to become wildly heterogeneous, unusually fractious, multi-product, non-profit entities? Universities began as teachers’ guilds, and they still give faculty a remarkable degree of autonomy. That structure attracts and empowers intellectuals, who are selected in part on their taste for knowledge, and those entrepreneurs and philanthropists have enabled universities to morph in ways that firms rarely do. Intellectual autonomy can also explain why universities are so often at odds with legal authorities and why faculty fight so often with each other and with their bosses. This essay presents a model of university organization and sketches the evolution of the university’s products and conflicts over the last 900 years. We also discuss the social value of university education.

We examine the financial consequences of the 2007 California Fair Pricing Law, which places a price ceiling on hospital bills for financially vulnerable individuals. Using cross-sectional variation in exposure to the law, proxied by county-level uninsured rates, we estimate its impact on individual financial outcomes. We find that the law reduces the likelihood of incurring non-medical debt in collections and the number of non-medical accounts in collections. In addition, we find evidence that credit scores increased and suggestive evidence that the number of delinquent accounts decreased for individuals in more exposed counties. Our results suggest hospital billing regulations can improve targeted individuals’ financial outcomes.

How do purpose-driven stakeholders induce reform? Using a multi-sided matching equilibrium, we show that whether they exit or engage depends on whether social harm scales with productivity. When harm is uncorrelated—an implicit assumption in most literature—purpose-driven stakeholders engage and compensating differentials adjust. But when harm scales with production, high-productivity firms outbid others for profit-driven stakeholders to avoid mitigation. Purpose-driven stakeholders exit—a seemingly ineffective action at the firm level but whose impact trickles down the productivity ladder and across stakeholder types. This necessitates a multi-sided framework, rationalizes puzzling findings, and explains why studies underestimate the aggregate impact of exit.

We examine how annuities affect longevity using administrative payout data on approximately 600,000 Chilean retirees from 2004 to 2022. To address selection into annuitization, we exploit the fact that annuity sales vary with recent market returns, a pattern consistent with extrapolative beliefs. We find that the decision to annuitize—instrumented by recent market returns—substantially reduces mortality at five- and ten-year horizons. Further analyses indicate that annuities reduce mortality by shielding retirees from income volatility and investment-related stress. Complementary survey evidence suggests that annuitants invest more in health and report lower disability rates.

COVID-19 brought a sharp, unanticipated increase in the usefulness and value of technologies that support work from home (WFH). To investigate how this shock influenced the direction of technical change, we examine the text in 5.6 million U.S. patent applications published from 2010 to 2026. The share of patent applications that advances technologies in support of WFH rose by about two thirds within three years after the pandemic struck and remains about 50% above pre-pandemic levels five years later. The lasting rise in the WFH share of new applications concentrates in telecommunications – especially video conferencing, speech recognition, and audio processing. It is driven overwhelmingly by US corporations rather than foreign assignees or universities. In short, we find evidence that a sudden, lasting rise in WFH redirected innovation to technologies that support it.

We investigate how the gender mix of expert teams affects performance in a high-stakes setting: childbirth. Using data on 2.5 million births, we exploit the quasi-exogenous assignment of patients to two-member obstetrician teams (Lead–Assisting), and find that: (i) female-only teams achieve the best maternal outcomes, whereas male-only teams have the worst; and (ii) female-led mixed-gender teams perform worse than male-led ones. Specifically, severe maternal complications are 15.8% higher in male-only teams and 7.1-10.8% higher in mixed-gender teams compared to female-only teams. These patterns cannot be explained by patient risk, endogenous team formation, or physician preferences for discretionary practices like C-sections. Instead, gender mix directly affects team decisions and performance, likely through gender norms — a mechanism supported by two findings. First, gender mix affects how closely team decisions reflect member preferences, with female-only teams being especially skilled at this process, possibly due to more collaborative decision-making. Second, gender mix affects team resilience, with female-led mixed gender teams performing especially poorly under challenging conditions (e.g., limited team familiarity), possibly because female leaders invert traditional gender norms. We also document other notable patterns: female-only teams not only achieve the lowest complication rates for Black women, but are also the only team type to have no racial disparity in maternal outcomes. Overall, this study provides new insights into gender dynamics in expert teams, informing managerial efforts to support effective collaboration in increasingly diverse workplaces.

This paper models double agents—individuals coerced into simultaneously serving two rival intelligence agencies—as a finite-horizon trilateral game between Agency A, Organization B, and the Mole M. The double agent persists within a corridor of survival: a set of bilateral beliefs under which both principals continue the relationship. Under a linear-quadratic-Gaussian benchmark, we obtain a closed-form characterization of the corridor geometry, analytical upper bounds on expected duration, and three main results: (i) existence of a double-agent equilibrium, (ii) structural transitoriness— belief updating, terminal unraveling, and compounding survival risk ensure inevitable collapse, and (iii) comparative statics linking monitoring technology, punishment severity, and protection costs to expected duration. The key mechanism is self-destructive experimentation: B learns about the mole’s type through both the type-dependence of effort and the traceability channel γ, which amplifies this learning. Extensions establish existence under general specifications and show that duration decays exponentially in the number of rival agencies. Predictions are consistent with historical patterns from Kim Philby to the Cold War mole hunts. The setting—bilateral coercion, existential participation constraints, and Bayesian learning in a finite-horizon trilateral structure— defines what we term antagonistic common agency.

Despite the importance of program participation for policy, treatment effects are often measured on self-selected samples. We study electric vehicle (EV) managed charging, intended to reduce electric grid strain by optimally allocating charging across EVs. Prior work finds large impacts of managed charging among households who volunteer for an RCT. In contrast, we test managed charging with an experiment including all EVs within a California utility. Enrollment is low even with high incentives, and we can reject even modest intent-to-treat effects on electricity consumption. Managed charging is less effective than previously thought, underscoring the value of population-wide experiments.

Incomplete performance metrics distort incentives. Exploiting the staggered roll-out of China’s national air monitoring network, we document a pollutant substitution effect: PM₂.₅ fell significantly, yet O₃ surged. We trace this to strategic behavior: facing binding PM₂.₅ targets, local governments prioritized abatement of particulate precursors while neglecting ozone precursors. Critically, this was not a benign trade-off. Although the policy reduced PM₂.₅-attributed deaths, the policy-induced O₃ surge increased O₃-attributed mortality and reduced biodiversity (measured by bird abundance). Conservative estimates suggest these costs reduced the policy’s net benefits by approximately 23.8%. Our findings highlight the hidden social costs of narrow performance targeting.

Multiple studies document a local bias of entrepreneurship (LBE) in recent decades, where self-employed entrepreneurs are systematically more likely than wage workers to operate in their region of birth. This paper documents an important new fact: the LBE has been declining in the United States since 1970. The LBE is still present for white men engaged in self-employment, but it no longer exists for the overall U.S.-born workforce. We connect that decline to the transformation of self-employment away from high startup-capital sectors and the reduced opportunity for local self-employed entrepreneurs to achieve high incomes compared to wage work.

This paper documents that the age at which CEOs are appointed has risen sharply over the past several decades. Using newly assembled data covering a wide set of firms, we show that this increase is concentrated outside the largest listed firms and driven primarily by longer and more diverse external career paths prior to CEO appointment. These patterns are difficult to reconcile with explanations based on demographics, schooling, or tenure, and are instead consistent with a matching framework in which rising demand for generalist human capital leads firms to trade off peak ability for accumulated experience. We investigate the forces behind this shift. Using variation in consulting networks, we establish that firms place greater weight on diversified managerial experience as operating environments have become increasingly uncertain and complex. We also provide evidence for a supply-side response in which prospective CEOs broaden their skill portfolio as demand for generalist skills rises.

We study how consumer expectations respond to monetary policy announcements using a two-wave survey experiment around the September 2025 FOMC meeting. We compare three commonly used approaches to identifying causal effects on expectations: hypothetical ("vignette’’) scenarios, randomized control trials, and event studies. All three identification strategies yield qualitatively similar results: a rate cut reduces short- and long-run inflation expectations, raises expectations of economic activity, and lowers unemployment expectations. The estimated magnitudes are similar across the randomized controlled trial and event-study approaches, but relatively larger for vignette-based measures. Within-respondent comparisons further show that individuals who revise their expectations more in response to vignette scenarios also exhibit larger revisions following actual policy announcements and experimental information treatments.

When should a founder act on a strong belief about an opportunity, knowing that rivals assessing the same opportunity may hold very different views? This paper studies entry decisions when entrepreneurs hold heterogeneous beliefs about an opportunity's value and each founder knows only the range of views rivals might hold. In equilibrium, a founder enters only when their conviction exceeds a threshold set by anticipated rival optimism. The relationship between belief dispersion and entry is surprisingly rich: depending on the founder's conviction and the cost of entry, there may be no level of dispersion that supports entry, all levels may support it, or only a middle range may, so that an outside observer may see the most entry at intermediate levels of belief dispersion. When founders can delay, high dispersion that deters immediate entry need not prevent it altogether: the absence of rival action gradually reveals that competitors are less bullish than feared. Finally, not all conviction-building is equal. Validation that only the founder sees strengthens entry incentives fully, whereas validation visible to the whole market partly backfires by encouraging rivals. The paper formalises the intuition that entrepreneurial value comes not from optimism alone but from optimism that the founder anticipates rivals will not share, and derives predictions linking belief dispersion to entry patterns.

We build a unified quantitative theory of increasing adult life expectancy and income growth in the last two centuries, and the emergence of a modern health sector in the 20th century. We interpret the data as three phases of a dynamic equilibrium in which households are initially poor, the price of health goods is prohibitively high, and life expectancy is stagnant. As technological progress fuels income growth, households commence consuming basic health goods and life expectancy rises in the first half of the 19th century. 100 years later, further directed technological progress leads to the emergence of a modern health sector. Through the lens of the model, the quality-adjusted relative price of modern health goods declined by about 2.5% per year between 1940 and 2020 while the model-implied relative price that lacks quality adjustment increases in line with the BEA health price index. Counterfactual analyses suggest that almost one fourth of adult life expectancy gains between 1940 and 2020 are attributed to the emergence and expansion of modern health and that public spending on health R&D during World War II played an important role in the kickoff of the modern health sector.

The stock market fails to efficiently process information in news text (Chen et al., 2026). But news itself is highly predictable by prevailing stock characteristics, which complicates inferences about market efficiency. After purging news of its predictable content, the resulting “news shocks” more than double the monthly return predictive power of raw news, and they continue to significantly predict returns up to 18 months ahead. The magnitude and longevity of the news shock anomaly is larger than every anomaly in the Jensen et al. (2022) universe. The news shock anomaly derives from negative-tone and quantitative topics to which investors underreact and from high-attention and ambiguous topics to which investors overreact.

This study examined how health inequalities with respect to income have changed among older adults in Japan from 2001 to 2022. The past two decades have witnessed a series of public pension reforms and increased labor force participation among older individuals. The pro-rich concentration of good health has become less clear for self-rated health and activities of daily living among older men. However, income-related inequality in stress/anxiety increased over time in men, and no clear trend was observed for health deficiencies or conditions. Compared to men, women showed more mixed results, with widening inequalities in health deficiencies and conditions.

Using cross-border holding data from all custodians in China’s Stock Connect, we provide evidence that Chinese mainland insiders evade see-through surveillance by round-tripping via the program. Following the 2018 Northbound Investor Identification reform, the return predictability of northbound flows decays, as does their correlation with insider trading. This reduction is especially pronounced among less prestigious foreign custodians and cross-operating mainland custodians, where insiders are more likely to hide. Furthermore, the reform erodes price informativeness, particularly in stocks with high exposure to homemade foreign investors. Our analysis highlights the role of regulatory cooperation in capital market integration.

Occupational change is a central feature of modern labor markets. This paper examines the career consequences in Norway of being initially employed in an occupation that subsequently declines during 2007–2024. Workers initially employed in occupations that later decline by at least 25% demonstrate 0.4 lower future years of work, although this employment difference is mostly explained by other individual traits. These workers, conditional on controls, experience a 4.7% reduction in future cumulative earnings relative to starting earnings, akin to losing one year’s worth of earnings over 2007–2024.

In the Netherlands, life expectancy has continued to rise over the last two decades and the distribution of the age of death has narrowed, which suggests a decrease in health inequality. For the same period, however, the income-mortality gradient has increased, which suggests that the health gains have been unequally distributed across the income distribution. We examine the latter suggestion using data for the Netherlands of the longitudinal Survey of Health, Ageing and Retirement in Europe. Our empirical findings show no significant changes in income-based physical and mental health inequalities during the last two decades. Arguably, larger samples, such as administrative data which is often used to analyze the income-mortality gradient, are needed to investigate in more detail the evolution of physical and mental health inequalities before drawing firm conclusions.

Historically high debt-to-GDP levels in the U.S. have raised concerns about future financial market stability and fiscal sustainability. We use high-frequency data and consider Treasury futures price changes within narrow windows around auction announcements in order to identify two distinct Treasury supply shocks: debt volume shocks that capture changes in the level of public debt, and maturity adjustment shocks that reflect changes in the maturity structure. We find that debt expansion shocks raise yields across the curve by increasing term premia, leading to tighter financial conditions. These shocks crowd out private sector activity by reducing investment and production, particularly during periods of rapid debt growth. In contrast, maturity extension shocks steepen the yield curve while lowering credit risk premia and fiscal uncertainty. By reducing risk premia, these shocks stimulate near-term investment and production, even as higher long-term borrowing costs weigh on longer-horizon investment. We also show that the Treasury debt management policy can meaningfully interact with the Federal Reserve's asset purchase programs.

We build a general equilibrium model in which firms endogenously choose whether to target prices or quantities. We characterize how these choices of organizational targets depend on firms' uncertainty about microeconomic and macroeconomic factors. In equilibrium, the transmission of both nominal and real shocks hinges on firms' organizational targets. For example, under otherwise identical microfoundations, money is neutral under quantity targets and non-neutral under price targets. We further characterize how targets shape firms' strategic interactions and prove that the macroeconomic uncertainty that arises from each choice of targets reinforces incentives to choose that target. That is, choices of organizational targets are strategic complements. For this reason, monetary policy aimed at stabilization can backfire by inducing a regime shift that renders it ineffective. A simple quantification suggests that incentives over organizational targets can vary markedly at business-cycle frequencies and help explain the state-dependent pass-through of monetary shocks to prices and output.

This paper quantifies the environmental externalities associated with electricity consumption by data centers in the United States, focusing on damages from local air pollution and greenhouse gas (GHG) emissions. Using facility-level data for approximately 2,800 operational data centers in 2025, combined with electricity grid characteristics and emissions data, the analysis estimates pollution impacts through the AP4 integrated assessment model and applies the social cost of carbon for GHG valuation. Results indicate that data centers consume roughly 250 TWh of electricity—about 5–6% of U.S. generation—and generate approximately $25 billion in gross external damages (GED), with a range of $10–$33 billion. These damages are highly geographically concentrated, with Texas and Virginia accounting for 30% of the national total. While GED comprises about 5% of industry GDP, this ratio varies widely across states, exceeding GDP in some regions. Planned data center expansion could increase electricity demand and associated damages by up to 85% in the near term. Despite these environmental costs, preliminary comparisons suggest that the damages attributable to AI-related energy use are small relative to potential productivity gains.

Financial crises remain a recurrent feature of modern economies despite evidence that many are predictable and preventable. This chapter discusses how financial instability often reflects a political equilibrium rather than purely technocratic shortcomings. Contrasting economic and political perspectives on regulation, the chapter emphasizes how policymakers shape financial rules in ways that favor politically-influential groups but result in financial vulnerability. Key mechanisms include restricted bank chartering, safety nets, credit subsidies, and sovereign borrowing. Political forces also shape crisis management. Delayed interventions, selective support, and constrained policy responses can deepen and prolong crises. Together, these dynamics help explain the persistent and foreseeable nature of financial instability across time, legal origins, political structures, and institutional contexts. Instead of seeing financial crises as arising from an unavoidable vulnerability to external shocks they are better seen as a mirror of the societies in which they occur, reflecting their political structures, vying constituencies, cultural preferences, and blind spots.

We study the macroeconomic effects of tariff policy using U.S. historical data from 1840–2024. We construct a narrative series of plausibly exogenous tariff changes – based on major legislative actions, multilateral negotiations, and temporary surcharges – and use it as an instrument to identify a structural tariff shock. Tariff increases are contractionary: imports fall sharply, exports decline with a lag, and output and manufacturing activity drop persistently. The shock transmits through both supply and demand channels. Prices rise in the full sample but fall post-World War II, a pattern consistent with changes in the monetary policy response and with stronger international retaliation and reciprocity in the modern trade regime.

This study evaluates a large-scale SMS outreach program to engage caregivers of students in private primary schools in Kenya. Using a two-stage randomization design, we tested two types of weekly SMS messages: growth-mindset encouragement and personalized performance information. We find two main effects: First, outreach improved test scores by 0.07 standard deviations, with particularly strong gains among initially lower-performing students. This improvement generates 12 learning-adjusted years of schooling per US$100 spent—making it highly cost-effective relative to other education interventions. Second, outreach increased student exit rates by 4.7-5.0 percentage points, with effects concentrated among higher-achieving students (5.7 to 6.6 percent-age points). We develop a theoretical model of vertically differentiated schools where parental engagement affects both learning production and school choice. The model shows that when parents update their understanding of education production through engagement programs, they become more sensitive to perceived school quality differences. This increased sensitivity can lead lower-quality schools to forgo implementing engagement programs—even when costless—as enhanced parental discernment accelerates student exits. Our findings suggest a role for third-party provision of parent engagement programs in competitive education markets.

This paper studies how new varieties enter markets and become locally available. We provide causal evidence of demand externalities that operate in two steps. First, information about new varieties diffuses directly through real-world social ties among consumers. Second, early purchases generate an indirect spillover to firms: local retailers learn from "pioneer'' consumers which new varieties are most likely to succeed and adjust their product offerings accordingly. We study this process in the context of direct-to-consumer imports. Using customs records on individuals' purchases matched to population-wide social networks, international migrant links, and retailer catchment areas, we document economically meaningful demand externalities. Product-specific demand shocks abroad transmit through migrant networks and shift which varieties consumers purchase. Leveraging these shocks as a plausibly exogenous source of local demand variation, we show strong peer effects: prior purchases by close neighbors, coworkers, or friends increase an individual’s likelihood of purchasing the same variety, especially for premium and visible goods. We leverage this result to identify an indirect spillover from consumers to firms: retailers are more likely to add a variety when it becomes popular among consumers in their catchment area. Combining the instrument with linked consumer--retailer data and a self-conducted retailer survey, we show that this response reflects learning about latent demand for varieties not yet stocked locally. Together, social diffusion and retailer learning generate demand multipliers that reshape local product availability and expand access to global variety.