Genetically engineered crops can lead to better output
Use of genetically engineered (GE) corn varieties can lead to better output. A National Bureau of Economic Research (NBER) working paper by Jayson L. Lusk from Purdue University and co-authors has found this using data from 28,000 observations for corn from 800 counties in the US during 1980 and 2015. The authors find that differences in weather conditions and soil quality can affect yields in different places. GE crops are also more likely to mitigate risks from weeds and insects. However, they have not led to an increase in heat or water resistance of crops. The authors add a caveat that future improvements in GM technology could change these results. The paper also says that not accounting for soil and weather-related factors might have led to divergence in results about gains from GE crops in earlier research.
Promotions can often become a tool by which bosses promote those who are similar to themselves, according to a new NBER paper by George Akerlof and Pascal Michaillat of Georgetown University and Brown University. The authors develop a mathematical model to study the outcome of favouritism and bias in promotions, and especially the role that such biases can have in developing scientific truth. In the case of scientists, bias against scientists representing new scientific paradigms can be manifested through the denial of tenure. The authors find that continued advancement in science can be attributed to the fact that high-powered tests which demonstrate a scientist’s calibre have prevented the rise of bias in promotions.
Trade unions had an important role in low wage inequality in the US in the mid-twentieth century. An NBER working paper by Brantly Callaway and William J. Collins from Temple University and Vanderbilt University attributes this to negative selection in trade unions. This means that workers with poor education and lower economic status are more likely to join unions. Because unions could get these workers better wage bargains, this had an overall effect of reducing wage inequality in the economy. This was also aided by the fact that policymakers in the US promoted unions to reduce inequality after the great recession. By the 1970s, there was a significant decline in unionization levels in the US.
The authors argue that it is important to understand the role of institutional factors in increasing wage inequality rather than just supply and demand for skills in the labour market.
A paper by Arturas Rozenas and Anoop Sadanandan of the New York University and Syracuse University suggests that illiteracy might be driving the high levels of political competition in India. Lack of coordination among voters to identify the two most viable parties in an election is the reason. This is because illiterate voters find it difficult to access political information. In constituencies with more literate voters, this information is disseminated through public means even among illiterates. The authors argue that this makes the role of political elites very important as they can manipulate information on which candidate stands a better chance of winning.
Economics Digest runs weekly, and features interesting reads from the world of economics.