Are immigrant remittance flows a source of capital for development?

There is a general presumption in the literature and among policymakers that immigrant remittances play the same role in economic development as foreign direct investment and other capital flows, but this is an open question. We develop a model of remittances based on the economics of the family that implies that remittances are not profit-driven, but are compensatory transfers, and should have a negative correlation with GDP growth. This is in contrast to the positive correlation of profit-driven capital flows with GDP growth. We test this implication of our model using a new panel data set on remittances and find a robust negative correlation between remittances and GDP growth. This indicates that remittances may not be intended to serve as a source of capital for economic development. © 2005 International Monetary Fund.

Beyond signaling and human capital: Education and the revelation of ability

We provide evidence that college graduation plays a direct role in revealing ability to the labor market. Using the NLSY79, our results suggest that ability is observed nearly perfectly for college graduates, but is revealed to the labor market more gradually for high school graduates. Consequently, from the beginning of their careers, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and returns to ability.

Contribution of the North Atlantic subtropical high to regional climate model (RCM) skill in simulating southeastern United States summer precipitation

© 2014, Springer-Verlag Berlin Heidelberg.This study assesses the skill of advanced regional climate models (RCMs) in simulating southeastern United States (SE US) summer precipitation and explores the physical mechanisms responsible for the simulation skill at a process level. Analysis of the RCM output for the North American Regional Climate Change Assessment Program indicates that the RCM simulations of summer precipitation show the largest biases and a remarkable spread over the SE US compared to other regions in the contiguous US. The causes of such a spread are investigated by performing simulations using the Weather Research and Forecasting (WRF) model, a next-generation RCM developed by the US National Center for Atmospheric Research. The results show that the simulated biases in SE US summer precipitation are due mainly to the misrepresentation of the modeled North Atlantic subtropical high (NASH) western ridge. In the WRF simulations, the NASH western ridge shifts 7° northwestward when compared to that in the reanalysis ensemble, leading to a dry bias in the simulated summer precipitation according to the relationship between the NASH western ridge and summer precipitation over the southeast. Experiments utilizing the four dimensional data assimilation technique further suggest that the improved representation of the circulation patterns (i.e., wind fields) associated with the NASH western ridge substantially reduces the bias in the simulated SE US summer precipitation. Our analysis of circulation dynamics indicates that the NASH western ridge in the WRF simulations is significantly influenced by the simulated planetary boundary layer (PBL) processes over the Gulf of Mexico. Specifically, a decrease (increase) in the simulated PBL height tends to stabilize (destabilize) the lower troposphere over the Gulf of Mexico, and thus inhibits (favors) the onset and/or development of convection. Such changes in tropical convection induce a tropical–extratropical teleconnection pattern, which modulates the circulation along the NASH western ridge in the WRF simulations and contributes to the modeled precipitation biases over the SE US. In conclusion, our study demonstrates that the NASH western ridge is an important factor responsible for the RCM skill in simulating SE US summer precipitation. Furthermore, the improvements in the PBL parameterizations for the Gulf of Mexico might help advance RCM skill in representing the NASH western ridge circulation and summer precipitation over the SE US.

Credit scores, cardiovascular disease risk, and human capital.

Credit scores are the most widely used instruments to assess whether or not a person is a financial risk. Credit scoring has been so successful that it has expanded beyond lending and into our everyday lives, even to inform how insurers evaluate our health. The pervasive application of credit scoring has outpaced knowledge about why credit scores are such useful indicators of individual behavior. Here we test if the same factors that lead to poor credit scores also lead to poor health. Following the Dunedin (New Zealand) Longitudinal Study cohort of 1,037 study members, we examined the association between credit scores and cardiovascular disease risk and the underlying factors that account for this association. We find that credit scores are negatively correlated with cardiovascular disease risk. Variation in household income was not sufficient to account for this association. Rather, individual differences in human capital factors—educational attainment, cognitive ability, and self-control—predicted both credit scores and cardiovascular disease risk and accounted for ∼45% of the correlation between credit scores and cardiovascular disease risk. Tracing human capital factors back to their childhood antecedents revealed that the characteristic attitudes, behaviors, and competencies children develop in their first decade of life account for a significant portion (∼22%) of the link between credit scores and cardiovascular disease risk at midlife. We discuss the implications of these findings for policy debates about data privacy, financial literacy, and early childhood interventions.