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.

Convergent Surface Water Distributions in U.S. Cities

Earth's surface is rapidly urbanizing, resulting in dramatic changes in the abundance, distribution and character of surface water features in urban landscapes. However, the scope and consequences of surface water redistribution at broad spatial scales are not well understood. We hypothesized that urbanization would lead to convergent surface water abundance and distribution: in other words, cities will gain or lose water such that they become more similar to each other than are their surrounding natural landscapes. Using a database of more than 1 million water bodies and 1 million km of streams, we compared the surface water of 100 US cities with their surrounding undeveloped land. We evaluated differences in areal (A WB) and numeric densities (N WB) of water bodies (lakes, wetlands, and so on), the morphological characteristics of water bodies (size), and the density (D C) of surface flow channels (that is, streams and rivers). The variance of urban A WB, N WB, and D C across the 100 MSAs decreased, by 89, 25, and 71%, respectively, compared to undeveloped land. These data show that many cities are surface water poor relative to undeveloped land; however, in drier landscapes urbanization increases the occurrence of surface water. This convergence pattern strengthened with development intensity, such that high intensity urban development had an areal water body density 98% less than undeveloped lands. Urbanization appears to drive the convergence of hydrological features across the US, such that surface water distributions of cities are more similar to each other than to their surrounding landscapes. © 2014 The Author(s).

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.