Archive for May 26th, 2011
Prof Mankiw raises a super question on the topic.
He points to a Leonhardt article who looks at how low income individuals are not really accepted by top colleges in US. The low incomes lead students to study at homes and lower SAT scores. Whereas rich ones get a better tuition and other facilities leading to higher SAT scores and acceptance in colleges. This leads to colleges underappreciating the effort put in by low-income people. This leads to wastage of human capital as good students who don’t have the opportunity are sidelined by the system. As good education usually leads to good income in future, it is kind of vicious cycle as well.
Adam Swadley and Mine Yücel of Dallas Fed write this nice paper on the topic. It is always great to read such papers on competition and efficiency.
The paper focuses on retail electricity market. In 2000s US reformed its retail electricity market and allowed competition. People could choose their suppliers and so on. What was the impact of such reforms? Did it help consumers? Did it lower prices?
This paper looks at these issues.