Showing papers by "Michael Kremer published in 2001"

Perspectives on stimulating industrial research and development for neglected infectious diseases

Abstract: Le present article fait le point des reflexions recentes sur la maniere de stimuler dans l'industrie pharmaceutique la recherche-developpement concernant les maladies infectieuses negligees. Il souligne qu'il est essentiel d'augmenter la valeur du marche pour les medicaments et les vaccins contre ces maladies en creant, par exemple, des fonds mondiaux d'achat. Les principaux obstacles economiques a la recherche-developpement tiennent au fait que les marches commerciaux sont restreints et que le pouvoir d'achat des particuliers demeure limite, meme si les patients peuvent etre tres nombreux. Compte tenu du cout eleve de la recherche-developpement pour toutes les maladies, le retour sur investissement devient tres aleatoire. Divers mecanismes ont ete proposes pour tenter de remedier a ce desequilibre economique - etant entendu qu'il faudra s'occuper aussi des autres obstacles. Les mesures economiques qui permettent de reduire les couts de la recherche-developpement - ce que l'on appelle les mesures dissuasives (push factors) - sont utiles, mais l'etude tend a demontrer que les couts eleves n'expliquent pas a eux seuls l'insuffisance de la recherche-developpement. Les interventions visant a remedier a l'absence de marches viables - ce que l'on appelle les mesures incitatives (pull factors) - ont pour but de creer ou de s'assurer un marche pour ameliorer les perspectives de retour sur investissement. L'un de ces mecanismes incitatifs consiste a s'engager par avance a acheter un produit repondant a des criteres specifiques si ce produit est invente. Ce pre-engagement d'achat presente plusieurs avantages : il permet, par exemple, de ne « recompenser » que les efforts aboutis au lieu d'appuyer des recherches qui peuvent echouer. Les programmes incitatifs se calquent sur le marche et amenent les laboratoires a privilegier des recherches dont ils estiment qu'elles deboucheront sur des produits commercialisables. Globalement, une association de mecanismes incitatifs/dissuasifs peut offrir une solution interessante : on peut, par exemple, decider d'accroitre le financement des laboratoires publics, de developper des partenariats public-prive pour la recherche-developpement et d'acheter des produits existants sous-utilises tout en s'engageant par avance a acheter de nouveaux produits et de nouveaux vaccins lorsqu'ils auront ete mis au point.

Does Function Follow Organizational Form

Abstract: Theories based on incomplete contracting suggest that small organizations may do better than large organizations in activities that require the processing of soft information. We explore this idea in the context of bank lending to small firms, an activity that is typically thought of as relying heavily on soft information. We find that large banks are less willing than small banks to lend to informationally “difficult” credits, such as firms that do not keep formal financial records. Moreover, controlling for the endogeneity of bank-firm matching, large banks lend at a greater distance, interact more impersonally with their borrowers, have shorter and less exclusive relationships, and do not alleviate credit constraints as effectively. All of this is consistent with small banks being better able to collect and act on soft information than large banks.

Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment

Abstract: Colombia's PACES program provided over 125,000 pupils from poor neighborhoods with vouchers that covered approximately half the cost of private secondary school. Since many vouchers were allocated by lottery, we use differences in outcomes between lottery winners and losers to assess program effects. Three years into the program, lottery winners were 15 percentage points more likely to have attended private school, had completed .1 more years of schooling, and were about 10 percentage points more likely to have finished 8 th grade, primarily because they were less likely to repeat grades. The program did not significantly affect dropout rates. Lottery winners scored .2 standard deviations higher on standardized tests. There is some evidence that winners worked less than losers and were less likely to marry or cohabit as teenagers. On average, lottery winners increased their educational expenditure by about 70% of the value of the voucher. Since winners also worked less, they devoted more total resources to education. Compared to an equivalent expansion of the public education system, the voucher program increased annual government educational expenditure by about $24 per winner. But the costs to the government and to participants were probably much less than the increase in winners' earnings due to greater educational attainment.

Creating Markets for New Vaccines - Part II: Design Issues

Abstract: Several programs have been proposed to improve incentives for research on vaccines for malaria, tuberculosis, and HIV, and to help increase accessibility of vaccines once they are developed. For these programs to spur research, potential vaccine developers must believe that the sponsor will not renege on the commitment once research costs have been sunk. Given appropriate legal language, the key determinant of credibility will be eligibility and pricing rules, rather than whether funds are physically placed in separate accounts. Requiring candidate vaccines to meet basic technical requirements would help ensure that funds were spent only on effective vaccines. Requiring developing countries to contribute co-payments would help ensure that they felt that the vaccines were useful given the conditions in their countries. Purchases under a vaccine purchase program could be the conditions in their countries. Purchases under a vaccine purchase program could be governed by a market exclusivity provision similar to that in the U.S. Orphan Drug Act. A program could start by offering a modest price and increasing it if it proved inadequate to spur research. If donors pledge approximately $250 million per year for each vaccine for ten years, vaccine purchases would cost approximately $10 per year of life saved. No funds would be spent or pledges called unless a vaccine were developed.

Peer Effects from Alcohol Use Among College Students

Abstract: * We are very grateful to seminar participants at the Brookings Institution and the Joint Center for Poverty Research, and to Rebecca M. Blank, Bill Dickens, Greg J. Duncan, Andrew Francis, Ellen Levy, Chris Taber and Rebecca Thornton for helpful comments. We are also grateful to university housing officers around the country for many helpful conversations, and in particular to personnel in the Housing, Admissions, Graduate School, Student Affairs, and Registrar's Office of the university used in this study. Financial support from the John D. and Catherine MacArthur Foundation and from the Joint Center for Poverty Research (Northwestern University / University of Chicago) is gratefully acknowledged.

Searching for Prosperity

Abstract: Quah's [1993a] transition matrix analysis of world income distribution based on annual data suggests an ergodic distribution with twin peaks at the rich and poor end of the distribution. Since the ergodic distribution is a highly non-linear function of the underlying transition matrix estimated extremely noisily. Estimates over the foreseeable future are more precise. The Markovian assumptions underlying the analysis are much better satisfied with an analysis based on five-year transitions than one-year transitions. Such an analysis yields an ergodic distribution with 72% of mass in the top income category, but a prolonged transition, during which some inequality measures increase. The rosy ergodic forecast and prolonged transition arise because countries' relative incomes move both up and down at moderate levels, but once countries reach the highest income category, they rarely leave it. This is consistent with a model in which countries search among policies until they reach an income level at which further experimentation is too costly. If countries can learn from each other's experience, the future may be much brighter than would be predicted based on projecting forward the historical transition matrix.

A Biological Model of Unions

Abstract: This paper applies principles from evolutionary biology to the study of unions. We show that unions which maximize the present discounted wages of current members will be displaced in evolutionary competition by unions with more moderate wage policies that allow their firms to live longer. This suggests that unions with constitutional incumbency advantages that allow leaders to moderate members' wage demands may have a selective advantage. The model also suggests that industries with high turnover of firms will have low unionization rates, and that there may be one equilibrium with high unionization and long-lived firms and another with low unionization and short-lived firms. These predictions seem broadly consistent with the data.

A Biological Model of Unions

Abstract: This paper applies principles from evolutionary biology to the study of unions. We show that unions which maximize the present discounted wages of current members will be displaced in evolutionary competition by unions with more moderate wage policies that allow their firms to live longer. This suggests that unions with constitutional incumbency advantages that allow leaders to moderate members' wage demands may have a selective advantage. The model also suggests that industries with high turnover of firms will have low unionization rates, and that there may be one equilibrium with high unionization and long-lived firms and another with low unionization and short-lived firms. These predictions seem broadly consistent with the data.