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Template-Type: ReDIF-Paper 1.0
Title: International Currency Exposures, Valuation Effects, and the Global Financial Crisis
Classification-JEL: F3; F31
Author-Name: Agustín S. Bénétrix
Author-Person: pbn2
Author-Name: Philip R. Lane
Author-Person: pla15
Author-Name: Jay C. Shambaugh
Note: IFM
Number: 20820
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20820
File-URL: http://www.nber.org/papers/w20820.pdf
File-Format: application/pdf
Publication-Status: published as International Currency Exposures, Valuation Effects, and the Global Financial Crisis, Agustin S. Bénétrix, Philip R. Lane, Jay C. Shambaugh. in NBER International Seminar on Macroeconomics 2014, Clarida, Frankel, Giavazzi, and Rey. 2015
Publication-Status: published as Bénétrix, Agustin S. & Lane, Philip R. & Shambaugh, Jay C., 2015. "International currency exposures, valuation effects and the global financial crisis," Journal of International Economics, Elsevier, vol. 96(S1), pages S98-S109.
Abstract: We examine the evolution of international currency exposures, with a particular focus on the 2002-12 period. During the run up to the global financial crisis, there was a widespread shift towards positive net foreign currency positions, such that relatively few countries exhibited the archetypal emerging-market \short foreign currency" position on the eve of the global financial crisis. During the crisis, the upheaval in currency markets generated substantial currency-generated valuation effects - much of which were not reversed. There is some evidence that the distribution of valuation effects was stabilizing in the sense of showing a negative covariation pattern with pre-crisis net foreign asset positions.
Handle: RePEc:nbr:nberwo:20820
Template-Type: ReDIF-Paper 1.0
Title: Distinguishing Constraints on Financial Inclusion and Their Impact on GDP, TFP, and the Distribution of Income
Classification-JEL: C54; E23; E44; E69; O11; O16; O57
Author-Name: Era Dabla-Norris
Author-Name: Yan Ji
Author-Name: Robert M. Townsend
Author-Person: pto99
Author-Name: D. Filiz Unsal
Author-Person: pun26
Note: DEV IFM
Number: 20821
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20821
File-URL: http://www.nber.org/papers/w20821.pdf
File-Format: application/pdf
Publication-Status: published as Era Dabla-Norris & Yan Ji & Robert M. Townsend & D. Filiz Unsal, 2020. "Distinguishing Constraints on Financial Inclusion and Their Impact on GDP, TFP, and the Distribution of Income," Journal of Monetary Economics, .
Abstract: A general equilibrium model featuring multiple realistic sources of financial frictions is developed to study how different constraints interact in equilibrium. We highlight, distinguish, and evaluate their differential impacts and rich interactions. The economic impact of financial inclusion policies in an economy depends not only on which constraint is alleviated, but also on the tightness of other constraints. Policy instruments should target the most binding constraint, which likely varies across countries. Moreover, there are important tradeoffs between financial inclusion, GDP, and the distribution of income. The transitional dynamics also differ from those in steady states. Policy makers should consider both.
Handle: RePEc:nbr:nberwo:20821
Template-Type: ReDIF-Paper 1.0
Title: Domestic and Multilateral Effects of Capital Controls in Emerging Markets
Classification-JEL: F32; F41; F42
Author-Name: Gurnain Pasricha
Author-Person: ppa330
Author-Name: Matteo Falagiarda
Author-Person: pfa281
Author-Name: Martin Bijsterbosch
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM
Number: 20822
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20822
File-URL: http://www.nber.org/papers/w20822.pdf
File-Format: application/pdf
Publication-Status: published as Gurnain Kaur Pasricha & Matteo Falagiarda & Martin Bijsterbosch & Joshua Aizenman, 2018. "Domestic and Multilateral Effects of Capital Controls in Emerging Markets," Journal of International Economics, .
Abstract: Using a novel, high frequency dataset on capital control actions in 16 emerging market economies (EMEs) from 2001 to 2012, we provide new insights into the domestic and multilateral effects of capital controls. Increases in capital account openness reduce monetary policy autonomy and increase exchange rate stability, confirming the constraints of the monetary policy trilemma. Both gross in- and outflows rise, while the effect on net capital flows is ambiguous. Tighter capital inflow restrictions generated significant spillovers, especially in the post-2008 environment of abundant global liquidity. We also find evidence of a domestic policy response to foreign capital control changes in countries that are affected by these spillovers.
Handle: RePEc:nbr:nberwo:20822
Template-Type: ReDIF-Paper 1.0
Title: Segmented Housing Search
Classification-JEL: E00; G12; R30
Author-Name: Monika Piazzesi
Author-Person: ppi37
Author-Name: Martin Schneider
Author-Person: psc69
Author-Name: Johannes Stroebel
Note: AP EFG ME PE
Number: 20823
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20823
File-URL: http://www.nber.org/papers/w20823.pdf
File-Format: application/pdf
Publication-Status: published as Monika Piazzesi & Martin Schneider & Johannes Stroebel, 2020. "Segmented Housing Search," American Economic Review, vol 110(3), pages 720-759.
Abstract: We study housing markets with multiple segments searched by heterogeneous clienteles. In the San Francisco Bay Area, search activity and inventory covary negatively across cities, but positively across market segments within cities. A quantitative search model shows how the endogenous flow of broad searchers to high-inventory segments within their search ranges induces a positive relationship between inventory and search activity across segments with a large common clientele. The prevalence of broad searchers also shapes the response of housing markets to localized supply and demand shocks. Broad searchers help spread such shocks across many segments and thereby reduce their effect on local market activity.
Handle: RePEc:nbr:nberwo:20823
Template-Type: ReDIF-Paper 1.0
Title: Central Bank Credibility: An Historical and Quantitative Exploration
Classification-JEL: C32; C36; E31; E58; N10
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Pierre L. Siklos
Author-Person: psi78
Note: DAE ME
Number: 20824
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20824
File-URL: http://www.nber.org/papers/w20824.pdf
File-Format: application/pdf
Abstract: In this paper we provide empirical measures of central bank credibility and augment these with historical narratives from eleven countries. To the extent we are able to apply reliable institutional information we can also indirectly assess their role in influencing the credibility of the monetary authority. We focus on measures of inflation expectations, the mean reversion properties of inflation, and indicators of exchange rate risk. In addition we place some emphasis on whether credibility is particularly vulnerable during financial crises, whether its evolution is a function of the type of crisis or its kind (i.e., currency, banking, sovereign debt crises). We find credibility changes over time are frequent and can be significant. Nevertheless, no robust empirical connection between the size of an economic shock (e.g., the Great Depression) and loss of credibility is found. Second, the frequency with which the world economy experiences economic and financial crises, institutional factors (i.e., the quality of governance) plays an important role in preventing a loss of credibility. Third, credibility shocks are dependent on the type of monetary policy regime in place. Finally, credibility is most affected by whether the shock can be associated with policy errors.
Handle: RePEc:nbr:nberwo:20824
Template-Type: ReDIF-Paper 1.0
Title: Exploration for Human Capital: Evidence from the MBA Labor Market
Classification-JEL: G31; J44; M51
Author-Name: Camelia M. Kuhnen
Author-Person: pku67
Author-Name: Paul Oyer
Author-Person: poy2
Note: AP CF LS
Number: 20825
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20825
File-URL: http://www.nber.org/papers/w20825.pdf
File-Format: application/pdf
Publication-Status: published as Camelia M. Kuhnen & Paul Oyer, 2016. "Exploration for Human Capital: Evidence from the MBA Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages S000 - S000.
Abstract: We empirically investigate the effect of uncertainty on corporate hiring. Using novel data from the labor market for MBA graduates, we show that uncertainty regarding how well job candidates fit with a firm’s industry hinders hiring, and that firms value probationary work arrangements that provide the option to learn more about potential full-time employees. The detrimental effect of uncertainty on hiring is more pronounced when firms face greater firing and replacement costs, and when they face less direct competition from other similar firms. These results suggest that firms faced with uncertainty use similar considerations when making hiring decisions as when making decisions regarding investment in physical capital.
Handle: RePEc:nbr:nberwo:20825
Template-Type: ReDIF-Paper 1.0
Title: The Skill Complementarity of Broadband Internet
Classification-JEL: J23; J24; J31; O33
Author-Name: Anders Akerman
Author-Person: pak67
Author-Name: Ingvil Gaarder
Author-Name: Magne Mogstad
Author-Person: pmo570
Note: LS PR
Number: 20826
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20826
File-URL: http://www.nber.org/papers/w20826.pdf
File-Format: application/pdf
Publication-Status: published as Anders Akerman & Ingvil Gaarder & Magne Mogstad, 2015. "The Skill Complementarity of Broadband Internet," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1781-1824.
Abstract: Does adoption of broadband internet in firms enhance labor productivity and increase wages? And is this technological change skill biased or factor neutral? We exploit rich Norwegian data to answer these questions. A public program with limited funding rolled out broadband access points, and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Our results suggest that broadband internet improves (worsens) the labor outcomes and productivity of skilled (unskilled) workers. We explore several possible explanations for the skill complementarity of broadband internet. We find suggestive evidence that broadband adoption in firms complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth.
Handle: RePEc:nbr:nberwo:20826
Template-Type: ReDIF-Paper 1.0
Title: Austerity in 2009-2013
Classification-JEL: C51; C53; E62; H60
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Omar Barbiero
Author-Name: Carlo Favero
Author-Person: pfa12
Author-Name: Francesco Giavazzi
Author-Person: pgi18
Author-Name: Matteo Paradisi
Author-Person: ppa1393
Note: IFM ME POL
Number: 20827
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20827
File-URL: http://www.nber.org/papers/w20827.pdf
File-Format: application/pdf
Publication-Status: published as in "Economic Policy," Volume 30, Issue 83, July 2015, Pages 383–437, https://doi.org/10.1093/epolic/eiv006
Abstract: The conventional wisdom is (i) that fiscal austerity was the main culprit for the recessions experienced by many countries, especially in Europe, since 2010 and (ii) that this round of fiscal consolidation was much more costly than past ones. The contribution of this paper is a clarification of the first point and, if not a clear rejection, at least it raises doubts on the second. In order to obtain these results we construct a new detailed "narrative" data set which documents the actual size and composition of the fiscal plans implemented by several countries in the period 2009-2013. Out of sample simulations, that project output growth conditional only upon the fiscal plans implemented since 2009 do reasonably well in predicting the total output fluctuations of the countries in our sample over the years 2010-13 and are also capable of explaining some of the cross-country heterogeneity in this variable. Fiscal adjustments based upon cuts in spending appear to have been much less costly, in terms of output losses, than those based upon tax increases. The difference between the two types of adjustment is very large. Our results, however, are mute on the question whether the countries we have studied did the right thing implementing fiscal austerity at the time they did, that is 2009-13. Finally we examine whether this round of fiscal adjustments, which occurred after a financial and banking crisis, has had different effects on the economy compared to earlier fiscal consolidations carried out in "normal" times. When we test this hypothesis we do not reject the null, although in some cases failure to reject is marginal. In other words, we don't find sufficient evidence to claim that the recent rounds of fiscal adjustment, when compared with those occurred before the crisis, have been especially costly for the economy.
Handle: RePEc:nbr:nberwo:20827
Template-Type: ReDIF-Paper 1.0
Title: The Fluidity of Race: “Passing” in the United States, 1880-1940
Classification-JEL: B4; J15; N3; N31; N32; P16
Author-Name: Emily Nix
Author-Name: Nancy Qian
Author-Person: pqi25
Note: DAE POL
Number: 20828
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20828
File-URL: http://www.nber.org/papers/w20828.pdf
File-Format: application/pdf
Abstract: This paper quantifies the extent to which individuals experience changes in reported racial identity in the historical U.S. context. Using the full population of historical Censuses for 1880-1940, we document that over 19% of black males “passed” for white at some point during their lifetime, around 10% of whom later “reverse-passed” to being black; passing was accompanied by geographic relocation to communities with a higher percentage of whites and occurred the most in Northern states. The evidence suggests that passing was positively associated with better political-economic and social opportunities for whites relative to blacks. As such, endogenous race is likely to be a quantitatively important phenomenon.
Handle: RePEc:nbr:nberwo:20828
Template-Type: ReDIF-Paper 1.0
Title: Patronage Politics and the Development of the Welfare State: Confederate Pensions in the American South
Classification-JEL: H0; I38; N0; N41; N42
Author-Name: Shari Eli
Author-Person: pel149
Author-Name: Laura Salisbury
Author-Person: psa1252
Note: DAE
Number: 20829
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20829
File-URL: http://www.nber.org/papers/w20829.pdf
File-Format: application/pdf
Publication-Status: published as Eli, Shari & Salisbury, Laura, 2016. "Patronage Politics and the Development of the Welfare State: Confederate Pensions in the American South," The Journal of Economic History, Cambridge University Press, vol. 76(04), pages 1078-1112, December.
Abstract: Beginning in the 1880s, southern states introduced pensions for Confederate veterans and widows. They continued to expand these programs through the 1920s, while states outside the region were introducing cash transfer programs for workers, poor mothers, and the elderly. Using legislative documents, application records for Confederate pensions, and county-level census and electoral data, we argue that political considerations guided the enactment and distribution of these pensions. We show that Confederate pensions programs were introduced and funded during years in which Democratic gubernatorial candidates were threatened at the ballot box. Moreover, we offer evidence that pensions were disbursed to counties in which these candidates had lost ground to candidates from alternative parties.
Handle: RePEc:nbr:nberwo:20829
Template-Type: ReDIF-Paper 1.0
Title: The Limits of Reputation in Platform Markets: An Empirical Analysis and Field Experiment
Classification-JEL: D47; D82; L15; L21; L86
Author-Name: Chris Nosko
Author-Name: Steven Tadelis
Author-Person: pta314
Note: IO PR
Number: 20830
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20830
File-URL: http://www.nber.org/papers/w20830.pdf
File-Format: application/pdf
Abstract: We argue that reputation mechanisms used by platform markets suffer from two problems. First, buyers may draw conclusions about the quality of the platform from single transactions, causing a reputational externality across sellers. Second, for a variety of reasons we discuss, reputations will be biased. We document these problems using eBay data and claim that platforms can benefit from identifying and promoting higher quality sellers. We create an unobservable measure of seller quality and demonstrate the benefits of our approach through a controlled experiment that prioritizes better quality sellers. We highlight the importance of reputational externalities and chart an agenda that aims to create more realistic models of platform markets.
Handle: RePEc:nbr:nberwo:20830
Template-Type: ReDIF-Paper 1.0
Title: Global Sunspots and Asset Prices in a Monetary Economy
Classification-JEL: E3; E43; G12
Author-Name: Roger E.A. Farmer
Author-Person: pfa3
Note: AP EFG
Number: 20831
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20831
File-URL: http://www.nber.org/papers/w20831.pdf
File-Format: application/pdf
Abstract: This paper constructs a simple model in which asset price fluctuations are caused by sunspots. Most existing sunspot models use local linear approximations: instead, I construct global sunspot equilibria. My agents are expected utility maximizers with logarithmic utility functions, there are no fundamental shocks and markets are sequentially complete. Despite the simplicity of these assumptions, I am able to go a considerable way towards explaining features of asset pricing data that have presented an obstacle to previous models that adopted similar assumptions. My model generates volatile persistent swings in asset prices, a substantial term premium for long bonds and bursts of conditional volatility in rates of return.
Handle: RePEc:nbr:nberwo:20831
Template-Type: ReDIF-Paper 1.0
Title: Fighting the Last War: Economists on the Lender of Last Resort
Classification-JEL: B0; N2
Author-Name: Richard S. Grossman
Author-Person: pgr394
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE ME
Number: 20832
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20832
File-URL: http://www.nber.org/papers/w20832.pdf
File-Format: application/pdf
Abstract: In this paper we trace the evolution of the lender of last resort doctrine—and its implementation—from the nineteenth century through the panic of 2008. We find that typically the most influential economists “fight the last war”: formulating policy guidelines that would have dealt effectively with the last crisis or in some cases the last two or three. This applies even to the still supreme voice among lender-of-last-resort theorists, Walter Bagehot, who wrestled with the how to deal with the financial crises that hit Britain between the end of the Napoleonic Wars and the panic of 1866. Fighting the last war may leave economists unprepared for meeting effectively the challenge of the next war.
Handle: RePEc:nbr:nberwo:20832
Template-Type: ReDIF-Paper 1.0
Title: The Returns to the Federal Tax Credits for Higher Education
Classification-JEL: H2; H24; I22; I23; I26; I28
Author-Name: George B. Bulman
Author-Person: pbu422
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Note: ED LS PE
Number: 20833
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20833
File-URL: http://www.nber.org/papers/w20833.pdf
File-Format: application/pdf
Publication-Status: published as The Returns to the Federal Tax Credits for Higher Education, George B. Bulman, Caroline M. Hoxby. in Tax Policy and the Economy, Volume 29, Brown. 2015
Abstract: Three tax credits benefit households who pay tuition and fees for higher education. The credits have been justified as an investment: generating more educated people and thus more earnings and externalities associated with education. The credits have also been justified purely as tax cuts to benefit the middle class. In 2009, the generosity of and eligibility for the tax credits expanded enormously so that their 2011 cost was $25 billion. Using selected, de-identified data from the population of potential filers, we show how the credits are distributed across households with different incomes. We estimate the causal effects of the federal tax credits using two empirical strategies (regression kink and simulated instruments) which we show to be strong and very credibly valid for this application. The latter strategy exploits the massive expansion of the credits in 2009. We present causal estimates of the credits' effects on postsecondary attendance, the type of college attended, the resources experienced in college, tuition paid, and financial aid received. We discuss the implications of our findings for society's return on investment and for the tax credits' budget neutrality over the long term (whether higher lifetime earnings generate sufficient taxes to recoup the tax expenditures). We assess several explanations why the credits appear to have negligible causal effects.
Handle: RePEc:nbr:nberwo:20833
Template-Type: ReDIF-Paper 1.0
Title: Cognitive Economics
Classification-JEL: B4; D03; D6; G02; J24
Author-Name: Miles S. Kimball
Author-Person: pki97
Note: AP
Number: 20834
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20834
File-URL: http://www.nber.org/papers/w20834.pdf
File-Format: application/pdf
Publication-Status: published as Miles Kimball, 2015. "Cognitive Economics," The Japanese Economic Review, Japanese Economic Association, vol. 66(2), pages 167-181, 06.
Abstract: Cognitive Economics is the economics of what is in people’s minds. It is a vibrant area of research (much of it within Behavioral Economics, Labor Economics and the Economics of Education) that brings into play novel types of data—especially novel types of survey data. Such data highlight the importance of heterogeneity across individuals and highlight thorny issues for Welfare Economics. A key theme of Cognitive Economics is finite cognition (often misleadingly called “bounded rationality”), which poses theoretical challenges that call for versatile approaches. Cognitive Economics brings a rich toolbox to the task of understanding a complex world.
Handle: RePEc:nbr:nberwo:20834
Template-Type: ReDIF-Paper 1.0
Title: Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?
Classification-JEL: H2; I1; I38
Author-Name: David W. Brown
Author-Name: Amanda E. Kowalski
Author-Name: Ithai Z. Lurie
Note: AG CH EH PE
Number: 20835
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20835
File-URL: http://www.nber.org/papers/w20835.pdf
File-Format: application/pdf
Publication-Status: published as The Review of Economic Studies, Volume 87, Issue 2, March 2020, Pages 792–821
Abstract: We examine the long-term impact of expansions to Medicaid and the State Children's Health Insurance Program that occurred in the 1980's and 1990's. With administrative data from the IRS, we calculate longitudinal health insurance eligibility from birth to age 18 for children in cohorts affected by these expansions, and we observe their longitudinal outcomes as adults. Using a simulated instrument that relies on variation in eligibility by cohort and state, we find that children whose eligibility increased paid more in cumulative taxes by age 28. These children collected less in EITC payments, and the women had higher cumulative wages by age 28. Incorporating additional data from the Medicaid Statistical Information System (MSIS), we find that the government spent $872 in 2011 dollars for each additional year of Medicaid eligibility induced by the expansions. Putting this together with the estimated increase in tax payments discounted at a 3% rate, assuming that tax impacts are persistent in percentage terms, the government will recoup 56 cents of each dollar spent on childhood Medicaid by the time these children reach age 60. This return on investment does not take into account other benefits that accrue directly to the children, including estimated decreases in mortality and increases in college attendance. Moreover, using the MSIS data, we find that each additional year of Medicaid eligibility from birth to age 18 results in approximately 0.58 additional years of Medicaid receipt. Therefore, if we scale our results by the ratio of beneficiaries to eligibles, then all of our results are almost twice as large.
Handle: RePEc:nbr:nberwo:20835
Template-Type: ReDIF-Paper 1.0
Title: Secular Stagnation: The Long View
Classification-JEL: E00; N1
Author-Name: Barry Eichengreen
Author-Person: pei2
Note: DAE
Number: 20836
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20836
File-URL: http://www.nber.org/papers/w20836.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen, 2015. "Secular Stagnation: The Long View," American Economic Review, American Economic Association, vol. 105(5), pages 66-70, May.
Abstract: Four explanations for secular stagnation are distinguished: a rise in global saving, slow population growth that makes investment less attractive, averse trends in technology and productivity growth, and a decline in the relative price of investment goods. A long view from economic history is most supportive of the last of these four views.
Handle: RePEc:nbr:nberwo:20836
Template-Type: ReDIF-Paper 1.0
Title: Prison Crowding, Recidivism, and Early Release in Early Rhode Island
Classification-JEL: K14; N00
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: DAE
Number: 20837
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20837
File-URL: http://www.nber.org/papers/w20837.pdf
File-Format: application/pdf
Publication-Status: published as Bodenhorn, Howard, 2016. "Prison crowding, recidivism, and early release in early Rhode Island," Explorations in Economic History, Elsevier, vol. 59(C), pages 55-74.
Abstract: Prison overcrowding is a perennial problem and several states are under court order to reduce crowding. The long-term solution to crowding has been more prisons. The short-term solution is early release. Early release programs can be effective when they balance the savings of reduced prison costs against the costs of recidivism by released convicts. This paper uses historical data to investigate how prison officials altered their early release policies in the face of prison crowding and rising real per prisoner detention costs. The empirical evidence is consistent with the hypothesis that prison officials make use of information about the risks of recidivism revealed at trial and during incarceration to make informed decisions about whom to release and when.
Handle: RePEc:nbr:nberwo:20837
Template-Type: ReDIF-Paper 1.0
Title: Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach
Classification-JEL: C14; H20; J22
Author-Name: Patrick Kline
Author-Name: Melissa Tartari
Note: EFG LS PE TWP
Number: 20838
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20838
File-URL: http://www.nber.org/papers/w20838.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Kline & Melissa Tartari, 2016. "Bounding the Labor Supply Responses to a Randomized Welfare Experiment: A Revealed Preference Approach," American Economic Review, American Economic Association, vol. 106(4), pages 972-1014, April.
Abstract: We study the short-term impact of Connecticut's Jobs First welfare reform experiment on women's labor supply and welfare participation decisions. A non-parametric optimizing model is shown to restrict the set of counterfactual choices compatible with each woman's actual choice. These revealed preference restrictions yield informative bounds on the frequency of several intensive and extensive margin responses to the experiment. We find that welfare reform induced many women to work but led some others to reduce their earnings in order to receive assistance. The bounds on this latter "opt-in" effect imply that intensive margin labor supply responses are non-trivial.
Handle: RePEc:nbr:nberwo:20838
Template-Type: ReDIF-Paper 1.0
Title: Directing Remittances to Education with Soft and Hard Commitments: Evidence from a Lab-in-the-field Experiment and New Product Take-up Among Filipino Migrants in Rome
Classification-JEL: C9; D19; F24; O15
Author-Name: Giuseppe De Arcangelis
Author-Person: pde217
Author-Name: Majlinda Joxhe
Author-Name: David McKenzie
Author-Person: pmc29
Author-Name: Erwin Tiongson
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV ED
Number: 20839
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20839
File-URL: http://www.nber.org/papers/w20839.pdf
File-Format: application/pdf
Publication-Status: published as De Arcangelis, Giuseppe & Joxhe, Majlinda & McKenzie, David & Tiongson, Erwin & Yang, Dean, 2015. "Directing remittances to education with soft and hard commitments: Evidence from a lab-in-the-field experiment and new product take-up among Filipino migrants in Rome," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 197-208.
Abstract: This paper tests how migrants’ willingness to remit changes when given the ability to direct remittances to educational purposes using different forms of commitment. Variants of a dictator game in a lab-in-the-field experiment with Filipino migrants in Rome are used to examine remitting behavior under varying degrees of commitment. These range from the soft commitment of simply labeling remittances as being for education, to the hard commitment of having funds directly paid to a school and the student’s educational performance monitored. We find that the introduction of simple labeling for education raises remittances by more than 15 percent. Adding the ability to directly send this funding to the school adds only a further 2.2 percent. We randomly vary the information asymmetry between migrants and their most closely connected household, but find no significant change in the remittance response to these forms of commitment as information varies. Behavior in these games is then shown to be predictive of take-up of a new financial product called EduPay, designed to allow migrants to directly pay remittances to schools in the Philippines. We find this take-up is largely driven by a response to the ability to label remittances for education, rather than to the hard commitment feature of directly paying schools.
Handle: RePEc:nbr:nberwo:20839
Template-Type: ReDIF-Paper 1.0
Title: Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants
Classification-JEL: H53; I13; J22; J38
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: Nicole Maestas
Author-Name: Kathleen J. Mullen
Author-Person: pmu207
Author-Name: Alexander Strand
Note: LS PE
Number: 20840
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20840
File-URL: http://www.nber.org/papers/w20840.pdf
File-Format: application/pdf
Abstract: This paper measures the causal effect of time out of the labor force on subsequent employment of Social Security Disability Insurance (SSDI) applicants and distinguishes it from the discouragement effect of receiving disability benefits. Using a unique Social Security Administration workload database to identify exogenous variation in decision times induced by differences in processing speed among disability examiners to whom applicants are randomly assigned, we find that longer processing times reduce the employment and earnings of SSDI applicants for multiple years following application, with the effects concentrated among applicants awarded benefits during their initial application. A one standard deviation (2.1 month) increase in initial processing time reduces long-run “substantial gainful activity” rates by 0.36 percentage points (3.5%) and long-run annual earnings by $178 (5.1%). Because applicants initially denied benefits spend on average more than 15 additional months appealing their denials, previous estimates of the benefit receipt effect are confounded with the effect of delays on subsequent employment. Accounting separately for these channels, we find that the receipt effect is at least 50% larger than previously estimated. Combining the delay and benefits receipt channels reveals that the SSDI application process reduces subsequent employment of applicants on the margin of award by twice as much as prior literature suggests.
Handle: RePEc:nbr:nberwo:20840
Template-Type: ReDIF-Paper 1.0
Title: Technology and Labor Regulations: Theory and Evidence
Classification-JEL: J31; J50; O33
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Michele Battisti
Author-Name: Joseph Zeira
Author-Person: pze3
Note: DEV
Number: 20841
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20841
File-URL: http://www.nber.org/papers/w20841.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Michele Battisti & Joseph Zeira, 2018. "Technology and labor regulations: theory and evidence," Journal of Economic Growth, vol 23(1), pages 41-78.
Abstract: This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which are binding for low skilled workers, become less technologically advanced in their high-skilled sectors, and more technologically advanced in their low-skilled sectors. We then present data on capital output ratios, on estimated productivity levels and on patent creation, which support the predictions of our model.
Handle: RePEc:nbr:nberwo:20841
Template-Type: ReDIF-Paper 1.0
Title: Migration, Congestion Externalities, and the Evaluation of Spatial Investments
Classification-JEL: H23; H43; H54; O15; O18; R13
Author-Name: Taryn Dinkelman
Author-Person: pdi279
Author-Name: Sam Schulhofer-Wohl
Note: DEV PE
Number: 20842
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20842
File-URL: http://www.nber.org/papers/w20842.pdf
File-Format: application/pdf
Publication-Status: published as Dinkelman, Taryn & Schulhofer-Wohl, Sam, 2015. "Migration, congestion externalities, and the evaluation of spatial investments," Journal of Development Economics, Elsevier, vol. 114(C), pages 189-202.
Abstract: The direct benefits of infrastructure in developing countries can be large, but if new infrastructure induces in-migration, congestion of other local publicly provided goods may offset the direct benefits. Using the example of rural household electrification in South Africa, we demonstrate the importance of accounting for migration when evaluating welfare gains of spatial programs. We also provide a practical approach to computing welfare gains that does not rely on land prices. We develop a location choice model that incorporates missing land markets and allows for congestion in local land. Using this model, we construct welfare bounds as a function of the income and population effects of the new electricity infrastructure. A novel prediction from the model is that migration elasticities and congestion effects are especially large when land markets are missing. We empirically estimate these welfare bounds for rural electrification in South Africa, and show that congestion externalities from program-induced migration reduced local welfare gains by about 40%.
Handle: RePEc:nbr:nberwo:20842
Template-Type: ReDIF-Paper 1.0
Title: The Long-Term Consequences of Free School Choice
Classification-JEL: J24
Author-Name: Victor Lavy
Author-Person: pla111
Note: CH ED LS
Number: 20843
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20843
File-URL: http://www.nber.org/papers/w20843.pdf
File-Format: application/pdf
Publication-Status: published as Victor Lavy, 2021. "The Long-Term Consequences of Free School Choice," Journal of the European Economic Association, European Economic Association, vol. 19(3), pages 1734-1781.
Abstract: I study the long-term consequences of what amounted to an effective free school choice program which two decades ago targeted disadvantaged students in Israel. I show that the program led to significant gains in post-secondary education, through increased enrollment in academic and teachers' colleges but without any increase in enrollment in research universities. Free school choice increased also earnings at adulthood of treated students. Male students had much larger improvements in college schooling and labor market outcomes. Female students, however, experienced higher increases in marriage and fertility rates, which most likely interfered with their schooling and labor market outcomes.
Handle: RePEc:nbr:nberwo:20843
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of the Financial Stability Mandate: From Its Origins to the Present Day
Classification-JEL: E58; G21; N1; N2
Author-Name: Gianni Toniolo
Author-Person: pto95
Author-Name: Eugene N. White
Author-Person: pwh5
Note: DAE
Number: 20844
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20844
File-URL: http://www.nber.org/papers/w20844.pdf
File-Format: application/pdf
Abstract: We investigate the origins and growth of the Financial Stability Mandate (FSM) to examine why bank supervisors, inside and outside of central banks succeeded or failed to meet their FSM. Three issues inform this study: (1) what drives changes in the FSM, (2) whether supervision should be conducted within the central bank or in independent agencies and (3) whether supervision should be rules- or discretion/principles-based. As histories of bank supervision are few, we focus on the history of six countries where there is sufficient information, three in Europe (England, France, and Italy) and three in the New World (U.S., Canada, and Colombia) to highlight the essential developments in the FSM. While there was a common evolutionary path, the development of FSM in each individual country was determined by how quickly each adapted to changes in the technology of the means of payment and their political economy, including their disposition towards competitive markets and openness to the world economy.
Handle: RePEc:nbr:nberwo:20844
Template-Type: ReDIF-Paper 1.0
Title: Estimating Management Practice Complementarity between Decentralization and Performance Pay
Classification-JEL: D2; H32; J33; L2; M1; M5
Author-Name: Bryan Hong
Author-Name: Lorenz Kueng
Author-Person: pku506
Author-Name: Mu-Jeung Yang
Note: EFG LS PE PR
Number: 20845
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20845
File-URL: http://www.nber.org/papers/w20845.pdf
File-Format: application/pdf
Abstract: The existence of complementarity across management practices has been proposed as one potential explanation for the persistence of firm-level productivity differences. However, thus far no conclusive population-level tests of the complementary joint adoption of management practices have been conducted. Using unique detailed data on internal organization, occupational composition, and firm performance for a nationally representative sample of firms in the Canadian economy, we exploit regional variation in income tax progression as an instrument for the adoption of performance pay. We find systematic evidence for the complementarity of performance pay and decentralization of decision-making from principals to employees. Furthermore, in response to the adoption of performance pay, we find a concentration of decision-making at the level of managerial employees, as opposed to a general movement towards more decentralization throughout the organization. Finally, we find that adoption of performance pay is related to other types of organizational restructuring, such as greater use of outsourcing, Total Quality Management, re-engineering, and a reduction in the number of layers in the hierarchy.
Handle: RePEc:nbr:nberwo:20845
Template-Type: ReDIF-Paper 1.0
Title: Business Strategy and the Management of Firms
Classification-JEL: D22; D23; D24; D92; M21
Author-Name: Mu-Jeung Yang
Author-Name: Lorenz Kueng
Author-Person: pku506
Author-Name: Bryan Hong
Note: IO PR
Number: 20846
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20846
File-URL: http://www.nber.org/papers/w20846.pdf
File-Format: application/pdf
Abstract: Business strategy can be defined as a firm's plan to generate economic profits based on lower cost, better quality, or new products. The analysis of business strategy is thus at the intersection of market competition and a firm's efforts to secure persistently superior performance via investments in better management and organization. We empirically analyze the interaction of firms' business strategies and their managerial practices using a unique, detailed dataset on business strategy, internal firm organization, performance and innovation, which is representative of the entire Canadian economy. Our empirical results show that measures of business strategy are strongly correlated with firm performance, both in the cross-section and over time, and even after controlling for unobserved profit shocks exploiting intermediates utilization. Results are particularly striking for innovation, as firms with some priority in business strategies are significantly more likely to innovate than firms without any strategic priority. Furthermore, our analysis highlights that the relationship between strategy and management is driven by two key organizational trade-offs: employee initiative vs. coordination as well as exploration of novel business opportunities vs. exploitation of existing profit sources.
Handle: RePEc:nbr:nberwo:20846
Template-Type: ReDIF-Paper 1.0
Title: The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms
Classification-JEL: H0; I20; I24; J00; J1
Author-Name: C. Kirabo Jackson
Author-Person: pja222
Author-Name: Rucker C. Johnson
Author-Name: Claudia Persico
Author-Person: ppe920
Note: CH ED LS PE
Number: 20847
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20847
File-URL: http://www.nber.org/papers/w20847.pdf
File-Format: application/pdf
Publication-Status: published as C. Kirabo Jackson & Rucker C. Johnson & Claudia Persico, 2016. "The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms," The Quarterly Journal of Economics, vol 131(1), pages 157-218.
Abstract: Since Coleman (1966), many have questioned whether school spending affects student outcomes. The school finance reforms that began in the early 1970s and accelerated in the 1980s caused some of the most dramatic changes in the structure of K–12 education spending in US history. To study the effect of these school-finance-reform-induced changes in school spending on long-run adult outcomes, we link school spending and school finance reform data to detailed, nationally-representative data on children born between 1955 and 1985 and followed through 2011. We use the timing of the passage of court-mandated reforms, and their associated type of funding formula change, as an exogenous shifter of school spending and we compare the adult outcomes of cohorts that were differentially exposed to school finance reforms, depending on place and year of birth. Event-study and instrumental variable models reveal that a 10 percent increase in per-pupil spending each year for all twelve years of public school leads to 0.27 more completed years of education, 7.25 percent higher wages, and a 3.67 percentage-point reduction in the annual incidence of adult poverty; effects are much more pronounced for children from low-income families. Exogenous spending increases were associated with sizable improvements in measured school quality, including reductions in student-to-teacher ratios, increases in teacher salaries, and longer school years.
Handle: RePEc:nbr:nberwo:20847
Template-Type: ReDIF-Paper 1.0
Title: Loan Originations and Defaults in the Mortgage Crisis: The Role of the Middle Class
Classification-JEL: G0; G01; G2; R2
Author-Name: Manuel Adelino
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Felipe Severino
Author-Person: pse646
Note: CF EFG ME POL PE AP
Number: 20848
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20848
File-URL: http://www.nber.org/papers/w20848.pdf
File-Format: application/pdf
Publication-Status: published as Manuel Adelino & Antoinette Schoar & Felipe Severino, 2016. "Loan Originations and Defaults in the Mortgage Crisis: The Role of the Middle Class," Review of Financial Studies, vol 29(7), pages 1635-1670.
Abstract: We provide new facts on the debt dynamics leading up to the financial crisis of 2007. Earlier research suggests that distortions in the supply of mortgage credit, evidenced by a decoupling of credit flow from income growth, may have caused the rise in house prices and the subsequent housing market collapse. This paper shows that the increase in mortgage originations was shared across the whole distribution of borrowers, and that middle- and high-income borrowers made up the majority of originations even at the peak of the boom. Compared to prior years, middle- and high-income borrowers (not the poor), as well as those with medium and high credit scores, made up a much larger share of delinquencies in the crisis relative to earlier years. We show that the relation between individual mortgage size and income growth during the housing boom was always strongly positive, also in line with previous periods (and independent of how income is measured). These results are most consistent with an expectations based view of the financial crisis in which both homebuyers and lenders were buying into increasing housing values and defaulted once prices dropped.
Handle: RePEc:nbr:nberwo:20848
Template-Type: ReDIF-Paper 1.0
Title: Student Loans and Repayment: Theory, Evidence and Policy
Classification-JEL: D14; D82; H21; H52; I22; I24; J24
Author-Name: Lance Lochner
Author-Person: plo31
Author-Name: Alexander Monge-Naranjo
Author-Person: pmo730
Note: ED LS PE
Number: 20849
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20849
File-URL: http://www.nber.org/papers/w20849.pdf
File-Format: application/pdf
Abstract: Rising costs of and returns to college have led to sizeable increases in the demand for student loans in many countries. In the U.S., student loan default rates have also risen for recent cohorts as labor market uncertainty and debt levels have increased. We discuss these trends as well as recent evidence on the extent to which students are able to obtain enough credit for college and the extent to which they are able to repay their student debts after. We then discuss optimal student credit arrangements that balance three important objectives: (i) providing credit for students to access college and finance consumption while in school, (ii) providing insurance against uncertain adverse schooling or post-school labor market outcomes in the form of income-contingent repayments, and (iii) providing incentives for student borrowers to honor their loan obligations (in expectation) when information and commitment frictions are present. Specifically, we develop a two-period educational investment model with uncertainty and show how student loan contracts can be designed to optimally address incentive problems related to moral hazard, costly income verification, and limited commitment by the borrower. We also survey other research related to the optimal design of student loan contracts in imperfect markets. Finally, we characterize key features of efficient student loan programs that provide insurance while addressing information and commitment frictions in the market.
Handle: RePEc:nbr:nberwo:20849
Template-Type: ReDIF-Paper 1.0
Title: Borrowing Trouble? Student Loans, the Cost of Borrowing, and Implications for the Effectiveness of Need-Based Grant Aid
Classification-JEL: D14; H52; I22
Author-Name: Benjamin M. Marx
Author-Name: Lesley J. Turner
Author-Person: ptu137
Note: ED LS PE
Number: 20850
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20850
File-URL: http://www.nber.org/papers/w20850.pdf
File-Format: application/pdf
Abstract: We use regression discontinuity and regression kink designs to estimate the impact of need-based grant aid on the borrowing and educational attainment of students enrolled in a large public university system. Pell Grant aid substantially reduces borrowing: among students who would borrow in the absence of a Pell Grant, every dollar of Pell Grant aid crowds-out over $1.80 of loans. A simple model illustrates that our findings are consistent with students facing a fixed cost of incurring debt. The presence of such a fixed cost may lead to the unintended consequence of additional grant aid decreasing some students' attainment. Empirically, we rule out all but modest average impacts of Pell Grant aid on attainment, and we provide suggestive evidence of heterogeneous effects consistent with our fixed-borrowing-cost model. We estimate an augmented Tobit model with random censoring thresholds to allow for heterogeneous fixed borrowing costs, and find that eliminating the fixed cost would increase borrowing by over 250 percent.
Handle: RePEc:nbr:nberwo:20850
Template-Type: ReDIF-Paper 1.0
Title: Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade
Classification-JEL: F14; F15; N73
Author-Name: Michael Huberman
Author-Person: phu57
Author-Name: Christopher M. Meissner
Author-Person: pme45
Author-Name: Kim Oosterlinck
Author-Person: poo7
Note: DAE
Number: 20851
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20851
File-URL: http://www.nber.org/papers/w20851.pdf
File-Format: application/pdf
Publication-Status: published as Huberman, Michael & Meissner, Christopher M. & Oosterlinck, Kim, 2017. "Technology and Geography in the Second Industrial Revolution: New Evidence from the Margins of Trade," The Journal of Economic History, Cambridge University Press, vol. 77(01), pages 39-89, March.
Abstract: In the Belle Époque, Belgium recorded an unprecedented trade boom, but growth in output per capita was lackluster. We seek to reconcile this ostensible paradox. Because of the sharp decline in both fixed and variable trade costs, the trade boom was as much about the expansion in the number of products delivered and markets served as it was about shipping more of the same old products. We use a new highly disaggregated data set on bilateral exports at the product level to illustrate these claims. In line with new trade theory, the effect of trade on productivity was mediated by sector-level firm heterogeneity and product differentiation. In new technology sectors, like tramways, the high degree of firm heterogeneity amplified the effect of trade on productivity. But in other sectors, mainly old staple industries like cotton textiles, a high level of firm uniformity muted the effect of trade. Into the twentieth century, old staples trumped new technology sectors, per capita income growing modestly as a result.
Handle: RePEc:nbr:nberwo:20851
Template-Type: ReDIF-Paper 1.0
Title: The Limits of Bimetallism
Classification-JEL: E42; N10; N40
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE
Number: 20852
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20852
File-URL: http://www.nber.org/papers/w20852.pdf
File-Format: application/pdf
Abstract: Bimetallism disappeared as a monetary regime in the 1870s. Flandreau (1996) clearly demonstrates that French bimetallism would have been able to withstand the German de-monetization of silver. Could it have withstood if many other countries in the world moved to the gold standard following in the footsteps of Bismarck? The answer is no. By 1875 bimetallism would have been unviable, and the US return to convertibility in 1879 would have made it impossible to sustain true bimetallism. It is difficult to understand the end of the bimetallic strategy as the outcome of a repeated game between rational actors. Rather, it would appear that very few actors had a good model of how the international monetary system worked in practice as of 1873. An attempt to resuscitate bimetallism, with France and the US both bimetallic at the mint ratio of 15.5 to one, would have been tenuous. No wonder then that there were few countries enthusiastic about reviving bimetallism at the International Monetary Conference of 1878. A similar lack of cooperation risks sending the European Monetary Union-as currently constituted-the way of bimetallism.
Handle: RePEc:nbr:nberwo:20852
Template-Type: ReDIF-Paper 1.0
Title: Knowledge, Human Capital and Economic Development: Evidence from the British Industrial Revolution, 1750-1930
Classification-JEL: J24; N13; O14; O3; O31; O34
Author-Name: B. Zorina Khan
Note: DAE DEV PR
Number: 20853
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20853
File-URL: http://www.nber.org/papers/w20853.pdf
File-Format: application/pdf
Publication-Status: published as Khan, B.Z. Cliometrica (2017). https://doi.org/10.1007/s11698-017-0163-z
Abstract: Endogenous growth models raise fundamental questions about the nature of human creativity, and the sorts of resources, skills, and knowledge inputs that shift the frontier of technology and production possibilities. Many argue that the nature of early British industrialization supports the thesis that economic advances depend on specialized scientific training or the acquisition of costly human capital. This paper examines the contributions of different types of knowledge to British industrialization, by assessing the backgrounds, education and inventive activity of the major contributors to technological advances in Britain during the crucial period between 1750 and 1930. The results indicate that scientists, engineers or technicians were not well-represented among the British great inventors until very late in the nineteenth century. Instead, important discoveries and British industrial advances were achieved by individuals who exercised commonplace skills and entrepreneurial abilities to resolve perceived industrial problems. For developing countries today, the implications are that costly investments in specialized human capital resources might be less important than incentives for creativity, flexibility, and the ability to make incremental adjustments that can transform existing technologies into inventions that are appropriate for prevailing domestic conditions.
Handle: RePEc:nbr:nberwo:20853
Template-Type: ReDIF-Paper 1.0
Title: Invisible Women: Entrepreneurship, Innovation and Family Firms in France during Early Industrialization
Classification-JEL: L2; L26; N13; N8; O14; O3
Author-Name: B. Zorina Khan
Note: DAE DEV PR
Number: 20854
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20854
File-URL: http://www.nber.org/papers/w20854.pdf
File-Format: application/pdf
Abstract: Family firms are typically associated with negative characteristics, including lower tendencies towards innovation, a higher risk of failure, and inefficiencies deriving from nepotism among family members, criticisms which are even greater when the company is handed over to a female relative. Women in business have generally been presented as petty traders and passive investors, whose entrepreneurial activities were scarce because of such restrictions as limited human capital, culture, market imperfections, and institutional biases. The French economy has similarly been faulted for the prevalence of family firms during the nineteenth century, and for disincentives for the integration of women in the business sector. These issues are explored using an extensive sample of women who obtained patents and prizes at industrial exhibitions during early industrialization. The empirical evidence indicates that middle-class women in France were extensively engaged in entrepreneurship and innovation, and that their commercial efforts were enhanced by association with family firms. Their formerly invisible achievements suggest a more productive role for family-based enterprises, as a means of incorporating relatively disadvantaged groups into the market economy as managers and entrepreneurs.
Handle: RePEc:nbr:nberwo:20854
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Changes in Between-Group Inequality
Classification-JEL: E24; F16; J2
Author-Name: Ariel Burstein
Author-Name: Eduardo Morales
Author-Name: Jonathan Vogel
Author-Person: pvo58
Note: EFG ITI LS
Number: 20855
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20855
File-URL: http://www.nber.org/papers/w20855.pdf
File-Format: application/pdf
Abstract: We perform a quantitative analysis of observed changes in U.S. between-group inequality between 1984 and 2003. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are caused by changes in workforce composition, occupation demand, computerization, and labor productivity. We parameterize our model using direct measures of computer usage within labor group-occupation pairs and quantify the impact of each shock for various measures of between-group inequality. We find, for instance, that the combination of computerization and shifts in occupation demand account for roughly 80% of the rise in the skill premium, with computerization alone accounting for roughly 60%. We show theoretically how computerization and changes in occupation demand may be caused by international trade and quantify the impact of trade in computers on U.S. inequality.
Handle: RePEc:nbr:nberwo:20855
Template-Type: ReDIF-Paper 1.0
Title: Why Doesn't Technology Flow from Rich to Poor Countries?
Classification-JEL: D92; E13; G24; O11; O16
Author-Name: Harold L. Cole
Author-Person: pco70
Author-Name: Jeremy Greenwood
Author-Person: pgr12
Author-Name: Juan M. Sanchez
Author-Person: psa150
Note: EFG
Number: 20856
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20856
File-URL: http://www.nber.org/papers/w20856.pdf
File-Format: application/pdf
Publication-Status: published as Harold L. Cole & Jeremy Greenwood & Juan M. Sanchez, 2016. "Why Doesn't Technology Flow From Rich to Poor Countries?," Econometrica, Econometric Society, vol. 84, pages 1477-1521, 07.
Abstract: What determines the technology that a country adopts? While many factors affect technological adoption, the efficiency of the country's financial system may also play a significant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The ability of an intermediary to monitor and control the cash flows of a firm plays an important role in the technology adoption decision. Can such a theory help to explain the differences in total factor productivity and establishment-size distributions across India, Mexico, and the United States? A quantitative illustration suggests the answer is yes.
Handle: RePEc:nbr:nberwo:20856
Template-Type: ReDIF-Paper 1.0
Title: News Shocks in Open Economies: Evidence from Giant Oil Discoveries
Classification-JEL: E00; F32; F41
Author-Name: Rabah Arezki
Author-Person: par153
Author-Name: Valerie A. Ramey
Author-Person: pra154
Author-Name: Liugang Sheng
Author-Person: psh552
Note: EFG IFM
Number: 20857
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20857
File-URL: http://www.nber.org/papers/w20857.pdf
File-Format: application/pdf
Publication-Status: published as Rabah Arezki & Valerie Ramey & Liugang Sheng, 2015. "News Shocks in Open Economies: Evidence from Giant Oil Discoveries," IMF Working Papers, vol 15(209).
Publication-Status: published as Rabah Arezki & Valerie A. Ramey & Liugang Sheng, 2017. "News Shocks in Open Economies: Evidence from Giant Oil Discoveries," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 103-155.
Abstract: This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output–the delay between a discovery and production is on average 4 to 6 years. We first present a two-sector small open economy model in order to predict the responses of macroeconomic aggregates to news of an oil discovery. We then estimate the effects of giant oil discoveries on a large panel of countries. Our empirical estimates are consistent with the predictions of the model. After an oil discovery, the current account and saving rate decline for the first 5 years and then rise sharply during the ensuing years. Investment rises robustly soon after the news arrives, while GDP does not increase until after 5 years. Employment rates fall slightly for a sustained period of time.
Handle: RePEc:nbr:nberwo:20857
Template-Type: ReDIF-Paper 1.0
Title: Long-run Bulls and Bears
Classification-JEL: G12
Author-Name: Rui Albuquerque
Author-Person: pal94
Author-Name: Martin Eichenbaum
Author-Person: pei4
Author-Name: Dimitris Papanikolaou
Author-Person: ppa463
Author-Name: Sergio Rebelo
Note: AP EFG
Number: 20858
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20858
File-URL: http://www.nber.org/papers/w20858.pdf
File-Format: application/pdf
Publication-Status: published as Albuquerque, Rui & Eichenbaum, Martin & Papanikolaou, Dimitris & Rebelo, Sergio, 2015. "Long-run bulls and bears," Journal of Monetary Economics, Elsevier, vol. 76(S), pages S21-S36.
Abstract: A central challenge in asset pricing is the weak connection between stock returns and observable economic fundamentals. We provide evidence that this connection is stronger than previously thought. We use a modified version of the Bry-Boschan algorithm to identify long-run swings in the stock market. We call these swings long-run bull and bear episodes. We find that there is a high correlation between stock returns and fundamentals across bull and bear episodes. This correlation is much higher than the analogous time-series correlations. We show that several asset pricing models cannot simultaneously account for the low time-series and high episode correlations.
Handle: RePEc:nbr:nberwo:20858
Template-Type: ReDIF-Paper 1.0
Title: Property Rights, Regulatory Capture, and Exploitation of Natural Resources
Classification-JEL: H23; H41; L2; Q2; Q22
Author-Name: Christopher Costello
Author-Person: pco426
Author-Name: Corbett Grainger
Note: EEE PE POL
Number: 20859
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20859
File-URL: http://www.nber.org/papers/w20859.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Costello & Corbett A. Grainger, 2018. "Property Rights, Regulatory Capture, and Exploitation of Natural Resources," Journal of the Association of Environmental and Resource Economists, vol 5(2), pages 441-479.
Abstract: We study how the strength of property rights to individual extractive firms affects a regulator’s choice over exploitation rates for a natural resource. The regulator is modeled as an intermediary between current and future resource harvesters, rather than between producers and consumers, as in the traditional regulatory capture paradigm. When incumbent resource users have weak property rights, they have an incentive to pressure the regulator to allow resource extraction at an inefficiently rapid rate. In contrast, when property rights are strong, this incentive is minimized or eliminated. We build a theoretical model in which different property right institutions can be compared for their incentives to exert influence on the regulator. The main theoretical prediction - that stronger individual property rights will lead the regulator to choose more economically efficient extraction paths - is tested empirically with a novel panel data set from global fisheries. Exploiting the variation in timing of catch share implementation in our panel data, we find that regulators are significantly more conservative in managing resources for which strong individual property rights have been assigned to firms; this is especially pronounced for resources that have been overexploited historically.
Handle: RePEc:nbr:nberwo:20859
Template-Type: ReDIF-Paper 1.0
Title: Capital Flow Management Measures: What Are They Good For?
Classification-JEL: F3; F4; F5; G0; G1
Author-Name: Kristin Forbes
Author-Person: pfo1
Author-Name: Marcel Fratzscher
Author-Person: pfr34
Author-Name: Roland Straub
Note: IFM ME
Number: 20860
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20860
File-URL: http://www.nber.org/papers/w20860.pdf
File-Format: application/pdf
Publication-Status: published as Forbes, Kristin & Fratzscher, Marcel & Straub, Roland, 2015. "Capital-flow management measures: What are they good for?," Journal of International Economics, Elsevier, vol. 96(S1), pages S76-S97.
Abstract: Are capital controls and macroprudential measures related to international exposures successful in achieving their objectives? Assessing their effectiveness is complicated by selection bias; countries which change their capital-flow management measures (CFMs) often share specific characteristics and are responding to changes in variables that the CFMs are intended to influence. This paper addresses these challenges by using a propensity-score matching methodology. We also create a new database with detailed information on weekly changes in controls on capital inflows, capital outflows, and macroprudential measures related to international transactions from 2009 to 2011 for 60 countries. Results show that these macroprudential measures can significantly reduce some measures of financial fragility. Most CFMs do not significantly affect other key targets, however, such as exchange rates, capital flows, interest-rate differentials, inflation, equity indices, and different volatilities. One exception is that removing controls on capital outflows may reduce real exchange rate appreciation. Therefore, certain CFMs can be effective in accomplishing specific goals—but most popular measures are not “good for” accomplishing their stated aims
Handle: RePEc:nbr:nberwo:20860
Template-Type: ReDIF-Paper 1.0
Title: What High-Achieving Low-Income Students Know About College
Classification-JEL: I2; I21; I22; I23; I24; I26
Author-Name: Caroline Hoxby
Author-Person: pho46
Author-Name: Sarah Turner
Author-Person: ptu103
Note: ED LS PE
Number: 20861
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20861
File-URL: http://www.nber.org/papers/w20861.pdf
File-Format: application/pdf
Publication-Status: published as Caroline M. Hoxby & Sarah Turner, 2015. "What High-Achieving Low-Income Students Know about College," American Economic Review, American Economic Association, vol. 105(5), pages 514-17, May.
Abstract: Previous work (Hoxby and Avery 2014) shows that low-income higher achievers tend not to apply to selective colleges despite being extremely likely to be admitted with financial aid so generous that they would pay less than they do to attend the non-selective schools they usually attend. The Expanding College Opportunities project is a randomized controlled trial that provides such students with individualized information about the college application process and colleges' net prices. In other work (Hoxby and Turner 2013), we show that the informational intervention substantially raises students' probability of applying to, being admitted at, enrolling at, and progressing at selective colleges. In this study, we show that the intervention actually changes students' informedness on key topics such as the cost of college, the availability of the curricula and peers they seek, and the different types of colleges available to them. We highlight topics on which the control students, who experienced no intervention, are seriously misinformed.
Handle: RePEc:nbr:nberwo:20861
Template-Type: ReDIF-Paper 1.0
Title: Ending the Euro Crisis?
Classification-JEL: E5; E6; H2
Author-Name: Martin S. Feldstein
Author-Person: pfe112
Note: EFG ME PE
Number: 20862
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20862
File-URL: http://www.nber.org/papers/w20862.pdf
File-Format: application/pdf
Publication-Status: published as Martin Feldstein, 2015. "Ending the euro crisis," Journal of Policy Modeling, vol 37(3), pages 423-427.
Abstract: All of the attempts to end the euro crisis and to return the Eurozone countries to healthy growth rates of income and employment have failed. The options that are currently being discussed are not likely to be more successful. If there is a politically feasible way out of the crisis, it will be through revenue neutral fiscal incentives adopted by the individual Eurozone countries. I describe some of these fiscal options after reviewing the history of failed attempts and the options that are currently on the table.
Handle: RePEc:nbr:nberwo:20862
Template-Type: ReDIF-Paper 1.0
Title: Spare Tire? Stock Markets, Banking Crises, and Economic Recoveries
Classification-JEL: D22; E02; G21; G3; G38; K22
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Chen Lin
Author-Person: pli551
Author-Name: Wensi Xie
Note: CF EFG IFM
Number: 20863
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20863
File-URL: http://www.nber.org/papers/w20863.pdf
File-Format: application/pdf
Publication-Status: published as Levine, Ross & Lin, Chen & Xie, Wensi, 2016. "Spare tire? Stock markets, banking crises, and economic recoveries," Journal of Financial Economics, Elsevier, vol. 120(1), pages 81-101.
Abstract: Do stock markets act as a “spare tire” during banking crises, providing an alternative corporate financing channel and mitigating the economic severity of banking crises? Using firm-level data in 36 countries from 1990 through 2011, we find that the adverse consequences of banking crises on firm profitability, employment, equity issuances, and investment efficiency are smaller in countries with stronger shareholder protection laws. These findings are not explained by the development of stock markets or financial institutions prior to the crises, the severity of the crisis, or overall economic, legal, and institutional development. The evidence is consistent with the view that stronger shareholder protection laws provide the legal infrastructure for stock markets to act as alternative sources of finance when banking systems go flat, easing the impact of the crisis on the economy.
Handle: RePEc:nbr:nberwo:20863
Template-Type: ReDIF-Paper 1.0
Title: Municipal Housekeeping: The Impact of Women's Suffrage on Public Education
Classification-JEL: H75; I24; N32
Author-Name: Celeste K. Carruthers
Author-Person: pca1113
Author-Name: Marianne H. Wanamaker
Author-Person: pwa584
Note: DAE PE
Number: 20864
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20864
File-URL: http://www.nber.org/papers/w20864.pdf
File-Format: application/pdf
Publication-Status: published as C. K. Carruthers & M. H. Wanamaker, 2015. "Municipal Housekeeping: The Impact of Women's Suffrage on Public Education," Journal of Human Resources, vol 50(4), pages 837-872.
Abstract: Gains in 20th century real wages and reductions in the black-white wage gap have been linked to the mid-century ascent of school quality. With a new dataset uniquely appropriate to identifying the impact of female voter enfranchisement on education spending, we attribute up to one-third of the 1920-1940 rise in public school expenditures to the Nineteenth Amendment. Yet the continued disenfranchisement of black southerners meant white school gains far outpaced those for blacks. As a result, women’s suffrage exacerbated racial inequality in education expenditures and substantially delayed relative gains in black human capital observed later in the century.
Handle: RePEc:nbr:nberwo:20864
Template-Type: ReDIF-Paper 1.0
Title: Microeconomic Origins of Macroeconomic Tail Risks
Classification-JEL: C67; E32
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Asuman Ozdaglar
Author-Name: Alireza Tahbaz-Salehi
Author-Person: pta370
Note: EFG ME
Number: 20865
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20865
File-URL: http://www.nber.org/papers/w20865.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Asuman Ozdaglar & Alireza Tahbaz-Salehi, 2017. "Microeconomic Origins of Macroeconomic Tail Risks," American Economic Review, American Economic Association, vol. 107(1), pages 54-108, January.
Abstract: We document that even though the normal distribution provides a good approximation to GDP fluctuations, it severely underpredicts “macroeconomic tail risks,” that is, the frequency of large economic downturns. Using a multi-sector general equilibrium model, we show that the interplay of idiosyncratic microeconomic shocks and sectoral heterogeneity results in systematic departures in the likelihood of large economic downturns relative to what is implied by the normal distribution. Notably, we also show that such departures can happen while GDP is approximately normally distributed away from the tails, highlighting the qualitatively different behavior of large economic downturns from small or moderate fluctuations. We further demonstrate the special role that input-output linkages play in generating “tail comovements,” whereby large recessions involve not only significant GDP contractions, but also large simultaneous declines across a wide range of sectors.
Handle: RePEc:nbr:nberwo:20865
Template-Type: ReDIF-Paper 1.0
Title: Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs
Classification-JEL: D47; D60; H80; I19; K32; Z10; Z18
Author-Name: Julio J. Elias
Author-Person: pel101
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Mario Macis
Author-Person: pma869
Note: EH LE PE
Number: 20866
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20866
File-URL: http://www.nber.org/papers/w20866.pdf
File-Format: application/pdf
Publication-Status: published as Julio J. Elias & Nicola Lacetera & Mario Macis, 2015. "Sacred Values? The Effect of Information on Attitudes toward Payments for Human Organs," American Economic Review, American Economic Association, vol. 105(5), pages 361-65, May.
Abstract: Many economic transactions are prohibited—even in the absence of health or safety concerns or negative externalities—because of ethical concerns that cause these exchanges to be perceived as “repugnant” if conducted through a market. Establishing a system of payments for human organs is a particularly relevant example given its implications for public health; in almost all countries, these payments are prohibited because they are considered morally unacceptable—a prohibition that societies seem to accept despite the long waitlists and high death rates for people needing a transplant. We investigate how deeply rooted these attitudes are and, in particular, whether providing information on how a price mechanism can help alleviate the organ shortage changes people’s opinions about the legalization of these transactions. We conducted a survey experiment with 3,417 subjects in the U.S. and found that providing information significantly increased support for payments for organs from a baseline of 52% to 72%, and this increase applied to most of the relevant subgroups of the analyzed sample. Additional analyses on the support for other morally controversial activities show that attitude changes in response to information depend on the type of activity under consideration and interactions with other beliefs.
Handle: RePEc:nbr:nberwo:20866
Template-Type: ReDIF-Paper 1.0
Title: Pricing in the Market for Anticancer Drugs
Classification-JEL: I1
Author-Name: David H. Howard
Author-Name: Peter B. Bach
Author-Name: Ernst R. Berndt
Author-Name: Rena M. Conti
Note: EH
Number: 20867
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20867
File-URL: http://www.nber.org/papers/w20867.pdf
File-Format: application/pdf
Publication-Status: published as David H. Howard & Peter B. Bach & Ernst R. Berndt & Rena M. Conti, 2015. "Pricing in the Market for Anticancer Drugs," Journal of Economic Perspectives, vol 29(1), pages 139-162.
Abstract: Drugs like bevacizumab ($50,000 per treatment episode) and ipilimumab ($120,000 per episode) have fueled the perception that the launch prices of anticancer drugs are increasing over time. Using an original dataset of 58 anticancer drugs approved between 1995 and 2013, we find that launch prices, adjusted for inflation and drugs’ survival benefits, increased by 10%, or about $8,500, per year. Although physicians are not penalized for prescribing costly drugs, they may be reluctant to prescribe drugs with prices that exceed subjective standards of fairness. Manufacturers may set higher launch prices over time as standards evolve. Pricing trends may also reflect manufacturers’ response to expansions in the 340B Drug Pricing Program, which requires manufacturers to provide steep discounts to eligible providers.
Handle: RePEc:nbr:nberwo:20867
Template-Type: ReDIF-Paper 1.0
Title: Mark-up and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan
Classification-JEL: F1; L1; O25
Author-Name: David Atkin
Author-Name: Azam Chaudhry
Author-Person: pch1485
Author-Name: Shamyla Chaudry
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Author-Name: Eric Verhoogen
Author-Person: pve68
Note: DEV ITI PR
Number: 20868
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20868
File-URL: http://www.nber.org/papers/w20868.pdf
File-Format: application/pdf
Publication-Status: published as David Atkin & Azam Chaudhry & Shamyla Chaudhry & Amit K. Khandelwal & Eric Verhoogen, 2015. "Markup and Cost Dispersion across Firms: Direct Evidence from Producer Surveys in Pakistan," American Economic Review, American Economic Association, vol. 105(5), pages 537-44, May.
Abstract: Researchers typically invoke theoretical assumptions to estimate mark-ups. Instead, we directly obtain mark-ups by surveying Pakistani soccer-ball producers. We document six facts: (1) Mark-ups are more dispersed than costs; (2) Mark-ups and costs increase with firm size; (3) The mark-up elasticity with respect to size exceeds the cost elasticity; (4) Costs increase with size because larger firms use higher-quality inputs; (5) Larger firms charge higher mark-ups because they have higher production shares of high-quality balls that carry higher mark-ups, and because they charge higher mark-ups conditional on ball type; (6) Correlations suggest marketing efforts are important for generating higher mark-ups.
Handle: RePEc:nbr:nberwo:20868
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013
Classification-JEL: J64; J65
Author-Name: David Card
Author-Person: pca271
Author-Name: Andrew Johnston
Author-Person: pjo354
Author-Name: Pauline Leung
Author-Name: Alexandre Mas
Author-Person: pma2363
Author-Name: Zhuan Pei
Note: LS PE
Number: 20869
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20869
File-URL: http://www.nber.org/papers/w20869.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Andrew Johnston & Pauline Leung & Alexandre Mas & Zhuan Pei, 2015. "The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013," American Economic Review, American Economic Association, vol. 105(5), pages 126-30, May.
Abstract: We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.
Handle: RePEc:nbr:nberwo:20869
Template-Type: ReDIF-Paper 1.0
Title: Using Field Experiments to Address Environmental Externalities and Resource Scarcity: Major Lessons Learned and New Directions for Future Research
Classification-JEL: D03; D04; D62; D83; H41; Q41; Q48
Author-Name: Michael Price
Author-Person: ppr89
Note: EEE
Number: 20870
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20870
File-URL: http://www.nber.org/papers/w20870.pdf
File-Format: application/pdf
Publication-Status: published as M. K. Price, 2014. "Using field experiments to address environmental externalities and resource scarcity: major lessons learned and new directions for future research," Oxford Review of Economic Policy, vol 30(4), pages 621-638.
Abstract: This article provides an overview of the use of field experiments in energy and resource economics. I concentrate on two areas of study; field experiments that (i) speak to the use of dynamic pricing plans to manage the use of electricity and water and (ii) explore the adoption of energy saving technologies. Viewed in its totality, this work suggests that both neo-classical factors such as prices or search costs and behavioral constructs such as salience or social norms influence the use of energy and water. For academics, the studies reviewed provide a deeper understanding of individual behavior and the factors that drive the private provision of public goods. For policy makers, the studies reviewed provide a blueprint outlining ways to combine insights from neo-classical and behavioral economics to manage energy/water demand and mitigate externalities generated through their use.
Handle: RePEc:nbr:nberwo:20870
Template-Type: ReDIF-Paper 1.0
Title: Capital Taxation in the 21st Century
Classification-JEL: H21; P17
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Kevin Hassett
Author-Person: pha378
Note: PE
Number: 20871
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20871
File-URL: http://www.nber.org/papers/w20871.pdf
File-Format: application/pdf
Abstract: In his influential book, Capital in the 21st Century, Thomas Piketty argues forcefully that rising wealth and wealth inequality is an inherent characteristic of capitalist economies and calls for strong policy responses, in particular a substantial wealth tax implemented globally. This paper takes issue with the facts, logic, and policy conclusions in Piketty’s book, suggesting that the factors needed to support the inexorable rise in capital’s share and concentration are lacking and that among tax policy reforms aimed at dealing with economic inequality a wealth tax finds little support either in Piketty’s own work or elsewhere in the literature.
Handle: RePEc:nbr:nberwo:20871
Template-Type: ReDIF-Paper 1.0
Title: Macroeconomic Volatility and External Imbalances
Classification-JEL: F32; F34; F41
Author-Name: Alessandra Fogli
Author-Person: pfo48
Author-Name: Fabrizio Perri
Author-Person: ppe52
Note: EFG IFM
Number: 20872
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20872
File-URL: http://www.nber.org/papers/w20872.pdf
File-Format: application/pdf
Publication-Status: published as Fogli, Alessandra & Perri, Fabrizio, 2015. "Macroeconomic volatility and external imbalances," Journal of Monetary Economics, Elsevier, vol. 69(C), pages 1-15.
Abstract: Does macroeconomic volatility/uncertainty affects accumulation of net foreign assets? In OECD economies over the period 1970-2012, changes in country specific aggregate volatility are, after controlling for a wide array of factors, significantly positively associated with net foreign asset position. An increase in volatility (measured as the standard deviation of GDP growth) of 0.5% over period of 10 years is associated with an increase in the net foreign assets of around 8% of GDP. A standard open economy model with time varying aggregate uncertainty can quantitatively account for this relationship. The key mechanism is precautionary motive: more uncertainty induces residents to save more, and higher savings are in part channeled into foreign assets. We conclude that both data and theory suggest uncertainty/volatility is an important determinant of the medium/long run evolution of external imbalances in developed countries.
Handle: RePEc:nbr:nberwo:20872
Template-Type: ReDIF-Paper 1.0
Title: Impact of China's Urban Employee Basic Medical Insurance on Health Care Expenditure and Health Outcomes
Classification-JEL: I11; I13
Author-Name: Feng Huang
Author-Name: Li Gan
Author-Person: pga94
Note: AG EH PE
Number: 20873
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20873
File-URL: http://www.nber.org/papers/w20873.pdf
File-Format: application/pdf
Publication-Status: published as Feng Huang & Li Gan`, 2017. "The Impacts of China's Urban Employee Basic Medical Insurance on Healthcare Expenditures and Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 149-163, February.
Abstract: At the end of 1998, China launched a government-run mandatory insurance program, the Urban Employee Basic Medical Insurance (UEBMI), to replace the previous medical insurance system. Using the UEBMI reform in China as a natural experiment, this study identify variations in patient cost sharing that were imposed by the UEBMI reform and examine their effects on the demand for health-care services. Using data from the 1991-2006 waves of the China Health and Nutrition Survey, we find that the increased cost sharing is associated with decreased outpatient medical care utilization and expenditures but not with decreased inpatient care utilization and expenditures. Patients from low- and middle-income households, or in less-serious medical situations are found to be more sensitive to prices. We observe little impact on patient health, as measured by self-reported poor health status.
Handle: RePEc:nbr:nberwo:20873
Template-Type: ReDIF-Paper 1.0
Title: Credit Supply and the Housing Boom
Classification-JEL: E32; E44
Author-Name: Alejandro Justiniano
Author-Person: pju154
Author-Name: Giorgio E. Primiceri
Author-Person: ppr18
Author-Name: Andrea Tambalotti
Author-Person: pta51
Note: EFG ME
Number: 20874
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20874
File-URL: http://www.nber.org/papers/w20874.pdf
File-Format: application/pdf
Publication-Status: published as Alejandro Justiniano & Giorgio E. Primiceri & Andrea Tambalotti, 2019. "Credit Supply and the Housing Boom," Journal of Political Economy, vol 127(3), pages 1317-1350.
Abstract: The housing boom that preceded the Great Recession was due to an increase in credit supply driven by looser lending constraints in the mortgage market. This view on the fundamental drivers of the boom is consistent with four empirical observations: the unprecedented rise in home prices and household debt, the stability of debt relative to house values, and the fall in mortgage rates. These facts are difficult to reconcile with the popular view that attributes the housing boom to looser borrowing constraints associated with lower collateral requirements. In fact, a slackening of collateral constraints at the peak of the lending cycle triggers a fall in home prices in our framework, providing a novel perspective on the possible origins of the bust.
Handle: RePEc:nbr:nberwo:20874
Template-Type: ReDIF-Paper 1.0
Title: Neglected Risks: The Psychology of Financial Crises
Classification-JEL: G01; G02
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Andrei Shleifer
Author-Person: psh93
Author-Name: Robert Vishny
Author-Person: pvi218
Note: AP CF
Number: 20875
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20875
File-URL: http://www.nber.org/papers/w20875.pdf
File-Format: application/pdf
Publication-Status: published as Nicola Gennaioli & Andrei Shleifer & Robert Vishny, 2015. "Neglected Risks: The Psychology of Financial Crises," American Economic Review, American Economic Association, vol. 105(5), pages 310-14, May.
Abstract: We model a financial market in which investor beliefs are shaped by representativeness. Investors overreact to a series of good news, because such a series is representative of a good state. A few bad news do not change investor minds because the good state is still representative, but enough bad news leads to a radical change in beliefs and a financial crisis. The model generates debt over-issuance, “this time is different” beliefs, neglect of tail risks, under- and over-reaction to information, boom-bust cycles, and excess volatility of prices in a unified psychological model of expectations.
Handle: RePEc:nbr:nberwo:20875
Template-Type: ReDIF-Paper 1.0
Title: Wage Inequality and Firm Growth
Classification-JEL: J24; J31
Author-Name: Holger M. Mueller
Author-Name: Paige P. Ouimet
Author-Name: Elena Simintzi
Note: LS
Number: 20876
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20876
File-URL: http://www.nber.org/papers/w20876.pdf
File-Format: application/pdf
Publication-Status: published as Holger M. Mueller & Paige P. Ouimet & Elena Simintzi, 2017. "Wage Inequality and Firm Growth," American Economic Review, vol 107(5), pages 379-383.
Abstract: We examine how within-firm skill premia–wage differentials associated with jobs involving different skill requirements–vary both across firms and over time. Our firm-level results mirror patterns found in aggregate wage trends, except that we find them with regard to increases in firm size. In particular, we find that wage differentials between high- and either medium- or low-skill jobs increase with firm size, while those between medium- and low-skill jobs are either invariant to firm size or, if anything, slightly decreasing. We find the same pattern within firms over time, suggesting that rising wage inequality–even nuanced patterns, such as divergent trends in upper- and lower-tail inequality–may be related to firm growth. We explore two possible channels: i) wages associated with “routine” job tasks are relatively lower in larger firms due to a higher degree of automation in these firms, and ii) larger firms pay relatively lower entry-level managerial wages in return for providing better career opportunities. Lastly, we document a strong and positive relation between within-country variation in firm growth and rising wage inequality for a broad set of developed countries. In fact, our results suggest that part of what may be perceived as a global trend toward more wage inequality may be driven by an increase in employment by the largest firms in the economy.
Handle: RePEc:nbr:nberwo:20876
Template-Type: ReDIF-Paper 1.0
Title: Do Natural Field Experiments Afford Researchers More or Less Control than Laboratory Experiments? A Simple Model
Classification-JEL: C9; C91; C92; C93
Author-Name: Omar Al-Ubaydli
Author-Person: pal295
Author-Name: John A. List
Author-Person: pli176
Note: EEE PE
Number: 20877
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20877
File-URL: http://www.nber.org/papers/w20877.pdf
File-Format: application/pdf
Publication-Status: published as Al-Ubaydli, Omar, and John A. List. 2015. "Do Natural Field Experiments Afford Researchers More or Less Control Than Laboratory Experiments?" American Economic Review, 105 (5): 462-66. DOI: 10.1257/aer.p20151013
Abstract: A commonly held view is that laboratory experiments provide researchers with more “control” than natural field experiments, and that this advantage is to be balanced against the disadvantage that laboratory experiments are less generalizable. This paper presents a simple model that explores circumstances under which natural field experiments provide researchers with more control than laboratory experiments afford. This stems from the covertness of natural field experiments: laboratory experiments provide researchers with a high degree of control in the environment which participants agree to be experimental subjects. When participants systematically opt out of laboratory experiments, the researcher’s ability to manipulate certain variables is limited. In contrast, natural field experiments bypass the participation decision altogether and allow for a potentially more diverse participant pool within the market of interest. We show one particular case where such selection is invaluable: when treatment effects interact with participant characteristics.
Handle: RePEc:nbr:nberwo:20877
Template-Type: ReDIF-Paper 1.0
Title: The Local Influence of Pioneer Investigators on Technology Adoption: Evidence from New Cancer Drugs
Classification-JEL: I11; O33
Author-Name: Leila Agha
Author-Person: pag166
Author-Name: David Molitor
Author-Person: pmo1401
Note: EH PR
Number: 20878
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20878
File-URL: http://www.nber.org/papers/w20878.pdf
File-Format: application/pdf
Publication-Status: published as Leila Agha & David Molitor, 2018. "The Local Influence of Pioneer Investigators on Technology Adoption: Evidence from New Cancer Drugs," The Review of Economics and Statistics, vol 100(1), pages 29-44.
Abstract: Local opinion leaders may play a key role in easing information frictions associated with technology adoption. This paper analyzes the influence of physician investigators who lead clinical trials for new cancer drugs. By comparing diffusion patterns across 21 new cancer drugs, we separate correlated regional demand for new technology from information spillovers. Patients in the lead investigator's region are initially 36% more likely to receive the new drug, but utilization converges within four years. We also find that “superstar ” physician authors, measured by trial role or citation history, have broader influence than less prominent authors.
Handle: RePEc:nbr:nberwo:20878
Template-Type: ReDIF-Paper 1.0
Title: Why is Pollution from U.S. Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade
Classification-JEL: F18; F64; H23; Q56
Author-Name: Joseph S. Shapiro
Author-Person: psh1006
Author-Name: Reed Walker
Author-Person: pwa410
Note: EEE ITI PE PR
Number: 20879
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20879
File-URL: http://www.nber.org/papers/w20879.pdf
File-Format: application/pdf
Publication-Status: published as Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
Abstract: Between 1990 and 2008, air pollution emissions from U.S. manufacturing fell by 60 percent despite a substantial increase in manufacturing output. We show that these emissions reductions are primarily driven by within-product changes in emissions intensity rather than changes in output or in the composition of products produced. We then develop and estimate a quantitative model linking trade with the environment to better understand the economic forces driving these changes. Our estimates suggest that the implicit pollution tax that manufacturers face doubled between 1990 and 2008. These changes in environmental regulation, rather than changes in productivity and trade, account for most of the emissions reductions.
Handle: RePEc:nbr:nberwo:20879
Template-Type: ReDIF-Paper 1.0
Title: Are Firms in "Boring" Industries Worth Less?
Classification-JEL: G12; G14; G31; G32
Author-Name: Jia Chen
Author-Person: pch1408
Author-Name: Kewei Hou
Author-Person: pho571
Author-Name: René M. Stulz
Note: AP CF
Number: 20880
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20880
File-URL: http://www.nber.org/papers/w20880.pdf
File-Format: application/pdf
Abstract: Using theories from the behavioral finance literature to predict that investors are attracted to industries with more salient outcomes and that therefore firms in such industries have higher valuations, we find that firms in industries that have high industry-level dispersion of profitability have on average higher market-to-book ratios than firms in low dispersion industries. This positive relation between market-to-book ratios and industry profitability dispersion is economically large and statistically significant and is robust to controlling for variables used to explain firm-level valuation ratios in the literature. Consistent with the mispricing explanation of this finding, we show that firms in less boring industries have a lower implied cost of equity and lower realized returns. We explore alternative explanations for our finding, but find that these alternative explanations cannot explain our results.
Handle: RePEc:nbr:nberwo:20880
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Technology Diffusion, Trade, and Growth
Classification-JEL: A1; E1; F00; F43; O4
Author-Name: Jesse Perla
Author-Name: Christopher Tonetti
Author-Person: pto237
Author-Name: Michael E. Waugh
Author-Person: pwa234
Note: EFG ITI PR
Number: 20881
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20881
File-URL: http://www.nber.org/papers/w20881.pdf
File-Format: application/pdf
Publication-Status: published as Jesse Perla & Christopher Tonetti & Michael E. Waugh, 2021. "Equilibrium Technology Diffusion, Trade, and Growth," American Economic Review, American Economic Association, vol. 111(1), pages 73-128, January.
Abstract: We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country. We characterize the growth rate using a summary statistic of the profit distribution—the mean-min ratio. Opening to trade increases the profit spread through increased export opportunities and foreign competition, induces more rapid technology adoption, and generates faster growth. Quantitatively, these forces produce large welfare gains from trade by increasing an inefficiently low rate of technology adoption and economic growth.
Handle: RePEc:nbr:nberwo:20881
Template-Type: ReDIF-Paper 1.0
Title: The Power of Forward Guidance Revisited
Classification-JEL: E21; E40; E50
Author-Name: Alisdair McKay
Author-Person: pmc138
Author-Name: Emi Nakamura
Author-Person: pna121
Author-Name: Jón Steinsson
Author-Person: pst155
Note: EFG ME
Number: 20882
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20882
File-URL: http://www.nber.org/papers/w20882.pdf
File-Format: application/pdf
Publication-Status: published as Alisdair McKay & Emi Nakamura & Jón Steinsson, 2016. "The Power of Forward Guidance Revisited," American Economic Review, vol 106(10), pages 3133-3158.
Abstract: In recent years, central banks have increasingly turned to “forward guidance” as a central tool of monetary policy, especially as interest rates around the world have hit the zero lower bound. Standard monetary models imply that far future forward guidance is extremely powerful: promises about far future interest rates have huge effects on current economic outcomes, and these effects grow with the horizon of the forward guidance. We show that the power of forward guidance is highly sensitive to the assumption of complete markets. If agents face uninsurable income risk and borrowing constraints, a precautionary savings effect tempers their responses to changes in future interest rates. As a consequence, forward guidance has substantially less power to stimulate the economy. In addition, we show that the business cycle dynamics of our incomplete markets model differ substantially from its complete market counterpart. This contrasts with the well-known results of Krusell and Smith (1998). We present approximate representations that can easily be incorporated into standard business cycle models.
Handle: RePEc:nbr:nberwo:20882
Template-Type: ReDIF-Paper 1.0
Title: Pareto Efficiency and Identity
Classification-JEL: D6; E24; H21
Author-Name: Christopher Phelan
Author-Person: pph1
Author-Name: Aldo Rustichini
Note: EFG
Number: 20883
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20883
File-URL: http://www.nber.org/papers/w20883.pdf
File-Format: application/pdf
Abstract: Inherent in the definition of Pareto efficiency is the idea that, in dynamic environments, an individual is indexed by the history of events up to his birth (rather than, as usual, the date of birth). Here, we explore the implications of this natural formulation. The set of Pareto efficient allocations that is consistent with this view is potentially larger than those considered so far in the literature. We show that the set of allocations is strictly larger because we do not require individuals to have insurance motives of the Harsanyi-Rawls type regarding risks on their own type realization. We do, however, maintain the insurance motives of parents toward their children. Even in our more general framework, efficiency criteria impose substantial restrictions on the set of allocations. Interestingly, the restrictions are of a new nature. Our different, more natural view has some important policy implications. The first is that some policy criteria (for example, the progressive nature of taxes) cannot be defended on efficiency grounds, once the Harsanyi-Rawlsian insurance criterion is rejected as being normatively unsound. Second, we show that the condition of imposing no taxes of any kind, coupled with each agent owning his own production, results in a Pareto efficient allocation.
Handle: RePEc:nbr:nberwo:20883
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?
Classification-JEL: E24; J63; J64; J65
Author-Name: Marcus Hagedorn
Author-Person: pha949
Author-Name: Iourii Manovskii
Author-Person: pma158
Author-Name: Kurt Mitman
Author-Person: pmi418
Note: EFG
Number: 20884
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20884
File-URL: http://www.nber.org/papers/w20884.pdf
File-Format: application/pdf
Abstract: We measure the aggregate effect of unemployment benefit duration on employment and the labor force. We exploit the variation induced by Congress' failure in December 2013 to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states were abruptly cut to zero. To achieve identification we use the fact that this policy change was exogenous to cross-sectional differences across U.S. states and we exploit a policy discontinuity at state borders. Our baseline estimates reveal that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.019 log points. In levels, 2.1 million individuals secured employment in 2014 due to the benefit cut. More than 1.1 million of these workers would not have participated in the labor market had benefit extensions been reauthorized.
Handle: RePEc:nbr:nberwo:20884
Template-Type: ReDIF-Paper 1.0
Title: Understanding Ethnic Identity in Africa: Evidence from the Implicit Association Test (IAT)
Classification-JEL: O1; O55
Author-Name: Sara Lowes
Author-Person: plo464
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Jonathan Weigel
Note: DEV EFG POL
Number: 20885
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20885
File-URL: http://www.nber.org/papers/w20885.pdf
File-Format: application/pdf
Publication-Status: published as Sara Lowes & Nathan Nunn & James A. Robinson & Jonathan Weigel, 2015. "Understanding Ethnic Identity in Africa: Evidence from the Implicit Association Test (IAT)," American Economic Review, American Economic Association, vol. 105(5), pages 340-45, May.
Abstract: We use a variant of the Implicit Association Test (IAT) to examine individuals’ implicit attitudes towards various ethnic groups. Using a population from the Democratic Republic of Congo, we find that the IAT measures show evidence of an implicit bias in favor of one’s own ethnicity. Individuals have implicit views of their own ethnic group that are more positive than their implicit views of other ethnic groups. We find this implicit bias to be quantitatively smaller than the (explicit) bias one finds when using self-reported attitudes about different ethnic groups.
Handle: RePEc:nbr:nberwo:20885
Template-Type: ReDIF-Paper 1.0
Title: Insurance Decision-Making For Rare Events: The Role Of Emotions
Classification-JEL: C90; D12; D60; D81; G22
Author-Name: Howard Kunreuther
Author-Name: Mark Pauly
Note: TWP
Number: 20886
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20886
File-URL: http://www.nber.org/papers/w20886.pdf
File-Format: application/pdf
Publication-Status: published as Howard Kunreuther & Mark V. Pauly, 2018. "Dynamic Insurance Decision-Making for Rare Events: The Role of Emotions," The Geneva Papers on Risk and Insurance - Issues and Practice, vol 43(2), pages 335-355.
Abstract: This paper describes the results of a web-based multi-period insurance purchasing experiment focusing on how individuals make insurance choices for low-probability, high-consequence events. Participants were told the probability and resulting losses of a hurricane occurring and were informed that these were stable from period to period. We contrast the model of informed expected utility [E(U)] maximization with alternative behavioral models of choice as explanations for what we observe. The majority of individuals (63 percent) behaved in ways that were consistent with expected utility theory, although we do not know whether these individuals were utilizing other decision rules. A sizeable number of uninsured individuals decided to purchase insurance after learning that they had suffered a loss and revealing that they were unhappy about having been uninsured. In this sense, the study shows that a loss coupled with emotions is likely to play an important role in convincing an uninsured person to buy coverage. In contrast, insured individuals who did not suffer a loss rarely dropped coverage. The paper concludes by raising questions regarding the welfare implications of this behavior.
Handle: RePEc:nbr:nberwo:20886
Template-Type: ReDIF-Paper 1.0
Title: What Do Longitudinal Data on Millions of Hospital Visits Tell us About The Value of Public Health Insurance as a Safety Net for the Young and Privately Insured?
Classification-JEL: I13
Author-Name: Amanda E. Kowalski
Note: AG EH PE
Number: 20887
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20887
File-URL: http://www.nber.org/papers/w20887.pdf
File-Format: application/pdf
Abstract: Young people with private health insurance sometimes transition to the public health insurance safety net after they get sick, but popular sources of cross-sectional data obscure how frequently these transitions occur. We use longitudinal data on almost all hospital visits in New York from 1995 to 2011. We show that young privately insured individuals with diagnoses that require more hospital visits in subsequent years are more likely to transition to public insurance. If we ignore the longitudinal transitions in our data, we obscure over 80% of the value of public health insurance to the young and privately insured.
Handle: RePEc:nbr:nberwo:20887
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Regulatory Harmonization on Cross-border Labor Migration: Evidence from the Accounting Profession
Classification-JEL: D10; E24; F22; F55; F66; J44; J61; J62; K22; L84; M41; M42
Author-Name: Matthew J. Bloomfield
Author-Name: Ulf Brüggemann
Author-Person: pbr578
Author-Name: Hans B. Christensen
Author-Name: Christian Leuz
Author-Person: ple259
Note: CF ED LS
Number: 20888
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20888
File-URL: http://www.nber.org/papers/w20888.pdf
File-Format: application/pdf
Publication-Status: published as Matthew J. Bloomfield & Ulf Brüggemann & Hans B. Christensen & Christian Leuz, 2017. "The Effect of Regulatory Harmonization on Cross-Border Labor Migration: Evidence from the Accounting Profession," Journal of Accounting Research, Wiley Blackwell, vol. 55(1), pages 35-78, March.
Abstract: The paper examines whether international regulatory harmonization increases cross-border labor migration. To study this question, we analyze European Union (EU) initiatives that harmonized accounting and auditing standards. Regulatory harmonization should reduce economic mobility barriers, essentially making it easier for accounting professionals to move across countries. Our research design compares the cross-border migration of accounting professionals relative to tightly-matched other professionals before and after regulatory harmonization. We find that international labor migration in the accounting profession increases significantly relative to other professions. We provide evidence that this effect is due to harmonization, rather than increases in the demand for accounting services during the implementation of the rule changes. The findings illustrate that diversity in rules constitutes an economic barrier to cross-border labor mobility and, more specifically, that accounting harmonization can have a meaningful effect on cross-border migration.
Handle: RePEc:nbr:nberwo:20888
Template-Type: ReDIF-Paper 1.0
Title: Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules
Classification-JEL: O3; O33; O38
Author-Name: Pierre Azoulay
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Danielle Li
Author-Name: Bhaven N. Sampat
Author-Person: psa1696
Note: EH PE PR
Number: 20889
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20889
File-URL: http://www.nber.org/papers/w20889.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Joshua S Graff Zivin & Danielle Li & Bhaven N Sampat, 2019. "Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules," The Review of Economic Studies, vol 86(1), pages 117-152.
Abstract: We quantify the impact of scientific grant funding at the National Institutes of Health (NIH) on patenting by pharmaceutical and biotechnology firms. Our paper makes two contributions. First, we use newly constructed bibliometric data to develop a method for flexibly linking specific grant expenditures to private-sector innovations. Second, we take advantage of idiosyncratic rigidities in the rules governing NIH peer review to generate exogenous variation in funding across research areas. Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 2.3 patents. Though valuing patents is difficult, we report a range of estimates for the private value of these patents using different approaches.
Handle: RePEc:nbr:nberwo:20889
Template-Type: ReDIF-Paper 1.0
Title: Can Online Learning Bend the Higher Education Cost Curve?
Classification-JEL: I22; I23
Author-Name: David J. Deming
Author-Person: pde497
Author-Name: Claudia Goldin
Author-Person: pgo601
Author-Name: Lawrence F. Katz
Author-Person: pka266
Author-Name: Noam Yuchtman
Author-Person: pyu185
Note: DAE ED LS
Number: 20890
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20890
File-URL: http://www.nber.org/papers/w20890.pdf
File-Format: application/pdf
Publication-Status: published as David J. Deming & Claudia Goldin & Lawrence F. Katz & Noam Yuchtman, 2015. "Can Online Learning Bend the Higher Education Cost Curve?," American Economic Review, American Economic Association, vol. 105(5), pages 496-501, May.
Abstract: We examine whether online learning technologies have led to lower prices in higher education. Using data from the Integrated Postsecondary Education Data System, we show that online education is concentrated in large for-profit chains and less-selective public institutions. Colleges with a higher share of online students charge lower tuition prices. We present evidence that real and relative prices for full-time undergraduate online education declined from 2006 to 2013. Although the pattern of results suggests some hope that online technology can “bend the cost curve” in higher education, the impact of online learning on education quality remains uncertain.
Handle: RePEc:nbr:nberwo:20890
Template-Type: ReDIF-Paper 1.0
Title: Informal Employment in a Growing and Globalizing Low-income Country
Classification-JEL: F0; F16; J46; O12
Author-Name: Brian McCaig
Author-Person: pmc113
Author-Name: Nina Pavcnik
Author-Person: ppa511
Note: DEV ITI
Number: 20891
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20891
File-URL: http://www.nber.org/papers/w20891.pdf
File-Format: application/pdf
Publication-Status: published as Brian McCaig & Nina Pavcnik, 2015. "Informal Employment in a Growing and Globalizing Low-Income Country," American Economic Review, American Economic Association, vol. 105(5), pages 545-50, May.
Abstract: We document several facts about workforce transitions from the informal to the formal sector in Vietnam, a fast growing, industrializing, and low-income country. First, younger workers, particularly migrants, are more likely to work in the formal sector and stay there permanently. Second, the decline in the aggregate share of informal employment occurs through changes between and within birth cohorts. Third, younger, educated, male, and urban workers are more likely to switch to the formal sector than other workers initially in the informal sector. Poorly educated, older, female, rural workers face little prospect of formalization. Fourth, formalization coincides with occupational upgrading.
Handle: RePEc:nbr:nberwo:20891
Template-Type: ReDIF-Paper 1.0
Title: Can Changing Economic Factors Explain the Rise in Obesity?
Classification-JEL: I12
Author-Name: Charles J. Courtemanche
Author-Person: pco421
Author-Name: Joshua C. Pinkston
Author-Person: ppi149
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Author-Name: George Wehby
Note: EH
Number: 20892
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20892
File-URL: http://www.nber.org/papers/w20892.pdf
File-Format: application/pdf
Publication-Status: published as Charles J. Courtemanche & Joshua C. Pinkston & Christopher J. Ruhm & George L. Wehby, 2016. "Can Changing Economic Factors Explain the Rise in Obesity?," Southern Economic Journal, Southern Economic Association, vol. 82(4), pages 1266-1310, April.
Abstract: A growing literature examines the effects of economic variables on obesity, typically focusing on only one or a few factors at a time. We build a more comprehensive economic model of body weight, combining the 1990-2010 Behavioral Risk Factor Surveillance System with 27 state-level variables related to general economic conditions, labor supply, and the monetary or time costs of calorie intake, physical activity, and cigarette smoking. Controlling for demographic characteristics and state and year fixed effects, changes in these economic variables collectively explain 37% of the rise in BMI, 43% of the rise in obesity, and 59% of the rise in class II/III obesity. Quantile regressions also point to large effects among the heaviest individuals, with half the rise in the 90th percentile of BMI explained by economic factors. Variables related to calorie intake – particularly restaurant and supercenter/warehouse club densities – are the primary drivers of the results.
Handle: RePEc:nbr:nberwo:20892
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Independence under Flexible Exchange Rates: An Illusion?
Classification-JEL: E5; E52; E58; F30; F31; F32
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM
Number: 20893
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20893
File-URL: http://www.nber.org/papers/w20893.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Edwards, 2015. "Monetary Policy Independence under Flexible Exchange Rates: An Illusion?," The World Economy, vol 38(5), pages 773-787.
Abstract: I analyze whether countries with flexible exchange rates are able to pursue an independent monetary policy, as suggested by traditional theory. I use data for three Latin American countries with flexible exchange rates, inflation targeting, and capital mobility – Chile, Colombia and Mexico – to investigate the extent to which Federal Reserve actions are translated into local central banks’ policy rates. The results indicate that there is significant “policy contagion,” and that these countries tend to “import” Fed policies. The degree of monetary policy independence is lower than what traditional models suggest.
Handle: RePEc:nbr:nberwo:20893
Template-Type: ReDIF-Paper 1.0
Title: Does Finance Benefit Society?
Classification-JEL: G00; O43
Author-Name: Luigi Zingales
Note: CF
Number: 20894
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20894
File-URL: http://www.nber.org/papers/w20894.pdf
File-Format: application/pdf
Publication-Status: published as ZINGALES, L. (2015), Presidential Address: Does Finance Benefit Society?. The Journal of Finance, 70: 1327-1363. doi:10.1111/jofi.12295
Abstract: Academics’ view of the benefits of finance vastly exceeds societal perception. This dissonance is at least partly explained by an under-appreciation by academia of how, without proper rules, finance can easily degenerate into a rent-seeking activity. I outline what finance academics can do, from a research point of view and from an educational point of view, to promote good finance and minimize the bad.
Handle: RePEc:nbr:nberwo:20894
Template-Type: ReDIF-Paper 1.0
Title: Understanding Heterogeneity in the Effects of Birth Weight on Adult Cognition and Wages
Classification-JEL: I1; J1; J24
Author-Name: C. Justin Cook
Author-Person: pco578
Author-Name: Jason M. Fletcher
Note: CH EH
Number: 20895
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20895
File-URL: http://www.nber.org/papers/w20895.pdf
File-Format: application/pdf
Publication-Status: published as Justin Cook, C. & Fletcher, Jason M., 2015. "Understanding heterogeneity in the effects of birth weight on adult cognition and wages," Journal of Health Economics, Elsevier, vol. 41(C), pages 107-116.
Abstract: A large economics literature has shown long term impacts of birth weight on adult outcomes, including IQ and earnings that are often robust to sibling or twin fixed effects. We examine potential mechanisms underlying these effects by incorporating findings from the genetics and neuroscience literatures. We use a sample of siblings combined with an “orchids and dandelions hypothesis”, where the IQ of genetic dandelions is not affected by in utero nutrition variation but genetic orchids thrive under advantageous conditions and wilt in poor conditions. Indeed, using variation in three candidate genes related to neuroplasticity (APOE, BDNF, and COMT), we find substantial heterogeneity in the associations between birth weight and adult outcomes, where part of the population (i.e., “dandelions”) is not affected by birth weight variation. Our results help uncover why birth weight affects adult outcomes.
Handle: RePEc:nbr:nberwo:20895
Template-Type: ReDIF-Paper 1.0
Title: The Maturity and Payment Schedule of Sovereign Debt
Classification-JEL: E62; F34
Author-Name: Yan Bai
Author-Person: pba291
Author-Name: Seon Tae Kim
Author-Person: pki356
Author-Name: Gabriel P. Mihalache
Note: IFM
Number: 20896
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20896
File-URL: http://www.nber.org/papers/w20896.pdf
File-Format: application/pdf
Abstract: This paper studies the maturity and stream of payments of sovereign debt. Using Bloomberg bond data for eleven emerging economies, we document that countries react to crises by issuing debt with shortened maturity but back-load payment schedules. To account for this pattern, we develop a sovereign default model with an endogenous choice of debt maturity and payment schedule. During recessions, the country prefers its payments to be more back-loaded—delaying relatively larger payments—to smooth consumption. However, such a back-loaded schedule is expensive given that later payments carry higher default risk. To reduce borrowing costs, the country optimally shortens maturity. When calibrated to the Brazilian data, the model can rationalize the observed patterns of maturity and payment schedule, as an optimal trade-off between consumption smoothing and endogenous borrowing cost.
Handle: RePEc:nbr:nberwo:20896
Template-Type: ReDIF-Paper 1.0
Title: On the Origins of Dishonesty: From Parents to Children
Classification-JEL: C9; C91; C93
Author-Name: Daniel Houser
Author-Name: John A. List
Author-Person: pli176
Author-Name: Marco Piovesan
Author-Person: ppi143
Author-Name: Anya Savikhin Samek
Author-Person: psa1068
Author-Name: Joachim Winter
Author-Person: pwi1
Note: PE
Number: 20897
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20897
File-URL: http://www.nber.org/papers/w20897.pdf
File-Format: application/pdf
Abstract: Acts of dishonesty permeate life. Understanding their origins, and what mechanisms help to attenuate such acts is an underexplored area of research. This study takes an economics approach to explore the propensity of individuals to act dishonestly across different economic environments. We begin by developing a simple model that highlights the channels through which one can increase or decrease dishonest acts. We lend empirical insights into this model by using an experiment that includes both parents and their young children as subjects. We find that the highest level of dishonesty occurs in settings where the parent acts alone and the dishonest act benefits the child rather than the parent. In this spirit, there is also an interesting effect of children on parents’ behavior: in the child’s presence, parents act more honestly, but there are gender differences. Parents act more dishonestly in front of sons than daughters. This finding has the potential of shedding light on the origins of the widely documented gender differences in cheating behavior observed among adults.
Handle: RePEc:nbr:nberwo:20897
Template-Type: ReDIF-Paper 1.0
Title: Nominal GDP Targeting for Developing Countries
Classification-JEL: E5; F41
Author-Name: Pranjul Bhandari
Author-Name: Jeffrey A. Frankel
Author-Person: pfr12
Note: EFG IFM ME
Number: 20898
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20898
File-URL: http://www.nber.org/papers/w20898.pdf
File-Format: application/pdf
Publication-Status: published as Pranjul Bhandari & Jeffrey Frankel, 2017. "Nominal GDP targeting for developing countries," Research in Economics, vol 71(3), pages 491-506.
Abstract: The revival of interest in nominal GDP (NGDP) targeting has come in the context of large advanced economies. We consider the case for NGDP targeting for mid-sized developing countries, in light of their susceptibility to supply shocks and terms of trade shocks. For India, in particular, one major exogenous supply shock is the monsoon rains. NGDP targeting splits the impact of supply shocks automatically between inflation and real GDP growth. In the case of annual inflation targeting (IT), by contrast, the full impact of an adverse supply shock or terms of trade shock is felt as a loss in real GDP alone. NGDP targeting automatically accommodates supply shocks as most central banks with discretion would do anyway, while retaining the advantage of anchoring expectations as rules are designed to do. We outline a simple theoretical model and derive the condition under which an NGDP targeting regime would dominate other regimes such as annual IT for achieving objectives of output and price stability. We go on to estimate for the case of India the parameters needed to ascertain whether the condition holds, particularly the slope of the aggregate supply curve. Estimates suggest that the condition may indeed hold.
Handle: RePEc:nbr:nberwo:20898
Template-Type: ReDIF-Paper 1.0
Title: Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending
Classification-JEL: G24
Author-Name: Adair Morse
Note: CF
Number: 20899
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20899
File-URL: http://www.nber.org/papers/w20899.pdf
File-Format: application/pdf
Publication-Status: published as Adair Morse, 2015. "Peer-to-Peer Crowdfunding: Information and the Potential for Disruption in Consumer Lending," Annual Review of Financial Economics, vol 7(1), pages 463-482.
Abstract: Can peer-to-peer lending (P2P) crowdfunding disintermediate and mitigate information frictions in lending such that choices and outcomes for at least some borrowers and investors are improved? I offer a framing of issues and survey the nascent literature on P2P. On the investor side, P2P disintermediates an asset class of consumer loans, and investors seem to capture some rents associated with the removal of the cost of that financial intermediation. Risk and portfolio choice questions linger prior to any inference. On the borrower side, evidence suggests that proximate knowledge (direct or inferred) unearths soft information, and by implication, P2P should be able to offer pricing and/or access benefits to potential borrowers. However, social connections require costly certification (skin in the game) to inform credit risk. Early research suggests an ever-increasing scope for use of Big Data and incentivized re-intermediation of underwriting. I ask many more questions than current research can answer, hoping to motivate future research.
Handle: RePEc:nbr:nberwo:20899
Template-Type: ReDIF-Paper 1.0
Title: Climate Sensitivity Uncertainty: When is Good News Bad?
Classification-JEL: D81; Q54
Author-Name: Mark C. Freeman
Author-Name: Gernot Wagner
Author-Person: pwa77
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: EEE
Number: 20900
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20900
File-URL: http://www.nber.org/papers/w20900.pdf
File-Format: application/pdf
Publication-Status: published as Mark C. Freeman & Gernot Wagner & Richard J. Zeckhauser, 2015. "Climate sensitivity uncertainty: when is good news bad?," Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, vol 373(2055).
Abstract: Climate change is real and dangerous. Exactly how bad it will get, however, is uncertain. Uncertainty is particularly relevant for estimates of one of the key parameters: equilibrium climate sensitivity—how eventual temperatures will react as atmospheric carbon dioxide concentrations double. Despite significant advances in climate science and increased confidence in the accuracy of the range itself, the “likely” range has been 1.5-4.5°C for over three decades. In 2007, the Intergovernmental Panel on Climate Change (IPCC) narrowed it to 2-4.5°C, only to reverse its decision in 2013, reinstating the prior range. In addition, the 2013 IPCC report removed prior mention of 3°C as the “best estimate.” We interpret the implications of the 2013 IPCC decision to lower the bottom of the range and excise a best estimate. Intuitively, it might seem that a lower bottom would be good news. Here we ask: When might apparently good news about climate sensitivity in fact be bad news? The lowered bottom value also implies higher uncertainty about the temperature increase, a definite bad. Under reasonable assumptions, both the lowering of the lower bound and the removal of the “best estimate” may well be bad news.
Handle: RePEc:nbr:nberwo:20900
Template-Type: ReDIF-Paper 1.0
Title: An Evaluation of the Impact of the China (Shanghai) Pilot Free Trade Zone (SPFTZ)
Classification-JEL: F38
Author-Name: Daqing Yao
Author-Name: John Whalley
Author-Person: pwh8
Note: IFM
Number: 20901
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20901
File-URL: http://www.nber.org/papers/w20901.pdf
File-Format: application/pdf
Abstract: In this paper we present evidence as to the effects of the China (Shanghai) Pilot Free Trade Zone (SPFTZ) on China’s capital controls. The start of the SPFTZ in September, 2013 was a trial to introduce a combination of exchange rate floating and capital account liberalization into China’s macro policy mix. We employ three methods to test the SPFTZ’s impact on capital controls: price spread tests between CNH and CNY, RMB yield gaps between onshore and offshore RMB markets, and Granger causalities among China’s money supply and the foreign interest rates. All these tests give consistent results suggesting that the impact of China’s capital controls is weaker since the SPFTZ.
Handle: RePEc:nbr:nberwo:20901
Template-Type: ReDIF-Paper 1.0
Title: Killing the Golden Goose? The Decline of Science in Corporate R&D
Classification-JEL: O31; O32
Author-Name: Ashish Arora
Author-Person: par15
Author-Name: Sharon Belenzon
Author-Person: pbe264
Author-Name: Andrea Patacconi
Note: PR
Number: 20902
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20902
File-URL: http://www.nber.org/papers/w20902.pdf
File-Format: application/pdf
Abstract: Scientific knowledge is believed to be the wellspring of innovation. Historically, firms have also invested in research to fuel innovation and growth. In this paper, we document a shift away from scientific research by large corporations between 1980 and 2007. We find that publications by company scientists have declined over time in a range of industries. We also find that the value attributable to scientific research has dropped, whereas the value attributable to technical knowledge (as measured by patents) has remained stable. These effects appear to be associated with globalization and narrower firm scope, rather than changes in publication practices or a decline in the usefulness of science as an input into innovation. Large firms appear to value the golden eggs of science (as reflected in patents) but not the golden goose itself (the scientific capabilities). These findings have important implications for both public policy and management.
Handle: RePEc:nbr:nberwo:20902
Template-Type: ReDIF-Paper 1.0
Title: Competition and R&D Financing Decisions: Theory and Evidence from the Biopharmaceutical Industry
Classification-JEL: D82; D83; G31; G32; L11; L15; L25; L65
Author-Name: Richard T. Thakor
Author-Person: pth359
Author-Name: Andrew W. Lo
Author-Person: plo171
Note: CF EH IO PR
Number: 20903
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20903
File-URL: http://www.nber.org/papers/w20903.pdf
File-Format: application/pdf
Abstract: How does competition affect innovation and how it is financed in R&D-intensive firms? We study the interaction between competition, R&D investments, and the financing choices of such firms using data on biopharmaceutical firms. To motivate the empirical hypotheses, we develop a model for such firms in which their capital structure and amounts invested in R&D as well as existing assets are all determined in response to the degree of competition in the industry. The key predictions are that, as competition increases, such firms will: (1) increase R&D investment relative to investment in assets-in-place that support existing products; (2) carry more cash and maintain less net debt; and (3) experience declining betas but greater total stock return volatility due to higher idiosyncratic risk. While the focus is on the biopharmaceutical industry, the results are broadly applicable to other R&Dintensive industries as well. We provide empirical support for these predictions. In order to deal with the endogeneity issue introduced by the fact that a firm's R&D investments and the product-market competition it faces influence each other, we provide further evidence through a differences-in-differences analysis.
Handle: RePEc:nbr:nberwo:20903
Template-Type: ReDIF-Paper 1.0
Title: Assessing the Energy-Efficiency Gap
Classification-JEL: L00; Q4; Q48; Q5
Author-Name: Todd D. Gerarden
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Robert N. Stavins
Author-Person: pst167
Note: EEE
Number: 20904
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20904
File-URL: http://www.nber.org/papers/w20904.pdf
File-Format: application/pdf
Publication-Status: published as Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
Abstract: Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but these technologies appear not to be adopted by consumers and businesses to the degree that would apparently be justified, even on a purely financial basis. We present two complementary frameworks for understanding this so-called “energy paradox” or “energy-efficiency gap.” First, we build on the previous literature by dividing potential explanations for the energy-efficiency gap into three categories: market failures, behavioral anomalies, and model and measurement errors. Second, we posit that it is useful to think in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices cost-minimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We review empirical evidence on these questions, with an emphasis on recent advances, and offer suggestions for future research.
Handle: RePEc:nbr:nberwo:20904
Template-Type: ReDIF-Paper 1.0
Title: An Assessment of the Energy-Efficiency Gap and its Implications for Climate-Change Policy
Classification-JEL: Q4; Q48
Author-Name: Todd D. Gerarden
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Robert N. Stavins
Author-Person: pst167
Author-Name: Robert C. Stowe
Note: EEE
Number: 20905
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20905
File-URL: http://www.nber.org/papers/w20905.pdf
File-Format: application/pdf
Abstract: Improving end-use energy efficiency—that is, the energy-efficiency of individuals, households, and firms as they consume energy—is often cited as an important element in efforts to reduce greenhouse-gas (GHG) emissions. Arguments for improving energy efficiency usually rely on the idea that energy-efficient technologies will save end users money over time and thereby provide low-cost or no-cost options for reducing GHG emissions. However, some research suggests that energy-efficient technologies appear not to be adopted by consumers and businesses to the degree that would seem justified, even on a purely financial basis. We review in this paper the evidence for a range of explanations for this apparent “energy-efficiency gap.” We find most explanations are grounded in sound economic theory, but the strength of empirical support for these explanations varies widely. Retrospective program evaluations suggest the cost of GHG abatement varies considerably across different energy-efficiency investments and can diverge substantially from the predictions of prospective models. Findings from research on the energy-efficiency gap could help policy makers generate social and private benefits from accelerating the diffusion of energy-efficient technologies—including reduction of GHG emissions.
Handle: RePEc:nbr:nberwo:20905
Template-Type: ReDIF-Paper 1.0
Title: Synthesizing Econometric Evidence: The Case of Demand Elasticity Estimates
Classification-JEL: H0; H2; I1; I18
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Donald S. Kenkel
Author-Person: pke44
Note: EH
Number: 20906
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20906
File-URL: http://www.nber.org/papers/w20906.pdf
File-Format: application/pdf
Publication-Status: published as Philip DeCicca & Don Kenkel, 2015. "Synthesizing Econometric Evidence: The Case of Demand Elasticity Estimates," Risk Analysis, vol 35(6), pages 1073-1085.
Abstract: Econometric estimates of the responsiveness of health-related consumer demand to higher prices are often key ingredients for policy analysis. Drawing on several examples, especially that of cigarette demand, we review the potential advantages and challenges of synthesizing econometric evidence on the price-responsiveness of consumer demand. We argue that the overarching goal of research synthesis in this context is to provide policy-relevant evidence for broad brush conclusions and propose three main criteria to select among research synthesis methods. We also contribute a new empirical exercise that puts the results of previous research synthesis to the test. In particular, we ask whether the “best” consensus estimates of the price-elasticity of smoking help predict trends in smoking from 1995 to 2010. The demographics of the smoking population in our baseline year predict a downward trend in smoking even if cigarette prices remained constant. Average cigarette prices, however, more than doubled in real terms by 2010. We find that the observed declines in smoking over this period are considerably smaller than smoking demographics combined with prior consensus elasticity estimates would predict. Our results suggest that these consensus estimates may have systematically overestimated the price responsiveness of cigarette demand.
Handle: RePEc:nbr:nberwo:20906
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Market Size and Composition on Health Insurance Premiums: Evidence from the First Year of the ACA
Classification-JEL: I11; I13; I18
Author-Name: Michael J. Dickstein
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Joseph Orsini
Author-Name: Pietro Tebaldi
Author-Person: pte334
Note: EH IO
Number: 20907
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20907
File-URL: http://www.nber.org/papers/w20907.pdf
File-Format: application/pdf
Publication-Status: published as Dickstein, Michael J., Mark Duggan, Joe Orsini, and Pietro Tebaldi. 2015. "The Impact of Market Size and Composition on Health Insurance Premiums: Evidence from the First Year of the Affordable Care Act." American Economic Review, 105 (5): 120-25. DOI: 10.1257/aer.p20151083
Abstract: Under the Affordable Care Act, individual states have discretion in how they define coverage regions, within which insurers must charge the same premium to buyers of the same age, family structure, and smoking status. We exploit variation in these definitions to investigate whether the size of the coverage region affects outcomes in the ACA marketplaces. We find large consequences for small and rural markets. When states combine small counties with neighboring urban areas into a single region, the included rural markets see .6 to .8 more active insurers, on average, and savings in annual premiums of between $200 and $300.
Handle: RePEc:nbr:nberwo:20907
Template-Type: ReDIF-Paper 1.0
Title: Trade Reform and Regional Dynamics: Evidence From 25 Years of Brazilian Matched Employer-Employee Data
Classification-JEL: F14; F16; J23
Author-Name: Rafael Dix-Carneiro
Author-Person: pdi592
Author-Name: Brian K. Kovak
Author-Person: pko1102
Note: DEV ITI LS
Number: 20908
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20908
File-URL: http://www.nber.org/papers/w20908.pdf
File-Format: application/pdf
Abstract: We empirically study the dynamics of labor market adjustment following the Brazilian trade reform of the 1990s. We use variation in industry-specific tariff cuts interacted with initial regional industry mix to measure trade-induced local labor demand shocks, and then examine regional and individual labor market responses to those one-time shocks over two decades. Contrary to conventional wisdom, we do not find that the impact of local shocks is dissipated over time through wage-equalizing migration. Instead, we find steadily growing effects of local shocks on regional formal sector wages and employment for 20 years. This finding can be rationalized in a simple equilibrium model with two complementary factors of production, labor and industry-specific factors such as capital, that adjust slowly and imperfectly to shocks. Next, we document rich margins of adjustment induced by the trade reform at the regional and individual level. Workers initially employed in harder hit regions face continuously deteriorating formal labor market outcomes relative to workers employed in less affected regions, and this gap persists even 20 years after the beginning of trade liberalization. Negative local trade shocks induce workers to shift out of the formal tradable sector and into the formal nontradable sector. Non-employment strongly increases in harder-hit regions in the medium run, but in the longer run, non-employed workers eventually find re-employment in the informal sector. Working age population does not react to these local shocks, but formal sector net migration does, consistent with the relative decline of the formal sector and growth of the informal sector in adversely affected regions.
Handle: RePEc:nbr:nberwo:20908
Template-Type: ReDIF-Paper 1.0
Title: On The Origins of Gender Human Capital Gaps: Short and Long Term Consequences of Teachers’ Stereotypical Biases
Classification-JEL: J16; J24
Author-Name: Victor Lavy
Author-Person: pla111
Author-Name: Edith Sand
Author-Person: psa1976
Note: CH ED LS
Number: 20909
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20909
File-URL: http://www.nber.org/papers/w20909.pdf
File-Format: application/pdf
Publication-Status: published as Victor Lavy & Edith Sand, 2018. "On the origins of gender gaps in human capital: Short- and long-term consequences of teachers' biases," Journal of Public Economics, vol 167, pages 263-279.
Abstract: In this paper, we estimate the effect of primary school teachers’ gender biases on boys’ and girls’ academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school. For identification, we rely on the random assignments of teachers and students to classes in primary schools. Our results suggest that teachers’ biases favoring boys have an asymmetric effect by gender— positive effect on boys’ achievements and negative effect on girls’. Such gender biases also impact students’ enrollment in advanced level math courses in high school—boys positively and girls negatively. These results suggest that teachers’ biased behavior at early stage of schooling have long run implications for occupational choices and earnings at adulthood, because enrollment in advanced courses in math and science in high school is a prerequisite for post-secondary schooling in engineering, computer science and so on. This impact is heterogeneous, being larger for children from families where the father is more educated than the mother and larger on girls from low socioeconomic background.
Handle: RePEc:nbr:nberwo:20909
Template-Type: ReDIF-Paper 1.0
Title: The Persistence of Moral Suasion and Economic Incentives: Field Experimental Evidence from Energy Demand
Classification-JEL: D12; L11; L94; L98; Q4; Q41; Q5; Q58
Author-Name: Koichiro Ito
Author-Person: pit23
Author-Name: Takanori Ida
Author-Person: pid7
Author-Name: Makoto Tanaka
Author-Person: pta263
Note: EEE IO PE
Number: 20910
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20910
File-URL: http://www.nber.org/papers/w20910.pdf
File-Format: application/pdf
Abstract: Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for various economic activities. To investigate the persistence of such interventions, we randomly assigned households to moral suasion and dynamic pricing that stimulate energy conservation during peak demand hours. Using household-level consumption data for 30-minute intervals, we find significant short-run effects of moral suasion, but the effects diminished quickly after repeated interventions. Economic incentives produced larger and persistent effects, which induced habit formation after the final interventions. While each policy produces substantial welfare gains, economic incentives provide particularly large gains when we consider persistence.
Handle: RePEc:nbr:nberwo:20910
Template-Type: ReDIF-Paper 1.0
Title: Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore
Classification-JEL: J7; O17
Author-Name: Huailu Li
Author-Person: pli1238
Author-Name: Kevin Lang
Author-Person: pla83
Author-Name: Kaiwen Leong
Note: DEV LS
Number: 20911
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20911
File-URL: http://www.nber.org/papers/w20911.pdf
File-Format: application/pdf
Publication-Status: published as Huailu Li & Kevin Lang & Kaiwen Leong, 2018. "Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore," The Economic Journal, vol 128(611), pages 1570-1608.
Abstract: The street sex worker market in Geylang, Singapore is highly competitive. Clients can search legally at negligible cost. Sex workers discriminate based on client ethnicity despite an excess supply of sex workers. Workers are more (less) likely to approach and ask a higher (lower) price of Caucasians (Bangladeshis), based on their perceived willingness to pay. They avoid Indians, set a significantly higher price and are less likely to reach an agreement with them, suggesting that Indians face taste discrimination. These findings remain even after controlling for prostitute fixed effects and are consistent with the workers' self-reported attitudes and beliefs.
Handle: RePEc:nbr:nberwo:20911
Template-Type: ReDIF-Paper 1.0
Title: Trade Liberalization and the Skill Premium: A Local Labor Markets Approach
Classification-JEL: F14; F16; J31
Author-Name: Rafael Dix-Carneiro
Author-Person: pdi592
Author-Name: Brian K. Kovak
Author-Person: pko1102
Note: DEV ITI LS
Number: 20912
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20912
File-URL: http://www.nber.org/papers/w20912.pdf
File-Format: application/pdf
Publication-Status: published as Rafael Dix-Carneiro & Brian K. Kovak, 2015. "Trade Liberalization and the Skill Premium: A Local Labor Markets Approach," American Economic Review, vol 105(5), pages 551-557.
Abstract: We develop a specific-factors model of regional economies that includes two types of workers, skilled and unskilled. The model delivers a simple equation relating trade-induced local shocks to changes in local skill premia. We apply the methodology to Brazil's early 1990s trade liberalization and find statistically significant but modest effects of liberalization on the evolution of the skill premium between 1991 and 2010. The methodology uses widely available household survey data and can easily be applied to other countries and liberalization episodes.
Handle: RePEc:nbr:nberwo:20912
Template-Type: ReDIF-Paper 1.0
Title: What Do Data on Millions of U.S. Workers Reveal about Life-Cycle Earnings Risk?
Classification-JEL: E24; J31; J62
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Fatih Karahan
Author-Person: pka732
Author-Name: Serdar Ozkan
Author-Person: poz42
Author-Name: Jae Song
Author-Person: pso277
Note: AG AP EFG EH LS ME
Number: 20913
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20913
File-URL: http://www.nber.org/papers/w20913.pdf
File-Format: application/pdf
Abstract: We study the evolution of individual labor earnings over the life cycle using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First, earnings shocks display substantial deviations from lognormality---the standard assumption in the incomplete markets literature. In particular, earnings shocks display strong negative skewness and extremely high kurtosis---as high as 30 compared with 3 for a Gaussian distribution. The high kurtosis implies that in a given year, most individuals experience very small earnings shocks, and a small but non-negligible number experience very large shocks. Second, these statistical properties vary significantly both over the life cycle and with the earnings level of individuals. We also estimate impulse response functions of earnings shocks and find important asymmetries: positive shocks to high-income individuals are quite transitory, whereas negative shocks are very persistent; the opposite is true for low-income individuals. Finally, we use these rich sets of moments to estimate econometric processes with increasing generality to capture these salient features of earnings dynamics.
Handle: RePEc:nbr:nberwo:20913
Template-Type: ReDIF-Paper 1.0
Title: Environmental Engel Curves
Classification-JEL: Q56
Author-Name: Arik Levinson
Author-Person: ple135
Author-Name: James O'Brien
Note: EEE
Number: 20914
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20914
File-URL: http://www.nber.org/papers/w20914.pdf
File-Format: application/pdf
Abstract: Environmental Engel curves (EECs) plot the relationship between households’ incomes and the pollution embodied in the goods and services they consume. They provide a basis for estimating the degree to which observed environmental improvements, which come in part from changing consumption patterns, can be attributed to income growth. We calculate a set of annual EECs for the United States from 1984 to 2002, revealing three clear results. First, EECs are upward sloping: richer households are indirectly responsible for more pollution. Second, EECs are convex, with income elasticities of less than one. Third, EECs have been shifting down over time: at every level of income households are responsible for decreasing amounts of pollution. We show that even without changes to production techniques, the pollution necessary to produce the goods and services American households consume would have declined 5 to 8 percent, despite a 13 percent increase in real household incomes. Most of this improvement is attributable to households consuming a less pollution-intensive mix of goods, driven about equally by two factors: household income growth represented by movement along convex EECs; and economy-wide changes represented by downward shifts in EECs.
Handle: RePEc:nbr:nberwo:20914
Template-Type: ReDIF-Paper 1.0
Title: Latin American Inequality: Colonial Origins, Commodity Booms, or a Missed 20th Century Leveling?
Classification-JEL: D3; N16; N36; O15
Author-Name: Jeffrey G. Williamson
Author-Person: pwi169
Note: DAE DEV
Number: 20915
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20915
File-URL: http://www.nber.org/papers/w20915.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey G. Williamson, 2015. "Latin American Inequality: Colonial Origins, Commodity Booms or a Missed Twentieth-Century Leveling?," Journal of Human Development and Capabilities, vol 16(3), pages 324-341.
Abstract: Most analysts of the modern Latin American economy have held the pessimistic belief in historical persistence -- they believe that Latin America has always had very high levels of inequality, and that it’s the Iberian colonists’ fault. Thus, modern analysts see today a more unequal Latin America compared with Asia and most rich post-industrial nations and assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. The recent leveling of inequality in the region since the 1990s seems to have done little to erode that pessimism. It is important, therefore, to stress that this alleged persistence is based on an historical literature which has made little or no effort to be comparative, and it matters. Compared with the rest of the world, inequality was not high in the century following 1492, and it was not even high in the post-independence decades just prior Latin America’s belle époque and start with industrialization. It only became high during the commodity boom 1870-1913, by the end of which it had joined the rich country unequal club that included the US and the UK. Latin America only became relatively high between 1913 and the 1970s when it missed the Great Egalitarian Leveling which took place almost everywhere else. That Latin American inequality has its roots in its colonial past is a myth.
Handle: RePEc:nbr:nberwo:20915
Template-Type: ReDIF-Paper 1.0
Title: Disability Insurance Incentives and the Retirement Decision: Evidence from the U.S.
Classification-JEL: J14; J26
Author-Name: Courtney Coile
Author-Person: pco557
Note: AG
Number: 20916
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20916
File-URL: http://www.nber.org/papers/w20916.pdf
File-Format: application/pdf
Publication-Status: published as Disability Insurance Incentives and the Retirement Decision: Evidence from the United States, Courtney Coile. in Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement, Wise. 2016
Abstract: A rising share of older workers in the U.S. make use of the Disability Insurance (DI) program in their transition to retirement, with about one in seven men and one in nine women ages 60 to 64 now enrolled in the program. This study explores how financial incentives from Social Security and DI affect retirement decisions, using an option value approach. We find that financial incentives have a significant effect on retirement, particularly for those in poor health or with low education, who may be more actively considering retirement at younger ages. Simulations suggest that increasing the stringency of the screening process for DI would increase the expected working life of DI applicants.
Handle: RePEc:nbr:nberwo:20916
Template-Type: ReDIF-Paper 1.0
Title: Financial Development and Output Growth in Developing Asia and Latin America: A Comparative Sectoral Analysis
Classification-JEL: G20; G30; O40; O47; O57
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Author-Name: Donghyun Park
Author-Person: ppa611
Note: DEV IFM
Number: 20917
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20917
File-URL: http://www.nber.org/papers/w20917.pdf
File-Format: application/pdf
Abstract: We use data from the Groningen Growth and Development Centre (GGDC) database to perform preliminary empirical analysis of the interplay between quality and quantity of finance in accounting for the output growth of ten sectors. We review the existing literature and some salient open questions pertaining to the relationship between financial depth and output growth. Our analysis looks at the finance-growth nexus in 41 economies, including 11 East Asian and 9 Latin American economies for a comparison between two regions which are at similar income levels. We document large differences between the two regions in terms of the impact of financial depth on sectoral growth, and validate the negative impact of financial deepening on output growth in several sectors. Our results suggest that the impact of financial development on growth may be non-linear – i.e. it may promote growth only up to a point.
Handle: RePEc:nbr:nberwo:20917
Template-Type: ReDIF-Paper 1.0
Title: Motivation and Incentives in Education: Evidence from a Summer Reading Experiment
Classification-JEL: I21; J24
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: James S. Kim
Author-Name: Kyung Park
Note: CH ED LS
Number: 20918
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20918
File-URL: http://www.nber.org/papers/w20918.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Guryan & James S. Kim & Kyung Park, 2016. "Motivation and Incentives in Education: Evidence from a Summer Reading Experiment," Economics of Education Review, .
Abstract: For whom and under what conditions do incentives work in education? In the context of a summer reading program called Project READS, we test whether responsiveness to incentives is positively or negatively related to the student’s baseline level of motivation to read. Elementary school students were mailed books weekly during the summer, mailed books and also offered an incentive to read, or assigned to a control group. We find that students who were more motivated to read at baseline were more responsive to incentives, suggesting that incentives may not effectively target the students whose behavior they are intended to change.
Handle: RePEc:nbr:nberwo:20918
Template-Type: ReDIF-Paper 1.0
Title: Capital and Wealth in the 21st Century
Classification-JEL: D31; Y3
Author-Name: David N. Weil
Author-Person: pwe24
Note: EFG
Number: 20919
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20919
File-URL: http://www.nber.org/papers/w20919.pdf
File-Format: application/pdf
Publication-Status: published as Weil, D. (2015). Capital and Wealth in the Twenty-First Century. The American Economic Review, 105(5), 34-37.
Abstract: In Capital in the 21st Century, Thomas Piketty uses the market value of tradeable assets to measure both productive capital and wealth. As a measure of wealth this is problematic because it ignores the value of human capital and transfer wealth, which have grown enormously over the last 300 years. Thus the constancy of the wealth/income ratio as portrayed in his data is an illusion. Further, the types of wealth that he does not measure are more equally distributed than tradeable assets. The approach also incorrectly identifies capital gains due to reduced discount rates as increases in the capital stock.
Handle: RePEc:nbr:nberwo:20919
Template-Type: ReDIF-Paper 1.0
Title: Age and the Trying Out of New Ideas
Classification-JEL: I1; J11; O31; O32; O33
Author-Name: Mikko Packalen
Author-Person: ppa648
Author-Name: Jay Bhattacharya
Note: AG EH PR
Number: 20920
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20920
File-URL: http://www.nber.org/papers/w20920.pdf
File-Format: application/pdf
Publication-Status: published as Mikko Packalen & Jay Bhattacharya, 2019. "Age and the Trying Out of New Ideas," Journal of Human Capital, vol 13(2), pages 341-373.
Abstract: Older scientists are often seen as less open to new ideas than younger scientists. We put this assertion to an empirical test. Using a measure of new ideas derived from the text of nearly all biomedical scientific articles published since 1946, we compare the tendency of younger and older researchers to try out new ideas in their work. We find that papers published in biomedicine by younger researchers are more likely to build on new ideas. Collaboration with a more experienced researcher matters as well. Papers with a young first author and a more experienced last author are more likely to try out newer ideas than papers published by other team configurations. Given the crucial role that the trying out of new ideas plays in the advancement of science, our results buttress the importance of funding scientific work by young researchers.
Handle: RePEc:nbr:nberwo:20920
Template-Type: ReDIF-Paper 1.0
Title: Cities and Ideas
Classification-JEL: O18; O31; O32; O33; R12
Author-Name: Mikko Packalen
Author-Person: ppa648
Author-Name: Jay Bhattacharya
Note: DAE EH PR
Number: 20921
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20921
File-URL: http://www.nber.org/papers/w20921.pdf
File-Format: application/pdf
Abstract: Faster technological progress has long been considered a key potential benefit of agglomeration. Physical proximity to others may help inventors adopt new ideas in their work by increasing awareness about which new ideas exist and by enhancing understanding of the properties and usefulness of new ideas through a vigorous debate on the ideas' merits (Marshall, 1920). We test a key empirical prediction of this theory: that inventions in large cities build on newer ideas than inventions in smaller cities. We analyze the idea inputs of nearly every US patent granted during 1836–2010. We find that a larger city size provided a considerable advantage in inventive activities during most of the 20th century but that in recent decades this advantage has eroded.
Handle: RePEc:nbr:nberwo:20921
Template-Type: ReDIF-Paper 1.0
Title: New Ideas in Invention
Classification-JEL: I1; O31; O32; O33
Author-Name: Mikko Packalen
Author-Person: ppa648
Author-Name: Jay Bhattacharya
Note: EH PR
Number: 20922
Creation-Date: 2015-01
Order-URL: http://www.nber.org/papers/w20922
File-URL: http://www.nber.org/papers/w20922.pdf
File-Format: application/pdf
Abstract: A key decision in research is whether to try out new ideas or build on more established ideas. In this paper, we evaluate which type of work is more likely to spur further invention. When recent advances create superior opportunities for invention, their adoption as research inputs in the invention process promotes technological progress. The gains from pursuing such innovative research paths may, however, be very limited as new ideas are often initially raw and poorly understood. We determine idea inputs in invention based on the text of nearly every US patent granted during 1836–2010. We find that inventions that build on new ideas early are more likely to spur subsequent invention than inventions that rely on ideas of older vintage. Our results are important because they suggest a benefit from encouraging and supporting innovative research that tries out new ideas — avoiding stagnation in technological advance.
Handle: RePEc:nbr:nberwo:20922
Template-Type: ReDIF-Paper 1.0
Title: The Power of Transparency: Information, Identification Cards and Food Subsidy Programs in Indonesia
Classification-JEL: D73; I38; O12
Author-Name: Abhijit Banerjee
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Jordan C. Kyle
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Sudarno Sumarto
Author-Person: psu251
Note: DEV PE POL
Number: 20923
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20923
File-URL: http://www.nber.org/papers/w20923.pdf
File-Format: application/pdf
Abstract: Can governments improve aid programs by providing information to beneficiaries? In our model, information can change how much aid citizens receive as they bargain with local officials who implement national programs. In a large-scale field experiment, we test whether mailing cards with program information to beneficiaries increases their subsidy from a subsidized rice program. Beneficiaries received 26 percent more subsidy in card villages. Ineligible households received no less, so this represents lower leakage. The evidence suggests that this effect is driven by citizen bargaining with local officials. Experimentally adding the official price to the cards increased the subsidy by 21 percent compared to cards without price information. Additional public information increased higher-order knowledge about eligibility, leading to a 16 percent increase in subsidy compared to just distributing cards. In short, increased transparency empowered citizens to reduce leakages and improve program functioning.
Handle: RePEc:nbr:nberwo:20923
Template-Type: ReDIF-Paper 1.0
Title: The China (Shanghai) Pilot Free Trade Zone: Background, Developments and Preliminary Assessment of Initial Impacts
Classification-JEL: F49
Author-Name: Daqing Yao
Author-Name: John Whalley
Author-Person: pwh8
Note: IFM ITI
Number: 20924
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20924
File-URL: http://www.nber.org/papers/w20924.pdf
File-Format: application/pdf
Publication-Status: published as Daqing Yao & John Whalley, 2016. "The China (Shanghai) Pilot Free Trade Zone: Background, Developments and Preliminary Assessment of Initial Impacts," The World Economy, vol 39(1), pages 2-15.
Abstract: The China (Shanghai) Pilot Free Trade Zone (SPFTZ) founded one year ago is a trial for China’s new round of reform and opening out, which has promised liberalization on capital account and trade facilitation as its main objectives. Here we discuss the differences between the SPFTZ and other free trade areas, and the developments of the SPFTZ in the past year. We also make a preliminary assessment of the SPFTZ’s initial impacts, especially of its impact on China’s capital account opening and financial liberalization. It is possible that the successful practice of the SPFTZ and more pilot policies replicated in China will give rise to a more balanced Chinese economy in the following decade.
Handle: RePEc:nbr:nberwo:20924
Template-Type: ReDIF-Paper 1.0
Title: Voting on Prices vs. Voting on Quantities in a World Climate Assembly
Classification-JEL: F51; H41; Q54
Author-Name: Martin L. Weitzman
Note: EEE
Number: 20925
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20925
File-URL: http://www.nber.org/papers/w20925.pdf
File-Format: application/pdf
Publication-Status: published as Martin L. Weitzman, 2016. "Voting on Prices vs. Voting on Quantities in a World Climate Assembly," Research in Economics, .
Abstract: This paper posits the conceptually useful allegory of a futuristic "World Climate Assembly" that votes on global carbon emissions via the basic principle of majority rule. Two variants are considered. One is to vote on a universal price (or tax) that is internationally harmonized, but the proceeds from which are domestically retained. The other is to vote on the overall quantity of total worldwide emissions, which are then distributed for free (via a pre-decided fractional subdivision formula) as individual allowance permits that are subsequently marketed in an international cap-and-trade system. The model of the paper suggests that the majority-voted price is likely to be less distortionary and easier to enact than the majority-voted total quantity of permits. While the study is centered on a formal model, the tone of the policy discussion resembles more an exploratory think piece.
Handle: RePEc:nbr:nberwo:20925
Template-Type: ReDIF-Paper 1.0
Title: Disaster Risk and its Implications for Asset Pricing
Classification-JEL: G12
Author-Name: Jerry Tsai
Author-Person: pts130
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Note: AP EFG
Number: 20926
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20926
File-URL: http://www.nber.org/papers/w20926.pdf
File-Format: application/pdf
Publication-Status: published as Jerry Tsai & Jessica A. Wachter, 2015. "Disaster Risk and Its Implications for Asset Pricing," Annual Review of Financial Economics, vol 7(1), pages 219-252.
Abstract: After laying dormant for more than two decades, the rare disaster framework has emerged as a leading contender to explain facts about the aggregate market, interest rates, and financial derivatives. In this paper we survey recent models of disaster risk that provide explanations for the equity premium puzzle, the volatility puzzle, return predictability and other features of the aggregate stock market. We show how these models can also explain violations of the expectations hypothesis in bond pricing, and the implied volatility skew in option pricing. We review both modeling techniques and results and consider both endowment and production economies. We show that these models provide a parsimonious and unifying framework for understanding puzzles in asset pricing.
Handle: RePEc:nbr:nberwo:20926
Template-Type: ReDIF-Paper 1.0
Title: Patient Responses to Incentives in Consumer-directed Health Plans: Evidence from Pharmaceuticals
Classification-JEL: I1; I13
Author-Name: Peter J. Huckfeldt
Author-Name: Amelia Haviland
Author-Name: Ateev Mehrotra
Author-Name: Zachary Wagner
Author-Name: Neeraj Sood
Author-Person: pso62
Note: EH
Number: 20927
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20927
File-URL: http://www.nber.org/papers/w20927.pdf
File-Format: application/pdf
Abstract: Prior studies suggest that consumer-directed health plans (CDHPs) -characterized by high deductibles and health care accounts- reduce health costs, but there is concern that enrollees indiscriminately reduce use of low-value services (e.g., unnecessary emergency department use) and high-value services (e.g., preventive care). We investigate how CDHP enrollees change use of pharmaceuticals for chronic diseases. We compare two large firms where nearly all employees were switched to CDHPs to firms with conventional health insurance plans. In the first firm’s CDHP, pharmaceuticals were subject to the deductible, while in the second firm pharmaceuticals were exempt. Employees in the first firm shifted the timing of drug purchases to periods with lower cost sharing and were more likely to use lower-cost drugs, but the largest effect of the CDHP was to reduce utilization. Employees in the second firm also reduced utilization, but did not shift the timing or use of low cost drugs.
Handle: RePEc:nbr:nberwo:20927
Template-Type: ReDIF-Paper 1.0
Title: Behavioral Economics and Public Policy: A Pragmatic Perspective
Classification-JEL: B4; H0
Author-Name: Raj Chetty
Author-Person: pch161
Note: AG LE LS PE
Number: 20928
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20928
File-URL: http://www.nber.org/papers/w20928.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty, 2015. "Behavioral Economics and Public Policy: A Pragmatic Perspective," American Economic Review, American Economic Association, vol. 105(5), pages 1-33, May.
Abstract: The debate about behavioral economics – the incorporation of insights from psychology into economics – is often framed as a question about the foundational assumptions of economic models. This paper presents a more pragmatic perspective on behavioral economics that focuses on its value for improving empirical predictions and policy decisions. I discuss three ways in which behavioral economics can contribute to public policy: by offering new policy tools, improving predictions about the effects of existing policies, and generating new welfare implications. I illustrate these contributions using applications to retirement savings, labor supply, and neighborhood choice. Behavioral models provide new tools to change behaviors such as savings rates and new counterfactuals to estimate the effects of policies such as income taxation. Behavioral models also provide new prescriptions for optimal policy that can be characterized in a non-paternalistic manner using methods analogous to those in neoclassical models. Model uncertainty does not justify using the neoclassical model; instead, it can provide a new rationale for using behavioral nudges. I conclude that incorporating behavioral features to the extent they help answer core economic questions may be more productive than viewing behavioral economics as a separate subfield that challenges the assumptions of neoclassical models.
Handle: RePEc:nbr:nberwo:20928
Template-Type: ReDIF-Paper 1.0
Title: Childhood Medicaid Coverage and Later Life Health Care Utilization
Classification-JEL: I12; I13; I28
Author-Name: Laura R. Wherry
Author-Person: pwh68
Author-Name: Sarah Miller
Author-Person: pmi744
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Bruce D. Meyer
Author-Person: pme273
Note: CH EH PE
Number: 20929
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20929
File-URL: http://www.nber.org/papers/w20929.pdf
File-Format: application/pdf
Publication-Status: published as Laura R. Wherry & Sarah Miller & Robert Kaestner & Bruce D. Meyer, 2018. "Childhood Medicaid Coverage and Later-Life Health Care Utilization," The Review of Economics and Statistics, vol 100(2), pages 287-302.
Abstract: Policy-makers have argued that providing public health insurance coverage to the uninsured lowers long-run costs by reducing the need for expensive hospitalizations and emergency department visits later in life. In this paper, we provide evidence for such a phenomenon by exploiting a legislated discontinuity in the cumulative number of years a child is eligible for Medicaid based on date of birth. We find that having more years of Medicaid eligibility in childhood is associated with fewer hospitalizations and emergency department visits in adulthood for blacks. Our effects are particularly pronounced for hospitalizations and emergency department visits related to chronic illnesses and those of patients living in low-income neighborhoods. Furthermore, we find evidence suggesting that these effects are larger in states where the difference in the number of Medicaid-eligible years across the cutoff birthdate is greater. Calculations suggest that lower rates of hospitalizations and emergency department visits during one year in adulthood offset between 3 and 5 percent of the initial costs of expanding Medicaid.
Handle: RePEc:nbr:nberwo:20929
Template-Type: ReDIF-Paper 1.0
Title: State Capitalism vs. Private Enterprise
Classification-JEL: G15; G31; G32; G34; P1; P31
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Author-Name: Donghua Chen
Author-Name: Dequan Jiang
Author-Name: Haitian Lu
Author-Name: Mingming Zhou
Author-Person: pzh314
Note: CF LE
Number: 20930
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20930
File-URL: http://www.nber.org/papers/w20930.pdf
File-Format: application/pdf
Abstract: We study the efficiency of capital allocations at state-controlled and privately owned business groups in China. Using highly granular data on within-group capital transfers, we document stark differences: while private groups allocate more capital to units with better investment opportunities, state groups do the opposite, especially when part of the “national team.” Minority shareholders in state owned enterprises suffer as a result. External monitoring by outside investors helps discipline state groups’ tendency to ignore investment opportunities. We trace capital allocation decisions to the objectives of the Chinese Communist Party, which incentivizes managers to maintain social stability. Consistent with the party’s policy preferences, capital allocations are used to prop up struggling employers in high-unemployment areas and when many young men enter the local labor market, but the interests of the party and of managers may be misaligned.
Handle: RePEc:nbr:nberwo:20930
Template-Type: ReDIF-Paper 1.0
Title: Networks, Shocks, and Systemic Risk
Classification-JEL: D85; G01
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Asuman Ozdaglar
Author-Name: Alireza Tahbaz-Salehi
Author-Person: pta370
Note: EFG
Number: 20931
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20931
File-URL: http://www.nber.org/papers/w20931.pdf
File-Format: application/pdf
Publication-Status: published as Networks, Shocks, and Systemic Risk (with Daron Acemoglu and Asuman Ozdaglar) The Oxford Handbook of the Economics of Networks, Chapter 21, 569-607, 2016 Edited by Yann Bramoulle, Andrea Galeotti, and Brian Rogers.
Abstract: This chapter develops a unified framework for the study of how network interactions can function as a mechanism for propagation and amplification of microeconomic shocks. The framework nests various classes of games over networks, models of macroeconomic risk originating from microeconomic shocks, and models of financial interactions. Under the assumption that shocks are small, we provide a fairly complete characterization of the structure of equilibrium, clarifying the role of network interactions in translating microeconomic shocks into macroeconomic outcomes. This characterization enables us to rank different networks in terms of their aggregate performance. It also sheds light on several seemingly contradictory results in the prior literature on the role of network linkages in fostering systemic risk.
Handle: RePEc:nbr:nberwo:20931
Template-Type: ReDIF-Paper 1.0
Title: Veterans’ Labor Force Participation: What Role Does the VA’s Disability Compensation Program Play?
Classification-JEL: H56; J14; J22
Author-Name: Courtney Coile
Author-Person: pco557
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Audrey Guo
Author-Person: pgu703
Note: AG EH LS PE
Number: 20932
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20932
File-URL: http://www.nber.org/papers/w20932.pdf
File-Format: application/pdf
Publication-Status: published as Courtney Coile & Mark Duggan & Audrey Guo, 2015. "Veterans' Labor Force Participation: What Role Does the VA's Disability Compensation Program Play?," American Economic Review, American Economic Association, vol. 105(5), pages 131-36, May.
Abstract: We explore trends over time in the labor force participation of veterans and non-veterans and investigate whether these patterns are consistent with a rising role for the Veterans’ Affairs Disability Compensation (DC) program, which pays benefits to veterans with service-connected disabilities and has grown rapidly since 2000. Using 35 years of March CPS data, we find that veterans’ labor force participation declined over time in a way that coincides closely with DC growth and that veterans have become more sensitive to economic shocks. Our findings suggest that DC program growth has contributed to recent declines in veterans’ labor force participation.
Handle: RePEc:nbr:nberwo:20932
Template-Type: ReDIF-Paper 1.0
Title: The International Transmission of Credit Bubbles: Theory and Policy
Classification-JEL: E32; E44; O40
Author-Name: Jaume Ventura
Author-Person: pve110
Author-Name: Alberto Martin
Author-Person: pma513
Note: EFG
Number: 20933
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20933
File-URL: http://www.nber.org/papers/w20933.pdf
File-Format: application/pdf
Publication-Status: published as Martin, Alberto & Ventura, Jaume, 2015. "The international transmission of credit bubbles: Theory and policy," Journal of Monetary Economics, Elsevier, vol. 76(S), pages S37-S56.
Abstract: We live in a new world economy characterized by financial globalization and historically low interest rates. This environment is conducive to countries experiencing credit bubbles that have large macroeconomic effects at home and are quickly propagated abroad. In previous work, we built on the theory of rational bubbles to develop a framework to think about the origins and domestic effects of these credit bubbles. This paper extends that framework to two-country setting and studies the channels through which credit bubbles are transmitted across countries. We find that there are two main channels that work through the interest rate and the terms of trade. The former constitutes a negative spillover, while the latter constitutes a negative spillover in the short run but a positive one in the long run. We study both cooperative and noncooperative policies in this world. The interest-rate and terms-of-trade spillovers produce policy externalities that make the noncooperative outcome suboptimal.
Handle: RePEc:nbr:nberwo:20933
Template-Type: ReDIF-Paper 1.0
Title: The National Rise in Residential Segregation
Classification-JEL: J1; N3; N9; N91; N92
Author-Name: Trevon Logan
Author-Person: plo110
Author-Name: John Parman
Author-Person: ppa1012
Note: DAE
Number: 20934
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20934
File-URL: http://www.nber.org/papers/w20934.pdf
File-Format: application/pdf
Publication-Status: published as Logan, Trevon D. & Parman, John M., 2017. "The National Rise in Residential Segregation," The Journal of Economic History, Cambridge University Press, vol. 77(01), pages 127-170, March.
Abstract: This paper introduces a new measure of residential segregation based on individual-level data. We exploit complete census manuscript files to derive a measure of segregation based upon the racial similarity of next-door neighbors. Our measure allows us to analyze segregation consistently and comprehensively for all areas in the United States and allows for a richer view of the variation in segregation across time and space. We show that the fineness of our measure reveals aspects of racial sorting that cannot be captured by traditional segregation indices. Our measure can distinguish between the effects of increasing racial homogeneity of a location and the tendency to segregate within a location given a particular racial composition. Analysis of neighbor-based segregation over time establishes several new facts about segregation. First, segregation doubled nationally from 1880 to 1940. Second, contrary to previous estimates, we find that urban areas in the South were the most segregated in the country and remained so over time. Third, the dramatic increase in segregation in the twentieth century was not driven by urbanization, black migratory patterns, or white flight to suburban areas, but rather resulted from a national increase in racial sorting at the household level. The likelihood that an African American household had a non-African American neighbor declined by more than 15 percentage points (more than a 25% decrease) through the mid-twentieth century. In all areas of the United States -- North and South, urban and rural -- racial segregation increased dramatically.
Handle: RePEc:nbr:nberwo:20934
Template-Type: ReDIF-Paper 1.0
Title: Premature Deindustrialization
Classification-JEL: O14
Author-Name: Dani Rodrik
Author-Person: pro60
Note: DEV EFG ITI PR
Number: 20935
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20935
File-URL: http://www.nber.org/papers/w20935.pdf
File-Format: application/pdf
Publication-Status: published as Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, vol 21(1), pages 1-33.
Abstract: I document a significant deindustrialization trend in recent decades, that goes considerably beyond the advanced, post-industrial economies. The hump-shaped relationship between industrialization (measured by employment or output shares) and incomes has shifted downwards and moved closer to the origin. This means countries are running out of industrialization opportunities sooner and at much lower levels of income compared to the experience of early industrializers. Asian countries and manufactures exporters have been largely insulated from those trends, while Latin American countries have been especially hard hit. Advanced economies have lost considerable employment (especially of the low-skill type), but they have done surprisingly well in terms of manufacturing output shares at constant prices. While these trends are not very recent, the evidence suggests both globalization and labor-saving technological progress in manufacturing have been behind these developments. Premature deindustrialization has potentially significant economic and political ramifications, including lower economic growth and democratic failure.
Handle: RePEc:nbr:nberwo:20935
Template-Type: ReDIF-Paper 1.0
Title: Collective Action: Experimental Evidence
Classification-JEL: C92; D72; H0; O1
Author-Name: María Victoria Anauati
Author-Name: Brian Feld
Author-Person: pfe570
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Gustavo Torrens
Note: DEV
Number: 20936
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20936
File-URL: http://www.nber.org/papers/w20936.pdf
File-Format: application/pdf
Publication-Status: published as Anauati, María Victoria & Feld, Brian & Galiani, Sebastian & Torrens, Gustavo, 2016. "Collective action: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 99(C), pages 36-55.
Abstract: We conducted a laboratory experiment to test the comparative statics predictions of a new approach to collective action games based on the method of stability sets. We find robust support for the main theoretical predictions. As we increase the payoff of a successful collective action (accruing to all players and only to those who contribute), the share of cooperators increases. The experiment also points to new avenues for refining the theory. We find that, as the payoff of a successful collective action increases, subjects tend to upgrade their prior beliefs as to the expected share of cooperators. Although this does not have a qualitative effect on comparative static predictions, using the reported distribution of beliefs rather than an ad hoc uniform distribution reduces the gap between theoretical predictions and observed outcomes. This finding also allows to decompose the mechanism that leads to more cooperation into a ”belief effect” and a ”range of cooperation effect”.
Handle: RePEc:nbr:nberwo:20936
Template-Type: ReDIF-Paper 1.0
Title: Racial Disparities in Savings Behavior for a Continuously Employed Cohort
Classification-JEL: D14; D31; I31; J11; J32
Author-Name: Kai Yuan Kuan
Author-Name: Mark R. Cullen
Author-Name: Sepideh Modrek
Note: AG PE
Number: 20937
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20937
File-URL: http://www.nber.org/papers/w20937.pdf
File-Format: application/pdf
Abstract: The wealth gap has reached record highs. At the same time there has been substantial proliferation of 401(k) savings accounts as the dominant retirement savings vehicle, and these accounts make up an increasing proportion of overall wealth. In this paper we examine 401(k) saving behavior of continuously employed workers over an eight-year period at a single, geographically diverse employer. We demonstrate substantial difference in 401(k) savings behavior by employee ethnicity even within a single employer 401(k) plan architecture. We show both African American and Hispanic employees are less likely to participate in the 401(k) plans. Moreover, conditional on participation African Americans contribute a lower proportion of their income to their 401(k) plan on average. We also show that African Americans and Hispanics tend to draw down on their 401(k) balances more often. Finally, we document that both African Americans and Hispanics favor safer assets within their plan options. Together these differences substantially impact the level of 401(k) balances accumulated and therefore overall wealth accumulation.
Handle: RePEc:nbr:nberwo:20937
Template-Type: ReDIF-Paper 1.0
Title: Age, Cohort and Co-Authorship
Classification-JEL: A11; B31; J01
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 20938
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20938
File-URL: http://www.nber.org/papers/w20938.pdf
File-Format: application/pdf
Publication-Status: published as “Age, Cohort and Co-authorship: The Statistics of Collaboration” in Collaborative Research in Economics The Wisdom of Working Together Editors: Szenberg, Michael, Ramrattan, Lall B. (Eds.) Palgrave Macmillan, 2017, pp. 65-93
Abstract: The previously documented trend toward more co- and multi-authored research in economics is partly (perhaps 20 percent) due to different research styles of scholars in different birth cohorts (of different ages). Most of the trend reflects profession-wide changes in research style. Older scholars show greater variation in their research styles than younger ones, who use similar numbers of co-authors in each published paper; but there are no differences across cohorts in scholars’ willingness to work with different coauthors. There are only small gender differences in the impacts of age on numbers of coauthors, but substantial differences on choice of coauthors.
Handle: RePEc:nbr:nberwo:20938
Template-Type: ReDIF-Paper 1.0
Title: Measuring Job-Finding Rates and Matching Efficiency with Heterogeneous Jobseekers
Classification-JEL: E24; J63
Author-Name: Robert E. Hall
Author-Name: Sam Schulhofer-Wohl
Note: EFG LS
Number: 20939
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20939
File-URL: http://www.nber.org/papers/w20939.pdf
File-Format: application/pdf
Publication-Status: published as Robert E. Hall & Sam Schulhofer-Wohl, 2018. "Measuring Job-Finding Rates and Matching Efficiency with Heterogeneous Job-Seekers," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 1-32, January.
Abstract: Matching efficiency is the productivity of the process for matching jobseekers to available jobs. Job-finding is the output; vacant jobs and active jobseekers are the inputs. Measurement of matching efficiency follows the same principles as measuring an index of productivity of production. We develop a framework for measuring matching productivity when the population of jobseekers is heterogeneous. The efficiency index for each type of jobseeker is the monthly job finding rate for the type adjusted for the overall tightness of the labor market. We find that overall matching efficiency declined smoothly over the period from 2001 through 2013. Measures of matching efficiency that neglect heterogeneity among the unemployed and also neglect jobseekers other than the unemployed suggest a 23 percent decline in efficiency between 2007 and 2009. We demonstrate that essentially all of this apparent decline results from changes in the composition of jobseekers rather than any true movement in efficiency. We also develop a new approach to measuring matching rates that avoids counting short-duration jobs as job-seeking successes.
Handle: RePEc:nbr:nberwo:20939
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Intergroup Contact on Racial Attitudes and Revealed Preferences
Classification-JEL: I24; J15
Author-Name: Scott E. Carrell
Author-Person: pca439
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: James E. West
Author-Person: pwe191
Note: ED LS PE
Number: 20940
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20940
File-URL: http://www.nber.org/papers/w20940.pdf
File-Format: application/pdf
Abstract: Understanding whether racial attitudes are malleable is critical for addressing the underlying causes of racial discrimination. We examine whether white males' stated attitudes and behavior toward African Americans change based on the number and type of black peers to whom they are exposed. To overcome selection bias, we exploit data from the U.S. Air Force Academy in which students are randomly assigned to peer groups. Results show significant evidence in favor of the contact hypothesis. White males are significantly affected by both the number (quantity) and aptitude (quality) of the black peers with whom they are exposed. Specifically, white men randomly assigned to higher-aptitude black peers report being more accepting of blacks in general and are more likely to match with a black roommate the following year after reassignment to a new peer group with a different set of black peers. We also find that, ceteris paribus, exposure to more black peers significantly increases the probability of a bi-racial roommate match.
Handle: RePEc:nbr:nberwo:20940
Template-Type: ReDIF-Paper 1.0
Title: Robots Are Us: Some Economics of Human Replacement
Classification-JEL: E22; E23; E24; J24; J31; O30; O40
Author-Name: Seth G. Benzell
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Guillermo LaGarda
Author-Person: pla788
Author-Name: Jeffrey D. Sachs
Note: EFG LS PE PR
Number: 20941
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20941
File-URL: http://www.nber.org/papers/w20941.pdf
File-Format: application/pdf
Abstract: Will smart machines do to humans what the internal combustion engine did to horses – make them obsolete? If so, can putting people out of work or, at least, good work leave them unable to buy what smart machines produce? Our model’s answer is yes. Over time and under the right conditions, supply reduces demand, leaving everyone worse off in the long-run. Carefully crafted redistribution policies can prevent such immiserating growth. But blunt policies, such as limiting intellectual property rights or restricting labor supply, can make matters worse.
Handle: RePEc:nbr:nberwo:20941
Template-Type: ReDIF-Paper 1.0
Title: Is Sniping A Problem For Online Auction Markets?
Classification-JEL: D12; D44; D47; L81
Author-Name: Matthew Backus
Author-Name: Tom Blake
Author-Person: pbl139
Author-Name: Dimitriy V. Masterov
Author-Name: Steven Tadelis
Author-Person: pta314
Note: IO
Number: 20942
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20942
File-URL: http://www.nber.org/papers/w20942.pdf
File-Format: application/pdf
Abstract: A common complaint about online auctions for consumer goods is the presence of "snipers," who place bids in the final seconds of sequential ascending auctions with predetermined ending times. The literature conjectures that snipers are best-responding to the existence of "incremental" bidders that bid up to their valuation only as they are outbid. Snipers aim to catch these incremental bidders at a price below their reserve, with no time to respond. As a consequence, these incremental bidders may experience regret when they are outbid at the last moment at a price below their reservation value. We measure the effect of this experience on a new buyer's propensity to participate in future auctions. We show the effect to be causal using a carefully selected subset of auctions from eBay.com and instrumental variables estimation strategy. Bidders respond to sniping quite strongly and are between 4 and 18 percent less likely to return to the platform.
Handle: RePEc:nbr:nberwo:20942
Template-Type: ReDIF-Paper 1.0
Title: The Internationalization of the RMB, Capital Market Openness, and Financial Reforms in China
Classification-JEL: F3; F32; F36; F4; F41
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM
Number: 20943
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20943
File-URL: http://www.nber.org/papers/w20943.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman, 2015. "Internationalization of the RMB, Capital Market Openness and Financial Reforms in China," Pacific Economic Review, vol 20(3), pages 444-460.
Abstract: This paper provides an overview of Chinese financial and trade integration in recent decades, and the challenges facing China in the coming years. China had been a prime example of exported growth, benefiting from learning by doing, and by adopting foreign know-how, supported by a complex industrial policy. While the resultant growth has been spectacular, it comes with hidden but growing costs and distortions. The Chinese export-led growth path has been challenged by its own success, and the Global Financial Crisis forced China toward rebalancing, which is a work in progress. Reflecting on the internationalization of the CNY, one expects the rapid accelerating of the commercial internationalization of the CNY.
Handle: RePEc:nbr:nberwo:20943
Template-Type: ReDIF-Paper 1.0
Title: The Impact of War on Resource Allocation: 'Creative Destruction' and the American Civil War
Classification-JEL: N11; N4; O3; O51
Author-Name: B. Zorina Khan
Note: DAE POL PR
Number: 20944
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20944
File-URL: http://www.nber.org/papers/w20944.pdf
File-Format: application/pdf
Publication-Status: published as B. Zorina Khan, 2015. "The Impact of War on Resource Allocation: “Creative Destruction,” Patenting, and the American Civil War," Journal of Interdisciplinary History, vol 46(3), pages 315-353.
Abstract: What is the effect of wars on industrialization, technology and commercial activity? In economic terms, such events as wars comprise a large exogenous shock to labor and capital markets, aggregate demand, the distribution of expenditures, and the rate and direction of technological innovation. In addition, if private individuals are extremely responsive to changes in incentives, wars can effect substantial changes in the allocation of resources, even within a decentralized structure with little federal control and a low rate of labor participation in the military. This paper examines war-time resource reallocation in terms of occupation, geographical mobility, and the commercialization of inventions during the American Civil War. The empirical evidence shows the war resulted in a significant temporary misallocation of resources, by reducing geographical mobility, and by creating incentives for individuals with high opportunity cost to switch into the market for military technologies, while decreasing financial returns to inventors. However, the end of armed conflict led to a rapid period of catching up, suggesting that the war did not lead to a permanent misallocation of inputs, and did not long inhibit the capacity for future technological progress.
Handle: RePEc:nbr:nberwo:20944
Template-Type: ReDIF-Paper 1.0
Title: ‘To Have and Have Not’: Are Rich Litigious Plaintiffs Favored in Court?
Classification-JEL: K10; K41; N11; O43
Author-Name: B. Zorina Khan
Note: DAE DEV LE POL
Number: 20945
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20945
File-URL: http://www.nber.org/papers/w20945.pdf
File-Format: application/pdf
Abstract: A long-standing debate centers on the role of the “Haves” and the “Have Nots” in litigation. It is often suggested that wealthier plaintiffs are more likely to be repeat players, who tend to prevail in disputes before the courts. Do wealthy repeat players indeed capture courts and succeed in shaping legal rules regardless of the intent of policy makers? This paper employs a unique historical data set that allows a direct test of these hypotheses, including information on the wealth of participants in civil district courts, their occupations, and the total number of lawsuits filed by each litigant over a long period. The results show that repeat players indeed tended to be wealthier, in occupations that likely benefited from creating a reputation for uncooperative litigation strategies. However, outcomes in court were independent of wealth, and related more to the type of case. Far from being under the sway of the “Haves,” early courts functioned as an effective enforcement mechanism for extensive markets in debt, that likely promoted economic growth during this period.
Handle: RePEc:nbr:nberwo:20945
Template-Type: ReDIF-Paper 1.0
Title: Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi
Classification-JEL: D03; D91; O16; Q14
Author-Name: Lasse Brune
Author-Name: Xavier Giné
Author-Person: pgi131
Author-Name: Jessica Goldberg
Author-Person: pgo591
Author-Name: Dean Yang
Author-Person: pya75
Note: DEV
Number: 20946
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20946
File-URL: http://www.nber.org/papers/w20946.pdf
File-Format: application/pdf
Publication-Status: published as Lasse Brune & Xavier Gin� & Jessica Goldberg & Dean Yang, 2016. "Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi," Economic Development and Cultural Change, University of Chicago Press, vol. 64(2), pages 187 - 220.
Abstract: We implemented a randomized intervention among Malawian farmers aimed at facilitating formal savings for agricultural inputs. Treated farmers were offered the opportunity to have their cash crop harvest proceeds deposited directly into new bank accounts in their own names, while farmers in the control group were paid harvest proceeds in cash (the status quo). The treatment led to higher savings in the months immediately prior to the next agricultural planting season, and raised agricultural input usage in that season. We also find positive treatment effects on subsequent crop sale proceeds and household expenditures. Because the treatment effect on savings was only a small fraction of the treatment effect on the value of agricultural inputs, mechanisms other than alleviation of savings constraints per se are needed to explain the treatment’s impact on input utilization. We discuss other possible mechanisms through which treatment effects may have operated.
Handle: RePEc:nbr:nberwo:20946
Template-Type: ReDIF-Paper 1.0
Title: Fraudulent Income Overstatement on Mortgage Applications during the Credit Expansion of 2002 to 2005
Classification-JEL: E3; E4; E5; G01; G2; R31
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: AP CF EFG ME
Number: 20947
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20947
File-URL: http://www.nber.org/papers/w20947.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi, 2017. "Fraudulent Income Overstatement on Mortgage Applications During the Credit Expansion of 2002 to 2005," The Review of Financial Studies, vol 30(6), pages 1832-1864.
Abstract: Academic research, government inquiries, and press accounts show extensive mortgage fraud during the housing boom of the mid-2000s. We explore a particular type of mortgage fraud: the overstatement of income on mortgage applications. We define “income overstatement” in a zip code as the growth in income reported on home-purchase mortgage applications minus the average IRS-reported income growth from 2002 to 2005. Income overstatement is highest in low credit score, low income zip codes that Mian and Sufi (2009) show experience the strongest mortgage credit growth from 2002 to 2005. These same zip codes with high income overstatement are plagued with mortgage fraud according to independent measures. Income overstatement in a zip code is associated with poor performance during the mortgage credit boom, and terrible economic and financial economic outcomes after the boom including high default rates, negative income growth, and increased poverty and unemployment. From 1991 to 2007, the zip code-level correlation between IRS-reported income growth and growth in income reported on mortgage applications is always positive with one exception: the correlation goes to zero in the non-GSE market during the 2002 to 2005 period. Income reported on mortgage applications should not be used as true income in low credit score zip codes from 2002 to 2005.
Handle: RePEc:nbr:nberwo:20947
Template-Type: ReDIF-Paper 1.0
Title: Money Earlier or Later? Simple Heuristics Explain Intertemporal Choices Better than Delay Discounting
Classification-JEL: D03; D9
Author-Name: Keith M. Ericson
Author-Name: John Myles White
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Jonathan D. Cohen
Note: AG
Number: 20948
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20948
File-URL: http://www.nber.org/papers/w20948.pdf
File-Format: application/pdf
Publication-Status: published as Money Earlier or Later? Simple Heuristics Explain Intertemporal Choices Better Than Delay Discounting Does Keith M. Marzilli Ericson, , John Myles White, David Laibson, , Jonathan D. Cohen, Psychological Science Vol 26, Issue 6, pp. 826 - 833 First Published April 24, 2015 https://doi.org/10.1177/0956797615572232
Abstract: Heuristic models have been proposed for many domains of choice. We compare heuristic models of intertemporal choice, which can account for many of the known intertemporal choice anomalies, to discounting models. We conduct an out-of-sample, cross-validated comparison of intertemporal choice models. Heuristic models outperform traditional utility discounting models, including models of exponential and hyperbolic discounting. The best performing models predict choices by using a weighted average of absolute differences and relative (percentage) differences of the attributes of the goods in a choice set. We conclude that heuristic models explain time-money tradeoff choices in experiments better than utility discounting models.
Handle: RePEc:nbr:nberwo:20948
Template-Type: ReDIF-Paper 1.0
Title: Decision-Making Approaches and the Propensity to Default: Evidence and Implications
Classification-JEL: D03; D14; G11
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Anne M. Farrell
Author-Name: Scott J. Weisbenner
Note: AG PE
Number: 20949
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20949
File-URL: http://www.nber.org/papers/w20949.pdf
File-Format: application/pdf
Publication-Status: published as Brown, Jeffrey R. & Farrell, Anne M. & Weisbenner, Scott J., 2016. "Decision-making approaches and the propensity to default: Evidence and implications," Journal of Financial Economics, Elsevier, vol. 121(3), pages 477-495.
Abstract: This paper examines heterogeneity in the responsiveness to default options in a large state retirement plan, focusing on individuals’ decision-making approaches as well as their economic and demographic characteristics. Using a survey of plan participants, we find that procrastination and the need for cognitive closure are important determinants of the likelihood of default. We also explore an important implication of defaulting – individuals who default are significantly more likely to subsequently express a desire to enroll in a different plan. The desire to change plans is also correlated with numerous economic and decision-making characteristics, including procrastination.
Handle: RePEc:nbr:nberwo:20949
Template-Type: ReDIF-Paper 1.0
Title: Lifecycle Effects of a Recession on Health Behaviors: Boom, Bust, and Recovery in Iceland
Classification-JEL: D1; I1; J2
Author-Name: Tinna Laufey Ásgeirsdóttir
Author-Name: Hope Corman
Author-Name: Kelly Noonan
Author-Name: Nancy Reichman
Note: EH
Number: 20950
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20950
File-URL: http://www.nber.org/papers/w20950.pdf
File-Format: application/pdf
Publication-Status: published as Tinna Laufey Ásgeirsdóttir & Hope Corman & Kelly Noonan & Nancy E. Reichman, 2016. "Lifecycle effects of a recession on health behaviors: Boom, bust, and recovery in Iceland," Economics & Human Biology, vol 20, pages 90-107.
Abstract: This study uses individual-level longitudinal data from Iceland, a country that experienced a severe economic crisis in 2008 and substantial recovery by 2012, to investigate the extent to which the effects of a recession on health behaviors are lingering or short-lived and to explore trajectories in health behaviors from pre-crisis boom, to crisis, to recovery. Health-compromising behaviors (smoking, heavy drinking, sugared soft drinks, sweets, fast food, and tanning) declined during the crisis, and all but sweets continued to decline during the recovery. Health-promoting behaviors (consumption of fruit, fish oil, and vitamin/ minerals and getting recommended sleep) followed more idiosyncratic paths. Overall, most behaviors reverted back to their pre-crisis levels or trends during the recovery, and these short-term deviations in trajectories were probably too short-lived in this recession to have major impacts on health or mortality. A notable exception is for alcohol consumption, which declined dramatically during the crisis years, continued to fall (at a slower rate) during the recovery, and did not revert back to the pre-crisis upward trend during our observation period. These lingering effects, which directionally run counter to the pre-crisis upward trend, suggest that alcohol is a potential pathway by which recessions improve health and/or reduce mortality.
Handle: RePEc:nbr:nberwo:20950
Template-Type: ReDIF-Paper 1.0
Title: Macroprudential Policy in a World of High Capital Mobility: Policy Implications from an Academic Perspective
Classification-JEL: F33; F36; F42
Author-Name: Charles Engel
Author-Person: pen14
Note: IFM
Number: 20951
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20951
File-URL: http://www.nber.org/papers/w20951.pdf
File-Format: application/pdf
Abstract: The paper explicates the issues raised for macroprudential regulation in a global economy with high capital mobility. The study surveys the recent literature and aims to translate the academic rationale for such policies, in which market imperfections lead to external effects that require policy interventions. The new economics of capital controls is addressed, in which capital controls may be introduced to reduce financial market distortions or to help stabilize exchange rate movements in the face of other market distortions. The empirical literature on the effectiveness of such policies is surveyed.
Handle: RePEc:nbr:nberwo:20951
Template-Type: ReDIF-Paper 1.0
Title: International Coordination of Central Bank Policy
Classification-JEL: F41; F42
Author-Name: Charles Engel
Author-Person: pen14
Note: IFM
Number: 20952
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20952
File-URL: http://www.nber.org/papers/w20952.pdf
File-Format: application/pdf
Publication-Status: published as Charles Engel, 2015. "International coordination of central bank policy," Journal of International Money and Finance, .
Abstract: This paper surveys the current state of the literature on international monetary policy coordination. It relates recent policy discussions to the lessons from the literature. It proposes several avenues for future research.
Handle: RePEc:nbr:nberwo:20952
Template-Type: ReDIF-Paper 1.0
Title: Who Is Coming to the Artefactual Field Experiment? Participation Bias among Chinese Rural Migrants
Classification-JEL: C81; C90; C93
Author-Name: Paul Frijters
Author-Person: pfr18
Author-Name: Tao Sherry Kong
Author-Person: pko375
Author-Name: Elaine M. Liu
Author-Person: pli459
Note: DEV
Number: 20953
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20953
File-URL: http://www.nber.org/papers/w20953.pdf
File-Format: application/pdf
Publication-Status: published as Frijters, Paul & Kong, Tao Sherry & Liu, Elaine M., 2015. "Who is coming to the artefactual field experiment? Participation bias among Chinese rural migrants," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 62-74.
Abstract: In this paper, we compare participants in an artefactual field experiment in urban China with the survey population of migrants from which they were recruited. The experimental participants were more educated, more likely to lend money to friends, and worked fewer hours than the general population. They differ significantly from non-participants in terms of regression coefficients, such as the effects of wealth and marital status on the probability of being self-employed and distance migrated. We thus find that there was selection into our experiments on the basis of both observable characteristics and on unobserved differences in behavioral relations.
Handle: RePEc:nbr:nberwo:20953
Template-Type: ReDIF-Paper 1.0
Title: Nowcasting and Placecasting Entrepreneurial Quality and Performance
Classification-JEL: C43; C51; C81; E27; L25; L26; R12
Author-Name: Jorge Guzman
Author-Name: Scott Stern
Note: PR
Number: 20954
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20954
File-URL: http://www.nber.org/papers/w20954.pdf
File-Format: application/pdf
Publication-Status: published as Nowcasting and Placecasting Entrepreneurial Quality and Performance, Jorge Guzman, Scott Stern. in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, Haltiwanger, Hurst, Miranda, and Schoar. 2017
Abstract: A central challenge in the measurement of entrepreneurship is accounting for the wide variation in entrepreneurial quality across firms. This paper develops a new approach for estimating entrepreneurial quality by linking the probability of a growth outcome (e.g., achieving an IPO or a significant acquisition) as a function of start-up characteristics observable at or near the time of initial business registration (e.g., the firm name or filing for a trademark/patent). Our approach allows us to characterize entrepreneurial quality at an arbitrary level of geographic granularity (placecasting) and in advance of observing the ultimate growth outcomes associated with any cohort of start-ups (nowcasting). We implement this approach in Massachusetts from 1988-2014, yielding several key findings. First, consistent with Guzman and Stern (2015), we find that a small number of observable start-up characteristics allow us to distinguish the potential for a significant growth outcome: in an out-of-sample test, more than 75% of growth outcomes occur in the top 5% of our estimated quality distribution. Second, we propose two new economic statistics for the measurement of entrepreneurship: the Entrepreneurship Quality Index (EQI) and the Regional Entrepreneurship Cohort Potential Index (RECPI). We use these indices to offer a novel characterization of changes in entrepreneurial quality across space and time. For example, we are able to document changes in entrepreneurial quality leadership between the Route 128 corridor, Cambridge and Boston, as well as more granular assessments that allow us to distinguish variation in average entrepreneurial quality down to the level of individual addresses. Third, we find a high correlation between an index that depends only on information directly observable from business registration records (and so can be calculated on a real-time basis) with an index that allows for a two-year lag that allows the estimate of entrepreneurial quality to incorporate early milestones such as patent or trademark application or being featured in local newspapers. Finally, we find that the most significant “gap” between our index and the realized growth outcomes of a given cohort seem to be closely related to investment cycles: while the most successful cohort of Massachusetts start-ups was founded in 1995, the year 2000 cohort registered the highest estimated quality.
Handle: RePEc:nbr:nberwo:20954
Template-Type: ReDIF-Paper 1.0
Title: Demand Estimation with Machine Learning and Model Combination
Classification-JEL: C14; C53; C55
Author-Name: Patrick Bajari
Author-Name: Denis Nekipelov
Author-Person: pne42
Author-Name: Stephen P. Ryan
Author-Person: pry32
Author-Name: Miaoyu Yang
Note: IO
Number: 20955
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20955
File-URL: http://www.nber.org/papers/w20955.pdf
File-Format: application/pdf
Publication-Status: published as Bajari, Patrick, Denis Nekipelov, Stephen P. Ryan, and Miaoyu Yang. 2015. "Machine Learning Methods for Demand Estimation." American Economic Review, 105 (5): 481-85. DOI: 10.1257/aer.p20151021
Abstract: We survey and apply several techniques from the statistical and computer science literature to the problem of demand estimation. We derive novel asymptotic properties for several of these models. To improve out-of-sample prediction accuracy and obtain parametric rates of convergence, we propose a method of combining the underlying models via linear regression. Our method has several appealing features: it is robust to a large number of potentially-collinear regressors; it scales easily to very large data sets; the machine learning methods combine model selection and estimation; and the method can flexibly approximate arbitrary non-linear functions, even when the set of regressors is high dimensional and we also allow for fixed effects. We illustrate our method using a standard scanner panel data set to estimate promotional lift and find that our estimates are considerably more accurate in out of sample predictions of demand than some commonly used alternatives. While demand estimation is our motivating application, these methods are likely to be useful in other microeconometric problems.
Handle: RePEc:nbr:nberwo:20955
Template-Type: ReDIF-Paper 1.0
Title: Unshrouding Effects on Demand for a Costly Add-on: Evidence from Bank Overdrafts in Turkey
Classification-JEL: D12; D14; G02
Author-Name: Sule Alan
Author-Person: pal184
Author-Name: Mehmet Cemalcılar
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Jonathan Zinman
Author-Person: pzi83
Note: DEV LE LS
Number: 20956
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20956
File-URL: http://www.nber.org/papers/w20956.pdf
File-Format: application/pdf
Abstract: The pricing and advertising of tied add-ons and overages have come under increasing scrutiny. Working with a large Turkish bank to test SMS direct marketing promotions to 108,000 existing holders of “free” checking accounts, we find that promoting a large discount on the 60% APR charged for overdrafts reduces overdraft usage. In contrast, messages mentioning overdraft availability without mentioning price increase usage. Neither change persists long after messages stop, suggesting that induced overdrafting is not habit-forming. We discuss implications for interventions to promote transparency in pricing and advertising, and for models of shrouded equilibria, limited attention, and salience.
Handle: RePEc:nbr:nberwo:20956
Template-Type: ReDIF-Paper 1.0
Title: The Real Value of China's Stock Market
Classification-JEL: E44; G12; G15; G18; O16; O53; P20; P34
Author-Name: Jennifer N. Carpenter
Author-Person: pca939
Author-Name: Fangzhou Lu
Author-Name: Robert F. Whitelaw
Note: AP CF DEV EFG IFM
Number: 20957
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20957
File-URL: http://www.nber.org/papers/w20957.pdf
File-Format: application/pdf
Publication-Status: published as Jennifer N. Carpenter & Fangzhou Lu & Robert F. Whitelaw, 2020. "The Real Value of China’s Stock Market," Journal of Financial Economics, .
Abstract: China is the world’s largest investor and greatest contributor to global economic growth by wide margins, and will remain so for many years. The efficiency of its financial system in allocating capital to investment will be important to sustain this growth. This paper shows that China’s stock market has a crucial role to play. Since the reforms of the last decade, China’s stock market has become as informative about future corporate profits as in the US. Moreover, though it is a segmented market, Chinese investors price risk and other stock characteristics remarkably like investors in other large economies. They pay up for large stocks, growth stocks, and long shots, and they discount for illiquidity and market risk. China’s stock market no longer deserves its reputation as a casino. In addition, the trend of stock price informativeness over the last two decades is highly correlated with that of corporate investment efficiency. China’s stock market appears to be aggregating diffuse information and generating useful signals for managers. On the buy side, because of its low correlation with other stock markets and high average returns, China’s stock market offers high alpha to diversified global investors who can access it. Yet this high alpha amounts to an inflated cost of equity capital, constraining the investment of China’s smaller, more profitable enterprises. Further reforms that open this market to global investors and improve stock price informativeness will be important to increase China’s investment efficiency and fuel its continued economic growth. Finally, we interpret the stock market’s recent gyrations through the lens of this research, arguing that its post-crisis lag was a rational downward adjustment to competition from the rapidly expanding shadow banking sector, and its enormous rally last year is a cheer for the roll out of deposit insurance and other Third Plenum reforms. More than ever, China’s stock market is a crucial counterpart to its extraordinary, relationship-driven, but opaque banking sector. China’s stock market may now be the world’s most important crystal ball.
Handle: RePEc:nbr:nberwo:20957
Template-Type: ReDIF-Paper 1.0
Title: Outside Options, Coercion, and Wages: Removing the Sugar Coating
Classification-JEL: F1; F16; N26
Author-Name: Christian Dippel
Author-Name: Avner Greif
Author-Person: pgr24
Author-Name: Daniel Trefler
Author-Person: ptr44
Note: DAE ITI POL
Number: 20958
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20958
File-URL: http://www.nber.org/papers/w20958.pdf
File-Format: application/pdf
Publication-Status: published as Christian Dippel & Avner Greif & Daniel Trefler, 2020. "Outside Options, Coercion, and Wages: Removing the Sugar Coating," The Economic Journal, vol 130(630), pages 1678-1714.
Abstract: In economies with a large informal sector firms can increase profits by reducing workers’ outside options in that informal sector. We formalize this idea in a simple model of an agricultural economy with plantation owners who lobby the government to enact coercive policies—e.g. the eviction and incarceration of squatting small-hold farmers—that reduce the value to working outside the formal sector. Using unique data for 14 British West Indies ‘sugar islands’ from the year of slave emancipation in 1838 until 1913, we examine the impact of plantation owners’ power on wages and coercion-related incarceration. To gain identification, we utilize exogenous variation in the ease with which smallholders could evade the plantation system in the different islands over time. Where evading the plantation system became exogenously easier, planter power declined, incarceration rates dropped, and agricultural wages rose, accompanied by a decline in formal agricultural employment. Most of the wage increase can be statistically explained by the reduced coercion of smallholders.
Handle: RePEc:nbr:nberwo:20958
Template-Type: ReDIF-Paper 1.0
Title: Economic Behavior, Market Signals, and Urban Ecology
Classification-JEL: Q20; Q51; Q57
Author-Name: Joshua K. Abbott
Author-Name: H. Allen Klaiber
Author-Person: pkl93
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 20959
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20959
File-URL: http://www.nber.org/papers/w20959.pdf
File-Format: application/pdf
Abstract: Urban ecologists have extended the bounds of this field to incorporate both the effects of human activities on ecological processes (e.g., humans as generators of disturbances), and the ways in which the structures, functions, and processes of urban ecosystems, and human alterations to them, in turn alter people’s behavior. This feedback loop from the perspective of urban ecologists offers a natural connection to economic models for human behavior. At their core, housing markets reveal price signals that communicate to developers the tradeoffs consumers are willing to make for the private characteristics of homes and the attributes of the neighborhoods where they are located. These signals together with local land use rules guide the location of development. The characteristics of this development in turn influence the functioning and evolution of urban ecosystems. This paper describes markets as coordination mechanisms and conveyors of information from a complex adaptive systems perspective. It also discusses the way in which physical and biological processes, infrastructural boundaries, and the institutional equivalent of “barbed wire” all simultaneously act to shape the transmission of ecosystem services over the landscape. These processes alter the spatial distribution of housing prices in ways that are both continuous and discrete.
Handle: RePEc:nbr:nberwo:20959
Template-Type: ReDIF-Paper 1.0
Title: The Great Recession, Retirement and Related Outcomes
Classification-JEL: E24; E32; J11; J14; J21; J26; J4; J6; J63; J64; J82
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 20960
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20960
File-URL: http://www.nber.org/papers/w20960.pdf
File-Format: application/pdf
Publication-Status: published as “Retirement and the Great Recession” in The Journal of Retirement, Summer, 2015, Vol. 3, No. 1, pp. 87-106.
Abstract: This paper uses data from the Health and Retirement Study to examine retirement and related labor market outcomes for the Early Boomer cohort, those in their mid-fifties at the onset of the Great Recession. Outcomes are then compared with older cohorts at the same age. The Great Recession increased their probability of being laid off and the length of time it took to find other full-time employment. Differences in layoffs between those affected by the recession and members of older cohorts in turn accounted for almost the entire difference between cohorts in employment change with age. The Great Recession does not appear, however, to have depressed the wages in subsequent jobs for those who experienced a layoff. In 2010, 17 percent of the Early Boomers were Not Working and Not Retired or Partially Retired, and 6 percent were unemployed, leaving at least 9 percent who were not working and not unemployed but not retired or only partially retired. At the recession’s peak, half of those who experienced a layoff ended up in the Not Retired or Partially Retired, Not Working category. But only a quarter of those who declared themselves to be Not Retired or Partially Retired, and were Not Working, had experienced a layoff. Most of the jump in Not Retired or Partially Retired, Not Working appears to reflect a change in expectations about the potential or need for future work, a change that is not the result of an actual job loss.
Handle: RePEc:nbr:nberwo:20960
Template-Type: ReDIF-Paper 1.0
Title: Analyzing the Labor Market Outcomes of Occupational Licensing
Classification-JEL: J30; J38; J4; J44; J48; K23; L5; L51; L88
Author-Name: Maury Gittleman
Author-Person: pgi10
Author-Name: Mark A. Klee
Author-Name: Morris M. Kleiner
Note: IO LE LS
Number: 20961
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20961
File-URL: http://www.nber.org/papers/w20961.pdf
File-Format: application/pdf
Publication-Status: published as Maury Gittleman & Mark A. Klee & Morris M. Kleiner, 2018. "Analyzing the Labor Market Outcomes of Occupational Licensing," Industrial Relations: A Journal of Economy and Society, vol 57(1), pages 57-100.
Abstract: Recent assessments of occupational licensing have shown varying effects of the institution on labor market outcomes. This study revisits the relationship between occupational licensing and labor market outcomes by analyzing a new topical module to the Survey of Income and Program Participation (SIPP). Relative to previously available data, the topical module offers more detailed information on occupational licensing from government, with larger sample sizes and access to richer sets of person-level characteristics. We exploit this larger and more detailed data set to examine the labor market outcomes of occupational licensing and how workers obtain these licenses from government. More specifically, we analyze whether there is evidence of a licensing wage premium, and how this premium varies with aspects of the regulatory regime such as the requirements to obtain a license or certification and the level of government oversight. After controlling for observable heterogeneity, including occupational status, we find that those with a license earn higher pay, are more likely to be employed, and have a higher probability of retirement and pension plan offers.
Handle: RePEc:nbr:nberwo:20961
Template-Type: ReDIF-Paper 1.0
Title: Affirmative Action and the Quality-Fit Tradeoff
Classification-JEL: I23; I24; I26; J15
Author-Name: Peter Arcidiacono
Author-Name: Michael Lovenheim
Author-Person: plo162
Note: ED LS PE
Number: 20962
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20962
File-URL: http://www.nber.org/papers/w20962.pdf
File-Format: application/pdf
Publication-Status: published as Peter Arcidiacono & Michael Lovenheim, 2016. "Affirmative Action and the Quality-Fit Trade-Off," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 3-51, March.
Abstract: This paper reviews the literature on affirmative action in undergraduate education and law schools, focusing in particular on the tradeoff between the quality of an institution and the fit between a school and a student. We first discuss the conditions under which affirmative action for under-represented minorities (URM) could help or harm their educational outcomes. We then provide descriptive evidence on the extent of affirmative action in law schools, as well as a review of the contentious literature on how affirmative action affects URM student performance in law school. We present a simple selection model that we argue provides a useful framework for interpreting the disparate findings in this literature. The paper then turns to a similar discussion of affirmative action in undergraduate admissions, focusing on evidence of the extent of race-based admissions practices and the effect such preferences have on the quality of schools in which minority students enroll, graduation rates, college major and earnings. We pay much attention to the evidence from state-level bans on affirmative action and argue these bans are very informative about how affirmative action affects URM students. Finally, we discuss the evidence on "percent plans," which several states have enacted in an attempt to replace affirmative action.
Handle: RePEc:nbr:nberwo:20962
Template-Type: ReDIF-Paper 1.0
Title: Systemic Risk and the Macroeconomy: An Empirical Evaluation
Classification-JEL: C31; C32; C38; C58; E44; G01; G2
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Bryan T. Kelly
Author-Name: Seth Pruitt
Author-Person: ppr155
Note: AP EFG IFM
Number: 20963
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20963
File-URL: http://www.nber.org/papers/w20963.pdf
File-Format: application/pdf
Publication-Status: published as Giglio, Stefano & Kelly, Bryan & Pruitt, Seth, 2016. "Systemic risk and the macroeconomy: An empirical evaluation," Journal of Financial Economics, Elsevier, vol. 119(3), pages 457-471.
Abstract: This article evaluates a large collection of systemic risk measures based on their ability to predict macroeconomic downturns. We evaluate 19 measures of systemic risk in the US and Europe spanning several decades. We propose dimension reduction estimators for constructing systemic risk indexes from the cross section of measures and prove their consistency in a factor model setting. Empirically, systemic risk indexes provide significant predictive information out- of-sample for the lower tail of future macroeconomic shocks.
Handle: RePEc:nbr:nberwo:20963
Template-Type: ReDIF-Paper 1.0
Title: Sovereign Default, Debt Restructuring, and Recovery Rates: Was the Argentinean “Haircut” Excessive?
Classification-JEL: F34; F41; F65; G15
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM
Number: 20964
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20964
File-URL: http://www.nber.org/papers/w20964.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Edwards, 2015. "Sovereign Default, Debt Restructuring, and Recovery Rates: Was the Argentinean “Haircut” Excessive?," Open Economies Review, vol 26(5), pages 839-867.
Abstract: I use data on 180 sovereign defaults to analyze what determines the recovery rate after a debt restructuring process. Why do creditors recover, in some cases, more than 90%, while in other cases they recover less than 10%? I find support for the Grossman and Van Huyk model of “excusable defaults”: countries that experience more severe negative shocks tend to have higher “haircuts” than countries that face less severe shocks. I discuss in detail debt restructuring episodes in Argentina, Chile, Uruguay and Greece. The results suggest that the haircut imposed by Argentina in its 2005 restructuring (75%) was “excessively high.” The other episodes’ haircuts are consistent with the model.
Handle: RePEc:nbr:nberwo:20964
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Production Function for Human Capital: Results from a Randomized Control Trial in Colombia
Classification-JEL: H31; I24; I25; I28; I3; J38; O1; O15; O54
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Sarah Cattan
Author-Person: pca1168
Author-Name: Emla Fitzsimons
Author-Person: pfi87
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Marta Rubio-Codina
Note: CH DEV LS
Number: 20965
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20965
File-URL: http://www.nber.org/papers/w20965.pdf
File-Format: application/pdf
Publication-Status: published as Orazio Attanasio & Sarah Cattan & Emla Fitzsimons & Costas Meghir & Marta Rubio-Codina, 2020. "Estimating the Production Function for Human Capital: Results from a Randomized Controlled Trial in Colombia," American Economic Review, vol 110(1), pages 48-85.
Abstract: We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of parents' material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, emphasizing the importance of parenting interventions at an early age.
Handle: RePEc:nbr:nberwo:20965
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Horizontal Product Differentiation under Bertrand and Cournot Competition: Revisiting the Bertrand Paradox
Classification-JEL: D4; L1; L13
Author-Name: James A. Brander
Author-Person: pbr168
Author-Name: Barbara J. Spencer
Author-Person: psp2
Note: IO
Number: 20966
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20966
File-URL: http://www.nber.org/papers/w20966.pdf
File-Format: application/pdf
Abstract: This paper provides a new and simple model of endogenous horizontal product differentiation based on a standard demand structure derived from quadratic utility. One objective of the paper is to explain the “empirical Bertrand paradox” – the failure to observe homogeneous product Bertrand oligopoly, while homogeneous product Cournot oligopoly has significant empirical relevance. In our model firms invest in product differentiation if differentiation investments are sufficiently effective (i.e. if differentiation is not too costly). The threshold level of differentiation effectiveness needed to induce such investments is an order of magnitude less for Bertrand firms than for Cournot firms. Thus there is a wide range over which Bertrand firms differentiate their products but Cournot firms do not. If Cournot firms do choose to differentiate their products, corresponding Bertrand firms always differentiate more. We also establish the important insight that if product differentiation is endogenous Bertrand firms may charge higher prices and earn higher profits than corresponding Cournot firms, in contrast to the general presumption that Bertrand behavior is more competitive than Cournot behavior. Interestingly, consumer surplus increases with differentiation in the Cournot model but, due to sharply increasing prices, decreases with differentiation in the Bertrand model.
Handle: RePEc:nbr:nberwo:20966
Template-Type: ReDIF-Paper 1.0
Title: Corporate Culture, Societal Culture, and Institutions
Classification-JEL: K4; Z1
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: LE
Number: 20967
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20967
File-URL: http://www.nber.org/papers/w20967.pdf
File-Format: application/pdf
Publication-Status: published as Luigi Guiso & Paola Sapienza & Luigi Zingales, 2015. "Corporate Culture, Societal Culture, and Institutions," American Economic Review, American Economic Association, vol. 105(5), pages 336-39, May.
Abstract: While both cultural and legal norms (institutions) help foster cooperation, culture is the more primitive of the two and itself sustains formal institutions. Cultural changes are rarer and slower than changes in legal institutions, which makes it difficult to identify the role played by culture. Cultural changes and their effects are easier to identify in simpler, more controlled, environments, such as corporations. Corporate culture, thus, is not only interesting per se, but also as a laboratory to study the role of societal culture and the way it can be changed.
Handle: RePEc:nbr:nberwo:20967
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Financially Constrained Arbitrage
Classification-JEL: D52; D53; G01; G11; G12; G14; G23
Author-Name: Denis Gromb
Author-Person: pgr309
Author-Name: Dimitri Vayanos
Author-Person: pva498
Note: AP
Number: 20968
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20968
File-URL: http://www.nber.org/papers/w20968.pdf
File-Format: application/pdf
Publication-Status: published as DENIS GROMB & DIMITRI VAYANOS, 2018. "The Dynamics of Financially Constrained Arbitrage," The Journal of Finance, vol 73(4), pages 1713-1750.
Abstract: We develop a model of financially constrained arbitrage, and use it to study the dynamics of arbitrage capital, liquidity, and asset prices. Arbitrageurs exploit price discrepancies between assets traded in segmented markets, and in doing so provide liquidity to investors. A collateral constraint limits their positions as a function of capital. We show that the dynamics of arbitrage activity are self-correcting: following a shock that depletes arbitrage capital, profitability increases, and this allows capital to be gradually replenished. Spreads increase more and recover faster for more volatile trades, although arbitrageurs cut their positions in these trades the least. When arbitrage capital is more mobile across markets, liquidity in each market generally becomes less volatile, but the reverse may hold for aggregate liquidity because of mobility-induced contagion.
Handle: RePEc:nbr:nberwo:20968
Template-Type: ReDIF-Paper 1.0
Title: Individual Time Preferences and Energy Efficiency
Classification-JEL: D9; H43; Q41; Q48
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Juha V. Siikamaki
Author-Person: psi168
Note: EEE PE PR
Number: 20969
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20969
File-URL: http://www.nber.org/papers/w20969.pdf
File-Format: application/pdf
Publication-Status: published as Richard G. Newell & Juha Siikamäki, 2015. "Individual Time Preferences and Energy Efficiency," American Economic Review, American Economic Association, vol. 105(5), pages 196-200, May.
Abstract: We examine the role of individual discount rates in energy efficiency decisions using evidence from an extensive survey of U.S. homeowners to elicit preferences for energy efficiency and cash flows over time. We find considerable heterogeneity in individual discount rates. We also find that individual time preferences systematically influence willingness to invest in energy efficiency, as measured through product choices, required payback periods, and energy efficiency tax credit claims. Individual discount rate heterogeneity is in turn significantly related to characteristics of the individual and their household, including their financial situation. Individuals with less education, larger households, low income, and low credit scores had systematically higher discount rates, as did black, non-Hispanic respondents. Our findings highlight the importance of individual discount rates to understanding energy efficiency investments, the energy-efficiency gap, and policy evaluation.
Handle: RePEc:nbr:nberwo:20969
Template-Type: ReDIF-Paper 1.0
Title: Capital Control Measures: A New Dataset
Classification-JEL: F3; F38
Author-Name: Andrés Fernández
Author-Person: pfe290
Author-Name: Michael W. Klein
Author-Person: pkl9
Author-Name: Alessandro Rebucci
Author-Person: pre6
Author-Name: Martin Schindler
Author-Person: psc16
Author-Name: Martín Uribe
Note: IFM
Number: 20970
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20970
File-URL: http://www.nber.org/papers/w20970.pdf
File-Format: application/pdf
Publication-Status: published as Andrés Fernández & Michael W Klein & Alessandro Rebucci & Martin Schindler & Martín Uribe, 2016. "Capital Control Measures: A New Dataset," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 548-574, August.
Abstract: We present and describe a new dataset of capital control restrictions on both inflows and outflows of ten categories of assets for 100 countries over the period 1995 to 2013. Building on the data first presented in Martin Schindler (2009), and other datasets based on the analysis of the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions, this dataset includes additional asset categories, more countries, and a longer time period. We discuss the manner in which we translate the information in the AREAER into a usable data set. We also characterize the data with respect to the prevalence of controls across asset categories, the correlation of controls across asset categories and between controls on inflows and controls on outflows, the aggregation of the separate categories into broader indicators, and the comparison of our dataset with other indicators of capital controls.
Handle: RePEc:nbr:nberwo:20970
Template-Type: ReDIF-Paper 1.0
Title: The Catch-22 of External Validity in the Context of Constraints to Firm Growth
Classification-JEL: M1; O1
Author-Name: Greg Fischer
Author-Name: Dean Karlan
Author-Person: pka56
Note: DEV LS
Number: 20971
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20971
File-URL: http://www.nber.org/papers/w20971.pdf
File-Format: application/pdf
Publication-Status: published as Greg Fischer & Dean Karlan, 2015. "The Catch-22 of External Validity in the Context of Constraints to Firm Growth," American Economic Review, vol 105(5), pages 295-299.
Abstract: We document the presence of multiple and varied constraints to small and medium firm growth. This presents both a practical problem for business training programs and a challenge to academic economists trying to identify mechanisms though which these programs may affect outcomes. External validity needs theory. This pushes researchers to narrowly defined and highly selected sample frames, which limits the potential for clear, generalizable policy prescriptions. Ultimately, larger samples, multi-arm evaluations, process documentation, and narrowly-focused, theory-supported empirical work are all needed, but the complexity of the problem limits what we learn from any single study.
Handle: RePEc:nbr:nberwo:20971
Template-Type: ReDIF-Paper 1.0
Title: The Wealth of Wealthholders
Classification-JEL: D91; E21; H31; J14
Author-Name: John Ameriks
Author-Person: pam72
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Minjoon Lee
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Christopher Tonetti
Author-Person: pto237
Note: AG EFG ME PR
Number: 20972
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20972
File-URL: http://www.nber.org/papers/w20972.pdf
File-Format: application/pdf
Abstract: Wealth, though crucial for modeling economic behavior and understanding well-being, is difficult to measure in surveys. This paper introduces a new, comprehensive account-by-account approach for eliciting asset holding. This approach is implemented in the Vanguard Research Initiative, a panel of wealthholders designed to yield high-quality measurements for a large sample of older Americans with significant financial assets. Because survey responses are linked to administrative account balances, this paper can show that the approach yields precise, unbiased estimates. Having accurate and dense data on the wealth of wealthholders provides sharper inferences on wealth management behavior as well as on relationships between wealth and economic behavior than is possible in leading datasets.
Handle: RePEc:nbr:nberwo:20972
Template-Type: ReDIF-Paper 1.0
Title: Long-Term-Care Utility and Late-in-Life Saving
Classification-JEL: D91; E21; H31; I10; J14
Author-Name: John Ameriks
Author-Person: pam72
Author-Name: Joseph S. Briggs
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Christopher Tonetti
Author-Person: pto237
Note: AG EFG EH ME PR
Number: 20973
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20973
File-URL: http://www.nber.org/papers/w20973.pdf
File-Format: application/pdf
Publication-Status: published as John Ameriks & Joseph Briggs & Andrew Caplin & Matthew D. Shapiro & Christopher Tonetti, 2020. "Long-Term-Care Utility and Late-in-Life Saving," Journal of Political Economy, vol 128(6), pages 2375-2451.
Abstract: Older wealthholders spend down assets much more slowly than predicted by classic life-cycle models. This paper introduces health-dependent utility into a model in which preferences for bequests, expenditures when in need of long-term care (LTC), and ordinary consumption combine with health and longevity uncertainty to explain saving behavior. To sharply identify motives, it develops strategic survey questions (SSQs) that elicit stated preferences. The model is estimated using these SSQs and wealth data from the Vanguard Research Initiative. A robust finding is that the desire to self-insure against long-term-care risk explains a substantial fraction of the wealthholding of older Americans.
Handle: RePEc:nbr:nberwo:20973
Template-Type: ReDIF-Paper 1.0
Title: Hoard Behavior and Commodity Bubbles
Classification-JEL: G0
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Áureo de Paula
Author-Person: pde704
Author-Name: Vishal Singh
Note: AP
Number: 20974
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20974
File-URL: http://www.nber.org/papers/w20974.pdf
File-Format: application/pdf
Abstract: Hoarding by large speculators is often blamed for contributing to commodity market panics and bubbles. Using supermarket scanner data on US household purchases during the 2008 Rice Bubble, we show that hoarding is in fact more systemic, affecting even households who have no resale motive. Export bans led to a spike in prices worldwide in the first half of 2008, which spilled over into US markets. Anticipating shortages, US households with previous purchases of rice, especially those of Asian ethnicity, nearly doubled their buying around the peak of the bubble. We document transmission mechanisms through over-extrapolation from high prices and contagion, as many households bought rice for the first and last time during the bubble.
Handle: RePEc:nbr:nberwo:20974
Template-Type: ReDIF-Paper 1.0
Title: A Quantitative Analysis of Subsidy Competition in the U.S.
Classification-JEL: F12; F13; R12; R58
Author-Name: Ralph Ossa
Author-Person: pos139
Note: ITI
Number: 20975
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20975
File-URL: http://www.nber.org/papers/w20975.pdf
File-Format: application/pdf
Abstract: I use a quantitative economic geography model to explore subsidy competition among U.S. states. I ask what motivates state governments to subsidize firm relocations and quantify how strong their incentives are. I also characterize fully non-cooperative and cooperative subsidy choices and assess how far away we are from these extremes. I find that states have strong incentives to subsidize firm relocations in order to gain at the expense of other states. I also find that observed subsidies are closer to cooperative than non-cooperative subsidies but the potential losses from an escalation of subsidy competition are large.
Handle: RePEc:nbr:nberwo:20975
Template-Type: ReDIF-Paper 1.0
Title: Prescription Drug Use under Medicare Part D: A Linear Model of Nonlinear Budget Sets
Classification-JEL: D12; G22; I13
Author-Name: Jason Abaluck
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Ashley Swanson
Note: AG EH
Number: 20976
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20976
File-URL: http://www.nber.org/papers/w20976.pdf
File-Format: application/pdf
Publication-Status: published as Jason Abaluck & Jonathan Gruber & Ashley Swanson, 2018. "Prescription drug use under Medicare Part D: A linear model of nonlinear budget sets," Journal of Public Economics, vol 164, pages 106-138.
Abstract: Medicare Part D enrollees face a complicated decision problem: they must dynamically choose prescription drug consumption in each period given difficult- to-find prices and a non-linear budget set. We use Medicare Part D claims data from 2006-2009 to estimate a flexible model of consumption that accounts for non-linear budget sets, dynamic incentives due to myopia and uncertainty, and price salience. By using variation away from kink points, we are able to estimate structural models with a linear regression of consumption on coverage range prices. We then compare performance under several candidate models of expectations and coverage phase weighting. The estimates suggest small marginal price elasticities and substantial myopia; we also find evidence that salient plan characteristics impact consumption beyond their effect on out-of-pocket prices. A hyperbolic discounting model which allows for salient plan characteristics fits the data well, and outperforms both rational models and alternative behavioral models.
Handle: RePEc:nbr:nberwo:20976
Template-Type: ReDIF-Paper 1.0
Title: Old and Young Politicians
Classification-JEL: C21; D78; H72; H77; J18
Author-Name: Alberto F. Alesina
Author-Person: pal207
Author-Name: Ugo Troiano
Author-Person: ptr194
Author-Name: Traviss Cassidy
Author-Person: pca1102
Note: PE POL
Number: 20977
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20977
File-URL: http://www.nber.org/papers/w20977.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Traviss Cassidy & Ugo Troiano, 2019. "Old and Young Politicians," Economica, vol 86(344), pages 689-727.
Abstract: We evaluate the effect of a politician’s age on political governance, reelection rates,and policies using data on Italian local governments. Our results suggest that younger politicians are more likely to behave strategically in response to election incentives: they increase spending and obtain more transfers from higher levels of government in preelection years. We argue that is a sign of stronger career concerns incentives. The results are robust to adopting three different identification strategies: fixed-effects regression, standard regression discontinuity design, and an augmented regression discontinuity design that controls for residual heterogeneity.
Handle: RePEc:nbr:nberwo:20977
Template-Type: ReDIF-Paper 1.0
Title: Beyond Random Assignment: Credible Inference of Causal Effects in Dynamic Economies
Classification-JEL: C01; C22; C52; C54; G38
Author-Name: Christopher A. Hennessy
Author-Name: Ilya A. Strebulaev
Author-Person: pst526
Note: CF LS PE
Number: 20978
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20978
File-URL: http://www.nber.org/papers/w20978.pdf
File-Format: application/pdf
Abstract: Random assignment is insufficient for measured treatment responses to recover causal effects (comparative statics) in dynamic economies. We characterize analytically bias probabilities and magnitudes. If the policy variable is binary there is attenuation bias. With more than two policy states, treatment responses can undershoot, overshoot, or have incorrect signs. Under permanent random assignment, treatment responses overshoot (have incorrect signs) for realized changes opposite in sign to (small relative to) expected changes. We derive necessary and sufficient conditions, beyond random assignment, for correct inference of causal effects: martingale policy variable. Infinitesimal transition rates are only sufficient absent fixed costs. Stochastic monotonicity is sufficient for correct sign inference. If these conditions are not met, we show how treatment responses can nevertheless be corrected and mapped to causal effects or extrapolated to forecast responses to future policy changes within or across policy generating processes.
Handle: RePEc:nbr:nberwo:20978
Template-Type: ReDIF-Paper 1.0
Title: Optimal Contracting, Corporate Finance, and Valuation with Inalienable Human Capital
Classification-JEL: G3; G32
Author-Name: Patrick Bolton
Author-Person: pbo544
Author-Name: Neng Wang
Author-Person: pwa390
Author-Name: Jinqiang Yang
Note: CF
Number: 20979
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20979
File-URL: http://www.nber.org/papers/w20979.pdf
File-Format: application/pdf
Publication-Status: published as PATRICK BOLTON & NENG WANG & JINQIANG YANG, 2019. "Optimal Contracting, Corporate Finance, and Valuation with Inalienable Human Capital," The Journal of Finance, vol 74(3), pages 1363-1429.
Abstract: A risk-averse entrepreneur with access to a profitable venture needs to raise funds from investors. She cannot indefinitely commit her human capital to the venture, which limits the firm’s debt capacity, distorts investment and compensation, and constrains the entrepreneur’s risk-sharing. This puts dynamic liquidity and state-contingent risk allocation at the center of corporate financial management. The firm balances mean-variance investment efficiency and the preservation of financial slack. We show that in general the entrepreneur’s net worth is overexposed to idiosyncratic risk and underexposed to systematic risk. These distortions are greater the closer the firm is to exhausting its debt capacity.
Handle: RePEc:nbr:nberwo:20979
Template-Type: ReDIF-Paper 1.0
Title: Anticipation, Tax Avoidance, and the Price Elasticity of Gasoline Demand
Classification-JEL: H23; H26; Q41; Q47
Author-Name: John Coglianese
Author-Name: Lucas W. Davis
Author-Person: pda367
Author-Name: Lutz Kilian
Author-Person: pki110
Author-Name: James H. Stock
Author-Person: pst148
Note: EEE
Number: 20980
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20980
File-URL: http://www.nber.org/papers/w20980.pdf
File-Format: application/pdf
Publication-Status: published as John Coglianese & Lucas W. Davis & Lutz Kilian & James H. Stock, 2017. "Anticipation, Tax Avoidance, and the Price Elasticity of Gasoline Demand," Journal of Applied Econometrics, vol 32(1), pages 1-15.
Abstract: Traditional least squares estimates of the responsiveness of gasoline consumption to changes in gasoline prices are biased toward zero, given the endogeneity of gasoline prices. A seemingly natural solution to this problem is to instrument for gasoline prices using gasoline taxes, but this approach tends to yield implausibly large price elasticities. We demonstrate that anticipatory behavior provides an important explanation for this result. We provide evidence that gasoline buyers increase gasoline purchases before tax increases and delay gasoline purchases before tax decreases. This intertemporal substitution renders the tax instrument endogenous, invalidating conventional IV analysis. We show that including suitable leads and lags in the regression restores the validity of the IV estimator, resulting in much lower and more plausible elasticity estimates. Our analysis has implications more broadly for the IV analysis of markets in which buyers may store purchases for future consumption.
Handle: RePEc:nbr:nberwo:20980
Template-Type: ReDIF-Paper 1.0
Title: Regulating Innovation with Uncertain Quality: Information, Risk, and Access in Medical Devices
Classification-JEL: I11; L11; L51
Author-Name: Matthew Grennan
Author-Name: Robert Town
Author-Person: pto430
Note: EH IO
Number: 20981
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20981
File-URL: http://www.nber.org/papers/w20981.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Grennan & Robert J. Town, 2020. "Regulating Innovation with Uncertain Quality: Information, Risk, and Access in Medical Devices," American Economic Review, vol 110(1), pages 120-161.
Abstract: We study the impact of regulating product entry and quality information requirements on an oligopoly equilibrium and consumer welfare. Product testing can reduce consumer uncertainty, but also increase entry costs and delay entry. Using variation between EU and US medical device regulations, we document patterns consistent with valuable learning from more stringent US requirements. To derive welfare implications, we pair the data with a model of supply, demand, and testing regulation. US policy is indistinguishable from the policy that maximizes total surplus in our estimated model, while the EU could benefit from more testing. “Post-market surveillance” could further increase surplus.
Handle: RePEc:nbr:nberwo:20981
Template-Type: ReDIF-Paper 1.0
Title: Estimating Individual Ambiguity Aversion: A Simple Approach
Classification-JEL: C9; C91; C92; C93; D81
Author-Name: Uri Gneezy
Author-Person: pgn18
Author-Name: Alex Imas
Author-Person: pim44
Author-Name: John List
Author-Person: pli176
Note: EEE PE
Number: 20982
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20982
File-URL: http://www.nber.org/papers/w20982.pdf
File-Format: application/pdf
Abstract: We introduce a simple, easy to implement instrument for jointly eliciting risk and ambiguity attitudes. Using this instrument, we structurally estimate a two-parameter model of preferences. Our findings indicate that ambiguity aversion is significantly overstated when risk neutrality is assumed. This highlights the interplay between risk and ambiguity attitudes as well as the importance of joint estimation. In addition, over our stakes levels we find no difference in the estimated parameters when incentives are real or hypothetical, raising the possibility that a simple hypothetical question can provide insights into an individuals preferences over ambiguity in such economic environments.
Handle: RePEc:nbr:nberwo:20982
Template-Type: ReDIF-Paper 1.0
Title: Teachers’ Pay for Performance in the Long-Run: Effects on Students’ Educational and Labor Market Outcomes in Adulthood
Classification-JEL: J24; J3
Author-Name: Victor Lavy
Author-Person: pla111
Note: CH ED LS
Number: 20983
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20983
File-URL: http://www.nber.org/papers/w20983.pdf
File-Format: application/pdf
Abstract: This paper examines the dynamic effects of a teachers’ pay for performance experiment on long-term outcomes at adulthood. The program led to a gradual increase in university education of the high school treated students, reaching a gain of 0.25 years of schooling at age 28-30. The effects on employment and earnings were initially negative, coinciding with a higher enrollment rate in university, but became positive and significant with time. These gains are largely mediated by the positive effect of the program on several high school outcomes, including quantity and quality gains in the high stake matriculation exams.
Handle: RePEc:nbr:nberwo:20983
Template-Type: ReDIF-Paper 1.0
Title: Fundamentally, Momentum is Fundamental Momentum
Classification-JEL: G12
Author-Name: Robert Novy-Marx
Note: AP
Number: 20984
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20984
File-URL: http://www.nber.org/papers/w20984.pdf
File-Format: application/pdf
Abstract: Momentum in firm fundamentals, i.e., earnings momentum, explains the performance of strategies based on price momentum. Earnings surprise measures subsume past performance in cross sectional regressions of returns on firm characteristics, and the time-series performance of price momentum strategies is fully explained by their covariances with earnings momentum strategies. Controlling for earnings surprises when constructing price momentum strategies significantly reduces their performance, without reducing their high volatilities. Controlling for past performance when constructing earnings momentum strategies reduces their volatilities, and eliminates the crashes strongly associated with momentum of all types, without reducing the strategies' high average returns. While past performance does not have independent power predicting the cross section of expected returns, it does predicts stock comovements, and is thus important for explain cross sectional variation in realized returns.
Handle: RePEc:nbr:nberwo:20984
Template-Type: ReDIF-Paper 1.0
Title: How Can a Q-Theoretic Model Price Momentum?
Classification-JEL: G12
Author-Name: Robert Novy-Marx
Note: AP
Number: 20985
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20985
File-URL: http://www.nber.org/papers/w20985.pdf
File-Format: application/pdf
Abstract: The answer, of course, is that it can't. Hou, Xue, and Zhang's (2014) empirical model does price portfolios sorted on prior year's performance, but for reasons outside of q-theory---it does so by including a fundamental momentum factor, i.e., a factor based on momentum in firm fundamentals. The ROE factor, which does all the work pricing momentum, is constructed by sorting stocks on the most recently announced quarterly earnings, which tend to be high after positive earnings surprises. A post earnings announcement drift factor prices the model's ROE factor, and subsumes the role the ROE factor plays pricing momentum portfolios when both are included as explanatory variables. The HXZ model also only prices portfolios sorted on gross profitability by conflating earnings profitability, which drives the ROE factor's covariance with gross profitability, with post earnings announcement drift, which drives the ROE factor's high average returns. Controlling for fundamental momentum, the HXZ model also loses its power to explain the performance of gross profitability. These facts are inconsistent with a neoclassical interpretation of the empirical model.
Handle: RePEc:nbr:nberwo:20985
Template-Type: ReDIF-Paper 1.0
Title: Asymmetric Information and Remittances: Evidence from Matched Administrative Data
Classification-JEL: F22; F24; J60; O15; O53
Author-Name: Thomas Joseph
Author-Name: Yaw Nyarko
Author-Person: pny18
Author-Name: Shing-Yi Wang
Author-Person: pwa494
Note: DEV
Number: 20986
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20986
File-URL: http://www.nber.org/papers/w20986.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Joseph & Yaw Nyarko & Shing-Yi Wang, 2018. "Asymmetric Information and Remittances: Evidence from Matched Administrative Data," American Economic Journal: Applied Economics, vol 10(2), pages 58-100.
Abstract: Using new data matching remittances and monthly payroll disbursals, we demonstrate how fluctuations in migrants' earnings in the United Arab Emirates affect their remittances. We consider three types of income fluctuations that are observable by families at home: seasonalities, weather shocks and a labor reform. Remittances move with all of these income changes. Remittances do not move with an individual's growth in earnings over time. The slope of the relationship between earnings and time in the UAE varies across individuals and is not easy to observe by families. Thus, a key characteristic that drives remittance behavior is the observability of income rather than other features of these fluctuations. The results are consistent with a private information model where remittances are viewed by the migrant worker as payments to their families in an income-sharing contract.
Handle: RePEc:nbr:nberwo:20986
Template-Type: ReDIF-Paper 1.0
Title: Pick Your Poison: The Choices and Consequences of Policy Responses to Crises
Classification-JEL: F41
Author-Name: Kristin J. Forbes
Author-Person: pfo1
Author-Name: Michael W. Klein
Author-Person: pkl9
Note: IFM
Number: 20987
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20987
File-URL: http://www.nber.org/papers/w20987.pdf
File-Format: application/pdf
Publication-Status: published as Kristin J Forbes & Michael W Klein, 2015. "Pick Your Poison: The Choices and Consequences of Policy Responses to Crises," IMF Economic Review, Palgrave Macmillan, vol. 63(1), pages 197-237, May.
Abstract: Countries choose different strategies when responding to crises. An important challenge in assessing the impact of these policies is selection bias with respect to relatively time-invariant country characteristics, as well as time-varying values of outcome variables and other policy choices. This paper addresses this challenge by using propensity-score matching to estimate how major reserve sales, large currency depreciations, substantial changes in policy interest rates, and increased controls on capital outflows affect real GDP growth, unemployment, and inflation during two periods marked by crises, 1997 to 2001 and 2007 to 2011. We find that none of these policies yield significant improvements in growth, unemployment, and inflation. Instead, a large increase in interest rates and new capital controls are estimated to cause a significant decline in GDP growth. Sharp currency depreciations may raise GDP growth over time, but only with a lagged effect and after an initial contraction.
Handle: RePEc:nbr:nberwo:20987
Template-Type: ReDIF-Paper 1.0
Title: Power to Choose? An Analysis of Consumer Inertia in the Residential Electricity Market
Classification-JEL: D8; L0; L5
Author-Name: Ali Hortaçsu
Author-Name: Seyed Ali Madanizadeh
Author-Name: Steven L. Puller
Author-Person: ppu28
Note: EEE IO PE
Number: 20988
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20988
File-URL: http://www.nber.org/papers/w20988.pdf
File-Format: application/pdf
Publication-Status: published as Ali Hortaçsu & Seyed Ali Madanizadeh & Steven L. Puller, 2017. "Power to Choose? An Analysis of Consumer Inertia in the Residential Electricity Market," American Economic Journal: Economic Policy, vol 9(4), pages 192-226.
Abstract: Many jurisdictions around the world have deregulated utilities and opened retail markets to competition. However, inertial decisionmaking can diminish consumer benefits of retail competition. Using household-level data from the Texas residential electricity market, we document evidence of consumer inertia. We estimate an econometric model of retail choice to measure two sources of inertia: (1) search frictions/inattention, and (2) a brand advantage that consumers afford the incumbent. We find that households rarely search for alternative retailers, and when they do search, households attach a brand advantage to the incumbent. Counterfactual experiments show that low-cost information interventions can notably increase consumer surplus.
Handle: RePEc:nbr:nberwo:20988
Template-Type: ReDIF-Paper 1.0
Title: Culture, Ethnicity and Diversity
Classification-JEL: D74; J15; P48; Z10
Author-Name: Klaus Desmet
Author-Person: pde116
Author-Name: Ignacio Ortuño-Ortín
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: POL
Number: 20989
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20989
File-URL: http://www.nber.org/papers/w20989.pdf
File-Format: application/pdf
Publication-Status: published as Klaus Desmet & Ignacio Ortuño-Ortín & Romain Wacziarg, 2017. "Culture, Ethnicity, and Diversity," American Economic Review, vol 107(9), pages 2479-2513.
Abstract: We investigate the empirical relationship between ethnicity and culture, defined as a vector of traits reflecting norms, attitudes and preferences. Using surveys of individual values in 76 countries, we find that ethnic identity is a significant predictor of cultural values, yet that within-group variation in culture trumps between-group variation. Thus, in contrast to a commonly held view, ethnic and cultural diversity are unrelated. We explore the correlates of cultural diversity and of the overlap between culture and ethnicity, finding that the level of economic development is positively associated with cultural diversity and negatively associated with the overlap between culture and ethnicity. Finally, although only a small portion of a country's overall cultural heterogeneity occurs between groups, this does not imply that cultural differences between groups are irrelevant. Indeed, we find that civil conflict becomes more likely when there is greater overlap between ethnicity and culture.
Handle: RePEc:nbr:nberwo:20989
Template-Type: ReDIF-Paper 1.0
Title: Capitalization of Charter Schools into Residential Property Values
Classification-JEL: H41; I21; I22; R21
Author-Name: Scott A. Imberman
Author-Person: pim24
Author-Name: Michael Naretta
Author-Name: Margaret O’Rourke
Note: ED PE
Number: 20990
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20990
File-URL: http://www.nber.org/papers/w20990.pdf
File-Format: application/pdf
Publication-Status: published as Margaret Brehm & Scott A. Imberman & Michael Naretta, 2017. "Capitalization of Charter Schools into Residential Property Values," Education Finance and Policy, MIT Press, vol. 12(1), pages 1-27, Winter.
Abstract: While prior research has found clear impacts of schools and school quality on property values, little is known about whether charter schools have similar effects. Using sale price data for residential properties in Los Angeles County from 2008 to 2011 we estimate the neighborhood level impact of charter schools on housing prices. Using an identification strategy that relies on census block fixed-effects and variation in charter penetration over time, we find little evidence that the availability of charter schools affect housing prices on average. However, we do find that when restricting to charter schools located in the same school district as the household, housing prices outside Los Angeles Unified School District fall in response to an increase in nearby charter penetration.
Handle: RePEc:nbr:nberwo:20990
Template-Type: ReDIF-Paper 1.0
Title: Tips and Tells from Managers: How Analysts and the Market Read Between the Lines of Conference Calls
Classification-JEL: D82; G14; G24
Author-Name: Marina Druz
Author-Name: Alexander F. Wagner
Author-Person: pwa151
Author-Name: Richard J. Zeckhauser
Author-Person: pze7
Note: CF
Number: 20991
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20991
File-URL: http://www.nber.org/papers/w20991.pdf
File-Format: application/pdf
Abstract: Stock prices react significantly to the tone (negativity of words) managers use on earnings conference calls. This reaction reflects reasonably rational use of information. “Tone surprise” – the residual when negativity in managerial tone is regressed on the firm’s recent economic performance and CEO fixed effects – predicts future earnings and analyst uncertainty. Prices move more, as hypothesized, in firms where tone surprise predicts more strongly. Experienced analysts respond appropriately in revising their forecasts; inexperienced analysts overreact (underreact) to tone surprises in presentations (answers). Post-call price drift, like post-earnings announcement drift, suggests less-than-full-use of information embedded in managerial tone.
Handle: RePEc:nbr:nberwo:20991
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Entrepreneurial Risk Aversion on Wages in General Equilibrium
Classification-JEL: L26
Author-Name: Ying Feng
Author-Person: pfe580
Author-Name: James E. Rauch
Author-Person: pra166
Note: IO PR
Number: 20992
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w20992
File-URL: http://www.nber.org/papers/w20992.pdf
File-Format: application/pdf
Abstract: One of the leading theories of entrepreneurship is that less risk averse individuals become entrepreneurs and more risk averse individuals become their employees. Kihlstrom and Laffont (1979) formalized this insight in an elegant and widely taught general equilibrium model. However, their model has not been further developed. A reason may be that their main comparative static result, that an economy-wide increase in risk aversion lowers the equilibrium wage, appeared to require the assumption that all agents had identical risk aversion index, throwing out their motivating insight and indicating that the model is intractable. In this note we prove this comparative static result on risk aversion and wages in general equilibrium, retaining agent heterogeneity in risk aversion and the endogenous division of agents into less risk averse entrepreneurs and more risk averse workers, without adding any assumptions not already in the original paper. Besides the intrinsic value of the result, we hope to increase the usefulness of the Kihlstrom and Laffont (1979) model for other researchers and to facilitate improvement in its exposition for the many graduate courses in which it is taught.
Handle: RePEc:nbr:nberwo:20992
Template-Type: ReDIF-Paper 1.0
Title: Testing for Changes in the SES-Mortality Gradient When the Distribution of Education Changes Too
Classification-JEL: I14; J11
Author-Name: Thomas Goldring
Author-Name: Fabian Lange
Author-Person: pla224
Author-Name: Seth Richards-Shubik
Author-Person: pri342
Note: AG EH
Number: 20993
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20993
File-URL: http://www.nber.org/papers/w20993.pdf
File-Format: application/pdf
Publication-Status: published as Thomas Goldring & Fabian Lange & Seth Richards-Shubik, 2016. "Testing for changes in the SES-mortality gradient when the distribution of education changes too," Journal of Health Economics, vol 46, pages 120-130.
Abstract: We develop a flexible test for changes in the SES-mortality gradient over time that directly accounts for changes in the distribution of education, the most commonly used marker of SES. We implement the test for the period between 1984 and 2006 using microdata from the Census, CPS, and NHIS linked to death records. Using our flexible test, we find that the evidence for a change in the education-mortality gradient is not as strong and universal as previous research has suggested. Our results indicate that the gradient increased for females during this time period, but we cannot rule out that the gradient among males has not changed. Informally, the results suggest that the changes for females are mainly driven by the bottom of the education distribution.
Handle: RePEc:nbr:nberwo:20993
Template-Type: ReDIF-Paper 1.0
Title: Wealth and Volatility
Classification-JEL: E12; E21; E32
Author-Name: Jonathan Heathcote
Author-Person: phe1
Author-Name: Fabrizio Perri
Author-Person: ppe52
Note: EFG
Number: 20994
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20994
File-URL: http://www.nber.org/papers/w20994.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Heathcote & Fabrizio Perri, 2018. "Wealth and Volatility," The Review of Economic Studies, vol 85(4), pages 2173-2213.
Abstract: Periods of low household wealth in United States macroeconomic history have also been periods of high business cycle volatility. This paper develops a simple model that can exhibit self-fulfilling fluctuations in the expected path for unemployment. The novel feature is that the scope for sunspot-driven volatility depends on the level of household wealth. When wealth is high, consumer demand is largely insensitive to unemployment expectations and the economy is robust to confidence crises. When wealth is low, a stronger precautionary motive makes demand more sensitive to unemployment expectations, and the economy becomes vulnerable to confidence-driven fluctuations. In this case, there is a potential role for public policies to stabilize demand. Microeconomic evidence is consistent with the key model mechanism: during the Great Recession, households with relatively low wealth, ceteris paribus, cut expenditures more sharply.
Handle: RePEc:nbr:nberwo:20994
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of Primary and Secondary Pharmaceutical Patents in Chile
Classification-JEL: K12; L5; L65; O34
Author-Name: María José Abud Sittler
Author-Name: Bronwyn Hall
Author-Person: pha54
Author-Name: Christian Helmers
Author-Person: phe349
Note: DEV PR
Number: 20995
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20995
File-URL: http://www.nber.org/papers/w20995.pdf
File-Format: application/pdf
Publication-Status: published as PLOS ONE. doi:10.1371/journal.pone.0124257
Abstract: We analyze the patent filing strategies of foreign pharmaceutical companies in Chile distinguishing between “primary” (active ingredient) and “secondary” patents (patents on modified compounds, formulations, dosages, particular medical uses etc.). There is prior evidence that secondary patents are used by pharmaceutical originator companies in the U.S. and Europe to extend patent protection on drugs in length and breadth. Using a novel dataset that comprises all drugs registered in Chile between 1991 and 2010 as well as the corresponding patents and trademarks, we find evidence that foreign originator companies pursue similar strategies in Chile. We find a primary to secondary patents ratio of 1:4 at the drug-level which is comparable to the available evidence for Europe; most secondary patents are filed over several years following the original primary patent and after the protected active ingredient has obtained market approval in Chile. This points toward effective patent term extensions through secondary patents. Secondary patents dominate “older” therapeutic classes like anti-ulcer and anti-depressants. In contrast, newer areas like anti-virals and anti-neoplastics (anti-cancer) have a much larger share of primary patents.
Handle: RePEc:nbr:nberwo:20995
Template-Type: ReDIF-Paper 1.0
Title: Access to Four-Year Public Colleges and Degree Completion
Classification-JEL: I2; I23; J24
Author-Name: Joshua Goodman
Author-Person: pgo281
Author-Name: Michael Hurwitz
Author-Name: Jonathan Smith
Note: ED LS
Number: 20996
Creation-Date: 2015-02
Order-URL: http://www.nber.org/papers/w20996
File-URL: http://www.nber.org/papers/w20996.pdf
File-Format: application/pdf
Publication-Status: published as Access to 4-Year Public Colleges and Degree Completion Joshua Goodman, Michael Hurwitz, and Jonathan Smith Journal of Labor Economics 2017 35:3, 829-867
Abstract: Does access to four-year colleges affect degree completion for students who would otherwise attend two-year colleges? Admission to Georgia’s four-year public sector requires minimum SAT scores. Regression discontinuity estimates show that access to this sector increases four-year college enrollment and college quality, largely by diverting students from two-year colleges. Access substantially increases bachelor’s degree completion rates for these relatively low-skilled students. SAT retaking behavior suggests students value access to four-year public colleges, though perhaps less than they should. Our results imply that absolute college quality matters more than match quality and suggest potential unintended consequences of free community college proposals.
Handle: RePEc:nbr:nberwo:20996
Template-Type: ReDIF-Paper 1.0
Title: How Does Health Promotion Work? Evidence From The Dirty Business of Eliminating Open Defecation
Classification-JEL: I12; I15; O15
Author-Name: Paul Gertler
Author-Person: pge194
Author-Name: Manisha Shah
Author-Person: psh195
Author-Name: Maria Laura Alzua
Author-Name: Lisa Cameron
Author-Person: pca304
Author-Name: Sebastian Martinez
Author-Person: pma2097
Author-Name: Sumeet Patil
Note: CH DEV EH PE
Number: 20997
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w20997
File-URL: http://www.nber.org/papers/w20997.pdf
File-Format: application/pdf
Abstract: We investigate the mechanisms underlying health promotion campaigns designed to eliminate open defecation in at-scale randomized field experiments in four countries: India, Indonesia, Mali, and Tanzania. Health promotion works through a number of mechanisms, including: providing information on the return to better behavior, nudging better behavior that one already knows is in her self-interest, and encouraging households to invest in health products that lower the marginal cost of good behavior. We find that health promotion generally worked through both convincing households to invest in in-home sanitation facilities and nudging increased use of those facilities. We also estimate the causal relationship between village open defecation rates and child height using experimentally induced variation in open defecation for identification. Surprisingly we find a fairly linear relationship between village open defecation rates and the height of children less than 5 years old. Fully eliminating open defecation from a village where everyone defecates in the open would increase child height by 0.44 standard deviations. Hence modest to small reductions in open defecation are unlikely to have a detectable effect on child height and explain why many health promotion interventions designed to reduce open defecation fail to improve child height. Our results suggest that stronger interventions that combine intensive health promotional nudges with subsidies for sanitation construction may be needed to reduce open defecation enough to generate meaningful improvements in child health.
Handle: RePEc:nbr:nberwo:20997
Template-Type: ReDIF-Paper 1.0
Title: Retrospective and Prospective Benefit-Cost Analysis of US Anti-Smoking Policies
Classification-JEL: I12; I18
Author-Name: Lawrence Jin
Author-Name: Donald S. Kenkel
Author-Person: pke44
Author-Name: Feng Liu
Author-Person: pli590
Author-Name: Hua Wang
Note: EH
Number: 20998
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w20998
File-URL: http://www.nber.org/papers/w20998.pdf
File-Format: application/pdf
Publication-Status: published as Jin, Lawrence & Kenkel, Don & Liu, Feng & Wang, Hua, 2015. "Retrospective and Prospective Benefit-Cost Analyses of U.S. Anti-Smoking Policies," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 6(01), pages 154-186, March.
Abstract: Regulatory policies designed to improve societal welfare by “nudging” consumers to make better choices are increasingly popular. The application of benefit-cost analysis (BCA) to this sort of regulation confronts difficult theoretical and applied issues. In this analysis we contribute a worked example of behavioral BCA of US anti-smoking policies. Our conceptual framework extends the standard market-based approach to BCA to allow for individual failures to make lifetime utility-maximizing choices of cigarette consumption. We discuss how our market-based approach compares to the health benefits approach and the “consumer surplus offset” controversy in recent BCAs of several health-related regulations. We use a dynamic population model to make counterfactual simulations of smoking prevalence rates and cigarette demand over time. In our retrospective BCA the simulation results imply that the overall impact of antismoking policies from 1964 – 2010 is to reduce total cigarette consumption by 28 percent. At a discount rate of 3 percent the 1964-present value of the consumer benefits from anti-smoking policies through 2010 is estimated to be $573 billion ($2010). Although we are unable to develop a hard estimate of the policies’ costs, we discuss evidence that suggests the consumer benefits substantially outweigh the costs. We then turn to a prospective BCA of future anti-smoking FDA regulations. At a discount rate of 3 percent the 2010-present value of the consumer benefits 30 years into the future from a simulated FDA tobacco regulation is estimated to be $100 billion. However, the nature of potential FDA tobacco regulations suggests that they might impose additional costs on consumers that make it less clear that the net benefits of the regulations will be positive.
Handle: RePEc:nbr:nberwo:20998
Template-Type: ReDIF-Paper 1.0
Title: Expecting the Unexpected: Emissions Uncertainty and Environmental Market Design
Classification-JEL: Q5; Q52; Q54
Author-Name: Severin Borenstein
Author-Person: pbo78
Author-Name: James Bushnell
Author-Person: pbu181
Author-Name: Frank A. Wolak
Author-Name: Matthew Zaragoza-Watkins
Note: EEE IO
Number: 20999
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w20999
File-URL: http://www.nber.org/papers/w20999.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein & James Bushnell & Frank A. Wolak & Matthew Zaragoza-Watkins, 2019. "Expecting the Unexpected: Emissions Uncertainty and Environmental Market Design," American Economic Review, vol 109(11), pages 3953-3977.
Abstract: We study potential equilibria in California's cap-and-trade market for greenhouse gases (GHGs) based on information available before the market started. We find large ex ante uncertainty in business-as-usual emissions and in the abatement that might result from non-market policies, much larger than the reduction that could plausibly occur in response to an allowance price within a politically acceptable range. This implies that the market price is very likely to be determined by an administrative price floor or ceiling. Similar factors seem likely to be present in other cap-and-trade markets for GHGs.
Handle: RePEc:nbr:nberwo:20999
Template-Type: ReDIF-Paper 1.0
Title: A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler
Classification-JEL: E0; G01; G33; H0; J01; L50; L62
Author-Name: Austan D. Goolsbee
Author-Person: pgo49
Author-Name: Alan B. Krueger
Author-Person: pkr63
Note: IO LS PE
Number: 21000
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21000
File-URL: http://www.nber.org/papers/w21000.pdf
File-Format: application/pdf
Publication-Status: published as Austan D. Goolsbee & Alan B. Krueger, 2015. "A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler," Journal of Economic Perspectives, vol 29(2), pages 3-24.
Abstract: This paper takes a retrospective look at the U.S. government’s effort to rescue and restructure General Motors and Chrysler in the midst of the 2009 economic and financial crisis. The paper describes how two of the largest industrial companies in the world came to seek a bailout from the U.S. government, the analysis used to evaluate their request, and the steps taken by the government to rescue them. The paper also summarizes the performance of the U.S. auto industry since the bailout and draws some general lessons from the episode.
Handle: RePEc:nbr:nberwo:21000
Template-Type: ReDIF-Paper 1.0
Title: Social Learning and Selective Attention
Classification-JEL: D83
Author-Name: Andrew Caplin
Author-Person: pca77
Author-Name: John Leahy
Author-Person: ple189
Author-Name: Filip Matějka
Author-Person: pma1291
Note: EFG
Number: 21001
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21001
File-URL: http://www.nber.org/papers/w21001.pdf
File-Format: application/pdf
Abstract: Popularity is self reinforcing. The attention garnered by popular options propels further interest in them. Yet rather than blindly follow the crowd, most pay attention to how well these items match their tastes. We model this role of social learning in guiding selective attention and market dynamics. We confirm that attention focuses on options that quickly achieve popularity. Information externalities render the chosen set smaller than socially optimal. This rationalizes antitrust policies that encourage early experimentation. When attention costs are based on Shannon entropy, optimal policies are computable. With rich data, optimal choices can be identified for all consumer types.
Handle: RePEc:nbr:nberwo:21001
Template-Type: ReDIF-Paper 1.0
Title: The Efficiency of Slacking Off: Evidence from the Emergency Department
Classification-JEL: D20; I10; L23; M50
Author-Name: David C. Chan, Jr.
Note: EH LS PR
Number: 21002
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21002
File-URL: http://www.nber.org/papers/w21002.pdf
File-Format: application/pdf
Abstract: Work schedules play an important role in utilizing labor in organizations. In this study of emergency department physicians in shift work, schedules induce two distortions: First, physicians "slack off" by accepting fewer patients near end of shift (EOS). Second, physicians distort patient care, incurring higher costs as they spend less time on patients accepted near EOS. Examining how these effects change with shift overlap reveals a tradeoff between the two. Within an hour after the normal time of work completion, physicians are willing to spend hospital resources eight times more than their market wage to preserve their leisure. Accounting for overall costs, I find that physicians slack off at approximately second-best optimal levels.
Handle: RePEc:nbr:nberwo:21002
Template-Type: ReDIF-Paper 1.0
Title: Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut
Classification-JEL: G31; G35; G38; H25; H32
Author-Name: Danny Yagan
Author-Person: pya379
Note: CF PE
Number: 21003
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21003
File-URL: http://www.nber.org/papers/w21003.pdf
File-Format: application/pdf
Publication-Status: published as Danny Yagan, 2015. "Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut," American Economic Review, vol 105(12), pages 3531-3563.
Abstract: This paper tests whether the 2003 dividend tax cut—one of the largest reforms ever to a U.S. capital tax rate—stimulated corporate investment and increased labor earnings, using a quasi-experimental design and U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment and employee compensation. Economically, the statistical precision challenges leading estimates of the cost-of-capital elasticity of investment, or undermines models in which dividend tax reforms affect the cost of capital. Either way, it may be difficult to implement an alternative dividend tax cut that has substantially larger near-term effects.
Handle: RePEc:nbr:nberwo:21003
Template-Type: ReDIF-Paper 1.0
Title: The Marriage Market, Labor Supply and Education Choice
Classification-JEL: H31; J12; J16; J22; J24
Author-Name: Pierré-Andre Chiappori
Author-Person: pch377
Author-Name: Monica Costa Dias
Author-Person: pco852
Author-Name: Costas Meghir
Author-Person: pme144
Note: ED LS
Number: 21004
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21004
File-URL: http://www.nber.org/papers/w21004.pdf
File-Format: application/pdf
Publication-Status: published as Pierre-André Chiappori & Monica Costa Dias & Costas Meghir, 2018. "The Marriage Market, Labor Supply, and Education Choice," Journal of Political Economy, vol 126(S1), pages S26-S72.
Abstract: We develop an equilibrium lifecycle model of education, marriage and labor supply and consumption in a transferable utility context. Individuals start by choosing their investments in education anticipating returns in the marriage market and the labor market. They then match based on the economic value of marriage and on preferences. Equilibrium in the marriage market determines intrahousehold allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public commodities under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British HPS.
Handle: RePEc:nbr:nberwo:21004
Template-Type: ReDIF-Paper 1.0
Title: Short-term, Long-term, and Continuing Contracts
Classification-JEL: D23; D86; K12
Author-Name: Maija Halonen-Akatwijuka
Author-Person: pha158
Author-Name: Oliver Hart
Author-Person: pha222
Note: CF LE
Number: 21005
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21005
File-URL: http://www.nber.org/papers/w21005.pdf
File-Format: application/pdf
Abstract: Parties often regulate their relationships through “continuing” contracts that are neither long-term nor short-term but usually roll over. We study the trade-off between long-term, short-term, and continuing contracts in a two period model where gains from trade exist in the first period, and may or may not exist in the second period. A long-term contract that mandates trade in both periods is disadvantageous since renegotiation is required if there are no gains from trade in the second period. A short-term contract is disadvantageous since a new contract must be negotiated if gains from trade exist in the second period. A continuing contract can be better. In a continuing contract there is no obligation to trade in the second period but if there are gains from trade the parties will bargain “in good faith” using the first period contract as a reference point. This can reduce the cost of negotiating the next contract. Continuing contracts are not a panacea, however, since good faith bargaining may preclude the use of outside options in the bargaining process and as a result parties will sometimes fail to trade when this is efficient.
Handle: RePEc:nbr:nberwo:21005
Template-Type: ReDIF-Paper 1.0
Title: Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China
Classification-JEL: N15; O1
Author-Name: Chang-Tai Hsieh
Author-Name: Zheng (Michael) Song
Note: DEV EFG ITI PR
Number: 21006
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21006
File-URL: http://www.nber.org/papers/w21006.pdf
File-Format: application/pdf
Publication-Status: published as Chang-Tai Hsieh & Zheng (Michael) Song, 2016. "Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China," Brookings Papers on Economic Activity, vol 2015(1), pages 295-366.
Abstract: Starting in the late 1990s, China undertook a dramatic transformation of the large number of firms under state control. Small state-owned firms were privatized or closed. Large state-owned firms were corporatized and merged into large industrial groups under the control of the Chinese state. The state also created many new and large firms. We use detailed firm-level data to show that from 1998 to 2007, (i) state-owned firms that were closed were smaller and had low labor and capital productivity; (ii) the labor productivity of state-owned firms converged to that of private firms; (iii) the capital productivity of state-owned firms remained significantly lower than that of private firms; and (iv) total factor productivity (TFP) growth of state-owned firms was faster than that of private firms. We find the reforms of the state sector were responsible for 20 percent of aggregate TFP growth from 1998 to 2007.
Handle: RePEc:nbr:nberwo:21006
Template-Type: ReDIF-Paper 1.0
Title: Regional Redistribution Through the U.S. Mortgage Market
Classification-JEL: E02; G21; G28
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Benjamin J. Keys
Author-Person: pke311
Author-Name: Amit Seru
Author-Person: pse308
Author-Name: Joseph S. Vavra
Author-Person: pva480
Note: CF EFG ME POL
Number: 21007
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21007
File-URL: http://www.nber.org/papers/w21007.pdf
File-Format: application/pdf
Publication-Status: published as Erik Hurst & Benjamin J. Keys & Amit Seru & Joseph Vavra, 2016. "Regional Redistribution through the US Mortgage Market," American Economic Review, American Economic Association, vol. 106(10), pages 2982-3028, October.
Abstract: Regional shocks are an important feature of the U.S. economy. Households' ability to self-insure against these shocks depends on how they affect local interest rates. In the United States, most borrowing occurs through the mortgage market and is influenced by the presence of government-sponsored enterprises (GSEs). We establish that despite large regional variation in predictable default risk, GSE mortgage rates for otherwise identical loans do not vary spatially. In contrast, the private market does set interest rates that vary with local risk. We use a spatial model of collateralized borrowing to show that the national interest rate policy substantially affects welfare by redistributing resources across regions.
Handle: RePEc:nbr:nberwo:21007
Template-Type: ReDIF-Paper 1.0
Title: Intra-Industry Trade with Bertrand and Cournot Oligopoly: The Role of Endogenous Horizontal Product Differentiation
Classification-JEL: F12; L1; L13
Author-Name: James A. Brander
Author-Person: pbr168
Author-Name: Barbara J. Spencer
Author-Person: psp2
Note: ITI
Number: 21008
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21008
File-URL: http://www.nber.org/papers/w21008.pdf
File-Format: application/pdf
Publication-Status: published as Brander, James A. & Spencer, Barbara J., 2015. "Intra-industry trade with Bertrand and Cournot oligopoly: The role of endogenous horizontal product differentiation," Research in Economics, Elsevier, vol. 69(2), pages 157-165.
Abstract: This paper investigates the effect of endogenous horizontal product differentiation on trade patterns and the gains from trade under Bertrand and Cournot oligopoly. Firms differentiate their products to mitigate competition, but only if the investment required is not too high. Investment in product differentiation takes place in a much wider range of cases and results in a greater difference between products under Bertrand than Cournot competition. In our model, trade in homogeneous products never takes place under Bertrand competition: Bertrand firms export only if they differentiate their products. Cournot firms may trade in either homogeneous or differentiated products. If there is trade, consumers tend to be better off with Bertrand than Cournot competition due to greater product differentiation and more aggressive pricing, but higher levels of investment can raise Bertrand profit above Cournot profit and also above the monopoly profit at autarky when investment costs are sufficiently low.
Handle: RePEc:nbr:nberwo:21008
Template-Type: ReDIF-Paper 1.0
Title: Reference Points and Redistributive Preferences: Experimental Evidence
Classification-JEL: C9; D63; H21; H23
Author-Name: Jimmy Charité
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Ilyana Kuziemko
Note: PE POL
Number: 21009
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21009
File-URL: http://www.nber.org/papers/w21009.pdf
File-Format: application/pdf
Publication-Status: published as Jimmy Charité & Raymond Fisman & Ilyana Kuziemko & Kewei Zhang, 2022. "Reference points and redistributive preferences: Experimental evidence," Journal of Public Economics, vol 216.
Abstract: If individuals evaluate outcomes relative to the status quo, then a social planner may limit redistribution from rich to poor even in the absence of moral hazard. We present two experiments suggesting that individuals, placed in the position of a social planner, do in fact respect the reference points of others. First, subjects are given the opportunity to redistribute unequal, unearned initial endowments between two anonymous recipients. They redistribute significantly less when the recipients know the initial endowments (and thus may have formed corresponding reference points) than when the recipients do not know (when we observe near-complete redistribution). Subjects who are themselves risk-seeking over losses drive the effect, suggesting they project their own loss-aversion onto the recipients. In a separate experiment, respondents are asked to choose a tax rate for someone who (due to luck) became rich either five or one year(s) ago. Subjects faced with the five-year scenario choose a lower tax rate, indicating respect for the more deeply embedded (five-year) reference point. Our results thus suggest that respect for reference points of the wealthy may help explain why voters demand less redistribution than standard models predict.
Handle: RePEc:nbr:nberwo:21009
Template-Type: ReDIF-Paper 1.0
Title: TFP, News, and "Sentiments:" The International Transmission of Business Cycles
Classification-JEL: E32; F41; F44
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Author-Name: Nitya Pandalai-Nayar
Author-Person: ppa1172
Note: EFG IFM
Number: 21010
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21010
File-URL: http://www.nber.org/papers/w21010.pdf
File-Format: application/pdf
Publication-Status: published as Andrei A Levchenko & Nitya Pandalai-Nayar, 2020. "Tfp, News, and “Sentiments”: the International Transmission of Business Cycles," Journal of the European Economic Association, vol 18(1), pages 302-341.
Abstract: We propose a novel identification scheme for a non-technology business cycle shock, that we label "sentiment." This is a shock orthogonal to identified surprise and news TFP shocks that maximizes the short-run forecast error variance of an expectational variable, alternatively a GDP forecast or a consumer confidence index. We then estimate the international transmission of three identified shocks – surprise TFP, news of future TFP, and "sentiment" – from the US to Canada. The US sentiment shock produces a business cycle in the US, with output, hours, and consumption rising following a positive shock, and accounts for the bulk of short-run business cycle fluctuations in the US. The sentiment shock also has a significant impact on Canadian macro aggregates. In the short run, it is more important than either the surprise or the news TFP shocks in generating business cycle comovement between the US and Canada, accounting for up to 50% of the forecast error variance of Canadian GDP and about one-third of Canadian hours, imports, and exports. The news shock is responsible for some comovement at 5-10 years, and surprise TFP innovations do not generate synchronization.
Handle: RePEc:nbr:nberwo:21010
Template-Type: ReDIF-Paper 1.0
Title: Poisedness and Propagation: Organizational Emergence and the Transformation of Civic Order in 19th-Century New York City
Classification-JEL: N11; N5
Author-Name: Victoria Johnson
Author-Name: Walter W. Powell
Note: DAE PR
Number: 21011
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21011
File-URL: http://www.nber.org/papers/w21011.pdf
File-Format: application/pdf
Publication-Status: published as Organizational Poisedness and the Transformation of Civic Order in Nineteenth-Century New York City, Victoria Johnson, Walter W. Powell. in Organizations, Civil Society, and the Roots of Development, Lamoreaux and Wallis. 2017
Abstract: The emergence of novelty, especially of new categories of people and organizations, is undertheorized in the social sciences. Some social worlds are more hospitable to novel introductions or exogenous perturbations than others. Explaining this relative "poisedness" is essential to understanding when and why new organizational forms appear, persist, and expand, both cognitively and geographically. We offer a comparative analysis of two cases of emergence in 19th-century New York City that examines the conditions under which a new organizational form - a research-intensive botanical garden - developed and took root. We show that social worlds are highly poised when environmental, intellectual, and civic factors have reinforcing consequences. Poisedness is amplified when the social character of the individuals produced by specific historical milieux attunes these innovators to the larger social and material processes that favor the creation of new modes of organization. Although our analysis of poisedness is fixed on a specific time and place, New York City over the course of the 19th century, our arguments about the emergence of new organizational forms apply readily to other settings and time periods.
Handle: RePEc:nbr:nberwo:21011
Template-Type: ReDIF-Paper 1.0
Title: Preventives Versus Treatments
Classification-JEL: D42; I18; L11; O31
Author-Name: Michael Kremer
Author-Person: pkr20
Author-Name: Christopher Snyder
Author-Person: psn35
Note: DEV EH IO LE PR
Number: 21012
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21012
File-URL: http://www.nber.org/papers/w21012.pdf
File-Format: application/pdf
Publication-Status: published as Michael Kremer & Christopher M. Snyder, 2015. "Preventives Versus Treatments," The Quarterly Journal of Economics, vol 130(3), pages 1167-1239.
Abstract: Preventives are sold ex ante, before disease status is realized, while treatments are sold ex post. Even if the mean of the ex ante distribution of consumer values is the same as that ex post, the shape of the distributions may differ, generating a difference between the surplus each product can extract. If, for example, consumers differ only in ex ante disease risk, then a monopolist would have more difficulty extracting surplus with a preventive than with a treatment because treatment consumers, having contracted the disease, no longer differ in disease risk. We show that the ratio of preventive to treatment producer surplus can be arbitrarily small, in particular when the distribution of consumer values has a Zipf shape and the disease is rare. The firm's bias toward treatments can be reversed, for example, if the source of private information is disease severity learned ex post. The difference between the producer surplus earned from the products can result in distorted R&D incentives; the deadweight loss from this distortion can be as large as the entire producer-surplus difference. Calibrations for HIV and heart attacks based on risk factors in the U.S. population suggest that the distribution of disease risk is sufficiently Zipf-similar to generate substantial differences between producer surplus from preventives and treatments. Empirically, we find that proxies for the Zipf-similarity of the disease-risk distribution are associated a significantly lower likelihood of vaccine development but not drug development.
Handle: RePEc:nbr:nberwo:21012
Template-Type: ReDIF-Paper 1.0
Title: Effects of Peer Counseling to Support Breastfeeding: Assessing the External Validity of a Randomized Field Experiment
Classification-JEL: I12; I18
Author-Name: Onur Altindag
Author-Person: pal706
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Author-Name: Julie A. Reeder
Note: EH
Number: 21013
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21013
File-URL: http://www.nber.org/papers/w21013.pdf
File-Format: application/pdf
Abstract: In an effort to improve breastfeeding, the Oregon WIC Program tested whether a relatively low-cost telephone peer counseling initiative to support breastfeeding could increase the initiation and duration of exclusive breastfeeding among its participants. They conducted a large randomized field experiment (RFE) with over 1900 women from four WIC agencies in the state. In this study we use data from the RFE along with administrative data from the rest of the state to assess whether the results from the RFE can be extended to other agencies in the state. We find small or non-existent effects of peer counseling in the non-experimental settings, which suggest that the experimental estimates may reflect Hawthorne effects. We present evidence of selection into RFE in that exclusive breastfeeding among the controls is significantly greater than among women who were offered but declined to participate in the RFE as well as from women in the rest of the state who had no access to peer counseling. We conclude that despite the strong internal validity of the RFE, extending the program to other agencies in the state would have a limited impact at best on exclusive breastfeeding.
Handle: RePEc:nbr:nberwo:21013
Template-Type: ReDIF-Paper 1.0
Title: Treasure Hunt: Social Learning in the Field
Classification-JEL: C91; C93; D83
Author-Name: Markus Mobius
Author-Person: pmo367
Author-Name: Tuan Phan
Author-Name: Adam Szeidl
Author-Person: psz25
Note: LS PR
Number: 21014
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21014
File-URL: http://www.nber.org/papers/w21014.pdf
File-Format: application/pdf
Abstract: We seed noisy information to members of a real-world social network to study how information diffusion and information aggregation jointly shape social learning. Our environment features substantial social learning. We show that learning occurs via diffusion which is highly imperfect: signals travel only up to two steps in the conversation network and indirect signals are transmitted noisily. We then compare two theories of information aggregation: a naive model in which people double-count signals that reach them through multiple paths, and a sophisticated model in which people avoid double-counting by tagging the source of information. We show that to distinguish between these models of aggregation, it is critical to explicitly account for imperfect diffusion. When we do so, we find that our data are most consistent with the sophisticated tagged model.
Handle: RePEc:nbr:nberwo:21014
Template-Type: ReDIF-Paper 1.0
Title: The Insurance Value of Medical Innovation
Classification-JEL: I13; I18; J17; O30
Author-Name: Darius Lakdawalla
Author-Person: pla295
Author-Name: Anup Malani
Author-Person: pma903
Author-Name: Julian Reif
Author-Person: pre385
Note: EH PE PR
Number: 21015
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21015
File-URL: http://www.nber.org/papers/w21015.pdf
File-Format: application/pdf
Publication-Status: published as Darius Lakdawalla, Anup Malani and Julian Reif, “The insurance value of medical innovation,” Journal of Public Economics 145 (2017) 94–102.
Abstract: Economists think of medical innovation as a valuable but risky good, producing health benefits but increasing financial risk. This perspective overlooks how innovation can lower physical risks borne by healthy patients facing the prospect of future disease. We present an alternative framework that accounts for all these aspects of value and links them to the value of health insurance. We show that any innovation worth buying reduces overall risk, thereby generating positive insurance value on its own. We conduct two empirical exercises to assess the significance of our insights. First, we calculate that conventional methods underestimate the value of historical health gains by 30-80%. Second, we examine a large set of medical technologies and calculate that insurance value on average adds 100% to the conventional valuation of those treatments. Moreover, we find that the physical risk-reduction value of these technologies is ten times greater than the financial risk they pose and the corresponding value of health insurance that insures this financial risk. Our analysis also suggests standard methods disproportionately undervalue treatments for the most severe illnesses, where physical risk to consumers is most costly.
Handle: RePEc:nbr:nberwo:21015
Template-Type: ReDIF-Paper 1.0
Title: The CAPM Strikes Back? An Investment Model with Disasters
Classification-JEL: E32; E44; G12; G14
Author-Name: Hang Bai
Author-Name: Kewei Hou
Author-Person: pho571
Author-Name: Howard Kung
Author-Name: Lu Zhang
Author-Person: pzh29
Note: AP CF EFG
Number: 21016
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21016
File-URL: http://www.nber.org/papers/w21016.pdf
File-Format: application/pdf
Abstract: Value stocks are more exposed to disaster risk than growth stocks. Embedding disasters into an investment-based asset pricing model induces strong nonlinearity in the pricing kernel. Our single-factor model reproduces the failure of the CAPM in explaining the value premium in finite samples in which disasters are not materialized, and its relative success in samples in which disasters are materialized. The relation between pre-ranking market betas and average returns is flat in simulations, despite a strong positive relation between true market betas and expected returns. Evidence in the long U.S. sample from 1926 to 2014 lends support to the model’s key predictions.
Handle: RePEc:nbr:nberwo:21016
Template-Type: ReDIF-Paper 1.0
Title: Capital Flows and Domestic and International Order: Trilemmas from Macroeconomics to Political Economy and International Relations
Classification-JEL: E4; E6; N1
Author-Name: Michael Bordo
Author-Person: pbo243
Author-Name: Harold James
Author-Person: pja546
Note: DAE ME
Number: 21017
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21017
File-URL: http://www.nber.org/papers/w21017.pdf
File-Format: application/pdf
Abstract: This paper explains the problem of adjustment to the challenges of globalization in terms of the logic underpinning four distinct policy constraints or trilemmas, and their interrelationship, and in particular the disturbances that arise from capital flows. The analysis of a policy trilemma was developed first as a diagnosis of exchange rate problems (the incompatibility of free capital flows with monetary policy autonomy and a fixed exchange rate regime); but the approach can be extended. The second trilemma we describe is the incompatibility between financial stability, capital mobility and fixed exchange rates. The third example extends the analysis to politics, and looks at the strains in reconciling democratic politics with monetary autonomy and capital movements. Finally we examine the security aspect and look at the interactions of democracy with capital flows and international order. The trilemmas in short depict the way that domestic monetary, financial, economic and political systems are interconnected with the international. They can be described as the impossible policy choices at the heart of globalization. Frequently, the trilemmas conjure up countervailing anti-globalization tendencies and trends.
Handle: RePEc:nbr:nberwo:21017
Template-Type: ReDIF-Paper 1.0
Title: Toward an Understanding of Economic Growth in Africa: A Re-Interpretation of the Lewis Model
Classification-JEL: O11; O55
Author-Name: Xinshen Diao
Author-Person: pdi96
Author-Name: Margaret McMillan
Author-Person: pmc26
Note: DEV EFG
Number: 21018
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21018
File-URL: http://www.nber.org/papers/w21018.pdf
File-Format: application/pdf
Publication-Status: published as Xinshen Diao & Margaret McMillan, 2017. "Toward an Understanding of Economic Growth in Africa: A Reinterpretation of the Lewis Model," World Development, .
Abstract: Africa’s recent economic growth is at a historical high. The patterns associated with this growth appear to be quite different from the Asian experiences where rapid growth was fueled by labor intensive, export-oriented manufacturing. Because this pattern differs with our typical view of structural transformation, a heated debate has begun over the sustainability of Africa’s growth. One thing is clear: the recent growth is not well understood. Against this background, we adapt Lewis’s (1954) dual-economy model to the economies of Africa to better understand the role that the “in-between” sector as defined by Lewis (1979) has played in Africa’s recent growth. Our framework incorporates the coexistence of a closed and an open modern economy and takes into account the diversity and heterogeneity of the activities that characterize modern African economies. We apply this framework to the economy of Rwanda to assess Rwanda’s future growth prospects based on different levels of foreign capital inflows. We find that higher foreign inflows lead to significantly more growth in the closed modern economy and stagnant growth in the open modern economy, a phenomenon consistent with recently observed patterns of growth across several African countries.
Handle: RePEc:nbr:nberwo:21018
Template-Type: ReDIF-Paper 1.0
Title: Precautionary Strategies and Household Saving
Classification-JEL: E21; E26; F36
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Eduardo Cavallo
Author-Name: Ilan Noy
Author-Person: pno49
Note: IFM
Number: 21019
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21019
File-URL: http://www.nber.org/papers/w21019.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Eduardo Cavallo & Ilan Noy, 2015. "Precautionary Strategies and Household Saving," Open Economies Review, Springer, vol. 26(5), pages 911-939, November.
Abstract: Why do people save? A strand of the literature has emphasized the role of ‘precautionary’ motives; i.e., private agents save in order to mitigate unexpected future income shocks. An implication is that in countries faced with more macroeconomic volatility and risk, private saving should be higher. From the observable data, however, we find a negative correlation between risk and private saving in cross-country comparisons, particularly in developing countries. We provide a plausible explanation for the disconnect between precautionary-saving theory and the empirical evidence that is based on a model with a richer account for the various modes of ‘precautionary’ behavior by private agents, in cases where institutions are weaker and labor informality is prevalent. In such environments, household saving decisions are intertwined with firms’ investment decisions. As a result, the interaction between saving behavior, broadly construed, and aggregate risk and uncertainty, may be more complex than is frequently assumed.
Handle: RePEc:nbr:nberwo:21019
Template-Type: ReDIF-Paper 1.0
Title: The In-State Equity Bias of State Pension Plans
Classification-JEL: G11; G23; H75
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Joshua M. Pollet
Author-Name: Scott J. Weisbenner
Note: AG AP PE
Number: 21020
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21020
File-URL: http://www.nber.org/papers/w21020.pdf
File-Format: application/pdf
Abstract: This paper provides evidence on the investment behavior of 27 state pension plans that manage their own equity portfolios. Even though these state plans typically hold broadly diversified portfolios, they substantially over-weight the equity of companies that are headquartered in-state. The over-weighting of within-state stocks by these plans is three times larger than that of other institutional investors. We explore three possible reasons for this in-state bias: familiarity bias, information-based investing, and political considerations. While there is a substantial preference for in-state stocks, there is no similar tilt toward holding stocks from neighboring states or out-of-state stocks in the state’s primary industry. States generate excess returns through their in-state investment activities, particularly among smaller stocks in the state’s primary industry. We also find that state pension plans are more likely to hold a within-state stock if the headquarters of the firm is located in a county that gave a high fraction of its campaign contributions to the current governor. These politically-motivated holdings yield excess returns for the pension fund.
Handle: RePEc:nbr:nberwo:21020
Template-Type: ReDIF-Paper 1.0
Title: New Evidence on the Impact of Financial Crises in Advanced Countries
Classification-JEL: E32; E44; G01; N10; N20
Author-Name: Christina D. Romer
Author-Person: pro407
Author-Name: David H. Romer
Author-Person: pro406
Note: DAE EFG IFM ME
Number: 21021
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21021
File-URL: http://www.nber.org/papers/w21021.pdf
File-Format: application/pdf
Publication-Status: published as Romer, Christina D., and David H. Romer. 2017. "New Evidence on the Aftermath of Financial Crises in Advanced Countries." American Economic Review, 107 (10): 3072-3118. DOI: 10.1257/aer.20150320
Abstract: This paper examines the aftermath of financial crises in advanced countries in the four decades before the Great Recession. We construct a new series on financial distress in 24 OECD countries for the period 1967–2007. The series is based on assessments of the health of countries’ financial systems from a consistent, real-time narrative source; and it classifies financial distress on a relatively fine scale, rather than treating it as a 0-1 variable. We find that output declines following financial crises in modern advanced countries are highly variable, on average only moderate, and often temporary. One important driver of the variation in outcomes across crises appears to be the severity and persistence of the financial distress itself.
Handle: RePEc:nbr:nberwo:21021
Template-Type: ReDIF-Paper 1.0
Title: Accounting for the Rise in C-sections: Evidence from Population Level Data
Classification-JEL: I1; I11
Author-Name: Sara Allin
Author-Name: Michael Baker
Author-Person: pba400
Author-Name: Maripier Isabelle
Author-Name: Mark Stabile
Author-Person: pst179
Note: EH LS
Number: 21022
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21022
File-URL: http://www.nber.org/papers/w21022.pdf
File-Format: application/pdf
Abstract: Drawing on administrative records of nearly 4 million births in Canada as well as macro data from the US and Australia, we provide a comprehensive account of rising C-section rates. We explicitly consider the contributions of the changing characteristics of mothers, births, and physicians as well as changing financial incentives for C-section deliveries. These factors account for at most one-half of the increase in C-section rates. The majority of the remaining increase in C-sections over the period 1994-2011 occurred in the early 2000s. We overview the relative contributions that the Hannah Breech Trial and technological change may have played in this development.
Handle: RePEc:nbr:nberwo:21022
Template-Type: ReDIF-Paper 1.0
Title: Correlation, Consumption, Confusion, or Constraints: Why do Poor Children Perform so Poorly?
Classification-JEL: D1; I24; I26; J24
Author-Name: Elizabeth M. Caucutt
Author-Person: pca73
Author-Name: Lance Lochner
Author-Person: plo31
Author-Name: Youngmin Park
Author-Person: ppa1149
Note: CH ED LS PE
Number: 21023
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21023
File-URL: http://www.nber.org/papers/w21023.pdf
File-Format: application/pdf
Publication-Status: published as Elizabeth M. Caucutt & Lance Lochner & Youngmin Park, 2016. "Correlation, Consumption, Confusion, or Constraints: Why Do Poor Children Perform so Poorly?," The Scandinavian Journal of Economics, .
Abstract: The economic and social mobility of a generation may be largely determined by the time it enters school given early developing and persistent gaps in child achievement by family income and the importance of adolescent skill levels for educational attainment and lifetime earnings. After providing new evidence of important differences in early child investments by family income, we study four leading mechanisms thought to explain these gaps: an intergenerational correlation in ability, a consumption value of investment, information frictions, and credit constraints. In order to better determine which of these mechanisms influence family investments in children, we evaluate the extent to which these mechanisms also explain other important stylized facts related to the marginal returns on investments and the effects of parental income on child investments and skills.
Handle: RePEc:nbr:nberwo:21023
Template-Type: ReDIF-Paper 1.0
Title: Taxation and the International Mobility of Inventors
Classification-JEL: F22; H21; H24; H31; J61; O33; O38
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: Salomé Baslandze
Author-Person: pba1488
Author-Name: Stefanie Stantcheva
Author-Person: pst824
Note: LS PE PR
Number: 21024
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21024
File-URL: http://www.nber.org/papers/w21024.pdf
File-Format: application/pdf
Publication-Status: published as Ufuk Akcigit & Salomé Baslandze & Stefanie Stantcheva, 2016. "Taxation and the International Mobility of Inventors," American Economic Review, American Economic Association, vol. 106(10), pages 2930-2981, October.
Abstract: This paper studies the effect of top tax rates on inventors' international mobility since 1977. We put special emphasis on “superstar” inventors, those with the most abundant and most valuable patents. We use panel data on inventors from the United States and European Patent Offices to track inventors' locations over time and combine it with international effective top tax rate data. We construct a detailed set of proxies for inventors' counterfactual incomes in each possible destination country including, among others, measures of patent quality and technological fit with each potential destination. Exploiting the differential impact of changes in the top tax rate on inventors of different qualities, we find that superstar top 1% inventors are significantly affected by top tax rates when deciding where to locate. The elasticity to the net-of-tax rate of the number of domestic superstar inventors is relatively small, around 0.03, while the elasticity of the number of foreign superstar inventors is around 1. Inventors who work in multinational companies are more likely to take advantage of tax differentials. On the other hand, if the company of an inventor has a higher share of its research activity in a given country, the inventor is less sensitive to the tax rate in that country.
Handle: RePEc:nbr:nberwo:21024
Template-Type: ReDIF-Paper 1.0
Title: How Individuals Respond to a Liquidity Shock: Evidence from the 2013 Government Shutdown
Classification-JEL: D12; D91; E21; H31
Author-Name: Michael Gelman
Author-Person: pge242
Author-Name: Shachar Kariv
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Dan Silverman
Author-Person: psi181
Author-Name: Steven Tadelis
Author-Person: pta314
Note: EFG ME PE PR
Number: 21025
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21025
File-URL: http://www.nber.org/papers/w21025.pdf
File-Format: application/pdf
Publication-Status: published as Michael Gelman & Shachar Kariv & Matthew D. Shapiro & Dan Silverman & Steven Tadelis, 2018. "How individuals respond to a liquidity shock: Evidence from the 2013 government shutdown," Journal of Public Economics, .
Abstract: Using comprehensive account records, this paper examines how individuals adjusted spending and saving in response to a temporary drop in liquidity due to the 2013 U.S. government shutdown. The shutdown cut paychecks by 40% for affected employees, which was recovered within 2 weeks. Because the shutdown affected only the timing of payments, it provides a distinctive experiment allowing estimates of the response to a liquidity shock holding income constant. Spending dropped sharply, implying a naïve estimate of 58 cents less spending for every dollar of lost liquidity. This estimate overstates the consumption response. While many individuals had low liquid assets, they used multiple sources of short-term liquidity to smooth consumption. Sources of short-term liquidity include delaying recurring payments such as for mortgages and credit card balances.
Handle: RePEc:nbr:nberwo:21025
Template-Type: ReDIF-Paper 1.0
Title: Gambling for Redemption and Self-Fulfilling Debt Crises
Classification-JEL: F34; F45; G01
Author-Name: Juan Carlos Conesa
Author-Person: pco15
Author-Name: Timothy J. Kehoe
Author-Person: pke16
Note: EFG IFM
Number: 21026
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21026
File-URL: http://www.nber.org/papers/w21026.pdf
File-Format: application/pdf
Publication-Status: published as Juan Carlos Conesa & Timothy J. Kehoe, 2017. "Gambling for redemption and self-fulfilling debt crises," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(4), pages 707-740, December.
Publication-Status: published as Juan Carlos Conesa & Timothy J. Kehoe, 2017. "Gambling for redemption and self-fulfilling debt crises," Economic Theory, vol 64(4), pages 707-740.
Abstract: We develop a model for analyzing the sovereign debt crises of 2010–2013 in the Eurozone. The government sets its expenditure-debt policy optimally. The need to sell large quantities of bonds every period leaves the government vulnerable to self-fulfilling crises in which investors, anticipating a crisis, are unwilling to buy the bonds, thereby provoking the crisis. In this situation, the optimal policy of the government is to reduce its debt to a level where crises are not possible. If, however, the economy is in a recession where there is a positive probability of recovery in fiscal revenues, the government may optimally choose to “gamble for redemption,” running deficits and increasing its debt, thereby increasing its vulnerability to crises.
Handle: RePEc:nbr:nberwo:21026
Template-Type: ReDIF-Paper 1.0
Title: Why are American Workers getting Poorer? China, Trade and Offshoring
Classification-JEL: F16; F66
Author-Name: Avraham Ebenstein
Author-Person: peb32
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Margaret McMillan
Author-Person: pmc26
Note: ITI
Number: 21027
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21027
File-URL: http://www.nber.org/papers/w21027.pdf
File-Format: application/pdf
Abstract: We suggest that the impact of globalization on wages has been missed because its effects must be captured by analyzing occupational exposure to globalization. In this paper, we extend our previous work to include recent years (2003-2008), a period of increasing import penetration, China’s entry into the WTO, and growing US multinational employment abroad. We find significant effects of globalization, with offshoring to low wage countries and imports both associated with wage declines for US workers. We present evidence that globalization has led to the reallocation of workers away from high wage manufacturing jobs into other sectors and other occupations, with large declines in wages among workers who switch, explaining the large differences between industry and occupational analyses. While other research has focused primarily on China’s trade, we find that offshoring to China has also contributed to wage declines among US workers. However, the role of trade is quantitatively much more important. We also explore the impact of trade and offshoring on labor force participation rates. While offshoring to China has a negative impact on US labor force participation, other factors such as increasing computer use and substitution of capital for labor are significantly more important determinants of US employment rates across occupations.
Handle: RePEc:nbr:nberwo:21027
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Consumer Inattention on Insurer Pricing in the Medicare Part D Program
Classification-JEL: I11; L10; L11
Author-Name: Kate Ho
Author-Person: pho493
Author-Name: Joseph Hogan
Author-Name: Fiona Scott Morton
Note: EH IO
Number: 21028
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21028
File-URL: http://www.nber.org/papers/w21028.pdf
File-Format: application/pdf
Publication-Status: published as Kate Ho & Joseph Hogan & Fiona Scott Morton, 2017. "The impact of consumer inattention on insurer pricing in the Medicare Part D program," The RAND Journal of Economics, vol 48(4), pages 877-905.
Abstract: The Medicare Part D program relies on consumer choice to provide insurers with incentives to offer low-priced, high-quality pharmaceutical insurance plans. We demonstrate that consumers switch plans infrequently and search imperfectly. We estimate a model of consumer plan choice with inattentive consumers and show that high observed premiums are consistent with insurers profiting from consumer inertia. We estimate the reduction in steady state plan premiums if all consumers were attentive. An average consumer could save $1050 over three years; government savings in the same period could amount to $1.3 billion or 1% of the cost of subsidizing the relevant enrollees.
Handle: RePEc:nbr:nberwo:21028
Template-Type: ReDIF-Paper 1.0
Title: Stuck in the Middle? Structural Change and Productivity Growth in Botswana
Classification-JEL: O5; O55
Author-Name: Brian McCaig
Author-Person: pmc113
Author-Name: Margaret S. McMillan
Author-Person: pmc26
Author-Name: Iñigo Verduzco-Gallo
Author-Name: Keith Jefferis
Author-Person: pje13
Note: DEV ITI
Number: 21029
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21029
File-URL: http://www.nber.org/papers/w21029.pdf
File-Format: application/pdf
Abstract: This paper decomposes Botswana’s growth from the late 1960s through 2010 into a within-sector and a between-sector (structural change) component. We find that during the 70s and 80s Botswana’s rapid economic growth was characterized by significant structural change with the share of the labor force employed in agriculture dropping from more than 80 percent to around 40 percent. Between 1990 and 2010 growth was also rapid, but structural change detracted from growth. We hypothesize that this is one of the reasons for persistent poverty and very high income inequality in Botswana today. This leaves us with the following puzzle: why is it that a country with such an impressive track record marked by good governance and prudent macroeconomic and fiscal policy is having so much trouble diversifying its economy?
Handle: RePEc:nbr:nberwo:21029
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Polarization Over the Business Cycle
Classification-JEL: E24; J22; J23; J24; J62; J63; J64
Author-Name: Christopher L. Foote
Author-Person: pfo133
Author-Name: Richard W. Ryan
Note: EFG
Number: 21030
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21030
File-URL: http://www.nber.org/papers/w21030.pdf
File-Format: application/pdf
Publication-Status: published as Christopher L. Foote & Richard W. Ryan, 2015. "Labor-Market Polarization over the Business Cycle," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 371 - 413.
Abstract: Job losses during the Great Recession were concentrated among middle-skill workers, the same group that over the long run has suffered the most from automation and international trade. How might long-run occupational polarization be related to cyclical changes in middle-skill employment? We find that middle-skill occupations have traditionally been more cyclical than other occupations, in part because of the volatile industries that tend to employ middle-skill workers. Unemployed middle-skill workers also appear to have few attractive or feasible employment alternatives outside of their skill class, and the drop in male participation rates during the past several decades can be explained in part by an erosion of middle-skill job opportunities. Taken together, these results imply that a formal labor market model relating polarization to middle-skill employment fluctuations should include industry-level employment effects and a labor force participation margin as well as pure job-search considerations. The results thus provide encouragement for a growing literature that integrates "macro-labor" search models with "macro-macro" models featuring differential industry cyclicalities and convex preferences over consumption and leisure.
Handle: RePEc:nbr:nberwo:21030
Template-Type: ReDIF-Paper 1.0
Title: Do “Consumer-Directed” Health Plans Bend the Cost Curve Over Time?
Classification-JEL: I1; I13
Author-Name: Amelia M. Haviland
Author-Name: Matthew D. Eisenberg
Author-Name: Ateev Mehrotra
Author-Name: Peter J. Huckfeldt
Author-Name: Neeraj Sood
Author-Person: pso62
Note: EH
Number: 21031
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21031
File-URL: http://www.nber.org/papers/w21031.pdf
File-Format: application/pdf
Publication-Status: published as Amelia M. Haviland & Matthew D. Eisenberg & Ateev Mehrotra & Peter J. Huckfeldt & Neeraj Sood, 2016. "Do “Consumer-Directed” health plans bend the cost curve over time?," Journal of Health Economics, vol 46, pages 33-51.
Abstract: “Consumer-Directed” Health Plans (CDHPs) combine high deductibles with personal medical accounts and are intended to reduce health care spending through greater patient cost sharing. Prior research shows that CDHPs reduce spending in the first year. However, there is little research on the impact of CDHPs over the longer term. We add to this literature by using data from 13 million individuals in 54 large US firms to estimate the effects of a firm offering CDHPs on health care spending up to three years post offer. We use a difference-in-differences analysis and to further strengthen identification, we balance observables within firm, over time by developing weights through a machine learning algorithm. We find that spending is reduced for those in firms offering CDHPs in all three years post. The reductions are driven by spending decreases in outpatient care and pharmaceuticals, with no evidence of increases in emergency department or inpatient care.
Handle: RePEc:nbr:nberwo:21031
Template-Type: ReDIF-Paper 1.0
Title: Consumer Bankruptcy and Financial Health
Classification-JEL: D14; K35
Author-Name: Will Dobbie
Author-Name: Paul Goldsmith-Pinkham
Author-Person: pgo624
Author-Name: Crystal Yang
Note: LE LS PE
Number: 21032
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21032
File-URL: http://www.nber.org/papers/w21032.pdf
File-Format: application/pdf
Publication-Status: published as Will Dobbie & Paul Goldsmith-Pinkham & Crystal S. Yang, 2017. "Consumer Bankruptcy and Financial Health," The Review of Economics and Statistics, vol 99(5), pages 853-869.
Abstract: This paper estimates the effect of Chapter 13 bankruptcy protection on post-filing financial outcomes using a new dataset linking bankruptcy filings to credit bureau records. Our empirical strategy uses the leniency of randomly-assigned judges as an instrument for Chapter 13 protection. Over the first five post-filing years, we find that Chapter 13 protection decreases an index measuring adverse financial events such as civil judgments and repossessions by 0.316 standard deviations, increases the probability of being a homeowner by 13.2 percentage points, and increases credit scores by 14.9 points. Chapter 13 protection has little impact on open unsecured debt, but decreases the amount of debt in collections by $1,315.
Handle: RePEc:nbr:nberwo:21032
Template-Type: ReDIF-Paper 1.0
Title: IV Quantile Regression for Group-level Treatments, with an Application to the Distributional Effects of Trade
Classification-JEL: C21; C31; C33; C36; F16; J30
Author-Name: Denis Chetverikov
Author-Name: Bradley Larsen
Author-Person: pla525
Author-Name: Christopher Palmer
Note: DEV IO ITI LS PE TWP
Number: 21033
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21033
File-URL: http://www.nber.org/papers/w21033.pdf
File-Format: application/pdf
Publication-Status: published as Econometrica, 2016, 84(2), 809-833.
Abstract: We present a methodology for estimating the distributional effects of an endogenous treatment that varies at the group level when there are group-level unobservables, a quantile extension of Hausman and Taylor (1981). Because of the presence of group-level unobservables, standard quantile regression techniques are inconsistent in our setting even if the treatment is independent of unobservables. In contrast, our estimation technique is consistent as well as computationally simple, consisting of group-by-group quantile regression followed by two-stage least squares. Using the Bahadur representation of quantile estimators, we derive weak conditions on the growth of the number of observations per group that are sufficient for consistency and asymptotic zero-mean normality of our estimator. As in Hausman and Taylor (1981), micro-level covariates can be used as internal instruments for the endogenous group-level treatment if they satisfy relevance and exogeneity conditions. An empirical application indicates that low-wage earners in the US from 1990--2007 were significantly more affected by increased Chinese import competition than high-wage earners. Our approach applies to a broad range of settings in labor, industrial organization, trade, public finance, and other applied fields.
Handle: RePEc:nbr:nberwo:21033
Template-Type: ReDIF-Paper 1.0
Title: Quantile Regression with Panel Data
Classification-JEL: C23; C31; J31
Author-Name: Bryan S. Graham
Author-Person: pgr95
Author-Name: Jinyong Hahn
Author-Person: pha1189
Author-Name: Alexandre Poirier
Author-Name: James L. Powell
Note: LS TWP
Number: 21034
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21034
File-URL: http://www.nber.org/papers/w21034.pdf
File-Format: application/pdf
Abstract: We propose a generalization of the linear quantile regression model to accommodate possibilities afforded by panel data. Specifically, we extend the correlated random coefficients representation of linear quantile regression (e.g., Koenker, 2005; Section 2.6). We show that panel data allows the econometrician to (i) introduce dependence between the regressors and the random coefficients and (ii) weaken the assumption of comonotonicity across them (i.e., to enrich the structure of allowable dependence between different coefficients). We adopt a “fixed effects” approach, leaving any dependence between the regressors and the random coefficients unmodelled. We motivate different notions of quantile partial effects in our model and study their identification. For the case of discretely-valued covariates we present analog estimators and characterize their large sample properties. When the number of time periods (T) exceeds the number of random coefficients (P), identification is regular, and our estimates are √N-consistent. When T=P, our identification results make special use of the subpopulation of stayers – units whose regressor values change little over time – in a way which builds on the approach of Graham and Powell (2012). In this just-identified case we study asymptotic sequences which allow the frequency of stayers in the population to shrink with the sample size. One purpose of these “discrete bandwidth asymptotics” is to approximate settings where covariates are continuously-valued and, as such, there is only an infinitesimal fraction of exact stayers, while keeping the convenience of an analysis based on discrete covariates. When the mass of stayers shrinks with N, identification is irregular and our estimates converge at a slower than √N rate, but continue to have limiting normal distributions. We apply our methods to study the effects of collective bargaining coverage on earnings using the National Longitudinal Survey of Youth 1979 (NLSY79). Consistent with prior work (e.g., Chamberlain, 1982; Vella and Verbeek, 1998), we find that using panel data to control for unobserved worker heteroegeneity results in sharply lower estimates of union wage premia. We estimate a median union wage premium of about 9 percent, but with, in a more novel finding, substantial heterogeneity across workers. The 0.1 quantile of union effects is insignificantly different from zero, whereas the 0.9 quantile effect is of over 30 percent. Our empirical analysis further suggests that, on net, unions have an equalizing effect on the distribution of wages.
Handle: RePEc:nbr:nberwo:21034
Template-Type: ReDIF-Paper 1.0
Title: Tax Cuts For Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment
Classification-JEL: E32; E62; H2; H20; H31; N12
Author-Name: Owen M. Zidar
Author-Person: pzi93
Note: EFG PE
Number: 21035
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21035
File-URL: http://www.nber.org/papers/w21035.pdf
File-Format: application/pdf
Publication-Status: published as Owen Zidar, 2019. "Tax Cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment," Journal of Political Economy, vol 127(3), pages 1437-1472.
Abstract: This paper investigates how tax changes for different income groups affect aggregate economic activity. I construct a measure of who received (or paid for) tax changes in the postwar period using tax return data from NBER's TAXSIM. I aggregate each tax change by income group and state. Variation in the income distribution across U.S. states and federal tax changes generate variation in regional tax shocks that I exploit to test for heterogeneous effects. I find that the positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups, and that the effect of tax cuts for the top 10% on employment growth is small.
Handle: RePEc:nbr:nberwo:21035
Template-Type: ReDIF-Paper 1.0
Title: Why Are Indian Children So Short?
Classification-JEL: D10; O12; O53
Author-Name: Seema Jayachandran
Author-Person: pja86
Author-Name: Rohini Pande
Author-Person: ppa900
Note: CH DEV
Number: 21036
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21036
File-URL: http://www.nber.org/papers/w21036.pdf
File-Format: application/pdf
Publication-Status: published as Jayachandran, Seema, and Rohini Pande. 2017. "Why Are Indian Children So Short? The Role of Birth Order and Son Preference." American Economic Review, 107 (9): 2600-2629. DOI: 10.1257/aer.20151282
Abstract: India's child stunting rate is among the highest in the world, exceeding that of many poorer African countries. In this paper, we analyze data for over 174,000 Indian and Sub-Saharan African children to show that Indian firstborns are taller than African firstborns; the Indian height disadvantage emerges with the second child and then increases with birth order. This pattern persists when we compare height between siblings, and also holds for health inputs such as vaccinations. Three patterns in the data indicate that India's culture of eldest son preference plays a key role in explaining the steeper birth order gradient among Indian children and, consequently, the overall height deficit. First, the Indian firstborn height advantage only exists for sons. Second, an Indian son with an older sibling is taller than his African counterpart if and only if he is the eldest son. Third, the India-Africa height deficit is largest for daughters with no older brothers, which reflects that fact that their families are those most likely to exceed their desired fertility in order to have a son.
Handle: RePEc:nbr:nberwo:21036
Template-Type: ReDIF-Paper 1.0
Title: An Extrapolative Model of House Price Dynamics
Classification-JEL: D03; G02; R21
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Charles G. Nathanson
Note: AP EFG
Number: 21037
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21037
File-URL: http://www.nber.org/papers/w21037.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Charles G. Nathanson, 2017. "An extrapolative model of house price dynamics," Journal of Financial Economics, vol 126(1), pages 147-170.
Abstract: A modest approximation by homebuyers leads house prices to display three features that are present in the data but usually missing from perfectly rational models: momentum at one-year horizons, mean reversion at five-year horizons, and excess longer-term volatility relative to fundamentals. Valuing a house involves forecasting the current and future demand to live in the surrounding area. Buyers forecast using past transaction prices. Approximating buyers do not adjust for the expectations of past buyers, and instead assume that past prices reflect only contemporaneous demand, as with a capitalization rate formula. Consistent with survey evidence, this approximation leads buyers to expect increases in the market value of their homes after recent house price increases, to fail to anticipate the price busts that follow booms, and to be overconfident in their assessments of the housing market.
Handle: RePEc:nbr:nberwo:21037
Template-Type: ReDIF-Paper 1.0
Title: Temporary Assistance for Needy Families
Classification-JEL: H53; I3; J1; J13; J22; J24
Author-Name: James P. Ziliak
Author-Person: pzi120
Note: CH LS PE
Number: 21038
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21038
File-URL: http://www.nber.org/papers/w21038.pdf
File-Format: application/pdf
Publication-Status: published as Temporary Assistance for Needy Families, James P. Ziliak. in Economics of Means-Tested Transfer Programs in the United States, Volume 1, Moffitt. 2016
Abstract: In this chapter I provide a brief history of the TANF program, including changes made as part of the 2005 Deficit Reduction Act. I then present a variety of program statistics, including trends in aggregate and state-level caseloads and spending, along with changes in the demographic composition of the program, especially the shift from adult with child cases to child-only cases. I also highlight the changing composition of spending on the program from cash assistance to in-kind assistance, and the challenges faced in documenting total (cash + in-kind) caseloads and spending. I follow this with a discussion of the behavioral issues surrounding TANF, including the four program goals and possible modifications as part of the 2014 reauthorization legislation, and then I provide a systematic review of the research evidence on whether those goals have been met.
Handle: RePEc:nbr:nberwo:21038
Template-Type: ReDIF-Paper 1.0
Title: Credit, Financial Stability, and the Macroeconomy
Classification-JEL: E02; E31; E42; E44; E51; E58; F32; F42; G01; G20; G28; N10; N20
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: DAE EFG ME
Number: 21039
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21039
File-URL: http://www.nber.org/papers/w21039.pdf
File-Format: application/pdf
Publication-Status: published as Alan M. Taylor, 2015. "Credit, Financial Stability, and the Macroeconomy," Annual Review of Economics, vol 7(1), pages 309-339.
Abstract: Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a lead set by a fast-growing empirical literature. Recent long-run historical work has uncovered a range of important stylized facts concerning financial instability and the role of credit in advanced economies, and this article provides an overview of the key findings.
Handle: RePEc:nbr:nberwo:21039
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rate Exposure and Risk Management: The case of Japanese Exporting Firms
Classification-JEL: F31; G15; G32
Author-Name: Takatoshi Ito
Author-Name: Satoshi Koibuchi
Author-Name: Kiyotaka Sato
Author-Name: Junko Shimizu
Note: IFM
Number: 21040
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21040
File-URL: http://www.nber.org/papers/w21040.pdf
File-Format: application/pdf
Publication-Status: published as Takatoshi Ito & Satoshi Koibuchi & Kiyotaka Sato & Junko Shimizu, 2016. "Exchange Rate Exposure and Risk Management: The Case of Japanese Exporting Firms," Journal of the Japanese and International Economies, .
Abstract: This paper investigates the relationship between the Japanese firms’ exposure to the exchange rate risk and risk management, such as choice of invoicing currency, and financial and operational hedge. The firm’s exposure to the exchange rate risk is estimated by co-movements of the stock prices and exchange rates, following Dominguez (1998) and others. Data on risk management measures—financial and operational hedging, the choice of invoice currency and the price revision strategy (pass-through)—were collected from a questionnaire survey covering all Tokyo Stock Exchange listed firms in 2009. Results show the followings: First, firms with greater dependency on sales in foreign markets have greater foreign exchange exposure. Second, the higher the US dollar invoicing share, the greater is the foreign exchange exposure. But, risk is reduced by both financial and operational hedging. Third, yen invoicing reduces foreign exchange exposure. These findings indicate that Japanese firms use the combination of risk management tools to mitigate the degree of the exchange rate risk.
Handle: RePEc:nbr:nberwo:21040
Template-Type: ReDIF-Paper 1.0
Title: Inconsistent Policy Evaluation: A Case Study for a Large Workfare Program
Classification-JEL: D61; H43; H53; J08; O15
Author-Name: Arthur Alik-Lagrange
Author-Person: pal565
Author-Name: Martin Ravallion
Author-Person: pra29
Note: DEV
Number: 21041
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21041
File-URL: http://www.nber.org/papers/w21041.pdf
File-Format: application/pdf
Abstract: Evaluations of workfare programs in poor rural economies have typically ignored two features that policy makers stress: involuntary unemployment and the expected welfare losses from work requirements. The paper generalizes past evaluation theory and methods to incorporate both features, and shows that doing so can switch the policy ranking in favor of welfare over workfare. A case study for India’s massive National Rural Employment Guarantee Scheme indicates lower impacts on poverty than suggested by past methods, despite a more “poor-poor” incidence. A basic-income guarantee would dominate net workfare earnings in terms of the impact on poverty for a given budgetary outlay.
Handle: RePEc:nbr:nberwo:21041
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rates, Interest Rates, and the Risk Premium
Classification-JEL: F31; F41
Author-Name: Charles Engel
Author-Person: pen14
Note: IFM
Number: 21042
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21042
File-URL: http://www.nber.org/papers/w21042.pdf
File-Format: application/pdf
Publication-Status: published as Charles Engel, 2016. "Exchange Rates, Interest Rates, and the Risk Premium," American Economic Review, vol 106(2), pages 436-474.
Abstract: The well-known uncovered interest parity puzzle arises from the empirical regularity that, among developed country pairs, the high interest rate country tends to have high expected returns on its short term assets. At the same time, another strand of the literature has documented that high real interest rate countries tend to have currencies that are strong in real terms - indeed, stronger than can be accounted for by the path of expected real interest differentials under uncovered interest parity. These two strands - one concerning short-run expected changes and the other concerning the level of the real exchange rate - have apparently contradictory implications for the relationship of the foreign exchange risk premium and interest-rate differentials. This paper documents the puzzle, and shows that existing models appear unable to account for both empirical findings. The features of a model that might reconcile the findings are discussed.
Handle: RePEc:nbr:nberwo:21042
Template-Type: ReDIF-Paper 1.0
Title: Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets
Classification-JEL: D14; D31; G11; I24; I26
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Petter Lundborg
Author-Person: plu193
Author-Name: Kaveh Majlesi
Author-Person: pma1731
Note: AP LS
Number: 21043
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21043
File-URL: http://www.nber.org/papers/w21043.pdf
File-Format: application/pdf
Publication-Status: published as Sandra E Black & Paul J Devereux & Petter Lundborg & Kaveh Majlesi, 2018. "Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets*," Review of Finance, vol 22(3), pages 951-975.
Abstract: We investigate whether acquiring more education when young has long-term effects on risk-taking behavior in financial markets and whether the effects spill over to spouses and children. There is substantial evidence that more educated people are more likely to invest in the stock market. However, little is known about whether this is a causal effect of education or whether it arises from the correlation of education with unobserved characteristics. Using exogenous variation in education arising from a Swedish compulsory schooling reform in the 1950s and 1960s, and the wealth holdings of the population of Sweden in 2000, we estimate the effect of education on stock market participation and risky asset holdings. We find that an extra year of education increases stock market participation by about 2% for men but there is no evidence of any positive effect for women. More education also leads men to hold a greater proportion of their financial assets in stocks and other risky financial assets. We find no evidence of spillover effects from male schooling to the financial decisions of spouses or children.
Handle: RePEc:nbr:nberwo:21043
Template-Type: ReDIF-Paper 1.0
Title: Optimal Carbon Abatement in a Stochastic Equilibrium Model with Climate Change
Classification-JEL: D81; Q54
Author-Name: Christoph Hambel
Author-Name: Holger Kraft
Author-Name: Eduardo Schwartz
Note: AP EEE
Number: 21044
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21044
File-URL: http://www.nber.org/papers/w21044.pdf
File-Format: application/pdf
Publication-Status: published as Christoph Hambel & Holger Kraft & Eduardo Schwartz, 2021. "Optimal carbon abatement in a stochastic equilibrium model with climate change," European Economic Review, vol 132.
Abstract: This paper studies a dynamic stochastic general equilibrium model involving climate change. Our frame- work allows for feedback effects on the temperature dynamics. We are able to match estimates of future temperature distributions provided in the fifth assessment report of the IPCC (2014). We compare two approaches to capture damaging effects of temperature on output (level vs. growth rate impact) and combine them with two degrees of severity of this damage (Nordhaus vs. Weitzman calibration). It turns out that the choice of the damage function is crucial to answer the question of how much the distinction between level and growth rate impact matters. The social cost of carbon is similar for frameworks with level or growth rate impact if the potential damages of global warming are moderate. On the other hand, they are more than twice as large for a growth rate impact if damages are presumably severe. We also study the effect of varying risk aversion and elasticity of intertemporal substitution on our results. If damages are moderate for high temperatures, risk aversion only matters when climate change has a level impact on output, but the effects are relatively small. By contrast, the elasticity of intertemporal substitution has a significant effect for both level and growth rate impact. If damages are potentially severe for high temperatures, then the results also become sensitive to risk aversion for both damage specifications.
Handle: RePEc:nbr:nberwo:21044
Template-Type: ReDIF-Paper 1.0
Title: Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals
Classification-JEL: I11; L1
Author-Name: Michael Sinkinson
Author-Name: Amanda Starc
Note: EH IO
Number: 21045
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21045
File-URL: http://www.nber.org/papers/w21045.pdf
File-Format: application/pdf
Publication-Status: published as Michael Sinkinson, Amanda Starc; Ask Your Doctor? Direct-to-Consumer Advertising of Pharmaceuticals, The Review of Economic Studies, , rdy001, https://doi.org/10.1093/restud/rdy001
Abstract: We measure the impact of direct-to-consumer television advertising (DTCA) by drug manufacturers. Our identification strategy exploits shocks to local advertising markets generated by idiosyncrasies of the political advertising cycle as well as a regulatory intervention affecting a single product. We find that a 10% increase in the number of a firm's ads leads to a 0.76% increase in revenue, while the same increase in rival advertising leads to a 0.55% decrease in firm revenue. Results also indicate that a 10% increase in category advertising produces a 0.2% revenue increase for non-advertised drugs. Both the business-stealing and spillover effects would not be detected through OLS. Decomposition using micro data confirms that the effect is due mostly to new customers as opposed to switching among current customers. Simulations show that an outright ban on DTCA would have modest effects on the sales of advertised drugs as well as on non-advertised drugs.
Handle: RePEc:nbr:nberwo:21045
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Effects of Coordinated Assignment: Evidence from the NYC HS Match
Classification-JEL: C78; D47; D50; D61; I21
Author-Name: Atila Abdulkadiroğlu
Author-Name: Nikhil Agarwal
Author-Person: pag128
Author-Name: Parag A. Pathak
Note: ED IO LS PE
Number: 21046
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21046
File-URL: http://www.nber.org/papers/w21046.pdf
File-Format: application/pdf
Publication-Status: published as Abdulkadiroğlu, Atila, Nikhil Agarwal, and Parag A. Pathak. 2017. "The Welfare Effects of Coordinated Assignment: Evidence from the New York City High School Match." American Economic Review, 107 (12): 3635-89. DOI: 10.1257/aer.20151425
Abstract: Coordinated single-offer school assignment systems are a popular education reform. We show that uncoordinated offers in NYC’s school assignment mechanism generated mismatches. One-third of applicants were unassigned after the main round and later administratively placed at less desirable schools. We evaluate the effects of the new coordinated mechanism based on deferred acceptance using estimated student preferences. The new mechanism achieves 80% of the possible gains from a no-choice neighborhood extreme to a utilitarian benchmark. Coordinating offers dominates the effects of further algorithm modifications. Students most likely to be previously administratively assigned experienced the largest gains in welfare and subsequent achievement.
Handle: RePEc:nbr:nberwo:21046
Template-Type: ReDIF-Paper 1.0
Title: Wealth Inequality, Family Background, and Estate Taxation
Classification-JEL: D1; D14; D31; E21; E6; H2
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Fang Yang
Author-Person: pya115
Note: PE
Number: 21047
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21047
File-URL: http://www.nber.org/papers/w21047.pdf
File-Format: application/pdf
Publication-Status: published as Mariacristina De Nardi & Fang Yang, 2016. "Wealth inequality, family background, and estate taxation," Journal of Monetary Economics, vol 77, pages 130-145.
Abstract: This paper generates two main contributions. First, it provides a new theory of wealth inequality that merges two empirically relevant forces generating inequality: bequest motives and inheritance of ability across generations; and an earnings process that allows for more earnings risk for the richest. Second, it uses the resulting calibrated framework to study the effects of changing estate taxation. Increasing the estate tax reduces the wealth concentration in the hands of the richest few and the economic advantage of being born to a rich and super-rich family, at the cost of reduced aggregate capital and output. However, all of these effects are quite small. In contrast, increasing estate taxation can generate a significant welfare gain to a newborn under the veil of ignorance, but this comes at a large welfare cost for the super-rich.
Handle: RePEc:nbr:nberwo:21047
Template-Type: ReDIF-Paper 1.0
Title: Narrow Framing and Long-Term Care Insurance
Classification-JEL: D03; G22; I13
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG EH PE
Number: 21048
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21048
File-URL: http://www.nber.org/papers/w21048.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Gottlieb & Olivia S. Mitchell, 2020. "Narrow Framing and Long‐Term Care Insurance," Journal of Risk and Insurance, vol 87(4), pages 861-893.
Abstract: We propose a model of narrow framing in insurance and test it using data from a new module we designed and fielded in the Health and Retirement Study. We show that respondents subject to narrow framing are substantially less likely to buy long-term care insurance than average. This effect is distinct from, and much larger than, the effects of risk aversion or adverse selection, and it offers a new explanation for why people underinsure their later-life care needs.
Handle: RePEc:nbr:nberwo:21048
Template-Type: ReDIF-Paper 1.0
Title: Does Medicaid Coverage for Pregnant Women Affect Prenatal Health Behaviors?
Classification-JEL: D1; D9; I12; I13; I18
Author-Name: Dhaval M. Dave
Author-Person: pda245
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: George L. Wehby
Note: CH EH
Number: 21049
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21049
File-URL: http://www.nber.org/papers/w21049.pdf
File-Format: application/pdf
Abstract: Despite plausible mechanisms, little research has evaluated potential changes in health behaviors as a result of the Medicaid expansions of the 1980s and 1990s for pregnant women. Accordingly, we provide the first national study of the effects of Medicaid on health behaviors for pregnant women. We exploit exogenous variation from the Medicaid income eligibility expansions for pregnant women and children during late-1980s through mid-1990s to examine effects on several prenatal health behaviors and health outcomes using U.S. vital statistics data. We find that increases in Medicaid eligibility were associated with increases in smoking and decreases in weight gain during pregnancy. Raising Medicaid eligibility by 12 percentage-points increased rates of any prenatal smoking and smoking more than five cigarettes daily by 0.7-0.8 percentage point. Medicaid expansions were associated with a reduction in pregnancy weight-gain by about 0.6%. These effects diminish at higher levels of eligibility, which is consistent with crowd-out from private to public insurance. Importantly, our evidence is consistent with ex-ante moral hazard although income effects are also at play. The worsening of health behaviors may partly explain why Medicaid expansions have not been associated with substantial improvement in infant health.
Handle: RePEc:nbr:nberwo:21049
Template-Type: ReDIF-Paper 1.0
Title: Uncovering Waste in U.S. Healthcare
Classification-JEL: I10; I18
Author-Name: Joseph Doyle
Author-Name: John Graves
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH PE
Number: 21050
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21050
File-URL: http://www.nber.org/papers/w21050.pdf
File-Format: application/pdf
Abstract: There is widespread agreement that the US healthcare system wastes as much as 5% of GDP, yet little consensus on what care is actually unproductive. This partly arises because of the endogeneity of patient choice of treatment location. This paper uses the effective random assignment of patients to ambulance companies to generate comparisons across similar patients treated at different hospitals. We find that assignment to hospitals whose patients receive large amounts of care over the three months following a health emergency do not have meaningfully better survival outcomes compared to hospitals whose patients receive less. Outcomes are related to different types of treatment intensity, however: patients assigned to hospitals with high levels of inpatient spending are more likely to survive to one year, while those assigned to hospitals with high levels of outpatient spending are less likely to do so. This adverse effect of outpatient spending is predominately driven by spending at skilled nursing facilities (SNF) following hospitalization. These results offer a new type of quality measure for hospitals based on utilization of SNFs. We find that patients quasi-randomized to hospitals with high rates of SNF discharge have poorer outcomes, as well as higher downstream spending once conditioning on initial hospital spending.
Handle: RePEc:nbr:nberwo:21050
Template-Type: ReDIF-Paper 1.0
Title: Some Like it (Less) Hot: Extracting Tradeoff Measures for Physically Coupled Amenities
Classification-JEL: H23; H44; Q51; Q57
Author-Name: H. Allen Klaiber
Author-Person: pkl93
Author-Name: Joshua Abbott
Author-Name: V. Kerry Smith
Author-Person: psm143
Note: EEE
Number: 21051
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21051
File-URL: http://www.nber.org/papers/w21051.pdf
File-Format: application/pdf
Publication-Status: published as H. Allen Klaiber & Joshua K. Abbott & V. Kerry Smith, 2017. "Some Like It (Less) Hot: Extracting Trade-Off Measures for Physically Coupled Amenities," Journal of the Association of Environmental and Resource Economists, vol 4(4), pages 1053-1079.
Abstract: The Urban Heat Island (UHI) provides direct evidence of how human activities contribute to a feedback loop that can result in multiple changes in ecosystem services by creating localized warming as well as differences in vegetated landscapes in areas surrounding the urban core. This paper develops a new spatial-temporal panel estimator to recover consistent estimates of household valuation of coupled landscape and temperature ecosystem services. Using data from Phoenix, AZ, we estimate a hedonic price function using an extension of the Hausman-Taylor model. The framework adapts the earlier Abbott Klaiber [2011] proposal to overcome challenges associated with the varying spatial scales of capitalization of landscape and temperature variables and the likelihood of spatially and temporally varying omitted variables. We find a positive and economically significant marginal willingness to pay (MWTP) for measures of green landscaping at multiple spatial scales and a separate, MWTP for a one degree (F) reduction in outdoor temperatures of $56 monthly.
Handle: RePEc:nbr:nberwo:21051
Template-Type: ReDIF-Paper 1.0
Title: Religion and Innovation
Classification-JEL: O3; O31; O35; O4; Z1; Z12
Author-Name: Roland Bénabou
Author-Person: pbe27
Author-Name: Davide Ticchi
Author-Person: pti48
Author-Name: Andrea Vindigni
Author-Person: pvi120
Note: EFG PR
Number: 21052
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21052
File-URL: http://www.nber.org/papers/w21052.pdf
File-Format: application/pdf
Publication-Status: published as Roland Bénabou & Davide Ticchi & Andrea Vindigni, 2015. "Religion and Innovation," American Economic Review, American Economic Association, vol. 105(5), pages 346-51, May.
Abstract: In earlier work (Bénabou, Ticchi and Vindigni 2013) we uncovered a robust negative association between religiosity and patents per capita, holding across countries as well as US states, with and without controls. In this paper we turn to the individual level, examining the relationship between religiosity and a broad set of pro- or anti-innovation attitudes in all five waves of the World Values Survey (1980 to 2005). We thus relate eleven indicators of individual openness to innovation, broadly defined (e.g., attitudes toward science and technology, new versus old ideas, change, risk taking, personal agency, imagination and independence in children) to five different measures of religiosity, including beliefs and attendance. We control for all standard socio-demographics as well as country, year and denomination fixed effects. Across the fifty-two estimated specifications, greater religiosity is almost uniformly and very significantly associated to less favorable views of innovation.
Handle: RePEc:nbr:nberwo:21052
Template-Type: ReDIF-Paper 1.0
Title: What Do We Know So Far about Multigenerational Mobility?
Classification-JEL: D1; D31; D63; J62
Author-Name: Gary Solon
Author-Person: pso215
Note: CH DAE LS
Number: 21053
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21053
File-URL: http://www.nber.org/papers/w21053.pdf
File-Format: application/pdf
Publication-Status: published as Gary Solon, 2018. "What Do We Know So Far about Multigenerational Mobility?," The Economic Journal, vol 128(612), pages F340-F352.
Abstract: “Multigenerational mobility” refers to the associations in socioeconomic status across three or more generations. This article begins by summarizing the longstanding but recently growing empirical literature on multigenerational mobility. It then discusses multiple theoretical interpretations of the empirical patterns, including the one recently proposed in Gregory Clark’s book The Son Also Rises.
Handle: RePEc:nbr:nberwo:21053
Template-Type: ReDIF-Paper 1.0
Title: Do Foreign Firm Betas Change During Cross-listing?
Classification-JEL: F15; G1; G15
Author-Name: Karen K. Lewis
Author-Person: ple1119
Note: AP IFM
Number: 21054
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21054
File-URL: http://www.nber.org/papers/w21054.pdf
File-Format: application/pdf
Abstract: The reaction of foreign stocks to cross-listing events has been documented in an extensive literature, finding that the betas of these stocks change over time. In this paper, I use stock return data for foreign companies listed on U.S. exchanges to ask whether the betas changed at all and, if so, on what date. While betas for most of these companies indeed change over their sample, the evidence shows that these changes arise from greater integration between their home markets and the U.S. Moreover, of the remaining companies, the betas change significantly after, not during, the cross-listing event.
Handle: RePEc:nbr:nberwo:21054
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Community Traumatic Events on Student Achievement: Evidence from the Beltway Sniper Attacks
Classification-JEL: I12; I21; I24; K42
Author-Name: Seth Gershenson
Author-Person: pge195
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH ED EH LE
Number: 21055
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21055
File-URL: http://www.nber.org/papers/w21055.pdf
File-Format: application/pdf
Publication-Status: published as Seth Gershenson & Erdal Tekin, 2018. "The Effect of Community Traumatic Events on Student Achievement: Evidence from the Beltway Sniper Attacks," Education Finance and Policy, vol 13(4), pages 513-544.
Abstract: Community traumatic events such as mass shootings, terrorist attacks, and natural or man-made disasters have the potential to disrupt student learning in numerous ways. For example, these events can reduce instructional time by causing teacher and student absences, school closures, and disturbances to usual classroom routines. Similarly, they might also disrupt home environments. This paper uses a quasi-experimental research design to identify the effects of the 2002 “Beltway Sniper” attacks on student achievement in Virginia’s public elementary schools. In order to identify the causal impact of these events, the empirical analysis uses a difference-in-differences strategy that exploits geographic variation in schools’ proximity to the attacks. The main results indicate that the attacks significantly reduced school-level proficiency rates in schools within five miles of an attack. Evidence of a causal effect is most robust for math proficiency rates in the third and fifth grades, and third grade reading proficiency, suggesting that the shootings caused a decline in school proficiency rates of about five to nine percentage points. Particularly concerning from an equity standpoint, these effects appear to be entirely driven by achievement declines in schools that serve higher proportions of racial minority and socioeconomically disadvantaged students. Finally, results from supplementary analyses suggest that these deleterious effects faded out in subsequent years.
Handle: RePEc:nbr:nberwo:21055
Template-Type: ReDIF-Paper 1.0
Title: The Great Depression and the Great Recession: A View from Financial Markets
Classification-JEL: C32; G01; G12
Author-Name: Francesco Bianchi
Author-Person: pbi171
Note: AP EFG ME
Number: 21056
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21056
File-URL: http://www.nber.org/papers/w21056.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Bianchi, 2019. "The Great Depression and the Great Recession: A View from Financial Markets," Journal of Monetary Economics, .
Abstract: Similarities between the Great Depression and the Great Recession are documented with respect to the behavior of financial markets. A Great Depression regime is identified by using a Markov-switching VAR. The probability of this regime has remained close to zero for many decades, but spiked for a short period during the most recent financial crisis, the Great Recession. The Great Depression regime implies a collapse of the stock market, with small-growth stocks outperforming small-value stocks. A model with financial frictions and uncertainty about policy makers’ intervention suggests that policy intervention during the Great Recession might have avoided a second Great Depression. A multi-country analysis shows that the Great Depression and Great Recession were not like any other financial crises.
Handle: RePEc:nbr:nberwo:21056
Template-Type: ReDIF-Paper 1.0
Title: U.S. Food and Nutrition Programs
Classification-JEL: H53; I3
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Diane Whitmore Schanzenbach
Author-Person: psc874
Note: CH LS PE
Number: 21057
Creation-Date: 2015-03
Order-URL: http://www.nber.org/papers/w21057
File-URL: http://www.nber.org/papers/w21057.pdf
File-Format: application/pdf
Publication-Status: published as US Food and Nutrition Programs, Hilary Hoynes, Diane Whitmore Schanzenbach. in Economics of Means-Tested Transfer Programs in the United States, Volume 1, Moffitt. 2016
Abstract: This chapter provides an overview of the patchwork of U.S. food and nutrition programs, with detailed discussions of SNAP (formerly the Food Stamp Program), WIC, and the school breakfast and lunch programs. Building on Currie’s (2003) review, we document the history and goals of the programs, and describe the current program rules. We also provide program statistics and how participation and costs have changed over time. The programs vary along how “in-kind” the benefits are, and we describe economic frameworks through which each can be analyzed. We then review the recent research on each program, focusing on studies that employ techniques that can isolate causal impacts. We conclude by highlighting gaps in current knowledge and promising areas for future research.
Handle: RePEc:nbr:nberwo:21057
Template-Type: ReDIF-Paper 1.0
Title: Making Democracy Work: Culture, Social Capital and Elections in China
Classification-JEL: H41; P16
Author-Name: Gerard Padró i Miquel
Author-Name: Nancy Qian
Author-Person: pqi25
Author-Name: Yiqing Xu
Author-Name: Yang Yao
Note: DEV POL
Number: 21058
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21058
File-URL: http://www.nber.org/papers/w21058.pdf
File-Format: application/pdf
Abstract: This paper aims to show that culture is an important determinant of the effectiveness of formal democratic institutions, such as elections. We collect new data to document the presence of voluntary and social organizations and the history of electoral reforms in Chinese villages. We use the presence of village temples to proxy for culture, or more specifically, for social (civic) capital and show that their presence greatly enhances the increase in public goods due to the introduction of elections. These results support the view that social capital complements democratic institutions such as elections.
Handle: RePEc:nbr:nberwo:21058
Template-Type: ReDIF-Paper 1.0
Title: Insurance in extended family networks
Classification-JEL: D12; D31; D91; E21; E24; H31
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Corina Mommaerts
Note: LS PE
Number: 21059
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21059
File-URL: http://www.nber.org/papers/w21059.pdf
File-Format: application/pdf
Abstract: We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each component is insured. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the Panel Study of Income Dynamics. We find that over 60% of shocks to household income are potentially insurable within extended family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks.
Handle: RePEc:nbr:nberwo:21059
Template-Type: ReDIF-Paper 1.0
Title: Tax-Efficient Asset Management: Evidence from Equity Mutual Funds
Classification-JEL: G11; G18; G23; G28; H2; H22; H24
Author-Name: Clemens Sialm
Author-Person: psi59
Author-Name: Hanjiang Zhang
Note: AP CF PE
Number: 21060
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21060
File-URL: http://www.nber.org/papers/w21060.pdf
File-Format: application/pdf
Publication-Status: published as CLEMENS SIALM & HANJIANG ZHANG, 2020. "Tax‐Efficient Asset Management: Evidence from Equity Mutual Funds," The Journal of Finance, vol 75(2), pages 735-777.
Abstract: Investment taxes have a substantial impact on the performance of taxable mutual fund investors. Mutual funds can reduce the tax burdens of their shareholders by avoiding securities that are heavily taxed and by avoiding realizing capital gains that trigger higher tax burdens to the funds’ investors. Such tax avoidance strategies constrain the investment opportunities of the mutual funds and might reduce their before-tax performance. Our paper empirically investigates the costs and benefits of tax-efficient asset management based on U.S. equity mutual funds. We find that mutual funds that follow tax-efficient asset management strategies generate superior after-tax returns. Surprisingly, more tax-efficient mutual funds do not underperform other funds before taxes, indicating that the constraints imposed by tax-efficient asset management do not have significant performance consequences.
Handle: RePEc:nbr:nberwo:21060
Template-Type: ReDIF-Paper 1.0
Title: The Empiricists' Insurgency
Classification-JEL: F51; F52; H56; N76; N85; N87; O1
Author-Name: Eli Berman
Author-Person: pbe188
Author-Name: Aila M. Matanock
Note: DEV PE
Number: 21061
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21061
File-URL: http://www.nber.org/papers/w21061.pdf
File-Format: application/pdf
Publication-Status: published as Eli Berman & Aila M. Matanock, 2015. "The Empiricists' Insurgency," Annual Review of Political Science, vol 18(1), pages 443-464.
Abstract: Research on insurgency has been invigorated this past decade by better data, improved methods, and the urgency of understanding active engagements in Iraq and Afghanistan. This empiricists’ insurgency reinforces a classic literature on the essential role of civilians while challenging older theories about how they affect conflict outcomes. It provides a general framework describing “irregular” insurgencies (where government capacity exceeds rebel capacity), which is analytically cohesive and empirically tested using subnational data from multiple conflicts. The new research provides guidance on intervention design, including governance improvement, development programs, and rules of engagement. The design of interventions matters: some key evidence comes from measuring the effects of misguided policies. The framework may enable better conceived and implemented interventions, including foreign engagements with and without troop deployment, depending on the type of insurgency and mindful of political limitations. We position these findings in the literature, and highlight directions for future research, including legal aspects of countering insurgency.
Handle: RePEc:nbr:nberwo:21061
Template-Type: ReDIF-Paper 1.0
Title: Backlash in Policy Attitudes After the Election of Extreme Political Parties
Classification-JEL: D72; D8; L82
Author-Name: Magnus Carlsson
Author-Person: pca1050
Author-Name: Gordon B. Dahl
Author-Person: pda455
Author-Name: Dan-Olof Rooth
Author-Person: pro875
Note: LS PE POL
Number: 21062
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21062
File-URL: http://www.nber.org/papers/w21062.pdf
File-Format: application/pdf
Publication-Status: published as Magnus Carlsson & Gordon B. Dahl & Dan-Olof Rooth, 2021. "Backlash in policy attitudes after the election of an extreme political party," Journal of Public Economics, vol 204.
Abstract: Far-right and far-left parties by definition occupy the fringes of politics, with policy proposals outside the mainstream. This paper asks how public attitudes about such policies respond once an extreme party increases their political representation at the local level. We study attitudes towards the signature policies of two parties in Sweden, one from the far right and one from the far left, using panel data from 290 municipal election districts. To identify causal effects, we compare otherwise similar elections where a party either barely wins or loses an additional seat. We estimate that a one seat increase for the far-right, anti-immigration party decreases negative attitudes towards immigration by 1.8 or 4.1 percentage points (depending on which national survey we use). Likewise, when a far-left, anti-capitalist party politician gets elected, opposition to a six hour workday rises by 2.5 percentage points. These changes are contrary to the two parties’ policy positions. Exploring possible mechanisms, we find evidence for higher politician turnover and a rise in negative newspaper coverage for the anti-immigration party. These findings demonstrate that political representation can cause an attitudinal backlash as fringe parties and their ideas are placed under closer scrutiny.
Handle: RePEc:nbr:nberwo:21062
Template-Type: ReDIF-Paper 1.0
Title: Decentralizing Education Resources: School Grants in Senegal
Classification-JEL: H52; I22; I25; O15
Author-Name: Pedro Carneiro
Author-Person: pca130
Author-Name: Oswald Koussihouèdé
Author-Name: Nathalie Lahire
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Corina Mommaerts
Note: CH DEV ED
Number: 21063
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21063
File-URL: http://www.nber.org/papers/w21063.pdf
File-Format: application/pdf
Publication-Status: published as Pedro Carneiro, Oswald Koussihouèdé, Nathalie Lahire, Costas Meghir, Corina Mommaerts “School Grants and Education Quality: Experimental Evidence from Senegal,” Economica Volume 87, Issue 345, January 2020, Pages 28-51
Abstract: The impact of school resources on the quality of education in developing countries may depend crucially on whether resources are targeted efficiently. In this paper we use a randomized experiment to analyze the impact of a school grants program in Senegal, which decentralized a portion of the country’s education budget. We find large positive effects on test scores at younger grades that persist at least two years. We show that these effects are concentrated among schools that focused funds on human resources improvements rather than school materials, suggesting that teachers and principals may be a central determinant of school quality.
Handle: RePEc:nbr:nberwo:21063
Template-Type: ReDIF-Paper 1.0
Title: Investment and The Cross-Section of Equity Returns
Classification-JEL: D24; D92; G12
Author-Name: Gian Luca Clementi
Author-Name: Berardino Palazzo
Author-Person: ppa773
Note: AP EFG
Number: 21064
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21064
File-URL: http://www.nber.org/papers/w21064.pdf
File-Format: application/pdf
Publication-Status: published as GIAN LUCA CLEMENTI & BERARDINO PALAZZO, 2019. "Investment and the Cross-Section of Equity Returns," The Journal of Finance, vol 74(1), pages 281-321.
Abstract: We confront the one-factor production-based asset pricing model with the evidence on firm-level investment, to uncover that it produces implications for the dynamics of capital that are seriously at odds with the evidence. The data shows that, upon being hit by adverse profitability shocks, large public firms have ample latitude to divest their least productive assets and downsize. In turn, this reduces the risk faced by their shareholders and the returns that they are likely to demand. It follows that when the frictions to capital adjustment are shaped to respect the evidence on investment, the model–generated cross–sectional dispersion of returns is only a small fraction of what documented in the data. Our conclusions hold true even when either operating or labor leverage are modeled in ways that were shown to be promising in the extant literature.
Handle: RePEc:nbr:nberwo:21064
Template-Type: ReDIF-Paper 1.0
Title: Spatial Variation in Higher Education Financing and the Supply of College Graduates
Classification-JEL: I22; I23; J24; J61
Author-Name: John Kennan
Author-Person: pke13
Note: ED EFG LS
Number: 21065
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21065
File-URL: http://www.nber.org/papers/w21065.pdf
File-Format: application/pdf
Abstract: In the U.S. there are large differences across States in the extent to which college education is subsidized, and there are also large differences across States in the proportion of college graduates in the labor force. State subsidies are apparently motivated in part by the perceived benefits of having a more educated workforce. The paper extends the migration model of Kennan and Walker (2011) to analyze how geographical variation in college education subsidies affects the migration decisions of college graduates. The model is estimated using NLSY data, and used to quantify the sensitivity of migration and college enrollment decisions to differences in expected net lifetime income, focusing on how cross-State differences in public college financing affect the educational composition of the labor force. The main finding is that these differences have substantial effects on college enrollment, and that these effects are not dissipated through migration.
Handle: RePEc:nbr:nberwo:21065
Template-Type: ReDIF-Paper 1.0
Title: Donor Governance and Financial Management in Prominent U.S. Art Museums
Classification-JEL: G32; G34; L31
Author-Name: David Yermack
Author-Person: pye42
Note: CF LE
Number: 21066
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21066
File-URL: http://www.nber.org/papers/w21066.pdf
File-Format: application/pdf
Publication-Status: published as Yermack, D. J Cult Econ (2017) 41: 215. https://doi.org/10.1007/s10824-017-9290-4
Abstract: I study “donor governance,” which occurs when contributors to non-profit firms place restrictions on their gifts to limit the discretion of managers. In a study of U.S. art museums, I find that this practice has grown significantly in recent years, and it represents the largest source of permanent capital in the industry. When donor restrictions are strong, museums shift their cost structures away from administration and toward program services, and they exhibit very high savings rates, retaining in their endowments 45 cents of each incremental dollar donated. Retention rates are near zero for cash generated from other activities. Restricted donations appear to stabilize non-profits and significantly influence their activities, but they reduce management flexibility and may contribute to lower profit margins. Rising donor governance in U.S. art museums may represent a reaction by contributors to the industry’s high rates of financial distress, weak boards of trustees, and large private benefits of control enjoyed by managers.
Handle: RePEc:nbr:nberwo:21066
Template-Type: ReDIF-Paper 1.0
Title: Dynastic Entrepreneurship, Entry, and Non-Compete Enforcement
Classification-JEL: K12; L26
Author-Name: James Rauch
Author-Person: pra166
Note: IO LE PR
Number: 21067
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21067
File-URL: http://www.nber.org/papers/w21067.pdf
File-Format: application/pdf
Publication-Status: published as James E. Rauch, 2015. "Dynastic entrepreneurship, entry, and non-compete enforcement," European Economic Review, .
Abstract: We investigate entry in a dynastic entrepreneurship (overlapping generations) environment created by employee spinoffs. Without finance constraints, enforcement of non-compete agreements unambiguously improves social welfare outcomes, and even increases the rate of spinoffs from original firms. Indeed, if employers have all the bargaining power vis-à-vis their employees, optimal entry of original firms and all subsequent employee spinoffs is achieved, despite the fact that the original firm can only negotiate with the first spinoff. However, if employees are unable to buy out their non-compete contracts, enforcement of these agreements shuts down socially profitable spinoff firms. Non-enforcement sacrifices entry of original firms that would be marginally profitable in the absence of employee spinoffs, but otherwise clearly improves social welfare outcomes over enforcement in the presence of finance constraints.
Handle: RePEc:nbr:nberwo:21067
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Financial Education for Youth in Ghana
Classification-JEL: D14; J22; J24; O12
Author-Name: James Berry
Author-Person: pbe645
Author-Name: Dean Karlan
Author-Person: pka56
Author-Name: Menno Pradhan
Author-Person: ppr157
Note: DEV LS
Number: 21068
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21068
File-URL: http://www.nber.org/papers/w21068.pdf
File-Format: application/pdf
Publication-Status: published as James Berry & Dean Karlan & Menno Pradhan, 2018. "The Impact of Financial Education for Youth in Ghana," World Development, vol 102, pages 71-89.
Abstract: We evaluate, using a randomized trial, two school-based financial literacy education programs in government-run primary and junior high schools in Ghana. One program integrated financial and social education, whereas the second program only offered financial education. Both programs included a voluntary after-school savings club that provided students with a locked money box. After nine months, both programs had significant impacts on savings behavior relative to the control group, mostly because children moved savings from home to school. We observed few other impacts. We do find that financial education, when not accompanied by social education, led children to work more compared to the control group, whereas no such effect is found for the integrated curriculum; however, the difference between the two treatment effects on child labor is not statistically significant.
Handle: RePEc:nbr:nberwo:21068
Template-Type: ReDIF-Paper 1.0
Title: Creative Destruction and Subjective Wellbeing
Classification-JEL: I31; J63; J65; O33; O38; Z19
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: Angus Deaton
Author-Person: pde30
Author-Name: Alexandra Roulet
Note: EFG
Number: 21069
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21069
File-URL: http://www.nber.org/papers/w21069.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Ufuk Akcigit & Angus Deaton & Alexandra Roulet, 2016. "Creative Destruction and Subjective Well-Being," American Economic Review, American Economic Association, vol. 106(12), pages 3869-3897, December.
Abstract: In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing, using cross-sectional MSA level US data. We find that the effect of creative destruction on wellbeing is (i) unambiguously positive if we control for MSA-level unemployment, less so if we do not; (ii) more positive on future wellbeing than on current well-being; (iii) more positive in MSAs with faster growing industries or with industries that are less prone to outsourcing; (iv) more positive in MSAs within states with more generous unemployment insurance policies.
Handle: RePEc:nbr:nberwo:21069
Template-Type: ReDIF-Paper 1.0
Title: Demand for Value Added and Value-Added Exchange Rates
Classification-JEL: F1; F4
Author-Name: Rudolfs Bems
Author-Person: pbe208
Author-Name: Robert C. Johnson
Author-Person: pjo146
Note: IFM ITI
Number: 21070
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21070
File-URL: http://www.nber.org/papers/w21070.pdf
File-Format: application/pdf
Publication-Status: published as Rudolfs Bems & Robert Johnson, 2015. "Demand for Value Added and Value-Added Exchange Rates," IMF Working Papers, vol 15(199).
Publication-Status: published as Rudolfs Bems & Robert C. Johnson, 2017. "Demand for Value Added and Value-Added Exchange Rates," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 45-90, October.
Abstract: We examine the role of cross-border input linkages in governing how international relative price changes influence demand for domestic value added. We define a novel value-added real effective exchange rate (REER), which aggregates bilateral value-added price changes, and link this REER to demand for value added. Input linkages enable countries to gain competitiveness following depreciations by supply chain partners, and hence counterbalance beggar-thy-neighbor effects. Cross-country differences in input linkages also imply that the elasticity of demand for value added is country specific. Using global input-output data, we demonstrate these conceptual insights are quantitatively important and compute historical value-added REERs.
Handle: RePEc:nbr:nberwo:21070
Template-Type: ReDIF-Paper 1.0
Title: Low-Income Housing Policy
Classification-JEL: H53; I3; I38; R28
Author-Name: Robert Collinson
Author-Person: pco1000
Author-Name: Ingrid Gould Ellen
Author-Name: Jens Ludwig
Note: CH LS PE
Number: 21071
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21071
File-URL: http://www.nber.org/papers/w21071.pdf
File-Format: application/pdf
Publication-Status: published as Low-Income Housing Policy, Robert Collinson, Ingrid Gould Ellen, Jens Ludwig. in Economics of Means-Tested Transfer Programs in the United States, Volume 2, Moffitt. 2016
Abstract: The United States government devotes about $40 billion each year to means-tested housing programs, plus another $6 billion or so in tax expenditures on the Low Income Housing Tax Credit (LIHTC). What exactly do we spend this money on, why, and what does it accomplish? We focus on these questions. We begin by reviewing the history of low-income housing programs in the U.S., and then summarize the characteristics of participants in means-tested housing programs and how programs have changed over time. We consider important conceptual issues surrounding the design of and rationale for means-tested housing programs in the U.S. and review existing empirical evidence, which is limited in important ways. Finally, we conclude with thoughts about the most pressing questions that might be addressed in future research in this area.
Handle: RePEc:nbr:nberwo:21071
Template-Type: ReDIF-Paper 1.0
Title: How Increasing Medical Access to Opioids Contributes to the Opioid Epidemic: Evidence from Medicare Part D
Classification-JEL: I13; I18; K42
Author-Name: David Powell
Author-Person: ppo594
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Author-Name: Erin Taylor
Note: EH
Number: 21072
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21072
File-URL: http://www.nber.org/papers/w21072.pdf
File-Format: application/pdf
Publication-Status: published as David Powell & Rosalie Liccardo Pacula & Erin Taylor, 2020. "How Increasing Medical Access to Opioids Contributes to the Opioid Epidemic: Evidence from Medicare Part D," Journal of Health Economics, .
Abstract: Drug overdoses involving opioid analgesics have increased dramatically since 1999, representing one of the United States’ top public health crises. Opioids have legitimate medical functions, but improving access may increase abuse rates even among those not prescribed the drugs given that opioids are frequently diverted to nonmedical use. We have little evidence about the causal relationship between increased medical access to opioids and spillovers resulting in abuse. We use the introduction of the Medicare Prescription Drug Benefit Program (Part D) as a large and differential shock to the geographic supply of opioids. We compare growth in opioid supply and abuse rates in states with large 65+ population shares to states with smaller elderly population shares with a focus on abuse among the Medicare-ineligible population. Part D increased opioid utilization for the 65+ population, and we show that this increase in utilization led to significant growth in the overall supply of opioids in high elderly share states relative to low elderly share states. This relative expansion in opioid supply resulted in an escalation in opioid-related substance abuse treatment admissions and opioid-related mortality among the Medicare-ineligible population, implying meaningful spillovers to individuals who did not experience any change in prescription drug benefits. The evidence suggests that increased opioid supply is associated with economically-important levels of diversion for nonmedical purposes. Our estimates imply that a 10% increase in medical opioid distribution leads to a 7.4% increase in opioid-related deaths and a 14.1% increase in substance abuse treatment admission rates for the Medicare-ineligible population.
Handle: RePEc:nbr:nberwo:21072
Template-Type: ReDIF-Paper 1.0
Title: Death and the Media: Asymmetries in Infectious Disease Reporting During the Health Transition
Classification-JEL: I19; L82; N31
Author-Name: Dora L. Costa
Author-Person: pco358
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: DAE EEE PE
Number: 21073
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21073
File-URL: http://www.nber.org/papers/w21073.pdf
File-Format: application/pdf
Publication-Status: published as Dora L. Costa & Matthew E. Kahn, 2017. "Death and the Media: Infectious Disease Reporting During the Health Transition," Economica, vol 84(335), pages 393-416.
Abstract: In the late 19th Century, cities in Western Europe and the United States suffered from high levels of infectious disease. Over a 40 year period, there was a dramatic decline in infectious disease deaths in cities. As such objective progress in urban quality of life took place, how did the media report this trend? At that time newspapers were the major source of information educating urban households about the risks they faced. By constructing a unique panel data base, we find that news reports were positively associated with government announced typhoid mortality counts and the size of this effect actually grew after the local governments made large investments in public goods intended to reduce typhoid rates. News coverage was more responsive to unexpected increases in death rates than to unexpected decreases in death rates. Together, these facts suggest that consumers find bad news is more useful than good news.
Handle: RePEc:nbr:nberwo:21073
Template-Type: ReDIF-Paper 1.0
Title: How Fast are Semiconductor Prices Falling?
Classification-JEL: E01; E31; E66; L16; L63; N12; N72; O33
Author-Name: David M. Byrne
Author-Person: pby17
Author-Name: Stephen D. Oliner
Author-Person: pol82
Author-Name: Daniel E. Sichel
Author-Person: psi394
Note: DAE EFG IO PR
Number: 21074
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21074
File-URL: http://www.nber.org/papers/w21074.pdf
File-Format: application/pdf
Publication-Status: published as David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2017. "How Fast are Semiconductor Prices Falling?," Review of Income and Wealth, .
Abstract: The Producer Price Index (PPI) for the United States suggests that semiconductor prices have barely been falling in recent years, a dramatic contrast from the rapid declines reported from the mid-1980s to the early 2000s. This slowdown in the rate of decline is puzzling in light of evidence that the performance of microprocessor units (MPUs) has continued to improve at a rapid pace. Roughly coincident with the shift to slower price declines in the PPI, Intel — the leading producer of MPUs — substantially changed its pricing behavior for these chips. As a result of this change, we argue that the matched-model methodology used in the PPI for MPUs likely started to be biased in the mid-2000s and that hedonic indexes can provide a more accurate measure of price change since then. Our preferred hedonic index of MPU prices tracks the PPI closely through 2004. However, from 2004 to 2008, our preferred index fell faster than the PPI, and from 2008 to 2013 the gap widened further, with our preferred index falling at an average annual rate of 43 percent, while the PPI declined at only an 8 percent rate. Given that MPUs currently represent about half of U.S. shipments of semiconductors, this difference has important implications for gauging the rate of innovation in the semiconductor sector.
Handle: RePEc:nbr:nberwo:21074
Template-Type: ReDIF-Paper 1.0
Title: Social Trust and Differential Reactions of Local and Foreign Investors to Public News
Classification-JEL: F3; G02; G14
Author-Name: Chunxin Jia
Author-Name: Yaping Wang
Author-Name: Wei Xiong
Author-Person: pxi88
Note: AP CF IFM
Number: 21075
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21075
File-URL: http://www.nber.org/papers/w21075.pdf
File-Format: application/pdf
Abstract: This paper uses the segmented dual-class shares issued by several dozen Chinese firms---A shares to local Chinese investors and H shares to foreign investors---to compare reactions of local and foreign investors to the same public news. We find that local investors react more strongly to earnings forecasts by local analysts, while foreign investors react more strongly to forecasts of foreign analysts. This finding highlights social trust as a force driving people with different social backgrounds to react differently to the same information.
Handle: RePEc:nbr:nberwo:21075
Template-Type: ReDIF-Paper 1.0
Title: Firm Leverage and Unemployment during the Great Recession
Classification-JEL: E24; E32; R3
Author-Name: Xavier Giroud
Author-Name: Holger M. Mueller
Note: CF EFG LS
Number: 21076
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21076
File-URL: http://www.nber.org/papers/w21076.pdf
File-Format: application/pdf
Abstract: We argue that firms’ balance sheets were instrumental in the propagation of shocks during the Great Recession. Using establishment-level data, we show that firms that tightened their debt capacity in the run-up to the Great Recession (“highleverage firms”) exhibit a significantly larger decline in employment in response to household demand shocks than firms that freed up debt capacity (“low-leverage firms”). In fact, all of the job losses associated with falling house prices during the Great Recession are concentrated among establishments of high-leverage firms. At the county level, we show that counties with a larger fraction of establishments belonging to high-leverage firms exhibit a significantly larger decline in employment in response to household demand shocks. Thus, firms’ balance sheets also matter for aggregate employment.
Handle: RePEc:nbr:nberwo:21076
Template-Type: ReDIF-Paper 1.0
Title: Loss Aversion in Politics
Classification-JEL: H0
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Francesco Passarelli
Author-Person: ppa146
Note: POL
Number: 21077
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21077
File-URL: http://www.nber.org/papers/w21077.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Alesina & Francesco Passarelli, 2019. "Loss Aversion in Politics," American Journal of Political Science, vol 63(4), pages 936-947.
Abstract: We study loss aversion in majority voting. First, we show a status quo bias. Second, loss aversion implies a moderating effect. Third, in a dynamic setting, the effect of loss aversion diminishes with the length of the planning horizon of voters; however, in the presence of a projection bias, majorities are partially unable to understand how fast they will adapt. Fourth, in a stochastic environment, loss aversion yields a significant distaste for risk, but also a smaller attachment to the status quo. The application of these results to a model of redistribution leads to empirically plausible implications.
Handle: RePEc:nbr:nberwo:21077
Template-Type: ReDIF-Paper 1.0
Title: The Growing Segmentation of the Charter School Sector in North Carolina
Classification-JEL: H52; H75; I24
Author-Name: Helen F. Ladd
Author-Person: pla158
Author-Name: Charles T. Clotfelter
Author-Person: pcl34
Author-Name: John B. Holbein
Note: ED
Number: 21078
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21078
File-URL: http://www.nber.org/papers/w21078.pdf
File-Format: application/pdf
Publication-Status: published as Helen F. Ladd & Charles T. Clotfelter & John B. Holbein, 2017. "The Growing Segmentation of the Charter School Sector in North Carolina," Education Finance and Policy, vol 12(4), pages 536-563.
Abstract: A defining characteristic of charter schools is that they introduce a strong market element into public education. In this paper, we examine the evolution of the charter school sector in North Carolina between 1999 and 2012 through the lens of a market model. We examine trends in the mix of students enrolled in charter schools, the racial imbalance of charter schools, the quality of the match between parental preferences in charter schools relative to the quality of match in traditional public schools, and the distribution of test score performance across charter schools relative those in traditional public schools serving similar students over time. Taken together, our findings imply that the charter schools in North Carolina are increasingly serving the interests of relatively able white students in racially imbalanced schools.
Handle: RePEc:nbr:nberwo:21078
Template-Type: ReDIF-Paper 1.0
Title: Diversity and Conflict
Classification-JEL: D74; N30; N40; O11; O43; Z13
Author-Name: Cemal Eren Arbatlı
Author-Person: par394
Author-Name: Quamrul H. Ashraf
Author-Name: Oded Galor
Author-Person: pga46
Author-Name: Marc Klemp
Author-Person: pkl86
Note: DEV EFG POL
Number: 21079
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21079
File-URL: http://www.nber.org/papers/w21079.pdf
File-Format: application/pdf
Publication-Status: published as Cemal Eren Arbatlı & Quamrul H. Ashraf & Oded Galor & Marc Klemp, 2020. "Diversity and Conflict," Econometrica, Econometric Society, vol. 88(2), pages 727-797, March.
Abstract: This research advances the hypothesis and establishes empirically that interpersonal population diversity, rather than fractionalization or polarization across ethnic groups, has been pivotal to the emergence, prevalence, recurrence, and severity of intrasocietal conflicts. Exploiting an exogenous source of variations in population diversity across nations and ethnic groups, as determined predominantly during the exodus of humans from Africa tens of thousands of years ago, the study demonstrates that population diversity, and its impact on the degree of diversity within ethnic groups, has contributed significantly to the risk and intensity of historical and contemporary civil conflicts. The findings arguably reflect the contribution of population diversity to the non-cohesivnesss of society, as reflected partly in the prevalence of mistrust, the divergence in preferences for public goods and redistributive policies, and the degree of fractionalization and polarization across ethnic, linguistic, and religious groups.
Handle: RePEc:nbr:nberwo:21079
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Mandated Child Care on Female Wages in Chile
Classification-JEL: C21; J32; J71; J82
Author-Name: María F. Prada
Author-Person: ppr270
Author-Name: Graciana Rucci
Author-Name: Sergio S. Urzúa
Note: LS PE
Number: 21080
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21080
File-URL: http://www.nber.org/papers/w21080.pdf
File-Format: application/pdf
Abstract: This paper studies the effect of mandated employer-provided child care on the wages of women hired in large firms in Chile. We use a unique employer-employee database from the country's unemployment insurance (UI) system containing monthly information for all individuals that started a new contract between January 2005 and March 2013. We estimate the impact of the program using regression discontinuity design (RDD) exploiting the fact that child care provision is mandatory for all firms with 20 or more female workers. The results indicate that monthly starting wages of the infra-marginal woman hired in a firm with 20 or more female workers are between 9 and 20 percent below those of female workers hired by the same firm when no requirement of providing child care was imposed.
Handle: RePEc:nbr:nberwo:21080
Template-Type: ReDIF-Paper 1.0
Title: China's “Great Leap Forward” in Science and Engineering
Classification-JEL: I2; I23; J0; J24; O3
Author-Name: Richard B. Freeman
Author-Person: pfr23
Author-Name: Wei Huang
Author-Person: phu346
Note: ED LS PR
Number: 21081
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21081
File-URL: http://www.nber.org/papers/w21081.pdf
File-Format: application/pdf
Publication-Status: published as Richard B. Freeman and Wei Huang, Chapter 6 - China’s “Great Leap Forward” in Science and Engineering, In Global Mobility of Research Scientists, edited by Aldo Geuna,, Academic Press, San Diego, 2015, Pages 155-175, ISBN 9780128013960, https://doi.org/10.1016/B978-0-12-801396-0.00006-5.
Abstract: In the past two decades China leaped from bit player in global science and engineering (S&E) to become the world's largest source of S&E graduates and the second largest spender on R&D and second largest producer of scientific papers. As a latecomer to modern science and engineering, China trailed the US and other advanced countries in the quality of its universities and research but was improving both through the mid-2010s. This paper presents evidence that China's leap benefited greatly from the country's positive response to global opportunities to educate many of its best and brightest overseas and from the deep educational and research links it developed with the US. The findings suggest that global mobility of people and ideas allowed China to reach the scientific and technological frontier much faster and more efficiently.
Handle: RePEc:nbr:nberwo:21081
Template-Type: ReDIF-Paper 1.0
Title: Production Networks, Geography and Firm Performance
Classification-JEL: D22; D85; F14; L10; L14; R12
Author-Name: Andrew B. Bernard
Author-Name: Andreas Moxnes
Author-Name: Yukiko U. Saito
Author-Person: psa1086
Note: IO ITI
Number: 21082
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21082
File-URL: http://www.nber.org/papers/w21082.pdf
File-Format: application/pdf
Publication-Status: published as Andrew B. Bernard & Andreas Moxnes & Yukiko U. Saito, 2019. "Production Networks, Geography, and Firm Performance," Journal of Political Economy, vol 127(2), pages 639-688.
Abstract: This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model.
Handle: RePEc:nbr:nberwo:21082
Template-Type: ReDIF-Paper 1.0
Title: Good Rankings Are Bad: Why Reliable Rankings Can Hurt Consumers
Classification-JEL: D8; L15
Author-Name: Laurent Bouton
Author-Person: pbo198
Author-Name: Georg Kirchsteiger
Author-Person: pki156
Note: IO
Number: 21083
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21083
File-URL: http://www.nber.org/papers/w21083.pdf
File-Format: application/pdf
Abstract: Rankings have become increasingly popular on various markets, e.g. the market for study programs. We analyze their welfare implications. Consumers have to choose between two goods of unknown quality with exogenous presence or absence of an unbiased informative ranking. The existence of the ranking might affect the welfare of all consumers negatively. With rigid prices, the ranking induced change in demand can be detrimental to all consumers in markets featuring rationing or consumption externalities. With perfectly flexible prices, the ranking might increase firms' market power, and hence lead to losses for all consumers even in the absence of rationing and consumption externalities.
Handle: RePEc:nbr:nberwo:21083
Template-Type: ReDIF-Paper 1.0
Title: Aspire
Classification-JEL: L26; O12; O16
Author-Name: Marcel Fafchamps
Author-Person: pfa2
Author-Name: Simon Quinn
Author-Person: pqu106
Note: DEV
Number: 21084
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21084
File-URL: http://www.nber.org/papers/w21084.pdf
File-Format: application/pdf
Publication-Status: published as Marcel Fafchamps & Simon Quinn, 2017. "Aspire," The Journal of Development Studies, vol 53(10), pages 1615-1633.
Abstract: We gave US$1,000 cash prizes to winners of a business plan competition in Africa. The competition, entitled ‘Aspire’, was intended to attract young individuals aspiring to become entrepreneurs. Participants were ranked by committees of judges composed of established entrepreneurs. Each committee selected one winner among twelve candidates; that winner was awarded a prize of US$1,000 to spend at his or her discretion. Six months after the competition, we compare winners with the two runners-up in each committee: winners are about 33 percentage points more likely to be self-employed. We estimate an average effect on monthly profits of about US$150: an annual profit of 80% on initial investment. Our findings imply that access to start-up capital constitutes a sizable barrier to entry into entrepreneurship for the kind of young motivated individual most likely to succeed in business.
Handle: RePEc:nbr:nberwo:21084
Template-Type: ReDIF-Paper 1.0
Title: Bankruptcy Rates among NFL Players with Short-Lived Income Spikes
Classification-JEL: D91
Author-Name: Kyle Carlson
Author-Name: Joshua Kim
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Colin F. Camerer
Author-Person: pca47
Note: AG
Number: 21085
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21085
File-URL: http://www.nber.org/papers/w21085.pdf
File-Format: application/pdf
Publication-Status: published as Kyle Carlson & Joshua Kim & Annamaria Lusardi & Colin F. Camerer, 2015. "Bankruptcy Rates among NFL Players with Short-Lived Income Spikes," American Economic Review, American Economic Association, vol. 105(5), pages 381-84, May.
Abstract: One of the central predictions of the life cycle hypothesis is that individuals smooth consumption over their economic life cycle; thus, they save when income is high, in order to provide for when income is likely to be low, such as after retirement. We test this prediction in a group of people—players in the National Football League (NFL)—whose income profile does not just gradually rise then fall, as it does for most workers, but rather has a very large spike lasting only a few years. We collected data on all players drafted by NFL teams from 1996 to 2003. Given the difficulty of directly measuring consumption of NFL players, we test whether they have adequate savings by counting how many retired NFL players file for bankruptcy. Contrary to the life-cycle model predictions, we find that initial bankruptcy filings begin very soon after retirement and continue at a substantial rate through at least the first 12 years of retirement. Moreover, bankruptcy rates are not affected by a player’s total earnings or career length. Having played for a long time and been well-paid does not provide much protection against the risk of going bankrupt.
Handle: RePEc:nbr:nberwo:21085
Template-Type: ReDIF-Paper 1.0
Title: Financial Accelerator at Work: Evidence from Corn Fields
Classification-JEL: D24; E22; G31; Q14
Author-Name: Nittai K. Bergman
Author-Name: Rajkamal Iyer
Author-Name: Richard T. Thakor
Author-Person: pth359
Note: CF EFG PR
Number: 21086
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21086
File-URL: http://www.nber.org/papers/w21086.pdf
File-Format: application/pdf
Abstract: This paper tests financial accelerator models. Using a novel dataset on agricultural production, we examine how exogenous productivity shocks arising from variation in temperature are propagated into the future. We find that past weather shocks have persistent effects on land values and productivity up to two years following the shock. Propagation and amplification of productivity shocks are both significantly larger during the farm debt crisis of the 1980s and amongst farms in lower income counties. Finally, we find higher investment in farm equipment and decreased borrowing following a positive weather shock.
Handle: RePEc:nbr:nberwo:21086
Template-Type: ReDIF-Paper 1.0
Title: The Geography of Development: Evaluating Migration Restrictions and Coastal Flooding
Classification-JEL: E2; F11; F18; F22; F43; O1; O4; R23
Author-Name: Klaus Desmet
Author-Person: pde116
Author-Name: Dávid Krisztián Nagy
Author-Person: pna554
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: EFG ITI
Number: 21087
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21087
File-URL: http://www.nber.org/papers/w21087.pdf
File-Format: application/pdf
Publication-Status: published as Klaus Desmet & Dávid Krisztián Nagy & Esteban Rossi-Hansberg, 2018. "The Geography of Development," Journal of Political Economy, vol 126(3), pages 903-983.
Abstract: We study the relationship between geography and growth. To do so, we first develop a dynamic spatial growth theory with realistic geography. We characterize the model and its balanced growth path and propose a methodology to analyze equilibria with different levels of migration frictions. We bring the model to the data for the whole world economy at a 1°×1° geographic resolution. We then use the model to quantify the gains from relaxing migration restrictions as well as to describe the evolution of the distribution of economic activity in the different migration scenarios. Our results indicate that fully liberalizing migration would increase welfare more than three-fold and would significantly affect the evolution of particular regions in the world. We then use the model to study the effect of a spatial shock. We focus on the example of a rise in the sea level and find that coastal flooding can have an important impact on welfare by changing the geographic-dynamic path of the world economy.
Handle: RePEc:nbr:nberwo:21087
Template-Type: ReDIF-Paper 1.0
Title: Are PILOTs Property Taxes for Nonprofits?
Classification-JEL: H25; L31
Author-Name: Fan Fei
Author-Name: James R. Hines Jr.
Author-Person: phi111
Author-Name: Jill R. Horwitz
Note: EH LE PE
Number: 21088
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21088
File-URL: http://www.nber.org/papers/w21088.pdf
File-Format: application/pdf
Publication-Status: published as Fan Fei & James R. Hines & Jill R. Horwitz, 2016. "Are PILOTs Property Taxes for Nonprofits?," Journal of Urban Economics, .
Abstract: Nonprofit charitable organizations are exempt from most taxes, including local property taxes, but U.S. cities and towns increasingly request that nonprofits make payments in lieu of taxes (known as PILOTs). Strictly speaking, PILOTs are voluntary, though nonprofits may feel pressure to make them, particularly in high-tax communities. Evidence from Massachusetts indicates that PILOT rates, measured as ratios of PILOTs to the value of local tax-exempt property, are higher in towns with higher property tax rates: a one percent higher property tax rate is associated with a 0.2 percent higher PILOT rate. PILOTs appear to discourage nonprofit activity: a one percent higher PILOT rate is associated with 0.8 percent reduced real property ownership by local nonprofits, 0.2 percent reduced total assets, and 0.2 percent lower revenues of local nonprofits. These patterns are consistent with voluntary PILOTs acting in a manner similar to low-rate, compulsory real estate taxes.
Handle: RePEc:nbr:nberwo:21088
Template-Type: ReDIF-Paper 1.0
Title: Chinese Outwards Mercantilism – the Art and Practice of Bundling
Classification-JEL: F4; O2
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Author-Name: Huanhuan Zheng
Author-Person: pzh460
Note: IFM
Number: 21089
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21089
File-URL: http://www.nber.org/papers/w21089.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Yothin Jinjarak & Huanhuan Zheng, 2018. "Chinese Outwards Mercantilism – the Art and Practice of Bundling," Journal of International Money and Finance, .
Abstract: The Global Financial Crisis (GFC) brought to the fore the limits of the Chinese export led-growth strategy and the need for Chinese rebalancing of its international business approaches. Our paper takes stock of what may be the new chapter of Chinese outward-mercantilism, which aims at securing a higher rate of returns on its net foreign asset position, leveraging its success in manufacturing exports, natural resource imports and RMB internationalization. Using micro-level project data and macroeconomic covariates, we find positive association of Chinese trade and financial flows with China’s outward direct investment (ODI). The relationship is stronger for ODI originated from the Chinese state-owned enterprises, and strengthened by the provision of RMB swap-line agreements with China’s trading partners. The evidences support the conjecture that Chinese ODI is bundled to trade and financial linkages with its investment and trading partners.
Handle: RePEc:nbr:nberwo:21089
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Examination of Patent Hold-up
Classification-JEL: K11; O31; O34; O38
Author-Name: Alexander Galetovic
Author-Person: pga381
Author-Name: Stephen Haber
Author-Name: Ross Levine
Author-Person: ple61
Note: IO PR
Number: 21090
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21090
File-URL: http://www.nber.org/papers/w21090.pdf
File-Format: application/pdf
Publication-Status: published as Alexander Galetovic & Stephen Haber & Ross Levine, 2015. "An Empirical Examination Of Patent Holdup," Journal of Competition Law and Economics, Oxford University Press, vol. 11(3), pages 549-578.
Abstract: A large literature asserts that standard essential patents (SEPs) allow their owners to “hold up” innovation by charging fees that exceed their incremental contribution to a final product. We evaluate two central, interrelated predictions of this SEP hold-up hypothesis: (1) SEP-reliant industries should experience more stagnant quality-adjusted prices than similar non-SEP-reliant industries; and (2) court decisions that reduce the excessive power of SEP holders should accelerate innovation in SEP-reliant industries. We find no empirical support for either prediction. Indeed, SEP-reliant industries have the fastest quality-adjusted price declines in the U.S. economy.
Handle: RePEc:nbr:nberwo:21090
Template-Type: ReDIF-Paper 1.0
Title: Robots: Curse or Blessing? A Basic Framework
Classification-JEL: E22; E23; E24; E25; H53; J23; O40
Author-Name: Jeffrey D. Sachs
Author-Name: Seth G. Benzell
Author-Name: Guillermo LaGarda
Author-Person: pla788
Note: EFG PE
Number: 21091
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21091
File-URL: http://www.nber.org/papers/w21091.pdf
File-Format: application/pdf
Abstract: Do robots raise or lower economic well-being? On the one hand, they raise output and bring more goods and services into reach. On the other hand, they eliminate jobs, shift investments away from machines that complement labor, lower wages, and immiserize workers who cannot compete. The net effect of these offsetting forces is unclear. This paper seeks to clarify how economic outcomes, positive or negative, depend both on specific parameters of the economy and public policy. We find that a rise in robotic productivity is more likely to lower the welfare of young workers and future generations when the saving rate is low, automatable and non-automatable goods are more substitutable in consumption, and when traditional capital is a more important complement to labor. In some parameterizations the relationship of utility to robotic productivity follows a “noisy U” as large innovations are long-run welfare improving even though small innovations are immiserizing. Policies that redistribute income across generations can ensure that a rise in robotic productivity benefits all generations.
Handle: RePEc:nbr:nberwo:21091
Template-Type: ReDIF-Paper 1.0
Title: How Do Firms Form Their Expectations? New Survey Evidence
Classification-JEL: E3; E4; E5; E6
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Saten Kumar
Note: EFG ME
Number: 21092
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21092
File-URL: http://www.nber.org/papers/w21092.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Coibion & Yuriy Gorodnichenko & Saten Kumar, 2018. "How Do Firms Form Their Expectations? New Survey Evidence," American Economic Review, vol 108(9), pages 2671-2713.
Abstract: We implement a new survey of firms’ macroeconomic beliefs in New Zealand and document a number of novel stylized facts from this survey. Despite nearly twenty-five years under an inflation targeting regime, there is widespread dispersion in firms’ beliefs about both past and future macroeconomic conditions, especially inflation, with average beliefs about recent and past inflation being much higher than those of professional forecasters. Much of the dispersion in beliefs can be explained by firms’ incentives to collect and process information, i.e. rational inattention motives. Using experimental methods, we find that firms update their beliefs in a Bayesian manner when presented with new information about the economy. But few firms seem to think that inflation is important to their business decisions and therefore they tend to devote few resources to collecting and processing information about inflation.
Handle: RePEc:nbr:nberwo:21092
Template-Type: ReDIF-Paper 1.0
Title: Friendship at Work: Can Peer Effects Catalyze Female Entrepreneurship?
Classification-JEL: O1
Author-Name: Erica Field
Author-Name: Seema Jayachandran
Author-Person: pja86
Author-Name: Rohini Pande
Author-Person: ppa900
Author-Name: Natalia Rigol
Note: DEV
Number: 21093
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21093
File-URL: http://www.nber.org/papers/w21093.pdf
File-Format: application/pdf
Publication-Status: published as Erica Field & Seema Jayachandran & Rohini Pande & Natalia Rigol, 2016. "Friendship at Work: Can Peer Effects Catalyze Female Entrepreneurship?," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 125-53, May.
Abstract: Does the lack of peers contribute to the observed gender gap in entrepreneurial success, and is the constraint stronger for women facing more restrictive social norms? We offered two days of business counseling to a random sample of customers of India’s largest women’s bank. A random subsample was invited to attend with a friend. The intervention had a significant immediate impact on participants’ business activity, but only if they were trained in the presence of a friend. Four months later, those trained with a friend were more likely to have taken out business loans, were less likely to be housewives, and reported increased business activity and higher household income. The positive impacts of training with a friend were stronger among women from religious or caste groups with social norms that restrict female mobility.
Handle: RePEc:nbr:nberwo:21093
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Slack and Monetary Policy
Classification-JEL: E24; E32; E52; E58; J21
Author-Name: David G. Blanchflower
Author-Person: pbl22
Author-Name: Andrew T. Levin
Author-Person: ple143
Note: LS ME
Number: 21094
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21094
File-URL: http://www.nber.org/papers/w21094.pdf
File-Format: application/pdf
Abstract: In the wake of a severe recession and a sluggish recovery, labor market slack cannot be gauged solely in terms of the conventional measure of the unemployment rate (that is, the number of individuals who are not working at all and actively searching for a job). Rather, assessments of the employment gap should reflect the incidence of underemployment (that is, people working part time who want a full-time job) and the extent of hidden unemployment (that is, people who are not actively searching but who would rejoin the workforce if the job market were stronger). In this paper, we examine the evolution of U.S. labor market slack and show that underemployment and hidden unemployment currently account for the bulk of the U.S. employment gap. Next, using state-level data, we find strong statistical evidence that each of these forms of labor market slack exerts significant downward pressure on nominal wages. Finally, we consider the monetary policy implications of the employment gap in light of prescriptions from Taylor-style benchmark rules.
Handle: RePEc:nbr:nberwo:21094
Template-Type: ReDIF-Paper 1.0
Title: Delay Functions as the Foundation of Time Preference: Testing for Separable Discounted Utility
Classification-JEL: D01; D03; D9; D91
Author-Name: Keith Marzilli Ericson
Author-Name: Jawwad Noor
Author-Person: pno61
Note: AG
Number: 21095
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21095
File-URL: http://www.nber.org/papers/w21095.pdf
File-Format: application/pdf
Abstract: Delay functions, which vary timing of rewards but fix the money dimension, can elicit the form of discount functions with minimal assumptions. We present a general theorem that characterizes the set of discount functions and utility indices compatible with any 'regular' preference. We provide conditions to test for separable discounted utility (SDU). We elicit individual delay functions for a range of amounts and time horizons. When we impose SDU assumptions, we classify more than half our analysis sample as exponential discounters. However, we reject SDU assumptions for 68% of the sample in favor of magnitude-dependent discounting with time distortion.
Handle: RePEc:nbr:nberwo:21095
Template-Type: ReDIF-Paper 1.0
Title: Ethnic Complementarities after the Opening of China: How Chinese Graduate Students Affected the Productivity of Their Advisors
Classification-JEL: D83; J24; J61; O31
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Kirk B. Doran
Author-Person: pdo228
Author-Name: Ying Shen
Note: LS
Number: 21096
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21096
File-URL: http://www.nber.org/papers/w21096.pdf
File-Format: application/pdf
Publication-Status: published as George J. Borjas & Kirk B. Doran & Ying Shen, 2018. "Ethnic Complementarities after the Opening of China," Journal of Human Resources, vol 53(1), pages 1-31.
Abstract: The largest and most important flow of scientific talent in the world is the migration of international students to the doctoral programs offered by universities in industrialized countries. This paper uses the opening of China in 1978 to estimate the causal effect of this flow on the productivity of their professors in mathematics departments across the United States. Our identification strategy relies on both the suddenness of the opening of China and on a key feature of scientific production: intra-ethnic collaboration. The new Chinese students were more likely to be mentored by American professors with Chinese heritage. The increased access that the Chinese-American advisors had to a new pool of considerable talent led to a substantial increase in their productivity. Despite these sizable intra-ethnic knowledge spillovers, the relatively fixed size of doctoral mathematics programs (and the resulting crowdout of American students) implied that comparable non-Chinese advisors experienced a decline in the number of students they mentored and a concurrent decline in their research productivity. In fact, the productivity gains accruing to Chinese-American advisors were almost exactly offset by the losses suffered by the non-Chinese advisors. Finally, it is unlikely that the gains from the supply shock will be more evident in the next generation, as the Chinese students begin to contribute to mathematical knowledge. The rate of publication and the quality of the output of the Chinese students is comparable to that of the American students in their cohort.
Handle: RePEc:nbr:nberwo:21096
Template-Type: ReDIF-Paper 1.0
Title: The Use and Misuse of Models for Climate Policy
Classification-JEL: D81; Q51; Q54
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: EEE
Number: 21097
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21097
File-URL: http://www.nber.org/papers/w21097.pdf
File-Format: application/pdf
Publication-Status: published as Robert S. Pindyck, 2017. "The Use and Misuse of Models for Climate Policy," Review of Environmental Economics and Policy, vol 11(1), pages 100-114.
Abstract: In recent articles, I have argued that integrated assessment models (IAMs) have flaws that make them close to useless as tools for policy analysis. IAM-based analyses of climate policy create a perception of knowledge and precision that is illusory, and can fool policy-makers into thinking that the forecasts the models generate have some kind of scientific legitimacy. But some have claimed that we need some kind of model, and that IAMs can be structured and used in ways that correct for their shortcomings. For example, it has been argued that although we know little or nothing about key relationships in the model, we can get around this problem by attaching probability distributions to various parameters and then simulating the model using Monte Carlo methods. I argue that this would buy us nothing, and that a simpler and more transparent approach to the design of climate change policy is preferable. I briefly outline what that approach would look like.
Handle: RePEc:nbr:nberwo:21097
Template-Type: ReDIF-Paper 1.0
Title: The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to a Large Improvement in Housing
Classification-JEL: I31
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Paul J. Gertler
Author-Person: pge194
Author-Name: Raimundo Undurraga
Note: DEV
Number: 21098
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21098
File-URL: http://www.nber.org/papers/w21098.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Galiani, Paul J Gertler, Raimundo Undurraga; The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to the Satisfaction of Basic Housing Needs, Journal of the European Economic Association, , jvx042, https://doi.org/10.1093/jeea/jvx042
Abstract: Subjective well-being may not improve in step with increases in material well-being due to hedonic adaptation, a psychological process that attenuates the long-term emotional impact of a favorable or unfavorable change in circumstances, such that people’s happiness eventually returns to a stable reference level. We use a multi-country field experiment to examine the impact of the provision of improved housing to extremely poor populations on subjective measures of well-being to test whether poor populations exhibit hedonic adaptation when their basic housing needs are met. After sixteen months, we find that subjective perceptions of well-being improve substantially for recipients of better housing but that after, on average, eight additional months, 60% of that gain disappears.
Handle: RePEc:nbr:nberwo:21098
Template-Type: ReDIF-Paper 1.0
Title: Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure
Classification-JEL: C9; D8; K2; L51
Author-Name: Ginger Zhe Jin
Author-Name: Michael Luca
Author-Name: Daniel Martin
Author-Person: pma1484
Note: IO
Number: 21099
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21099
File-URL: http://www.nber.org/papers/w21099.pdf
File-Format: application/pdf
Publication-Status: published as Ginger Zhe Jin & Michael Luca & Daniel Martin, 2021. "Is No News (Perceived As) Bad News? An Experimental Investigation of Information Disclosure," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 141-173, May.
Abstract: This paper uses laboratory experiments to directly test a central prediction of disclosure theory: that strategic forces can lead those who possess private information to voluntarily provide it. In a simple two-person disclosure game, we find that senders disclose favorable information, but withhold less favorable information. The degree to which senders withhold information is strongly related to their stated beliefs about receiver actions, and their stated beliefs are accurate on average. Receiver actions are also strongly related to their stated beliefs, but receiver actions and beliefs suggest they are insufficiently skeptical about non-disclosed information in the absence of repeated feedback.
Handle: RePEc:nbr:nberwo:21099
Template-Type: ReDIF-Paper 1.0
Title: Effects of Fiscal Shocks in a Globalized World
Classification-JEL: E62; F41
Author-Name: Alan J. Auerbach
Author-Person: pau33
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG PE
Number: 21100
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21100
File-URL: http://www.nber.org/papers/w21100.pdf
File-Format: application/pdf
Publication-Status: published as Alan J Auerbach & Yuriy Gorodnichenko, 2016. "Effects of Fiscal Shocks in a Globalized World," IMF Economic Review, Palgrave Macmillan, vol. 64(1), pages 177-215, May.
Abstract: While theoretical models consistently predict that government spending shocks should lead to appreciation of the domestic currency, empirical studies have been stubbornly finding depreciation. Using daily data on U.S. defense spending (announced and actual payments), we document that the dollar immediately and strongly appreciates after announcements about future government spending. In contrast, actual payments lead to no discernible effect on the exchange rate. We examine responses of other variables at the daily frequency and explore how the response of the exchange rate to fiscal shocks varies over the business cycle as well as at the zero lower bound and in normal times.
Handle: RePEc:nbr:nberwo:21100
Template-Type: ReDIF-Paper 1.0
Title: Child Cash Benefits and Family Expenditures: Evidence from the National Child Benefit
Classification-JEL: H51; H53; J18
Author-Name: Lauren E. Jones
Author-Name: Kevin S. Milligan
Author-Person: pmi14
Author-Name: Mark Stabile
Author-Person: pst179
Note: CH PE
Number: 21101
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21101
File-URL: http://www.nber.org/papers/w21101.pdf
File-Format: application/pdf
Publication-Status: published as Lauren E. Jones & Kevin Milligan & Mark Stabile, 2019. "Child cash benefits and family expenditures: Evidence from the National Child Benefit," Canadian Journal of Economics/Revue canadienne d'économique, vol 52(4), pages 1433-1463.
Abstract: A vast literature has examined the impact of family income on the health and development outcomes of children. Income may improve child outcomes through two mechanisms. First, income may improve development outcomes if it improves a family’s ability to purchase direct inputs into child education and health production such as reading material, educational equipment, and health care. Second, by reducing stress and conflict, additional income helps to foster an environment more conducive to healthy child development, regardless of the nature of specific expenditures. In this paper, we exploit changes in refundable tax benefit income in Canada to study these questions. Importantly, our approach allows us to make stronger causal inferences than has been possible in existing studies. Using variation in child benefits across province, time, and family type, we study expenditure patterns of families receiving child benefits. Our findings suggest that additional income may improve outcomes through both mechanisms: some benefit income is spent on direct education and health inputs, while some is spent on everyday items likely to improve the general conditions children face. Additionally, some families reduce spending on risky behavior items. Spending responses to benefit generosity appear to vary by income.
Handle: RePEc:nbr:nberwo:21101
Template-Type: ReDIF-Paper 1.0
Title: Borrowing from the Future: 401(k) Plan Loans and Loan Defaults
Classification-JEL: D04; D14; H24; J26
Author-Name: Timothy (Jun) Lu
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Author-Name: Stephen P. Utkus
Author-Name: Jean A. Young
Note: AG LS PE
Number: 21102
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21102
File-URL: http://www.nber.org/papers/w21102.pdf
File-Format: application/pdf
Publication-Status: published as Timothy (Jun) Lu & Olivia S. Mitchell & Stephen P. Utkus & Jean A. Young, 2017. "Borrowing From the Future? 401(K) Plan Loans and Loan Defaults," National Tax Journal, National Tax Association, vol. 70(1), pages 77-110, March.
Abstract: Tax-qualified retirement plans seek to promote saving for retirement, yet most employers permit pre- retirement access by letting 401(k) participants borrow plan assets. This paper examines who borrows and why, and who defaults on their loans. Our administrative dataset tracks several hundred plans over 5 years, showing that 20% borrow at any given time, and almost 40% do at some point over five years. Employer policies influence borrowing behavior, in that workers are more likely to borrow and borrow more in aggregate, when a plan permits multiple loans. We estimate loan default “leakage” at $6 billion annually, more than prior studies.
Handle: RePEc:nbr:nberwo:21102
Template-Type: ReDIF-Paper 1.0
Title: Assets with "Warts": How Reliable is the Market for Technology?
Classification-JEL: L10; L24; L65; O32
Author-Name: Vincenzo Palermo
Author-Name: Matthew J. Higgins
Author-Person: phi60
Author-Name: Marco Ceccagnoli
Note: PR
Number: 21103
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21103
File-URL: http://www.nber.org/papers/w21103.pdf
File-Format: application/pdf
Abstract: Existing research has focused on why and when firms may choose to access the external technology market. Surprisingly, however, less is known about the reliability of the patents attached to these external technologies in the face of litigation. “Weak” external patents expose a firm to the potential loss of downstream revenues. To address this question we construct a novel dataset of patent litigation in the pharmaceutical industry. We exploit a change in U.S. patent law as a natural experiment to test whether external patents are more reliable than those developed internally. We find that acquired patents are more likely to fall during litigation; they are less reliable then internal technologies. Losses lead to an average reduction in market capitalization of $450 million. Overall, our results demonstrate the critical importance of the underlying reliability of external patents and provides a cautionary note to the potential benefits of accessing external technology markets.
Handle: RePEc:nbr:nberwo:21103
Template-Type: ReDIF-Paper 1.0
Title: Salience, Myopia, and Complex Dynamic Incentives: Evidence from Medicare Part D
Classification-JEL: D03; I13; I18; L88
Author-Name: Christina M. Dalton
Author-Name: Gautam Gowrisankaran
Author-Name: Robert Town
Author-Person: pto430
Note: EH IO
Number: 21104
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21104
File-URL: http://www.nber.org/papers/w21104.pdf
File-Format: application/pdf
Abstract: The standard Medicare Part D drug insurance contract is nonlinear—with reduced subsidies in a coverage gap—resulting in a dynamic purchase problem. We consider enrollees who arrived near the gap early in the year and show that they should expect to enter the gap with high probability, implying that, under a benchmark model with neoclassical preferences, the gap should impact them very little. We find that these enrollees have flat spending in a period before the doughnut hole and a large spending drop in the gap, providing evidence against the benchmark model. We structurally estimate behavioral dynamic drug purchase models and find that a price salience model where enrollees do not incorporate future prices into their decision making at all fits the data best. For a nationally representative sample, full price salience would decrease enrollee spending by 31%. Entirely eliminating the gap would increase insurer spending 27%, compared to 7% for generic-drug-only gap coverage.
Handle: RePEc:nbr:nberwo:21104
Template-Type: ReDIF-Paper 1.0
Title: Forbidden Fruits: The Political Economy of Science, Religion, and Growth
Classification-JEL: E02; H11; H41; N0; O3; O43; P16; Z1; Z12
Author-Name: Roland Bénabou
Author-Person: pbe27
Author-Name: Davide Ticchi
Author-Person: pti48
Author-Name: Andrea Vindigni
Author-Person: pvi120
Note: DEV EFG PE POL PR
Number: 21105
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21105
File-URL: http://www.nber.org/papers/w21105.pdf
File-Format: application/pdf
Publication-Status: published as Roland Bénabou & Davide Ticchi & Andrea Vindigni, 2022. "Forbidden Fruits: The Political Economy of Science, Religion, and Growth," The Review of Economic Studies, vol 89(4), pages 1785-1832.
Abstract: We analyze the joint dynamics of religious beliefs, scientific progress and coalitional politics along both religious and economic lines. History offers many examples of the recurring tensions between science and organized religion, but as part of the paper's motivating evidence we also uncover a new fact: in both international and cross-state U.S. data, there is a significant and robust negative relationship between religiosity and patents per capita. The political-economy model we develop has three main features: (i) the recurrent arrival of scientific discoveries that generate productivity gains but sometimes erode religious beliefs; (ii) a government, endogenously in power, that can allow such innovations to spread or instead censor them; (iii) a religious organization or sector that may invest in adapting the doctrine to new knowledge. Three long-term outcomes emerge. First, a "Secularization" or "Western-European" regime with declining religiosity, unimpeded science, a passive Church and high levels of taxes and transfers. Second, a "Theocratic" regime with knowledge stagnation, extreme religiosity with no modernization effort, and high public spending on religious public goods. In-between is a third, "American" regime that generally (not always) combines scientific progress and stable religiosity within a range where religious institutions engage in doctrinal adaptation. It features low overall taxes, together with fiscal advantages or societal laws benefiting religious citizens. Rising income inequality can, however, lead some of the rich to form a successful Religious-Right alliance with the religious poor and start blocking belief-eroding discoveries and ideas.
Handle: RePEc:nbr:nberwo:21105
Template-Type: ReDIF-Paper 1.0
Title: Quantitative Models of Wealth Inequality: A Survey
Classification-JEL: D14; D31; E21; H2
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Note: PE
Number: 21106
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21106
File-URL: http://www.nber.org/papers/w21106.pdf
File-Format: application/pdf
Abstract: While in the data wealth is concentrated in the hands of a small number of rich people and the saving rate of the rich is high, many models used for quantitative policy evaluation fail to match these facts. In addition, some of the models that succeed in matching these facts have radically different policy implications, depending on the nature and strength of the saving motives assumed. This paper surveys the savings mechanisms proposed so far (preference heterogeneity, transmission of bequests and human capital across generations, entrepreneurship, and high earnings risk for the top earners) and argues that more work is needed to understand wealth inequality and the saving motives behind it, and to evaluate policy more reliably.
Handle: RePEc:nbr:nberwo:21106
Template-Type: ReDIF-Paper 1.0
Title: Entrepreneurship and Financial Frictions: A Macro-Development Perspective
Classification-JEL: L26; O1; O11; O15; O16; O4
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Joseph P. Kaboski
Author-Person: pka175
Author-Name: Yongseok Shin
Author-Person: psh383
Note: DEV EFG PR
Number: 21107
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21107
File-URL: http://www.nber.org/papers/w21107.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2015. "Entrepreneurship and Financial Frictions: A Macrodevelopment Perspective," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 409-436, 08.
Abstract: We review both the theoretical and empirical literature on entrepreneurship and financial frictions, with an emphasis on the heterogeneous and dynamic micro-level implications of financial frictions for macro development.
Handle: RePEc:nbr:nberwo:21107
Template-Type: ReDIF-Paper 1.0
Title: AIG in Hindsight
Classification-JEL: E00; G01; G18; G2
Author-Name: Robert L. McDonald
Author-Name: Anna Paulson
Author-Person: ppa1095
Note: CF
Number: 21108
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21108
File-URL: http://www.nber.org/papers/w21108.pdf
File-Format: application/pdf
Publication-Status: published as Robert McDonald & Anna Paulson, 2015. "AIG in Hindsight," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 81-106, Spring.
Abstract: The near-failure on September 16, 2008, of American International Group (AIG) was an iconic moment in the financial crisis. Two large bets on real estate made with funding that was vulnerable to bank-run like behavior on the part of funders pushed AIG to the brink of bankruptcy. AIG used securities lending to transform insurance company assets into residential mortgage-backed securities and collateralized debt obligations, ultimately losing at least $21 billion and threatening the solvency of the life insurance companies. AIG also sold insurance on multi-sector collateralized debt obligations, backed by real estate assets, ultimately losing more than $30 billion. These activities were apparently motivated by a belief that AIG’s real estate bets would not suffer defaults and were “money-good.” We find that these securities have in fact suffered write-downs and that the stark “money-good” claim can be rejected. Ultimately, both liquidity and solvency were issues for AIG.
Handle: RePEc:nbr:nberwo:21108
Template-Type: ReDIF-Paper 1.0
Title: Government Policy and Labor Supply with Myopic or Targeted Savings Decisions
Classification-JEL: D11; D91; H21; H24; H31; H55; J22; J26
Author-Name: Louis Kaplow
Author-Person: pka44
Note: AG PE
Number: 21109
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21109
File-URL: http://www.nber.org/papers/w21109.pdf
File-Format: application/pdf
Publication-Status: published as Government Policy and Labor Supply with Myopic or Targeted Savings Decisions, Louis Kaplow. in Tax Policy and the Economy, Volume 29, Brown. 2015
Abstract: A central justification for social insurance and for other policies aimed at retirement savings is that individuals may fail to make adequate provision during their working years. Much research has focused on myopia and other behavioral limitations. Yet little attention has been devoted to how these infirmities, and government policies to rectify them, influence labor supply. This linkage could be extremely important in light of the large pre-existing distortion due to income and consumption taxation and income-based transfer programs. For example, might myopic individuals, as a first approximation, view payroll taxes and other withholding to fund retirement savings as akin to an income tax, while largely ignoring the distant future retirement benefits that they fund? If so, the distortion of labor supply may be many times higher than otherwise, making savings-promotion policies much more costly than appreciated. Or consider what may be the labor supply implications for an individual who is defaulted into higher savings and, as a consequence, sees concomitantly lower take-home pay. This essay offers a preliminary, conceptual exploration of these questions. In most of the cases considered, savings policies do not act purely like a tax despite individuals’ non-optimizing savings behavior, and in some cases labor supply actually is raised, not lowered, in which event policies that boost savings may be significantly more welfare-enhancing than recognized. Accordingly, there is a compelling need for empirical exploration of the interaction between nonoptimal savings behavior and labor supply.
Handle: RePEc:nbr:nberwo:21109
Template-Type: ReDIF-Paper 1.0
Title: Cash burns: An inventory model with a cash-credit choice
Classification-JEL: E41
Author-Name: Fernando Alvarez
Author-Name: Francesco Lippi
Author-Person: pli62
Note: EFG ME
Number: 21110
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21110
File-URL: http://www.nber.org/papers/w21110.pdf
File-Format: application/pdf
Publication-Status: published as Fernando Alvarez & Francesco Lippi, 2017. "Cash burns: An inventory model with a cash-credit choice," Journal of Monetary Economics, vol 90, pages 99-112.
Abstract: We present a model that characterizes the relationship between optimal dynamic cash management and the choice of the means of payment. The novel feature of the model is the sequential nature of the payments choice: in each instant the agent can choose to pay with either cash or credit. This framework predicts that the current level of the stock of cash determines whether the agent uses cash or credit. Cash is used whenever the agent has enough of it, credit is used when cash holdings are low, a pattern recently documented by households data from several countries. The average level of cash and the average share of expenditures paid in cash depend on the opportunity cost of cash relative to the cost of credit. The model produces a rich set of over-identifying restrictions for consumers’ cash-management and payment choices which can be tested using recent households survey and diary data.
Handle: RePEc:nbr:nberwo:21110
Template-Type: ReDIF-Paper 1.0
Title: Benefit Incidence with Incentive Effects, Measurement Errors and Latent Heterogeneity: A Case Study for China
Classification-JEL: H22; I32; I38; O12
Author-Name: Martin Ravallion
Author-Person: pra29
Author-Name: Shaohua Chen
Author-Person: pch608
Note: DEV PE
Number: 21111
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21111
File-URL: http://www.nber.org/papers/w21111.pdf
File-Format: application/pdf
Publication-Status: published as Ravallion, Martin & Chen, Shaohua, 2015. "Benefit incidence with incentive effects, measurement errors and latent heterogeneity: A case study for China," Journal of Public Economics, Elsevier, vol. 128(C), pages 124-132.
Abstract: In what is probably the largest cash transfer program in the world today China’s Dibao program aims to fill all poverty gaps. In theory, the program creates a poverty trap, with 100% benefit withdrawal rate (BWR). But is that what we see in practice? The paper proposes an econometric method of estimating the mean BWR allowing for incentive effects, measurement errors and correlated latent heterogeneity. Under the method’s identifying assumptions, a feasible instrumental variables estimator corrects for incentive effects and measurement errors, and provides a bound for the true value when there is correlated incidence heterogeneity. The results suggest that past methods of assessing benefit incidence using either nominal official rates or raw tabulations from survey data are deceptive. The actual BWR appears to be much lower than the formal rate, and is also lower than the rate implied by optimal income tax models for poverty reduction. The paper discusses likely reasons based on qualitative observations from field work. The program’s local implementation appears to matter far more than incentives implied by its formal rules.
Handle: RePEc:nbr:nberwo:21111
Template-Type: ReDIF-Paper 1.0
Title: Demystifying the Chinese Housing Boom
Classification-JEL: R3
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Quanlin Gu
Author-Name: Wei Xiong
Author-Person: pxi88
Author-Name: Li-An Zhou
Author-Person: pzh156
Note: AP CF EFG IFM ME
Number: 21112
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21112
File-URL: http://www.nber.org/papers/w21112.pdf
File-Format: application/pdf
Publication-Status: published as Demystifying the Chinese Housing Boom, Hanming Fang, Quanlin Gu, Wei Xiong, Li‐An Zhou. in NBER Macroeconomics Annual 2015, Volume 30, Eichenbaum and Parker. 2016
Abstract: We construct housing price indices for 120 major cities in China in 2003-2013 based on sequential sales of new homes within the same housing developments. By using these indices and detailed information on mortgage borrowers across these cities, we find enormous housing price appreciation during the decade, which was accompanied by equally impressive growth in household income, except in a few first-tier cities. While bottom-income mortgage borrowers endured severe financial burdens by using price-to-income ratios over eight to buy homes, their participation in the housing market remained steady and their mortgage loans were protected by down payments commonly in excess of 35 percent. As such, the housing market is unlikely to trigger an imminent financial crisis in China, even though it may crash with a sudden stop in the Chinese economy and act as an amplifier of the initial shock.
Handle: RePEc:nbr:nberwo:21112
Template-Type: ReDIF-Paper 1.0
Title: The U.S. Electricity Industry After 20 Years of Restructuring
Classification-JEL: L51; L94; L97
Author-Name: Severin Borenstein
Author-Person: pbo78
Author-Name: James Bushnell
Author-Person: pbu181
Note: EEE IO PR
Number: 21113
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21113
File-URL: http://www.nber.org/papers/w21113.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein & James Bushnell, 2015. "The US Electricity Industry After 20 Years of Restructuring," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 437-463, 08.
Abstract: Prior to the 1990s, most electricity customers in the U.S. were served by regulated, vertically-integrated, monopoly utilities that handled electricity generation, transmission, local distribution and billing/collections. Regulators set retail electricity prices to allow the utility to recover its prudently incurred costs, a process known as cost-of-service regulation. During the 1990s, this model was disrupted in many states by "electricity restructuring," a term used to describe legal changes that allowed both non-utility generators to sell electricity to utilities — displacing the utility generation function — and/or "retail service providers" to buy electricity from generators and sell to end-use customers — displacing the utility procurement and billing functions. We review the original economic arguments for electricity restructuring, the potential winners and losers from these changes, and what has actually happened in the subsequent years. We argue that the greatest political motivation for restructuring was rent shifting, not efficiency improvements, and that this explanation is supported by observed waxing and waning of political enthusiasm for electricity reform. While electricity restructuring has brought significant efficiency improvements in generation, it has generally been viewed as a disappointment because the price-reduction promises made by some advocates were based on politically-unsustainable rent transfers. In reality, the electricity rate changes since restructuring have been driven more by exogenous factors — such as generation technology advances and natural gas price fluctuations — than by the effects of restructuring. We argue that a similar dynamic underpins the current political momentum behind distributed generation (primarily rooftop solar PV) which remains costly from a societal viewpoint, but privately economic due to the rent transfers it enables.
Handle: RePEc:nbr:nberwo:21113
Template-Type: ReDIF-Paper 1.0
Title: The Weaker Sex? Vulnerable Men, Resilient Women, and Variations in Sex Differences in Mortality since 1900
Classification-JEL: I14; I15; J10; J16
Author-Name: Mark R. Cullen
Author-Name: Michael Baiocchi
Author-Name: Karen Eggleston
Author-Person: peg13
Author-Name: Pooja Loftus
Author-Name: Victor Fuchs
Author-Person: pfu157
Note: EH
Number: 21114
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21114
File-URL: http://www.nber.org/papers/w21114.pdf
File-Format: application/pdf
Abstract: Sex differences in mortality (SDIM) vary over time and place as a function of social, health, and medical circumstances. The magnitude of these variations, and their response to large socioeconomic changes, suggest that biological differences cannot fully account for sex differences in survival. We document “stylized facts” about SDIM with which any theory will have to contend. We draw on a wide swath of mortality data, including probability of survival to age 70 by county in the United States, the Human Mortality Database data for 18 high-income countries since 1900, and mortality data within and across developing countries over time periods for which reasonably reliable data are available. We show that, in each of the periods of economic development after the onset of demographic and epidemiologic transition, cross-sectional variation in SDIM exhibits a consistent pattern of female resilience to mortality under adversity. Moreover, as societies develop, M/F survival first declines and then increases, a “SDIM transition” embedded within the demographic and epidemiologic transitions.
Handle: RePEc:nbr:nberwo:21114
Template-Type: ReDIF-Paper 1.0
Title: Welfare and Distributional Implications of Shale Gas
Classification-JEL: D12; L60; L71; Q41; Q53
Author-Name: Catherine Hausman
Author-Person: pha1310
Author-Name: Ryan Kellogg
Note: EEE IO
Number: 21115
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21115
File-URL: http://www.nber.org/papers/w21115.pdf
File-Format: application/pdf
Publication-Status: published as Catherine Hausman & Ryan Kellogg, 2015. "Welfare and Distributional Implications of Shale Gas," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 50(1 (Spring), pages 71-139.
Abstract: Technological innovations in horizontal drilling and hydraulic fracturing have enabled tremendous amounts of natural gas to be extracted profitably from underground shale formations that were long thought to be uneconomical. In this paper, we provide the first estimates of broad-scale welfare and distributional implications of this supply boom. We provide new estimates of supply and demand elasticities, which we use to estimate the drop in natural gas prices that is attributable to the supply expansion. We calculate large, positive welfare impacts for four broad sectors of gas consumption (residential, commercial, industrial, and electric power), and a negative impact for producers, with variation across regions. We then examine the evidence for a gas-led "manufacturing renaissance" and for pass-through to prices of products such as retail natural gas, retail electricity, and commodity chemicals. We conclude with a discussion of environmental externalities from unconventional natural gas, including limitations of the current regulatory environment. Overall, we find that between 2007 and 2013 the shale gas revolution led to an increase in welfare for natural gas consumers and producers of $48 billion per year, but more data are needed on the extent and valuation of the environmental impacts of shale gas production.
Handle: RePEc:nbr:nberwo:21115
Template-Type: ReDIF-Paper 1.0
Title: Green Skills
Classification-JEL: J24; Q52
Author-Name: Francesco Vona
Author-Person: pvo136
Author-Name: Giovanni Marin
Author-Person: pma1072
Author-Name: Davide Consoli
Author-Person: pco102
Author-Name: David Popp
Note: EEE
Number: 21116
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21116
File-URL: http://www.nber.org/papers/w21116.pdf
File-Format: application/pdf
Abstract: The catchword ‘green skills’ has been common parlance in policy circles for a while, yet there is little systematic empirical research to guide public intervention for meeting the demand for skills that will be needed to operate and develop green technology. The present paper proposes a data-driven methodology to identify green skills and to gauge the ways in which the demand for these competences responds to environmental regulation. Accordingly, we find that green skills are high-level analytical and technical know-how related to the design, production, management and monitoring of technology. The empirical analysis reveals that environmental regulation triggers technological and organizational changes that increase the demand for hard technical, engineering and scientific skills. Our analysis suggests also that this is not just a compositional change in skill demand due to job losses in sectors highly exposed to trade and regulation.
Handle: RePEc:nbr:nberwo:21116
Template-Type: ReDIF-Paper 1.0
Title: Culture, Institutions and Democratization
Classification-JEL: H1; P48; Z1
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Gerard Roland
Author-Person: pro20
Note: POL
Number: 21117
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21117
File-URL: http://www.nber.org/papers/w21117.pdf
File-Format: application/pdf
Publication-Status: published as Yuriy Gorodnichenko & Gerard Roland, 2021. "Culture, institutions and democratization," Public Choice, Springer, vol. 187(1), pages 165-195, April.
Publication-Status: published as Yuriy Gorodnichenko & Gerard Roland, 2021. "Culture, institutions and democratization*," Public Choice, vol 187(1-2), pages 165-195.
Abstract: We construct a model of revolution and transition to democracy under individualistic and collectivist cultures. The main result is that, despite facing potentially larger collective action problems, countries with an individualistic culture are more likely to end up adopting democracy earlier than countries with a collectivist culture. Our empirical analysis suggests a strong and robust association between individualistic culture and average polity scores and length of democracy, even after controlling for other determinants of democracy emphasized in the literature. We provide evidence that countries with collectivist culture are also more likely to experience autocratic breakdowns and transitions from autocracy to autocracy.
Handle: RePEc:nbr:nberwo:21117
Template-Type: ReDIF-Paper 1.0
Title: Liquidity as Social Expertise
Classification-JEL: D82; D83; G14
Author-Name: Pablo Kurlat
Note: AP EFG
Number: 21118
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21118
File-URL: http://www.nber.org/papers/w21118.pdf
File-Format: application/pdf
Publication-Status: published as KURLAT, P. (2018), Liquidity as Social Expertise. The Journal of Finance, 73: 619-656. doi:10.1111/jofi.12606
Abstract: This paper proposes a theory of liquidity dynamics. Illiquidity results from asymmetric information. Observing the historical track record teaches agents how to interpret public information and helps overcome information asymmetry. There can be an illiquidity trap: too much asymmetric information leads to the breakdown of trade, which interrupts learning and perpetuates illiquidity. Liquidity falls in response to unexpected events that lead agents to question their valuation models, especially in newer markets, may be slow to recover after a crisis and is higher in periods of stability.
Handle: RePEc:nbr:nberwo:21118
Template-Type: ReDIF-Paper 1.0
Title: Goldilocks Economies? Temperature Stress and the Direct Impacts of Climate Change
Classification-JEL: J22; Q5; Q54
Author-Name: Geoffrey Heal
Author-Person: phe40
Author-Name: Jisung Park
Note: DEV EEE LS
Number: 21119
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21119
File-URL: http://www.nber.org/papers/w21119.pdf
File-Format: application/pdf
Abstract: We review recent literature on the effect of temperature stress on economic activity, operating through basic human physiology. There is growing evidence from both micro and macro studies of causal impacts of extreme temperature on health, labor supply, and labor productivity, driven in large part by extreme heat stress. There is also a suggestion of an optimal temperature zone for economic activity, though empirical research on potential adaptive responses remains thin. This emerging literature has implications for the consequence of climate change, and may also provide a partial explanation of why hot countries are generally poorer than temperate or cold ones.
Handle: RePEc:nbr:nberwo:21119
Template-Type: ReDIF-Paper 1.0
Title: The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists
Classification-JEL: H71; J01; J08; J18; J23; R0
Author-Name: Enrico Moretti
Author-Person: pmo392
Author-Name: Daniel Wilson
Author-Person: pwi26
Note: ITI LS PE PR
Number: 21120
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21120
File-URL: http://www.nber.org/papers/w21120.pdf
File-Format: application/pdf
Publication-Status: published as Enrico Moretti & Daniel J. Wilson, 2017. "The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists," American Economic Review, American Economic Association, vol. 107(7), pages 1858-1903, July.
Abstract: Using data on the universe of U.S. patents filed between 1976 and 2010, we quantify how sensitive is migration by star scientist to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists’ migration patterns. The long run elasticity of mobility relative to taxes is 1.6 for personal income taxes, 2.3 for state corporate income tax and -2.6 for the investment tax credit. The effect on mobility is small in the short run, and tends to grow over time. We find no evidence of pre-trends: Changes in mobility follow changes in taxes and do not to precede them. Consistent with their high income, star scientists migratory flows are sensitive to changes in the 99th percentile marginal tax rate, but are insensitive to changes in taxes for the median income. As expected, the effect of corporate income taxes is concentrated among private sector inventors: no effect is found on academic and government researchers. Moreover, corporate taxes only matter in states where the wage bill enters the state’s formula for apportioning multi-state income. No effect is found in states that apportion income based only on sales (in which case labor’s location has little or no effect on the tax bill). We also find no evidence that changes in state taxes are correlated with changes in the fortunes of local firms in the innovation sector in the years leading up to the tax change. Overall, we conclude that state taxes have significant effect of the geographical location of star scientists and possibly other highly skilled workers. While there are many other factors that drive when innovative individual and innovative companies decide to locate, there are enough firms and workers on the margin that relative taxes matter.
Handle: RePEc:nbr:nberwo:21120
Template-Type: ReDIF-Paper 1.0
Title: Monnet's Error?
Classification-JEL: E42; F45
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: IFM ME
Number: 21121
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21121
File-URL: http://www.nber.org/papers/w21121.pdf
File-Format: application/pdf
Publication-Status: published as Luigi Guiso, Paola Sapienza, Luigi Zingales; Monnet’s error?, Economic Policy, Volume 31, Issue 86, 1 April 2016, Pages 247–297, https://doi.org/10.1093/epolic/eiw003
Abstract: Entering a currency union without any political union European countries have taken a gamble: will the needs of the currency union force a political integration (as anticipated by Monnet) or will the tensions create a backlash, as suggested by Kaldor, Friedman and many others? We try to answer this question by analyzing the cross sectional and time series variation in pro-European sentiments in the EU 15 countries. The 1992 Maastricht Treaty seems to have reduced the pro-Europe sentiment as does the 2010 Eurozone crisis. Yet, in spite of the worst recession in recent history, the Europeans still support the common currency. Europe seems trapped: there is no desire to go backward, no interest in going forward, but it is economically unsustainable to stay still.
Handle: RePEc:nbr:nberwo:21121
Template-Type: ReDIF-Paper 1.0
Title: High-frequency, Algorithmic Spillovers Between NASDAQ and Forex
Classification-JEL: F31; G12; G14; G15; G23
Author-Name: Takatoshi Ito
Author-Name: Masahiro Yamada
Note: IFM
Number: 21122
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21122
File-URL: http://www.nber.org/papers/w21122.pdf
File-Format: application/pdf
Abstract: We empirically examine the order flows spillovers between Nasdaq and the Forex markets in 2008 and 2009. With emphasis on a role of high-frequency traders (HFTs) who aggregate information between the two markets as well as within each market, our results show that HFTs in Nasdaq trade intensively on the market-wide information more rapidly than other market participants, and that their order flows contain more information about the Forex rates than those of the Forex themselves. As a result, order flows by HFTs in Nasdaq significantly lead those in the Forex activities. Reflecting each market's exposures to the common shocks during the Global Financial crisis, these spillovers vary over time, and HFTs have increased their influences. These empirical results are consistent with theoretical predictions of the rational expectations model of multi-asset trading.
Handle: RePEc:nbr:nberwo:21122
Template-Type: ReDIF-Paper 1.0
Title: Are Immigrants a Shot in the Arm for the Local Economy?
Classification-JEL: F22; F66
Author-Name: Gihoon Hong
Author-Name: John McLaren
Author-Person: pmc174
Note: ITI LS
Number: 21123
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21123
File-URL: http://www.nber.org/papers/w21123.pdf
File-Format: application/pdf
Abstract: Most research on the effects of immigration focuses on the effects of immigrants as adding to the supply of labor. By contrast, this paper studies the effects of immigrants on local labor demand, due to the increase in consumer demand for local services created by immigrants. This effect can attenuate downward pressure from immigrants on non-immigrants' wages, and also benefit non-immigrants by increasing the variety of local services available. For this reason, immigrants can raise native workers' real wages, and each immigrant could create more than one job. Using US Census data from 1980 to 2000, we find considerable evidence for these effects: Each immigrant creates 1.2 local jobs for local workers, most of them going to native workers, and 62% of these jobs are in non-traded services. Immigrants appear to raise local non-tradables sector wages and to attract native-born workers from elsewhere in the country. Overall, it appears that local workers benefit from the arrival of more immigrants.
Handle: RePEc:nbr:nberwo:21123
Template-Type: ReDIF-Paper 1.0
Title: Improving Policy Functions in High-Dimensional Dynamic Games
Classification-JEL: C44; C55; C57; C73; L1
Author-Name: Carlos A. Manzanares
Author-Name: Ying Jiang
Author-Name: Patrick Bajari
Note: IO TWP
Number: 21124
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21124
File-URL: http://www.nber.org/papers/w21124.pdf
File-Format: application/pdf
Abstract: In this paper, we propose a method for finding policy function improvements for a single agent in high-dimensional Markov dynamic optimization problems, focusing in particular on dynamic games. Our approach combines ideas from literatures in Machine Learning and the econometric analysis of games to derive a one-step improvement policy over any given benchmark policy. In order to reduce the dimensionality of the game, our method selects a parsimonious subset of state variables in a data-driven manner using a Machine Learning estimator. This one-step improvement policy can in turn be improved upon until a suitable stopping rule is met as in the classical policy function iteration approach. We illustrate our algorithm in a high-dimensional entry game similar to that studied by Holmes (2011) and show that it results in a nearly 300 percent improvement in expected profits as compared with a benchmark policy.
Handle: RePEc:nbr:nberwo:21124
Template-Type: ReDIF-Paper 1.0
Title: Identification and Efficient Semiparametric Estimation of a Dynamic Discrete Game
Classification-JEL: C01; C14; C57; C7; C73; L0
Author-Name: Patrick Bajari
Author-Name: Victor Chernozhukov
Author-Person: pch864
Author-Name: Han Hong
Author-Name: Denis Nekipelov
Author-Person: pne42
Note: IO TWP
Number: 21125
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21125
File-URL: http://www.nber.org/papers/w21125.pdf
File-Format: application/pdf
Abstract: In this paper, we study the identification and estimation of a dynamic discrete game allowing for discrete or continuous state variables. We first provide a general nonparametric identification result under the imposition of an exclusion restriction on agent payoffs. Next we analyze large sample statistical properties of nonparametric and semiparametric estimators for the econometric dynamic game model. We also show how to achieve semiparametric efficiency of dynamic discrete choice models using a sieve based conditional moment framework. Numerical simulations are used to demonstrate the finite sample properties of the dynamic game estimators. An empirical application to the dynamic demand of the potato chip market shows that this technique can provide a useful tool to distinguish long term demand from short term demand by heterogeneous consumers.
Handle: RePEc:nbr:nberwo:21125
Template-Type: ReDIF-Paper 1.0
Title: Is the Focus on Food Deserts Fruitless? Retail Access and Food Purchases Across the Socioeconomic Spectrum
Classification-JEL: I12; I24; I3; R2; R3
Author-Name: Jessie Handbury
Author-Person: pha907
Author-Name: Ilya Rahkovsky
Author-Name: Molly Schnell
Note: EH
Number: 21126
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21126
File-URL: http://www.nber.org/papers/w21126.pdf
File-Format: application/pdf
Abstract: Using novel data describing the healthfulness of household food purchases and the retail landscapes consumers face, we measure the role of access in explaining why wealthier and more educated households purchase healthier foods. We find that spatial differences in access, though significant, are small relative to spatial differences in the nutritional content of sales. Socioeconomic disparities in nutritional consumption exist even among households with equivalent access, and the healthfulness of household consumption responds minimally to improvements in local retail environments. Our results indicate that access-improving policies alone will eliminate less than one third of existing socioeconomic disparities in nutritional consumption. This paper has been subsumed by the authors’ later combined work
Handle: RePEc:nbr:nberwo:21126
Template-Type: ReDIF-Paper 1.0
Title: Redistribution and Group Participation: Comparative Experimental Evidence from Africa and the UK
Classification-JEL: D03; O17
Author-Name: Marcel Fafchamps
Author-Person: pfa2
Author-Name: Ruth Vargas Hill
Author-Person: phi68
Note: DEV
Number: 21127
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21127
File-URL: http://www.nber.org/papers/w21127.pdf
File-Format: application/pdf
Publication-Status: published as Marcel Fafchamps & Ruth Vargas Hill, 2019. "Redistribution and Group Participation: Experimental Evidence from Africa and the UK," The World Bank Economic Review, vol 33(3), pages 717-735.
Abstract: We design an original laboratory experiment to investigate whether redistributive actions hinder the formation of Pareto-improving groups. We test, in an anonymous setting with no feedback, whether people choose to destroy or steal the endowment of others and whether they choose to give to others, when granted the option. We then test whether subjects join a group that increases their endowment but exposes them to redistribution. We conduct the experiment in three very different settings with a priori different norms of pro-social behavior: a university town in the UK, the largest urban slum in Kenya, and rural Uganda. We find a lot of commonality but also large differences between sites. UK subjects behave in a more selfish and strategic way -- giving less, stealing more. Kenyan and Ugandan subjects behave in a more altruistic and less strategic manner. However, pro-social norms are not always predictive of joining behavior. African subjects are less likely to join a group when destruction or stealing is permitted. It is as if they are less trusting even though they are more trustworthy. These findings contradict the view that African current underdevelopment is due to a failure of generalized morality.
Handle: RePEc:nbr:nberwo:21127
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy Spillovers and the Trilemma in the New Normal: Periphery Country Sensitivity to Core Country Conditions
Classification-JEL: F33; F41
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Hiro Ito
Author-Person: pit4
Note: IFM
Number: 21128
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21128
File-URL: http://www.nber.org/papers/w21128.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Menzie D. Chinn & Hiro Ito, 2016. "Monetary policy spillovers and the trilemma in the new normal: Periphery country sensitivity to core country conditions," Journal of International Money and Finance, .
Abstract: We investigate why and how the financial conditions of developing and emerging market countries (peripheral countries) can be affected by the movements in the center economies - the U.S., Japan, the Eurozone, and China. We apply a two-step approach. First, we estimate the sensitivity of countries’ financial variables to the center economies [policy interest rate, stock market prices, and the real effective exchange rates (REER)] while controlling for global and domestic factors. Next, we examine the association of the estimated sensitivity coefficients with the macroeconomic conditions, policies, real and financial linkages with the center economies, and the level of institutional development. In the last two decades, for most financial variables, the strength of the links with the center economies have been the dominant factor while the movements of policy interest rate also appear sensitive to global financial shocks around the emerging market crises of the late 1990s and since the global financial crisis of 2008. While certain macroeconomic and institutional variables are important, the arrangement of open macro policies such as the exchange rate regime and financial openness are also found to have direct influence on the sensitivity to the center economies. An economy that pursues greater exchange rate stability and financial openness faces a stronger link with the center economies through policy interest rates and real effective exchange rate (REER) movements. We also find exchange market pressure (EMP) in peripheral economies is sensitive to the movements of the center economies’ REER and EMP during and after the global financial crisis. Open macro policy arrangements, especially exchange rate regimes, also have indirect effects on the strength of financial linkages, interacting with other macroeconomic conditions. Thus, trilemma policy arrangements, including exchange rate flexibility, continue to affect the sensitivity of developing countries to policy changes and shocks in the center economies.
Handle: RePEc:nbr:nberwo:21128
Template-Type: ReDIF-Paper 1.0
Title: Productivity, Safety, and Regulation in Underground Coal Mining: Evidence from Disasters and Fatalities
Classification-JEL: D24; I18; J28; L72
Author-Name: Gautam Gowrisankaran
Author-Name: Charles He
Author-Name: Eric A. Lutz
Author-Name: Jefferey L. Burgess
Note: EEE IO PR
Number: 21129
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21129
File-URL: http://www.nber.org/papers/w21129.pdf
File-Format: application/pdf
Abstract: Underground coal mining is a dangerous industry where the regulatory state may impose tradeoffs between productivity and safety. We recover the marginal tradeoffs using disasters near a mine as shocks that increase future accident costs. We find that in the second year after a disaster, productivity decreases 11% and accident rates decrease 18-80% for mines in the same state, with some evidence that the number of managers increases. Using published “value of statistical life” and injury cost estimates, we find that the productivity loss following a disaster in the same state costs 2.51 times the value of the safety increases.
Handle: RePEc:nbr:nberwo:21129
Template-Type: ReDIF-Paper 1.0
Title: Does Exposure to Economics Bring New Majors to the Field? Evidence from a natural Experiment.
Classification-JEL: A20; I20; I23
Author-Name: Hans Fricke
Author-Person: pfr329
Author-Name: Jeffrey Grogger
Author-Person: pgr125
Author-Name: Andreas Steinmayr
Author-Person: pst421
Note: ED
Number: 21130
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21130
File-URL: http://www.nber.org/papers/w21130.pdf
File-Format: application/pdf
Abstract: This study investigates how being exposed to a field of study influences students’ major choices. We exploit a natural experiment at a Swiss university where all first-year students face largely the same curriculum before they choose a major. An important component of the first-year curriculum that varies between students involves a multi-term research paper in business, economics, or law. Due to oversubscription of business, the university assigns the field of the paper in a standardized way that is unrelated to student characteristics. We find that being assigned to write in economics raises the probability of majoring in economics by 2.7 percentage points, which amounts to 18 percent of the share of students who major in economics.
Handle: RePEc:nbr:nberwo:21130
Template-Type: ReDIF-Paper 1.0
Title: Executive Compensation: A Modern Primer
Classification-JEL: D86; G34
Author-Name: Alex Edmans
Author-Person: ped30
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: CF LE LS
Number: 21131
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21131
File-URL: http://www.nber.org/papers/w21131.pdf
File-Format: application/pdf
Publication-Status: published as Alex Edmans & Xavier Gabaix, 2016. "Executive Compensation: A Modern Primer," Journal of Economic Literature, vol 54(4), pages 1232-1287.
Abstract: This article studies traditional and modern theories of executive compensation, bringing them together under a unifying framework. We analyze assignment models of the level of pay, and static and dynamic moral hazard models of incentives, and compare their predictions to empirical findings. We make two broad points. First, traditional optimal contracting theories find it difficult to explain the data, suggesting that compensation results from "rent extraction" by CEOs. In contrast, more modern theories that arguably better capture the CEO setting do deliver predictions consistent with observed practices, suggesting that these practices need not be inefficient. Second, seemingly innocuous features of the modeling setup, often made for tractability or convenience, can lead to significant differences in the model's implications and conclusions on the efficiency of observed practices. We close by highlighting apparent inefficiencies in executive compensation and additional directions for future research.
Handle: RePEc:nbr:nberwo:21131
Template-Type: ReDIF-Paper 1.0
Title: Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment
Classification-JEL: D22; L26; O33
Author-Name: Marcel Fafchamps
Author-Person: pfa2
Author-Name: Simon R. Quinn
Author-Person: pqu106
Note: DEV
Number: 21132
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21132
File-URL: http://www.nber.org/papers/w21132.pdf
File-Format: application/pdf
Publication-Status: published as Marcel Fafchamps & Simon Quinn, 2018. "Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment," World Bank Economic Review, World Bank Group, vol. 32(3), pages 656-675.
Abstract: We run a novel field experiment to link managers of African manufacturing firms. The experiment features exogenous link formation, exogenous seeding of information, and exogenous assignment to treatment and placebo. We study the impact of the experiment on firm business practices outside of the lab. We find that the experiment successfully created new variation in social networks. We find significant diffusion of business practices only in terms of VAT registration and having a bank current account. This diffusion is a combination of diffusion of innovation and simple imitation. At the time of our experiment, all three studied countries were undergoing large changes in their VAT legislation.
Handle: RePEc:nbr:nberwo:21132
Template-Type: ReDIF-Paper 1.0
Title: What Do Private Equity Firms Say They Do?
Classification-JEL: G24; G3; G31; G32
Author-Name: Paul Gompers
Author-Person: pgo301
Author-Name: Steven N. Kaplan
Author-Name: Vladimir Mukharlyamov
Note: CF PR
Number: 21133
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21133
File-URL: http://www.nber.org/papers/w21133.pdf
File-Format: application/pdf
Publication-Status: published as Paul Gompers & Steven N. Kaplan & Vladimir Mukharlyamov, 2016. "What do private equity firms say they do?," Journal of Financial Economics, vol 121(3), pages 449-476.
Abstract: We survey 79 private equity investors with combined AUM of over $750B about their practices in firm valuation, capital structure, governance, and value creation. Investors rely primarily on IRR and multiples to evaluate investments. Their LPs focus more on absolute performance. Capital structure choice is based equally on optimal trade-off and market timing considerations. PE investors anticipate adding value to portfolio companies, with a greater focus on increasing growth than on reducing costs. We also explore how the actions that PE managers say they take group into specific firm strategies and how those strategies are related to firm founder characteristics.
Handle: RePEc:nbr:nberwo:21133
Template-Type: ReDIF-Paper 1.0
Title: Slack Time and Innovation
Classification-JEL: J22; L26; O31
Author-Name: Ajay Agrawal
Author-Person: pag38
Author-Name: Christian Catalini
Author-Name: Avi Goldfarb
Author-Person: pgo53
Note: PR
Number: 21134
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21134
File-URL: http://www.nber.org/papers/w21134.pdf
File-Format: application/pdf
Publication-Status: published as Ajay Agrawal & Christian Catalini & Avi Goldfarb & Hong Luo, 2018. "Slack Time and Innovation," Organization Science, vol 29(6), pages 1056-1073.
Abstract: The extant literature linking slack time to innovation focuses on how slack time facilitates creative activities such as ideation, experimentation, and prototype development. We turn attention to how slack time may enable activities that are less creative but still important for innovation, namely mundane, execution-oriented tasks. First, we document the main effect: a sharp rise in innovative projects posted on a major crowdfunding platform when colleges are on break. Next, we report timing and project type evidence consistent with the causal interpretation that slack time drives innovation. Finally, we present a series of results consistent with the mundane task mechanism but not with the traditional creativity-related explanations. We do not rule out the possibility that creativity benefits from slack time. Instead, we introduce the idea that mundane, execution-oriented tasks, such as those associated with launching a crowdfunding campaign (e.g., administration, planning, promotion), are an important input to innovation that may benefit significantly from slack time.
Handle: RePEc:nbr:nberwo:21134
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Tuition Increases on Undocumented College Students' Attainment
Classification-JEL: H75; I21; J15
Author-Name: Dylan Conger
Author-Name: Lesley J. Turner
Author-Person: ptu137
Note: ED LS PE
Number: 21135
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21135
File-URL: http://www.nber.org/papers/w21135.pdf
File-Format: application/pdf
Publication-Status: published as Dylan Conger, Lesley J. Turner, The effect of price shocks on undocumented students' college attainment and completion, Journal of Public Economics, Volume 148, 2017, Pages 92-114, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2017.02.006.
Abstract: We examine the impact of a temporary price shock on the attainment of undocumented college students enrolled in a large urban college system. In spring 2002, the City University of New York reversed its policy of charging in-state tuition to undocumented students. By fall 2002, the state legislature restored in-state rates. Using a differences-in-differences identification strategy, we estimate impacts on reenrollment, credits, grades, and degree completion. The price shock led to an immediate 8 percent decrease in senior college students' enrollment. Senior college students who entered college the semester prior to the price shock experienced lasting reductions in attainment, including a 22 percent decrease in degree receipt. Conversely, among senior college students who been enrolled for at least a year, the price shock only affected the timing of exit.
Handle: RePEc:nbr:nberwo:21135
Template-Type: ReDIF-Paper 1.0
Title: How Modern Dictators Survive: An Informational Theory of the New Authoritarianism
Classification-JEL: H5; P16
Author-Name: Sergei Guriev
Author-Person: pgu59
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: POL
Number: 21136
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21136
File-URL: http://www.nber.org/papers/w21136.pdf
File-Format: application/pdf
Abstract: We develop an informational theory of dictatorship. Dictators survive not because of their use of force or ideology but because they convince the public—rightly or wrongly—that they are competent. Citizens do not observe the dictator's type but infer it from signals inherent in their living standards, state propaganda, and messages sent by an informed elite via independent media. If citizens conclude that the dictator is incompetent, they overthrow him in a revolution. The dictator can invest in making convincing state propaganda, censoring independent media, co-opting the elite, or equipping police to repress attempted uprisings—but he must finance such spending at the expense of the public's living standards. We show that incompetent dictators can survive as long as economic shocks are not too large. Moreover, their reputations for competence may grow over time—even if living standards fall. Censorship and co-optation of the elite are substitutes, but both are complements of propaganda. Due to coordination failure among members of the elite, multiple equilibria emerge. In some equilibria the ruler uses propaganda and co-opts the elite; in others, propaganda is combined with censorship. In the equilibrium with censorship, difficult economic times prompt higher relative spending on censorship and propaganda. The results illuminate tradeoffs faced by various recent dictatorships.
Handle: RePEc:nbr:nberwo:21136
Template-Type: ReDIF-Paper 1.0
Title: Career Technical Education and Labor Market Outcomes: Evidence from California Community Colleges
Classification-JEL: I24; I26
Author-Name: Ann Huff Stevens
Author-Person: pst180
Author-Name: Michal Kurlaender
Author-Name: Michel Grosz
Note: ED LS
Number: 21137
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21137
File-URL: http://www.nber.org/papers/w21137.pdf
File-Format: application/pdf
Publication-Status: published as Ann Huff Stevens & Michal Kurlaender & Michel Grosz, 2019. "Career Technical Education and Labor Market Outcomes," Journal of Human Resources, vol 54(4), pages 986-1036.
Abstract: Career technical education (CTE) programs at community colleges are increasingly seen as an attractive alternative to four-year colleges, yet little systematic evidence exists on the returns to specific certificates and degrees. We estimate returns to CTE programs using administrative data from the California Community College system linked to earnings records. We employ estimation approaches including individual fixed effects and individual-specific trends, and find average returns to CTE certificate and degrees that range from 14 to 45 percent. The largest returns are for programs in the healthcare sector; estimated returns in non-health related programs range from 15 to 23 percent.
Handle: RePEc:nbr:nberwo:21137
Template-Type: ReDIF-Paper 1.0
Title: Preference for Boys, Family Size and Educational Attainment in India
Classification-JEL: I21; J13; N3; O10
Author-Name: Adriana D. Kugler
Author-Person: pku361
Author-Name: Santosh Kumar
Note: CH LS
Number: 21138
Creation-Date: 2015-04
Order-URL: http://www.nber.org/papers/w21138
File-URL: http://www.nber.org/papers/w21138.pdf
File-Format: application/pdf
Publication-Status: published as Adriana D. Kugler & Santosh Kumar, 2017. "Preference for Boys, Family Size, and Educational Attainment in India," Demography, vol 54(3), pages 835-859.
Abstract: Using data from nationally representative household surveys, we test whether Indian parents make trade-offs between the number of children and investments in education and health of their children. To address the endogeneity due to the joint determination of quantity and quality of children by parents, we instrument family size with the gender of the first child which is plausibly random. Given a strong son-preference in India, parents tend to have more children if the first born is a girl. Our IV results show that children from larger families have lower educational attainment and are less likely to have ever been enrolled and to be currently enrolled in school, even after controlling for parents’ characteristics and birth-order of children. The effects are larger for rural, poorer and low-caste families and for families with less educated mothers. However, we find no evidence of a trade-off for health outcomes.
Handle: RePEc:nbr:nberwo:21138
Template-Type: ReDIF-Paper 1.0
Title: Cofinancing in Environment and Development: Evidence from the Global Environment Facility
Classification-JEL: Q01; Q2; Q54
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Author-Name: Neeraj Kumar Negi
Note: EEE
Number: 21139
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21139
File-URL: http://www.nber.org/papers/w21139.pdf
File-Format: application/pdf
Publication-Status: published as Matthew J Kotchen & Neeraj Kumar Negi, 2019. "Cofinancing in Environment and Development: Evidence from the Global Environment Facility," The World Bank Economic Review, vol 33(1), pages 41-62.
Abstract: Leveraged cofinancing from public and private sources has emerged as a policy priority among international environment and development agencies. There is nevertheless surprisingly little research on the determinants and impacts of cofinancing for accomplishing environment and development goals. This paper contributes to the literature with a focus on three interrelated questions: (1) How does observed cofinancing depend on characteristics of the development project, the country where the project takes place, and the agencies responsible for project funding and execution? (2) What factors explain the likelihood that project cofinancing is based on loans rather than grants, and that cofinancing comes from the private sector rather than public agencies or non-governmental organizations? (3) Does greater cofinancing result in better environment and development projects? To answer these questions, we take advantage of data from the Global Environment Facility (GEF) on 3,269 projects from 1991 through the beginning of 2014. The results provide insight not only on how agencies may target cofinancing going forward, but also on how greater emphasis on cofinancing may implicitly shift environment and development priorities.
Handle: RePEc:nbr:nberwo:21139
Template-Type: ReDIF-Paper 1.0
Title: Lost in the Clouds: The Impact of Changing Property Rights on Investment in Cloud Computing Ventures
Classification-JEL: G24; O34
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Greg Rafert
Note: CF PR
Number: 21140
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21140
File-URL: http://www.nber.org/papers/w21140.pdf
File-Format: application/pdf
Abstract: Our analysis seeks to understand the impact of changing allocations of property rights on investment in new firms. We focus on the Cartoon Network, et al. v. Cablevision decision in the U.S., which narrowed the protection enjoyed by content creators (e.g., movie studios) and gave greater rights to downstream technology firms, as well as decisions in France and Germany that took an opposite view. Our findings regarding relative venture capital investment in the U.S. and Europe, across Europe, and between the various judicial circuits of the U.S. suggest that decisions around the allocation of property rights can have economically and statistically significant impacts on investment in innovative enterprises.
Handle: RePEc:nbr:nberwo:21140
Template-Type: ReDIF-Paper 1.0
Title: It's Good to be First: Order Bias in Reading and Citing NBER Working Papers
Classification-JEL: A2; D03; D83
Author-Name: Daniel R. Feenberg
Author-Person: pfe56
Author-Name: Ina Ganguli
Author-Person: pga330
Author-Name: Patrick Gaule
Author-Person: pga219
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH LS PE
Number: 21141
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21141
File-URL: http://www.nber.org/papers/w21141.pdf
File-Format: application/pdf
Publication-Status: published as Daniel Feenberg & Ina Ganguli & Patrick Gaulé & Jonathan Gruber, 2017. "It’s Good to Be First: Order Bias in Reading and Citing NBER Working Papers," The Review of Economics and Statistics, MIT Press, vol. 99(1), pages 32-39, March.
Abstract: Choices are frequently made from lists where there is by necessity some ordering of options. In such situations individuals can exhibit both primacy bias towards the first option and recency bias towards the last option. We examine this phenomenon in a particularly interesting context: consumer response to the ordering of economics papers in an email announcement issued by the National Bureau of Economic Research (NBER). Each Monday morning Eastern Standard Time (EST) the NBER issues a “New This Week” (NTW) email that lists all of the working papers that have been issued in the past week. This email goes to more than 23,000 subscribers, both inside and outside academia, and the placement order is based on random factors. We show that despite the randomized list placement, papers that are listed first each week are about 30% more likely to be viewed, downloaded, and cited over the next two years. Lower ranking on the list leads to fewer views and downloads, but not cites; however, there is also some recency bias, with the last paper listed receiving more views, downloads and cites. The results are robust to a wide variety of specification checks and are present for both all viewers/downloaders, and for academic institutions in particular. These results suggest that even among expert searchers, list-based searches can be manipulated by list placement.
Handle: RePEc:nbr:nberwo:21141
Template-Type: ReDIF-Paper 1.0
Title: The Facts of Economic Growth
Classification-JEL: E0; O4
Author-Name: Charles I. Jones
Author-Person: pjo24
Note: EFG PR
Number: 21142
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21142
File-URL: http://www.nber.org/papers/w21142.pdf
File-Format: application/pdf
Publication-Status: published as C.I. Jones, Chapter 1 - The Facts of Economic Growth, Editor(s): John B. Taylor, Harald Uhlig, Handbook of Macroeconomics, Elsevier, Volume 2, 2016, Pages 3-69, ISSN 1574-0048, ISBN 9780444594877, https://doi.org/10.1016/bs.hesmac.2016.03.002.
Abstract: Why are people in the richest countries of the world so much richer today than 100 years ago? And why are some countries so much richer than others? Questions such as these define the field of economic growth. This paper documents the facts that underlie these questions. How much richer are we today than 100 years ago, and how large are the income gaps between countries? The purpose of the paper is to provide an encyclopedia of the fundamental facts of economic growth upon which our theories are built, gathering them together in one place and updating the facts with the latest available data.
Handle: RePEc:nbr:nberwo:21142
Template-Type: ReDIF-Paper 1.0
Title: Above a Swamp: A Theory of High-Quality Scientific Production
Classification-JEL: L31; O31
Author-Name: Bralind Kiri
Author-Name: Nicola Lacetera
Author-Person: pla61
Author-Name: Lorenzo Zirulia
Author-Person: pzi28
Note: PR
Number: 21143
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21143
File-URL: http://www.nber.org/papers/w21143.pdf
File-Format: application/pdf
Publication-Status: published as Bralind Kiri & Nicola Lacetera & Lorenzo Zirulia, 2018. "Above a swamp: A theory of high-quality scientific production," Research Policy, .
Abstract: We elaborate a model of the incentives of scientists to perform activities of control and criticism when these activities, just like the production of novel findings, are costly, and we study the strategic interaction between these incentives. We then use the model to assess policies meant to enhance the reliability of scientific knowledge. We show that a certain fraction of low-quality science characterizes all the equilibria in the basic model. In fact, the absence of detected low-quality research can be interpreted as the lack of verification activities and thus as a potential limitation to the reliability of a field. Incentivizing incremental research and verification activities improves the expected quality of research; this effect, however, is contrasted by the incentives to free ride on performing verification if many scientists are involved, and may discourage scientists to undertake new research in the first place. Finally, softening incentives to publish does not enhance quality, although it increases the fraction of detected low-quality papers. We also advance empirical predictions and discuss the insights for firms and investors as they "scout" the scientific landscape.
Handle: RePEc:nbr:nberwo:21143
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program
Classification-JEL: J22
Author-Name: David H. Autor
Author-Person: pau9
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Kyle Greenberg
Author-Person: pgr759
Author-Name: David S. Lyle
Note: AG LS PE
Number: 21144
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21144
File-URL: http://www.nber.org/papers/w21144.pdf
File-Format: application/pdf
Publication-Status: published as David H. Autor & Mark Duggan & Kyle Greenberg & David S. Lyle, 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program," American Economic Journal: Applied Economics, vol 8(3), pages 31-68.
Abstract: Combining administrative data from the U.S. Army, Department of Veterans Affairs (VA) and the U.S. Social Security Administration, we analyze the effect of the VA’s Disability Compensation (DC) program on veterans’ labor force participation and earnings. The largely unstudied Disability Compensation program currently provides income and health insurance to almost four million veterans of military service who suffer service-connected disabilities. We study a unique policy change, the 2001 Agent Orange decision, which expanded DC eligibility for Vietnam veterans who had served in-theatre to a broader set of conditions such as type 2 diabetes. Exploiting the fact that the Agent Orange policy excluded Vietnam era veterans who did not serve in-theatre, we assess the causal effects of DC eligibility by contrasting the outcomes of these two Vietnam-era veteran groups. The Agent Orange policy catalyzed a sharp increase in DC enrollment among veterans who served in-theatre, raising the share receiving benefits by five percentage points over five years. Disability ratings and payments rose rapidly among those newly enrolled, with average annual non-taxed federal transfer payments increasing to $17K within five years. We estimate that benefits receipt reduced labor force participation by 18 percentage points among veterans enrolled due to the policy, though measured income net of transfer benefits rose on average. Consistent with the relatively advanced age and diminished health of Vietnam era veterans in this period, we estimate labor force participation elasticities that are somewhat higher than among the general population.
Handle: RePEc:nbr:nberwo:21144
Template-Type: ReDIF-Paper 1.0
Title: Politics in the Courtroom: Political Ideology and Jury Decision Making
Classification-JEL: K0; K14; K4
Author-Name: Shamena Anwar
Author-Name: Patrick Bayer
Author-Person: pba636
Author-Name: Randi Hjalmarsson
Author-Person: phj5
Note: LE POL
Number: 21145
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21145
File-URL: http://www.nber.org/papers/w21145.pdf
File-Format: application/pdf
Publication-Status: published as Shamena Anwar & Patrick Bayer & Randi Hjalmarsson, 2019. "Politics in the Courtroom: Political Ideology and Jury Decision Making," Journal of the European Economic Association, vol 17(3), pages 834-875.
Abstract: This paper uses data from the Gothenburg District Court in Sweden and a research design that exploits the random assignment of politically appointed jurors (termed nämndemän) to make three contributions to the literature on jury decision-making: (i) an assessment of whether systematic biases exist in the Swedish nämndemän system, (ii) causal evidence on the impact of juror political party on verdicts, and (iii) an empirical examination of the role of peer effects in jury decision-making. The results reveal a number of systematic biases: convictions for young defendants and those with distinctly Arabic sounding names increase substantially when they are randomly assigned jurors from the far-right (nationalist) Swedish Democrat party, while convictions in cases with a female victim increase markedly when they are assigned jurors from the far-left (feminist) Vänster party. The results also indicate the presence of peer effects, with jurors from both the far-left and far-right parties drawing the votes of their more centrist peers towards their positions. Peer effects take the form of both sway effects, where jurors influence the opinions of their closest peers in a way that can impact trial outcomes, and dissent aversion, where jurors switch non-pivotal votes so that the decision is unanimous.
Handle: RePEc:nbr:nberwo:21145
Template-Type: ReDIF-Paper 1.0
Title: The Career Effects of Scandal: Evidence from Scientific Retractions
Classification-JEL: O31; O33
Author-Name: Pierre Azoulay
Author-Name: Alessandro Bonatti
Author-Person: pbo878
Author-Name: Joshua L. Krieger
Note: PR
Number: 21146
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21146
File-URL: http://www.nber.org/papers/w21146.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Alessandro Bonatti & Joshua L. Krieger, 2017. "The career effects of scandal: Evidence from scientific retractions," Research Policy, .
Abstract: We investigate how the scientific community's perception of a scientist's prior work changes when one of his articles is retracted. Relative to non-retracted control authors, faculty members who experience a retraction see the citation rate to their earlier, non-retracted articles drop by 10% on average, consistent with the Bayesian intuition that the market inferred their work was mediocre all along. We then investigate whether the eminence of the retracted author and the cause of the retraction (fraud vs. mistake) shape the magnitude of the penalty. We find that eminent scientists are more harshly penalized than their less distinguished peers in the wake of a retraction, but only in cases involving fraud or misconduct. When the retraction event had its source in “honest mistakes,” we find no evidence of differential stigma between high- and low-status faculty members.
Handle: RePEc:nbr:nberwo:21146
Template-Type: ReDIF-Paper 1.0
Title: Giving College Credit Where it is Due: Advanced Placement Exam Scores and College Outcomes
Classification-JEL: I2; I23; J24
Author-Name: Jonathan Smith
Author-Name: Michael Hurwitz
Author-Name: Christopher Avery
Author-Person: pav7
Note: ED
Number: 21147
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21147
File-URL: http://www.nber.org/papers/w21147.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Smith & Michael Hurwitz & Christopher Avery, 2017. "Giving College Credit Where It Is Due: Advanced Placement Exam Scores and College Outcomes," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 67-147.
Abstract: We implement a regression discontinuity design using the continuous raw Advanced Placement (AP) exam scores, which are mapped into the observed 1-5 integer scores, for over 4.5 million students. Earning higher AP integer scores positively impacts college completion and subsequent exam taking. Specifically, attaining credit-granting integer scores increases the probability that a student will receive a bachelor’s degree within four years by 1 to 2 percentage points per exam. We also find that receiving a score of 3 over a 2 on junior year AP exams causes students to take between 0.06 and 0.14 more AP exams senior year.
Handle: RePEc:nbr:nberwo:21147
Template-Type: ReDIF-Paper 1.0
Title: When Should Governments Subsidize Health? The Case of Mass Deworming
Classification-JEL: H2; H51; I1; I12; I15; I2; I20; I25; I3; O1
Author-Name: Amrita Ahuja
Author-Name: Sarah Baird
Author-Person: pba929
Author-Name: Joan Hamory Hicks
Author-Name: Michael Kremer
Author-Person: pkr20
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Shawn Powers
Note: DEV EH
Number: 21148
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21148
File-URL: http://www.nber.org/papers/w21148.pdf
File-Format: application/pdf
Publication-Status: published as Amrita Ahuja & Sarah Baird & Joan Hamory Hicks & Michael Kremer & Edward Miguel & Shawn Powers, 2015. "When Should Governments Subsidize Health? The Case of Mass Deworming," The World Bank Economic Review, vol 29(suppl 1), pages S9-S24.
Abstract: We discuss how evidence and theory can be combined to provide insight on the appropriate subsidy level for health products, focusing on the specific case of deworming. Although intestinal worm infections can be treated using safe, low-cost drugs, some have challenged the view that mass school-based deworming should be a policy priority. We review well-identified research which both uses experimental or quasi-experimental methods to demonstrate causal relationships and adequately accounts for epidemiological externalities from deworming treatment, including studies of deworming campaigns in the Southern United States, Kenya, and Uganda. The existing evidence shows consistent positive impacts on school participation in the short run and on academic test scores, employment, and income in the long run, while suggesting that most parents will not pay for deworming treatment that is not fully subsidized. There is also evidence for a fiscal externality through higher future tax revenue, which may exceed the cost of the program. Our analysis suggests that the economic benefits of school-based deworming programs are likely to exceed their costs in places where worm infestations are endemic. This would likely be the case even if the benefits were only a fraction of estimates in the existing literature.
Handle: RePEc:nbr:nberwo:21148
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Trade on Labor Market Dynamics
Classification-JEL: E24; F16; J62; R13; R23
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Maximiliano Dvorkin
Author-Name: Fernando Parro
Author-Person: ppa683
Note: ITI
Number: 21149
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21149
File-URL: http://www.nber.org/papers/w21149.pdf
File-Format: application/pdf
Abstract: We develop a dynamic labor search model where production and consumption take place in spatially distinct labor markets with varying exposure to domestic and international trade. The model recognizes the role of labor mobility frictions, goods mobility frictions, geographic factors, and input-output linkages in determining equilibrium allocations. We show how to solve the equilibrium of the model without estimating productivities, reallocation frictions, or trade frictions, which are usually difficult to identify. We use the model to study the dynamic labor market outcomes of aggregate trade shocks. We calibrate the model to 38 countries, 50 U.S. states and 22 sectors and use the rise in China's import competition to quantify the aggregate and disaggregate employment and welfare effects on the U.S. economy. We find that China's import competition growth resulted in 0.6 percentage point reduction in the share of manufacturing employment, approximately 1 million jobs lost, or about 60% of the change in the manufacturing employment share not explained by a secular trend. Overall, China's shock increases U.S. welfare by 6.7% in the long-run and by 0.2% in the short-run with very heterogeneous effects across labor markets.
Handle: RePEc:nbr:nberwo:21149
Template-Type: ReDIF-Paper 1.0
Title: Bank sovereign bond holdings, sovereign shock spillovers, and moral hazard during the European crisis
Classification-JEL: F34; G12; G15; G21; H63
Author-Name: Andrea Beltratti
Author-Name: René M. Stulz
Note: CF
Number: 21150
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21150
File-URL: http://www.nber.org/papers/w21150.pdf
File-Format: application/pdf
Abstract: From 2010 to 2012, the relation between bank stock returns from European Union (EU) countries and the returns on sovereign CDS of peripheral (GIIPS) countries is negative. We use days with tail sovereign CDS returns of peripheral countries to identify the effects of shocks to the cost of borrowing of these countries on EU banks from other countries. A CDS tail return affects banks with greater exposure to the country experiencing that return more, but it has an impact on banks regardless of exposure. Shocks to peripheral countries that are more pervasive impact the returns of banks from countries that experience no shock more than shocks to small individual peripheral countries. In general, the impact of tail returns is asymmetric in that banks suffer less from adverse shocks to peripheral countries than they gain from favourable shocks to such countries.
Handle: RePEc:nbr:nberwo:21150
Template-Type: ReDIF-Paper 1.0
Title: A Structural Model of Electoral Accountability
Classification-JEL: D72; D73; H70
Author-Name: S. Borağan Aruoba
Author-Person: par34
Author-Name: Allan Drazen
Author-Person: pdr25
Author-Name: Razvan Vlaicu
Author-Person: pvl56
Note: EFG POL
Number: 21151
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21151
File-URL: http://www.nber.org/papers/w21151.pdf
File-Format: application/pdf
Publication-Status: published as S. Borağan Aruoba & Allan Drazen & Razvan Vlaicu, 2018. "A STRUCTURAL MODEL OF ELECTORAL ACCOUNTABILITY," International Economic Review, .
Abstract: This paper proposes a structural approach to measuring the effects of electoral accountability. We estimate a political agency model with imperfect information in order to identify and quantify discipline and selection effects, using data on U.S. governors for 1982-2012. We find that the possibility of reelection provides a significant incentive for incumbents to exert effort. We also find a selection effect, although it is weaker in terms of its effect on average governor performance. According to our model, the widely-used two-term regime improves voter welfare by 4.2% compared to a one-term regime, and find that a three-term regime may improve voter welfare even further.
Handle: RePEc:nbr:nberwo:21151
Template-Type: ReDIF-Paper 1.0
Title: Colonial New Jersey's Provincial Fiscal Structure, 1709-1775: Spending Obligations, Revenue Sources, and Tax Burdens in War and in Peace
Classification-JEL: E42; E60; H20; H60; N11; N21; N41
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 21152
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21152
File-URL: http://www.nber.org/papers/w21152.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb, “Colonial New Jersey’s Provincial Fiscal Structure, 1709-1775: Spending Obligations, Revenue Sources, and Tax Burdens during Peace and War,” FINANCIAL HISTORY REVIEW, vol. 23, no. 2 (Aug. 2016), pp. 133-163.
Abstract: The spending obligations and revenue sources of colonial New Jersey’s provincial government for the years 1704 through 1775 are reconstituted using forensic accounting techniques from primary sources. Such has not been done previously for any British North American colony. These data are used to assess colonial New Jersey’s provincial fiscal structure. The methods for raising revenue to meet normal peacetime and emergency wartime expenses are identified and analyzed. The provincial tax burdens imposed on New Jersey’s subjects are calculated. How the British interfered with New Jersey’s provincial fiscal structure is identified. What revenues and tax burdens would have been without this interference are estimated.
Handle: RePEc:nbr:nberwo:21152
Template-Type: ReDIF-Paper 1.0
Title: Voluntary Associations, Corporate Rights, and the State: Legal Constraints on the Development of American Civil Society, 1750-1900
Classification-JEL: N11
Author-Name: Ruth H. Bloch
Author-Name: Naomi R. Lamoreaux
Note: DAE
Number: 21153
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21153
File-URL: http://www.nber.org/papers/w21153.pdf
File-Format: application/pdf
Abstract: The freedom of citizens to form voluntary associations has long been viewed as an essential ingredient of modern civil society. Our chapter revises the standard Tocquevillian account of associational freedom in the early United States by accentuating the role of state courts and legislatures in the creation and regulation of nineteenth-century American nonprofit corporations. Corporate status gave associations valuable rights that went beyond the basic right of individuals to associate. Government officials selectively used their power to grant and enforce corporate charters to reward politically favored groups while denying equivalent rights to groups they viewed as politically or socially disruptive.
Handle: RePEc:nbr:nberwo:21153
Template-Type: ReDIF-Paper 1.0
Title: Housing Constraints and Spatial Misallocation
Classification-JEL: E24; J01; R0
Author-Name: Chang-Tai Hsieh
Author-Name: Enrico Moretti
Author-Person: pmo392
Note: EFG LS PE PR
Number: 21154
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21154
File-URL: http://www.nber.org/papers/w21154.pdf
File-Format: application/pdf
Publication-Status: published as Chang-Tai Hsieh & Enrico Moretti, 2019. "Housing Constraints and Spatial Misallocation," American Economic Journal: Macroeconomics, vol 11(2), pages 1-39.
Abstract: We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.
Handle: RePEc:nbr:nberwo:21154
Template-Type: ReDIF-Paper 1.0
Title: A Tractable Framework for Analyzing a Class of Nonstationary Markov Models
Classification-JEL: C61; C63; C68; E31; E52
Author-Name: Lilia Maliar
Author-Name: Serguei Maliar
Author-Name: John Taylor
Author-Person: pta174
Author-Name: Inna Tsener
Note: EFG
Number: 21155
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21155
File-URL: http://www.nber.org/papers/w21155.pdf
File-Format: application/pdf
Publication-Status: published as Lilia Maliar & Serguei Maliar & John B. Taylor & Inna Tsener, 2020. "A tractable framework for analyzing a class of nonstationary Markov models," Quantitative Economics, Econometric Society, vol. 11(4), pages 1289-1323, November.
Abstract: We study a class of infinite-horizon nonlinear dynamic economic models in which preferences, technology and laws of motion for exogenous variables can change over time either deterministically or stochastically, according to a Markov process with time-varying transition probabilities, or both. The studied models are nonstationary in the sense that the decision and value functions are time-dependent, and they cannot be generally solved by conventional solution methods. We introduce a quantitative framework, called extended function path (EFP), for calibrating, solving, simulating and estimating such models. We apply EFP to analyze a collection of challenging applications that do not admit stationary Markov equilibria, including growth models with anticipated parameters shifts and drifts, unbalanced growth under capital augmenting technological progress, anticipated regime switches, deterministically time-varying volatility and seasonal fluctuations. Also, we show an example of estimation and calibration of parameters in an unbalanced growth model using data on the U.S. economy. Examples of MATLAB code are provided.
Handle: RePEc:nbr:nberwo:21155
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment
Classification-JEL: H53; I32; I38; R38
Author-Name: Raj Chetty
Author-Person: pch161
Author-Name: Nathaniel Hendren
Author-Name: Lawrence F. Katz
Author-Person: pka266
Note: CH ED LS PE
Number: 21156
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21156
File-URL: http://www.nber.org/papers/w21156.pdf
File-Format: application/pdf
Publication-Status: published as Raj Chetty & Nathaniel Hendren & Lawrence F. Katz, 2016. "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment," American Economic Review, American Economic Association, vol. 106(4), pages 855-902, April.
Abstract: The Moving to Opportunity (MTO) experiment offered randomly selected families living in high- poverty housing projects housing vouchers to move to lower-poverty neighborhoods. We present new evidence on the impacts of MTO on children's long-term outcomes using administrative data from tax returns. We find that moving to a lower-poverty neighborhood significantly improves college attendance rates and earnings for children who were young (below age 13) when their families moved. These children also live in better neighborhoods themselves as adults and are less likely to become single parents. The treatment effects are substantial: children whose families take up an experimental voucher to move to a lower-poverty area when they are less than 13 years old have an annual income that is $3,477 (31%) higher on average relative to a mean of $11,270 in the control group in their mid-twenties. In contrast, the same moves have, if anything, negative long-term impacts on children who are more than 13 years old when their families move, perhaps because of the disruption effects of moving to a very different environment. The gains from moving fall with the age when children move, consistent with recent evidence that the duration of exposure to a better environment during childhood is a key determinant of an individual's long-term outcomes. The findings imply that offering vouchers to move to lower-poverty neighborhoods to families with young children who are living in high- poverty housing projects may reduce the intergenerational persistence of poverty and ultimately generate positive returns for taxpayers.
Handle: RePEc:nbr:nberwo:21156
Template-Type: ReDIF-Paper 1.0
Title: Temperature and Human Capital in the Short- and Long-Run
Classification-JEL: H41; I0; Q5; Q54
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Author-Name: Solomon M. Hsiang
Author-Name: Matthew J. Neidell
Author-Person: pne362
Note: CH EEE EH LS PE
Number: 21157
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21157
File-URL: http://www.nber.org/papers/w21157.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Graff Zivin & Solomon M. Hsiang & Matthew Neidell, 2018. "Temperature and Human Capital in the Short and Long Run," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 77-105.
Abstract: We provide the first estimates of the potential impact of climate change on human capital, focusing on the impacts from both short-run weather and long-run climate. Exploiting the longitudinal structure of the NLSY79 and random fluctuations in weather across interviews, we identify the effect of temperature in models with child-specific fixed effects. We find that short-run changes in temperature lead to statistically significant decreases in cognitive performance on math (but not reading) beyond 26C (78.8F). In contrast, our long-run analysis, which relies upon long-difference and rich cross-sectional models, reveals no statistically significant relationship between climate and human capital. This finding is consistent with the notion that adaptation, particularly compensatory behavior, plays a significant role in limiting the long run impacts from short run weather shocks.
Handle: RePEc:nbr:nberwo:21157
Template-Type: ReDIF-Paper 1.0
Title: Self-Fulfilling Debt Crises: Can Monetary Policy Really Help?
Classification-JEL: E52; E60; E63
Author-Name: Philippe Bacchetta
Author-Person: pba111
Author-Name: Elena Perazzi
Author-Name: Eric van Wincoop
Author-Person: pva387
Note: IFM ME PE
Number: 21158
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21158
File-URL: http://www.nber.org/papers/w21158.pdf
File-Format: application/pdf
Abstract: This paper examines quantitatively the potential for monetary policy to avoid self-fulfilling sovereign debt crises. We combine a version of the slow-moving debt crisis model proposed by Lorenzoni and Werning (2014) with a standard New Keynesian model. We consider both conventional and unconventional monetary policy. Under conventional policy the central bank can preclude a debt crisis through inflation, lowering the real interest rate and raising output. These reduce the real value of the outstanding debt and the cost of new borrowing, and increase tax revenues and seigniorage. Unconventional policies take the form of liquidity support or debt buyback policies that raise the monetary base beyond the satiation level. We find that generally the central bank cannot credibly avoid a self-fulfilling debt crisis. Conventional policies needed to avert a crisis require excessive inflation for a sustained period of time. Unconventional monetary policy can only be effective when the economy is at a structural ZLB for a sustained length of time.
Handle: RePEc:nbr:nberwo:21158
Template-Type: ReDIF-Paper 1.0
Title: Uncovered Interest Parity and Monetary Policy Near and Far from the Zero Lower Bound
Classification-JEL: E12; F21; F31; F41; F47
Author-Name: Menzie D. Chinn
Author-Person: pch129
Author-Name: Yi Zhang
Note: IFM
Number: 21159
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21159
File-URL: http://www.nber.org/papers/w21159.pdf
File-Format: application/pdf
Publication-Status: published as Menzie D. Chinn & Yi Zhang, 2018. "Uncovered Interest Parity and Monetary Policy Near and Far from the Zero Lower Bound," Open Economies Review, vol 29(1), pages 1-30.
Abstract: Relying upon a standard New Keynesian DSGE, we propose an explanation for two empirical findings in the international finance literature. First, the unbiasedness hypothesis – the proposition that expost exchange rate depreciation matches interest differentials – is rejected much more strongly at short horizons than at long. Second, even at long horizons, the unbiasedness hypothesis tends to be rejected when one of the currencies has experienced a long period of low interest rates, such as in Japan and Switzerland. Using a calibrated New Keynesian dynamic stochastic general equilibrium model, we show how a monetary policy rule can induce the negative (positive) correlation between depreciation and interest differentials at short (long) horizons. The tendency to reject unbiasedness for Japan and Switzerland even at long horizons we attribute to the interaction of the monetary reaction function and the zero lower bound.
Handle: RePEc:nbr:nberwo:21159
Template-Type: ReDIF-Paper 1.0
Title: Do Individuals Make Sensible Health Insurance Decisions? Evidence from a Menu with Dominated Options
Classification-JEL: D82; D89; I11; I13
Author-Name: Saurabh Bhargava
Author-Person: pbh79
Author-Name: George Loewenstein
Author-Person: plo51
Author-Name: Justin Sydnor
Note: EH
Number: 21160
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21160
File-URL: http://www.nber.org/papers/w21160.pdf
File-Format: application/pdf
Abstract: The recent expansion of health-plan choice has been touted as increasing competition and enabling people to choose plans that fit their needs. This study provides new evidence challenging these proposed benefits of expanded health-insurance choice. We examine health-insurance decisions of employees at a large U.S. firm where a new plan menu included a large share of financially dominated options. This menu offers a unique litmus test for evaluating choice quality since standard risk preferences and beliefs about one’s health cannot rationalize enrollment into the dominated plans. We find that a majority of employees – and in particular, older workers, women, and low earners – chose dominated options, resulting in substantial excess spending. Most employees would have fared better had they instead been enrolled in the single actuarially-best plan. In follow-up hypothetical-choice experiments, we observe similar choices despite far simpler menus. We find these choices reflect a severe deficit in health insurance literacy and naïve considerations of health risk and price, rather than a sensible comparison of plan value. Our results challenge the standard practice of inferring risk attitudes and assessing welfare from insurance choices, and raise doubts whether recent health reforms will deliver their promised benefits.
Handle: RePEc:nbr:nberwo:21160
Template-Type: ReDIF-Paper 1.0
Title: The Supply and Demand of S&P 500 Put Options
Classification-JEL: G10; G12; G13; G23
Author-Name: George M. Constantinides
Author-Person: pco144
Author-Name: Lei Lian
Note: AP
Number: 21161
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21161
File-URL: http://www.nber.org/papers/w21161.pdf
File-Format: application/pdf
Publication-Status: published as George M. Constantinides & Lei Lian, 2021. "The Supply and Demand of S&P 500 Put Options," Critical Finance Review, vol 10(1), pages 1-20.
Abstract: We document that the implied volatility skew of S&P 500 index puts is non-decreasing in the disaster index and risk-neutral variance, contrary to the implications of a broad class of no-arbitrage models. The key to the puzzle lies in recognizing that, as the disaster risk increases, customers demand more puts as insurance while market makers become more credit-constrained in writing puts. The resulting increase in the equilibrium price is more pronounced in out-of-the-money than in-the-money puts, thereby steepening the implied volatility skew and resolving the puzzle. Consistent with the data, the model also implies that the equilibrium net buy of puts is decreasing in the disaster index, variance, and their price. The data shows a significant decreasing relationship between the IV skew and the net buy and no relationship in other periods, also explained by the model.
Handle: RePEc:nbr:nberwo:21161
Template-Type: ReDIF-Paper 1.0
Title: Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence
Classification-JEL: E5; F02; F33; G15
Author-Name: Hélène Rey
Author-Person: pre8
Note: AP IFM ME
Number: 21162
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21162
File-URL: http://www.nber.org/papers/w21162.pdf
File-Format: application/pdf
Abstract: There is a global financial cycle in capital flows, asset prices and in credit growth. This cycle co‐moves with the VIX, a measure of uncertainty and risk aversion of the markets. Asset markets in countries with more credit inflows are more sensitive to the global cycle. The global financial cycle is not aligned with countries’ specific macroeconomic conditions. Symptoms can go from benign to large asset price bubbles and excess credit creation, which are among the best predictors of financial crises. A VAR analysis suggests that one of the determinants of the global financial cycle is monetary policy in the centre country, which affects leverage of global banks, capital flows and credit growth in the international financial system. Whenever capital is freely mobile, the global financial cycle constrains national monetary policies regardless of the exchange rate regime. For the past few decades, international macroeconomics has postulated the “trilemma”: with free capital mobility, independent monetary policies are feasible if and only if exchange rates are floating. The global financial cycle transforms the trilemma into a “dilemma” or an “irreconcilable duo”: independent monetary policies are possible if and only if the capital account is managed. So should policy restrict capital mobility? Gains to international capital flows have proved elusive whether in calibrated models or in the data. Large gross flows disrupt asset markets and financial intermediation, so the costs may be very large. To deal with the global financial cycle and the “dilemma”, we have the following policy options: ( a) targeted capital controls; (b) acting on one of the sources of the financial cycle itself, the monetary policy of the Fed and other main central banks; (c) acting on the transmission channel cyclically by limiting credit growth and leverage during the upturn of the cycle, using national macroprudential policies; (d) acting on the transmission channel structurally by imposing stricter limits on leverage for all financial intermediaries.
Handle: RePEc:nbr:nberwo:21162
Template-Type: ReDIF-Paper 1.0
Title: Can helping the sick hurt the able? Incentives, information and disruption in a disability-related welfare reform
Classification-JEL: H53; I13; I38; J14; J18; J64
Author-Name: Nitika Bagaria
Author-Name: Barbara Petrongolo
Author-Person: ppe484
Author-Name: John Van Reenen
Author-Person: pva45
Note: LS
Number: 21163
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21163
File-URL: http://www.nber.org/papers/w21163.pdf
File-Format: application/pdf
Abstract: Disability rolls have escalated in developed nations over the last 40 years. The UK, however, stands out because the numbers on these benefits stopped rising when a welfare reform was introduced that integrated disability benefits with unemployment insurance (UI). This policy reform improved job information and sharpened bureaucratic incentives to find jobs for the disabled (relative to those on UI). We exploit the fact that policy was rolled-out quasi-randomly across geographical areas. In the long-run the policy improved the outflows from disability benefits by 6% and had an (insignificant) 1% increase in unemployment outflows. This is consistent with a model where information helps both groups, but bureaucrats were given incentives to shift effort towards helping the disabled find jobs and away from helping the unemployed. Interestingly, in the short-run the policy had a negative impact for both groups, suggesting important disruption effects. We estimate that it takes about six years for the estimated benefits of the reform to exceed its costs, which is beyond the time horizon of most policy-makers.
Handle: RePEc:nbr:nberwo:21163
Template-Type: ReDIF-Paper 1.0
Title: How You Export Matters: Export Mode, Learning and Productivity in China
Classification-JEL: F13; F14; L1
Author-Name: Xue Bai
Author-Person: pba1294
Author-Name: Kala Krishna
Author-Person: pkr26
Author-Name: Hong Ma
Note: ITI
Number: 21164
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21164
File-URL: http://www.nber.org/papers/w21164.pdf
File-Format: application/pdf
Publication-Status: published as Bai, Xue & Krishna, Kala & Ma, Hong, 2017. "How you export matters: Export mode, learning and productivity in China," Journal of International Economics, Elsevier, vol. 104(C), pages 122-137.
Abstract: This paper shows that how firms export (directly or indirectly via intermediaries) matters. We develop and estimate a dynamic discrete choice model that allows learning-by-exporting on the cost and demand side as well as sunk/fixed costs to differ by export mode. We find that demand and productivity evolve more favorably under direct exporting, though the fixed/sunk costs of this option are higher. Our results suggest that had China not liberalized its direct trading rights when it joined the WTO, its exports and export participation would have been 30 and 37 percent lower respectively.
Handle: RePEc:nbr:nberwo:21164
Template-Type: ReDIF-Paper 1.0
Title: Skill Biased Structural Change
Classification-JEL: E02; J2
Author-Name: Francisco J. Buera
Author-Person: pbu242
Author-Name: Joseph P. Kaboski
Author-Person: pka175
Author-Name: Richard Rogerson
Author-Person: pro53
Note: EFG
Number: 21165
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21165
File-URL: http://www.nber.org/papers/w21165.pdf
File-Format: application/pdf
Publication-Status: published as Francisco J Buera & Joseph P Kaboski & Richard Rogerson & Juan I Vizcaino & Dirk Krueger, 2022. "Skill-Biased Structural Change," The Review of Economic Studies, vol 89(2), pages 592-625.
Abstract: We document for a broad panel of advanced economies that increases in GDP per capita are associated with a shift in the composition of value added to sectors that are intensive in high-skill labor. It follows that further development in these economies leads to an increase in the relative demand for skilled labor. We develop a two-sector model of this process and use it to assess the contribution of this process of skill-biased structural change to the rise of the skill premium in the US, and a broad panel of advanced economies, over the period 1977 to 2005. We find that these compositional demands account for between 25 and 30% of the overall increase of the skill premium due to technical change.
Handle: RePEc:nbr:nberwo:21165
Template-Type: ReDIF-Paper 1.0
Title: Days to Cover and Stock Returns
Classification-JEL: G12
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Weikai Li
Author-Name: Sophie X. Ni
Author-Name: Jose A. Scheinkman
Author-Person: psc26
Author-Name: Philip Yan
Note: AP
Number: 21166
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21166
File-URL: http://www.nber.org/papers/w21166.pdf
File-Format: application/pdf
Abstract: The short ratio - shares shorted to shares outstanding - is an oft-used measure of arbitrageurs’ opinion about a stock’s over-valuation. We show that days-to-cover (DTC), which divides a stock’s short ratio by its average daily share turnover, is a more theoretically well-motivated measure because trading costs vary across stocks. Since turnover falls with trading costs, DTC is approximately the marginal cost of the shorts. At the arbitrageurs’ optimum it equals the marginal benefit, which is their opinion about over-valuation. DTC is a better predictor of poor stock returns than short ratio. A long-short strategy using DTC generates a 1.2% monthly return.
Handle: RePEc:nbr:nberwo:21166
Template-Type: ReDIF-Paper 1.0
Title: Market Definition, Market Power
Classification-JEL: D42; K21; L12; L40
Author-Name: Louis Kaplow
Author-Person: pka44
Note: IO
Number: 21167
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21167
File-URL: http://www.nber.org/papers/w21167.pdf
File-Format: application/pdf
Publication-Status: published as Louis Kaplow, 2015. "Market definition, market power," International Journal of Industrial Organization, vol 43, pages 148-161.
Abstract: Market definition and market power are central features of competition law and practice but pose serious challenges. On one hand, market definition suffers decisive logical infirmities that render it infeasible, unnecessary, and counterproductive, and the practice of stating market power requirements as market share threshold tests is incoherent as a matter of empirics and policy. On the other hand, market power is often probative of the desirability of liability, yet the typically assumed functional relationship is unexplored and often implausible. These latter deficiencies are addressed through a ground-up analysis of the channels by which market power can be relevant. It is important to explicitly and simultaneously consider both anticompetitive and procompetitive explanations for challenged practices and to attend to the magnitudes of the social consequences of correct and mistaken imposition of liability in order to identify the various ways and senses in which market power bears on optimal decision-making.
Handle: RePEc:nbr:nberwo:21167
Template-Type: ReDIF-Paper 1.0
Title: Liquidity in Retirement Savings Systems: An International Comparison
Classification-JEL: D14; F61; H3; H31
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: Joshua Hurwitz
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Note: AG IFM
Number: 21168
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21168
File-URL: http://www.nber.org/papers/w21168.pdf
File-Format: application/pdf
Publication-Status: published as John Beshears & James J. Choi & Joshua Hurwitz & David Laibson & Brigitte C. Madrian, 2015. "Liquidity in Retirement Savings Systems: An International Comparison," American Economic Review, American Economic Association, vol. 105(5), pages 420-25, May.
Publication-Status: published as Liquidity in Retirement Savings Systems: An International Comparison, John Beshears, James J. Choi, Joshua Hurwitz, David Laibson, Brigitte C. Madrian. in Insights in the Economics of Aging, Wise. 2017
Abstract: What is the socially optimal level of liquidity in a retirement savings system? Liquid retirement savings are desirable because liquidity enables agents to flexibly respond to pre-retirement events that raise the marginal utility of consumption. On the other hand, pre-retirement liquidity is undesirable when it leads to under-saving arising from, for example, planning mistakes or self-control problems. This paper compares the liquidity that six developed economies have built into their employer-based defined contribution (DC) retirement savings systems. We find that all of them, with the sole exception of the United States, have made their DC systems overwhelmingly illiquid before age 55.
Handle: RePEc:nbr:nberwo:21168
Template-Type: ReDIF-Paper 1.0
Title: Social Networks, Reputation and Commitment: Evidence from a Savings Monitors Experiment
Classification-JEL: D14; D83; L14; O16; Z13
Author-Name: Emily Breza
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Note: CF DEV LS
Number: 21169
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21169
File-URL: http://www.nber.org/papers/w21169.pdf
File-Format: application/pdf
Abstract: We conduct a field experiment with 1,300 participants in India to measure whether individuals save more when information about their savings is regularly shared with another member of their village (a “monitor”). We focus on whether the monitor's effectiveness depends on her social network position, as central monitors may be better able to disseminate information, and more proximate monitors may be more likely to pass information to individuals who interact with the saver most frequently. In 30 villages, we randomly assign monitors to a subset of savers. An average monitor increases total savings by 35%. Increasing the monitor’s network centrality by one standard deviation increases savings by 14%, and increasing proximity from social distance three to two increases savings by 16%. Supporting the information-based mechanism, 63% of monitors report telling others about the saver’s progress. Further, over a year later, villagers are more likely to know if the saver exceeded her goal and to think that the saver is responsible if the saver was randomly assigned to a more central monitor. We also provide evidence that the increase in savings persists over a year after the intervention’s end, and that monitored savers can better respond to shocks. In the remaining 30 villages, savers choose their own monitors. We find that savers choose monitors who are both proximate and central in the network. Finally, we find evidence of spillovers from monitored savers onto their non-monitored friends, suggesting another channel through which social networks influence savings decisions.
Handle: RePEc:nbr:nberwo:21169
Template-Type: ReDIF-Paper 1.0
Title: Do ‘Cheeseburger Bills’ Work? Effects of Tort Reform for Fast Food
Classification-JEL: I12; I18; K13
Author-Name: Christopher S. Carpenter
Author-Person: pca802
Author-Name: D. Sebastian Tello-Trillo
Author-Person: pte312
Note: EH LE
Number: 21170
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21170
File-URL: http://www.nber.org/papers/w21170.pdf
File-Format: application/pdf
Publication-Status: published as Christopher S. Carpenter & D. Sebastian Tello-Trillo, 2015. "Do Cheeseburger Bills Work? Effects of Tort Reform for Fast Food," The Journal of Law and Economics, vol 58(4), pages 805-827.
Abstract: After highly publicized lawsuits against McDonald’s in 2002, 26 states adopted Commonsense Consumption Acts (CCAs) – aka ‘Cheeseburger Bills’ – that greatly limit fast food companies’ liability for weight-related harms. We provide the first evidence of the effects of CCAs using plausibly exogenous variation in the timing of CCA adoption across states. In two-way fixed effects models, we find that CCAs significantly increased stated attempts to lose weight and consumption of fruits and vegetables among heavy individuals. We also find some evidence that CCAs increased employment in fast food. Finally, we find that CCAs significantly increased the number of company-owned McDonald’s restaurants and decreased the number of franchise-owned McDonald’s restaurants in a state. Overall our results provide novel evidence supporting a key prediction of tort reform – that it should induce individuals to take more care – and show that industry-specific tort reforms can have meaningful effects on market outcomes.
Handle: RePEc:nbr:nberwo:21170
Template-Type: ReDIF-Paper 1.0
Title: Kingpin Approaches to Fighting Crime and Community Violence: Evidence from Mexico's Drug War
Classification-JEL: I18; K42; O12
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: María Padilla-Romo
Note: DEV EH PE
Number: 21171
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21171
File-URL: http://www.nber.org/papers/w21171.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & María Padilla-Romo, 2018. "Kingpin Approaches to Fighting Crime and Community Violence: Evidence from Mexico's Drug War," Journal of Health Economics, .
Abstract: This study considers the effects of the kingpin strategy, an approach to fighting organized crime in which law-enforcement efforts focus on capturing the leaders of criminal organizations, on community violence in the context of Mexico's drug war. Newly constructed historical data on drug-trafficking organizations' areas of operation at the municipality level and monthly homicide data allow us to control for a rich set of fixed effects and to leverage variation in the timing of kingpin captures to estimate their effects. This analysis indicates that kingpin captures have large and sustained effects on the homicide rate in the municipality of capture and smaller but significant effects on other municipalities where the kingpin's organization has a presence, supporting the notion that removing kingpins can have destabilizing effects throughout an organization that are accompanied by escalations in violence.
Handle: RePEc:nbr:nberwo:21171
Template-Type: ReDIF-Paper 1.0
Title: Financial Flows and the International Monetary System
Classification-JEL: E5; F3
Author-Name: Evgenia Passari
Author-Name: Hélène Rey
Author-Person: pre8
Note: AP IFM ME
Number: 21172
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21172
File-URL: http://www.nber.org/papers/w21172.pdf
File-Format: application/pdf
Publication-Status: published as Evgenia Passari & Hélène Rey, 2015. "Financial Flows and the International Monetary System," Economic Journal, Royal Economic Society, vol. 0(584), pages 675-698, 05.
Abstract: We review the findings of the literature on the benefits of international financial flows and find that they are quantitatively elusive. We then present evidence on the existence of a global cycle in gross cross border flows, asset prices and leverage and discuss its impact on monetary policy autonomy across different exchange rate regimes. We focus in particular on the effect of US monetary policy shocks on the UK's financial conditions.
Handle: RePEc:nbr:nberwo:21172
Template-Type: ReDIF-Paper 1.0
Title: Maintaining Central-Bank Financial Stability under New-Style Central Banking
Classification-JEL: E42; E58
Author-Name: Robert E. Hall
Author-Name: Ricardo Reis
Author-Person: pre73
Note: EFG ME
Number: 21173
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21173
File-URL: http://www.nber.org/papers/w21173.pdf
File-Format: application/pdf
Abstract: Since 2008, the central banks of advanced countries have borrowed trillions of dollars from their commercial banks in the form of interest-paying reserves and invested the proceeds in portfolios of risky assets. We investigate how this new style of central banking affects central banks' solvency. A central bank is insolvent if its requirement to pay dividends to its government exceeds its income by enough to cause an unending upward drift in its debts to commercial banks. We consider three sources of risk to central banks: interest-rate risk (the Federal Reserve), default risk (the European Central Bank), and exchange-rate risk (central banks of small open economies). We find that a central bank that pays dividends equal to a standard concept of net income will always be solvent—its reserve obligations will not explode. In some circumstances, the dividend will be negative, meaning that the government is making a payment to the bank. If the charter does not provide for payments in that direction, then reserves will tend to grow more in crises than they shrink in normal times. To prevent this buildup, the charter needs to provide for makeup reductions in payments from the bank to the government. We compute measures of the financial strength of central banks, and discuss how different institutions interact with quantitative easing policies to put these banks in less or more danger of instability. We conclude that the risks to financial stability are real in theory, but remote in practice today.
Handle: RePEc:nbr:nberwo:21173
Template-Type: ReDIF-Paper 1.0
Title: Misperceiving Inequality
Classification-JEL: D31; D63; D83; H24; I30; P16
Author-Name: Vladimir Gimpelson
Author-Person: pgi142
Author-Name: Daniel Treisman
Author-Person: ptr286
Note: POL
Number: 21174
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21174
File-URL: http://www.nber.org/papers/w21174.pdf
File-Format: application/pdf
Publication-Status: published as Vladimir Gimpelson & Daniel Treisman, 2018. "Misperceiving inequality," Economics & Politics, vol 30(1), pages 27-54.
Abstract: A vast literature suggests that economic inequality has important consequences for politics and public policy. Higher inequality is thought to increase demand for income redistribution in democracies and to discourage democratization and promote class conflict and revolution in dictatorships. Most such arguments crucially assume that ordinary people know how high inequality is, how it has been changing, and where they fit in the income distribution. Using a variety of large, cross-national surveys, we show that, in recent years, ordinary people have had little idea about such things. What they think they know is often wrong. Widespread ignorance and misperceptions emerge robustly, regardless of data source, operationalization, and measurement method. Moreover, perceived inequality—not the actual level—correlates strongly with demand for redistribution and reported conflict between rich and poor. We suggest that most theories about political effects of inequality need to be reframed as theories about effects of perceived inequality.
Handle: RePEc:nbr:nberwo:21174
Template-Type: ReDIF-Paper 1.0
Title: Foreign and Native Skilled Workers: What Can We Learn from H-1B Lotteries?
Classification-JEL: F22; J61; O33; R10
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Kevin Shih
Author-Person: psh619
Author-Name: Chad Sparber
Author-Person: psp70
Note: ITI LS PR
Number: 21175
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21175
File-URL: http://www.nber.org/papers/w21175.pdf
File-Format: application/pdf
Abstract: In April of 2007 and 2008, the U.S. randomly allocated 65,000 H-1B temporary work permits to foreign-born skilled workers. About 88,000 requests for computer-related H-1B permits were declined in each of those two years. This paper exploits random H-1B variation across U.S. cities to analyze how these supply shocks affected labor market outcomes for computer-related workers. We find that negative H-1B supply shocks are robustly associated with declines in foreign-born computer-related employment, while native-born computer employment either falls or remains constant. Most of the correlation between H-1B supply shocks and foreign employment is due to rationing that varies with a city's initial dependence upon H-1B workers. Variation in random, lottery-driven, unexpected shocks is too small to identify significant effects on foreign employment in the full sample of cities. However, we do find that random rationing affects foreign employment in cities that are highly dependent upon the H-1B program. Altogether, the results support the existence of complementarities between native and foreign-born H-1B computer workers.
Handle: RePEc:nbr:nberwo:21175
Template-Type: ReDIF-Paper 1.0
Title: Retail Globalization and Household Welfare: Evidence from Mexico
Classification-JEL: F15; F23; F63; O24
Author-Name: David Atkin
Author-Name: Benjamin Faber
Author-Person: pfa662
Author-Name: Marco Gonzalez-Navarro
Author-Person: pgo372
Note: DEV ITI
Number: 21176
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21176
File-URL: http://www.nber.org/papers/w21176.pdf
File-Format: application/pdf
Publication-Status: published as David Atkin & Benjamin Faber & Marco Gonzalez-Navarro, 2018. "Retail Globalization and Household Welfare: Evidence from Mexico," Journal of Political Economy, vol 126(1), pages 1-73.
Abstract: The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare. The richness of the microdata allows us to estimate a general expression for the gains from retail FDI, and to decompose these gains into several distinct channels. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. About one quarter of this price index effect is due to pro-competitive effects on the prices charged by domestic stores, with the remaining three quarters due to the direct consumer gains from shopping at the new foreign stores. In contrast, we find little evidence of significant changes in average municipality-level incomes or employment. We do, however, find evidence of store exit, adverse effects on domestic store profits and reductions in the incomes of traditional retail sector workers. We also show that the gains from retail FDI are on average positive for all income groups but regressive, and quantify the opposing forces that underlie this finding. Finally, we find that the estimated gains are specific to foreign entry, rather than being driven by the entry of modern store formats more generally.
Handle: RePEc:nbr:nberwo:21176
Template-Type: ReDIF-Paper 1.0
Title: Optimal Income, Education, and Bequest Taxes in an Intergenerational Model
Classification-JEL: H21; H24; H31; I24
Author-Name: Stefanie Stantcheva
Author-Person: pst824
Note: PE
Number: 21177
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21177
File-URL: http://www.nber.org/papers/w21177.pdf
File-Format: application/pdf
Abstract: This paper considers dynamic optimal income, education, and bequest taxes in a Barro-Becker dynastic setup. Parents can transfer resources to their children in two ways: First, through education investments, which have heterogeneous and stochastic returns for children, and, second, through financial bequests, which yield a safe, uniform return. Each generation’s productivity and preferences are subject to idiosyncratic shocks. I derive optimal linear formulas for each tax, as functions of estimable sufficient statistics, robust to underlying heterogeneities in preferences, and at any given level of all other taxes. It is in general not optimal to make education expenses fully tax deductible and the optimal education subsidy, income tax and bequest tax can, but need not, move together at the optimum. I also show how to derive optimal formulas using “reform-specific elasticities” that can be targeted to empirical estimates from existing reforms. I extend the model to an OLG model with altruism to study the effects of credit constraints on optimal policies. Finally, I solve for the fully unrestricted policies and show that, if education is highly complementary to children’s ability, it is optimal to distort parents’ trade-off between education and bequests and to tax education investments relative to bequests.
Handle: RePEc:nbr:nberwo:21177
Template-Type: ReDIF-Paper 1.0
Title: Thinking, Fast and Slow? Some Field Experiments to Reduce Crime and Dropout in Chicago
Classification-JEL: C91; C93; D03; D1; I24; I3; I32; K42
Author-Name: Sara B. Heller
Author-Name: Anuj K. Shah
Author-Name: Jonathan Guryan
Author-Person: pgu126
Author-Name: Jens Ludwig
Author-Name: Sendhil Mullainathan
Author-Person: pmu103
Author-Name: Harold A. Pollack
Note: CH ED
Number: 21178
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21178
File-URL: http://www.nber.org/papers/w21178.pdf
File-Format: application/pdf
Publication-Status: Forthcoming in the Quarterly Journal of Economics
Abstract: We present the results of three large-scale randomized controlled trials (RCTs) carried out in Chicago, testing interventions to reduce crime and dropout by changing the decision-making of economically disadvantaged youth. We study a program called Becoming a Man (BAM), developed by the non-profit Youth Guidance, in two RCTs implemented in 2009–10 and 2013– 15. In the two studies participation in the program reduced total arrests during the intervention period by 28–35%, reduced violent-crime arrests by 45–50%, improved school engagement, and in the first study where we have follow-up data, increased graduation rates by 12–19%. The third RCT tested a program with partially overlapping components carried out in the Cook County Juvenile Temporary Detention Center (JTDC), which reduced readmission rates to the facility by 21%. These large behavioral responses combined with modest program costs imply benefit-cost ratios for these interventions from 5-to-1 up to 30-to-1 or more. Our data on mechanisms are not ideal, but we find no positive evidence that these effects are due to changes in emotional intelligence or social skills, self-control or “grit,” or a generic mentoring effect. We find suggestive support for the hypothesis that the programs work by helping youth slow down and reflect on whether their automatic thoughts and behaviors are well suited to the situation they are in, or whether the situation could be construed differently.
Handle: RePEc:nbr:nberwo:21178
Template-Type: ReDIF-Paper 1.0
Title: A Tractable Model of Monetary Exchange with Ex-post Heterogeneity
Classification-JEL: E0; E41; E52
Author-Name: Guillaume Rocheteau
Author-Person: pro264
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Author-Name: Tsz-Nga Wong
Author-Person: pwo181
Note: EFG ME
Number: 21179
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21179
File-URL: http://www.nber.org/papers/w21179.pdf
File-Format: application/pdf
Abstract: We construct a continuous-time, pure currency economy with the following three key features. First, our modelled economy incorporates idiosyncratic uncertainty—households receive infrequent and random opportunities of lumpy consumption—and displays an endogenous, non-degenerate distribution of money holdings. Second, the model is tractable: properties of equilibria can be obtained analytically, and equilibria can be solved in closed form in a variety of cases. Third, it admits as a special, limiting case the quasi-linear economy of Lagos and Wright (2005) and Rocheteau and Wright (2005). We use our modeled economy to obtain new insights into the effects of anticipated inflation on individual spending behavior, the social benefits and output effects of inflationary transfer schemes, and transitional dynamics following unanticipated monetary shocks.
Handle: RePEc:nbr:nberwo:21179
Template-Type: ReDIF-Paper 1.0
Title: Personalities and Public Sector Performance: Evidence from a Health Experiment in Pakistan
Classification-JEL: C93; D02; D73; H11; O31
Author-Name: Michael Callen
Author-Person: pca868
Author-Name: Saad Gulzar
Author-Name: Ali Hasanain
Author-Name: Muhammad Yasir Khan
Author-Name: Arman Rezaee
Note: DEV POL
Number: 21180
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21180
File-URL: http://www.nber.org/papers/w21180.pdf
File-Format: application/pdf
Abstract: This paper provides evidence that the personalities of policymakers matter for policy. Three results support the relevance of personalities for policy. First, doctors with higher Big Five and Perry Public Sector Motivation scores attend work more and falsify inspection reports less. Second, health inspectors who score higher on these measures exhibit larger treatment responses to increased monitoring. Last, senior health officials with higher personality scores respond more to data on staff absence by compelling better subsequent attendance. These results suggest that interpersonal differences matter are consequential for state performance.
Handle: RePEc:nbr:nberwo:21180
Template-Type: ReDIF-Paper 1.0
Title: The U.S. listing gap
Classification-JEL: G15; G20; G24; G30; G34; G38; O16
Author-Name: Craig Doidge
Author-Name: G. Andrew Karolyi
Author-Person: pka329
Author-Name: René M. Stulz
Note: CF
Number: 21181
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21181
File-URL: http://www.nber.org/papers/w21181.pdf
File-Format: application/pdf
Publication-Status: published as Craig Doidge & G. Andrew Karolyi & René M. Stulz, 2017. "The U.S. listing gap," Journal of Financial Economics, vol 123(3), pages 464-487.
Abstract: The U.S. had 14% fewer exchange-listed firms in 2012 than in 1975. Relative to other countries, the U.S. now has abnormally few listed firms given its level of development and the quality of its institutions. We call this the “U.S. listing gap” and investigate possible explanations for it. We rule out industry changes, changes in listing requirements, and the reforms of the early 2000s as explanations for the gap. We show that the probability that a firm is listed has fallen since the listing peak in 1996 for all firm size categories though more so for smaller firms. From 1997 to the end of our sample period in 2012, the new list rate is low and the delist rate is high compared to U.S. history and to other countries. High delists account for roughly 46% of the listing gap and low new lists for 54%. The high delist rate is explained by an unusually high rate of acquisitions of publicly-listed firms compared to previous U.S. history and to other countries.
Handle: RePEc:nbr:nberwo:21181
Template-Type: ReDIF-Paper 1.0
Title: The Price of Variance Risk
Classification-JEL: E44; G12
Author-Name: Ian Dew-Becker
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Anh Le
Author-Name: Marius Rodriguez
Author-Person: pro710
Note: AP EFG ME
Number: 21182
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21182
File-URL: http://www.nber.org/papers/w21182.pdf
File-Format: application/pdf
Publication-Status: published as Dew-Becker, Ian & Giglio, Stefano & Le, Anh & Rodriguez, Marius, 2017. "The price of variance risk," Journal of Financial Economics, Elsevier, vol. 123(2), pages 225-250.
Abstract: In the period 1996-2014, the average investor in the variance swap market was indifferent to news about future variance at horizons ranging from 1 month to 14 years. It is only purely transitory and unexpected realized variance that were priced. These results present a challenge to most structural models of the variance risk premium, such as the intertemporal CAPM, recent models with Epstein-Zin preferences and long-run risks, and models where institutional investors have value-at-risk constraints. The results also have strong implications for macro models where volatility affects investment decisions, suggesting that investors are not willing to pay to hedge shocks in expected economic uncertainty.
Handle: RePEc:nbr:nberwo:21182
Template-Type: ReDIF-Paper 1.0
Title: Mothers' Employment and Children's Educational Gender Gap
Classification-JEL: I2; J2
Author-Name: Xiaodong Fan
Author-Person: pfa517
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Simen Markussen
Author-Person: pma1399
Note: ED LS PE
Number: 21183
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21183
File-URL: http://www.nber.org/papers/w21183.pdf
File-Format: application/pdf
Abstract: This paper analyzes the connection between two concurrent trends since 1950: the narrowing and reversal of the educational gender gap and the increased labor force participation rate (LFPR) of married women. We hypothesize that the education production for boys is more adversely affected by a decrease in the mother's time input as a result of increasing employment. Therefore, an increase in the labor force participation rate of married women may narrow and even reverse the educational gender gap in the following generation. We use micro data from the Norwegian registry to directly show that the mother's employment during her children's childhood has an asymmetric effect on the educational achievement of her own sons and daughters. We also document a positive correlation between the educational gender gap in a particular generation and the LFPR of married women in the previous generation at the U.S. state level. We then propose a model that generates a novel prediction about the implications of these asymmetric effects on the mothers' labor supply decisions and find supporting evidence in both the U.S. and Norwegian data.
Handle: RePEc:nbr:nberwo:21183
Template-Type: ReDIF-Paper 1.0
Title: Neighborhood Sanitation and Infant Mortality
Classification-JEL: H23; H41; I1; I12; I15; O1; O15
Author-Name: Michael Geruso
Author-Name: Dean Spears
Author-Person: psp166
Note: CH DEV EH PE
Number: 21184
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21184
File-URL: http://www.nber.org/papers/w21184.pdf
File-Format: application/pdf
Publication-Status: published as Michael Geruso & Dean Spears, 2018. "Neighborhood Sanitation and Infant Mortality," American Economic Journal: Applied Economics, vol 10(2), pages 125-162.
Abstract: In this paper, we shed new light on a long-standing puzzle: In India, Muslim children are substantially more likely than Hindu children to survive to their first birthday, even though Indian Muslims have lower wealth, consumption, educational attainment, and access to state services. Contrary to the prior literature, we show that the observed mortality advantage accrues not to Muslim households themselves but rather to their neighbors, who are also likely to be Muslim. Investigating mechanisms, we provide a collage of evidence suggesting externalities due to poor sanitation are a channel linking the religious composition of neighborhoods to infant mortality.
Handle: RePEc:nbr:nberwo:21184
Template-Type: ReDIF-Paper 1.0
Title: Ghost-House Busters: The Electoral Response to a Large Anti Tax Evasion Program
Classification-JEL: D72; H26
Author-Name: Lorenzo Casaburi
Author-Name: Ugo Troiano
Author-Person: ptr194
Note: PE POL
Number: 21185
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21185
File-URL: http://www.nber.org/papers/w21185.pdf
File-Format: application/pdf
Publication-Status: published as Lorenzo Casaburi & Ugo Troiano, 2016. "Ghost-House Busters: The Electoral Response to a Large Anti–Tax Evasion Program," The Quarterly Journal of Economics, Oxford University Press, vol. 131(1), pages 273-314.
Abstract: The incentives of political agents to enforce tax collection are key determinants of the levels of compliance. We study the electoral response to the Ghost Buildings program, a nationwide anti-tax evasion policy in Italy that used innovative monitoring technologies to target buildings hidden from tax authorities. The program induced monetary and non-monetary benefits for non-evaders. A one standard deviation increase in town-level program intensity leads to a 4.8 percent increase in local incumbent reelection rates. In addition, these political returns are higher in areas with lower tax evasion tolerance and with higher efficiency of public good provision, implying complementarity among enforcement policies, the underlying tax culture, and the quality of the government.
Handle: RePEc:nbr:nberwo:21185
Template-Type: ReDIF-Paper 1.0
Title: Rigidity of Public Contracts
Classification-JEL: D23; D73; D78; H57; K23
Author-Name: Marian Moszoro
Author-Person: pmo1093
Author-Name: Pablo T. Spiller
Author-Person: psp34
Author-Name: Sebastian Stolorz
Author-Person: pst174
Note: LE
Number: 21186
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21186
File-URL: http://www.nber.org/papers/w21186.pdf
File-Format: application/pdf
Publication-Status: published as Marian Moszoro & Pablo T. Spiller & Sebastian Stolorz, 2016. "Rigidity of Public Contracts," Journal of Empirical Legal Studies, vol 13(3), pages 396-427.
Abstract: We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call "public contracts") with relational private contracts. We show that public contracts are lengthier and have more rule-based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents attempting to lower third-party opportunistic challenges.
Handle: RePEc:nbr:nberwo:21186
Template-Type: ReDIF-Paper 1.0
Title: Regulating Internalities
Classification-JEL: D03; D04; D10; D18; D61; D83; H21; K0; K20; L51; L94; Q48
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Cass R. Sunstein
Author-Person: psu474
Note: EEE
Number: 21187
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21187
File-URL: http://www.nber.org/papers/w21187.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Cass R. Sunstein, 2015. "REGULATING INTERNALITIES," Journal of Policy Analysis and Management, vol 34(3), pages 698-705.
Abstract: This paper offers a framework for regulating internalities. Using a simple economic model, we provide four principles for designing and evaluating behaviorally-motivated policy. We then outline rules for determining which contexts reliably reflect true preferences and discuss empirical strategies for measuring internalities. As a case study, we focus on energy efficiency policy, including Corporate Average Fuel Economy (CAFE) standards and appliance and lighting energy efficiency standards.
Handle: RePEc:nbr:nberwo:21187
Template-Type: ReDIF-Paper 1.0
Title: Political Bonds: Political Hazards and the Choice of Municipal Financial Instruments
Classification-JEL: D23; D73; D78; H57; K23
Author-Name: Abhay Aneja
Author-Name: Marian Moszoro
Author-Person: pmo1093
Author-Name: Pablo T. Spiller
Author-Person: psp34
Note: LE
Number: 21188
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21188
File-URL: http://www.nber.org/papers/w21188.pdf
File-Format: application/pdf
Abstract: We study the link between the choice of rule-based public contracts and political hazards using the municipal bond market. While general obligation bonds are serviced from all municipal revenue streams and offer elected officials financial flexibility, revenue bonds limit the discretion that political agents have in repaying debt as well as the use of revenues from the projects financed by the debt. We predict that public officials choose revenue bonds when elections are very contested to signal trustworthiness and transparency in contracting to the voter. We test this hypothesis on municipal finance data that includes 6,500 bond issuances nationwide as well as election data on over 400 cities over 20 years. We provide evidence that in politically contested cities, mayors are more likely to issue revenue bonds. The correlation is economically significant: a close victory margin of winning candidates and more partisan swings increases the probability of debt being issued as a revenue bond by 3–15% and the probability of issuing bonds through competitive bids by 7%. We test a few additional hypotheses that strengthen the argument that the choice of revenue bonds is a political risk adaptation of public agents so as to signal commitment and lower the likelihood of successful political challenges of misuse of funds.
Handle: RePEc:nbr:nberwo:21188
Template-Type: ReDIF-Paper 1.0
Title: New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part I. The Wealth Residual
Classification-JEL: D31; E21; E22
Author-Name: Joseph E. Stiglitz
Note: POL
Number: 21189
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21189
File-URL: http://www.nber.org/papers/w21189.pdf
File-Format: application/pdf
Abstract: The paper identifies, and then resolves, a number of seeming puzzles in a newly identified set of stylized facts entailing movements in factor returns and shares and the wealth-income ratio. Standard data on savings cannot be reconciled with the increase in the wealth-income ratio: there is a wealth residual. An important component of this is associated with rents: land rents, exploitation rents, and returns on intellectual property. Nor can these stylized facts be reconciled with a standard neoclassical model, focusing on labor and capital, even taking into account technological change (including skill-biased technological change), with appropriately defined aggregates. Explaining why the concepts of “capital” and “wealth” are distinct, we show that appropriately defined aggregates for wealth may be (and in the case of some countries appear to be) moving in opposite directions. We identify some of the factors that may have contributed to the increase in rents and the divergence between wealth and capital. Subsequent Parts of this paper will investigate some of these factors in detail and relate them to changes in inequality.
Handle: RePEc:nbr:nberwo:21189
Template-Type: ReDIF-Paper 1.0
Title: New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part II: Equilibrium Wealth Distributions
Classification-JEL: D31; E21; E22
Author-Name: Joseph E. Stiglitz
Note: POL
Number: 21190
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21190
File-URL: http://www.nber.org/papers/w21190.pdf
File-Format: application/pdf
Abstract: This paper investigates the determination of the equilibrium distribution of income and wealth among individuals within a simple equilibrium growth model, where there is consistency between the movements of aggregate variables and the savings, bequest, and reproduction behavior of individuals. It describes centrifugal and centripetal forces, (leading to more or less unequal distributions), identifies the factors that may have contributed to the observed increase in inequality, and provides explicit expressions for the level of tail-inequality in terms of the underlying parameters of the economy and policy variables. Among the key results are: (i) The magnitude of wealth inequality does not, in general depend on the difference between the rate of interest (r) and the rate of growth (g); the former is itself an endogenous variable that needs to be explained. In the standard generalization of the Solow model, in the long run not only is r < g, but sr < g (where s is the savings rate). (ii) An increase in capital taxation may be (and in some of the central models is) fully shifted, and so may not lead to lower levels of inequality. (iii) If the capital tax is progressive and/or the proceeds go to public investment, wealth inequality may be reduced the well-being of workers may be increased.
Handle: RePEc:nbr:nberwo:21190
Template-Type: ReDIF-Paper 1.0
Title: New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part III: Life Cycle Savings vs. Inherited Savings
Classification-JEL: D31; D91; E21; E22
Author-Name: Joseph E. Stiglitz
Note: POL
Number: 21191
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21191
File-URL: http://www.nber.org/papers/w21191.pdf
File-Format: application/pdf
Abstract: This paper extends the standard life cycle model to a world in which there are also capitalists. We obtain simple formulae describing the equilibrium fraction of wealth held by life-cycle savers. Using these formulae, we ascertain the effects of tax policy or changes in the parameters of the economy. The relative role of life cycle savings increases with the rate of growth and with the relative savings rate of life-cycle savers and capitalists. An increase in the savings rate of workers has no effect on output per capita; life cycle savings simply crowds out inherited savings. A tax on capital (even if proceeds are paid out to workers) is so shifted that capitalists are unaffected and that workers’ income (after transfers) and their share in national wealth are reduced. If the government invests the proceeds, the share of capital owned by life cycle savers may increase. We extend the analysis to endogenously derive the distribution of the population between life cycle savers and capitalists, in a model in which all individuals have identical non-linear savings functions. When wealth is low enough, bequests drop to zero. With stochastic returns, individuals move between the two groups. A second extension analyzes the effects of land. We ask whether land holding displaces the holding of capital, resulting in workers being worse off. A tax on land, while reducing the value of land, leaves unchanged the capital-labor ratio, output per capita, and wages. But the tax reduces the aggregate value of wealth, and if the proceeds of the tax are distributed to workers, their income and life cycle savings are increased. On both accounts, wealth inequality is reduced. Thus, consistent with Henry George’s views, a tax on the returns on land, including capital gains, reduces inequality with no adverse effect on national income.
Handle: RePEc:nbr:nberwo:21191
Template-Type: ReDIF-Paper 1.0
Title: New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals: Part IV: Land and Credit
Classification-JEL: D31; E21; E22
Author-Name: Joseph E. Stiglitz
Note: POL
Number: 21192
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21192
File-URL: http://www.nber.org/papers/w21192.pdf
File-Format: application/pdf
Abstract: A significant amount of the increase in the wealth income ratio in recent decades is due to an increase in the value of land. We present a series of models that explain why land prices may have increased. These models help us understand the increase in both the wealth income ratio and wealth inequality. One model focuses on certain locations as being positional good. In another, we show that land bubbles are a natural part of market economies, and that on “bubble paths”, wealth may increase, even as the real wealth of the economy diminishes. Focusing on long run equilibrium, we show that a tax on the returns on land (including capital gains) can lead to higher incomes and less inequality. We show the links between the increases in land values and the financial system, demonstrating how changes in the rules governing that sector and the conduct of monetary policy may increase inequality. Given the large amount of life cycle savings, the traditional division of society into the owners of capital and workers or creditors and debtors may no longer provide the most insights for understanding the impact of policies on distribution. The relevant division is between capitalists, who pass on their wealth from generation to generation, and workers, and between the owners of equity and the holders of debt instruments. These distinctions are important for tax, financial and monetary policy. In our simple model, a lowering of interest rates benefits holders of equity— the capitalists—but hurts holders of government bonds, disproportionately life-cycle savers, and thus increases inequality. Similarly, a lowering of collateral requirements or of banks’ capital adequacy requirements does not result in an increase in the overall efficiency of the economy, but leads to more inequality.
Handle: RePEc:nbr:nberwo:21192
Template-Type: ReDIF-Paper 1.0
Title: The Indigenous Roots of Representative Democracy
Classification-JEL: D72; N4; P16
Author-Name: Jeanet Bentzen
Author-Person: pbe620
Author-Name: Jacob Gerner Hariri
Author-Name: James A. Robinson
Author-Person: pro179
Note: POL
Number: 21193
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21193
File-URL: http://www.nber.org/papers/w21193.pdf
File-Format: application/pdf
Abstract: We document that rules for leadership succession in ethnic societies that antedate the modern state predict contemporary political regimes; leadership selection by election in indigenous societies is associated with contemporary representative democracy. The basic association, however, is conditioned on the relative strength of the indigenous groups within a country; stronger groups seem to have been able to shape national regime trajectories, weaker groups do not. This finding extends and qualifies a substantive qualitative literature, which has found in local democratic institutions of medieval Europe a positive impulse towards the development of representative democracy. It shows that contemporary regimes are shaped not only by colonial history and European influence; indigenous history also matters. For practitioners, our findings suggest that external reformers' capacity for regime-building should not be exaggerated.
Handle: RePEc:nbr:nberwo:21193
Template-Type: ReDIF-Paper 1.0
Title: Vehicle Miles (Not) Traveled: Why Fuel Economy Requirements Don't Increase Household Driving
Classification-JEL: L91; Q41; Q48
Author-Name: Jeremy West
Author-Person: pwe370
Author-Name: Mark Hoekstra
Author-Person: pho613
Author-Name: Jonathan Meer
Author-Person: pme529
Author-Name: Steven L. Puller
Author-Person: ppu28
Note: EEE PE
Number: 21194
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21194
File-URL: http://www.nber.org/papers/w21194.pdf
File-Format: application/pdf
Publication-Status: published as Jeremy West, Mark Hoekstra, Jonathan Meer, Steven L. Puller, Vehicle miles (not) traveled: Fuel economy requirements, vehicle characteristics, and household driving, Journal of Public Economics, Volume 145, 2017, Pages 65-81, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2016.09.009.
Abstract: A major concern with addressing the negative externalities of gasoline consumption by regulating fuel economy, rather than increasing fuel taxes, is that households respond by driving more. This paper exploits a discrete threshold in the eligibility for Cash for Clunkers to show that fuel economy restrictions lead households to purchase vehicles that have lower cost-per-mile, but are also smaller and lower-performance. Whereas the former effect can increase driving, the latter effect can reduce it. Results indicate these households do not drive more, suggesting that behavioral responses do not necessarily undermine the effectiveness of fuel economy restrictions at reducing gasoline consumption.
Handle: RePEc:nbr:nberwo:21194
Template-Type: ReDIF-Paper 1.0
Title: Corporation Law and the Shift toward Open Access in the Antebellum United States
Classification-JEL: K2; N0; N41; N81
Author-Name: Eric Hilt
Author-Person: phi104
Note: DAE LE
Number: 21195
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21195
File-URL: http://www.nber.org/papers/w21195.pdf
File-Format: application/pdf
Publication-Status: published as Corporation Law and the Shift toward Open Access in the Antebellum United States, Eric Hilt. in Organizations, Civil Society, and the Roots of Development, Lamoreaux and Wallis. 2017
Abstract: This paper analyses the general incorporation statutes for manufacturing firms adopted by the American states up to 1860. Prior to the enactment of a general law, a business could only incorporate by obtaining a special act of their state legislature; general statutes facilitated incorporation through a routine administrative procedure. A new chronology of the adoption of these statutes reveals that several states enacted them much earlier than previous scholarship has indicated. An analysis of the contents of these laws indicates that many imposed strict regulations on the corporations they created, whereas others granted entrepreneurs near-total freedom. Many Southern states enacted particularly liberal statutes, but sometimes also prohibited nonwhites from incorporating businesses or gave a government official discretion over access to the law. Finally, an analysis of the volume of incorporation through special charters reveals that the states that failed to adopt general incorporation laws tended to offer unusually generous access to incorporation through special legislative acts. Taken together, these results imply that the adoption of a general incorporation statute did not always represent a discrete transition to open access to the corporate form. Instead, general statutes sometimes included highly restrictive provisions governing access, and some states generously accommodated demands for incorporation in the absence of a general statute.
Handle: RePEc:nbr:nberwo:21195
Template-Type: ReDIF-Paper 1.0
Title: The Market Value of R&D in Weak Innovation Regimes: Evidence from India
Classification-JEL: G12; O16; O30
Author-Name: Sunil Kanwar
Author-Person: pka262
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Note: PR
Number: 21196
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21196
File-URL: http://www.nber.org/papers/w21196.pdf
File-Format: application/pdf
Publication-Status: published as B.E. Journal of Applied Economic Policy 17(1).
Abstract: We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using data for Indian firms from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than it values such investment in developed economies such as the US and European countries, suggesting some degree of underinvestment. The paper explores the use of a proxy for the option value of R&D and finds that this can account for a very small part of the R&D valuation (about 10 per cent). We also find that the market value‐R&D relationship does not vary significantly across industry groups, although these results are rather imprecise.
Handle: RePEc:nbr:nberwo:21196
Template-Type: ReDIF-Paper 1.0
Title: Soda Taxes and the Prices of Sodas and Other Drinks: Evidence from Mexico
Classification-JEL: H2; I1
Author-Name: Jeffrey Grogger
Author-Person: pgr125
Note: EH LS PE
Number: 21197
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21197
File-URL: http://www.nber.org/papers/w21197.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Grogger, 2017. "Soda Taxes And The Prices of Sodas And Other Drinks: Evidence From Mexico," American Journal of Agricultural Economics, vol 99(2), pages 481-498.
Abstract: To combat a growing obesity problem, Mexico imposed a nationwide tax on drinks with added sugar, popularly referred to as a “soda tax,” effective January 2014. I analyze data on taxed and untaxed products collected as part of Mexico’s Consumer Price Index program to estimate how prices responded to the tax. Prices of regular sodas jumped by more than the amount of the tax in the month that the tax took effect. The prices of other taxed drinks also rose, though by a smaller amount. Diet soda prices rose as well, suggesting that consumers may have substituted toward diet sodas after regular sodas became taxable. The prices of bottled water, pure (untaxed) juices, and milk were largely unchanged. A companion analysis of untaxed comparison products showed no general price increases around the time that the soda tax was imposed.
Handle: RePEc:nbr:nberwo:21197
Template-Type: ReDIF-Paper 1.0
Title: Culture and Global Sourcing
Classification-JEL: F1; F14; F23; P14; P26; P48; Z1
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Bohdan Kukharskyy
Author-Name: Gerard Roland
Author-Person: pro20
Note: ITI POL
Number: 21198
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21198
File-URL: http://www.nber.org/papers/w21198.pdf
File-Format: application/pdf
Abstract: This paper develops a model of global sourcing with culturally dissimilar countries. Production of final goods requires the coordination of decisions between the headquarter of a multinational firm and managers of their component suppliers. Managers of both units are assumed to have strong beliefs about the right course of action and are reluctant to adjust their decisions. We characterize the optimal allocation of decision rights across firms when contracts are incomplete. Our theoretical model delivers two key predictions: the incentive of a firm to integrate (rather than outsource) its input supply is decreasing in the cultural distance between the home and the host country and decreasing in trade costs between the two countries. Combining data from the U.S. Census Bureau's Related Party Trade with various measures for cultural distance and trade cost, we find empirical evidence strongly supportive of these two predictions.
Handle: RePEc:nbr:nberwo:21198
Template-Type: ReDIF-Paper 1.0
Title: Firming Up Inequality
Classification-JEL: E24; E25; J31; L23
Author-Name: Jae Song
Author-Person: pso277
Author-Name: David J. Price
Author-Person: ppr462
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Till von Wachter
Author-Person: pvo196
Note: EFG IO LS ME PE PR
Number: 21199
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21199
File-URL: http://www.nber.org/papers/w21199.pdf
File-Format: application/pdf
Publication-Status: published as Jae Song & David J Price & Fatih Guvenen & Nicholas Bloom & Till von Wachter, 2019. "Firming Up Inequality*," The Quarterly Journal of Economics, vol 134(1), pages 1-50.
Abstract: Earnings inequality in the United States has increased rapidly over the last three decades, but little is known about the role of firms in this trend. For example, how much of the rise in earnings inequality can be attributed to rising dispersion between firms in the average wages they pay, and how much is due to rising wage dispersion among workers within firms? Similarly, how did rising inequality affect the wage earnings of different types of workers working for the same employer—men vs. women, young vs. old, new hires vs. senior employees, and so on? To address questions like these, we begin by constructing a matched employer-employee data set for the United States using administrative records. Covering all U.S. firms between 1978 to 2012, we show that virtually all of the rise in earnings dispersion between workers is accounted for by increasing dispersion in average wages paid by the employers of these individuals. In contrast, pay differences within employers have remained virtually unchanged, a finding that is robust across industries, geographical regions, and firm size groups. Furthermore, the wage gap between the most highly paid employees within these firms (CEOs and high level executives) and the average employee has increased only by a small amount, refuting oft-made claims that such widening gaps account for a large fraction of rising inequality in the population.
Handle: RePEc:nbr:nberwo:21199
Template-Type: ReDIF-Paper 1.0
Title: Immigration, Trade and Productivity in Services: Evidence from U.K. Firms
Classification-JEL: F16; F22; F23; F6
Author-Name: Gianmarco I.P. Ottaviano
Author-Person: pot15
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Greg C. Wright
Author-Person: pwr29
Note: ITI LS
Number: 21200
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21200
File-URL: http://www.nber.org/papers/w21200.pdf
File-Format: application/pdf
Publication-Status: published as Gianmarco I.P. Ottaviano & Giovanni Peri & Greg C. Wright, 2018. "Immigration, Trade and Productivity in Services: Evidence from U.K. Firms," Journal of International Economics, .
Abstract: This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export behavior. The first effect can be understood as the re-assignment of offshore productive tasks to immigrant workers. The second can be seen as a productivity or cost cutting effect due to immigration, and the third as the effect of immigrants on specific bilateral trade costs. We test the predictions of our model using differences in immigrant inflows across U.K. labor markets, instrumented with an enclave-based instrument that distinguishes between aggregate and bilateral immigration, as well as immigrant diversity. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. Immigrants also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks and, finally, they increase country-specific exports, implying an important role in reducing communication and trade costs for services.
Handle: RePEc:nbr:nberwo:21200
Template-Type: ReDIF-Paper 1.0
Title: Runs versus Lemons: Information Disclosure and Fiscal Capacity
Classification-JEL: E44; E5; E6; G01; G21; G28; H12; H2
Author-Name: Miguel Faria-e-Castro
Author-Person: pfa225
Author-Name: Joseba Martinez
Author-Person: pma2854
Author-Name: Thomas Philippon
Author-Person: pph81
Note: AP CF EFG ME
Number: 21201
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21201
File-URL: http://www.nber.org/papers/w21201.pdf
File-Format: application/pdf
Publication-Status: published as Miguel Faria-e-Castro & Joseba Martinez & Thomas Philippon, 2017. "Runs versus Lemons: Information Disclosure and Fiscal Capacity," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1683-1707.
Abstract: We study the optimal use of disclosure and fiscal backstops during financial crises. Providing information can reduce adverse selection in credit markets, but negative disclosures can also trigger inefficient bank runs. In our model governments are thus forced to choose between runs and lemons. A fiscal backstop mitigates the risk of runs and allows a government to pursue a high disclosure strategy. Our model explains why governments with strong fiscal positions are more likely to run informative stress tests, and, paradoxically, how they can end up spending less than governments that are more fiscally constrained.
Handle: RePEc:nbr:nberwo:21201
Template-Type: ReDIF-Paper 1.0
Title: Insurgency and Small Wars: Estimation of Unobserved Coalition Structures
Classification-JEL: O1; P48
Author-Name: Francesco Trebbi
Author-Person: ptr40
Author-Name: Eric Weese
Author-Person: pwe387
Note: DEV POL
Number: 21202
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21202
File-URL: http://www.nber.org/papers/w21202.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Trebbi & Eric Weese, 2019. "Insurgency and Small Wars: Estimation of Unobserved Coalition Structures," Econometrica, Econometric Society, vol. 87(2), pages 463-496, March.
Abstract: Insurgency and guerrilla warfare impose enormous socio-economic costs and often persist for decades. The opacity of such forms of conflict is often an obstacle to effective international humanitarian intervention and development programs. To shed light on the internal organization of otherwise unknown insurgent groups, this paper proposes two methodologies for the detection of unobserved coalitions of militant factions in conflict areas, and studies their main determinants. Our approach is parsimonious and based on daily geocoded incident-level data on insurgent attacks alone. We provide applications to the Afghan conflict during the 2004-2009 period and to Pakistan during the 2008-2011 period, identifying systematically different coalition structures. Further applications are discussed.
Handle: RePEc:nbr:nberwo:21202
Template-Type: ReDIF-Paper 1.0
Title: Household Debt and Defaults from 2000 to 2010: Facts from Credit Bureau Data
Classification-JEL: E0; R3
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Note: AP CF EFG ME
Number: 21203
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21203
File-URL: http://www.nber.org/papers/w21203.pdf
File-Format: application/pdf
Abstract: We use individual level credit bureau data to document which individuals saw the biggest rise in household debt from 2000 to 2007 and the biggest rise in defaults from 2007 to 2010. Growth in household debt from 2000 to 2007 was substantially larger for individuals with the lowest initial credit scores. However, initial debt levels were lower for individuals in the lowest 20% of the initial credit score distribution. As a result, the contribution to the total dollar rise in household debt was strongest among individuals in the 20th to 60th percentile of the initial credit score distribution. Consistent with the importance of home-equity based borrowing, the increase in debt is especially large among individuals in the lowest 60% of the credit score distribution living in high house price growth zip codes. In contrast, the borrowing of individuals in the top 20% of the credit score distribution is completely unresponsive to higher house price growth. In terms of defaults, the evidence is unambiguous: both default rates and the share of total delinquent debt is largest among individuals with low initial credit scores. The bottom 40% of the credit score distribution is responsible for 73% of the total amount of delinquent debt in 2007, and 68% of the total in 2008. Individuals in the top 40% of the initial credit score distribution never make up more than 15% of total delinquencies, even in 2009 at the height of the default crisis.
Handle: RePEc:nbr:nberwo:21203
Template-Type: ReDIF-Paper 1.0
Title: Reducing crime and violence: Experimental evidence from cognitive behavioral therapy in Liberia
Classification-JEL: D03; J22; K42; O12
Author-Name: Christopher Blattman
Author-Person: pbl37
Author-Name: Julian C. Jamison
Author-Name: Margaret Sheridan
Note: DEV
Number: 21204
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21204
File-URL: http://www.nber.org/papers/w21204.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Blattman & Julian C. Jamison & Margaret Sheridan, 2017. "Reducing Crime and Violence: Experimental Evidence from Cognitive Behavioral Therapy in Liberia," American Economic Review, vol 107(4), pages 1165-1206.
Abstract: We show that a number of “noncognitive” skills and preferences, including patience and identity, are malleable in adults, and that investments in them reduce crime and violence. We recruited criminally-engaged men and randomized half to eight weeks of cognitive behavioral therapy designed to foster self-regulation, patience, and a noncriminal identity and lifestyle. We also randomized $200 grants. Cash alone and therapy alone initially reduced crime and violence, but effects dissipated over time. When cash followed therapy, crime and violence decreased dramatically for at least a year. We hypothesize that cash reinforced therapy’s impacts by prolonging learning-by-doing, lifestyle changes, and self-investment.
Handle: RePEc:nbr:nberwo:21204
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Public Income Volatility: With an Application to the Resource Curse
Classification-JEL: D72; D78; Q2
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Ragnar Torvik
Author-Person: pto24
Author-Name: Thierry Verdier
Author-Person: pve75
Note: POL
Number: 21205
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21205
File-URL: http://www.nber.org/papers/w21205.pdf
File-Format: application/pdf
Publication-Status: published as Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2017. "The political economy of public income volatility: With an application to the resource curse," Journal of Public Economics, Elsevier, vol. 145(C), pages 243-252.
Abstract: We develop a model of the political consequences of public income volatility. As is standard, political incentives create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces the benefit of being in power, making policy more efficient. Yet at the same time it also reduces the re-election probability of an incumbent and since some of the policy inefficiencies are concentrated in the future, this makes inefficient policy less costly. We show how this model can help think about the connection between volatility and economic growth and in the case where volatility comes from volatile natural resource prices, a characteristic of many developing countries, we show that volatility in itself is a source of inefficient resource extraction.
Handle: RePEc:nbr:nberwo:21205
Template-Type: ReDIF-Paper 1.0
Title: Causal Effects of Mental Health Treatment on Education Outcomes for Youth in the Justice System
Classification-JEL: I1; I21
Author-Name: Alison Evans Cuellar
Author-Name: Dhaval M. Dave
Author-Person: pda245
Note: CH ED EH LE LS
Number: 21206
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21206
File-URL: http://www.nber.org/papers/w21206.pdf
File-Format: application/pdf
Publication-Status: published as Alison Cuellar & Dhaval M. Dave, 2016. "Causal Effects of Mental Health Treatment on Education Outcomes for Youth in the Justice System," Economics of Education Review, .
Abstract: This study assesses whether mental health interventions can improve academic outcomes for justice-involved youth. Only a limited number of studies have linked justice policies to outcomes beyond crime, particularly education, which carries large monetary and non-monetary benefits. The current study relies on detailed administrative data and unique policy rules under which youth are assigned to behavioral treatment programs. The administrative data allow for a rich set of controls for observed family- and youth-specific heterogeneity. In addition, the treatment assignment rules create a discontinuity among youth who are deemed eligible or not eligible for treatment, rules which the study exploits empirically to address the non-random selection bias in estimating plausibly causal effects of treatment eligibility and treatment receipt. Estimates indicate that certain types of intensive mental health intervention can lower dropout and increase high-school completion for justice-involved youth. Effects on grades are negative or not significant, possibly due to the greater retention of less academically-skilled students. We also assess heterogeneity in the treatment effects, and find that the effects on dropout tend to be greater among youth believed to be less academically engaged prior to treatment.
Handle: RePEc:nbr:nberwo:21206
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxation and Human Capital Policies over the Life Cycle
Classification-JEL: H21; H23; I21; I22; I24
Author-Name: Stefanie Stantcheva
Author-Person: pst824
Note: ED PE
Number: 21207
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21207
File-URL: http://www.nber.org/papers/w21207.pdf
File-Format: application/pdf
Publication-Status: published as Stefanie Stantcheva, 2017. "Optimal Taxation and Human Capital Policies over the Life Cycle," Journal of Political Economy, vol 125(6), pages 1931-1990.
Abstract: This paper derives optimal income tax and human capital policies in a dynamic life cycle model of labor supply and risky human capital formation. The wage is a function of both stochastic, persistent, and exogenous "ability'' and endogenous human capital. Human capital is acquired throughout life through monetary expenses. The government faces asymmetric information regarding the initial ability of agents and the lifetime evolution of ability, as well as the labor supply. The optimal subsidy on human capital expenses is determined by three considerations: counterbalancing distortions to human capital investment from the taxation of wage and capital income, encouraging labor supply, and providing insurance against adverse draws from the productivity distribution. When the wage elasticity with respect to ability is increasing in human capital, the optimal subsidy involves less than full deductibility of human capital expenses on the tax base, and falls with age. I consider two ways to implement the optimum: income contingent loans, and a tax scheme that allows for a deferred deductibility of human capital expenses. Numerical results are presented that suggest that full dynamic risk-adjusted deductibility of expenses might be close to optimal, and that simple linear age-dependent policies can achieve most of the welfare gain from the second best.
Handle: RePEc:nbr:nberwo:21207
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of State and Local Investment in Pre-K Programs
Classification-JEL: H41; H72; R2
Author-Name: Matthew E. Kahn
Author-Person: pka41
Author-Name: Kyle Barron
Note: CH ED PE POL
Number: 21208
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21208
File-URL: http://www.nber.org/papers/w21208.pdf
File-Format: application/pdf
Abstract: The expansion of access to publicly provided pre-kindergarten bundles together redistribution to the poor with an early human capital investment. Financing publicly provided pre-K investment is mainly a state and local issue. Which voters favor local pre-K expansion? This paper uses several new data sets to describe the circumstances such that local voters reveal a willingness to spend on an early intervention that may not yield direct benefits for them. Republican voters consistently oppose the expansion of publicly provided pre-K. Suburban voters also tend to oppose such investment. We explore several possible explanations for these facts.
Handle: RePEc:nbr:nberwo:21208
Template-Type: ReDIF-Paper 1.0
Title: The Supplemental Security Income (SSI) Program
Classification-JEL: H51; H53; J18
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Melissa S. Kearney
Author-Name: Stephanie Rennane
Author-Person: pre472
Note: CH EH PE
Number: 21209
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21209
File-URL: http://www.nber.org/papers/w21209.pdf
File-Format: application/pdf
Publication-Status: published as The Supplemental Security Income Program, Mark Duggan, Melissa S. Kearney, Stephanie Rennane. in Economics of Means-Tested Transfer Programs in the United States, Volume 2, Moffitt. 2016
Abstract: The SSI program provides cash assistance to some of the nation’s most vulnerable elderly, blind, and disabled residents. In this paper, we briefly summarize the history of the SSI program and present descriptive evidence on caseload composition and trends. We discuss relevant conceptual issues and empirical evidence focused on four key issues. First, we describe the advantages and disadvantages of categorical eligibility requirements and we show that the SSI caseload has become increasingly comprised of difficult-to-verify conditions, namely pain and mental disabilities. Second, we describe systematic disincentives to accumulate earnings and assets inherent in the SSI program design, but emphasize that the more relevant set of questions for the SSI population are related to the full disability requirement for eligibility. Third, we describe the questions and research about long-term benefits and costs to program participants, in terms of whether the program adequately and appropriately serves the needs of disabled individuals and their family members. And fourth, we present information and evidence about program spillovers, both across programs and across federal and state levels of government. Throughout the paper we make numerous explicit references to areas where further study is warranted and open research questions remain. SSI is an important part of the U.S. safety net, but particular features of the program raise questions about whether there is a more effective way to provide income support for individuals with work-limiting disabilities and families with disabled the children. Our goal for this paper is to systematically present the issues for scholars and policy-makers to consider and explore.
Handle: RePEc:nbr:nberwo:21209
Template-Type: ReDIF-Paper 1.0
Title: The Making of Homo Honoratus: From Omission to Commission
Classification-JEL: C9; C93; H2; K0
Author-Name: Michael Hallsworth
Author-Name: John A. List
Author-Person: pli176
Author-Name: Robert D. Metcalfe
Author-Person: pme196
Author-Name: Ivo Vlaev
Note: PE
Number: 21210
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21210
File-URL: http://www.nber.org/papers/w21210.pdf
File-Format: application/pdf
Abstract: Framing remains one of the pillars of behavioral economics. While framing effects have been found to be quite important in the lab, what is less clear is how well evidence drawn from naturally-occurring settings conforms to received laboratory insights. We use debt obligation to the UK government as a case study to explore the ‘omission bias’ present in decision making with large stakes. Using a natural field experiment that generates nearly 40,000 observations, we find that repayment rates are roughly doubled when the act is reframed as one of commission rather than omission. We estimate that this reframing of the perceived nature of the action generated over $1.3 million of new yield. We find evidence that this behavior may result from a deliberate ‘omission strategy’, rather than a behavioral bias, as is often assumed in the literature. Our natural field experiment highlights that behavioral economics is much more than a series of empirical exercises to quench the intellectual curiosity of academics.
Handle: RePEc:nbr:nberwo:21210
Template-Type: ReDIF-Paper 1.0
Title: The Earned Income Tax Credit (EITC)
Classification-JEL: D31; H2; H22; J2
Author-Name: Austin Nichols
Author-Name: Jesse Rothstein
Author-Person: pro180
Note: LS PE
Number: 21211
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21211
File-URL: http://www.nber.org/papers/w21211.pdf
File-Format: application/pdf
Publication-Status: published as The Earned Income Tax Credit, Austin Nichols, Jesse Rothstein. in Economics of Means-Tested Transfer Programs in the United States, Volume 1, Moffitt. 2016
Abstract: We review research on the Earned Income Tax Credit (EITC), focusing on work appearing since the Hotz and Scholz (2003) review. Recent work has confirmed earlier findings that labor supply effects are positive for single mothers, smaller and negative for married mothers, and essentially nonexistent for men. Where earlier estimates indicated that all responses were on the extensive margin, some recent studies find evidence of non-zero, but small, intensive margin effects. We also review research on the incidence of the credit, suggesting that employers capture some of the program benefits through lower wages; on the large impact of the program on poverty rates and on children’s outcomes; and on families’ apparent preferences for lump-sum refunds over smaller payments distributed throughout the year. We present new evidence regarding the accuracy of EITC imputations in the Current Population Survey. We discuss proposals for reform, including a more generous childless credit, and argue that the EITC may be complementary to the minimum wage, rather than an alternative.
Handle: RePEc:nbr:nberwo:21211
Template-Type: ReDIF-Paper 1.0
Title: Structural Gravity and Fixed Effects
Classification-JEL: C13; C50; F10; F15
Author-Name: Thibault Fally
Author-Person: pfa184
Note: ITI
Number: 21212
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21212
File-URL: http://www.nber.org/papers/w21212.pdf
File-Format: application/pdf
Publication-Status: published as Fally, Thibault, 2015. "Structural gravity and fixed effects," Journal of International Economics, Elsevier, vol. 97(1), pages 76-85.
Abstract: The gravity equation for trade flows is one of the most successful empirical models in economics and has long played a central role in the trade literature (Anderson, 2011). Different approaches to estimate the gravity equation, i.e. reduced-form or more structural, have been proposed. This paper examines the role of adding-up constraints as the key difference between structural gravity with "multilateral resistance" indexes and reduced-form gravity with simple fixed effects by exporter and importer. In particular, estimating gravity equations using the Poisson Pseudo-Maximum-Likelihood Estimator (Poisson PML) with fixed effects automatically satisfies these constraints and is consistent with the introduction of "multilateral resistance" indexes as in Anderson and van Wincoop (2003).
Handle: RePEc:nbr:nberwo:21212
Template-Type: ReDIF-Paper 1.0
Title: An Economic Rationale for the African Scramble: The Commercial Transition and the Commodity Price Boom of 1845-1885
Classification-JEL: F10; O40; O55
Author-Name: Ewout Frankema
Author-Person: pfr253
Author-Name: Jeffrey Williamson
Author-Person: pwi169
Author-Name: Pieter Woltjer
Note: DAE DEV
Number: 21213
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21213
File-URL: http://www.nber.org/papers/w21213.pdf
File-Format: application/pdf
Publication-Status: published as Frankema, E., Williamson, J., & Woltjer, P. (2018). An Economic Rationale for the West African Scramble? The Commercial Transition and the Commodity Price Boom of 1835–1885. The Journal of Economic History, 78(1), 231-267. doi:10.1017/S0022050718000128
Abstract: This is the first study to present a unified quantitative account of African commodity trade in the long 19th century from the zenith of the Atlantic slave trade (1790s) to the eve of World War II (1939). Drawing evidence from a new dataset on export and import prices, volumes, composition and net barter terms of trade for five African regions, we show that Sub-Saharan Africa experienced a terms of trade boom that was comparable to other parts of the ‘global periphery’ from the late 18th century up to the mid-1880s, with an exceptionally sharp price boom in the four decades before the Berlin conference (1845-1885). We argue that this commodity price boom changed the economic context in favor of a European scramble for Africa. We also show that the accelerated export growth after the establishment of colonial rule deepened Africa’s specialization in primary commodities, even though the terms of trade turned into a prolonged decline after 1885.
Handle: RePEc:nbr:nberwo:21213
Template-Type: ReDIF-Paper 1.0
Title: Socioeconomic Status and Learning from Financial Information
Classification-JEL: D03; D14; D83; D84; G02; G11
Author-Name: Camelia M. Kuhnen
Author-Person: pku67
Author-Name: Andrei C. Miu
Note: AP
Number: 21214
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21214
File-URL: http://www.nber.org/papers/w21214.pdf
File-Format: application/pdf
Publication-Status: published as Kuhnen, Camelia M. & Miu, Andrei C., 2017. "Socioeconomic status and learning from financial information," Journal of Financial Economics, Elsevier, vol. 124(2), pages 349-372.
Abstract: The majority of lower socioeconomic status (SES) households do not have any stock investments, which is detrimental to wealth accumulation. Here, we examine one potential driver of this puzzling fact, namely, that SES may influence the process by which people learn from information in financial markets. In an experimental setting we find that low SES participants, relative to medium or high SES ones, form more pessimistic beliefs about the distribution of stock investment outcomes and are less likely to invest in stocks. The pessimism bias in assessing risky assets induced by low SES is robust to several ways of measuring one’s socioeconomic standing and it replicates out of sample. These results suggest that SES shapes in predictable ways people’s beliefs about financial assets, which in turn may induce large differences across households in their propensity to participate in financial markets.
Handle: RePEc:nbr:nberwo:21214
Template-Type: ReDIF-Paper 1.0
Title: Crime, Punishment and the Halo Effect of Corporate Social Responsibility
Classification-JEL: G0; K0
Author-Name: Harrison Hong
Author-Person: pho390
Author-Name: Inessa Liskovich
Author-Person: pli849
Note: CF LE
Number: 21215
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21215
File-URL: http://www.nber.org/papers/w21215.pdf
File-Format: application/pdf
Abstract: Three reasons are often cited for the value of corporate social responsibility: product quality signalling, delegated giving, and the halo effect. Previous tests cannot separate these channels because they focus on consumers, who value all three. We focus on prosecutors, who are only susceptible to the halo effect. Using Foreign Corrupt Practices Act enforcements, we find that social responsibility is associated with 2 million dollars less in fines, though it is uncorrelated with bribe characteristics and cooperation, which should entirely determine sanctions following Becker (1974). We show that this bias is likely a halo effect and not prosecutorial conflict of interest.
Handle: RePEc:nbr:nberwo:21215
Template-Type: ReDIF-Paper 1.0
Title: Job Loss in the Great Recession and its Aftermath: U.S. Evidence from the Displaced Workers Survey
Classification-JEL: J63
Author-Name: Henry S. Farber
Note: LS
Number: 21216
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21216
File-URL: http://www.nber.org/papers/w21216.pdf
File-Format: application/pdf
Abstract: The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which, by some measures, it has not completely recovered. I use data from the Displaced Workers Survey (DWS) from 1984-2014 to investigate the incidence and consequences of job loss from 1981-2013. In particular, the 2010, 2012, and 2014 DWSs provide a window through which to examine the experience of job losers in the Great Recession and its aftermath and to compare their experience to that of earlier job losers. These data show a record high rate of job loss in the Great Recession, with almost one in six workers reporting having lost a job in the 2007-2009 period, that has not yet returned to pre-recession levels. The employment consequences of job loss are also very serious during this period with very low rates of reemployment and difficulty finding full-time employment. The reduction in weekly earnings for those job losers during the 2007-2013 period who were able to find new employment are not unusually large by historical standards.
Handle: RePEc:nbr:nberwo:21216
Template-Type: ReDIF-Paper 1.0
Title: The Great Escape: Intergenerational Mobility in the United States Since 1940
Classification-JEL: J1; J24; J62; N01; N3; O15
Author-Name: Nathaniel G. Hilger
Author-Person: phi185
Note: CH DAE ED LS PE
Number: 21217
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21217
File-URL: http://www.nber.org/papers/w21217.pdf
File-Format: application/pdf
Abstract: I develop a method to estimate intergenerational mobility (IM) in education on large cross-sectional surveys and apply the method to U.S. census data from 1940 to 2000. The method estimates IM directly for children age 26-29 who still live with parents and adjusts for independent children using a procedure that I validate extensively. Estimates imply large post-1940 gains in IM that were (1) driven primarily by large IM gains in the South for both whites and blacks, (2) larger for blacks due to their greater concentration in the South, and (3) driven by high school rather than college enrollment.
Handle: RePEc:nbr:nberwo:21217
Template-Type: ReDIF-Paper 1.0
Title: Physician Practice Style and Patient Health Outcomes: The Case of Heart Attacks
Classification-JEL: I11
Author-Name: Janet Currie
Author-Person: pcu13
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Author-Name: Jessica Van Parys
Note: EH LS
Number: 21218
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21218
File-URL: http://www.nber.org/papers/w21218.pdf
File-Format: application/pdf
Publication-Status: published as Janet Currie, W. Bentley MacLeod, Jessica Van Parys, Provider practice style and patient health outcomes: The case of heart attacks, Journal of Health Economics, Volume 47, 2016, Pages 64-80, ISSN 0167-6296, https://doi.org/10.1016/j.jhealeco.2016.01.013.
Abstract: When a patient arrives at the Emergency Room with acute myocardial infarction (AMI), the provider on duty must quickly decide how aggressively the patient should be treated. Using Florida data on all such patients from 1992-2014, we decompose practice style into two components: The provider’s probability of conducting invasive procedures on the average patient (which we characterize as aggressiveness), and the responsiveness of the choice of procedure to the patient’s characteristics. We show that within hospitals and years, patients with more aggressive providers have consistently higher costs and better outcomes. Since all patients benefit from higher utilization of invasive procedures, targeting procedure use to the most appropriate patients benefits these patients at the expense of the less appropriate patients. We also find that the most aggressive and responsive physicians are young, male, and trained in top 20 schools.
Handle: RePEc:nbr:nberwo:21218
Template-Type: ReDIF-Paper 1.0
Title: Procuring Firm Growth: The Effects of Government Purchases on Firm Dynamics
Classification-JEL: F14; F66; J21; O1
Author-Name: Claudio Ferraz
Author-Person: pfe125
Author-Name: Frederico Finan
Author-Person: pfi199
Author-Name: Dimitri Szerman
Note: DEV LS PR
Number: 21219
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21219
File-URL: http://www.nber.org/papers/w21219.pdf
File-Format: application/pdf
Abstract: This paper tests whether demand shocks affect firm dynamics. We examine whether firms that win government procurement contracts grow more compared to firms that compete for these contracts but do not win. We assemble a comprehensive data set combining matched employer-employee data for the universe of formal firms in Brazil with the universe of federal government procurement contracts over the period of 2004 to 2010. Exploiting a quasi-experimental design, we find that winning at least one contract in a given quarter increases firm growth by 2.2 percentage points over that quarter, with 93% of the new hires coming from either unemployment or the informal sector. These effects also persist well beyond the length of the contracts. Part of this persistence comes from firms participating and wining more future auctions, as well as penetrating other markets.
Handle: RePEc:nbr:nberwo:21219
Template-Type: ReDIF-Paper 1.0
Title: Balance-Sheet Households and Fiscal Stimulus: Lessons from the Payroll Tax Cut and Its Expiration
Classification-JEL: C83; E21; E62; H31
Author-Name: Claudia R. Sahm
Author-Person: psa596
Author-Name: Matthew D. Shapiro
Author-Person: psh144
Author-Name: Joel Slemrod
Author-Person: psl10
Note: EFG ME PE PR
Number: 21220
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21220
File-URL: http://www.nber.org/papers/w21220.pdf
File-Format: application/pdf
Abstract: Balance-sheet repair drove the response of a significant fraction of households to fiscal stimulus following the Great Recession. By combining survey, behavioral, and time-series evidence on the 2011 payroll tax cut and its expiration in 2013, this papers identifies and analyzes households who smooth debt repayment. These “balance-sheet households” are as prevalent as “permanent-income households,” who smooth consumption in response to the temporary tax cut, and outnumber “constrained households,” who temporarily boost spending. The asymmetric spending response of balance-sheet households poses challenges to standard models, but nonetheless appears important for understanding individual and aggregate responses to fiscal stimulus.
Handle: RePEc:nbr:nberwo:21220
Template-Type: ReDIF-Paper 1.0
Title: War and Inflation in the United States from the Revolution to the First Iraq War
Classification-JEL: N10
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 21221
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21221
File-URL: http://www.nber.org/papers/w21221.pdf
File-Format: application/pdf
Publication-Status: published as “War and Inflation in the United States from the Revolution to the Persian Gulf War.” In Economic History of Warfare and State Formation, eds. Jari Eloranta, Eric Golson, Andre Markevich, Nikolaus Wolf. Springer: Singapore, 2016,159-195.
Abstract: The institutional arrangements governing the creation of money in the United States have changed dramatically since the Revolution. Yet beneath the surface the story of wartime money creation has remained much the same. During wars against minor powers, the government was able to fund the war by borrowing and levying taxes. In major wars, however, there came a point when further increases in taxes could not be undertaken for administrative or political reasons, and further increases in borrowing could not be undertaken except at higher interest rates; rates that exceeded what was considered fair based on prewar norms. At those moments governments turned to the printing press. The result was substantial inflation.
Handle: RePEc:nbr:nberwo:21221
Template-Type: ReDIF-Paper 1.0
Title: Upcoding: Evidence from Medicare on Squishy Risk Adjustment
Classification-JEL: H42; H51; I1; I13; I18
Author-Name: Michael Geruso
Author-Name: Timothy Layton
Author-Person: pla866
Note: AG EH PE
Number: 21222
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21222
File-URL: http://www.nber.org/papers/w21222.pdf
File-Format: application/pdf
Publication-Status: published as Michael Geruso & Timothy Layton, 2020. "Upcoding: Evidence from Medicare on Squishy Risk Adjustment," Journal of Political Economy, vol 128(3), pages 984-1026.
Abstract: In most US health insurance markets, plans face strong incentives to “upcode” the patient diagnoses they report to the regulator, as these affect the risk-adjusted payments plans receive. We show that enrollees in private Medicare plans generate 6% to 16% higher diagnosis-based risk scores than they would under fee-for-service Medicare, where diagnoses do not affect most provider payments. Our estimates imply upcoding generates billions in excess public spending and significant distortions to firm and consumer behavior. We show that coding intensity increases with vertical integration, suggesting a principal-agent problem faced by insurers, who desire more intense coding from the providers with whom they contract.
Handle: RePEc:nbr:nberwo:21222
Template-Type: ReDIF-Paper 1.0
Title: The Stress Cost of Children
Classification-JEL: I31; J12; J13
Author-Name: Hielke Buddelmeyer
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Author-Name: Mark Wooden
Author-Person: pwo52
Note: LS
Number: 21223
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21223
File-URL: http://www.nber.org/papers/w21223.pdf
File-Format: application/pdf
Publication-Status: published as Hielke Buddelmeyer, Daniel S. Hamermesh, Mark Wooden, THE stress cost of children on moms and dads, European Economic Review, 2017, , ISSN 0014-2921, https://doi.org/10.1016/j.euroecorev.2016.12.012.
Abstract: We use longitudinal data describing couples in Australia from 2001-12 and Germany from 2002-12 to examine how demographic events affect perceived time and financial stress. Consistent with the view of measures of stress as proxies for the Lagrangean multipliers in models of household production, we show that births increase time stress, especially among mothers, and that the effects last at least several years. Births generally also raise financial stress slightly. The monetary equivalent of the costs of the extra time stress is very large. While the departure of a child from the home reduces parents’ time stress, its negative impacts on the tightness of the time constraints are much smaller than the positive impacts of a birth.
Handle: RePEc:nbr:nberwo:21223
Template-Type: ReDIF-Paper 1.0
Title: Financial Markets where Traders Neglect the Informational Content of Prices
Classification-JEL: D53; D84; G02; G11; G12; G14
Author-Name: Erik Eyster
Author-Name: Matthew Rabin
Author-Person: pra660
Author-Name: Dimitri Vayanos
Author-Person: pva498
Note: AP
Number: 21224
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21224
File-URL: http://www.nber.org/papers/w21224.pdf
File-Format: application/pdf
Publication-Status: published as ERIK EYSTER & MATTHEW RABIN & DIMITRI VAYANOS, 2019. "Financial Markets Where Traders Neglect the Informational Content of Prices," The Journal of Finance, vol 74(1), pages 371-399.
Abstract: We present a model of a financial market where some traders are "cursed" when choosing how much to invest in a risky asset, failing to fully take into account what prices convey about others' private information. Cursed traders put more weight on their private signals than rational traders. But because they neglect that the price encodes other traders' information, prices depend less on private signals and more on public signals than rational-expectation-equilibrium (REE) prices. Markets comprised entirely of cursed traders generate more trade than those comprised entirely of rationals; mixed markets can generate even more trade, as rationals employ momentum-trading strategies to exploit cursed traders. We contrast our results to other models of departures from REE and show that per-trader volume with cursed traders increases when the market becomes large, while natural forms of overconfidence predict that volume should converge to zero.
Handle: RePEc:nbr:nberwo:21224
Template-Type: ReDIF-Paper 1.0
Title: Does Exporting Improve Matching? Evidence from French Employer-Employee Data
Classification-JEL: F16; J2
Author-Name: Matilde Bombardini
Author-Name: Gianluca Orefice
Author-Person: por110
Author-Name: Maria D. Tito
Note: ITI
Number: 21225
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21225
File-URL: http://www.nber.org/papers/w21225.pdf
File-Format: application/pdf
Publication-Status: published as Matilde Bombardini & Gianluca Orefice & Maria D. Tito, 2018. "Does exporting improve matching? Evidence from French employer-employee data," Journal of International Economics, .
Abstract: Does opening a market to international trade affect the pattern of matching between firms and workers? And does the modified sorting pattern affect welfare? This paper answers these questions both theoretically and empirically in three parts. We set up a model of matching between heterogeneous workers and firms where variation in the worker type at the firm level exists in equilibrium only because of the presence of search costs. When firms gain access to the foreign market their revenue potential increases. When stakes are high, matching with the right worker becomes particularly important because deviations from the ideal match quickly reduce the value of the relationship. Hence exporting firms select sets of workers that are less dispersed relative to the average. We then document a novel fact about the hiring decisions of exporting firms versus non-exporting firms in a French matched employer-employee dataset. We find that exporting firms feature a lower type dispersion in the pool of workers they hire. The matching between exporting firms and workers is even tighter in sectors characterized by better exporting opportunities as measured by foreign demand or tariff shocks. In a calibrated general equilibrium version of the model we show that trade opening increases welfare by more when search costs are high, pointing to an additional source of gains from trade.
Handle: RePEc:nbr:nberwo:21225
Template-Type: ReDIF-Paper 1.0
Title: Different Types of Central Bank Insolvency and the Central Role of Seignorage
Classification-JEL: E42; E58; E59
Author-Name: Ricardo Reis
Author-Person: pre73
Note: ME
Number: 21226
Creation-Date: 2015-05
Order-URL: http://www.nber.org/papers/w21226
File-URL: http://www.nber.org/papers/w21226.pdf
File-Format: application/pdf
Abstract: A central bank is insolvent if its plans imply a Ponzi scheme on reserves so the price level becomes infinity. If the central bank enjoys fiscal support, in the form of a dividend rule that pays out net income every period, including when it is negative, it can never become insolvent independently of the fiscal authority. Otherwise, this note distinguishes between intertemporal insolvency, rule insolvency, and period insolvency. While period and rule solvency depend on analyzing dividend rules and sources of risk to net income, evaluating intertemporal solvency requires overcoming the difficult challenge of measuring the present value of seignorage.
Handle: RePEc:nbr:nberwo:21226
Template-Type: ReDIF-Paper 1.0
Title: The Long-Term Effects of Hedge Fund Activism
Classification-JEL: G12; G23; G32; G34; G35; G38; K22
Author-Name: Lucian A. Bebchuk
Author-Person: pbe72
Author-Name: Alon Brav
Author-Name: Wei Jiang
Author-Person: pji52
Note: AP CF LE
Number: 21227
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21227
File-URL: http://www.nber.org/papers/w21227.pdf
File-Format: application/pdf
Abstract: We test the empirical validity of a claim that has been playing a central role in debates on corporate governance—the claim that interventions by activist hedge funds have a negative effect on the long-term shareholder value and corporate performance. We subject this claim to a comprehensive empirical investigation, examining a long five-year window following activist interventions, and we find that the claim is not supported by the data. We find no evidence that activist interventions, including the investment-limiting and adversarial interventions that are most resisted and criticized, are followed by short-term gains in performance that come at the expense of long-term performance. We also find no evidence that the initial positive stock-price spike accompanying activist interventions tends to be followed by negative abnormal returns in the long term; to the contrary, the evidence is consistent with the initial spike reflecting correctly the intervention’s long-term consequences. Similarly, we find no evidence for pump-and-dump patterns in which the exit of an activist is followed by abnormal long-term negative returns. Our findings have significant implications for ongoing policy debates.
Handle: RePEc:nbr:nberwo:21227
Template-Type: ReDIF-Paper 1.0
Title: Natural Experiments in Macroeconomics
Classification-JEL: C1; C9; E21; E62; H31; O11; O14; O43; O50
Author-Name: Nicola Fuchs-Schuendeln
Author-Person: pfu121
Author-Name: Tarek Alexander Hassan
Author-Person: pha489
Note: DAE EFG IFM ITI ME PE POL
Number: 21228
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21228
File-URL: http://www.nber.org/papers/w21228.pdf
File-Format: application/pdf
Abstract: A growing literature relies on natural experiments to establish causal effects in macroeconomics. In diverse applications, natural experiments have been used to verify underlying assumptions of conventional models, quantify specific model parameters, and identify mechanisms that have major effects on macroeconomic quantities but are absent from conventional models. We discuss and compare the use of natural experiments across these different applications and summarize what they have taught us about such diverse subjects as the validity of the Permanent Income Hypothesis, the size of the fiscal multiplier, and about the effects of institutions, social structure, and culture on economic growth. We also outline challenges for future work in each of these fields, give guidance for identifying useful natural experiments, and discuss the strengths and weaknesses of the approach.
Handle: RePEc:nbr:nberwo:21228
Template-Type: ReDIF-Paper 1.0
Title: Early Childhood Education by MOOC: Lessons from Sesame Street
Classification-JEL: I24; J24
Author-Name: Melissa S. Kearney
Author-Name: Phillip B. Levine
Author-Person: ple553
Note: CH ED LS
Number: 21229
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21229
File-URL: http://www.nber.org/papers/w21229.pdf
File-Format: application/pdf
Abstract: This paper investigates whether preschool children exposed to Sesame Street when it began in 1969 experienced improved educational and labor market outcomes subsequently. We exploit geographic variation in broadcast reception derived from technological limitations, including distance to a broadcast tower and UHF versus VHF transmission. We relate this variation to Census data on grade-for-age status, educational attainment, and labor market outcomes in 1980, 1990, and 2000, respectively. The results indicate that Sesame Street improved school readiness, particularly for boys and children living in economically disadvantaged areas. The estimated impact on ultimate educational attainment and labor market outcomes is inconclusive.
Handle: RePEc:nbr:nberwo:21229
Template-Type: ReDIF-Paper 1.0
Title: The Big Sort: College Reputation and Labor Market Outcomes
Classification-JEL: I21; I23; I24; I25; I26; J01; J24; J3
Author-Name: W. Bentley MacLeod
Author-Person: pma156
Author-Name: Evan Riehl
Author-Name: Juan E. Saavedra
Author-Name: Miguel Urquiola
Author-Person: pur10
Note: ED LS
Number: 21230
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21230
File-URL: http://www.nber.org/papers/w21230.pdf
File-Format: application/pdf
Publication-Status: published as W. Bentley MacLeod & Evan Riehl & Juan E. Saavedra & Miguel Urquiola, 2017. "The Big Sort: College Reputation and Labor Market Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 223-261, July.
Abstract: Spence (1973) noted that individuals’ choice of educational quantity—measured by years of schooling—may stem partially from a desire to signal their ability to the labor market. This paper asks if individuals’ choice of educational quality—measured by college reputation—may likewise signal their ability. We use data on the admission scores of all Colombian college graduates to define a measure of reputation that gives clear predictions in a signaling framework. We find that college reputation, unlike years of schooling, is correlated with graduates’ earnings growth. We also show that Colombia’s staggered rollout of a new signal of skill—a college exit exam—reduced the earnings return to reputation and increased the return to individual admission scores. These results are consistent with the hypothesis that a college’s reputation provides information about the ability of its student body and about its value added, broadly understood.
Handle: RePEc:nbr:nberwo:21230
Template-Type: ReDIF-Paper 1.0
Title: Majority Choice of Tax Systems in Single- and Multi-Jurisdictional Economies
Classification-JEL: H2; H71
Author-Name: Stephen Calabrese
Author-Person: pca1347
Author-Name: Dennis Epple
Author-Person: pep21
Author-Name: Richard Romano
Author-Person: pro223
Note: PE POL
Number: 21231
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21231
File-URL: http://www.nber.org/papers/w21231.pdf
File-Format: application/pdf
Publication-Status: published as Calabrese, Stephen & Epple, Dennis & Romano, Richard, 2015. "Majority choice of tax systems in single- and multi-jurisdictional economies," Journal of Public Economics, Elsevier, vol. 131(C), pages 58-70.
Abstract: We examine majority choice of tax instruments in single- and multi-jurisdictional economies with heterogeneous households. In our framework majority voting equilibrium exists despite the multidimensional policy choice set. We identify five competing incentives that influence choice of tax instruments. Equilibria generally entail a mixture of tax types. With multiple jurisdictions, strong reliance on head taxation in rich communities arises to deter poorer households from immigrating. Mobility fundamentally affects the equilibrium tax system with redistribution incentives dominating choice of instruments when mobility is limited. Limiting or eliminating head taxation fundamentally alters stratification, public good provision levels, and tax systems.
Handle: RePEc:nbr:nberwo:21231
Template-Type: ReDIF-Paper 1.0
Title: Admitting Students to Selective Education Programs: Merit, Profiling, and Affirmative Action
Classification-JEL: I2
Author-Name: Dario Cestau
Author-Name: Dennis Epple
Author-Person: pep21
Author-Name: Holger Sieg
Note: CH ED PE
Number: 21232
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21232
File-URL: http://www.nber.org/papers/w21232.pdf
File-Format: application/pdf
Publication-Status: published as Dario Cestau & Dennis Epple & Holger Sieg, 2017. "Admitting Students to Selective Education Programs: Merit, Profiling, and Affirmative Action," Journal of Political Economy, University of Chicago Press, vol. 125(3), pages 761-797.
Abstract: For decades, colleges and universities have struggled to increase participation of minority and disadvantaged students. Urban school districts confront a parallel challenge; minority and disadvantaged students are underrepresented in selective programs that use merit-based admission. In their referral and admission policies to such selective programs, school districts may potentially set different admission thresholds based on income and race (affirmative action), and they may potentially take account of differences in achievement relative to ability across race and income groups (profiling). We develop an econometric model that provides a unified treatment of affirmative action and profiling. Implementing the model for an urban district, we find profiling by race and income, and affirmative action for low-income students. Counterfactual analysis reveals that these policies achieve more than 80% of African American enrollment that could be attained by race-based affirmative action.
Handle: RePEc:nbr:nberwo:21232
Template-Type: ReDIF-Paper 1.0
Title: An Overview of the Stratified Economics of Stratified Medicine
Classification-JEL: D04; D21; I11; I18; L11; L65
Author-Name: Mark R. Trusheim
Author-Name: Ernst R. Berndt
Note: EH
Number: 21233
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21233
File-URL: http://www.nber.org/papers/w21233.pdf
File-Format: application/pdf
Abstract: The economics of stratified medicine depend critically on setting the cut-off score of the companion diagnostic (CDx). This action integrates scientific, clinical, ethical and commercial considerations, and simultaneously determines the value of the stratified medicine to developers, providers, payers and patient. Setting a high cut-off ensures a larger response by excluding more non-responders but also denies treatment to patients who would respond. This creates ethical and clinical concerns, and limits market size. Setting a low cut-off includes more patients who can benefit but includes more non-responders with commensurate costs, side effects and lost time. CDx’s capture little value under current reimbursement and exclusivity protections. Combined with low CDx investment incentives for generic drug manufacturers, little CDx development occurs for older legacy drugs. Therefore payers face an asymmetric situation of novel stratified medicines raising public health and payers’ costs, but no CDx’s for legacy treatments to reduce costs. It would be in payers’ interests to rediscover their heritage of direct investment in diagnostic development.
Handle: RePEc:nbr:nberwo:21233
Template-Type: ReDIF-Paper 1.0
Title: The Term Structure of Returns: Facts and Theory
Classification-JEL: G12
Author-Name: Jules H. van Binsbergen
Author-Person: pva668
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Note: AP
Number: 21234
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21234
File-URL: http://www.nber.org/papers/w21234.pdf
File-Format: application/pdf
Publication-Status: published as Jules H. van Binsbergen & Ralph S.J. Koijen, 2017. "The term structure of returns: Facts and theory," Journal of Financial Economics, vol 124(1), pages 1-21.
Abstract: We summarize and extend the new literature on the term structure of equity. Short-term equity claims, or dividend strips, have on average significantly higher returns than the aggregate stock market. The returns on short-term dividend claims are risky as measured by volatility, but safe as measured by market beta. These facts are hard to reconcile with traditional macro-finance models and we provide an overview of new models that can reproduce some of these facts. We relate our evidence on dividend strips to facts about other asset classes such as nominal and corporate bonds, volatility, and housing. We conclude by discussing the broader economic implications by linking the term structure of returns to real economic decisions such as hiring and investment.
Handle: RePEc:nbr:nberwo:21234
Template-Type: ReDIF-Paper 1.0
Title: Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage
Classification-JEL: E24; E32; J63
Author-Name: John Haltiwanger
Author-Person: pha231
Author-Name: Henry Hyatt
Author-Name: Erika McEntarfer
Author-Person: pmc155
Note: EFG LS
Number: 21235
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21235
File-URL: http://www.nber.org/papers/w21235.pdf
File-Format: application/pdf
Abstract: Do the job-to-job moves of workers contribute to the cyclicality of employment growth at different types of firms? In this paper, we use linked employer-employee data to provide direct evidence on the role of job-to-job flows in job reallocation in the U.S. economy. To guide our analysis, we look to the theoretical literature on on-the-job search, which predicts that job-to-job flows should reallocate workers from small to large firms. While this prediction is not supported by the data, we do find that job-to-job moves generally reallocate workers from lower paying to higher paying firms, and this reallocation of workers is highly procyclical. During the Great Recession, this firm wage job ladder collapsed, with net worker reallocation to higher wage firms falling to zero. We also find that differential responses of net hires from non-employment play an important role in the patterns of the cyclicality of employment dynamics across firms classified by size and wage. For example, we find that small and low wage firms experience greater reductions in net hires from non-employment during periods of economic contractions.
Handle: RePEc:nbr:nberwo:21235
Template-Type: ReDIF-Paper 1.0
Title: Who is Internationally Diversified? Evidence from 296 401(k)
Classification-JEL: G11; G15
Author-Name: Geert Bekaert
Author-Person: pbe52
Author-Name: Kenton Hoyem
Author-Name: Wei-Yin Hu
Author-Name: Enrichetta Ravina
Author-Person: pra1119
Note: AP
Number: 21236
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21236
File-URL: http://www.nber.org/papers/w21236.pdf
File-Format: application/pdf
Publication-Status: published as Geert Bekaert, Kenton Hoyem, Wei-Yin Hu, Enrichetta Ravina, Who is internationally diversified? Evidence from the 401(k) plans of 296 firms, Journal of Financial Economics, Volume 124, Issue 1, 2017, Pages 86-112, ISSN 0304-405X, https://doi.org/10.1016/j.jfineco.2016.12.010.
Abstract: We examine the international equity allocations of 3.8 million individuals in 296 401(k) plans over the 2005-2011 period. We find enormous cross-individual variation, ranging from zero to over 75%, and strong cohort effects, with younger cohorts investing more internationally than older ones, and each cohort investing more internationally over time. Access to financial advice, lower fees and more international fund options are associated with higher international allocations, suggesting a role for plan design and policy. Education, financial literacy and the fraction of foreign-born population in the zip code also have positive effects on international diversification, consistent with familiarity and information stories.
Handle: RePEc:nbr:nberwo:21236
Template-Type: ReDIF-Paper 1.0
Title: International Organizations and Structural Reforms
Classification-JEL: D72; F53
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Ivan Torre
Author-Person: pto502
Author-Name: Gustavo Torrens
Note: DEV
Number: 21237
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21237
File-URL: http://www.nber.org/papers/w21237.pdf
File-Format: application/pdf
Publication-Status: published as "International Organizations and Structural Reforms." Journal of International Economics, Volume 121, Nov. 2019
Abstract: Different countries have been following different reform paths since the early 1990s. We develop a simple dynamic model of policy reform that captures some of the determinants that underlie these differences. The model emphasizes the interaction between domestic institutions and international organizations that promote reform, on the one hand, and the political incentives for reversing reforms, on the other. At equilibrium, there are three types of reform paths. A country can undergo a full-scale, lasting reform; it can undertake a partial but lasting reform; or it can go through cycles of reforms and costly counter-reforms. Domestic institutions, as well as the incentives provided by international organizations, determine the equilibrium path. Unless the cost of reversal is high enough, an international intervention that promotes reforms induces an increase in the probability of reversals. A benevolent international organization that is fully aware of the possibility and social cost of reversals will always increase social welfare if it embraces the following principle: promote the greatest partial reform that is compatible with no reversal, or induce cycles of full-scale reform and complete reversal, depending on which of those two paths will generate greater social welfare. A benevolent but politically myopic international organization, however, may reduce social welfare because it does not take the fact into account that an overly aggressive reform could trigger costly reversals that outweigh the benefits of the reform. Deliberately making the costs of reversal high could be a risky way of improving the trade-off between the extent of the reform and the probability of reversal. Our model suggests that international organizations should also consider the possibility of providing defensive funding for dealing with counter-reform shocks.
Handle: RePEc:nbr:nberwo:21237
Template-Type: ReDIF-Paper 1.0
Title: How Large is the Stock Component of Human Capital?
Classification-JEL: D91; E21; G12; J24
Author-Name: Mark Huggett
Author-Person: phu6
Author-Name: Greg Kaplan
Author-Person: pka660
Note: AP EFG LS
Number: 21238
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21238
File-URL: http://www.nber.org/papers/w21238.pdf
File-Format: application/pdf
Publication-Status: published as Mark Huggett & Greg Kaplan, 2016. "How large is the stock component of human capital?," Review of Economic Dynamics, vol 22, pages 21-51.
Abstract: This paper examines the value of an individual’s human capital and the associated return on human capital using U.S. data on male earnings and financial asset returns. We find that (1) the value of human capital is far below the value implied by discounting earnings at the risk-free rate and (2) the stock component of the value of human capital is smaller than the bond component at all ages. The stock component averages less than 35 percent of the value of human capital at each age.
Handle: RePEc:nbr:nberwo:21238
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Pharmaceutical Innovation on Premature Cancer Mortality in Canada, 2000-2011
Classification-JEL: C23; C33; I10; J11; J17; L65; O33
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EH PR
Number: 21239
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21239
File-URL: http://www.nber.org/papers/w21239.pdf
File-Format: application/pdf
Publication-Status: published as International Journal of Health Economics and Management: Volume 15, Issue 3 (2015), Page 339-359
Publication-Status: published as Frank Lichtenberg, 2015. "The impact of pharmaceutical innovation on premature cancer mortality in Canada, 2000–2011," International Journal of Health Care Finance and Economics, Springer, vol. 15(3), pages 339-359, September.
Abstract: The premature cancer mortality rate has been declining in Canada, but there has been considerable variation in the rate of decline across cancer sites. I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Canada during the period 2000-2011, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in the premature mortality rate, controlling for changes in the incidence rate. The estimates imply that pharmaceutical innovation during the period 1985-1996 reduced the number of years of potential life lost to cancer before age 75 in 2011 by 105,366. The cost per life-year before age 75 gained from previous pharmaceutical innovation is estimated to have been 2730 USD. The evidence suggests that, even if these drugs had been sold at branded rather than generic prices, the cost per life-year gained would have been below 11,000 USD, a figure well below even the lowest estimates of the value of a life-year gained.
Handle: RePEc:nbr:nberwo:21239
Template-Type: ReDIF-Paper 1.0
Title: Mental Health Stigma
Classification-JEL: I1
Author-Name: Prashant Bharadwaj
Author-Name: Mallesh M. Pai
Author-Name: Agne Suziedelyte
Author-Person: psu352
Note: CH EH
Number: 21240
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21240
File-URL: http://www.nber.org/papers/w21240.pdf
File-Format: application/pdf
Publication-Status: published as Prashant Bharadwaj & Mallesh M. Pai & Agne Suziedelyte, 2017. "Mental health stigma," Economics Letters, vol 159, pages 57-60.
Abstract: Comparing self-reports to administrative data records on diagnosis and prescription drug use, we find that survey respondents under-report mental health conditions 36% of the time when asked about diagnosis and about 20% of the time when asked about prescription drug use. Survey respondents are significantly less likely to under-report other conditions such as diabetes or hypertension. This behavior is consistent with a model in which mental health illnesses are stigmatized and agents have incentives to hide such traits from others. We show that differential under-reporting of depression is correlated with age, gender, and ethnicity and that these characteristics also predict a lower probability of mental health treatment, suggesting that stigma can play an important role in determining health-seeking behavior.
Handle: RePEc:nbr:nberwo:21240
Template-Type: ReDIF-Paper 1.0
Title: Reviving the Limit Cycle View of Macroeconomic Fluctuations
Classification-JEL: E3
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Dana Galizia
Author-Person: pga818
Author-Name: Franck Portier
Author-Person: ppo12
Note: EFG
Number: 21241
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21241
File-URL: http://www.nber.org/papers/w21241.pdf
File-Format: application/pdf
Abstract: There is a long tradition in macroeconomics suggesting that market imperfections may explain why economies repeatedly go through periods of booms and busts, with booms sowing the seeds of the subsequent busts. This idea can be captured mathematically as a limit cycle. For several reasons, limit cycles play almost no role in current mainstream business cycle theory. In this paper we present both a general structure and a particular model with the aim of giving new life to this mostly dismissed view of fluctuations. We begin by showing why and when models with strategic complementarities—which are quite common in macroeconomics—give rise to unique equilibrium dynamics characterized by a limit cycle. We then develop and estimate a fully-specified dynamic general equilibrium model that embeds a demand complementarity to see whether the data favors a configuration supportive of a limit cycle. Booms and busts arise endogenously in our setting because agents want to concentrate their purchases of goods at times when purchases by others are high, since in such situations unemployment is low and therefore taking on debt is perceived as being less risky. A key feature of our approach is that we allow limit-cycle forces to compete with exogenous disturbances in explaining the data. Our estimation results indicate that US business cycle fluctuations in employment and output can be well explained by endogenous demand-driven cycles buffeted by technological disturbances that render those fluctuations irregular.
Handle: RePEc:nbr:nberwo:21241
Template-Type: ReDIF-Paper 1.0
Title: Ancestry, Language and Culture
Classification-JEL: F14; O11; O33; O47; O57; Z1
Author-Name: Enrico Spolaore
Author-Person: psp27
Author-Name: Romain Wacziarg
Author-Person: pwa67
Note: POL
Number: 21242
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21242
File-URL: http://www.nber.org/papers/w21242.pdf
File-Format: application/pdf
Publication-Status: published as Spolaore E., Wacziarg R. (2016) Ancestry, Language and Culture. In: Ginsburgh V., Weber S. (eds) The Palgrave Handbook of Economics and Language. Palgrave Macmillan, London https://doi.org/10.1007/978-1-137-32505-1_7
Abstract: We explore the interrelationships between various measures of cultural distance. We first discuss measures of genetic distance, used in the recent economics literature to capture the degree of relatedness between countries. We next describe several classes of measures of linguistic, religious, and cultural distances. We introduce new measures of cultural distance based on differences in average answers to questions from the World Values Survey. Using a simple theoretical model we hypothesize that ancestral distance, measured by genetic distance, is positively correlated with linguistic, religious, and cultural distance. An empirical exploration of these correlations shows this to be the case. This empirical evidence is consistent with the view that genetic distance is a summary statistic for a wide array of cultural traits transmitted intergenerationally.
Handle: RePEc:nbr:nberwo:21242
Template-Type: ReDIF-Paper 1.0
Title: Facts and Fantasies about Commodity Futures Ten Years Later
Classification-JEL: G1; G11; G12
Author-Name: Geetesh Bhardwaj
Author-Person: pbh29
Author-Name: Gary Gorton
Author-Person: pgo458
Author-Name: Geert Rouwenhorst
Author-Person: pro146
Note: AP
Number: 21243
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21243
File-URL: http://www.nber.org/papers/w21243.pdf
File-Format: application/pdf
Abstract: Gorton and Rouwenhorst (2006) examined commodity futures returns over the period July 1959 to December 2004 based on an equally-weighted index. They found that fully collateralized commodity futures had historically offered the same return and Sharpe ratio as U.S. equities, but were negatively correlated with the return on stocks and bonds. Reviewing these results ten years later, we find that our conclusions largely hold up out-of-sample. The in- and out-of-sample average commodity risk premiums are not significantly different, nor is the cross-sectional relationship between average returns and the basis. Correlations among commodities and commodity correlations with other assets experienced a temporary increase during the financial crisis which is in line with historical experience of variation of these correlations over the business cycle.
Handle: RePEc:nbr:nberwo:21243
Template-Type: ReDIF-Paper 1.0
Title: Trends and Cycles in China's Macroeconomy
Classification-JEL: E2; F4; G1; H81
Author-Name: Chun Chang
Author-Person: pch1378
Author-Name: Kaiji Chen
Author-Person: pch372
Author-Name: Daniel F. Waggoner
Author-Person: pwa463
Author-Name: Tao Zha
Author-Person: pzh80
Note: DEV EFG IFM ME
Number: 21244
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21244
File-URL: http://www.nber.org/papers/w21244.pdf
File-Format: application/pdf
Publication-Status: published as Trends and Cycles in China's Macroeconomy, Chun Chang, Kaiji Chen, Daniel F. Waggoner, Tao Zha. in NBER Macroeconomics Annual 2015, Volume 30, Eichenbaum and Parker. 2016
Abstract: We make four contributions in this paper. First, we provide a core of macroeconomic time series usable for systematic research on China. Second, we document, through various empirical methods, the robust findings about striking patterns of trend and cycle. Third, we build a theoretical model that accounts for these facts. Fourth, the model's mechanism and assumptions are corroborated by institutional details, disaggregated data, and banking time series, all of which are distinctive of Chinese characteristics. We argue that preferential credit policy for promoting heavy industries accounts for the unusual cyclical patterns as well as the post-1990s economic transition featured by the persistently rising investment rate, the declining labor income share, and a growing foreign surplus. The departure of our theoretical model from standard ones offers a constructive framework for studying China's modern macroeconomy.
Handle: RePEc:nbr:nberwo:21244
Template-Type: ReDIF-Paper 1.0
Title: Cross-border Acquisitions and Labor Regulations
Classification-JEL: F2; G34; G38; J6; J8
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Chen Lin
Author-Person: pli551
Author-Name: Beibei Shen
Note: CF IFM ITI LS
Number: 21245
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21245
File-URL: http://www.nber.org/papers/w21245.pdf
File-Format: application/pdf
Abstract: Do labor regulations influence the reaction of stock markets and firm profitability to cross-border acquisitions? We discover that acquiring firms enjoy smaller abnormal stock returns and profits when targets are in countries with stronger labor protection regulations, i.e., in countries where laws, regulations, and policies increase the costs to firms of adjusting their workforces. These effects are especially pronounced when the target is in a labor-intensive or high labor-volatility industry. Consistent with labor regulations shaping the success of cross-border deals, we find that firms make fewer and smaller cross-border acquisitions into countries with strong labor regulations.
Handle: RePEc:nbr:nberwo:21245
Template-Type: ReDIF-Paper 1.0
Title: Intellectual Property Rights and Innovation: Evidence from Health Care Markets
Classification-JEL: I1; O3
Author-Name: Heidi L. Williams
Author-Person: pwi239
Note: AG EH PR
Number: 21246
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21246
File-URL: http://www.nber.org/papers/w21246.pdf
File-Format: application/pdf
Publication-Status: published as Intellectual Property Rights and Innovation: Evidence from Health Care Markets, Heidi L. Williams. in Innovation Policy and the Economy, Volume 16, Lerner and Stern. 2016
Abstract: A long theoretical literature has analyzed optimal patent policy design, yet there is very little empirical evidence on a key parameter needed to apply these models in practice: the relationship between patent strength and research investments. I argue that the dearth of empirical evidence on this question reflects two key challenges: the difficulty of measuring specific research investments, and the fact that finding variation in patent protection is difficult. I then summarize the findings of two recent studies which have made progress in starting to overcome these empirical challenges by combining new datasets measuring biomedical research investments with novel sources of variation in the effective intellectual property protection provided to different inventions. The first study, Budish, Roin, and Williams (forthcoming), documents evidence consistent with patents affecting the rate and direction of research investments in the context of cancer drug development. The second study, Williams (2013), documents evidence that one form of intellectual property rights on the human genome had quantitatively important impacts on follow-on scientific research and commercial development. I discuss the relevance of both studies for patent policy, and discuss directions for future research.
Handle: RePEc:nbr:nberwo:21246
Template-Type: ReDIF-Paper 1.0
Title: Innovation and Top Income Inequality
Classification-JEL: D63; J14; J15; O30; O31; O33; O34; O40; O43; O47
Author-Name: Philippe Aghion
Author-Person: pag175
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: Antonin Bergeaud
Author-Name: Richard Blundell
Author-Person: pbl81
Author-Name: David Hémous
Author-Person: phe470
Note: EFG PE PR
Number: 21247
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21247
File-URL: http://www.nber.org/papers/w21247.pdf
File-Format: application/pdf
Publication-Status: published as Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 1-45.
Abstract: In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Yet, innovation does not appear to increase other measures of inequality which do not focus on top incomes. Next, we show that the positive effects of innovation on the top 1% income share are dampened in states with higher lobbying intensity. Finally, from cross-section regressions performed at the commuting zone (CZ) level, we find that: (i) innovativeness is positively correlated with upward social mobility; (ii) the positive correlation between innovativeness and social mobility, is driven mainly by entrant innovators and less so by incumbent innovators, and it is dampened in states with higher lobbying intensity. Overall, our findings vindicate the Schumpeterian view whereby the rise in top income shares is partly related to innovation-led growth, where innovation itself fosters social mobility at the top through creative destruction.
Handle: RePEc:nbr:nberwo:21247
Template-Type: ReDIF-Paper 1.0
Title: Estimating the Impacts of Program Benefits: Using Instrumental Variables with Underreported and Imputed Data
Classification-JEL: C80; E21; H53; H55
Author-Name: Melvin Stephens, Jr.
Author-Person: pst400
Author-Name: Takashi Unayama
Author-Person: pun9
Note: LS PE
Number: 21248
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21248
File-URL: http://www.nber.org/papers/w21248.pdf
File-Format: application/pdf
Publication-Status: published as Melvin Stephens & Takashi Unayama, 2019. "Estimating the Impacts of Program Benefits: Using Instrumental Variables with Underreported and Imputed Data," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 468-475, July.
Abstract: Survey non-response has risen in recent years which has increased the share of imputed and underreported values found on commonly used datasets. While this trend has been well-documented for earnings, the growth in non-response to government transfers questions has received far less attention. We demonstrate analytically that the underreporting and imputation of transfer benefits can lead to program impact estimates that are substantially overstated when using instrumental variables methods to correct for endogeneity and/or measurement error in benefit amounts. We document the importance of failing to account for these issues using two empirical examples.
Handle: RePEc:nbr:nberwo:21248
Template-Type: ReDIF-Paper 1.0
Title: Sample-selection biases and the “industrialization puzzle”
Classification-JEL: J11; N11; N31
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Author-Name: Timothy W. Guinnane
Author-Person: pgu29
Author-Name: Thomas A. Mroz
Author-Person: pmr8
Note: DAE
Number: 21249
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21249
File-URL: http://www.nber.org/papers/w21249.pdf
File-Format: application/pdf
Publication-Status: published as Bodenhorn, Howard & Guinnane, Timothy W. & Mroz, Thomas A., 2017. "Sample-Selection Biases and the Industrialization Puzzle," The Journal of Economic History, Cambridge University Press, vol. 77(01), pages 171-207, March.
Abstract: Understanding long-term changes in human well-being is central to understanding the consequences of economic development. An extensive anthropometric literature purports to show that heights in the United States declined between the 1830s and the 1890s, which is when the US economy industrialized and urbanized. Most research argues that declining heights reflects the impact of the industrialization process. This interpretation, however, relies on sources subject to selection bias. Changes in that selection mechanism may account for the declining heights. We show that the evidentiary basis of the puzzle is not as robust as previously believed. Our meta-analysis of more than 150 studies shows that declining-heights finding emerges primarily in selected samples. Finally, we offer a parsimonious diagnostic test for revealing (but not necessarily correcting for) selection bias. The diagnostic applied to four samples that underlay the industrialization puzzle shows compelling evidence of selection.
Handle: RePEc:nbr:nberwo:21249
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of European Integration
Classification-JEL: F02; F15; F5; H41; H56; H77
Author-Name: Enrico Spolaore
Author-Person: psp27
Note: POL
Number: 21250
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21250
File-URL: http://www.nber.org/papers/w21250.pdf
File-Format: application/pdf
Publication-Status: published as Routledge Handbook of the Economics of European Integration, Chapter VII. Institutions 1.The Political Economy of European Integration (Enrico Spolaore)
Abstract: This paper discusses the process of European institutional integration from a political-economy perspective, linking the long-standing political debate on the nature of the European project to the recent economic literature on political integration and disintegration. First, we introduce the fundamental trade-off between economies of scale associated with larger political unions and the costs from sharing public goods and policies among more heterogeneous populations, and examine the implications of the trade-off for European integration. Second, we describe the two main political theories of European integration - intergovernmentalism and functionalism - and argue that both theories capture important aspects of European integration, but that neither view provides a complete and realistic interpretation of the process. Finally, we critically discuss the actual process of European institutional integration and its limits, from its beginnings after World War II to the current crisis.
Handle: RePEc:nbr:nberwo:21250
Template-Type: ReDIF-Paper 1.0
Title: Linkages and Economic Development
Classification-JEL: C67; O11; O47
Author-Name: Dominick Bartelme
Author-Person: pba1414
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG ITI ME PR
Number: 21251
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21251
File-URL: http://www.nber.org/papers/w21251.pdf
File-Format: application/pdf
Abstract: Specialization is a powerful source of productivity gains, but how production networks at the industry level are related to aggregate productivity in the data is an open question. We construct a database of input-output tables covering a broad spectrum of countries and times, develop a theoretical framework to derive an econometric specification, and document a strong and robust relationship between the strength of industry linkages and aggregate productivity. We then calibrate a multisector neoclassical model and use alternative identification assumptions to extract an industry-level measure of distortions in intermediate input choices. We compute the aggregate losses from these distortions for each country in our sample and find that they are quantitatively consistent with the relationship between industry linkages and aggregate productivity in the data. Our estimates imply that the TFP gains from eliminating these distortions are modest but significant, averaging roughly 10% for middle and low income countries.
Handle: RePEc:nbr:nberwo:21251
Template-Type: ReDIF-Paper 1.0
Title: Declining Desire to Work and Downward Trends in Unemployment and Participation
Classification-JEL: E24; J6
Author-Name: Regis Barnichon
Author-Person: pba542
Author-Name: Andrew Figura
Note: EFG LS ME PE
Number: 21252
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21252
File-URL: http://www.nber.org/papers/w21252.pdf
File-Format: application/pdf
Publication-Status: published as Declining Desire to Work and Downward Trends in Unemployment and Participation, Regis Barnichon, Andrew Figura. in NBER Macroeconomics Annual 2015, Volume 30, Eichenbaum and Parker. 2016
Abstract: This paper argues that a key aspect of the US labor market is the presence of time-varying heterogeneity across nonparticipants. We document a decline in the share of nonparticipants who report wanting to work, and we argue that that decline, which was particularly strong in the second half of the 90s, is a major aspect of the downward trends in unemployment and participation over the past 20 years. A decline in the share of "want to work" nonparticipants lowers both the participation rate and the unemployment rate, because a nonparticipant who wants to work has (i) a higher probability of entering the labor force (compared to other nonparticipants), and (ii) a higher probability of joining unemployment conditional on entering the labor force. We use cross-sectional variation to estimate a model of nonparticipants' propensity to want to work, and we find that changes in the provision of welfare and social insurance, possibly linked to the mid-90s welfare reforms, explain about 50 percent of the decline in desire to work among nonparticipants.
Handle: RePEc:nbr:nberwo:21252
Template-Type: ReDIF-Paper 1.0
Title: How Important Are Terms Of Trade Shocks?
Classification-JEL: E32; F41; F44
Author-Name: Stephanie Schmitt-Grohé
Author-Person: psc44
Author-Name: Martín Uribe
Note: IFM
Number: 21253
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21253
File-URL: http://www.nber.org/papers/w21253.pdf
File-Format: application/pdf
Publication-Status: published as Stephanie Schmitt-Grohé & Martín Uribe, 2018. "HOW IMPORTANT ARE TERMS-OF-TRADE SHOCKS?," International Economic Review, vol 59(1), pages 85-111.
Abstract: According to conventional wisdom, terms of trade shocks represent a major source of business cycles in emerging and poor countries. This view is largely based on the analysis of calibrated business-cycle models. We argue that the view that emerges from empirical SVAR models is strikingly different. We estimate country-specific SVARs using data from 38 emerging and countries and find that terms-of-trade shocks explain less than 10 percent of movements in aggregate activity. We then build a three-sector open economy model and estimate key structural parameters country by country. We find that at the country level there is a disconnect between the empirical and theoretical models in the importance assigned to terms-of-trade shocks.
Handle: RePEc:nbr:nberwo:21253
Template-Type: ReDIF-Paper 1.0
Title: Corps Intermédiaires, Civil Society, and the Art of Association
Classification-JEL: B12; L30; N10
Author-Name: Jacob T. Levy
Note: POL
Number: 21254
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21254
File-URL: http://www.nber.org/papers/w21254.pdf
File-Format: application/pdf
Publication-Status: published as Pluralism without Privilege? "Corps Intermédiaires", Civil Society, and the Art of Association, Jacob T. Levy. in Organizations, Civil Society, and the Roots of Development, Lamoreaux and Wallis. 2017
Abstract: This paper traces the shifts in treatments of intermediate groups among some liberal and democratic political theorists in the 18th and 19th centuries. The decades of the late 18th and early 19th centuries are traditionally understood to encompass the emergence of fully liberal political and social theory, and an early version of liberal political practice, in France, the UK, and the US; they have lately been identified by North, Wallis, and Weingast as the decades when those three societies substantially made the transition to “open access” political, economic, and legal orders. This transition consists in part in the democratization of organizational tools that had previously been open only to members of the elite, such as the shift from specially chartered monopolistic corporations to general incorporation laws, and that from parliamentary oligopolistic party competition to modern parties competing in wide-suffrage elections. Although the early liberal theorists did not fully perceive the changes happening around them, their analyses and reactions can help us see things about the shift to open-access orders that might not be fully visible in retrospect. To varying degrees they looked forward to the possibility of a pluralism without privilege, but they also had doubts about its possibility. They offered some reasons to prefer pluralism with privilege to the absence of both. They worried that centralization, democratic or otherwise, might be the preeminent fact of modern state consolidation, and that purely voluntary, equal, associational pluralism might not be powerful enough to check it. The kinds of pluralism grounded in ancient regime privilege and status, in entrenched jurisdictional pluralism within the constitutional order, or in pre-political cultural and customary ties might be needed to motivate the oppositional political action that could protect pluralism and freedom.
Handle: RePEc:nbr:nberwo:21254
Template-Type: ReDIF-Paper 1.0
Title: House Price Volatility and the Housing Ladder
Classification-JEL: D12; D91
Author-Name: James Banks
Author-Person: pba509
Author-Name: Richard Blundell
Author-Person: pbl81
Author-Name: Zoé Oldfield
Author-Person: pol30
Author-Name: James P. Smith
Author-Person: psm28
Note: AG
Number: 21255
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21255
File-URL: http://www.nber.org/papers/w21255.pdf
File-Format: application/pdf
Publication-Status: published as House Price Volatility and the Housing Ladder, James Banks, Richard Blundell, Zoë Oldfield, James P. Smith. in Insights in the Economics of Aging, Wise. 2017
Abstract: This paper investigates the effects of spatial housing price risk on housing choices over the first half of the life-cycle. Housing price risk can be substantial but, unlike other risky assets which people can avoid, most people want to eventually own their home thereby creating an insurance demand early in life. Our contribution focuses on the importance of home ownership as a hedge against future house price risk for individuals that plan to move up the housing ladder. We use a simple theoretical model to show that people living in places with higher housing price risk should own their first home at a younger age, live in larger homes, and be less likely to refinance. These predictions are shown to hold using panel data from the United States and United Kingdom.
Handle: RePEc:nbr:nberwo:21255
Template-Type: ReDIF-Paper 1.0
Title: Charter Schools: A Survey of Research on Their Characteristics and Effectiveness
Classification-JEL: H4; I2; I21
Author-Name: Dennis Epple
Author-Person: pep21
Author-Name: Richard Romano
Author-Person: pro223
Author-Name: Ron Zimmer
Author-Person: pzi138
Note: ED
Number: 21256
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21256
File-URL: http://www.nber.org/papers/w21256.pdf
File-Format: application/pdf
Publication-Status: published as D. Epple, R. Romano, R. Zimmer, Chapter 3 - Charter Schools: A Survey of Research on Their Characteristics and Effectiveness, Editor(s): Eric A. Hanushek, Stephen Machin, Ludger Woessmann, Handbook of the Economics of Education, Elsevier, Volume 5, 2016, Pages 139-208, ISSN 1574-0692, ISBN 9780444634597, https://doi.org/10.1016/B978-0-444-63459-7.00003-8.
Abstract: The charter school movement is nearing its 25th anniversary, making this an opportune time to take stock of the movement by addressing the following questions: Where do charter schools locate? Who do they serve? Who manages them? Who teaches in them? Most importantly, what are the effects of charter schools on the academic performance of students who enroll in charters and on students who remain in traditional public schools? We review research findings that shed light on these questions.
Handle: RePEc:nbr:nberwo:21256
Template-Type: ReDIF-Paper 1.0
Title: Welfare Rules, Incentives, and Family Structure
Classification-JEL: I38; J1
Author-Name: Robert A. Moffitt
Author-Person: pmo48
Author-Name: Brian J. Phelan
Author-Name: Anne E. Winkler
Author-Person: pwi276
Note: LS PE
Number: 21257
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21257
File-URL: http://www.nber.org/papers/w21257.pdf
File-Format: application/pdf
Publication-Status: published as Robert A. Moffitt & Brian J. Phelan & Anne E. Winkler, 2020. "Welfare Rules, Incentives, and Family Structure," Journal of Human Resources, vol 55(1), pages 1-42.
Abstract: We provide a new examination of the incentive effects of welfare rules on family structure among low-income women by emphasizing that the eligibility and benefit rules in the AFDC and TANF programs are based more on the biological relationship between the children and any male in the household than on marriage or cohabitation per se. Using data from 1996 through 2008, we analyze the effects of 1990s welfare reforms on family structure categories that incorporate the biological status of the male. Like past work, we find that most policies did not affect family structure. However, we do find that several work-related reforms increased single parenthood and decreased marriage to biological fathers. These results are especially evident when multiple work-related policies were implemented together and when we examine the longer term impacts of the policies. We posit that these effects of work-related welfare policies on family structure stem from their effects on increased labor force participation and earnings of single mothers combined with factors special to biological fathers, including a decline in their employment and wages.
Handle: RePEc:nbr:nberwo:21257
Template-Type: ReDIF-Paper 1.0
Title: Customers and Investors: A Framework for Understanding Financial Institutions
Classification-JEL: D81; D83; G01; G20; G21; G23; G28; H12; H81
Author-Name: Robert C. Merton
Author-Person: pme203
Author-Name: Richard T. Thakor
Author-Person: pth359
Note: EFG LE POL
Number: 21258
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21258
File-URL: http://www.nber.org/papers/w21258.pdf
File-Format: application/pdf
Publication-Status: published as Robert C. Merton & Richard T. Thakor, 2018. "Customers and Investors: A Framework for Understanding the Evolution of Financial Institutions," Journal of Financial Intermediation, .
Abstract: Financial institutions have both investors and customers. Investors, such as those who invest in stocks and bonds or private/public-sector guarantors of institutions, expect an appropriate risk-adjusted return in exchange for the financing and risk-bearing that they provide. Customers of a financial intermediary, in contrast, provide financing in exchange for a specific set of services, and do not want the fulfillment of these services to be contingent on the credit risk of the intermediary, even when they are not small, uninformed agents lacking in sophistication. This paper develops a framework that defines the roles of customers and investors in intermediaries, and uses the framework to provide an economic foundation for the aversion to intermediary credit risk on the part of its customers. This customer-investor nexus has implications for a host of issues related to how contracts between financial intermediaries and their customers are structured and how risks are shared between them, as well as the consequences of (unanticipated) deviations from the ex ante efficient contractual arrangement for institutional design, regulatory practices, and financial crises. Moreover, customers and investors are often intertwined in practice, and so this intertwining provides insights into the adoption of “too-big-to-fail” policies and bailouts by regulators in general.
Handle: RePEc:nbr:nberwo:21258
Template-Type: ReDIF-Paper 1.0
Title: Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan
Classification-JEL: L5; L9; Q48; Q54
Author-Name: James B. Bushnell
Author-Person: pbu181
Author-Name: Stephen P. Holland
Author-Person: pho374
Author-Name: Jonathan E. Hughes
Author-Person: phu390
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Note: EEE IO POL
Number: 21259
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21259
File-URL: http://www.nber.org/papers/w21259.pdf
File-Format: application/pdf
Publication-Status: published as James B. Bushnell & Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel, 2017. "Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 57-90, May.
Abstract: Flexibility in environmental regulations can lead to reduced costs if it allows additional abatement from lower cost sources or if policy tailoring and experimentation across states increases regulatory efficiency. The EPA's 2014 Clean Power Plan, which implements greenhouse gas regulation of power plants under the Clean Air Act, allows substantial regulatory flexibility. The Clean Power Plan sets state-level 2030 goals for emissions rates (in lbs CO2 per MWh) with substantial variation in the goals across states. The Clean Power Plan allows states considerable flexibility in attaining these goals. In particular, states can choose whether to implement the rate standards goals or equivalent mass-based goals (i.e., emissions cap and trade, CAT). Moreover, states can choose whether or not to join with other states in implementing their goals. We analyze incentives to adopt inefficient rate standards versus efficient CAT standards using both analytical and simulation models. We have five main results. First, we theoretically show that industry supply can be efficient under both CAT regulation and rate-based regulation. However, under rate-based standards the carbon price must equal the social cost of carbon and the rate standard must be equal across all the states. Second, we illustrate important differences in the incentives of a unified coalition of states and the incentives of a single state. Third, our simulation results show that when states fail to coordinate on a policy, the merit order can be ``scrambled'' quite dramatically leading to significant inefficiencies. Fourth, the Nash equilibrium of a game between coastal and inland western states is an inefficient policy for consumers and an uncoordinated policy for generators. Finally, we show that how new plants are treated under the Clean Power Plan has large effects on the scale and location of entry.
Handle: RePEc:nbr:nberwo:21259
Template-Type: ReDIF-Paper 1.0
Title: Expectations and Investment
Classification-JEL: E03; E22; E32; G3
Author-Name: Nicola Gennaioli
Author-Person: pge95
Author-Name: Yueran Ma
Author-Name: Andrei Shleifer
Author-Person: psh93
Note: CF EFG ME
Number: 21260
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21260
File-URL: http://www.nber.org/papers/w21260.pdf
File-Format: application/pdf
Publication-Status: published as Expectations and Investment, Nicola Gennaioli, Yueran Ma, Andrei Shleifer. in NBER Macroeconomics Annual 2015, Volume 30, Eichenbaum and Parker. 2016
Abstract: Using micro data from Duke University quarterly survey of Chief Financial Officers, we show that corporate investment plans as well as actual investment are well explained by CFOs’ expectations of earnings growth. The information in expectations data is not subsumed by traditional variables, such as Tobin’s Q or discount rates. We also show that errors in CFO expectations of earnings growth are predictable from past earnings and other data, pointing to extrapolative structure of expectations and suggesting that expectations may not be rational. This evidence, like earlier findings in finance, points to the usefulness of data on actual expectations for understanding economic behavior.
Handle: RePEc:nbr:nberwo:21260
Template-Type: ReDIF-Paper 1.0
Title: A New Look at the U.S. Foreclosure Crisis: Panel Data Evidence of Prime and Subprime Borrowers from 1997 to 2012
Classification-JEL: E0; G0; H0; J0; R0
Author-Name: Fernando Ferreira
Author-Person: pfe163
Author-Name: Joseph Gyourko
Author-Person: pgy3
Note: AP CF EFG IFM LS ME PE POL
Number: 21261
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21261
File-URL: http://www.nber.org/papers/w21261.pdf
File-Format: application/pdf
Abstract: Utilizing new panel micro data on the ownership sequences of all types of borrowers from 1997-2012 leads to a reinterpretation of the U.S. foreclosure crisis as more of a prime, rather than a subprime, borrower issue. Moreover, traditional mortgage default factors associated with the economic cycle, such as negative equity, completely account for the foreclosure propensity of prime borrowers relative to all-cash owners, and for three-quarters of the analogous subprime gap. Housing traits, race, initial income, and speculators did not play a meaningful role, and initial leverage only accounts for a small variation in outcomes of prime and subprime borrowers.
Handle: RePEc:nbr:nberwo:21261
Template-Type: ReDIF-Paper 1.0
Title: Labor Market Networks and Recovery from Mass Layoffs: Evidence from the Great Recession Period
Classification-JEL: J01; R12
Author-Name: Judith K. Hellerstein
Author-Person: phe270
Author-Name: Mark J. Kutzbach
Author-Person: pku187
Author-Name: David Neumark
Author-Person: pne16
Note: LS
Number: 21262
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21262
File-URL: http://www.nber.org/papers/w21262.pdf
File-Format: application/pdf
Publication-Status: published as Judith K. Hellerstein & Mark J. Kutzbach & David Neumark, 2019. "Labor Market Networks and Recovery from Mass Layoffs: Evidence from the Great Recession Period," Journal of Urban Economics, .
Abstract: We measure the changing efficacy of neighborhood-based labor market networks, across the business cycle, in helping displaced workers become re-employed, focusing on the periods before, during, and just after the Great Recession. Networks can only be effective when hiring is occurring, and hiring varied greatly between 2005 and 2012, the period we study. We therefore focus on a measure of the strength of the labor market networks that includes not only the number of employed neighbors of a laid off worker, but also the gross hiring rate at that person’s neighbors’ workplaces. Our evidence indicates that local labor market networks increase re-employment following mass layoffs, and in particular, that networks serve to markedly increase the probability of re-employment specifically at neighbors’ employers. This is especially true for low-earnings workers. Moreover, although hiring and employment rates decreased during the Great Recession period, the productivity of labor market networks in helping to secure re-employment for laid off workers was remarkably stable during our sample period.
Handle: RePEc:nbr:nberwo:21262
Template-Type: ReDIF-Paper 1.0
Title: Watersheds in Child Mortality: The Role of Effective Water and Sewerage Infrastructure, 1880 to 1920
Classification-JEL: H51; I15; J1; N3
Author-Name: Marcella Alsan
Author-Person: pal885
Author-Name: Claudia Goldin
Author-Person: pgo601
Note: DAE DEV
Number: 21263
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21263
File-URL: http://www.nber.org/papers/w21263.pdf
File-Format: application/pdf
Publication-Status: published as Marcella Alsan & Claudia Goldin, 2019. "Watersheds in Child Mortality: The Role of Effective Water and Sewerage Infrastructure, 1880–1920," Journal of Political Economy, vol 127(2), pages 586-638.
Abstract: We explore the first period of sustained decline in child mortality in the U.S. and provide estimates of the independent and combined effects of clean water and effective sewerage systems on under-five mortality. Our case is Massachusetts, 1880 to 1920, when authorities developed a sewerage and water district in the Boston area. We find the two interventions were complementary and together account for approximately one-third of the decline in log child mortality during the 41 years. Our findings are relevant to the developing world and suggest that a piecemeal approach to infrastructure investments is unlikely to significantly improve child health.
Handle: RePEc:nbr:nberwo:21263
Template-Type: ReDIF-Paper 1.0
Title: Shaming Tax Delinquents
Classification-JEL: H26; H63; K42
Author-Name: Ricardo Perez-Truglia
Author-Name: Ugo Troiano
Author-Person: ptr194
Note: PE
Number: 21264
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21264
File-URL: http://www.nber.org/papers/w21264.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo Perez-Truglia & Ugo Troiano, 2018. "Shaming tax delinquents," Journal of Public Economics, vol 167, pages 120-137.
Abstract: Many federal and local governments rely on shaming penalties to achieve policy goals, but little is known about how shaming works. Such penalties may be ineffective, or even backfire by crowding out intrinsic motivation. In this paper, we study shaming in the context of the collection of tax delinquencies. We sent letters to 34,334 tax delinquents who owed a total of half a billion dollars in three U.S. states. We randomized some of the information contained in the letter to vary the salience of financial penalties, shaming penalties, and peer comparisons. We then measured the effects of this information on subsequent payment rates, and found that increasing the visibility of delinquency status increases compliance by individuals who have debts below $2,500, but has no significant effect on individuals with larger debt amounts. Financial reminders have a positive effect on payment rates independent of the size of the debt, while information about the delinquency of neighbors has no effect on payment rates.
Handle: RePEc:nbr:nberwo:21264
Template-Type: ReDIF-Paper 1.0
Title: Single-Issue Campaigns and Multidimensional Politics
Classification-JEL: D72; D82
Author-Name: Georgy Egorov
Author-Person: peg15
Note: POL
Number: 21265
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21265
File-URL: http://www.nber.org/papers/w21265.pdf
File-Format: application/pdf
Abstract: In most elections, voters care about several issues, but candidates may have to choose only a few to build their campaign on. The information that voters will get about the politician depends on this choice, and it is therefore a strategic one. In this paper, I study a model of elections where voters care about the candidates' competences (or positions) over two issues, e.g., economy and foreign policy, but each candidate may only credibly signal his competence or announce his position on at most one issue. Voters are assumed to get (weakly) better information if the candidates campaign on the same issue rather than on different ones. I show that the first mover will, in equilibrium, set the agenda for both himself and the opponent if campaigning on a different issue is uninformative, but otherwise the other candidate may actually be more likely to choose the other issue. The social (voters') welfare is a non-monotone function of the informativeness of different-issue campaigns, but in any case the voters are better off if candidates are free to pick an issue rather than if an issue is set by exogenous events or by voters. If the first mover is able to reconsider his choice in case the follower picked a different issue, then politicians who are very competent on both issues will switch. If voters have superior information on a politician's credentials on one of the issues, this politician is more likely to campaign on another issue. If voters care about one issue more than the other, the politicians are more likely to campaign on the more important issue. If politicians are able to advertise on both issues, at a cost, then the most competent and well-rounded will do so. This possibility makes voters better informed and better off, but has an ambiguous effect on politicians' utility. The model and the results may help understand endogenous selection of issues in political campaigns and the dynamics of these decisions.
Handle: RePEc:nbr:nberwo:21265
Template-Type: ReDIF-Paper 1.0
Title: The Mortality Cost of Political Connections
Classification-JEL: D73; J81; P26
Author-Name: Raymond Fisman
Author-Person: pfi257
Author-Name: Yongxiang Wang
Note: CF DEV LE POL
Number: 21266
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21266
File-URL: http://www.nber.org/papers/w21266.pdf
File-Format: application/pdf
Publication-Status: published as Raymond Fisman & Yongxiang Wang, 2015. "The Mortality Cost of Political Connections," The Review of Economic Studies, vol 82(4), pages 1346-1382.
Abstract: We study the relationship between the political connections of Chinese firms and workplace fatalities. In our preferred specification we find that the worker death rate for connected companies is two to three times that of unconnected firms (depending on the sample employed), a pattern that holds for within-firm estimations. The connections-mortality relationship is attenuated in provinces where safety regulators' promotion is contingent on meeting safety targets. In the absence of fatalities, connected firms receive fewer reports of major violations for safety compliance, whereas in years of fatal accidents the rate of reported violations is identical. Moreover, fatal accidents produce negative returns at connected companies and are associated with the subsequent departure of well-connected executives. These results provide suggestive evidence that connections enable firms to avoid (potentially costly) compliance measures, rather than using connections to avoid regulatory response after accidents occur. Our findings emphasize the social costs of political connections, and suggest that appropriate regulatory incentives may be useful in mitigating these costs.
Handle: RePEc:nbr:nberwo:21266
Template-Type: ReDIF-Paper 1.0
Title: The Gordon Gekko Effect: The Role of Culture in the Financial Industry
Classification-JEL: G01; G28; G3; M14; Z1
Author-Name: Andrew W. Lo
Author-Person: plo171
Note: AP CF IO LS POL PR
Number: 21267
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21267
File-URL: http://www.nber.org/papers/w21267.pdf
File-Format: application/pdf
Publication-Status: published as Lo, Andrew W., 2016. "The Gordon Gekko effect: the role of culture in the financial industry," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 17-42.
Abstract: Culture is a potent force in shaping individual and group behavior, yet it has received scant attention in the context of financial risk management and the recent financial crisis. I present a brief overview of the role of culture according to psychologists, sociologists, and economists, and then present a specific framework for analyzing culture in the context of financial practices and institutions in which three questions are answered: (1) What is culture?; (2) Does it matter?; and (3) Can it be changed? I illustrate the utility of this framework by applying it to five concrete situations—Long Term Capital Management; AIG Financial Products; Lehman Brothers and Repo 105; Société Générale’s rogue trader; and the SEC and the Madoff Ponzi scheme—and conclude with a proposal to change culture via “behavioral risk management.”
Handle: RePEc:nbr:nberwo:21267
Template-Type: ReDIF-Paper 1.0
Title: Savings After Retirement: A Survey
Classification-JEL: D1; D14; D31; E21; H2; I14
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Eric French
Author-Person: pfr203
Author-Name: John B. Jones
Author-Person: pjo135
Note: AG EH PE
Number: 21268
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21268
File-URL: http://www.nber.org/papers/w21268.pdf
File-Format: application/pdf
Publication-Status: published as De Nardi, Mariacristina & French, Eric & Jones, John Bailey, 2016. "Savings after Retirement: A Survey," Chicago Fed Letter, Federal Reserve Bank of Chicago.
Publication-Status: published as Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Savings After Retirement: A Survey," Annual Review of Economics, vol 8(1).
Abstract: The saving patterns of retired U.S. households pose a challenge to the basic life-cycle model of saving. The observed patterns of out-of-pocket medical expenses, which rise quickly with age and income during retirement, and heterogeneous lifespan risk, can explain a significant portion U.S. savings during retirement. However, more work is needed to disentangle these precautionary saving motives from other motives, such as the desire to leave bequests. An important complementary question is why households do not buy more insurance against these risks. Going beyond total savings and looking at its components, including housing, and looking at other portfolio choices can help shed light on these questions.
Handle: RePEc:nbr:nberwo:21268
Template-Type: ReDIF-Paper 1.0
Title: Simulating Russia’s and Other Large Economies’ Challenging and Interconnected Transitions
Classification-JEL: F0; F20; H0; H2; H3; J20
Author-Name: Seth G. Benzell
Author-Name: Eugene Goryunov
Author-Person: pgo582
Author-Name: Maria Kazakova
Author-Name: Laurence J. Kotlikoff
Author-Person: pko44
Author-Name: Guillermo LaGarda
Author-Person: pla788
Author-Name: Kristina Nesterova
Author-Name: Andrey Zubarev
Author-Person: pzu44
Note: PE
Number: 21269
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21269
File-URL: http://www.nber.org/papers/w21269.pdf
File-Format: application/pdf
Abstract: This paper develops a large-scale, dynamic life-cycle model to simulate Russia’s demographic and fiscal transition under favorable and unfavorable fossil-fuel price regimes. The model includes Russia, the U.S., China, India, the EU, and Japan+ (Japan plus Korea). The model predicts dramatic increases in tax rates in the U.S., EU, India, and Russia. Indeed, the increases are so large as to question their political feasibility let alone their actual collection given the potential for tax avoidance and tax evasion.
Handle: RePEc:nbr:nberwo:21269
Template-Type: ReDIF-Paper 1.0
Title: Medical Spending of the U.S. Elderly
Classification-JEL: D12; D14; I13; I14
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Eric French
Author-Person: pfr203
Author-Name: John Bailey Jones
Author-Person: pjo135
Author-Name: Jeremy McCauley
Author-Person: pmc251
Note: AG EH PE
Number: 21270
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21270
File-URL: http://www.nber.org/papers/w21270.pdf
File-Format: application/pdf
Publication-Status: published as Eric French & Elaine Kelly & Mariacristina Nardi & Eric French & John Bailey Jones & Jeremy McCauley, 2016. "Medical Spending of the US Elderly," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 717-747, September.
Abstract: We use data from the Medicare Current Beneficiary Survey (MCBS) to document the medical spending of Americans aged 65 and older. We find that medical expenses more than double between ages 70 and 90 and that they are very concentrated: the top 10% of all spenders are responsible for 52% of medical spending in a given year. In addition, those currently experiencing either very low or very high medical expenses are likely to find themselves in the same position in the future. We also find that the poor consume more medical goods and services than the rich and have a much larger share of their expenses covered by the government. Overall, the government pays for 65% of the elderly's medical expenses. Despite this, the expenses that remain after government transfers are even more concentrated among a small group of people. Thus, government health insurance, while potentially very valuable, is far from complete. Finally, while medical expenses before death can be large, on average they constitute only a small fraction of total spending, both in the aggregate and over the life cycle. Hence, medical expenses before death do not appear to be an important driver of the high and increasing medical spending found in the U.S.
Handle: RePEc:nbr:nberwo:21270
Template-Type: ReDIF-Paper 1.0
Title: What Do University Endowment Managers Worry About? An Analysis of Alternative Asset Investments and Background Income
Classification-JEL: I22; I23
Author-Name: Harvey S. Rosen
Author-Person: pro55
Author-Name: Alexander J. W. Sappington
Note: ED PE
Number: 21271
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21271
File-URL: http://www.nber.org/papers/w21271.pdf
File-Format: application/pdf
Publication-Status: published as Harvey S. Rosen & Alexander J. W. Sappington, 2016. "What Do University Endowment Managers Worry About? An Analysis of Alternative Asset Investments and Background Income," Education Finance and Policy, vol 11(4), pages 404-425.
Abstract: This paper examines whether university endowment managers think only in terms of the assets they manage, or also take into account background income, the other flows of income to the university. Specifically, we test whether the level and variability of a university’s background income (e.g., from tuition and government grants) affect its endowment’s allocations to so-called alternative assets such as hedge funds, private equity, and venture capital. We find that both the probability of investing in alternative assets and the proportion of the portfolio invested in such assets increase with expected background income and decrease with its variability.
Handle: RePEc:nbr:nberwo:21271
Template-Type: ReDIF-Paper 1.0
Title: Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers
Classification-JEL: D14; D91; H24
Author-Name: Damon Jones
Author-Person: pjo350
Author-Name: Aprajit Mahajan
Note: PE
Number: 21272
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21272
File-URL: http://www.nber.org/papers/w21272.pdf
File-Format: application/pdf
Abstract: We conduct a field experiment designed to test theories of time-inconsistency, namely a "Beta-Delta" model of present bias. The experiment takes place in the context of a saving decision made by low-income tax filers who can deposit their income tax refund into an illiquid account. We find qualitative evidence consistent with present-biased preferences. The tradeoff between an earlier payment or a later one is much more skewed toward taking the early payment when the decision is made on the spot than when the decision is made in advance. We estimate a β and δ of 0.34 and 1.08 over an 8-month horizon, respectively, which translates into an annual discount rate of 164%.
Handle: RePEc:nbr:nberwo:21272
Template-Type: ReDIF-Paper 1.0
Title: Partisan Conflict and Private Investment
Classification-JEL: C11; C26; E02; E22; E32; E62; H3; P48
Author-Name: Marina Azzimonti
Author-Person: paz11
Note: EFG POL
Number: 21273
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21273
File-URL: http://www.nber.org/papers/w21273.pdf
File-Format: application/pdf
Publication-Status: published as Marina Azzimonti, 2017. "Partisan Conflict and Private Investment," Journal of Monetary Economics, .
Abstract: American politics have been characterized by a high degree of partisan conflict in recent years. Combined with a divided government, this has led not only to significant Congressional gridlock, but also to spells of high fiscal policy uncertainty. The unusually slow recovery from the Great Recession during the same period suggests the possibility that the two phenomena may be related. In this paper, I investigate the hypothesis that political discord depresses private investment. To this end, I construct a novel high- frequency indicator of partisan conflict. The partisan conflict index (PCI) uses a semantic search methodology to measure the frequency of newspaper articles reporting lawmakers' disagreement about policy. I find a negative relationship between the PCI and aggregate investment in the US. Moreover, the decline is persistent, which may help explain the slow recovery observed since the 2007 recession ended. Partisan conflict is also associated with lower investment rates at the firm level, particularly in firms that rely heavily on government spending and in those who actively engage in campaign contributions through PACs.
Handle: RePEc:nbr:nberwo:21273
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Trade and International Labor Mobility
Classification-JEL: F13; F22
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Gustavo Torrens
Note: DEV
Number: 21274
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21274
File-URL: http://www.nber.org/papers/w21274.pdf
File-Format: application/pdf
Publication-Status: published as Sebastian Galiani & Gustavo Torrens, 2021. "The political economy of trade and international labour mobility," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(4), pages 1737-1781, November.
Abstract: We explore the political economy of trade and migration policies in several models of international trade. We show that in a Ricardian world, free trade and no international labor mobility is a Nash equilibrium outcome, but free trade and free international labor mobility is not. The result holds under different assumptions about the set of goods, preferences and the number of countries. An analogous result also holds in multifactor economies such as: a version of the standard two-sector Heckscher-Ohlin model, the Ricardo-Vinner specific factors model, and a three-sector model with a non-tradeable sector. We also study three extensions of our model in which free trade and at least partial labor mobility is a Nash equilibrium outcome. One extension introduces increasing returns to scale. Another an extractive elite. Finally, we allow the recipient country to charge an immigration fee in the form of an income tax and distribute the proceeds among domestic workers, which induces a Pareto improvement for the global economy.
Handle: RePEc:nbr:nberwo:21274
Template-Type: ReDIF-Paper 1.0
Title: How Much Can Expanding Access to Long-Acting Reversible Contraceptives Reduce Teen Birth Rates?
Classification-JEL: H4; I12; J13
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Analisa Packham
Note: CH EH PE
Number: 21275
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21275
File-URL: http://www.nber.org/papers/w21275.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & Analisa Packham, 2017. "How Much Can Expanding Access to Long-Acting Reversible Contraceptives Reduce Teen Birth Rates?," American Economic Journal: Economic Policy, vol 9(3), pages 348-376.
Abstract: Despite a near-continuous decline over the past 20 years, the teen birth rate in the United States continues to be higher than that of other developed countries. Given that over three- quarters of teen births are unintended at conception and that over a third of unplanned births are to women using contraception, many have advocated for promoting the use of long-acting reversible contraceptives (LARCs), which are more effective at preventing pregnancy than more commonly used contraceptives. In order to speak to the degree to which increasing access to LARCs can reduce teen birth rates, this paper analyzes the first large-scale policy intervention to promote and improve access to LARCs in the United States: Colorado’s Family Planning Initiative. We estimate its effects using a difference-in-differences approach, comparing the changes in teen birth rates in Colorado counties with Title X clinics (which received funding) to the changes observed in other US counties with Title X clinics. The results of this analysis indicate that the $23 million program reduced the teen birth rate by approximately 5% in the four years following its implementation, providing support for the notion that increasing access to LARCs is a mechanism through which policy can reduce teenage childbearing.
Handle: RePEc:nbr:nberwo:21275
Template-Type: ReDIF-Paper 1.0
Title: Discounting Pension Liabilities: Funding versus Value
Classification-JEL: G20; H55; J26
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: George G. Pennacchi
Author-Person: ppe479
Note: AG AP PE
Number: 21276
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21276
File-URL: http://www.nber.org/papers/w21276.pdf
File-Format: application/pdf
Publication-Status: published as Discounting Pension Liabilities: Funding versus Value, Jeffrey R. Brown, George Pennacchi. in The Impact of Reforms of State Retirement Plans, Clark and Newhouse. 2016
Publication-Status: published as JEFFREY R. BROWN & GEORGE G. PENNACCHI, 2016. "Discounting pension liabilities: funding versus value," Journal of Pension Economics and Finance, vol 15(03), pages 254-284.
Abstract: We argue that the appropriate discount rate for pension liabilities depends on the objective. In particular, if the objective is to measure pension under- or over- funding, a default-free discount rate should always be used, even if the liabilities are themselves not default-free. If, instead, the objective is to determine the market value of pension benefits, then it is appropriate that discount rates incorporate default risk. We also discuss the choice of a default-free discount rate. Finally, we show how cost-of-living adjustments (COLAs) that are common in public pensions can be accounted for and valued in this framework.
Handle: RePEc:nbr:nberwo:21276
Template-Type: ReDIF-Paper 1.0
Title: Biological Health Risks and Economic Development
Classification-JEL: I15; O10
Author-Name: Elizabeth Frankenberg
Author-Name: Jessica Y. Ho
Author-Name: Duncan Thomas
Author-Person: pth20
Note: DEV
Number: 21277
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21277
File-URL: http://www.nber.org/papers/w21277.pdf
File-Format: application/pdf
Publication-Status: published as "Biological health risks and economic development." in John Komlos and Inas Rashad Kelly (eds.) The Oxford Handbook of Economics and Human Biology, Oxford University Press, 2016
Abstract: With populations aging and the epidemic of obesity spreading across the globe, global health risks are shifting toward non-communicable diseases. Innovative biomarker data from recently conducted population-representative surveys in lower, middle and higher income countries are used to describe how four key biological health risks – hypertension, cholesterol, glucose and inflammation – vary with economic development and, within each country, with age, gender and education. As obesity rises in lower income countries, the burden of non-communicable diseases will rise in roughly predictable ways and the costs to society are potentially very large. Investigations that explain cross-country differences in these relationships will have a major impact on advancing understanding of the complex interplay between biology, health and development.
Handle: RePEc:nbr:nberwo:21277
Template-Type: ReDIF-Paper 1.0
Title: Financing Entrepreneurial Experimentation
Classification-JEL: G24; L26; O31
Author-Name: Ramana Nanda
Author-Person: pna187
Author-Name: Matthew Rhodes-Kropf
Author-Person: prh19
Note: CF PR
Number: 21278
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21278
File-URL: http://www.nber.org/papers/w21278.pdf
File-Format: application/pdf
Publication-Status: published as Financing Entrepreneurial Experimentation, Ramana Nanda, Matthew Rhodes-Kropf. in Innovation Policy and the Economy, Volume 16, Lerner and Stern. 2016
Abstract: The fundamental uncertainty of new technologies at their earliest stages implies that it is virtually impossible to know the true potential of a venture without learning about its viability through a sequence of investments over time. We show how this process of experimentation can be particularly valuable in the context of entrepreneurship because most new ventures fail completely, and only a few become extremely successful. We also shed light on important costs to this process of experimentation, and demonstrate how these can fundamentally alter both the rate and direction of startup innovation across industries, regions and periods of time.
Handle: RePEc:nbr:nberwo:21278
Template-Type: ReDIF-Paper 1.0
Title: Suicide, Age, and Wellbeing: an Empirical Investigation
Classification-JEL: I12; I3
Author-Name: Anne Case
Author-Person: pca108
Author-Name: Angus Deaton
Author-Person: pde30
Note: AG EH
Number: 21279
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21279
File-URL: http://www.nber.org/papers/w21279.pdf
File-Format: application/pdf
Publication-Status: published as Suicide, Age, and Well-Being: An Empirical Investigation, Anne Case, Angus Deaton. in Insights in the Economics of Aging, Wise. 2017
Abstract: Suicide rates, life evaluation, and measures of affect are all plausible measures of the mental health and wellbeing of populations. Yet in the settings we examine, correlations between suicide and measured wellbeing are at best inconsistent. Differences in suicides between men and women, between Hispanics, blacks, and whites, between age groups for men, between countries or US states, between calendar years, and between days of the week, do not match differences in life evaluation. By contrast, reports of physical pain are strongly predictive of suicide in many contexts. The prevalence of pain is increasing among middle-aged Americans, and is accompanied by a substantial increase in suicides and deaths from drug and alcohol poisoning. Our measure of pain is now highest in middle age—when life evaluation and positive affect are at a minimum. In the absence of the pain epidemic, suicide and life evaluation are likely unrelated, leaving unresolved whether either one is a useful overall measure of population wellbeing.
Handle: RePEc:nbr:nberwo:21279
Template-Type: ReDIF-Paper 1.0
Title: Debt into Growth: How Sovereign Debt Accelerated the First Industrial Revolution
Classification-JEL: E22; E25; E62; H56; H60; N13; N23
Author-Name: Jaume Ventura
Author-Person: pve110
Author-Name: Hans-Joachim Voth
Author-Person: pvo5
Note: EFG IFM
Number: 21280
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21280
File-URL: http://www.nber.org/papers/w21280.pdf
File-Format: application/pdf
Abstract: Why did the country that borrowed the most industrialize first? Earlier research has viewed the explosion of debt in 18th century Britain as either detrimental, or as neutral for economic growth. In this paper, we argue instead that Britain’s borrowing boom was beneficial. The massive issuance of liquidly traded bonds allowed the nobility to switch out of low-return investments such as agricultural improvements. This switch lowered factor demand by old sectors and increased profits in new, rising ones such as textiles and iron. Because external financing contributed little to the Industrial Revolution, this boost in profits in new industries accelerated structural change, making Britain more industrial more quickly. The absence of an effective transfer of financial resources from old to new sectors also helps to explain why the Industrial Revolution led to massive social change – because the rich nobility did not lend to or invest in the revolutionizing industries, it failed to capture the high returns to capital in these sectors, leading to relative economic decline.
Handle: RePEc:nbr:nberwo:21280
Template-Type: ReDIF-Paper 1.0
Title: Comovement Revisited
Classification-JEL: G14
Author-Name: Honghui Chen
Author-Name: Vijay Singal
Author-Name: Robert F. Whitelaw
Note: AP
Number: 21281
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21281
File-URL: http://www.nber.org/papers/w21281.pdf
File-Format: application/pdf
Publication-Status: published as Honghui Chen & Vijay Singal & Robert F. Whitelaw, 2016. "Comovement revisited," Journal of Financial Economics, vol 121(3), pages 624-644.
Abstract: Recent evidence of excessive comovement among stocks following index additions (Barberis, Shleifer, and Wurgler, 2005) and stock splits (Green and Hwang, 2009) challenges traditional finance theory. Based on a simple model, we show that the bivariate regressions relied upon in the literature often provide little or no information about the economic magnitude of the phenomenon of interest, and the coefficients in these regressions are very sensitive to time-variation in the characteristics of the return processes that are unrelated to excess comovement. Instead, univariate regressions of the stock return on the returns of the group it is leaving (e.g., non-S&P stocks) and the group it is joining (e.g., S&P stocks) reveal the relevant information. When we reexamine the empirical evidence using control samples matched on past returns and compute Dimson betas, almost all evidence of excess comovement disappears. The results in the literature are consistent with changes in the fundamental factor loadings of the stocks. One key element to understanding these striking results is that, in both the examples we study, the stocks exhibit strong returns prior to the event in question. We document the heretofore unknown empirical regularity that winner stocks exhibit increases in betas. Thus, much of the apparent excess comovement is just a manifestation of momentum.
Handle: RePEc:nbr:nberwo:21281
Template-Type: ReDIF-Paper 1.0
Title: Core Inflation and Trend Inflation
Classification-JEL: E31
Author-Name: James H. Stock
Author-Person: pst148
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: EFG ME
Number: 21282
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21282
File-URL: http://www.nber.org/papers/w21282.pdf
File-Format: application/pdf
Publication-Status: published as James H. Stock & Mark W. Watson, 2016. "Core Inflation and Trend Inflation," Review of Economics and Statistics, vol 98(4), pages 770-784.
Abstract: An important input to monetary policymaking is estimating the current level of inflation. This paper examines empirically whether the measurement of trend inflation can be improved by using disaggregated data on sectoral inflation to construct indexes akin to core inflation, but with time-varying distributed lags of weights, where the sectoral weight depends on the time-varying volatility and persistence of the sectoral inflation series, and on the comovement among sectors. The model is estimated using U.S. data on 17 components of the personal consumption expenditure inflation index. The modeling framework is a dynamic factor model with time-varying coefficients and stochastic volatility as in del Negro and Otrok (2008); this is the multivariate extension of the univariate unobserved components-stochastic volatility model of trend inflation in Stock and Watson (2007). Our main empirical results are (i) the resulting multivariate estimate of trend inflation is similar to the univariate estimate of trend inflation computed using core PCE inflation (excluding food and energy) in the first half of the sample, but introduces food in the second half of the sample: early in the sample, food inflation was noisy and a poor indicator of trend inflation, but now food inflation is less volatile, more persistent, and a useful indicator; (ii) the model-based filtering uncertainty about trend inflation is substantially reduced by using the disaggregated series in a multivariate model, relative to computing the trend using only headline inflation; (iii) the multivariate trend and the univariate trend constructed using core measures of inflation forecast average inflation over the 1-3 year horizon more accurately than a variety of other benchmark inflation measures, although there is considerable sampling uncertainty in these forecast comparisons.
Handle: RePEc:nbr:nberwo:21282
Template-Type: ReDIF-Paper 1.0
Title: Choosing a Human Capital Measure: Educational Attainment Gaps and Rankings
Classification-JEL: E24; I25
Author-Name: Barbara M. Fraumeni
Note: DEV ED LS PR
Number: 21283
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21283
File-URL: http://www.nber.org/papers/w21283.pdf
File-Format: application/pdf
Abstract: According to the World Bank and the United Nations, human capital is the largest component of human wealth for most countries in the world. There is no question that human capital is critical to individual and society well-being and both present and future growth. This presentation draws upon an analysis of human capital measures for 18 countries, including the three most populous countries in the world: China, India, and the United States. This paper will focus on two human capital issues, which are considerations in choosing a human capital measure: the size of the educational attainment gap between those younger and older, and differences in rankings using alternative human capital measures. In a number of countries, younger individuals (age 25-24) have a significantly higher educational attainment than older individuals (aged 55-64). For these countries, expectations are that economic growth and well-being will improve over the longer term. Lifetime income measures which explicitly include the expected future work history and income of all individuals in a country are preferred over other measures if these gaps matter. The answer to the question: “What is the human capital ranking of countries?” depends upon the reference measure. Six types of measures are considered: PISA test scores, PIAAC, Barro-Lee educational attainment, Inclusive Wealth human capital, Jorgenson-Fraumeni lifetime income, and World Bank intangible capital. What explains the significant differences in the rankings? Is it important unmeasured attributes or country specific institutions and labor markets? Is it a failure of standard economic assumptions, such as individuals being paid what they are worth, to predict labor market outcomes? It is critical to answer these questions before choosing a human capital measure to predict economic growth and well-being in general, and notably the impact of younger cohorts being more highly educated than older cohorts.
Handle: RePEc:nbr:nberwo:21283
Template-Type: ReDIF-Paper 1.0
Title: The Accumulation of Human and Nonhuman Capital, Revisited
Classification-JEL: D24; E01; E24
Author-Name: Barbara M. Fraumeni
Author-Name: Michael S. Christian
Author-Name: Jon D. Samuels
Note: DAE ED EFG PR
Number: 21284
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21284
File-URL: http://www.nber.org/papers/w21284.pdf
File-Format: application/pdf
Publication-Status: published as Barbara M. Fraumeni & Michael S. Christian & Jon D. Samuels, 2017. "The Accumulation of Human and Nonhuman Capital, Revisited," Review of Income and Wealth, vol 63, pages S381-S410.
Abstract: In the 25 years since Jorgenson and Fraumeni (1989) published their first article on human capital, the U.S. National Income and Product Accounts (NIPA) and the SNA have changed significantly. The contribution of this paper is two-fold: Creation of a contemporary set of accounts which integrate human capital measures into the latest comprehensive revision of the U.S. national income accounts and an analysis of trends in human capital and national income account aggregates over the post-war period. The paper is a national income accounting paper with production and factor outlay, income, receipt and expenditure, capital accumulation , and wealth accounts. All of these accounts are tied to the NIPA accounts, and supplemented with human capital estimates. A key feature of the human capital accounts is presentation of human capital estimates in current and constant prices. The time period covered is 1949-84 and 1998-2009. We update the human capital national income accounts and examine trends in the aggregate time series. The results in the original Jorgenson and Fraumeni paper are for 1982 and the aggregate time series are from 1949-1984. Subsequent research by Christian (2012) developed modified Jorgenson-Fraumeni (J-F) human capital estimates from 1998 through 2009. Unfortunately there is a gap in coverage. Nonetheless, a comparison of the aggregates and their trends between the earlier and later period will be informative. The accounting tables in this new paper are for 2009, the latest base year for the NIPA accounts.
Handle: RePEc:nbr:nberwo:21284
Template-Type: ReDIF-Paper 1.0
Title: Cheap Talk, Round Numbers, and the Economics of Negotiation
Classification-JEL: C78; D82; D83; M21
Author-Name: Matthew Backus
Author-Name: Tom Blake
Author-Person: pbl139
Author-Name: Steven Tadelis
Author-Person: pta314
Note: IO PR
Number: 21285
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21285
File-URL: http://www.nber.org/papers/w21285.pdf
File-Format: application/pdf
Abstract: Can sellers credibly signal their private information to reduce frictions in negotiations? Guided by a simple cheap-talk model, we posit that impatient sellers use round numbers to signal their willingness to cut prices in order to sell faster, and test its implications using millions of online bargaining interactions. Items listed at multiples of $100 receive offers that are 5% - 8% lower but that arrive 6 - 11 days sooner than listings at neighboring "precise" values, and are 3% - 5% more likely to sell. Similar patterns in real estate transactions suggest that round-number signaling plays a broader role in negotiations.
Handle: RePEc:nbr:nberwo:21285
Template-Type: ReDIF-Paper 1.0
Title: Dark Trading at the Midpoint: Pricing Rules, Order Flow, and High Frequency Liquidity Provision
Classification-JEL: G10; G15; G18; G23; G28; K22
Author-Name: Robert P. Bartlett, III
Author-Name: Justin McCrary
Note: AP LE
Number: 21286
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21286
File-URL: http://www.nber.org/papers/w21286.pdf
File-Format: application/pdf
Abstract: Using over eight trillion observations of market data, we use a regression discontinuity design to analyze the effect of increasing the minimum price variation (MPV) for quoting equity securities in light of recent proposals to increase the MPV from $0.01 to $0.05. We show that a larger MPV encourages investors to trade in dark venues at the midpoint of the national best bid and offer. Enhanced order flow to dark venues reduces price competition by exchange liquidity providers, especially those using high frequency trading (HFT). Trading in dark venues due to a wider MPV reduces volatility and increases trading volume.
Handle: RePEc:nbr:nberwo:21286
Template-Type: ReDIF-Paper 1.0
Title: Growing Up to Stability? Financial Globalization, Financial Development and Financial Crises
Classification-JEL: E44; E58; E65; F32; F33; F34; F43; F6; N10; N20
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE
Number: 21287
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21287
File-URL: http://www.nber.org/papers/w21287.pdf
File-Format: application/pdf
Abstract: Why did some countries learn to grow up to financial stability and others not? We explore this question by surveying the key determinants and major policy responses to banking, currency, and debt crises between 1880 and present. We divide countries into three groups: leaders, learners, and non-learners. Each of these groups had very different experiences in terms of long-run economic outcomes, financial development, financial stability, crisis frequency, and their policy responses to crises. The countries that grew up to financial stability had rule of law, democracy, political stability and other institutional features highlighted in the literature on comparative development. We illustrate this by way of case studies for three kinds of financial crises for four countries (Argentina, Australia, Canada, and the United States) over the long-run.
Handle: RePEc:nbr:nberwo:21287
Template-Type: ReDIF-Paper 1.0
Title: Compassion or Cash: Evaluating Survey Response Incentives and Valuing Public Goods
Classification-JEL: C81; H44
Author-Name: V. Kerry Smith
Author-Person: psm143
Author-Name: Sharon L. Harlan
Author-Name: Michael McLaen
Author-Name: Jacob Fishman
Author-Name: Carlos Valcarcel
Author-Name: Marcia Nation
Note: EEE
Number: 21288
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21288
File-URL: http://www.nber.org/papers/w21288.pdf
File-Format: application/pdf
Abstract: This paper reports the results of an experiment evaluating the effects of incentives on individuals' willingness to participate in a survey. By pairing the assessment with a natural field experiment, the analysis considers private versus public goods as incentives, and estimates respondents' willingness to support the oldest food bank in the U.S.
Handle: RePEc:nbr:nberwo:21288
Template-Type: ReDIF-Paper 1.0
Title: Can Employment Reduce Lawlessness and Rebellion? A Field Experiment with High-Risk Men in a Fragile State
Classification-JEL: C93; D74; J21; O12
Author-Name: Christopher Blattman
Author-Person: pbl37
Author-Name: Jeannie Annan
Note: DEV LS POL
Number: 21289
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21289
File-URL: http://www.nber.org/papers/w21289.pdf
File-Format: application/pdf
Publication-Status: published as CHRISTOPHER BLATTMAN & JEANNIE ANNAN, 2016. "Can Employment Reduce Lawlessness and Rebellion? A Field Experiment with High-Risk Men in a Fragile State," American Political Science Review, vol 110(01), pages 1-17.
Abstract: States and aid agencies use employment programs to rehabilitate high-risk men in the belief that peaceful work opportunities will deter them from crime and violence. Rigorous evidence is rare. We experimentally evaluate a program of agricultural training, capital inputs, and counseling for Liberian ex-fighters who were illegally mining or occupying rubber plantations. 14 months after the program ended, men who accepted the program offer increased their farm employment and profits, and shifted work hours away from illicit activities. Men also reduced interest in mercenary work in a nearby war. Finally, some men did not receive their capital inputs but expected a future cash transfer instead, and they reduced illicit and mercenary activities most of all. The evidence suggests that illicit and mercenary labor supply responds to small changes in returns to peaceful work, especially future and ongoing incentives. But the impacts of training alone, without capital, appear to be low.
Handle: RePEc:nbr:nberwo:21289
Template-Type: ReDIF-Paper 1.0
Title: Hospitals as Insurers of Last Resort
Classification-JEL: H51; I11
Author-Name: Craig Garthwaite
Author-Name: Tal Gross
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: EH PE
Number: 21290
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21290
File-URL: http://www.nber.org/papers/w21290.pdf
File-Format: application/pdf
Publication-Status: published as Craig Garthwaite & Tal Gross & Matthew J. Notowidigdo, 2018. "Hospitals as Insurers of Last Resort," American Economic Journal: Applied Economics, vol 10(1), pages 1-39.
Abstract: American hospitals are required to provide emergency medical care to the uninsured. We use previously confidential hospital financial data to study the resulting uncompensated care, medical care for which no payment is received. We use both panel-data methods and case studies from state-wide Medicaid disenrollments and find that the uncompensated care costs of hospitals increase in response to the size of the uninsured population. The results suggest that each additional uninsured person costs local hospitals $900 each year in uncompensated care. Similarly, the closure of a nearby hospital increases the uncompensated care costs of remaining hospitals. Increases in the uninsured population also lower hospital profit margins, which suggests that hospitals cannot simply pass along all increased costs onto privately insured patients. For-profit hospitals are less affected by these factors, suggesting that non-profit hospitals serve a unique role as part of the social insurance system.
Handle: RePEc:nbr:nberwo:21290
Template-Type: ReDIF-Paper 1.0
Title: Environmental Benefits from Driving Electric Vehicles?
Classification-JEL: D62; H23; Q53; Q54
Author-Name: Stephen P. Holland
Author-Person: pho374
Author-Name: Erin T. Mansur
Author-Person: pma874
Author-Name: Nicholas Z. Muller
Author-Person: pmu472
Author-Name: Andrew J. Yates
Author-Person: pya124
Note: EEE
Number: 21291
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21291
File-URL: http://www.nber.org/papers/w21291.pdf
File-Format: application/pdf
Publication-Status: published as Holland, Stephen P., Erin T. Mansur, Nicholas Z. Muller, and Andrew J. Yates. 2016. "Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors." American Economic Review, 106 (12): 3700-3729. DOI: 10.1257/aer.20150897
Abstract: Electric vehicles offer the promise of reduced environmental externalities relative to their gasoline counterparts. We combine a theoretical discrete-choice model of new vehicle purchases, an econometric analysis of the marginal emissions from electricity, and the AP2 air pollution model to estimate the environmental benefit of electric vehicles. First, we find considerable variation in the environmental benefit, implying a range of second-best electric vehicle purchase subsidies from $3025 in California to -$4773 in North Dakota, with a mean of -$742. Second, over ninety percent of local environmental externalities from driving an electric vehicle in one state are exported to others, implying that electric vehicles may be subsidized locally, even though they may lead to negative environmental benefits overall. Third, geographically differentiated subsidies can reduce deadweight loss, but only modestly. Fourth, the current federal purchase subsidy of $7500 has greater deadweight loss than a no-subsidy policy.
Handle: RePEc:nbr:nberwo:21291
Template-Type: ReDIF-Paper 1.0
Title: On the Effect of the Costs of Operating Formally: New Experimental Evidence
Classification-JEL: J21; J46
Author-Name: Sebastian Galiani
Author-Person: pga326
Author-Name: Marcela Meléndez
Author-Person: pme414
Author-Name: Camila Navajas
Author-Person: pna779
Note: DEV
Number: 21292
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21292
File-URL: http://www.nber.org/papers/w21292.pdf
File-Format: application/pdf
Publication-Status: published as Galiani, Sebastian & Meléndez, Marcela & Ahumada, Camila Navajas, 2017. "On the effect of the costs of operating formally: New experimental evidence," Labour Economics, Elsevier, vol. 45(C), pages 143-157.
Abstract: This paper analyzes the impact of the elimination of the initial fixed costs of registration on the decision of informal firms to operate formally in Bogotá, Colombia. The Chamber of Commerce of Bogotá (CCB) conducts workshops for prospective formal-sector entrants and arranges personalized meetings for them with CCB agents. The CCB’s decision to significantly reduce the transaction costs of registration and the entry into force of Act No. 1429 of 2010, which eliminated the costs of the initial procedure for registering as a formal enterprise and provided exemptions from relevant taxes during the first years after formalization, provided us with an ideal experiment for studying how the elimination of the initial fixed costs of formalization would influence firms’ decision to operate formally or not. We obtained two important results. First, while a workshop treatment had no effect on firms’ formalization decisions, meetings at the firm with CCB agents raised the likelihood that a business would begin to operate formally by 5.5 percentage points for all the firms that were invited, at random, to participate in this arm of the intervention and by 32 percentage points for the firms that accepted the invitation. Second, the effect on the treatment firms did not persist over time. After a year of formal operation, it disappeared. These results indicate that substantial reductions in the fixed costs of operating formally are not effective in formalization choices, since such reductions had no lasting effect on formalization decisions.
Handle: RePEc:nbr:nberwo:21292
Template-Type: ReDIF-Paper 1.0
Title: Illinois Pensions in a Fiscal Context: A (Basket) Case Study
Classification-JEL: H20; H71; H75
Author-Name: Jeffrey R. Brown
Author-Person: pbr264
Author-Name: Richard F. Dye
Note: AG PE
Number: 21293
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21293
File-URL: http://www.nber.org/papers/w21293.pdf
File-Format: application/pdf
Abstract: Illinois’ public pensions are among the worst funded in the nation. We present evidence that the main reason for Illinois' underfunding is a history of making inadequate contributions, dating back to the origins of the state's pensions. We discuss the recent history and legal status of pension reform efforts in the state. Using a fiscal model of the state's finances, we project how Illinois' fiscal situation may evolve in the future. A key finding is that with or without pension reform, Illinois will continue to face significant structural deficits that will require revenue increases and/or additional spending cuts to address.
Handle: RePEc:nbr:nberwo:21293
Template-Type: ReDIF-Paper 1.0
Title: Sentiments, Financial Markets, and Macroeconomic Fluctuations
Classification-JEL: E02; E44; G01; G20
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Xuewen Liu
Author-Name: Pengfei Wang
Author-Person: pwa169
Note: EFG IFM
Number: 21294
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21294
File-URL: http://www.nber.org/papers/w21294.pdf
File-Format: application/pdf
Publication-Status: published as Benhabib, Jess & Liu, Xuewen & Wang, Pengfei, 2016. "Sentiments, financial markets, and macroeconomic fluctuations," Journal of Financial Economics, Elsevier, vol. 120(2), pages 420-443.
Abstract: This paper studies how financial information frictions can generate sentiment-driven fluctuations in asset prices and self-fulfilling business cycles. In our model economy, exuberant financial market sentiments of high output and high demand for capital increase the price of capital, which signals strong fundamentals of the economy to the real side and consequently leads to an actual boom in real output and employment. The model further derives implications for asymmetric non-linear asset prices and for economic contagion and co-movement across countries. In the extension to the dynamic OLG setting, our model demonstrates that sentiment shocks can generate persistent output, employment and business cycle fluctuations, and offers some new implications for asset prices over business cycles.
Handle: RePEc:nbr:nberwo:21294
Template-Type: ReDIF-Paper 1.0
Title: Knowledge Capital and Aggregate Income Differences: Development Accounting for U.S. States
Classification-JEL: I25; J24; O47
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Jens Ruhose
Author-Person: pru186
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: CH DEV ED EFG LS PE
Number: 21295
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21295
File-URL: http://www.nber.org/papers/w21295.pdf
File-Format: application/pdf
Publication-Status: published as Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2017. "Knowledge Capital and Aggregate Income Differences: Development Accounting for US States," American Economic Journal: Macroeconomics, vol 9(4), pages 184-224.
Abstract: Improvement in human capital is often presumed important for state economic development, but little research links better education to state incomes. We develop detailed measures of worker skills in each state that incorporate cognitive skills from state- and country-of-origin achievement tests. These new measures of knowledge capital permit development accounting analyses calibrated with standard production parameters. Differences in knowledge capital account for 20-30 percent of the state variation in per-capita GDP, with roughly even contributions by school attainment and cognitive skills. Similar results emerge from growth accounting analyses. These estimates support school improvement as a strategy for state economic development.
Handle: RePEc:nbr:nberwo:21295
Template-Type: ReDIF-Paper 1.0
Title: Recent Declines in Labor's Share in US Income: A Preliminary Neoclassical Account
Classification-JEL: D3; D33
Author-Name: Robert Z. Lawrence
Author-Person: pla608
Note: DAE LS
Number: 21296
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21296
File-URL: http://www.nber.org/papers/w21296.pdf
File-Format: application/pdf
Abstract: As shown in the 1930s by Hicks and Robinson the elasticity of substitution (`sigma`) is a key parameter that captures whether capital and labor are gross complements or substitutes. Establishing the magnitude of `sigma` is vital, not only for explaining changes in the distribution of income between factors but also for undertaking policy measures to influence it. Several papers have explained the recent decline in labor's share in income by claiming that `sigma` is greater than one and that there has been capital deepening. This paper presents evidence that refutes these claims. It shows that despite a rise in measured capital-labor ratios, labor-augmenting technical change in the US has been sufficiently rapid that effective capital-labor ratios have actually fallen in the sectors and industries that account for the largest portion of the declining labor share in income since 1980. In combination with estimates that corroborate the consensus in the literature that σ is less than 1, these declines in the effective capital ratio can account for much of the recent fall in labor's share in US income at both the aggregate and industry level. Paradoxically, these results also suggest that increased capital formation would raise labor's share in income.
Handle: RePEc:nbr:nberwo:21296
Template-Type: ReDIF-Paper 1.0
Title: Why Work More? The Impact of Taxes, and Culture of Leisure on Labor Supply in Europe
Classification-JEL: H2; J22; J61; Z1
Author-Name: Naci H. Mocan
Author-Person: pmo270
Author-Name: Luiza Pogorelova
Note: LS ME PE POL
Number: 21297
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21297
File-URL: http://www.nber.org/papers/w21297.pdf
File-Format: application/pdf
Abstract: We use micro data from the European Social Survey to investigate the impact of “culture of leisure” and taxes on labor force participation and hours worked of second-generation immigrants who reside in 26 European countries. These individuals are born in Europe, and they have been exposed to institutional, legal and labor market structures of their countries, including the tax rates. Fathers of these individuals are first-generation immigrants who migrated from 81 different countries. We construct measures of “taste for leisure” in the country of origin of each immigrant father. We employ average and marginal taxes for each country of residence, and control for a large set of individual characteristics, in addition to attributes of the country of residence and country of ancestry. The results show that for women, both taxes and culture of leisure impact participation and hours worked. For men, taxes influence labor supply both at the intensive and the extensive margins, but culture of leisure has no impact.
Handle: RePEc:nbr:nberwo:21297
Template-Type: ReDIF-Paper 1.0
Title: Subsidy Design in Privately-Provided Social Insurance: Lessons from Medicare Part D
Classification-JEL: H2; H4; I11; I18; L1; L2
Author-Name: Francesco Decarolis
Author-Person: pde612
Author-Name: Maria Polyakova
Author-Person: ppo520
Author-Name: Stephen P. Ryan
Author-Person: pry32
Note: EH IO PE
Number: 21298
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21298
File-URL: http://www.nber.org/papers/w21298.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Decarolis & Maria Polyakova & Stephen P. Ryan, 2020. "Subsidy Design in Privately Provided Social Insurance: Lessons from Medicare Part D," Journal of Political Economy, vol 128(5), pages 1712-1752.
Abstract: The efficiency of publicly-subsidized, privately-provisioned social insurance programs depends on the interaction between strategic insurers and the subsidy mechanism. We study this interaction in the context of Medicare's prescription drug coverage program. We find that the observed mechanism is successful in keeping "raise-the-subsidy" incentives relatively low, acts much like a at voucher, and obtains a level of welfare close to the optimal voucher. Across a range of counterfactuals, we find that more efficient subsidy mechanisms share three features: they retain the marginal elasticity of demand, limit the exercise of market power, and preserve the link between prices and marginal costs.
Handle: RePEc:nbr:nberwo:21298
Template-Type: ReDIF-Paper 1.0
Title: Assessing the Effects of the MFA/ATC from US and World Trade Data after Its Removal
Classification-JEL: F13; F14; F68
Author-Name: Daqing Yao
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 21299
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21299
File-URL: http://www.nber.org/papers/w21299.pdf
File-Format: application/pdf
Abstract: In this paper we assess the effects of the MFA/ATC using both world trade and US data after its removal. Previous literature assesses its effects while in operation. The trade data we analyze are consistent with theoretical predictions of more trade volumes, lower product prices, smaller effect of RTA on trade, less transshipment and quota hopping investment, and higher country concentration of exporters. We also find the effects of the MFA on clothing trade were more significant than for textiles trade. The benefits from freer trade in textiles and clothing shed light on other sectors that are still under trade protection.
Handle: RePEc:nbr:nberwo:21299
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Earnings Disclosure on College Enrollment Decisions
Classification-JEL: H0; H52; I22; I23; I24; I26; J3
Author-Name: Justine Hastings
Author-Person: pha804
Author-Name: Christopher A. Neilson
Author-Person: pne96
Author-Name: Seth D. Zimmerman
Author-Person: pzi155
Note: DEV ED LS PE
Number: 21300
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21300
File-URL: http://www.nber.org/papers/w21300.pdf
File-Format: application/pdf
Abstract: We use a large-scale survey and field experiment to evaluate a policy that provided information about college- and major-specific earnings and cost outcomes to college applicants in Chile. The intervention was administered by the Chilean government and reached 30% of student loan applicants. We show that the low-income and low-achieving students who apply to low-earning college degree programs overestimate earnings for past graduates by over 100%, while beliefs for high-achieving students are correctly centered. Treatment causes low-income students to reduce their demand for low-return degrees by 4.6%, and increases the likelihood they remain in college for at least four years. To understand the mechanisms driving the effect of disclosure policies we estimate a model of college demand. We find that disclosure changes college choice by reducing uncertainty about earnings outcomes, but that its impact is limited by strong student preferences for non-pecuniary degree attributes.
Handle: RePEc:nbr:nberwo:21300
Template-Type: ReDIF-Paper 1.0
Title: Self-Protection Investment Exacerbates Air Pollution Exposure Inequality in Urban China
Classification-JEL: Q53; Q55; R21
Author-Name: Siqi Zheng
Author-Person: pzh497
Author-Name: Cong Sun
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: CH EEE
Number: 21301
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21301
File-URL: http://www.nber.org/papers/w21301.pdf
File-Format: application/pdf
Publication-Status: published as Sun, Cong & Kahn, Matthew E. & Zheng, Siqi, 2017. "Self-protection investment exacerbates air pollution exposure inequality in urban China," Ecological Economics, Elsevier, vol. 131(C), pages 468-474.
Abstract: Urban China’s high levels of ambient air pollution both lowers quality of life and raises mortality risk. China’s wealthy have the purchasing power to purchase private products such as portable room air filters that allows them to offset some of the pollution exposure risk. Using a unique data set of Internet purchases, we document that households invest more in masks and air filter products when ambient pollution levels exceed key alert thresholds. Richer people are more likely to invest in air filters, which are much more expensive than masks. Our findings have implications for trends in inequality in human capital accumulation and in quality of life inequality in urban China.
Handle: RePEc:nbr:nberwo:21301
Template-Type: ReDIF-Paper 1.0
Title: Can Bureaucrats Really Be Paid Like CEOs? School Administrator Incentives for Anemia Reduction in Rural China
Classification-JEL: C93; H40; I12; M52; O15
Author-Name: Renfu Luo
Author-Person: plu268
Author-Name: Grant Miller
Author-Name: Scott Rozelle
Author-Person: pro707
Author-Name: Sean Sylvia
Author-Person: psy42
Author-Name: Marcos Vera-Hernández
Author-Person: pve1
Note: CH DEV ED EH
Number: 21302
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21302
File-URL: http://www.nber.org/papers/w21302.pdf
File-Format: application/pdf
Abstract: Unlike performance incentives for private sector managers, little is known about performance incentives for managers in public sector bureaucracies. Through a randomized trial in rural China, we study performance incentives rewarding school administrators for reducing student anemia—as well as complementarity between incentives and orthogonally assigned discretionary resources. Large (but not small) incentives and unrestricted grants both reduced anemia, but incentives were more cost-effective. Although unrestricted grants and small incentives do not interact, grants fully crowd-out the effect of larger incentives. Our findings suggest that performance incentives can be effective in bureaucratic environments, but they are not complementary to discretionary resources.
Handle: RePEc:nbr:nberwo:21302
Template-Type: ReDIF-Paper 1.0
Title: Is the WTO passé?
Classification-JEL: F13; F15; F53; F55
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Chad P. Bown
Author-Name: Robert W. Staiger
Author-Person: pst85
Note: ITI
Number: 21303
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21303
File-URL: http://www.nber.org/papers/w21303.pdf
File-Format: application/pdf
Publication-Status: published as Kyle Bagwell & Chad P. Bown & Robert W. Staiger, 2016. "Is the WTO Passé?," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1125-1231, December.
Abstract: The WTO has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements (PTAs). Should economists see this as an efficient institutional hand-off, where the WTO has carried trade liberalization as far as it can manage, and is now passing the baton to PTAs to finish the job? We survey a growing economics literature on international trade agreements and argue on this basis that the WTO is not passé. Rather, and subject to some caveats, our survey of research to date suggests that the WTO is structured in a way that is likely to encourage policy outcomes that are viewed as efficiency enhancing by WTO member governments, while the analogous claim for PTA-led liberalization is less clear.
Handle: RePEc:nbr:nberwo:21303
Template-Type: ReDIF-Paper 1.0
Title: Beyond Statistics: The Economic Content of Risk Scores
Classification-JEL: D12; G22; I11; I13
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Raymond Kluender
Author-Name: Paul Schrimpf
Note: AG EH IO PE
Number: 21304
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21304
File-URL: http://www.nber.org/papers/w21304.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Amy Finkelstein & Raymond Kluender & Paul Schrimpf, 2016. "Beyond Statistics: The Economic Content of Risk Scores," American Economic Journal: Applied Economics, vol 8(2), pages 195-224.
Abstract: In recent years, the increased use of “big data” and statistical techniques to score potential transactions has transformed the operation of insurance and credit markets. In this paper, we observe that these widely-used scores are statistical objects that constitute a one-dimensional summary of a potentially much richer heterogeneity, some of which may be endogenous to the specific context in which they are applied. We demonstrate this point empirically using rich data from the Medicare Part D prescription drug insurance program. We show that the “risk scores,” which are designed to predict an individualʼs drug spending and are used by Medicare to customize reimbursement rates to private insurers, do not distinguish between two different sources of spending: underlying health, and responsiveness of drug spending to the insurance contract. Naturally, however, these two determinants of spending have very different implications when trying to predict counterfactual spending under alternative contracts. As a result, we illustrate that once we enrich the theoretical framework to allow individuals to have heterogeneous behavioral responses to the contract, strategic incentives for cream skimming still exist, even in the presence of “perfect” risk scoring under a given contract.
Handle: RePEc:nbr:nberwo:21304
Template-Type: ReDIF-Paper 1.0
Title: Risk and Risk Management in the Credit Card Industry
Classification-JEL: D12; D14; D18; E21; E51; G01; G17; G21
Author-Name: Florentin Butaru
Author-Name: QingQing Chen
Author-Name: Brian Clark
Author-Name: Sanmay Das
Author-Name: Andrew W. Lo
Author-Person: plo171
Author-Name: Akhtar Siddique
Note: AP ME
Number: 21305
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21305
File-URL: http://www.nber.org/papers/w21305.pdf
File-Format: application/pdf
Publication-Status: published as Florentin Butaru & Qingqing Chen & Brian Clark & Sanmay Das & Andrew W. Lo & Akhtar Siddique, 2016. "Risk and risk management in the credit card industry," Journal of Banking & Finance, vol 72, pages 218-239.
Abstract: Using account level credit-card data from six major commercial banks from January 2009 to December 2013, we apply machine-learning techniques to combined consumer-tradeline, credit-bureau, and macroeconomic variables to predict delinquency. In addition to providing accurate measures of loss probabilities and credit risk, our models can also be used to analyze and compare risk management practices and the drivers of delinquency across the banks. We find substantial heterogeneity in risk factors, sensitivities, and predictability of delinquency across banks, implying that no single model applies to all six institutions. We measure the efficacy of a bank’s risk-management process by the percentage of delinquent accounts that a bank manages effectively, and find that efficacy also varies widely across institutions. These results suggest the need for a more customized approached to the supervision and regulation of financial institutions, in which capital ratios, loss reserves, and other parameters are specified individually for each institution according to its credit-risk model exposures and forecasts.
Handle: RePEc:nbr:nberwo:21305
Template-Type: ReDIF-Paper 1.0
Title: ICT and Education: Evidence from Student Home Addresses
Classification-JEL: D83; F66; I20
Author-Name: Benjamin Faber
Author-Person: pfa662
Author-Name: Rosa Sanchis-Guarner
Author-Person: psa518
Author-Name: Felix Weinhardt
Author-Person: pwe231
Note: ED ITI
Number: 21306
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21306
File-URL: http://www.nber.org/papers/w21306.pdf
File-Format: application/pdf
Abstract: Governments are making it a priority to upgrade information and communication technologies (ICT) with the aim to increase available internet connection speeds. This paper presents a new empirical strategy to estimate the causal effects of these policies, and applies it to the questions of whether and how ICT upgrades affect educational attainment. We draw on a rich collection of microdata that allows us to link administrative test score records for the population of English primary and secondary school students to the available ICT at their home addresses. To base estimations on exogenous variation in ICT, we notice that the boundaries of usually invisible telephone exchange station catchment areas give rise to substantial and essentially randomly placed jumps in the available ICT across neighboring residences. Using this design across more than 20,000 boundaries in England, we find that even large changes in available broadband connection speeds have a precisely estimated zero effect on educational attainment. Guided by a simple model we then bring to bear additional microdata on student time and internet use to quantify the potentially opposing mechanisms underlying the zero reduced form effect. While jumps in the available ICT appear to increase student consumption of online content, we find no significant effects on student time spent studying online or offline, or on their learning productivity.
Handle: RePEc:nbr:nberwo:21306
Template-Type: ReDIF-Paper 1.0
Title: Technological Change, Occupational Tasks and Declining Immigrant Outcomes: Implications for Earnings and Income Inequality in Canada
Classification-JEL: J15; J24; J31; J61; J71
Author-Name: Casey Warman
Author-Person: pwa250
Author-Name: Christopher Worswick
Author-Person: pwo88
Note: LS
Number: 21307
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21307
File-URL: http://www.nber.org/papers/w21307.pdf
File-Format: application/pdf
Publication-Status: published as Casey Warman & Christopher Worswick, 2015. "Technological change, occupational tasks and declining immigrant outcomes: Implications for earnings and income inequality in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 48(2), pages 736-772, May.
Publication-Status: published as Casey Warman & Christopher Worswick, 2015. "Technological change, occupational tasks and declining immigrant outcomes: Implications for earnings and income inequality in Canada," Canadian Journal of Economics/Revue canadienne d'économique, vol 48(2), pages 736-772.
Abstract: The earnings and occupational task requirements of immigrants to Canada are analyzed. The growing education levels of immigrants in the 1990s have not led to a large improvement in earnings as one might expect if growing computerization and the resulting technological change was leading to a rising return to non-routine cognitive skills and a greater wage return to university education. Controlling for education, we find a pronounced cross-arrival cohort decline in earnings that coincided with cross-cohort declines in cognitive occupational task requirements and cross-cohort increases in manual occupational task requirements. The immigrant earnings outcomes had only a small effect on overall Canadian earnings inequality.
Handle: RePEc:nbr:nberwo:21307
Template-Type: ReDIF-Paper 1.0
Title: The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment
Classification-JEL: H51; I13
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Nathaniel Hendren
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Note: AG EH PE
Number: 21308
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21308
File-URL: http://www.nber.org/papers/w21308.pdf
File-Format: application/pdf
Publication-Status: published as Amy Finkelstein & Nathaniel Hendren & Erzo F. P. Luttmer, 2019. "The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment," Journal of Political Economy, vol 127(6), pages 2836-2874.
Abstract: We develop a set of frameworks for valuing Medicaid and apply them to welfare analysis of the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Our baseline estimates of Medicaid's welfare benefit to recipients per dollar of government spending range from about $0.2 to $0.4, depending on the framework, with at least two-fifths – and as much as four-fifths – of the value of Medicaid coming from a transfer component, as opposed to its ability to move resources across states of the world. In addition, we estimate that Medicaid generates a substantial transfer, of about $0.6 per dollar of government spending, to the providers of implicit insurance for the low-income uninsured. The economic incidence of these transfers is critical for assessing the social value of providing Medicaid to low-income adults relative to alternative redistributive policies.
Handle: RePEc:nbr:nberwo:21308
Template-Type: ReDIF-Paper 1.0
Title: Two-sided Altruism and Signaling
Classification-JEL: D64; F24; O15; O16
Author-Name: Garance Genicot
Author-Person: pge26
Note: DEV
Number: 21309
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21309
File-URL: http://www.nber.org/papers/w21309.pdf
File-Format: application/pdf
Publication-Status: published as Garance Genicot, 2016. "Two-sided altruism and signaling," Economics Letters, vol 145, pages 92-97.
Abstract: This paper shows that when donors and recipients care about each other --two-sided altruism -- the presence of asymmetry of information about the donor's income leads very naturally to a signaling game. A donor who cares about the recipient's welfare has incentives to appear richer than he is when the recipient cares about him. Similarly, asymmetry of information regarding the donor's income generates a signaling game in the presence of two-sided altruism. These signaling games put upward pressure on transfers and this pressure increases with the altruism of the recipient.
Handle: RePEc:nbr:nberwo:21309
Template-Type: ReDIF-Paper 1.0
Title: The Returns to Microenterprise Support Among the Ultra-Poor: A Field Experiment in Post-War Uganda
Classification-JEL: C93; D13; J24; O12
Author-Name: Christopher Blattman
Author-Person: pbl37
Author-Name: Eric P. Green
Author-Name: Julian C. Jamison
Author-Name: M. Christian Lehmann
Author-Person: ple1127
Author-Name: Jeannie Annan
Note: DEV LS
Number: 21310
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21310
File-URL: http://www.nber.org/papers/w21310.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Blattman & Eric P. Green & Julian Jamison & M. Christian Lehmann & Jeannie Annan, 2016. "The Returns to Microenterprise Support among the Ultrapoor: A Field Experiment in Postwar Uganda," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 35-64, April.
Abstract: We show that extremely poor, war-affected women in northern Uganda have high returns to a package of $150 cash, five days of business skills training, and ongoing supervision. 16 months after grants, participants doubled their microenterprise ownership and incomes, mainly from petty trading. We also show these ultrapoor have too little social capital, but that group bonds, informal insurance, and cooperative activities could be induced and had positive returns. When the control group received cash and training 20 months later, we varied supervision, which represented half of the program costs. A year later, supervision increased business survival but not consumption.
Handle: RePEc:nbr:nberwo:21310
Template-Type: ReDIF-Paper 1.0
Title: Cigarette Taxes and Youth Smoking: Updated Estimates Using YRBS Data
Classification-JEL: H71; I18
Author-Name: Benjamin Hansen
Author-Person: pha383
Author-Name: Joseph J. Sabia
Author-Name: Daniel I. Rees
Author-Person: pre268
Note: CH EH
Number: 21311
Creation-Date: 2015-06
Order-URL: http://www.nber.org/papers/w21311
File-URL: http://www.nber.org/papers/w21311.pdf
File-Format: application/pdf
Publication-Status: published as Have Cigarette Taxes Lost Their Bite? New Estimates of the Relationship between Cigarette Taxes and Youth Smoking Benjamin Hansen , Joseph J. Sabia , and Daniel I. Rees American Journal of Health Economics 2017 3:1, 60-75
Abstract: Using data from the state and national Youth Risk Behavior Surveys for the period 1991-2005, Carpenter and Cook (2008) found a strong, negative relationship between cigarette taxes and youth smoking. We revisit this relationship using four additional waves of YRBS data (2007, 2009, 2011, and 2013). Our results suggest that youths have become much less responsive to cigarette taxes since 2005. In fact, we find little evidence of a negative relationship between cigarette taxes and youth smoking when we restrict our attention to the period 2007-2013.
Handle: RePEc:nbr:nberwo:21311
Template-Type: ReDIF-Paper 1.0
Title: Solving Shortage in a Priceless Market: Insights from Blood Donation
Classification-JEL: D47; D83; I18
Author-Name: Tianshu Sun
Author-Name: Susan Feng Lu
Author-Name: Ginger Zhe Jin
Note: IO
Number: 21312
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21312
File-URL: http://www.nber.org/papers/w21312.pdf
File-Format: application/pdf
Publication-Status: published as Tianshu Sun & Susan Feng Lu & Ginger Zhe Jin, 2016. "Solving Shortage in a Priceless Market: Insights from Blood Donation," Journal of Health Economics, .
Abstract: Shortage is common in many markets, such as those for human organs or blood, but the problem is often difficult to solve through price adjustment, given safety and ethical concerns. In this paper, we investigate whether market designers can use non-price methods to address shortage. Specifically, we study two methods that are used to alleviate shortage in the market for human blood. The first method is informing existing donors of a current shortage via a mobile message and encouraging them to donate voluntarily. The second method is asking the patient’s family or friends to donate in a family replacement (FR) program at the time of shortage. We are interested in both the short-run and long-run effects of these methods on blood supply. Using 447,357 individual donation records across 8 years from a large Chinese blood bank, we show that both methods are effective in addressing blood shortage in the short run but have different implications for total blood supply in the long run. Specifically, we find that a shortage message leads to significantly more donations among existing donors within the first six months but has no effect afterwards. In comparison, a family replacement program has a small positive effect in encouraging existing donors (who donated before the FR) to donate more blood voluntarily after their FR donation, but discourages no-history donors (whose first donation is the FR) from donating in the long run. We compare the effect and efficiency of these methods and discuss their applications under different scenarios to alleviate shortage.
Handle: RePEc:nbr:nberwo:21312
Template-Type: ReDIF-Paper 1.0
Title: Exact P-values for Network Interference
Classification-JEL: C01; C1
Author-Name: Susan Athey
Author-Person: pat6
Author-Name: Dean Eckles
Author-Name: Guido W. Imbens
Author-Person: pim4
Note: IO LS PE TWP
Number: 21313
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21313
File-URL: http://www.nber.org/papers/w21313.pdf
File-Format: application/pdf
Publication-Status: published as Susan Athey & Dean Eckles & Guido W. Imbens, 2018. "Exact -Values for Network Interference," Journal of the American Statistical Association, vol 113(521), pages 230-240.
Abstract: We study the calculation of exact p-values for a large class of non-sharp null hypotheses about treatment effects in a setting with data from experiments involving members of a single connected network. The class includes null hypotheses that limit the effect of one unit's treatment status on another according to the distance between units; for example, the hypothesis might specify that the treatment status of immediate neighbors has no effect, or that units more than two edges away have no effect. We also consider hypotheses concerning the validity of sparsification of a network (for example based on the strength of ties) and hypotheses restricting heterogeneity in peer effects (so that, for example, only the number or fraction treated among neighboring units matters). Our general approach is to define an artificial experiment, such that the null hypothesis that was not sharp for the original experiment is sharp for the artificial experiment, and such that the randomization analysis for the artificial experiment is validated by the design of the original experiment.
Handle: RePEc:nbr:nberwo:21313
Template-Type: ReDIF-Paper 1.0
Title: Relaxing Migration Constraints for Rural Households
Classification-JEL: O15
Author-Name: Cynthia Kinnan
Author-Person: pki546
Author-Name: Shing-Yi Wang
Author-Person: pwa494
Author-Name: Yongxiang Wang
Note: DEV
Number: 21314
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21314
File-URL: http://www.nber.org/papers/w21314.pdf
File-Format: application/pdf
Abstract: This paper exploits two unique features of China's history to study the effects of access to internal migration: reforms to the household registration (hukou) system, and historical migration flows. We show that temporary migration due to a government policy called the “sent-down youth” (SDY) program created lasting inter-province links, so that decades later, hukou reforms in cities which sent SDY increased migration in provinces where those SDY temporarily resided. Using this variation, we find that improved access to migration leads to higher consumption levels and lower consumption volatility for rural households. Furthermore, household production shifts into high-risk, high-return activities.
Handle: RePEc:nbr:nberwo:21314
Template-Type: ReDIF-Paper 1.0
Title: Aggregating Elasticities: Intensive and Extensive Margins of Female Labour Supply
Classification-JEL: D12; J22
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Peter Levell
Author-Person: ple883
Author-Name: Hamish Low
Author-Person: plo34
Author-Name: Virginia Sánchez-Marcos
Note: EFG
Number: 21315
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21315
File-URL: http://www.nber.org/papers/w21315.pdf
File-Format: application/pdf
Abstract: We estimate labour supply elasticities at the micro level and show what we can learn from possibly very heterogeneous elasticities for aggregate behaviour. We consider both intertemporal and intratemporal choices, and identify intensive and extensive responses in a consistent life-cycle framework, using US CEX data. There is substantial heterogeneity in how individuals respond to wage changes at all margins, both due to observables, such as age, wealth, hours worked and the wage level as well as to unobservable tastes for leisure. We estimate the distribution of Marshallian elasticities for hours worked to have a median value of 0.18, and corresponding Hicksian elasticities of 0.54 and Frisch elasticities of 0.87. At the 90th percentile, these values are 0.79, 1.16, and 1.92. Responses at the extensive margin are important, explaining about 54% of the total labour supply response for women under 30, although this importance declines with age. We show that aggregate elasticities are cyclical, being larger in recessions and particularly so in long recessions. This heterogeneity at the micro level means that the aggregate labour supply elasticity is not a structural parameter: any aggregate elasticity will depend on the demographic structure of the economy as well as the distribution of wealth and the particular point in the business cycle.
Handle: RePEc:nbr:nberwo:21315
Template-Type: ReDIF-Paper 1.0
Title: Government Economic Policy, Sentiments, and Consumption
Classification-JEL: E20; E21; E60
Author-Name: Atif Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Author-Name: Nasim Khoshkhou
Note: EFG ME PE POL
Number: 21316
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21316
File-URL: http://www.nber.org/papers/w21316.pdf
File-Format: application/pdf
Abstract: We examine how consumption responds to changes in sentiment regarding government economic policy using cross-sectional variation across counties in the ideological predisposition of constituents. When the incumbent party loses a presidential election, individuals in counties more ideologically predisposed toward the losing party experience a dramatic and discontinuous relative decrease in optimism on government economic policy. Using the interaction of constituent ideology in a county with election timing as an instrument, we estimate the impact of government policy sentiment shocks on consumer spending, and we find a very small effect that cannot be statistically distinguished from zero. The small magnitude of the effect is estimated precisely. For example, we can reject the hypothesis that pessimism regarding government economic policy effectiveness during the Great Recession had as large an effect on consumption as the negative shock to household net worth coming from the collapse in house prices.
Handle: RePEc:nbr:nberwo:21316
Template-Type: ReDIF-Paper 1.0
Title: Health Disparities Across Education: The Role of Differential Reporting Error
Classification-JEL: I1; I12; I14; I20; I24; I3
Author-Name: John Cawley
Author-Person: pca6
Author-Name: Anna Choi
Note: ED EH
Number: 21317
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21317
File-URL: http://www.nber.org/papers/w21317.pdf
File-Format: application/pdf
Publication-Status: published as Anna Choi & John Cawley, 2018. "Health disparities across education: The role of differential reporting error," Health Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 1-29, March.
Abstract: One of the most robust findings in health economics is that higher-educated individuals tend to be in better health. This paper tests whether health disparities across education are to some extent due to differences in reporting error across education. We test this hypothesis using data from the pooled National Health and Nutrition Examination Survey (NHANES) Continuous for 1999-2012, which include both self-reports and objective verification for an extensive set of health behaviors and conditions, including smoking, obesity, high blood pressure, high cholesterol and diabetes. We find that college graduates are more likely to give false negative reports of obesity and high total cholesterol; one possible explanation for this is social desirability bias. However, college graduates are also significantly less likely to give false positive reports of smoking, obesity, high cholesterol, and diabetes. Because there are far more truly negative people (who are less likely to give a false positive report) than truly positive people (who are more likely to give a false negative report), we find that college graduates report their health significantly more accurately overall.
Handle: RePEc:nbr:nberwo:21317
Template-Type: ReDIF-Paper 1.0
Title: The Elasticity of Substitution Between Time and Market Goods: Evidence from the Great Recession
Classification-JEL: D12; E31; J22
Author-Name: Aviv Nevo
Author-Person: pne133
Author-Name: Arlene Wong
Author-Person: pwo217
Note: EFG IO ME
Number: 21318
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21318
File-URL: http://www.nber.org/papers/w21318.pdf
File-Format: application/pdf
Publication-Status: published as Aviv Nevo & Arlene Wong, 2019. "THE ELASTICITY OF SUBSTITUTION BETWEEN TIME AND MARKET GOODS: EVIDENCE FROM THE GREAT RECESSION," International Economic Review, vol 60(1), pages 25-51.
Abstract: We document a change in household shopping behavior during the Great Recession. Households purchased more on sale, larger sizes and generic products, increased coupon usage, and shopping at discount stores. We estimate that the returns to these shopping activities declined during the recession and therefore this behavior implies a significant decrease in households’ opportunity cost of time. Using the estimated cost of time and time use data, we estimate a high elasticity of substitution between market expenditure and time spent on non-market work. We find that households smooth a sizable fraction of consumption by varying their time allocation during recessions.
Handle: RePEc:nbr:nberwo:21318
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Effects of Opening the Border: Evidence from Switzerland
Classification-JEL: J2; J24; J61
Author-Name: Andreas Beerli
Author-Person: pbe842
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: LS
Number: 21319
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21319
File-URL: http://www.nber.org/papers/w21319.pdf
File-Format: application/pdf
Abstract: Between 1999 and 2004 Switzerland opened its border region (BR) to cross-border workers (CBW), who are foreign residents commuting to Switzerland for work. In this paper, we exploit the timing of implementation and the fact that CBW commute almost exclusively to municipalities close to the border to estimate the effect of this policy on foreign labor supply and on native labor market outcomes, using a difference-in-difference approach. We find that opening the border to CBW increased their employment within 20 minutes of commuting time from the border by four to five percentage points. The increased inflow was constituted of highly-educated workers and it was associated with an increase in wages for highly-educated Swiss workers. Native highly-educated workers became more likely to fill top managerial positions after the liberalization. Moreover, we find increases in wages, employment and firm-creation, especially in high-skilled manufacturing and knowledge-intensive services, which help explain the positive wage effects of CBW on high skilled natives.
Handle: RePEc:nbr:nberwo:21319
Template-Type: ReDIF-Paper 1.0
Title: Loan Originations and Defaults in the Mortgage Crisis: Further Evidence
Classification-JEL: D30; G21; R30
Author-Name: Manuel Adelino
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Felipe Severino
Author-Person: pse646
Note: AP CF EFG ME PE
Number: 21320
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21320
File-URL: http://www.nber.org/papers/w21320.pdf
File-Format: application/pdf
Abstract: This paper addresses two critiques by Mian and Sufi (2015a, 2015b) that were released in response to the results documented in Adelino, Schoar and Severino (2015). We confirm that none of the results in our previous paper are affected by the issues put forward in these critiques; in particular income overstatement does not drive any of our results. Our analysis shows that the origination of purchase mortgages increased across the whole income distribution during the 2002-2006 housing boom, and did not flow disproportionately to low-income borrowers. In addition, middle- and high-income, as well as middle- and high-credit-score borrowers (not the poor), represent a larger fraction of delinquencies in the crisis relative to earlier periods. The results are inconsistent with the idea that distortions in the origination of credit caused the housing boom and the crisis and are more consistent with an expectations-based view where both home buyers and lenders were buying into increasing housing values and defaulted once prices dropped.
Handle: RePEc:nbr:nberwo:21320
Template-Type: ReDIF-Paper 1.0
Title: Usage-Based Pricing and Demand for Residential Broadband
Classification-JEL: L1; L13; L96
Author-Name: Aviv Nevo
Author-Person: pne133
Author-Name: John L. Turner
Author-Name: Jonathan W. Williams
Note: IO PR
Number: 21321
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21321
File-URL: http://www.nber.org/papers/w21321.pdf
File-Format: application/pdf
Publication-Status: published as Aviv Nevo & John L. Turner & Jonathan W. Williams, 2016. "Usage‐Based Pricing and Demand for Residential Broadband," Econometrica, Econometric Society, vol. 84, pages 411-443, 03.
Abstract: We estimate demand for residential broadband using high-frequency data from subscribers facing a three-part tariff. The three-part tariff makes data usage during the billing cycle a dynamic problem; thus, generating variation in the (shadow) price of usage. We provide evidence that subscribers respond to this variation, and use their dynamic decisions to estimate a flexible distribution of willingness to pay for different plan characteristics. Using the estimates, we simulate demand under alternative pricing and find that usage-based pricing eliminates low-value traffic. Furthermore, we show that the costs associated with investment in fiber-optic networks are likely recoverable in some markets, but that there is a large gap between social and private incentives to invest.
Handle: RePEc:nbr:nberwo:21321
Template-Type: ReDIF-Paper 1.0
Title: The Optimal Use of Government Purchases for Stabilization
Classification-JEL: E32; E62; H21; H41
Author-Name: Pascal Michaillat
Author-Person: pmi1005
Author-Name: Emmanuel Saez
Author-Person: psa117
Note: EFG PE
Number: 21322
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21322
File-URL: http://www.nber.org/papers/w21322.pdf
File-Format: application/pdf
Publication-Status: published as Pascal Michaillat & Emmanuel Saez, 2019. "Optimal Public Expenditure with Inefficient Unemployment," Review of Economic Studies, vol. 86 (3), pages 1301–1331.
Abstract: This paper describes the optimal level of government purchases in the presence of unemployment. The theoretical framework is a general-equilibrium matching model in which government purchases are valuable. When the unemployment gap is zero, the conventional Samuelson formula is valid. Otherwise, optimal government spending deviates from the Samuelson level to fill the unemployment gap partially. Hence, with a positive unemployment multiplier (so that increasing government purchases reduces unemployment), government spending should be higher than the Samuelson level when unemployment is inefficiently high and lower when unemployment is inefficiently low. We characterize the optimal level of stimulus spending. We find that stimulus spending is largest for a moderate unemployment multiplier. With larger multipliers, stimulus spending is smaller because less spending is required to fill the unemployment gap. With smaller multipliers, stimulus spending is smaller because there is more crowding out of private spending by public spending. We also find that stimulus spending increases with the elasticity of substitution between public and private consumption. With a zero elasticity (so that additional public workers dig and fill holes), stimulus spending is zero. With an infinite elasticity (so that private and public workers are perfect substitute), stimulus spending is large enough to fill the unemployment gap completely. Finally, the results hold whether taxes are nondistortionary or distortionary.
Handle: RePEc:nbr:nberwo:21322
Template-Type: ReDIF-Paper 1.0
Title: The Taxation of Superstars
Classification-JEL: H21; H24
Author-Name: Florian Scheuer
Author-Person: psc147
Author-Name: Iván Werning
Author-Person: pwe141
Note: LS PE
Number: 21323
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21323
File-URL: http://www.nber.org/papers/w21323.pdf
File-Format: application/pdf
Publication-Status: published as Florian Scheuer & Iván Werning, 2017. "The Taxation of Superstars," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 211-270.
Publication-Status: published as Florian Scheuer & Iván Werning, 2016. "The Taxation of Superstars," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 211-270.
Abstract: How are optimal taxes affected by the presence of superstar phenomena at the top of the earnings distribution? To answer this question, we extend the Mirrlees model to incorporate an assignment problem in the labor market that generates superstar effects. Perhaps surprisingly, rather than providing a rationale for higher taxes, we show that superstar effects provides a force for lower marginal taxes, conditional on the observed distribution of earnings. Superstar effects make the earnings schedule convex, which increases the responsiveness of individual earnings to tax changes. We show that various common elasticity measures are not sufficient statistics and must be adjusted upwards in optimal tax formulas. Finally, we study a comparative static that does not keep the observed earnings distribution fixed: when superstar technologies are introduced, inequality increases but we obtain a neutrality result, finding tax rates at the top unaltered.
Handle: RePEc:nbr:nberwo:21323
Template-Type: ReDIF-Paper 1.0
Title: Governance and the Effectiveness of Public Health Subsidies
Classification-JEL: D73; H11; I15; I38
Author-Name: Rebecca Dizon-Ross
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Jonathan Robinson
Author-Person: pro377
Note: CH DEV POL
Number: 21324
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21324
File-URL: http://www.nber.org/papers/w21324.pdf
File-Format: application/pdf
Abstract: Heavily subsidizing essential health products through existing health infrastructure has the potential to substantially decrease child mortality in sub-Saharan Africa. There is, however, widespread concern that poor governance and in particular limited accountability among health workers seriously undermines the effectiveness of such programs. We performed innovative audits on bed net distribution programs in three countries (Ghana, Kenya and Uganda) to investigate local agency problems and their determinants in the allocation of targeted subsidies. Overall, agency concerns appear modest. Around 80% of the eligible receive the subsidy as intended and leakage to the ineligible appears limited, even when the ineligible have a high willingness to pay. The estimated level of mistargeting only modestly affects the cost-effectiveness of free distribution.
Handle: RePEc:nbr:nberwo:21324
Template-Type: ReDIF-Paper 1.0
Title: Mining with Environmental Risk
Classification-JEL: Q31; Q32; Q38; Q52
Author-Name: Christopher Costello
Author-Person: pco426
Author-Name: Charles D. Kolstad
Author-Person: pko133
Note: EEE
Number: 21325
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21325
File-URL: http://www.nber.org/papers/w21325.pdf
File-Format: application/pdf
Abstract: Environmental concerns dominate modern-day decisions about mining. While the minerals extracted are surely valuable, mining of natural gas, deep seabed minerals, rare earth metals, and traditional ore is often fraught with environmental uncertainty. We examine how this uncertainty affects the optimal decision of if, and when, to mine. When environmental damage from mining is known, the socially optimal timing depends straightforwardly on the magnitude of the damage relative to these damages in the rest of the world. But when environmental damage is uncertain, and its magnitude is learned over time, an option value arises, which fundamentally alters the mining decision. This decision depends on the costs and benefits of mining at different times, which are innately linked for non-renewable resources by Hotelling’s rule. Using this insight, we find that any uncertainty over environmental costs can make it optimal to delay mining; this occurs even when expected environmental costs are low or even negative. We show conditions under which it is optimal to postpone the mining decision indefinitely, and conditions when it is optimal to postpone only for a finite duration. We use these insights to derive, for the first time, the equilibrium outcome of an entire industry of decentralized mine owners who all face an incentive to delay to acquire improved information. This gives rise to strikingly different price and extraction paths than are currently understood. One such outcome is that price paths flatten relative to what Hotelling theory predicts, consistent with empirical findings that have puzzled the literature.
Handle: RePEc:nbr:nberwo:21325
Template-Type: ReDIF-Paper 1.0
Title: Does Retirement Improve Health and Life Satisfaction?
Classification-JEL: I10; I31; J26
Author-Name: Aspen Gorry
Author-Person: pgo400
Author-Name: Devon Gorry
Author-Name: Sita Slavov
Author-Person: pna81
Note: AG EH
Number: 21326
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21326
File-URL: http://www.nber.org/papers/w21326.pdf
File-Format: application/pdf
Publication-Status: published as Aspen Gorry & Devon Gorry & Sita Nataraj Slavov, 2018. "Does retirement improve health and life satisfaction?," Health Economics, John Wiley & Sons, Ltd., vol. 27(12), pages 2067-2086, December.
Abstract: We utilize panel data from the Health and Retirement Study to investigate the impact of retirement on physical and mental health, life satisfaction, and health care utilization. Because poor health can induce retirement, we instrument for retirement using eligibility for Social Security and employer sponsored pensions and coverage by the Social Security earnings test. We find strong evidence that retirement improves both health and life satisfaction. While the impact on life satisfaction occurs within the first 4 years of retirement, many of the improvements in health show up 4 or more years later, consistent with the view that health is a stock that evolves slowly. We find little evidence that retirement influences health care utilization.
Handle: RePEc:nbr:nberwo:21326
Template-Type: ReDIF-Paper 1.0
Title: The Measurement of Wealth: Recessions, Sustainability and Inequality
Classification-JEL: D31; E21; E22
Author-Name: Joseph E. Stiglitz
Note: EFG
Number: 21327
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21327
File-URL: http://www.nber.org/papers/w21327.pdf
File-Format: application/pdf
Publication-Status: published as "The Measurement of Wealth: Recessions, Sustainability and Inequality," Contemporary Issues in Macroeconomics, Joseph E. Stiglitz and Martin Guzman (eds.), IEA Conference Volume, No. 155-II, Houndmills, UK and New York: Palgrave Macmillan and NBER Working Paper 21327, July 2015.
Abstract: This paper considers two central problems in our statistical frameworks which impair the ability to use wealth to assess economic sustainability or the impacts of economic downturns. Some increases in wealth may reflect increased economic rents—in particular, land and exploitation rents—and their capitalized value, unrelated to an increase in the productive capacity of the economy. Another major problem in our wealth accounts is the “missing capital” required to explain the marked decrease in economic output, at the time of the recession and in the years following, that cannot be fully accounted for by a decrease in measured inputs. When account is taken of this missing capital, the adverse effects of austerity appear much greater than suggested by the standard national income accounts.
Handle: RePEc:nbr:nberwo:21327
Template-Type: ReDIF-Paper 1.0
Title: Mandatory Disclosure and Financial Contagion
Classification-JEL: G01; G18; G33
Author-Name: Fernando Alvarez
Author-Name: Gadi Barlevy
Author-Person: pba129
Note: EFG ME
Number: 21328
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21328
File-URL: http://www.nber.org/papers/w21328.pdf
File-Format: application/pdf
Publication-Status: published as Alvarez, Fernando & Barlevy, Gadi, 2021. "Mandatory disclosure and financial contagion," Journal of Economic Theory, Elsevier, vol. 194(C).
Abstract: This paper explores whether mandatory disclosure of bank balance sheet information can improve welfare. In our benchmark model, mandatory disclosure can raise welfare only when markets are frozen, i.e. when investors refuse to fund banks in the absence of balance sheet information. Even then, intervention is only warranted if there is sufficient contagion across banks, in a sense we make precise within our model. In the same benchmark model, if in the absence of balance sheet information investors would fund banks, mandatory disclosure cannot raise welfare and it will be desirable to forbid banks to disclose their financial positions. When we modify the model to allow banks to engage in moral hazard, mandatory disclosure can increase welfare in normal times. But the case for intervention still hinges on there being sufficient contagion. Finally, we argue disclosure represents a substitute to other financial reforms rather than complement them as some have argued.
Handle: RePEc:nbr:nberwo:21328
Template-Type: ReDIF-Paper 1.0
Title: Backtesting Strategies Based on Multiple Signals
Classification-JEL: C58; G11
Author-Name: Robert Novy-Marx
Note: AP
Number: 21329
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21329
File-URL: http://www.nber.org/papers/w21329.pdf
File-Format: application/pdf
Abstract: Strategies selected by combining multiple signals suffer severe overfitting biases, because underlying signals are typically signed such that each predicts positive in-sample returns. “Highly significant” backtested performance is easy to generate by selecting stocks on the basis of combinations of randomly generated signals, which by construction have no true power. This paper analyzes t-statistic distributions for multi-signal strategies, both empirically and theoretically, to determine appropriate critical values, which can be several times standard levels. Overfitting bias also severely exacerbates the multiple testing bias that arises when investigators consider more results than they present. Combining the best k out of n candidate signals yields a bias almost as large as those obtained by selecting the single best of nᵏ candidate signals.
Handle: RePEc:nbr:nberwo:21329
Template-Type: ReDIF-Paper 1.0
Title: (Un)Informed College and Major Choice: Evidence from Linked Survey and Administrative Data
Classification-JEL: H52; I2; I24; I26; I28; J24
Author-Name: Justine S. Hastings
Author-Person: pha804
Author-Name: Christopher A. Neilson
Author-Person: pne96
Author-Name: Anely Ramirez
Author-Name: Seth D. Zimmerman
Author-Person: pzi155
Note: ED LS
Number: 21330
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21330
File-URL: http://www.nber.org/papers/w21330.pdf
File-Format: application/pdf
Publication-Status: published as Justine S. Hastings & Christopher A. Neilson & Anely Ramirez & Seth D. Zimmerman, 2015. "REMOVED: (Un)informed college and major choice: Evidence from linked survey and administrative data," Economics of Education Review, .
Abstract: We use large-scale surveys of Chilean college applicants and college students to explore the way students form beliefs about earnings and cost outcomes at different institutions and majors and how these beliefs relate to degree choice and persistence. Linking our survey records to administrative education and earnings data, we compare earnings and cost expectations to observed values for past students and follow survey participants forward to see how beliefs relate to matriculation and dropout outcomes. We find that students have correctly centered but noisy cost expectations, and appear to systematically overestimate earnings outcomes for past graduates. Students who overestimate costs are less likely to matriculate in any degree program and in their stated first-choice program, and are more likely to drop out. Students who overestimate earnings matriculate at similar rates to other students, but choose degree programs where past students have been less likely to graduate, have earned less early in their careers, and have been more likely to default on student loans. Consistent with an informal model of enrollment choice, students with a stated preference for labor market-related degree characteristics are less likely to overestimate earnings outcomes and choose degrees where past students have gone on to earn more, while the opposite is true for students with a stated preference for enjoyment of the curriculum.
Handle: RePEc:nbr:nberwo:21330
Template-Type: ReDIF-Paper 1.0
Title: Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program
Classification-JEL: Q4; Q48; Q5
Author-Name: Meredith Fowlie
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Catherine Wolfram
Note: EEE
Number: 21331
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21331
File-URL: http://www.nber.org/papers/w21331.pdf
File-Format: application/pdf
Publication-Status: published as Meredith Fowlie, Michael Greenstone, Catherine Wolfram; Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program, The Quarterly Journal of Economics, , qjy005, https://doi.org/10.1093/qje/qjy005
Abstract: Conventional wisdom suggests that energy efficiency (EE) policies are beneficial because they induce investments that pay for themselves and lead to emissions reductions. However, this belief is primarily based on projections from engineering models. This paper reports on the results of an experimental evaluation of the nation’s largest residential EE program conducted on a sample of more than 30,000 households. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are roughly 2.5 times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.
Handle: RePEc:nbr:nberwo:21331
Template-Type: ReDIF-Paper 1.0
Title: On the Origins of Risk-Taking
Classification-JEL: G11; J01
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Petter Lundborg
Author-Person: plu193
Author-Name: Kaveh Majlesi
Author-Person: pma1731
Note: CH LS
Number: 21332
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21332
File-URL: http://www.nber.org/papers/w21332.pdf
File-Format: application/pdf
Publication-Status: published as BLACK, S. E., DEVEREUX, P. J., LUNDBORG, P. and MAJLESI, K. (2017), On the Origins of Risk‐Taking in Financial Markets. The Journal of Finance, 72: 2229-2278. doi:10.1111/jofi.12521
Abstract: Risk-taking behavior is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use data on stock market participation of Swedish adoptees and relate this to the investment behavior of both their biological and adoptive parents. We find that stock market participation of parents increases that of children by about 34% and that both pre-birth and post-birth factors are important. However, once we condition on having positive financial wealth, we find that nurture has a much stronger influence on risk-taking by children, and the evidence of a relationship between stock-holding of biological parents and their adoptive children becomes very weak. We find similar results when we study the share of financial wealth that is invested in stocks. This suggests that a substantial proportion of risk-attitudes and behavior is environmentally determined.
Handle: RePEc:nbr:nberwo:21332
Template-Type: ReDIF-Paper 1.0
Title: From Financial Repression to External Distress: The Case of Venezuela
Classification-JEL: E4; E5; E58; E6; F31; F36; N26
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Miguel Angel Santos
Author-Person: psa1518
Note: IFM ME
Number: 21333
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21333
File-URL: http://www.nber.org/papers/w21333.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Miguel Angel Santos, 2016. "From Financial Repression to External Distress: The Case of Venezuela," Emerging Markets Finance and Trade, vol 52(2), pages 255-284.
Abstract: Recent work has supported that there is a connection between the level of domestic debt level and sovereign default on external debt. We examine the potential linkages in a case study of Venezuela from 1984 to 2013. This unique example encompasses multiple financial crises, cycles of liberalization and policy reversals, and alternative exchange rate arrangements. This experience reveals a nexus among domestic debt, financial repression, and external vulnerability. Unlike foreign currency-denominated debt, debt in domestic currency may be reduced through financial repression, a tax on bondholders and savers producing negative real interest rates. Using a variety of methodologies, we estimate the magnitude of the tax from financial repression. On average, this financial repression tax (as a share of GDP) is similar to those of OECD economies, in spite of the much higher domestic debt-to-GDP ratios in the latter. However, the financial repression “tax rate” is significantly higher in years of exchange controls and legislated interest rate ceilings. In line with earlier literature on capital controls, our comprehensive measures of capital flight document a link between domestic disequilibrium and a weakening of the net foreign asset position via private capital flight. We suggest these findings are not unique to the Venezuelan case.
Handle: RePEc:nbr:nberwo:21333
Template-Type: ReDIF-Paper 1.0
Title: Banks' Risk Exposures
Classification-JEL: E4; E43; E58; G0; G2; G21
Author-Name: Juliane Begenau
Author-Name: Monika Piazzesi
Author-Person: ppi37
Author-Name: Martin Schneider
Author-Person: psc69
Note: AP CF EFG ME
Number: 21334
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21334
File-URL: http://www.nber.org/papers/w21334.pdf
File-Format: application/pdf
Abstract: This paper studies U.S. banks' exposure to interest rate and credit risk. We exploit the factor structure in interest rates to represent many bank positions in terms of simple factor portfolios. This approach delivers time varying measures of exposure that are comparable across banks as well as across the business segments of an individual bank. We also propose a strategy to estimate exposure due to interest rate derivatives from regulatory data on notional and fair values together with the history of interest rates. We use the approach to document stylized facts about the recent evolution of bank risk taking.
Handle: RePEc:nbr:nberwo:21334
Template-Type: ReDIF-Paper 1.0
Title: The Development of Corporate Governance in Toulouse: 1372-1946
Classification-JEL: G30; G34; G35; N0; N2; N8; N83; O16; P1
Author-Name: David Le Bris
Author-Name: William N. Goetzmann
Author-Person: pgo59
Author-Name: Sébastien Pouget
Note: CF
Number: 21335
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21335
File-URL: http://www.nber.org/papers/w21335.pdf
File-Format: application/pdf
Abstract: We document a sequence of institutional innovations associated with the corporate form over the course of several centuries in Toulouse. Shareholding companies that began in the 11th century formally incorporated themselves into two large-scale, widely held firms by 1373. In the years that followed they experienced the economic challenges and conflicts we now recognize as inherent in the separation of ownership and control. Using new and existing archival research, we show how the Toulouse firms developed institutional solutions including tradable shares, limited liability, governing boards, cash payout policies, external audits, shareholder meetings and mechanisms for re-capitalization. We examine these developments in the context of institutional economic theory and the received history of the corporation. The Toulouse companies preceded the birth of the Dutch and English East India companies by centuries. The Toulouse firms shed light on the necessary and sufficient conditions for the development of the corporate form. We show that the constellation of features associated with the corporation can appear in situations of relative economic certainty and in the context of Medieval legal code that did not require the granting of governmental approval or patent. The Toulouse firms are a unique case in which the corporation appears as a nexus of private contracts.
Handle: RePEc:nbr:nberwo:21335
Template-Type: ReDIF-Paper 1.0
Title: Time Consistency and the Duration of Government Debt: A Signalling Theory of Quantitative Easing
Classification-JEL: E31; E4; E42; E43; E5; E52; E62; E63
Author-Name: Saroj Bhattarai
Author-Person: pbh111
Author-Name: Gauti B. Eggertsson
Author-Person: peg7
Author-Name: Bulat Gafarov
Author-Person: pga650
Note: ME
Number: 21336
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21336
File-URL: http://www.nber.org/papers/w21336.pdf
File-Format: application/pdf
Abstract: We present a signalling theory of Quantitative Easing (QE) at the zero lower bound on the short term nominal interest rate. QE is effective because it generates a credible signal of low future real interest rates in a time consistent equilibrium. We show these results in two models. One has coordinated monetary and fiscal policy. The other an independent central bank with balance sheet concerns. Numerical experiments show that the signalling effect can be substantial in both models.
Handle: RePEc:nbr:nberwo:21336
Template-Type: ReDIF-Paper 1.0
Title: Healthy(?), Wealthy and Wise: Birth Order and Adult Health
Classification-JEL: I1; J1
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH EH LS
Number: 21337
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21337
File-URL: http://www.nber.org/papers/w21337.pdf
File-Format: application/pdf
Publication-Status: published as Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2016. "Healthy(?), wealthy, and wise: Birth order and adult health," Economics & Human Biology, Elsevier, vol. 23(C), pages 27-45.
Abstract: While recent research finds strong evidence that birth order affects children’s outcomes such as education, IQ scores, and earnings, the evidence for effects on health is more limited. This paper uses a large dataset on the population of Norway and focuses on the effect of birth order on a range of health and health-related behaviors, outcomes not previously available in datasets of this magnitude. Interestingly, we find complicated effects of birth order. First-borns are more likely to be overweight, to be obese, and to have high blood pressure and high triglycerides. So, unlike education or earnings, there is no clear first-born advantage in health. However, later-borns are more likely to smoke and have poorer self-reported physical and mental health. They are also less likely to report that they are happy. We find that these effects are largely unaffected by conditioning on education and earnings, suggesting that these are not the only important pathways to health differentials by birth order. When we explore possible mechanisms, we find that smoking early in pregnancy is more prevalent for first pregnancies than for later ones. However, women are more likely to quit smoking during their first pregnancy than during later ones, and first-borns are more likely to be breast-fed. These findings suggest a role for early maternal investment in determining birth order effects on health.
Handle: RePEc:nbr:nberwo:21337
Template-Type: ReDIF-Paper 1.0
Title: A Theory of Civil Disobedience
Classification-JEL: K0; P16; R28
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Cass R. Sunstein
Author-Person: psu474
Note: LE
Number: 21338
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21338
File-URL: http://www.nber.org/papers/w21338.pdf
File-Format: application/pdf
Abstract: From the streets of Hong Kong to Ferguson, Missouri, civil disobedience has again become newsworthy. What explains the prevalence and extremity of acts of civil disobedience?This paper presents a model in which protest planners choose the nature of the disturbance hoping to influence voters (or other decision-makers in less democratic regimes) both through the size of the unrest and by generating a response. The model suggests that protesters will either choose a mild “epsilon” protest, such as a peaceful march, which serves mainly to signal the size of the disgruntled population, or a “sweet spot” protest, which is painful enough to generate a response but not painful enough so that an aggressive response is universally applauded. Since non-epsilon protests serve primarily to signal the leaders’ type, they will occur either when protesters have private information about the leader’s type or when the distribution of voters’ preferences are convex in a way that leads the revelation of uncertainty to increase the probability of regime change. The requirements needed for rational civil disobedience seem not to hold in many world settings, and so we explore ways in which bounded rationality by protesters, voters, and incumbent leaders can also explain civil disobedience.
Handle: RePEc:nbr:nberwo:21338
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Savings Accounts on Interpersonal Financial Relationships: Evidence from a Field Experiment in Rural Kenya
Classification-JEL: C93; D14; G21; O16
Author-Name: Pascaline Dupas
Author-Person: pdu104
Author-Name: Anthony Keats
Author-Name: Jonathan Robinson
Author-Person: pro377
Note: DEV
Number: 21339
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21339
File-URL: http://www.nber.org/papers/w21339.pdf
File-Format: application/pdf
Publication-Status: published as Pascaline Dupas & Anthony Keats & Jonathan Robinson, 2019. "The Effect of Savings Accounts on Interpersonal Financial Relationships: Evidence from a Field Experiment in Rural Kenya," Economic Journal, Royal Economic Society, vol. 129(617), pages 273-310.
Abstract: The welfare impact of expanding access to bank accounts depends on whether accounts crowd out pre-existing financial relationships, or whether private gains from accounts are shared within social networks. To study the effect of accounts on financial linkages, we provided free bank accounts to a random subset of 885 households. Within households, we randomized which spouse was offered an account and find no evidence of negative spillovers to spouses. Across households, we document positive spillovers: treatment households become less reliant on grown children and siblings living outside their village, and become more supportive of neighbors and friends within their village.
Handle: RePEc:nbr:nberwo:21339
Template-Type: ReDIF-Paper 1.0
Title: Effective Policy for Reducing Inequality? The Earned Income Tax Credit and the Distribution of Income
Classification-JEL: H2; I38; J2
Author-Name: Hilary W. Hoynes
Author-Person: pho278
Author-Name: Ankur J. Patel
Note: CH LS PE
Number: 21340
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21340
File-URL: http://www.nber.org/papers/w21340.pdf
File-Format: application/pdf
Abstract: In this paper, we examine the effect of the EITC on the employment and income of single mothers with children. We provide the first comprehensive estimates of this central safety net policy on the full distribution of after-tax and transfer income. We use a quasi-experiment approach, using variation in generosity due to policy expansions across tax years and family sizes. Our results show that a policy-induced $1000 increase in the EITC leads to a 7.3 percentage point increase in employment and a 9.4 percentage point reduction in the share of families with after-tax and transfer income below 100% poverty. Event study estimates show no evidence of differential pre-trends, providing strong evidence in support of our research design. We find that the income increasing effects of the EITC are concentrated between 75% and 150% of income-to-poverty with little effect at the lowest income levels (50% poverty and below) and at levels of 250% of poverty and higher. By capturing the indirect effects of the credit on earnings, our results show that static calculations of the anti-poverty effects of the EITC (such as those released based on the Supplemental Poverty Measure, Short 2014) may be underestimated by as much as 50 percent.
Handle: RePEc:nbr:nberwo:21340
Template-Type: ReDIF-Paper 1.0
Title: Protecting Financial Stability in the Aftermath of World War I: The Federal Reserve Bank of Atlanta's Dissenting Policy
Classification-JEL: E58; G01; N12; N22
Author-Name: Eugene N. White
Author-Person: pwh5
Note: DAE ME
Number: 21341
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21341
File-URL: http://www.nber.org/papers/w21341.pdf
File-Format: application/pdf
Publication-Status: published as White, E. (2017). Protecting Financial Stability in the Aftermath of World War I: The Federal Reserve Bank of Atlanta’s Dissenting Policy. In P. Rousseau & P. Wachtel (Eds.), Financial Systems and Economic Growth: Credit, Crises, and Regulation from the 19th Century to the Present (Studies in Macroeconomic History, pp. 201-231). Cambridge: Cambridge University Press. doi:10.1017/9781316493281.008
Abstract: During the 1920-1921 recession, the Federal Reserve Bank of Atlanta resisted the deflationary policy sanctioned by the Federal Reserve Board and pursued by other Reserve banks. By borrowing gold reserves from other Reserve banks, it facilitated a reallocation of liquidity to its district during the contraction. Viewing the collapse of the price of cotton, the dominant crop in the region, as a systemic shock to the Sixth District, the Atlanta Fed increased discounting and enabled capital infusions to aid its member banks. The Atlanta Fed believed that it had to limit bank failures to prevent a fire sale of cotton collateral that would precipitate a general panic. In this previously unknown episode, the Federal Reserve Board applied considerable pressure on the Atlanta Fed to adhere to its policy and follow a simple Bagehot-style rule. The Atlanta Fed was vindicated when the shock to cotton prices proved to be temporary, and the Board conceded that the Reserve Bank had intervened appropriately.
Handle: RePEc:nbr:nberwo:21341
Template-Type: ReDIF-Paper 1.0
Title: The Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives and Rebates
Classification-JEL: L94; Q42; Q52; Q58
Author-Name: Severin Borenstein
Author-Person: pbo78
Note: EEE
Number: 21342
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21342
File-URL: http://www.nber.org/papers/w21342.pdf
File-Format: application/pdf
Publication-Status: published as Severin Borenstein, 2017. "Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives, and Rebates," Journal of the Association of Environmental and Resource Economists, vol 4(S1), pages S85-S122.
Abstract: With dramatic declines in the cost of solar PV technology over the last 5 years, the electricity industry is in the midst of discussions about whether to use this low-polluting renewable energy source in grid-scale generation or in distributed generation (DG), mostly with rooftop solar PV. California has led the growth in DG solar in the U.S. I use 2007 to early 2014 residential data from Pacific Gas & Electric – the utility with largest number of residential solar customers in the U.S. – to examine the full range of private incentives for installing residential solar, from the direct payments and tax credits to the indirect incentives that result from the residential tariff design and the crediting of solar production under “net energy metering.” I then study the income distribution of solar adopters and how that has changed over time. I find the skew to wealthy households adopting solar is still significant, but has lessened since 2011. Adoption continues to be dominated by the heaviest electricity-consuming households, probably because the steeply-tiered tariff structure greatly increases the private value of solar to such customers while reducing the incentive for consumers who are below median consumption. In fact, the financial incentive for those who adopt solar over the sample period may have been due nearly as much to California's tiered tariff structure as to the 30% federal tax credit. The California experience suggests that rate design can greatly influence the economic incentives for residential solar adoption and which customers receive those benefits.
Handle: RePEc:nbr:nberwo:21342
Template-Type: ReDIF-Paper 1.0
Title: The Pass-Through of RIN Prices to Wholesale and Retail Fuels under the Renewable Fuel Standard
Classification-JEL: C32; Q42
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Ben S. Meiselman
Author-Person: pme726
Author-Name: James H. Stock
Author-Person: pst148
Note: EEE
Number: 21343
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21343
File-URL: http://www.nber.org/papers/w21343.pdf
File-Format: application/pdf
Publication-Status: published as Christopher R. Knittel & Ben S. Meiselman & James H. Stock, 2017. "The Pass-Through of RIN Prices to Wholesale and Retail Fuels under the Renewable Fuel Standard," Journal of the Association of Environmental and Resource Economists, vol 4(4), pages 1081-1119.
Abstract: The U.S. Renewable Fuel Standard (RFS) requires blending increasing quantities of biofuels into the U.S. surface vehicle fuel supply. In 2013, the fraction of ethanol in the gasoline pool effectively reached 10%, the ethanol capacity of the dominant U.S. gasoline blend (the “E10 blend wall”). During 2013-2015, the price of RINs—tradeable electronic certificates for complying with the RFS—fluctuated through a wide range, largely because of changes in actual and expected policy combined with learning about the implications of the E10 blend wall. RINs are sold by biofuels producers and purchased by obligated parties (refiners and importers), who must retire RINs in proportion to the petroleum they sell for surface transportation. As a result, RINs in effect serve as a charge on obligated fuels and a corrective subsidy for lower-carbon renewable fuels, and are neutral for fuels outside the RFS. In theory, RIN prices provide incentives to consumers to use fuels with a high renewable content and to biofuels producers to produce those fuels, and as such are a key mechanism of the RFS. This paper examines the extent to which RIN prices are passed through to the price of obligated fuels, and provides econometric results that complement the graphical analysis in Burkholder (2015). We analyze daily data on RINs and fuel prices from January 1, 2013 through March 10, 2015. When we examine wholesale prices on comparable obligated and non-obligated fuels, for example the spread between diesel and jet fuel in the U.S. Gulf, we find that that roughly one-half to three-fourths of a change in RIN prices is passed through to obligated fuels in the same day as the RIN price movement, and this fraction rises over the subsequent few business days. Using six different wholesale spreads between obligated and non-obligated fuels, we estimate a pooled long-run pass-through coefficient of 1.01 with a standard error of 0.12. We also examine the transmission of RIN prices to retail fuel prices. The net RIN obligation on E10 is essentially zero over this period, and indeed we find no statistical evidence linking changes in RIN prices to changes in E10 prices. We also examine the price of E85 which, with an estimated average of 74% ethanol, generates more RINs than it obligates and thus in principle receives a large RIN subsidy. In contrast to the foregoing results, which are consistent with theory, the pass-through of RIN prices to the E85-E10 spread is precisely estimated to be zero if one adjusts for seasonality (as we argue should be done), or if not, is at most 30%. Over this period, on average high RIN prices did not translate into discounted prices for E85.
Handle: RePEc:nbr:nberwo:21343
Template-Type: ReDIF-Paper 1.0
Title: Networks and the Macroeconomy: An Empirical Exploration
Classification-JEL: E32
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Ufuk Akcigit
Author-Person: pak203
Author-Name: William Kerr
Author-Person: pke127
Note: EFG PR
Number: 21344
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21344
File-URL: http://www.nber.org/papers/w21344.pdf
File-Format: application/pdf
Publication-Status: published as Networks and the Macroeconomy: An Empirical Exploration, Daron Acemoglu, Ufuk Akcigit, William Kerr. in NBER Macroeconomics Annual 2015, Volume 30, Eichenbaum and Parker. 2016
Abstract: The propagation of macroeconomic shocks through input-output and geographic networks can be a powerful driver of macroeconomic fluctuations. We first exposit that in the presence of Cobb-Douglas production functions and consumer preferences, there is a specific pattern of economic transmission whereby demand-side shocks propagate upstream (to input-supplying industries) and supply-side shocks propagate downstream (to customer industries) and that there is a tight relationship between the direct impact of a shock and the magnitudes of the downstream and the upstream indirect effects. We then investigate the short-run propagation of four different types of industry-level shocks: two demand-side ones (the exogenous component of the variation in industry imports from China and changes in federal spending) and two supply-side ones (TFP shocks and variation in knowledge/ideas coming from foreign patenting). In each case, we find substantial propagation of these shocks through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation is larger than the direct effects of the shocks. We also show quantitatively large effects from the geographic network, capturing the fact that the local propagation of a shock to an industry will fall more heavily on other industries that tend to collocate with it across local markets. Our results suggest that the transmission of various different types of shocks through economic networks and industry interlinkages could have first-order implications for the macroeconomy.
Handle: RePEc:nbr:nberwo:21344
Template-Type: ReDIF-Paper 1.0
Title: Do Medical Marijuana Laws Reduce Addictions and Deaths Related to Pain Killers?
Classification-JEL: I12; I28
Author-Name: David Powell
Author-Person: ppo594
Author-Name: Rosalie Liccardo Pacula
Author-Person: ppa1299
Author-Name: Mireille Jacobson
Author-Person: pja574
Note: EH
Number: 21345
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21345
File-URL: http://www.nber.org/papers/w21345.pdf
File-Format: application/pdf
Publication-Status: published as David Powell & Rosalie Liccardo Pacula & Mireille Jacobson, 2018. "Do medical marijuana laws reduce addictions and deaths related to pain killers?," Journal of Health Economics, vol 58, pages 29-42.
Abstract: Many medical marijuana patients report using marijuana to alleviate chronic pain from musculoskeletal problems and other sources. If marijuana is used as a substitute for powerful and addictive pain relievers in medical marijuana states, a potential overlooked positive impact of medical marijuana laws may be a reduction in harms associated with opioid pain relievers, a far more addictive and potentially deadly substance. To assess this issue, we study the impact of medical marijuana laws on problematic opioid use. We use two measures of problematic use: treatment admissions for opioid pain reliever addiction from the Treatment Episode Data Set (TEDS) and state-level opioid overdose deaths in the National Vital Statistics System (NVSS). Using both standard differences-in-differences models as well as synthetic control models, we find that states permitting medical marijuana dispensaries experience a relative decrease in both opioid addictions and opioid overdose deaths compared to states that do not. We find no impact of medical marijuana laws more broadly; the mitigating effect of medical marijuana laws is specific to states that permit dispensaries. We evaluate potential mechanisms. Our findings suggest that providing broader access to medical marijuana may have the potential benefit of reducing abuse of highly addictive painkillers.
Handle: RePEc:nbr:nberwo:21345
Template-Type: ReDIF-Paper 1.0
Title: Evaluating the Risk of Chinese Housing Markets: What We Know and What We Need to Know
Classification-JEL: R11; R3; R31; R52
Author-Name: Jing Wu
Author-Person: pwu144
Author-Name: Joseph Gyourko
Author-Person: pgy3
Author-Name: Yongheng Deng
Author-Person: pde836
Note: PE
Number: 21346
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21346
File-URL: http://www.nber.org/papers/w21346.pdf
File-Format: application/pdf
Publication-Status: published as Jing Wu & Joseph Gyourko & Yongheng Deng, 2016. "Evaluating the risk of Chinese housing markets: What we know and what we need to know," China Economic Review, vol 39, pages 91-114.
Abstract: Real estate is an important driver of the Chinese economy, which itself is vital for global growth. However, data limitations make it challenging to evaluate competing claims about the state of Chinese housing markets. This paper brings new data and analysis to the study of supply and demand conditions in nearly three dozen major cities. We first document the most accurate measures of land values, construction costs, and overall house prices. We then create and investigate a number of supply and demand metrics to see if price growth reasonably can be interpreted as reflecting local market fundamentals. Key results include the following: (1) Real house price growth has been high, averaging 10% per annum since 2004. However, there is substantial heterogeneity across markets, ranging from 3% (Jinan) to 20% (Beijing). House price growth is driven by rising land values, not by construction costs. Real land values have risen by over 15% per annum on average. In Beijing, the increase has been by a remarkable 27.5% per year (or by 1,036%) since 2004. (2) There is variation about the strong positive trend in house price and land value growth. Land values fell by nearly one-third at the beginning of the global financial crisis, but more than fully recovered amidst the 2009-2010 Chinese stimulus. More recent growth has been much more modest, with some markets beginning to decline. Quantities of land sales by local governments to private residential developers have dropped sharply over the past two years. The most recent data show transactions volumes down by half or more. This should lead to a reduced supply of new housing units in coming years. (3) Market-level analysis of short- and longer-run changes in supply-demand balances finds important variation across markets. In the major East region markets of Beijing, Hangzhou, Shanghai and Shenzhen which have experienced very high rates of real price growth, we estimate that the growth in households demanding housing units has outpaced new construction since the turn of the century. However, there are a dozen large markets, primarily in the interior of the country, in which new housing production has outpaced household growth by at least 30% and another eight in which it did so by at least 10%. Regression results show that a one standard deviation increase in local market housing inventory is associated with a 0.45 standard deviation lower rate of real house price growth the following year. (4) There are no official data on residential vacancy rates in China, but some researchers have reported very high figures (17%+). We develop a new series at the provincial level which yields a much lower vacancy rate on average, but it has been rising—from 5% in 2009 to 7% in 2013. (5) The risk of housing even in markets such as Beijing which show no evidence of oversupply, is best evidenced by price-to-rent ratios. They are well above 50 in the capital city. Poterba’s (1984) user cost model suggests these levels can be justified only if owners have sufficiently high expectations of future capital gains. Even a modest one percentage point drop in expected appreciation (or increase in interest rates) would result in a drop in prices of about one-third, absent an offsetting increase in rents.
Handle: RePEc:nbr:nberwo:21346
Template-Type: ReDIF-Paper 1.0
Title: Top Incomes in Canada: Evidence from the Census
Classification-JEL: J24; J31
Author-Name: Thomas Lemieux
Author-Person: ple92
Author-Name: W. Craig Riddell
Author-Person: pri20
Note: LS
Number: 21347
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21347
File-URL: http://www.nber.org/papers/w21347.pdf
File-Format: application/pdf
Abstract: This paper looks at the evolution of incomes at the top of the distribution in Canada. Master files of the Canadian Census are used to study the composition of top income earners between 1981 and 2011. Our main finding is that, as in the United States, executives and individuals working in the financial and business services sectors are the two most important groups driving the growth in top incomes in Canada. A finding more specific to Canada is that the oil and gas sector has also played an important role in income growth at the top, especially in more recent years. Another arguably Canadian-specific finding is that holders of medical degrees have lost ground compared to other top income earners. Finally, despite the IT revolution, scientists, engineers and even computer scientists do not account for much of the growth in top incomes in Canada.
Handle: RePEc:nbr:nberwo:21347
Template-Type: ReDIF-Paper 1.0
Title: The Long-Term Consequences of Vietnam-Era Conscription and Genotype on Smoking Behavior and Health
Classification-JEL: I1; I12; I14
Author-Name: Lauren Schmitz
Author-Name: Dalton Conley
Note: AG EH
Number: 21348
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21348
File-URL: http://www.nber.org/papers/w21348.pdf
File-Format: application/pdf
Publication-Status: published as Lauren Schmitz & Dalton Conley, 2016. "The Long-Term Consequences of Vietnam-Era Conscription and Genotype on Smoking Behavior and Health," Behavior Genetics, vol 46(1), pages 43-58.
Abstract: Research is needed to understand the extent to which environmental factors mediate links between genetic risk and the development of smoking behaviors. The Vietnam-era draft lottery offers a unique opportunity to investigate whether genetic susceptibility to smoking is influenced by risky environments in young adulthood. Access to free or reduced-price cigarettes coupled with the stress of military life meant conscripts were exposed to a large, exogenous shock to smoking behavior at a young age. Using data from the Health and Retirement Study (HRS), we interact a genetic risk score for smoking initiation with instrumented veteran status in an instrumental variables (IV) framework to test for genetic moderation (i.e. heterogeneous treatment effects) of veteran status on smoking behavior and smoking-related morbidities. We find evidence that veterans with a high genetic predisposition for smoking were more likely to become regular smokers, smoke heavily, and are at a higher risk of being diagnosed with cancer or hypertension at older ages. Smoking behavior was significantly attenuated for high-risk veterans who attended college after the war, indicating post-service schooling gains from veterans’ use of the GI Bill may have reduced tobacco consumption in adulthood.
Handle: RePEc:nbr:nberwo:21348
Template-Type: ReDIF-Paper 1.0
Title: Capital Markets in China and Britain, 18th and 19th Century: Evidence from Grain Prices
Classification-JEL: G12; N10; N13; N25; O10
Author-Name: Wolfgang Keller
Author-Person: pke8
Author-Name: Carol H. Shiue
Author-Name: Xin Wang
Note: AP DAE EFG
Number: 21349
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21349
File-URL: http://www.nber.org/papers/w21349.pdf
File-Format: application/pdf
Abstract: Based on the most comprehensive grain prices available, we employ a storage model to estimate consistent interest rates and compare capital market development in Britain and China. Interest rates for Britain were lower than China’s on average by about three percentage points from 1770 to 1860. Regional capital market integration in the Yangzi Delta comes close to the British average at distances below 200 kilometers, but at larger distances interest rate correlations in Britain are twice those of the Delta, and three or more times as high as elsewhere in China. Overall, our results suggest capital market divergence at an early date.
Handle: RePEc:nbr:nberwo:21349
Template-Type: ReDIF-Paper 1.0
Title: The Antecedents and Aftermath of Financial Crises as told by Carlos F. Díaz Alejandro
Classification-JEL: B26; E5; E6; F3; G01
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Note: IFM ME
Number: 21350
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21350
File-URL: http://www.nber.org/papers/w21350.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart, 2015. "The Antecedents and Aftermath of Financial Crises as Told by Carlos F. Díaz-Alejandro," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2015), pages 187-217, October.
Abstract: Some of the best-known papers of Carlos F. Díaz Alejandro were about Latin America’s crises in the 1980s and 1930s. I will show data, figures and evidence here about the crises in the advanced economies 30 years later that fit the same narrative. His unadulterated words aptly describe modern problems across geographical borders and, in this case, income levels. This attests to his timeless insight and understanding. Because some of the observations he made have general applicability to the study of recurring patterns across crises, I have taken the liberty to label these as lessons.
Handle: RePEc:nbr:nberwo:21350
Template-Type: ReDIF-Paper 1.0
Title: What do Exporters Know?
Classification-JEL: F14
Author-Name: Michael J. Dickstein
Author-Name: Eduardo Morales
Note: IO ITI
Number: 21351
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21351
File-URL: http://www.nber.org/papers/w21351.pdf
File-Format: application/pdf
Publication-Status: published as Michael J Dickstein & Eduardo Morales, 2018. "What do Exporters Know?*," The Quarterly Journal of Economics, vol 133(4), pages 1753-1801.
Abstract: Much of the variation in international trade volume is driven by firms' extensive margin decision to participate in export markets. To understand this decision and predict the sensitivity of export flows to changes in trade costs, we estimate a standard model of firms' export participation. In choosing whether to export, firms weigh the fixed costs of exporting against the forecasted profits from serving a foreign market. We show that the estimated parameters and counterfactual predictions from the model depend heavily on how the researcher specifies firms' expectations over these profits. We therefore develop a novel moment inequality approach with weaker assumptions on firms' expectations. Our approach introduces a new set of moment inequalities --odds-based inequalities-- and applies the revealed preference inequalities introduced in Pakes (2010) to a new setting. We use data from Chilean exporters to show that, relative to methods that require specifying firms' information sets, our approach generates estimates of fixed export costs that are 65-85% smaller. Counterfactual reductions in fixed costs generate gains in export participation that are 30% smaller, on average, than those predicted by existing approaches.
Handle: RePEc:nbr:nberwo:21351
Template-Type: ReDIF-Paper 1.0
Title: Family Labor Supply Responses to Severe Health Shocks
Classification-JEL: H0; I1; J1; J2
Author-Name: Itzik Fadlon
Author-Person: pfa513
Author-Name: Torben Heien Nielsen
Note: AG EH LS PE
Number: 21352
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21352
File-URL: http://www.nber.org/papers/w21352.pdf
File-Format: application/pdf
Abstract: This paper provides new evidence on how household labor supply responds to fatal and severe non-fatal health shocks in the short- and medium-run. To identify the causal effects of these shock realizations, we leverage administrative data on families' health and labor market outcomes, and construct counterfactuals to affected households by using households that experience the same shock but a few years in the future. We find that fatal health shocks lead to an immediate increase in the surviving spouses' labor supply and that this effect is entirely driven by families who experience significant income losses. Accordingly, widows, who face large income losses when their husbands die, increase their labor force participation by more than 11%; while widowers, who are significantly more financially stable, slightly decrease their labor supply. Notably, however, the patterns of sensitivity to comparable income changes are similar across genders. In contrast to fatal shocks, we find that non-fatal health shocks—in particular, heart attacks or strokes—have no meaningful effects on spousal labor supply, consistent with the adequate insurance coverage for the associated foregone income. Overall, the results point to self-insurance as a driving mechanism for the family labor supply responses that we estimate. Combined with a stylized model, our findings suggest efficient ways to target government transfers through existing social insurance programs.
Handle: RePEc:nbr:nberwo:21352
Template-Type: ReDIF-Paper 1.0
Title: Health and Unemployment during Macroeconomic Crises
Classification-JEL: I1; J65
Author-Name: Prashant Bharadwaj
Author-Name: Petter Lundborg
Author-Person: plu193
Author-Name: Dan-Olof Rooth
Author-Person: pro875
Note: CH EH PE
Number: 21353
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21353
File-URL: http://www.nber.org/papers/w21353.pdf
File-Format: application/pdf
Abstract: This paper shows that health is an important determinant of labor market vulnerability during large economic crises. Using data on adults during Sweden’s unexpected economic crisis in the early 1990s, we show that early and later life health are important determinants of job loss after the crisis, but not before. Adults who were born with worse health (proxied by birth weight) and those who experience hospitalizations (and especially so for mental health related issues) in the pre-crisis period, are much more likely to lose their jobs and go on unemployment insurance after the crisis. These effects are concentrated in the private sector that happened to be more affected by the crisis. The results hold while controlling for individual education and occupational sorting prior to the crisis, and for controlling for family level characteristics by exploiting health differences within twin pairs. We conclude that poor health (both in early life and as adults) is an important indicator of vulnerability during economic shocks.
Handle: RePEc:nbr:nberwo:21353
Template-Type: ReDIF-Paper 1.0
Title: Birth Weight in the Long Run
Classification-JEL: I1
Author-Name: Prashant Bharadwaj
Author-Name: Petter Lundborg
Author-Person: plu193
Author-Name: Dan-Olof Rooth
Author-Person: pro875
Note: CH
Number: 21354
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21354
File-URL: http://www.nber.org/papers/w21354.pdf
File-Format: application/pdf
Publication-Status: published as Prashant Bharadwaj & Petter Lundborg & Dan-Olof Rooth, 2018. "Birth Weight in the Long Run," Journal of Human Resources, vol 53(1), pages 189-231.
Abstract: We study the effect of birth weight on long-run outcomes, including permanent income, income across various stages of the lifecycle, education, social benefits take-up, and adult mortality. For this purpose, we have linked a unique dataset on nearly all Swedish twins born between 1926- 1958, containing information on birth weight, to administrative records spanning nearly entire life time lab or market histories. We find that birth weight positively affects permanent income and income across large parts of the life cycle, although there is some evidence of a fade out after age 50. Our results indicate that lower birth weight children are more likely to avail of social insurance programs such as unemployment and sickness insurance and that birth weight matters for adult mortality. We supplement our main analysis with more recent data, which enables us to study how the impact of birth weight on income and education of young adults has changed across cohorts born almost 50 years apart.
Handle: RePEc:nbr:nberwo:21354
Template-Type: ReDIF-Paper 1.0
Title: Solar Geoengineering, Uncertainty, and the Price of Carbon
Classification-JEL: C61; H23; Q54; Q58
Author-Name: Garth Heutel
Author-Person: phe315
Author-Name: Juan Moreno Cruz
Author-Person: pmo742
Author-Name: Soheil Shayegh
Author-Person: psh1024
Note: EEE PE
Number: 21355
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21355
File-URL: http://www.nber.org/papers/w21355.pdf
File-Format: application/pdf
Publication-Status: published as Garth Heutel & Juan Moreno-Cruz & Soheil Shayegh, 2017. "Solar Geoengineering, Uncertainty, and the Price of Carbon," Journal of Environmental Economics and Management, .
Abstract: We consider the socially optimal use of solar geoengineering to manage climate change. Solar geoengineering can reduce damages from atmospheric greenhouse gas concentrations, potentially more cheaply than reducing emissions. If so, optimal policy includes less abatement than recommended by models that ignore solar geoengineering, and the price of carbon is lower. Solar geoengineering reduces temperature but does not reduce atmospheric or ocean carbon concentrations, and that carbon may cause damages apart from temperature increases. Finally, uncertainty over climate change and solar geoengineering alters the optimal deployment of solar geoengineering. We explore these issues with an analytical model and a numerical simulation. The price of carbon is 30%-45% lower than the price recommended in a model without geoengineering, depending on the parameterizations of geoengineering costs and benefits. Carbon concentrations are higher but temperature is lower when allowing for solar geoengineering. The optimal amount of solar geoengineering is more sensitive to climate uncertainty than is the optimal amount of abatement.
Handle: RePEc:nbr:nberwo:21355
Template-Type: ReDIF-Paper 1.0
Title: Precautionary Savings, Retirement Planning and Misperceptions of Financial Literacy
Classification-JEL: G02
Author-Name: Anders Anderson
Author-Name: Forest Baker
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF
Number: 21356
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21356
File-URL: http://www.nber.org/papers/w21356.pdf
File-Format: application/pdf
Publication-Status: published as Anders Anderson & Forest Baker & David T. Robinson, 2017. "Precautionary savings, retirement planning and misperceptions of financial literacy," Journal of Financial Economics, .
Abstract: We measure financial literacy among LinkedIn members, complementing standard questions with additional questions that allow us to gauge self-perceptions of financial literacy. Average financial literacy is surprisingly low given the demographics of our sample: fewer than two-thirds of CFOs, CEOs, and COOs complete the test correctly. Financial literacy, precautionary savings and retirement planning are positively correlated, but this is mostly driven by perceived, not actual, literacy: controlling for self-perceptions, actual literacy has low predictive power. Perceptions drive decision-making among low-literacy respondents and are associated with mistaken beliefs about financial products and less willingness to accept financial advice.
Handle: RePEc:nbr:nberwo:21356
Template-Type: ReDIF-Paper 1.0
Title: Why the Referential Treatment: Evidence from Field Experiments on Referrals
Classification-JEL: C93; J24; J63; M51
Author-Name: Amanda Pallais
Author-Name: Emily Glassberg Sands
Note: LS
Number: 21357
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21357
File-URL: http://www.nber.org/papers/w21357.pdf
File-Format: application/pdf
Publication-Status: published as Amanda Pallais & Emily Glassberg Sands, 2016. "Why the Referential Treatment? Evidence from Field Experiments on Referrals," Journal of Political Economy, vol 124(6), pages 1793-1828.
Abstract: Referred workers are more likely than non-referred workers to be hired, all else equal. In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers' observable characteristics. We also find that referrals performed particularly well when working directly with their referrers. However, we do not find evidence that referrals exert more effort because they believe their performance will affect their relationship with their referrer or their referrer's position at the firm.
Handle: RePEc:nbr:nberwo:21357
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Policies and the Prices of Labor: A Comparison of the U.K. and U.S.
Classification-JEL: E24; H31; I38
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: EFG PE
Number: 21358
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21358
File-URL: http://www.nber.org/papers/w21358.pdf
File-Format: application/pdf
Publication-Status: published as Casey B. Mulligan, 2015. "Fiscal policies and the prices of labor: a comparison of the U.K. and U.S.," IZA Journal of Labor Policy, vol 4(1).
Abstract: This paper measures the 2007-13 evolution of employment tax rates in the U.K. and the U.S., especially as they are influenced by changes in tax and safety net benefit rules. The magnitudes of the U.S. changes are greater, in the direction of taxing a greater fraction of the value created by employment, and primarily achieved with changes in implicit tax rates. Even though both countries implemented temporary “fiscal stimulus,” their tax rate dynamics were different: the U.S. stimulus increased rates whereas the U.K. stimulus reduced them. The U.K. later increased the tax on employment during its so-called “austerity” period. Employer-cost dynamics are also different in the two countries. The tax rates calculated in this paper are a first ingredient for cross-country comparisons of labor market and fiscal policy dynamics during and after the financial crisis.
Handle: RePEc:nbr:nberwo:21358
Template-Type: ReDIF-Paper 1.0
Title: Who Needs a Fracking Education? The Educational Response to Low-Skill Biased Technological Change
Classification-JEL: I20; J2; J3; O33; Q33; R23
Author-Name: Elizabeth U. Cascio
Author-Person: pca757
Author-Name: Ayushi Narayan
Note: CH ED EEE LS
Number: 21359
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21359
File-URL: http://www.nber.org/papers/w21359.pdf
File-Format: application/pdf
Publication-Status: published as Elizabeth U. Cascio & Ayushi Narayan, 2022. "Who Needs a Fracking Education? The Educational Response to Low-Skill-Biased Technological Change," ILR Review, vol 75(1), pages 56-89.
Abstract: We explore the educational response to fracking, a recent technological breakthrough in the oil and gas industry, taking advantage of the timing of its diffusion and spatial variation in shale reserves. We show that fracking has significantly increased relative demand for less-educated male labor and high school dropout rates of male teens, both overall and relative to females. Our estimates imply that, absent fracking, the teen male dropout rate would have been 1 percentage point lower over 2011-15 in the average labor market with shale reserves, implying an elasticity of school enrollment with respect to earnings below historical estimates. Fracking increased earnings more among young men than teenage boys, suggesting that educational decisions respond to improved earnings prospects, not just opportunity costs. Other explanations for our findings, like changes in school quality, migration, or demographics, receive less empirical support.
Handle: RePEc:nbr:nberwo:21359
Template-Type: ReDIF-Paper 1.0
Title: Economic and Social Impacts of the Media
Classification-JEL: A13; D01; D10; H4; I10; I20; J0; K42; L82; L96; O10
Author-Name: Stefano DellaVigna
Author-Person: pde710
Author-Name: Eliana La Ferrara
Author-Person: pla68
Note: CH DEV ED EEE EH IO LS PE POL
Number: 21360
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21360
File-URL: http://www.nber.org/papers/w21360.pdf
File-Format: application/pdf
Publication-Status: published as Handbook of Media Economics Volume 1, Pages 723-768 Chapter 19 - Economic and Social Impacts of the Media Stefano DellaVigna Eliana La Ferrara https://doi.org/10.1016/B978-0-444-63685-0.00019-X
Abstract: In this survey, we review the literature on the impact of exposure to the media. We cast a wide net and cover media impacts on education, family choices, labor and migration decisions, environmental choices, health, crime, public economics, attitudes, consumption and savings, and development economics. We stress five themes. First, the demand for entertainment plays a key role, with the economic impacts emerging largely as by-products. Second, to understand the media effects one cannot just focus on the direct effect of exposure but one needs to take into account the crowding-out of alternative activities (substitution effect). Third, the sources of identification play a critical role in determining what is known: credible estimates of short- and long run effects are available for some topics and some media but not for others. Fourth, most of the evidence on social and economic impacts is for exposure to the entertainment media such as television, as opposed to the printed press. Fifth, for the policy impacts both the substitution effect of media exposure and the demand for entertainment play an important role.
Handle: RePEc:nbr:nberwo:21360
Template-Type: ReDIF-Paper 1.0
Title: Long Run Effects of Temporary Incentives on Medical Care Productivity
Classification-JEL: I11; I13; I15
Author-Name: Pablo Celhay
Author-Person: pce143
Author-Name: Paul Gertler
Author-Person: pge194
Author-Name: Paula Giovagnoli
Author-Name: Christel Vermeersch
Note: CH DEV EH IO PR
Number: 21361
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21361
File-URL: http://www.nber.org/papers/w21361.pdf
File-Format: application/pdf
Publication-Status: published as Pablo A. Celhay & Paul J. Gertler & Paula Giovagnoli & Christel Vermeersch, 2019. "Long-Run Effects of Temporary Incentives on Medical Care Productivity," American Economic Journal: Applied Economics, vol 11(3), pages 92-127.
Abstract: The adoption of new clinical practice patterns by medical care providers is often challenging, even when they are believed to be both efficacious and profitable. This paper uses a randomized field experiment to examine the effects of temporary financial incentives paid to medical care clinics for the initiation of prenatal care in the first trimester of pregnancy. The rate of early initiation of prenatal care was 34% higher in the treatment group than in the control group while the incentives were being paid, and this effect persisted at least 24 months or more after the incentives ended. These results are consistent with a model where the incentives enable providers to address the fixed costs of overcoming organizational inertia in innovation, and suggest that temporary incentives may be effective at motivating improvements in long run provider performance at a substantially lower cost than permanent incentives.
Handle: RePEc:nbr:nberwo:21361
Template-Type: ReDIF-Paper 1.0
Title: The Private Ordering Solution to Multiforum Shareholder Litigation
Classification-JEL: G34; K22
Author-Name: Roberta Romano
Author-Name: Sarath Sanga
Note: CF LE
Number: 21362
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21362
File-URL: http://www.nber.org/papers/w21362.pdf
File-Format: application/pdf
Publication-Status: published as Roberta Romano & Sarath Sanga, 2017. "The Private Ordering Solution to Multiforum Shareholder Litigation," Journal of Empirical Legal Studies, vol 14(1), pages 31-78.
Abstract: This paper analyzes a private ordering solution to multiforum shareholder litigation: exclusive forum provisions in corporate charters and bylaws. We examine what drives the growth in these provisions and whether, as some critics contend, their adoption reflects managerial opportunism. We find that nearly all new Delaware corporations adopt the provision at the IPO stage, and that the transition from zero to near-universal IPO adoption over 2007-14 is driven by law firms. Characteristics of individual companies appear to play little or no role in adoption decisions. Instead, the pattern of adoption follows what can be described as a light switch model, in which law firms suddenly switch from never adopting to always adopting the provision in the IPOs they advise. For midstream adoptions, we compare corporate governance features of adopters to a matched sample of non-adopters to test the hypothesis that midstream bylaw adoption reflects managerial opportunism. If the hypothesis were correct, then we would expect to find that adopters exhibit poor corporate governance compared to non-adopters (using the metrics of good governance practices as identified by critics of the provisions). We find, however, that there are either no significant differences in governance or that it is adopters that have higher quality governance features. We also find no significant differences in governance and ownership structures between firms whose boards adopt the provisions as bylaws and those who obtain shareholder approval.
Handle: RePEc:nbr:nberwo:21362
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Inequality
Classification-JEL: D31; E24
Author-Name: Xavier Gabaix
Author-Person: pga174
Author-Name: Jean-Michel Lasry
Author-Name: Pierre-Louis Lions
Author-Name: Benjamin Moll
Author-Person: pmo661
Note: EFG IFM
Number: 21363
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21363
File-URL: http://www.nber.org/papers/w21363.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
Abstract: The past forty years have seen a rapid rise in top income inequality in the United States. While there is a large number of existing theories of the Pareto tails of the income and wealth distributions at a given point in time, almost none of these address the fast rise in top inequality observed in the data. We show that standard theories, which build on a random growth mechanism, generate transition dynamics that are an order of magnitude too slow relative to those observed in the data. We then suggest parsimonious deviations from the basic model that can explain such changes, namely heterogeneity in mean growth rates or deviations from Gibrat's law. These deviations are consistent with theories in which the increase in top income inequality is driven by the rise of "superstar" entrepreneurs or managers.
Handle: RePEc:nbr:nberwo:21363
Template-Type: ReDIF-Paper 1.0
Title: When Is Social Responsibility Socially Desirable?
Classification-JEL: D21; G30; H20
Author-Name: Jean-Etienne de Bettignies
Author-Person: pde289
Author-Name: David T. Robinson
Author-Person: pro347
Note: CF
Number: 21364
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21364
File-URL: http://www.nber.org/papers/w21364.pdf
File-Format: application/pdf
Publication-Status: published as When Is Social Responsibility Socially Desirable? Jean-Etienne de Bettignies and David T. Robinson Journal of Labor Economics 0 0:ja
Abstract: We study a model in which corporate social responsibility (CSR) arises as a response to inefficient regulation. In our model, firms, governments, and workers interact. Firms generate profits but create negative spillovers that can be attenuated through government regulation, which is set endogenously and may or may not be socially optimal. Governments may choose suboptimal levels of regulation if they face lobbying pressure from companies. Companies can, in turn, hire socially responsible employees who enjoy taking actions to ameliorate the negative spillovers. Because firms can capture part of the rent created by allowing socially responsible employees to correct social ills, in some settings they find it optimal to lobby for inefficient rules and then capture the surplus associated with being "good citizens" in the face of bad regulation. In equilibrium, this means CSR can either increase or decrease social welfare, depending on the costs of political capture.
Handle: RePEc:nbr:nberwo:21364
Template-Type: ReDIF-Paper 1.0
Title: Accounting for Adaptation in the Economics of Happiness
Classification-JEL: C1; D6; I31
Author-Name: Miles Kimball
Author-Person: pki97
Author-Name: Ryan Nunn
Author-Name: Dan Silverman
Author-Person: psi181
Note: AG EH PE
Number: 21365
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21365
File-URL: http://www.nber.org/papers/w21365.pdf
File-Format: application/pdf
Abstract: Reported happiness provides a potentially useful way to evaluate unpriced goods and events; but measures of subjective well-being (SWB) often revert to the mean after responding to events, and this hedonic adaptation creates challenges for interpretation. Previous work tends to estimate time-invariant effects of events on happiness. In the presence of hedonic adaptation, this restriction can lead to biases, especially when comparing events to which people adapt at different rates. Our paper provides a flexible, extensible econometric framework that accommodates adaptation and permits the comparison of happiness-relevant life events with dissimilar hedonic adaptation paths. We present a method that is robust to individual fixed effects, imprecisely-dated data, and permanent consequences. The method is used to analyze a variety of events in the Health and Retirement Study panel. Many of the variables studied have substantial consequences for subjective well-being - consequences that differ greatly in their time profiles.
Handle: RePEc:nbr:nberwo:21365
Template-Type: ReDIF-Paper 1.0
Title: The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure
Classification-JEL: J21; J23; J3; J31; J5; J81; L1; L11; L16; L22; L23; L24; M12; M13; M51; M52
Author-Name: Deborah Goldschmidt
Author-Name: Johannes F. Schmieder
Note: IO LS
Number: 21366
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21366
File-URL: http://www.nber.org/papers/w21366.pdf
File-Format: application/pdf
Publication-Status: published as Deborah Goldschmidt & Johannes F. Schmieder, 2017. "The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1165-1217.
Abstract: The nature of the relationship between employers and employees has been changing over the last decades, with firms increasingly relying on contractors, temp agencies and franchises rather than hiring employees directly. We investigate the impact of this transformation on the wage structure by following jobs that are moved outside of the boundary of lead employers to contracting firms. For this end we develop a new method for identifying outsourcing of food, cleaning, security and logistics services in administrative data using the universe of social security records in Germany. We document a dramatic growth of domestic outsourcing in Germany since the early 1990s. Event-study analyses show that wages in outsourced jobs fall by approximately 10-15% relative to similar jobs that are not outsourced. We find evidence that the wage losses associated with outsourcing stem from a loss of firm-specific rents, suggesting that labor cost savings are an important reason why firms choose to contract out these services. Finally, we tie the increase in outsourcing activity to broader changes in the German wage structure, in particular showing that outsourcing of cleaning, security and logistics services alone accounts for around 10 percent of the increase in German wage inequality since the 1980s.
Handle: RePEc:nbr:nberwo:21366
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Post-and-Hold Laws on Alcohol Consumption
Classification-JEL: I18
Author-Name: Henry Saffer
Author-Person: psa935
Author-Name: Markus Gehrsitz
Note: EH
Number: 21367
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21367
File-URL: http://www.nber.org/papers/w21367.pdf
File-Format: application/pdf
Publication-Status: published as Saffer, Henry & Gehrsitz, Markus, 2016. "The effect of post-and-hold laws on alcohol consumption," International Review of Law and Economics, Elsevier, vol. 45(C), pages 63-71.
Abstract: This paper estimates the effects of post-and-hold laws on alcohol consumption and price. Post-and-hold laws require alcohol wholesalers to provide a list of prices to the state, which can be reviewed by retailers, competitors and the public. These laws were generally enacted at the end of prohibition with the intention of limiting alcohol consumption by raising prices. The laws may also have the unintended consequence of protecting small retailers. Recently, several large retailers have argued in court that these laws are counter to the Sherman Act, which limits anti-competitive behavior. This paper follows the recent paper by Cooper and Wright (2012) and adds new data and new statistical tests. Both difference-in–difference models and synthetic control models are employed. The estimation results provide no persuasive evidence of an effect of post-and-hold laws on the consumption of either beer, wine, or spirits. There is also no persuasive evidence that the laws increase the prices of these products. One possible explanation of this null effect is that the wholesale markets for alcohol are so highly regulated that post-and-hold laws have no discernable marginal effect. The empirical results presented in this paper do support alcohol excise taxes as effective means of reducing alcohol consumption.
Handle: RePEc:nbr:nberwo:21367
Template-Type: ReDIF-Paper 1.0
Title: Apply Yourself: Racial and Ethnic Differences in College Application
Classification-JEL: I21; I23; I24; J15; J18
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Kalena E. Cortes
Author-Name: Jane Arnold Lincove
Note: CH ED LS
Number: 21368
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21368
File-URL: http://www.nber.org/papers/w21368.pdf
File-Format: application/pdf
Publication-Status: published as Sandra E. Black & Kalena E. Cortes & Jane Arnold Lincove, 2020. "Apply Yourself: Racial and Ethnic Differences in College Application," Education Finance and Policy, vol 15(2), pages 209-240.
Abstract: Access to higher education begins with a student’s decision whether and where to apply to college. This paper examines racial and ethnic differences in college application behavior of high school graduates, using two recent graduation cohorts from Texas. We estimate racial and ethnic differences in the probability of applying to college, controlling for a student’s college readiness, high school quality, certainty of college admissions, and high school fixed effects. We then investigate racial and ethnic differences in the choice of where to apply. We enhance the typical model of college matching by considering the social setting and high school feeder patterns of state universities. We find that racial and ethnic gaps in application rates, particularly for Hispanic students, are not explained by differential levels of college readiness, high school quality, or information regarding college admission processes. When applying to college, minorities are influenced by more than just matching their academic ability to the institution, and prefer institutions with a large proportion of same race students and campuses where same race students from their high school have been successful in the past.
Handle: RePEc:nbr:nberwo:21368
Template-Type: ReDIF-Paper 1.0
Title: Why Don't Households Smooth Consumption? Evidence from a 25 Million Dollar Experiment
Classification-JEL: D14; E21
Author-Name: Jonathan A. Parker
Author-Person: ppa21
Note: AP CF EFG ME PE
Number: 21369
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21369
File-URL: http://www.nber.org/papers/w21369.pdf
File-Format: application/pdf
Publication-Status: published as Parker, Jonathan A. 2017. "Why Don't Households Smooth Consumption? Evidence from a $25 Million Experiment." American Economic Journal: Macroeconomics, 9 (4): 153-83. DOI: 10.1257/mac.20150331
Abstract: This paper evaluates theoretical explanations for the propensity of households to increase spending in response to the arrival of predictable, lump-sum payments, using households in the Nielsen Consumer Panel who received 25 million in randomly-distributed stimulus payments. The pattern of spending is inconsistent with models in which identical households cycle rapidly through high and low response states as they manage liquidity, but is instead highly predictable by income years before the payment. Spending responses are unrelated to expectation errors, almost unrelated to crude measures of procrastination and self-control, significantly related to sophistication and planning, and highly related to impatience.
Handle: RePEc:nbr:nberwo:21369
Template-Type: ReDIF-Paper 1.0
Title: The Elusive Pro-Competitive Effects of Trade
Classification-JEL: F1; F12
Author-Name: Costas Arkolakis
Author-Person: par274
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Dave Donaldson
Author-Name: Andrés Rodríguez-Clare
Author-Person: pro372
Note: ITI
Number: 21370
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21370
File-URL: http://www.nber.org/papers/w21370.pdf
File-Format: application/pdf
Publication-Status: published as Costas Arkolakis, Arnaud Costinot, Dave Donaldson, Andrés Rodríguez-Clare; The Elusive Pro-Competitive Effects of Trade, The Review of Economic Studies, , rdx075, https://doi.org/10.1093/restud/rdx075
Abstract: We study the gains from trade liberalization in models with monopolistic competition, firm-level heterogeneity, and variable markups. For a large class of demand functions used in the international macro and trade literature, we derive a parsimonious generalization of the welfare formula in Arkolakis, Costinot, and Rodríguez-Clare (2012). We then use micro-level trade data to quantify the implications of this new formula. Our main finding is that gains from trade liberalization predicted by models with variable markups are slightly lower than those predicted by models with constant markups. In this sense, pro-competitive effects of trade are elusive.
Handle: RePEc:nbr:nberwo:21370
Template-Type: ReDIF-Paper 1.0
Title: The Intergenerational Transmission of War
Classification-JEL: D74; D90; J12; J13; Z10
Author-Name: Filipe Campante
Author-Person: pca428
Author-Name: David Yanagizawa-Drott
Author-Person: pya366
Note: DAE LS POL
Number: 21371
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21371
File-URL: http://www.nber.org/papers/w21371.pdf
File-Format: application/pdf
Abstract: We study whether war service by one generation affects service by the next generation in later wars, in the context of the major US theaters of the 20th century. To identify a causal effect, we exploit the fact that general suitability for service implies that how close to age 21 an individual’s father happened to be at a time of war is a key determinant of the father’s likelihood of participation. We find that a father’s war service experience has a positive and significant effect on his son’s likelihood of service. We estimate an intergenerational transmission parameter of approximately 0.1, across all wars, and that each individual war had a substantial impact on service in those that followed. We find evidence consistent with cultural transmission of war service from fathers to sons, and with the presence of substitutability between this direct transmission and oblique transmission (from society at large). In contrast, father’s war service increases sons’ educational achievement and actually reduces the likelihood of military service outside of wartime, suggesting that the results cannot be explained by material incentives or broader occupational choice. Taken together, our results indicate that a history of wars helps countries overcome the collective action problem of getting citizens to volunteer for war service.
Handle: RePEc:nbr:nberwo:21371
Template-Type: ReDIF-Paper 1.0
Title: Military Officer Quality in the All-Volunteer Force
Classification-JEL: H56; J4
Author-Name: Matthew F. Cancian
Author-Name: Michael W. Klein
Author-Person: pkl9
Note: LS
Number: 21372
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21372
File-URL: http://www.nber.org/papers/w21372.pdf
File-Format: application/pdf
Publication-Status: published as Military Officer Aptitude in the All-Volunteer Force Matthew Franklin Cancian, Michael W. Klein Armed Forces & Society Vol 44, Issue 2, pp. 219 - 237 First Published April 13, 2017 https://doi.org/10.1177/0095327X17695223
Abstract: We show a statistically significant and quantitatively meaningful decline in the intelligence of Marine Officers from 1980 to 2014 as measured by their scores on the General Classification Test (GCT) which has been shown to be a good predictor of success in the military. This contrasts with the increasing quality of enlisted personnel since 1973 when conscription ended. We argue that the source of this decline is the greater number of young Americans in college since Marine officers must have a four-year degree. The increasing diversity of the pool of incoming officers has not contributed to the decline in GCT scores.
Handle: RePEc:nbr:nberwo:21372
Template-Type: ReDIF-Paper 1.0
Title: Broadening State Capacity
Classification-JEL: D78; H11; H41; H75; N0; N21; N22; N41; N42
Author-Name: Traviss Cassidy
Author-Person: pca1102
Author-Name: Mark Dincecco
Author-Person: pdi142
Author-Name: Ugo Troiano
Author-Person: ptr194
Note: DAE PE POL
Number: 21373
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21373
File-URL: http://www.nber.org/papers/w21373.pdf
File-Format: application/pdf
Abstract: We provide new evidence about the fiscal and mobility consequences of the introduction of the income tax, a major investment in modern state capacity. Drawing on archival data, we introduce a novel panel database that spans all 50 U.S. states between 1900 and 2008. Our research design exploits the staggered introduction of the income tax across states, while accounting for the potentially selective timing of adoption. We find that tax broadening significantly increased total revenue and expenditure in the short run but not the long run, while revenue and expenditure per capita significantly increased on a permanent basis. To explain these results, we show that the introduction of the income tax led to significant outmigration to non-income-tax states, particularly by high earners. Our findings demonstrate that the introduction of the income tax allowed U.S. states to significantly increase their revenue-raising capacity on a per capita basis. Nonetheless, population mobility provided a partial check on the absolute size of state governments.
Handle: RePEc:nbr:nberwo:21373
Template-Type: ReDIF-Paper 1.0
Title: How was the Weekend? How the Social Context Underlies Weekend Effects in Happiness and other Emotions for US Workers
Classification-JEL: I31; J81
Author-Name: John F. Helliwell
Author-Person: phe368
Author-Name: Shun Wang
Note: IO LS
Number: 21374
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21374
File-URL: http://www.nber.org/papers/w21374.pdf
File-Format: application/pdf
Publication-Status: published as How Was the Weekend? How the Social Context Underlies Weekend Effects in Happiness and Other Emotions for US Workers Helliwell JF, Wang S (2015) How Was the Weekend? How the Social Context Underlies Weekend Effects in Happiness and Other Emotions for US Workers. PLOS ONE 10(12): e0145123. https://doi.org/10.1371/journal.pone.0145123
Abstract: In this paper we estimate the size of weekend effects for seven emotions and then explore their main determinants for the working population in the United States, using the Gallup/Healthways US Daily Poll 2008-2012. We first find that weekend effects exist for all emotions, and that these effects are not explained by sample selection bias. Full-time workers have a larger weekend effects than do part- time workers for all emotions except sadness, for which weekend effects are almost identical for all workers. We then explore the sources of weekend effects and find that workplace trust and workplace social relations, combined with differences in social time spent with family and friends, together almost fully explain the weekend effects for happiness, laughter, enjoyment and sadness, for both full-time and part-time workers, with significant but smaller proportions explained for the remaining three emotions - worry, anger and stress.
Handle: RePEc:nbr:nberwo:21374
Template-Type: ReDIF-Paper 1.0
Title: Inventing Prizes: A Historical Perspective on Innovation Awards and Technology Policy
Classification-JEL: N80; O3; O31
Author-Name: B. Zorina Khan
Note: DAE DEV LE POL PR
Number: 21375
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21375
File-URL: http://www.nber.org/papers/w21375.pdf
File-Format: application/pdf
Publication-Status: published as B. Zorina Khan, 2015. "Inventing Prizes: A Historical Perspective on Innovation Awards and Technology Policy," Business History Review, vol 89(04), pages 631-660.
Abstract: Prizes for innovations are currently experiencing a renaissance, following their marked decline during the nineteenth century. However, Daguerre’s “patent buyout,” the longitude prize, inducement prizes for butter substitutes and billiard balls, the activities of the Royal Society of Arts and other “encouragement” institutions, all comprise historically inaccurate and potentially misleading case studies. Daguerre, for instance, never obtained a patent in France and, instead, lobbied for government support in a classic example of rent-seeking. This paper surveys empirical research using more representative samples drawn from Britain, France, and the United States, including “great inventors” and their ordinary counterparts, and prizes at industrial exhibitions. The results suggest that administered systems of rewards to innovators suffered from a number of disadvantages in design and practice, some of which might be inherent to their non-market orientation. These findings in part explain why innovation prizes lost favour as a technology policy instrument in both the United States and Europe in the period of industrialization and economic growth.
Handle: RePEc:nbr:nberwo:21375
Template-Type: ReDIF-Paper 1.0
Title: Multidimensional Skill Mismatch
Classification-JEL: E24; J24; J31
Author-Name: Fatih Guvenen
Author-Person: pgu24
Author-Name: Burhanettin Kuruscu
Author-Person: pku17
Author-Name: Satoshi Tanaka
Author-Person: pta452
Author-Name: David Wiczer
Author-Person: pwi218
Note: ED EFG LS
Number: 21376
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21376
File-URL: http://www.nber.org/papers/w21376.pdf
File-Format: application/pdf
Publication-Status: published as Faith Guvenen & Burhan Kuruscu & Satoshi Tanaka & David Wiczer, 2015. "Multidimensional Skill Mismatch," Federal Reserve Bank of St. Louis, Working Papers, vol 2015(022).
Publication-Status: published as Fatih Guvenen & Burhan Kuruscu & Satoshi Tanaka & David Wiczer, 2020. "Multidimensional Skill Mismatch," American Economic Journal: Macroeconomics, vol 12(1), pages 210-244.
Abstract: What determines the earnings of a worker relative to his peers in the same occupation? What makes a worker fail in one occupation but succeed in another? More broadly, what are the factors that determine the productivity of a worker-occupation match? To help answer questions like these, we propose an empirical measure of multidimensional skill mismatch, which is based on the discrepancy between the portfolio of skills required by an occupation and the portfolio of abilities possessed by a worker for learning those skills. This measure arises naturally in a dynamic model of occupational choice and human capital accumulation with multidimensional skills and Bayesian learning about one’s ability to learn skills. Not only does mismatch depress wage growth in the current occupation, it also leaves a scarring effect—by stunting skill acquisition—that reduces wages in future occupations. Mismatch also predicts different aspects of occupational switching behavior. We construct the empirical analog of our skill mismatch measure from readily available US panel data on individuals and occupations and find empirical support for these implications. The magnitudes of these effects are large: moving from the worst- to the best-matched decile can improve wages by 11% per year for the rest of one’s career.
Handle: RePEc:nbr:nberwo:21376
Template-Type: ReDIF-Paper 1.0
Title: Growth and Trade with Frictions: A Structural Estimation Framework
Classification-JEL: F10; F43; O40
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Mario Larch
Author-Person: pla366
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: EFG ITI
Number: 21377
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21377
File-URL: http://www.nber.org/papers/w21377.pdf
File-Format: application/pdf
Publication-Status: published as James E Anderson & Mario Larch & Yoto V Yotov, 2020. "Transitional Growth and Trade with Frictions: A Structural Estimation Framework," The Economic Journal, vol 130(630), pages 1583-1607.
Abstract: We build and estimate a structural dynamic general equilibrium model of growth and trade. Trade affects growth through changes in consumer and producer prices that in turn stimulate or impede physical capital accumulation. At the same time, growth affects trade, directly through changes in country size and indirectly through altering the incidence of trade costs. The model combines structural gravity with a capital accumulation specification of the transition between steady states. Theory translates into an intuitive econometric system that identifies the causal impact of trade on income and growth, and also delivers estimates of the key structural parameters in our model. Counterfactual experiments based on the estimated model give evidence for strong dynamic relationships between growth and trade, resulting in doubling of the static gains from trade liberalization.
Handle: RePEc:nbr:nberwo:21377
Template-Type: ReDIF-Paper 1.0
Title: The Birth of Edge Cities in China: Measuring the Spillover Effects of Industrial Parks
Classification-JEL: H42; H72
Author-Name: Siqi Zheng
Author-Person: pzh497
Author-Name: Weizeng Sun
Author-Name: Jianfeng Wu
Author-Person: pwu120
Author-Name: Matthew E. Kahn
Author-Person: pka41
Note: PE POL PR
Number: 21378
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21378
File-URL: http://www.nber.org/papers/w21378.pdf
File-Format: application/pdf
Abstract: Several Chinese cities have invested billions of dollars to construct new industrial parks. These place based investments solve the land assembly problem which allows many productive firms to co-locate close to each other. The resulting local economic growth creates new opportunities for real estate developers and retailers that develop properties and stores close to the new park. The city mayor has the political clout and the personal promotion incentives to anticipate these effects as he chooses whether and where within the city to build the park. Using several geo-coded data sets, we measure the localized spillover effects of the new parks on local incumbent firm productivity, the growth of retail activity close to the park and local real estate pricing and construction. We document the heterogeneous effects of investment in parks. Those parks featuring a higher level of human capital, a greater level of co-agglomeration among firms within the park, and a smaller share of State Owned Enterprises offer greater spillover effects.
Handle: RePEc:nbr:nberwo:21378
Template-Type: ReDIF-Paper 1.0
Title: Does Protecting Older Workers from Discrimination Make It Harder to Get Hired? Evidence from Disability Discrimination Laws
Classification-JEL: J14; J71; J78
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Joanne Song
Author-Person: pso374
Author-Name: Patrick Button
Author-Person: pbu318
Note: AG LS
Number: 21379
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21379
File-URL: http://www.nber.org/papers/w21379.pdf
File-Format: application/pdf
Publication-Status: published as David Neumark & Joanne Song & Patrick Button, 2017. "Does Protecting Older Workers From Discrimination Make It Harder to Get Hired? Evidence From Disability Discrimination Laws," Research on Aging, vol 39(1), pages 29-63.
Abstract: We explore the effects of disability discrimination laws on hiring of older workers. A concern with anti-discrimination laws is that they may reduce hiring by raising the cost of terminations and – in the specific case of disability discrimination laws – raising the cost of employment because of the need to accommodate disabled workers. Moreover, disability discrimination laws can affect non-disabled older workers because they are fairly likely to develop work-related disabilities, yet are not protected by these laws. Using state variation in disability discrimination protections, we find little or no evidence that stronger disability discrimination laws lower the hiring of non-disabled older workers. We similarly find no evidence of adverse effects of disability discrimination laws on hiring of disabled older workers.
Handle: RePEc:nbr:nberwo:21379
Template-Type: ReDIF-Paper 1.0
Title: Academics as Economic Advisers: Gold, the ‘Brains Trust,’ and FDR
Classification-JEL: B2; B22; B26; E31; F31; N12; N22
Author-Name: Sebastian Edwards
Author-Person: ped3
Note: IFM
Number: 21380
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21380
File-URL: http://www.nber.org/papers/w21380.pdf
File-Format: application/pdf
Publication-Status: published as Gold, the Brains Trust, and Roosevelt Sebastian Edwards History of Political Economy (2017) 49 (1): 1-30.
Abstract: In this paper I revisit the period leading to the abandonment of the gold standard by the U.S. in 1933. I analyze what the important players – and in particular FDR and the members of the advisory group known as the “Brains Trust” – thought about the gold standard. My conclusion is that during the primary and presidential campaigns, neither Roosevelt nor his inner circle had a strong view on gold or the dollar. They did believe in the need to experiment with different policies in order to get the country out of the slump. Tinkering with the value of the currency was a possible area for experimentation; but it was an option with a relatively low priority, lower than implementing a public works program, and passing a bill that included crops allotment. Until inauguration day FDR’s views on the gold standard were ambivalent and noncommittal; he was neither a diehard fan of the system, nor was he a severe critic.
Handle: RePEc:nbr:nberwo:21380
Template-Type: ReDIF-Paper 1.0
Title: Learning and (or) Doing: Human Capital Investments and Optimal Taxation
Classification-JEL: H21; H23; H24; H53; J24
Author-Name: Stefanie Stantcheva
Author-Person: pst824
Note: LS PE
Number: 21381
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21381
File-URL: http://www.nber.org/papers/w21381.pdf
File-Format: application/pdf
Abstract: This paper considers a dynamic taxation problem when agents can allocate their time between working and investing in their human capital. Time investment in human capital, or "training," increases the wage and can interact with an agent's intrinsic, exogenous, and stochastic earnings ability. It also interacts with both current and future labor supply and there can be either "learning-and-doing" (when labor and training are complements, like for on-the-job training) or "learning-or-doing" (when labor and training are substitutes, like for college). Agents' abilities and labor supply are private information to them, which leads to a dynamic mechanism design problem with incentive compatibility constraints. At the optimum, the subsidy on training time is set so as to balance the total labor supply effect of the subsidy and its distributional consequences. In a one-period version of the model, particularly simple relations arise at the optimum between the labor wedge and the training wedge that can also be used to test for the Pareto efficiency of existing tax and subsidy systems. In the limit case of learning-by-doing (when training is a direct by-product of labor) or in the case in which agents who are more able at work are also more able at training, there are important modifications to the labor wedge.
Handle: RePEc:nbr:nberwo:21381
Template-Type: ReDIF-Paper 1.0
Title: Supplemental Plan Offerings and Retirement Saving Choices: An Analysis of North Carolina School Districts
Classification-JEL: H75; J26; J45
Author-Name: Robert L. Clark
Author-Name: Emma Hanson
Author-Name: Melinda Sandler Morrill
Author-Person: pmo1044
Author-Name: Aditi Pathak
Note: AG
Number: 21382
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21382
File-URL: http://www.nber.org/papers/w21382.pdf
File-Format: application/pdf
Publication-Status: published as Supplemental Plan Offerings and Retirement Saving Choices: An Analysis of North Carolina School Districts, Robert L. Clark, Emma Hanson, Melinda S. Morrill, Aditi Pathak. in The Impact of Reforms of State Retirement Plans, Clark and Newhouse. 2016
Publication-Status: published as Robert L. Clark, Emma Hanson, Melinda Sandler Morrill, Adiit Pathak, 2016. "Supplemental plan offerings and retirement saving choices: an analysis of North Carolina school districts," Journal of Pension Economics and Finance, vol 15(03), pages 333-355.
Abstract: Unlike private sector employers, public school districts generally offer more than one type of supplemental retirement savings plan and allow multiple vendors to offer products. Using individual-level payroll data from over half of the public school districts in North Carolina coupled with data from an employer survey, this study examines the impact of inter-district differences in supplemental plan administration on participation in these savings vehicles. We find wide variation in total participation rates and in 403(b) plan participation rates in particular, even among this population of public-sector workers with the same defined benefit pension plan, health plan, and retiree health coverage. Individual and district characteristics explain some, but not all, of the variation observed.
Handle: RePEc:nbr:nberwo:21382
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Trading on the Costs and Benefits of the Acid Rain Program
Classification-JEL: Q51; Q52; Q58
Author-Name: H. Ron Chan
Author-Person: pch771
Author-Name: B. Andrew Chupp
Author-Person: pch712
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Author-Name: Nicholas Z. Muller
Author-Person: pmu472
Note: EEE
Number: 21383
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21383
File-URL: http://www.nber.org/papers/w21383.pdf
File-Format: application/pdf
Publication-Status: published as H. Ron Chan & B. Andrew Chupp & Maureen L. Cropper & Nicholas Z. Muller, 2017. "The Impact of Trading on the Costs and Benefits of the Acid Rain Program," Journal of Environmental Economics and Management, .
Abstract: This study quantifies the cost savings from the Acid Rain Program (ARP) compared with a command-and-control alternative and also examines the impact of trading under the ARP on health damages. To quantify cost savings, we compare compliance costs for non-NSPS (New Source Performance Standards) coal-fired Electricity Generating Units (EGUs) under the ARP with compliance costs under a uniform performance standard that achieves the same aggregate emissions. We do this for the year 2002, the third year of Phase II of the program. We find annual cost savings of approximately $240 million (1995$). To examine the health effects of trading, we compute the health damages associated with observed sulfur dioxide (SO2) emissions from all units regulated under the ARP in 2002—approximately 10.2 million tons—and compare them with damages from a No-Trade counterfactual in which each unit emits SO2 at a rate equal to its allocation of permits for the year 2002, plus any drawdown of its allowance bank. Damages under the ARP are $2.4 billion (2000$) higher than under the No-Trade. This reflects the transfer of allowances from EGUs west of the Mississippi River to units in the eastern US with higher exposed populations.
Handle: RePEc:nbr:nberwo:21383
Template-Type: ReDIF-Paper 1.0
Title: The Great Migration in Black and White: New Evidence on the Selection and Sorting of Southern Migrants
Classification-JEL: J10; J61; N32
Author-Name: William J. Collins
Author-Person: pco315
Author-Name: Marianne H. Wanamaker
Author-Person: pwa584
Note: DAE
Number: 21384
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21384
File-URL: http://www.nber.org/papers/w21384.pdf
File-Format: application/pdf
Publication-Status: published as Collins, William J. & Wanamaker, Marianne H., 2015. "The Great Migration in Black and White: New Evidence on the Selection and Sorting of Southern Migrants," The Journal of Economic History, Cambridge University Press, vol. 75(04), pages 947-992, December.
Abstract: We construct datasets of linked census records to study internal migrants’ selection and destination choices during the first decades of the “Great Migration” (1910-1930). We study both whites and blacks and intra- and inter-regional migration. While there is some evidence of positive selection, the degree of selection was small and participation in migration was widespread. Differences in background, including initial location, cannot account for racial differences in destination choices. Blacks and whites were similarly responsive to pre-existing migrant stocks from their home state, but black men were more deterred by distance, attracted to manufacturing, and responsive to labor demand.
Handle: RePEc:nbr:nberwo:21384
Template-Type: ReDIF-Paper 1.0
Title: Lessons for Public Pensions from Utah’s Move to Pension Choice
Classification-JEL: H55; H75; J26; J38
Author-Name: Robert L. Clark
Author-Name: Emma Hanson
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG LS PE
Number: 21385
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21385
File-URL: http://www.nber.org/papers/w21385.pdf
File-Format: application/pdf
Publication-Status: published as ROBERT L. CLARK & EMMA HANSON & OLIVIA S. MITCHELL, 2016. "Lessons for public pensions from Utah's move to pension choice," Journal of Pension Economics and Finance, vol 15(03), pages 285-310.
Abstract: We explore what happened when the state of Utah moved away from its traditional defined benefit pension. In its place, it offered new hires a choice between a conventional defined contribution plan and a hybrid plan option, where the latter has both a guaranteed benefit component and a defined contribution plan where employees bear investment risk. We show that around 60 percent of new hires failed to make any active choice and, as a result, were automatically defaulted into the hybrid plan. Slightly more than half of those who made an active choice elected the hybrid plan. Post-reform, employees who failed to actively elect a primary retirement plan were also far less likely to enroll in a supplemental retirement account, compared to new hires who actively selected a plan. We also find that employees hired following the reform were more likely to leave public employment, resulting in higher separation rates. This could reflect a reduction in the desirability of public employment under the new pension design and an improving economic climate in the state. Our results imply that public pension reformers must consider employee responses in addition to potential cost savings, when developing and enacting major pension plan changes.
Handle: RePEc:nbr:nberwo:21385
Template-Type: ReDIF-Paper 1.0
Title: Sources of Inaction in Household Finance: Evidence from the Danish Mortgage Market
Classification-JEL: G11; G21
Author-Name: Steffen Andersen
Author-Person: pan114
Author-Name: John Y. Campbell
Author-Person: pca54
Author-Name: Kasper Meisner Nielsen
Author-Name: Tarun Ramadorai
Author-Person: pra44
Note: AP ME
Number: 21386
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21386
File-URL: http://www.nber.org/papers/w21386.pdf
File-Format: application/pdf
Publication-Status: published as Steffen Andersen & John Y. Campbell & Kasper Meisner Nielsen & Tarun Ramadorai, 2020. "Sources of Inaction in Household Finance: Evidence from the Danish Mortgage Market," American Economic Review, American Economic Association, vol. 110(10), pages 3184-3230, October.
Publication-Status: published as Steffen Andersen & John Y. Campbell & Kasper Meisner Nielsen & Tarun Ramadorai, 2020. "Sources of Inaction in Household Finance: Evidence from the Danish Mortgage Market," American Economic Review, vol 110(10), pages 3184-3230.
Abstract: We build an empirical model to decompose delays in mortgage refinancing into time-dependent inaction (a low probability of responding to a refinancing incentive in a given quarter) and state- dependent inaction (a psychological addition to the financial cost of refinancing). We estimate the model on high-quality administrative panel data from Denmark, where mortgage refinancing without cash-out is unconstrained. Middle-aged and wealthy households exhibit state-dependent inaction; but older, poorer, and less-educated households exhibit strong time-dependent inaction and thereby achieve lower savings. We use the model to understand frictions in the mortgage channel of monetary policy transmission.
Handle: RePEc:nbr:nberwo:21386
Template-Type: ReDIF-Paper 1.0
Title: Which Models Can We Trust to Evaluate Consumer Decision Making? Comment on “Choice Inconsistencies among the Elderly”
Classification-JEL: D12; I11; I38
Author-Name: Jonathan D. Ketcham
Author-Name: Nicolai V. Kuminoff
Author-Person: pku420
Author-Name: Christopher A. Powers
Note: AG EH
Number: 21387
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21387
File-URL: http://www.nber.org/papers/w21387.pdf
File-Format: application/pdf
Publication-Status: published as Ketcham, Jonathan, Nicolai V. Kuminoff, and Christopher A. Powers. 2016. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Comment." American Economic Review. 106(12): 3932-3961.
Abstract: Neoclassical and psychological models of consumer behavior often make divergent predictions for the welfare effects of paternalistic policies, leaving wide scope for researchers’ choice of a model to influence their policy conclusions. We develop a framework to reduce this model uncertainty and apply it to administrative data on consumer decision making in Medicare Part D. Consumers’ choices for prescription drug insurance plans can be explained by Abaluck and Gruber’s (AER 2011) model of utility maximization with psychological biases or by a neoclassical version of their model that precludes such biases. We evaluate these competing hypotheses using nonparametric tests of utility maximization and a trio of model validation tests. We find that 79% of enrollment decisions in Medicare Part D from 2006-2010 satisfied basic axioms of consumer preference theory under the assumptions of full information, zero transaction cost, and no measurement error. The validation tests provide evidence against widespread psychological biases. In particular, we find that precluding psychological biases improves the structural model’s out-of-sample predictions for consumer behavior.
Handle: RePEc:nbr:nberwo:21387
Template-Type: ReDIF-Paper 1.0
Title: What Measure of Inflation Should a Developing Country Central Bank Target?
Classification-JEL: E31; E52; E61
Author-Name: Rahul Anand
Author-Name: Eswar Prasad
Author-Person: ppr1
Author-Name: Boyang Zhang
Author-Person: pzh528
Note: IFM
Number: 21388
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21388
File-URL: http://www.nber.org/papers/w21388.pdf
File-Format: application/pdf
Publication-Status: published as Anand, Rahul & Prasad, Eswar S. & Zhang, Boyang, 2015. "What measure of inflation should a developing country central bank target?," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 102-116.
Abstract: In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We analyze this result in the context of developing economies, where a large proportion of households are credit constrained and the share of food expenditures in total consumption expenditures is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting improves welfare outcomes. We also compute the optimal price index, which includes a positive weight on food prices but, unlike headline inflation, assigns zero weight to import prices.
Handle: RePEc:nbr:nberwo:21388
Template-Type: ReDIF-Paper 1.0
Title: Information Technology and Patient Health: Analyzing Outcomes, Populations, and Mechanisms
Classification-JEL: I10; O33
Author-Name: Seth Freedman
Author-Person: pfr305
Author-Name: Haizhen Lin
Author-Person: pli405
Author-Name: Jeffrey Prince
Author-Person: ppr63
Note: EH
Number: 21389
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21389
File-URL: http://www.nber.org/papers/w21389.pdf
File-Format: application/pdf
Publication-Status: published as Seth Freedman & Haizhen Lin & Jeffrey Prince, 2018. "Information Technology and Patient Health: Analyzing Outcomes, Populations, and Mechanisms," American Journal of Health Economics, vol 4(1), pages 51-79.
Abstract: We study the effect of hospital adoption of electronic medical records (EMRs) on health outcomes, particularly patient safety indicators (PSIs). We find evidence of a positive impact of EMRs on PSIs via decision support rather than care coordination. Consistent with this mechanism, we find an EMR with decision support is more effective at reducing PSIs for less complicated cases, using several different metrics for complication. These findings indicate the negligible impacts for EMRs found by previous studies focusing on the Medicare population and/or mortality do not apply in all settings.
Handle: RePEc:nbr:nberwo:21389
Template-Type: ReDIF-Paper 1.0
Title: Long Term Impacts of Vouchers for Vocational Training: Experimental Evidence for Colombia
Classification-JEL: J24; J46; O15
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Arlen Guarín
Author-Person: pgu398
Author-Name: Carlos Medina
Author-Person: pme245
Author-Name: Costas Meghir
Author-Person: pme144
Note: DEV ED EFG
Number: 21390
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21390
File-URL: http://www.nber.org/papers/w21390.pdf
File-Format: application/pdf
Abstract: We use experimental data of a training program in 2005 in Colombia. We find that even up to ten years ahead, the JeA program had a positive and significant effect on the probability to work in the formal sector. Applicants in the treatment group also contributed more months to social security during the analyzed period, and to work for a large firm. Earnings of treated applicants were 11.8% higher in the whole sample, and they made larger contributions to social security. In addition, we also present non parametric bounds that for some percentiles of the sample of women, there are positive and nearly significant effects of the program. Thus, the effects of the program would have been capitalized both in increases in the likelihood of being formal, and increases in productivity. We also present evidence that the estimated program effects on the likelihood of working for the formal sector, the likelihood of working for a large firm, and the earnings in the formal sector, are not an artifact of analyzing multiple outcomes. We also find that for the whole sample of applicants, those in the treatment group have 0.315 more years of education, and have a probability of graduating from high school 10 percent higher than the control group. We find no significant effect on the probability of attending college or any school program, nor on fertility decisions, marital status or some dimensions of assortative mating. Among applicants matching to the census of the poorest population, we find that beneficiaries are more likely to participate in the labor market, to be employed, and to be enrolled in a private health insurance at the time of the survey. Finally, we find that the benefits of the JeA program are higher than it costs, leading to an internal rate of return of at least 22.1 percent. On the whole, the program was a cost-effective alternative, worth to consider to bridging the transit of youths from the informal to the formal sector in the future.
Handle: RePEc:nbr:nberwo:21390
Template-Type: ReDIF-Paper 1.0
Title: The Economics of Exclusion Restrictions in IV Models
Classification-JEL: C1; C26; C36
Author-Name: Damon Jones
Author-Person: pjo350
Note: LS PE
Number: 21391
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21391
File-URL: http://www.nber.org/papers/w21391.pdf
File-Format: application/pdf
Abstract: We explore a key underlying assumption, the exclusion restriction, commonly used in interpreting IV estimates in the presence of heterogenous treatment effects as a local average treatment effect (LATE). We show through a series of simple examples that in some commonly featured cases that this assumption is likely to be violated among inframarginal agents, i.e. the always- and never-takers. This violation of the exclusion restriction will generally confound the LATE interpretation of the associated IV results. We discuss potential adjustments to IV estimates in the presence of this bias.
Handle: RePEc:nbr:nberwo:21391
Template-Type: ReDIF-Paper 1.0
Title: On the Welfare and Cyclical Implications of Moderate Trend Inflation
Classification-JEL: E31; E32
Author-Name: Guido Ascari
Author-Person: pas4
Author-Name: Louis Phaneuf
Author-Person: pph3
Author-Name: Eric Sims
Author-Person: psi336
Note: EFG ME
Number: 21392
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21392
File-URL: http://www.nber.org/papers/w21392.pdf
File-Format: application/pdf
Publication-Status: published as Guido Ascari & Louis Phaneuf & Eric R. Sims, 2018. "On the Welfare and Cyclical Implications of Moderate Trend Inflation," Journal of Monetary Economics, .
Abstract: We offer a comprehensive evaluation of the welfare and cyclical implications of moderate trend inflation. In an extended version of a medium-scale New Keynesian model, recent proposals to increase trend inflation from 2 to 4 percent would generate a consumption-equivalent welfare loss of 3.7 percent based on the non-stochastic steady state and of 6.9 percent based on the stochastic mean. Welfare costs of this magnitude are driven by four main factors: i) multiperiod nominal wage contracting, ii) trend growth in investment-specific and neutral technology, iii) roundaboutness in the U.S. production structure, and iv) and the interaction between trend inflation and shocks to the marginal efficiency of investment (MEI), insofar that this type of shock is sufficiently persistent. Moreover, moderate trend inflation has important cyclical implications. It interacts much more strongly with MEI shocks than with either productivity or monetary shocks.
Handle: RePEc:nbr:nberwo:21392
Template-Type: ReDIF-Paper 1.0
Title: Weak Markets, Strong Teachers: Recession at Career Start and Teacher Effectiveness
Classification-JEL: E32; H75; I20; J24
Author-Name: Markus Nagler
Author-Person: pna738
Author-Name: Marc Piopiunik
Author-Person: ppi223
Author-Name: Martin R. West
Note: CH ED LS PE
Number: 21393
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21393
File-URL: http://www.nber.org/papers/w21393.pdf
File-Format: application/pdf
Publication-Status: published as Markus Nagler & Marc Piopiunik & Martin R. West, 2020. "Weak Markets, Strong Teachers: Recession at Career Start and Teacher Effectiveness," Journal of Labor Economics, vol 38(2), pages 453-500.
Abstract: How do alternative job opportunities affect teacher quality? We provide causal evidence on this question by exploiting business cycle conditions at career start as a source of exogenous variation in the outside options of potential teachers. Unlike prior research, we directly assess teacher quality with value-added measures of impacts on student test scores, using administrative data on 33,000 teachers in Florida public schools. Consistent with a Roy model of occupational choice, teachers entering the profession during recessions are significantly more effective in raising student test scores. Results are supported by placebo tests and not driven by differential attrition.
Handle: RePEc:nbr:nberwo:21393
Template-Type: ReDIF-Paper 1.0
Title: Inequality when Effort Matters
Classification-JEL: D31; D63; I32; J22
Author-Name: Martin Ravallion
Author-Person: pra29
Note: DEV LS PE
Number: 21394
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21394
File-URL: http://www.nber.org/papers/w21394.pdf
File-Format: application/pdf
Publication-Status: published as MDPI and ACS Style Ravallion, M. Inequality and Poverty When Effort Matters. Econometrics 2017, 5, 50. doi:10.3390/econometrics5040050
Abstract: It is sometimes argued that poorer people choose to work less, implying less welfare inequality than suggested by observed incomes. Social policies have also acknowledged that efforts differ, and that people respond to incentives. Prevailing measures of inequality (in outcomes or opportunities) do not, however, measure incomes consistently with personal choices of effort. The direction of bias is unclear given the heterogeneity in efforts and preferences. Data on the labor supplies of single American adults suggest that adjusting for effort imposing common preferences attenuates inequality, although the effect is small. Allowing for preference heterogeneity consistently with behavior suggests higher inequality.
Handle: RePEc:nbr:nberwo:21394
Template-Type: ReDIF-Paper 1.0
Title: Objective Course Placement and College Readiness: Evidence from Targeted Middle School Math Acceleration
Classification-JEL: I20; I24; J24
Author-Name: Shaun Dougherty
Author-Name: Joshua Goodman
Author-Person: pgo281
Author-Name: Darryl Hill
Author-Name: Erica Litke
Author-Name: Lindsay C. Page
Note: ED LS
Number: 21395
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21395
File-URL: http://www.nber.org/papers/w21395.pdf
File-Format: application/pdf
Publication-Status: published as Dougherty, Shaun M. & Goodman, Joshua S. & Hill, Darryl V. & Litke, Erica G. & Page, Lindsay C., 2017. "Objective course placement and college readiness: Evidence from targeted middle school math acceleration," Economics of Education Review, Elsevier, vol. 58(C), pages 141-161.
Abstract: Advanced math coursework can affect college and labor market outcomes, yet discretionary placement policies can lead to differential access at key points in the college preparatory pipeline. We examine a targeted approach to course assignment that uses prior test scores to identify middle school students deemed qualified for a college preparatory math sequence. Accelerated math placement of relatively low-skilled middle schoolers increases the fraction later enrolling in Precalculus by one-seventh, and by over one-third for female and non-low income students. Acceleration increases college readiness and intentions to pursue a bachelor’s degree. Course placement rules based on objective measures can identify students capable of completing rigorous coursework but whom discretionary systems might overlook.
Handle: RePEc:nbr:nberwo:21395
Template-Type: ReDIF-Paper 1.0
Title: Should We Give Up After Solyndra? Optimal Technology R&D Portfolios under Uncertainty
Classification-JEL: O38; Q42; Q48; Q54; Q55
Author-Name: Mort Webster
Author-Name: Karen Fisher-Vanden
Author-Name: David Popp
Author-Name: Nidhi Santen
Note: EEE PR
Number: 21396
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21396
File-URL: http://www.nber.org/papers/w21396.pdf
File-Format: application/pdf
Publication-Status: published as Mort Webster & Karen Fisher-Vanden & David Popp & Nidhi Santen, 2017. "Should We Give Up after Solyndra? Optimal Technology R&D Portfolios under Uncertainty," Journal of the Association of Environmental and Resource Economists, vol 4(S1), pages S123-S151.
Abstract: Global climate change and other environmental challenges require the development of new energy technologies with lower emissions. In the near-term, R&D investments, either by government or the private sector, can bring down the costs of these lower emission technologies. However, the results of R&D are uncertain, and there are many potential technologies that may turn out to play an effective role in the future energy mix. In this paper, we address the problem of allocating R&D across technologies under uncertainty. Specifically, given two technologies, one with lower costs at present, but the other with greater uncertainty in the returns to R&D, how should one allocate the R&D budget? We develop a multi-stage stochastic dynamic programming version of an integrated assessment model of climate and economy that represents endogenous technological change through R&D decisions for two substitutable non-carbon backstop technologies. Using the model, we demonstrate that near-term R&D into the higher cost technology is justified, and that the amount of R&D into the high cost technology increases with both the variance in the uncertainty in returns to R&D and with the skewness of the uncertainty. We also present an illustrative case study of wind and solar photovoltaic technologies, and show that poor R&D results in early periods do not necessarily mean that investment should not continue.
Handle: RePEc:nbr:nberwo:21396
Template-Type: ReDIF-Paper 1.0
Title: The Economy of People’s Republic of China from 1953
Classification-JEL: N1; N55; O11; O14; O2; O41; P2
Author-Name: Anton Cheremukhin
Author-Person: pch889
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Sergei Guriev
Author-Person: pgu59
Author-Name: Aleh Tsyvinski
Note: DEV EFG POL
Number: 21397
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21397
File-URL: http://www.nber.org/papers/w21397.pdf
File-Format: application/pdf
Abstract: This paper studies growth and structural transformation of the Chinese economy from 1953 to 2012 through a lens of a two-sector growth model. The main goal of the paper is to provide a systematic analysis of both the pre-1978 reform and post-1978 reform periods in a unified framework. First, we construct a dataset that allows the application of the neoclassical model and computation of wedges, their components, and rates of TFP growth. Second, we determine the key quantitative factors behind growth and structural transformation. The changes in the intersectoral labor wedge play the dominant role in accounting for the change in the share of labor force in agriculture. TFP growth and changes in the intersectoral wedges are the two most significant factors contributing to GDP growth. Further decomposing the effects of reduction in wedges, we find that two components: the production component (the gap between the ratio of the marginal products of labor and relative wages) and the consumption component (the gap between the marginal rate of substitution and the relative prices) play a particularly large role. Third, we use the pre-reform period as a key benchmark to measure the success of the post-1978 reforms. We show that reforms yielded a significant growth and structural transformation differential. GDP growth is 4.2 percentage points higher and the share of the labor force in agriculture is 23.9 percentage points lower compared with the continuation of the pre-1978 policies. We provide extensive historical evidence for the reforms that are consistent with the evolution of the components of the wedges. The decrease in the production component of the intersectoral wedge is consistent with increased competition and demonopolization of the economy. The decrease in the consumption component of the wedge is consistent with the price and housing reforms. Finally, we project the path of the Chinese economy until 2050 and also calculate a lower bound on future growth by projecting pre-reform trends.
Handle: RePEc:nbr:nberwo:21397
Template-Type: ReDIF-Paper 1.0
Title: Do Building Energy Codes Have a Lasting Effect on Energy Consumption? New Evidence From Residential Billing Data in Florida
Classification-JEL: Q4; Q48
Author-Name: Matthew J. Kotchen
Author-Person: pko326
Note: EEE PE
Number: 21398
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21398
File-URL: http://www.nber.org/papers/w21398.pdf
File-Format: application/pdf
Abstract: This paper provides an ex post evaluation of how changes to a building energy code affect energy consumption. Using residential billing data for electricity and natural gas over 11 years, the analysis is based on comparisons between residences constructed just before and just after a building code change in Florida. While an earlier study using 3 years of data for the same residences showed savings for both electricity an natural gas, new results show an enduring savings for natural gas only. These findings underscore the importance of accounting for age versus vintage effects and all sources of energy consumption when conducting evaluations of building codes. More broadly, the results provide a counterpoint to the growing literature casting doubt on whether ex ante forecasts of energy efficiency policies and investments can provide useful information about actual energy savings. Indeed, more than a decade after Florida's energy code change, the measured energy savings still meets or exceeds the forecasted amount.
Handle: RePEc:nbr:nberwo:21398
Template-Type: ReDIF-Paper 1.0
Title: Household Surveys in Crisis
Classification-JEL: C42; C81; D31; H53; H55; I32; I38
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: Wallace K.C. Mok
Author-Person: pmo227
Author-Name: James X. Sullivan
Note: AG CH EH LS PE
Number: 21399
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21399
File-URL: http://www.nber.org/papers/w21399.pdf
File-Format: application/pdf
Publication-Status: published as Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2015. "Household Surveys in Crisis," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 199-226, Fall.
Abstract: Household surveys, one of the main innovations in social science research of the last century, are threatened by declining accuracy due to reduced cooperation of respondents. While many indicators of survey quality have steadily declined in recent decades, the literature has largely emphasized rising nonresponse rates rather than other potentially more important dimensions to the problem. We divide the problem into rising rates of nonresponse, imputation, and measurement error, documenting the rise in each of these threats to survey quality over the past three decades. A fundamental problem in assessing biases due to these problems in surveys is the lack of a benchmark or measure of truth, leading us to focus on the accuracy of the reporting of government transfers. We provide evidence from aggregate measures of transfer reporting as well as linked microdata. We discuss the relative importance of misreporting of program receipt and conditional amounts of benefits received, as well as some of the conjectured reasons for declining cooperation and survey errors. We end by discussing ways to reduce the impact of the problem including the increased use of administrative data and the possibilities for combining administrative and survey data.
Handle: RePEc:nbr:nberwo:21399
Template-Type: ReDIF-Paper 1.0
Title: Do Risk Preferences Change? Evidence from Panel Data before and after the Great East Japan Earthquake
Classification-JEL: C23; D81; J16; Q54
Author-Name: Chie Hanaoka
Author-Person: pha244
Author-Name: Hitoshi Shigeoka
Author-Person: psh553
Author-Name: Yasutora Watanabe
Author-Person: pwa155
Note: AG EEE EH
Number: 21400
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21400
File-URL: http://www.nber.org/papers/w21400.pdf
File-Format: application/pdf
Publication-Status: published as Hanaoka, Chie, Hitoshi Shigeoka, and Yasutora Watanabe. 2018. "Do Risk Preferences Change? Evidence from the Great East Japan Earthquake." American Economic Journal: Applied Economics, 10 (2): 298-330. DOI: 10.1257/app.20170048
Abstract: We investigate whether individuals’ risk preferences change after experiencing a natural disaster, specifically, the 2011 Great East Japan Earthquake. Exploiting the panels of nationally representative surveys on risk preferences, we find that men who experienced greater intensity of the Earthquake became more risk tolerant after the Earthquake. Furthermore, these men gamble more, which is consistent with the direction of changes in risk preferences. We find no such pattern for women. Finally, the effects on men’s risk preferences are persistent even five years after the Earthquake at almost the same magnitude as those shortly after the Earthquake.
Handle: RePEc:nbr:nberwo:21400
Template-Type: ReDIF-Paper 1.0
Title: Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade
Classification-JEL: F10; F11; F14; F15; F17
Author-Name: Rodrigo Adao
Author-Name: Arnaud Costinot
Author-Person: pco355
Author-Name: Dave Donaldson
Note: ITI
Number: 21401
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21401
File-URL: http://www.nber.org/papers/w21401.pdf
File-Format: application/pdf
Publication-Status: published as Rodrigo Adao & Arnaud Costinot & Dave Donaldson, 2017. "Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade," American Economic Review, vol 107(3), pages 633-689.
Abstract: We develop a methodology to construct nonparametric counterfactual predictions, free of functional-form restrictions on preferences and technology, in neoclassical models of international trade. First, we establish the equivalence between such models and reduced exchange models in which countries directly exchange factor services. This equivalence implies that, for an arbitrary change in trade costs, counterfactual changes in the factor content of trade, factor prices, and welfare only depend on the shape of a reduced factor demand system. Second, we provide sufficient conditions under which estimates of this system can be recovered nonparametrically. Together, these results offer a strict generalization of the parametric approach used in so-called gravity models. Finally, we use China's recent integration into the world economy to illustrate the feasibility and potential benefits of our approach.
Handle: RePEc:nbr:nberwo:21401
Template-Type: ReDIF-Paper 1.0
Title: School Entry Cutoff Date and the Timing of Births
Classification-JEL: I24; J11; J13
Author-Name: Hitoshi Shigeoka
Author-Person: psh553
Note: CH ED EH LS
Number: 21402
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21402
File-URL: http://www.nber.org/papers/w21402.pdf
File-Format: application/pdf
Abstract: Using birth records in Japan, where school entry rule is strictly enforced, this paper shows that more than 1,800 births a year are shifted from one week before the school entry cutoff date to one week following the cutoff date. Because older children perform better academically than their younger peers, parents who value potential long-term academic gains over the short-term gain of childcare cost savings do exploit birth timing as a means of early childhood investment. Heterogeneous responses by parents violate the assumption of regression discontinuity design that births around the school entry cutoff dates are random.
Handle: RePEc:nbr:nberwo:21402
Template-Type: ReDIF-Paper 1.0
Title: Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women
Classification-JEL: J16; J31; J71
Author-Name: David Card
Author-Person: pca271
Author-Name: Ana Rute Cardoso
Author-Person: pca97
Author-Name: Patrick Kline
Note: LS
Number: 21403
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21403
File-URL: http://www.nber.org/papers/w21403.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, vol 131(2), pages 633-686.
Abstract: There is growing evidence that firm-specific pay premiums are an important source of wage inequality. These premiums will contribute to the gender wage gap if women are less likely to work at high-paying firms or if women negotiate (or are offered) worse wage bargains with their employers than men. Using longitudinal data on the hourly wages of Portuguese workers matched with income statement information for firms, we show that the wages of both men and women contain firm-specific premiums that are strongly correlated with simple measures of the potential bargaining surplus at each firm. We then show how the impact of these firm-specific pay differentials on the gender wage gap can be decomposed into a combination of sorting and bargaining effects. We find that women are less likely to work at firms that pay higher premiums to either gender, with sorting effects being most important for low- and middle-skilled workers. We also find that women receive only 90% of the firm-specific pay premiums earned by men. Importantly, we find the same gender gap in the responses of wages to changes in potential surplus over time. Taken together, the combination of sorting and bargaining effects explain about one-fifth of the cross-sectional gender wage gap in Portugal.
Handle: RePEc:nbr:nberwo:21403
Template-Type: ReDIF-Paper 1.0
Title: Content Aggregation by Platforms: The Case of the News Media
Classification-JEL: L63; L82; L86; L88
Author-Name: Lesley Chiou
Author-Name: Catherine Tucker
Author-Person: ptu36
Note: PR
Number: 21404
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21404
File-URL: http://www.nber.org/papers/w21404.pdf
File-Format: application/pdf
Publication-Status: published as Lesley Chiou & Catherine Tucker, 2017. "Content aggregation by platforms: The case of the news media," Journal of Economics & Management Strategy, .
Abstract: The digitization of content has led to the emergence of platforms that draw information from multiple sources. Policymakers are concerned that these new platforms threaten incentives for the production of original content. As a result, policymakers are contemplating regulations that would force aggregation platforms to pay or require an explicit "opt-in" for content providers. To understand the possible consequences and underlying rationale of such laws, we explore whether aggregation of content by a single platform encourages users to "skim" content or to investigate in depth. We study a contract dispute that led a major aggregator to remove information from a major content provider. We find that after the removal, users were less likely to investigate additional, related content in depth, particularly sources that were horizontally or vertically differentiated.
Handle: RePEc:nbr:nberwo:21404
Template-Type: ReDIF-Paper 1.0
Title: Quality and Accountability in Healthcare Delivery: Audit-Study Evidence from Primary Care in India
Classification-JEL: D40; H10; H42; I11; O15
Author-Name: Jishnu Das
Author-Person: pda284
Author-Name: Alaka Holla
Author-Name: Aakash Mohpal
Author-Name: Karthik Muralidharan
Author-Person: pmu102
Note: DEV EH LS PE
Number: 21405
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21405
File-URL: http://www.nber.org/papers/w21405.pdf
File-Format: application/pdf
Publication-Status: published as Jishnu Das & Alaka Holla & Aakash Mohpal & Karthik Muralidharan, 2016. "Quality and Accountability in Health Care Delivery: Audit-Study Evidence from Primary Care in India," American Economic Review, American Economic Association, vol. 106(12), pages 3765-3799, December.
Abstract: We present the first direct evidence on the relative quality of public and private healthcare in a low-income setting, using a unique set of audit studies. We sent standardized (fake) patients to rural primary care providers in the Indian state of Madhya Pradesh, and recorded the quality of care provided and prices charged in each interaction. We report three main findings. First, most private providers lacked formal medical training, but they spent more time with patients and completed more essential checklist items than public providers, and were equally likely to provide a correct treatment. Second, we compare the performance of qualified public doctors across their public and private practices, and find that the same doctors exerted higher effort and were more likely to provide a correct treatment in their private practices. Third, in the private sector, we find that prices charged are positively correlated with provider effort and correct treatment, but also with unnecessary treatments. In the public sector, we find no correlation between provider salaries and any measure of quality. We develop a simple theoretical framework to interpret our results and show that in settings with low levels of effort in the public sector, the benefits of higher diagnostic effort in the private sector may outweigh the costs of market incentives to over treat. These differences in provider effort may partly explain the dominant market share of fee-charging private providers even in the presence of a system of free public healthcare.
Handle: RePEc:nbr:nberwo:21405
Template-Type: ReDIF-Paper 1.0
Title: Nudges in Exercise Commitment Contracts: A Randomized Trial
Classification-JEL: D6; I1; I12
Author-Name: Jay Bhattacharya
Author-Name: Alan M. Garber
Author-Name: Jeremy D. Goldhaber-Fiebert
Note: EH
Number: 21406
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21406
File-URL: http://www.nber.org/papers/w21406.pdf
File-Format: application/pdf
Abstract: We consider the welfare consequences of nudges and other behavioral economic devices to encourage exercise habit formation. We analyze a randomized trial of nudged exercise commitment contracts in the context of a time-inconsistent intertemporal utility maximization model of the demand for exercise. The trial follows more than 4,000 people seeking to make exercise commitments. Each person was randomly nudged towards making longer (20 weeks) or shorter (8 weeks) exercise commitment contracts. Our empirical analysis shows that people who are interested in exercise commitment contracts choose longer contracts when nudged to do so, and are then more likely to meet their pre-stated exercise goals. People are also more likely to enroll in a subsequent commitment contract after the original expires if they receive a nudge for a longer duration initial contract. Our theoretical analysis of the welfare implications of these effects shows conditions under which nudges can reduce utility even when they succeed in the goal of promoting habitual exercise.
Handle: RePEc:nbr:nberwo:21406
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Teacher-Student Gender Matches: Random Assignment Evidence from South Korea
Classification-JEL: I21; I24; J16
Author-Name: Jaegeum Lim
Author-Name: Jonathan Meer
Author-Person: pme529
Note: ED LS
Number: 21407
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21407
File-URL: http://www.nber.org/papers/w21407.pdf
File-Format: application/pdf
Publication-Status: published as Jaegeum Lim & Jonathan Meer, 2017. "The Impact of Teacher–Student Gender Matches," Journal of Human Resources, vol 52(4), pages 979-997.
Abstract: Gender disparities in academic performance may be driven in part by the interaction of teacher and student gender, but systematic sorting of students into classrooms makes it difficult to identify causal effects. We use the random assignment of students to Korean middle school classrooms and show that the female students perform substantially better on standardized tests when assigned to female teachers; there is little effect on male students.
Handle: RePEc:nbr:nberwo:21407
Template-Type: ReDIF-Paper 1.0
Title: Exporter Heterogeneity and Price Discrimination: A Quantitative View
Classification-JEL: F12; F14; F17; F6
Author-Name: Jae Wook Jung
Author-Person: pju123
Author-Name: Ina Simonovska
Author-Person: psi395
Author-Name: Ariel Weinberger
Author-Person: pwe439
Note: ITI
Number: 21408
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21408
File-URL: http://www.nber.org/papers/w21408.pdf
File-Format: application/pdf
Publication-Status: published as Jae Wook Jung & Ina Simonovska & Ariel Weinberger, 2019. "Exporter heterogeneity and price discrimination: A quantitative view," Journal of International Economics, vol 116, pages 103-124.
Abstract: We quantify a class of commonly-employed general equilibrium models of international trade and pricing-to-market that feature firm-level heterogeneity and consumers with nonhomothetic preferences. We demonstrate theoretically that the models lack the flexibility to match salient features of US firm-level data. Consequently, we outline a theoretical framework that can reconcile the documented price dispersion across firms and markets, while maintaining consistency with cross-sectional observations on firm productivity and sales. We calibrate the model’s parameters to match bilateral trade flows across 71 countries as well as the productivity and sales advantages of US exporters over non-exporters. We find that the calibrated model accounts for the majority of the dispersion in prices of tradables across countries of different income levels, while maintaining a tight quantitative fit to firm-level data. Given its additional flexibility, the model quantitatively outperforms the existing alternatives and yields welfare gains for the US that are 14-54% higher, but at the cost of loss of tractability.
Handle: RePEc:nbr:nberwo:21408
Template-Type: ReDIF-Paper 1.0
Title: Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviors
Classification-JEL: G0; G11; J13; J62
Author-Name: Sandra E. Black
Author-Person: pbl92
Author-Name: Paul J. Devereux
Author-Person: pde187
Author-Name: Petter Lundborg
Author-Person: plu193
Author-Name: Kaveh Majlesi
Author-Person: pma1731
Note: CH LS
Number: 21409
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21409
File-URL: http://www.nber.org/papers/w21409.pdf
File-Format: application/pdf
Publication-Status: published as Sandra E Black & Paul J Devereux & Petter Lundborg & Kaveh Majlesi, 2020. "Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviours," Review of Economic Studies, Oxford University Press, vol. 87(4), pages 1683-1725.
Abstract: Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors and we find little evidence that nature/nurture interactions are important. When bequests are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth. We further build on the existing literature by providing a more comprehensive view of the role of nature and nurture on intergenerational mobility, looking at a wide range of different outcomes using a common sample and method. We find that environmental influences are relatively more important for wealth-related variables such as savings and investment decisions than for human capital. We conclude by studying consumption as an overall measure of welfare and find that, like wealth, it is more determined by environment than by biology.
Handle: RePEc:nbr:nberwo:21409
Template-Type: ReDIF-Paper 1.0
Title: Biological Well-Being in Late 19th Century Philippines
Classification-JEL: I10; N35; O10
Author-Name: Jean-Pascal Bassino
Author-Person: pba1442
Author-Name: Marion Dovis
Author-Person: pdo195
Author-Name: John Komlos
Author-Person: pko37
Note: DAE DEV EH
Number: 21410
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21410
File-URL: http://www.nber.org/papers/w21410.pdf
File-Format: application/pdf
Publication-Status: published as Bassino, JP., Dovis, M. & Komlos, J. Cliometrica (2018) 12: 33. https://doi.org/10.1007/s11698-016-0147-4
Abstract: This paper investigates the biological standard of living toward the end of Spanish rule. We investigate levels, trends, and determinants of physical stature from the birth cohorts of the 1860s to the 1890s using data on 23,000 Filipino soldiers enlisted by the U.S. military between 1901 and 1913. We use truncated regression technique for estimating average height and use province level information for investigating the determinants of biological wellbeing. The results indicate a decline of more than 1.5 cm cm (0.6 inches) in the height of soldiers born between the early 1870s and the late 1880s. The decline in heights at the end of the 19th century occurred at a time when there was an expansion of commercial activity in cash crop production for export. Heights did not regain the level of the 1870s until the late 1930s and early 1940s. We also find that at 159.3 cm (62.7 inches), the average height of soldiers born in the mid-1870s was very short even for the time. The low biological standard of living in late 19th century was not due to the tropical disease environment alone since taller men were found in the same period in other parts of Asia.
Handle: RePEc:nbr:nberwo:21410
Template-Type: ReDIF-Paper 1.0
Title: The Contribution of Female Health to Economic Development
Classification-JEL: O1
Author-Name: David E. Bloom
Author-Person: pbl79
Author-Name: Michael Kuhn
Author-Person: pku109
Author-Name: Klaus Prettner
Author-Person: ppr159
Note: DEV EH
Number: 21411
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21411
File-URL: http://www.nber.org/papers/w21411.pdf
File-Format: application/pdf
Publication-Status: published as David E Bloom & Michael Kuhn & Klaus Prettner, 2020. "The contribution of female health to economic development," The Economic Journal, vol 130(630), pages 1650-1677.
Abstract: We analyze the economic consequences for less developed countries of investing in female health. In so doing we introduce a novel micro-founded dynamic general equilibrium framework in which parents trade off the number of children against investments in their education and in which we allow for health-related gender differences in productivity. We show that better female health speeds up the demographic transition and thereby the take-off toward sustained economic growth. By contrast, male health improvements delay the transition and the take-off because ceteris paribus they raise fertility. According to our results, investing in female health is therefore an important lever for development policies. However, and without having to assume anti-female bias, we also show that households prefer male health improvements over female health improvements because they imply a larger static utility gain. This highlights the existence of a dynamic trade-off between the short-run interests of households and long-run development goals. Our numerical analysis shows that even small changes in female health can have a strong impact on the transition process to a higher income level in the long run. Our results are robust with regard to a number of extensions, most notably endogenous investment in health care.
Handle: RePEc:nbr:nberwo:21411
Template-Type: ReDIF-Paper 1.0
Title: Does Credit-card Information Reporting Improve Small-business Tax Compliance?
Classification-JEL: H26
Author-Name: Joel Slemrod
Author-Person: psl10
Author-Name: Brett Collins
Author-Name: Jeffrey Hoopes
Author-Person: pho699
Author-Name: Daniel Reck
Author-Name: Michael Sebastiani
Note: PE
Number: 21412
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21412
File-URL: http://www.nber.org/papers/w21412.pdf
File-Format: application/pdf
Publication-Status: published as Slemrod, Joel & Collins, Brett & Hoopes, Jeffrey L. & Reck, Daniel & Sebastiani, Michael, 2017. "Does credit-card information reporting improve small-business tax compliance?," Journal of Public Economics, Elsevier, vol. 149(C), pages 1-19.
Abstract: We investigate the response of small businesses operating as sole proprietorships to Form 1099-K, an information report released in 2011 which provides the Internal Revenue Service with information about payment card sales. Theory and distributional analysis isolates affected taxpayers, who report receipts equal to or slightly exceeding the receipts reported on 1099-K. Information reporting made these taxpayers more likely to file a return declaring business income, and increased filers’ reported receipts by up to 24 percent. Taxpayers largely offset increased reported receipts with increased reported expenses, which do not face information reporting, diminishing the impact on reported net taxable income.
Handle: RePEc:nbr:nberwo:21412
Template-Type: ReDIF-Paper 1.0
Title: Exchange Rate Pass-Through, Currency of Invoicing and Market Share
Classification-JEL: F3; F4
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Ben Tomlin
Author-Person: pto196
Author-Name: Wei Dong
Author-Person: pdo344
Note: IFM
Number: 21413
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21413
File-URL: http://www.nber.org/papers/w21413.pdf
File-Format: application/pdf
Abstract: This paper investigates the impact of market structure on the joint determination of exchange rate pass- through and currency of invoicing in international trade. A novel feature of the study is the focus on market share of firms on both sides of the market—that is, exporting firms and importing firms. A model of monopolistic competition with heterogeneous firms has the following set of predictions: a) exchange rate pass-through should be non-monotonic and U-shaped in the market share of exporting firms, but monotonically declining in the market share of importers; b) exchange rate pass-through should be lower, the higher is local currency invoicing of imports; and c) producer currency invoicing should be related non-monotonically and U-shaped to exporter market share, and monotonically declining in importing firms’ market share. We test these predictions using a new and large micro data set covering the universe of Canadian imports over a six-year period. The data strongly support all three predictions.
Handle: RePEc:nbr:nberwo:21413
Template-Type: ReDIF-Paper 1.0
Title: Technology Adoption Under Uncertainty: Take-Up and Subsequent Investment in Zambia
Classification-JEL: D81; O13; Q12
Author-Name: B. Kelsey Jack
Author-Person: pja401
Author-Name: Paulina Oliva
Author-Person: pol147
Author-Name: Christopher Severen
Author-Person: pse430
Author-Name: Elizabeth Walker
Author-Name: Samuel Bell
Note: DEV EEE
Number: 21414
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21414
File-URL: http://www.nber.org/papers/w21414.pdf
File-Format: application/pdf
Publication-Status: published as Paulina Oliva & B. Kelsey Jack & Samuel Bell & Elizabeth Mettetal & Christopher Severen, 2020. "Technology Adoption under Uncertainty: Take-Up and Subsequent Investment in Zambia," The Review of Economics and Statistics, MIT Press, vol. 102(3), pages 617-632, July.
Abstract: Many technology adoption decisions are made under uncertainty about the costs or benefits of subsequent investments in the technology after the initial take-up. As new information is realized, agents may prefer to abandon a technology that appeared profitable at the time of take-up. Low rates of follow-through (engagement in subsequent investments) are particularly problematic when subsidies are used to increase adoption, in part because they may attract users with a lower value for the technology. We use a field experiment with two stages of randomization to generate exogenous variation in the payoffs associated with taking up and following through with a new technology: a tree species that provides private fertilizer benefits to adopting farmers. Our empirical results show high rates of abandoning the technology, even after paying a positive price to take it up. The experimental variation offers a novel source of identification for a structural model of intertemporal decision making under uncertainty. Estimation results indicate that the farmers experience idiosyncratic shocks to net payoffs after take-up, which increase take-up but lower average per farmer tree survival. We simulate counterfactual outcomes under different levels of uncertainty and observe that subsidizing take-up of the technology affects the composition of adopters only when the level of uncertainty is relatively low. Thus, uncertainty provides an additional explanation for why many subsidized technologies may not be utilized even when take-up is high.
Handle: RePEc:nbr:nberwo:21414
Template-Type: ReDIF-Paper 1.0
Title: Using Scientific Publications to Evaluate Government R&D Spending: The Case of Energy
Classification-JEL: O21; O38; Q42; Q48; Q55
Author-Name: David Popp
Note: EEE PR
Number: 21415
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21415
File-URL: http://www.nber.org/papers/w21415.pdf
File-Format: application/pdf
Abstract: The mix of public and private research funding investments in alternative energy presents a challenge for isolating the effect of government R&D funding. Factors such as energy prices and environmental policy influence both private and public R&D decisions. Moreover, because government R&D is further upstream from the final commercialized product, it may take several years for its effect on technology to be realized. Combining data on scientific publications for alternative energy technologies with data on government R&D support for these technologies, we address these challenges. First, we ask how long it takes for energy R&D to provide successful research outcomes. We both provide information on the lags between research funding and new publication and link these articles to citations in U.S. energy patents. One million dollars in additional government R&D funding leads to 1-2 additional publications, but with lags as long as ten years between initial funding and publication. Second, we ask whether adjustment costs associated with large increases in research funding result in diminishing returns to government R&D. There is no evidence of diminishing returns on the level of publication output, but some evidence that additional funding leads to lower quality publications, using citations as a measure of publication quality.
Handle: RePEc:nbr:nberwo:21415
Template-Type: ReDIF-Paper 1.0
Title: Micro-Evidence on Product and Labor Market Regime Differences between Chile and France
Classification-JEL: C23; D21; J51; L13
Author-Name: Sabien Dobbelaere
Author-Person: pdo46
Author-Name: Rodolfo Lauterbach
Author-Name: Jacques Mairesse
Author-Person: pma712
Note: PR
Number: 21416
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21416
File-URL: http://www.nber.org/papers/w21416.pdf
File-Format: application/pdf
Publication-Status: published as Jozef Konings, François Rycx and Vincent & Sabien Dobbelaere & Rodolfo Lauterbach & Jacques Mairesse, 2016. "Micro-evidence on product and labor market regime differences between Chile and France," International Journal of Manpower, vol 37(2), pages 229-252.
Abstract: Institutions, social norms and the nature of industrial relations vary greatly between Latin American and Western European countries. Such institutional and organizational differences might shape firms operational environment in general and the type of competition in product and labor markets in particular. Contributing to the literature on estimating simultaneously product and labor market imperfections, this paper quantifies industry differences in both types of imperfections using firm-level data in Chile, a non-OECD member under the considered time period, and France. We rely on two extensions of Hall’s econometric framework for estimating price-cost margins by nesting three labor market settings (perfect competition or right-to-manage bargaining, efficient bargaining and monopsony). Using an unbalanced panel of 1,737 firms over the period 1996-2003 in Chile containing unique data on firm-level output price indices and 14,270 firms over the period 1994-2001 in France, we first classify 20 comparable manufacturing industries in 6 distinct regimes that differ in the type of competition prevailing in product and labor markets. We then investigate industry differences in the estimated product and labor market imperfections. Consistent with differences in institutions and in the industrial relations system in the two countries, we find important regime differences across the two countries. In addition, we observe cross-country differences in the levels of product and labor market imperfections within regimes.
Handle: RePEc:nbr:nberwo:21416
Template-Type: ReDIF-Paper 1.0
Title: Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan
Classification-JEL: D2; L2; O1; O3
Author-Name: David Atkin
Author-Name: Azam Chaudhry
Author-Person: pch1485
Author-Name: Shamyla Chaudry
Author-Name: Amit K. Khandelwal
Author-Person: pkh138
Author-Name: Eric Verhoogen
Author-Person: pve68
Note: DEV ITI LS PR
Number: 21417
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21417
File-URL: http://www.nber.org/papers/w21417.pdf
File-Format: application/pdf
Publication-Status: published as David Atkin & Azam Chaudhry & Shamyla Chaudry & Amit K. Khandelwal & Eric Verhoogen, 2017. "Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1101-1164.
Abstract: This paper studies technology adoption in a cluster of soccer-ball producers in Sialkot, Pakistan. We invented a new cutting technology that reduces waste of the primary raw material and gave the technology to a random subset of producers. Despite the clear net benefits for nearly all firms, after 15 months take-up remained puzzlingly low. We hypothesize that an important reason for the lack of adoption is a misalignment of incentives within firms: the key employees (cutters and printers) are typically paid piece rates, with no incentive to reduce waste, and the new technology slows them down, at least initially. Fearing reductions in their effective wage, employees resist adoption in various ways, including by misinforming owners about the value of the technology. To investigate this hypothesis, we implemented a second experiment among the firms that originally received the technology: we offered one cutter and one printer per firm a lump-sum payment, approximately a month's earnings, conditional on demonstrating competence in using the technology in the presence of the owner. This incentive payment, small from the point of view of the firm, had a significant positive effect on adoption. The results suggest that misalignment of incentives within firms is an important barrier to technology adoption in our setting.
Handle: RePEc:nbr:nberwo:21417
Template-Type: ReDIF-Paper 1.0
Title: Social Interactions, Mechanisms, and Equilibrium: Evidence from a Model of Study Time and Academic Achievement
Classification-JEL: H0; I20; J0
Author-Name: Timothy Conley
Author-Person: pco561
Author-Name: Nirav Mehta
Author-Person: pme460
Author-Name: Ralph Stinebrickner
Author-Person: pst471
Author-Name: Todd Stinebrickner
Author-Person: pst255
Note: ED
Number: 21418
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21418
File-URL: http://www.nber.org/papers/w21418.pdf
File-Format: application/pdf
Publication-Status: published as Timothy G. Conley & Nirav Mehta & Ralph Stinebrickner & Todd Stinebrickner, 2024. "Social Interactions, Mechanisms, and Equilibrium: Evidence from a Model of Study Time and Academic Achievement," Journal of Political Economy, vol 132(3), pages 824-866.
Abstract: We develop and estimate a model of student study time choices on a social network. The model is designed to exploit unique data collected in the Berea Panel Study. Study time data allow us to quantify an intuitive mechanism for academic social interactions: own study time may depend on friend study time in a heterogeneous manner. Social network data allow us to embed study time and resulting academic achievement in an estimable equilibrium framework. We develop a specification test that exploits the equilibrium nature of social interactions and use it to show that novel study propensity measures mitigate econometric endogeneity concerns.
Handle: RePEc:nbr:nberwo:21418
Template-Type: ReDIF-Paper 1.0
Title: Moving to Opportunity or Isolation? Network Effects of a Randomized Housing Lottery in Urban India
Classification-JEL: C93; H42; O12
Author-Name: Sharon Barnhardt
Author-Name: Erica Field
Author-Name: Rohini Pande
Author-Person: ppa900
Note: DEV
Number: 21419
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21419
File-URL: http://www.nber.org/papers/w21419.pdf
File-Format: application/pdf
Publication-Status: published as Sharon Barnhardt & Erica Field & Rohini Pande, 2017. "Moving to Opportunity or Isolation? Network Effects of a Randomized Housing Lottery in Urban India," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 1-32, January.
Abstract: A housing lottery in an Indian city provided winning slum dwellers the opportunity to move into improved housing on the city’s periphery. Fourteen years later, relative to lottery losers, winners report improved housing farther from the city center, but no change in family income or human capital. Winners also report increased isolation from family and caste networks and lower access to informal insurance. We observe significant program exit: 34% of winners never moved into the subsidized housing and 32% eventually exited. Our results point to the importance of considering social networks when designing housing programs for the poor.
Handle: RePEc:nbr:nberwo:21419
Template-Type: ReDIF-Paper 1.0
Title: On the Desirability of Nominal GDP Targeting
Classification-JEL: E31; E47; E52; E58
Author-Name: Julio Garín
Author-Name: Robert Lester
Author-Person: ple893
Author-Name: Eric Sims
Author-Person: psi336
Note: EFG ME
Number: 21420
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21420
File-URL: http://www.nber.org/papers/w21420.pdf
File-Format: application/pdf
Publication-Status: published as Julio Garín & Robert Lester & Eric Sims, 2016. "On the Desirability of Nominal GDP Targeting," Journal of Economic Dynamics and Control, .
Abstract: This paper evaluates the welfare properties of nominal GDP targeting in the context of a New Keynesian model with both price and wage rigidity. In particular, we compare nominal GDP targeting to inflation and output gap targeting as well as to a conventional Taylor rule. These comparisons are made on the basis of welfare losses relative to a hypothetical equilibrium with flexible prices and wages. Output gap targeting is the most desirable of the rules under consideration, but nominal GDP targeting performs almost as well. Nominal GDP targeting is associated with smaller welfare losses than a Taylor rule and significantly outperforms inflation targeting. Relative to inflation targeting and a Taylor rule, nominal GDP targeting performs best conditional on supply shocks and when wages are sticky relative to prices. Nominal GDP targeting may outperform output gap targeting if the gap is observed with noise, and has more desirable properties related to equilibrium determinacy than does gap targeting.
Handle: RePEc:nbr:nberwo:21420
Template-Type: ReDIF-Paper 1.0
Title: The Dynamic Properties of Financial-Market Equilibrium with Trading Fees
Classification-JEL: G0; G1
Author-Name: Adrian Buss
Author-Name: Bernard Dumas
Author-Person: pdu519
Note: AP
Number: 21421
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21421
File-URL: http://www.nber.org/papers/w21421.pdf
File-Format: application/pdf
Publication-Status: published as ADRIAN BUSS & BERNARD DUMAS, 2019. "The Dynamic Properties of Financial‐Market Equilibrium with Trading Fees," The Journal of Finance, vol 74(2), pages 795-844.
Abstract: We incorporate trading fees in a long-horizon dynamic general-equilibrium model in which traders optimally and endogenously decide when and how much to trade. A full characterization of equilibrium is provided, which allows us to study the dynamics of equilibrium trades, equilibrium asset prices and rates of return in the presence of trading fees. We exhibit the effect of trading fees on deviations from the consumption- CAPM and analyze the pricing of endogenous liquidity risk. We compare, for the same shocks, the impulse responses of this model to those of a model in which trading is infrequent because of trader inattention.
Handle: RePEc:nbr:nberwo:21421
Template-Type: ReDIF-Paper 1.0
Title: Elections and Divisiveness: Theory and Evidence
Classification-JEL: P16
Author-Name: Elliott Ash
Author-Person: pas226
Author-Name: Massimo Morelli
Author-Person: pmo645
Author-Name: Richard Van Weelden
Note: PE POL
Number: 21422
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21422
File-URL: http://www.nber.org/papers/w21422.pdf
File-Format: application/pdf
Publication-Status: published as Elliott Ash & Massimo Morelli & Richard Van Weelden, 2017. "Elections and Divisiveness: Theory and Evidence," The Journal of Politics, vol 79(4), pages 1268-1285.
Abstract: This paper analyzes the effort allocation choices of incumbent politicians when voters are uncertain about politician preferences. There is a pervasive incentive to "posture" by over-providing effort to pursue divisive policies, even if all voters would strictly prefer to have a consensus policy implemented. As such, the desire of politicians to convince voters that their preferences are aligned with the majority of the electorate can lead them to choose strictly pareto dominated effort allocations. Transparency over the politicians' effort choices can re-enforce the distortions, and for some parameters can be bad both for incentivizing politicians to focus on socially efficient tasks and for allowing voters to select congruent politicians. We take our theoretical results to the data with an empirical analysis of how Members of the U.S. Congress allocate time across issues in their floor speeches. Consistent with the theory, we find evidence of political posturing due to elections among U.S. Senators. We also demonstrate empirically that, among U.S. House Members, increased transparency can lead to more divisive speech.
Handle: RePEc:nbr:nberwo:21422
Template-Type: ReDIF-Paper 1.0
Title: The Armington Assumption and the Size of Optimal Tariffs
Classification-JEL: F13
Author-Name: Chunding Li
Author-Name: Jing Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: ITI
Number: 21423
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21423
File-URL: http://www.nber.org/papers/w21423.pdf
File-Format: application/pdf
Publication-Status: published as He, Chuantian & Li, Chunding & Wang, Jing & Whalley, John, 2017. "The Armington assumption and the size of optimal tariffs," Economic Modelling, Elsevier, vol. 66(C), pages 214-222.
Abstract: There has been commentary on the seeming success of the world trading system responding to the large shock of the 2008 financial crisis without an outbreak of retaliatory market closing. The threat of large retaliatory tariffs and fears of a 1930s style downturn in trade have been associated with numerical trade modelling which project post retaliation optimal tariffs in excesses of 100%. In the relevant numerical modelling it is common to use the Armington assumption of product heterogeneity by country. Here we argue and show by numerical calculation that the widespread use of this assumption gives a large upward bias to optimal tariffs, both first step and post retaliation, relative to alternative homogenous good models used in trade theory.
Handle: RePEc:nbr:nberwo:21423
Template-Type: ReDIF-Paper 1.0
Title: Corporate Venture Capital as a Real Option in the Markets for Technology
Classification-JEL: G34; L24; L65; O32
Author-Name: Marco Ceccagnoli
Author-Name: Matthew J. Higgins
Author-Person: phi60
Author-Name: Hyunsung D. Kang
Note: CF PR
Number: 21424
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21424
File-URL: http://www.nber.org/papers/w21424.pdf
File-Format: application/pdf
Publication-Status: published as Marco Ceccagnoli & Matthew J. Higgins & Hyunsung D. Kang, 2018. "Corporate venture capital as a real option in the markets for technology," Strategic Management Journal, vol 39(13), pages 3355-3381.
Abstract: Despite the fact that one of the main goals of corporate venture capital (CVC) investments in high-tech industries is to gain a window on future technologies, the relationship between CVC investments and strategies used to acquire technologies in the markets, such as licensing, has not been adequately explored. To address this gap, we build on the real option literature suggesting that CVC investments can be used as real options in the markets for technology. Accordingly, we formulate hypotheses about key drivers of the option value of CVC investments and the decision to exercise the option. Using a longitudinal dataset based on 604 dyads formed by a sample of global pharmaceutical firms and their external technology partners, we find that corporate investors’ scientific capabilities, technological domains, research pipelines, and the resolution of exogenous uncertainty related to partner firms’ technologies impact investors’ decisions on CVC investments and ex post technology acquisition. In our research setting, the most common way to exercise the option post-CVC investment is via technology licensing.
Handle: RePEc:nbr:nberwo:21424
Template-Type: ReDIF-Paper 1.0
Title: The Medicaid Program
Classification-JEL: I11; I13; I18; I3
Author-Name: Thomas Buchmueller
Author-Person: pbu179
Author-Name: John C. Ham
Author-Person: pha1028
Author-Name: Lara D. Shore-Sheppard
Author-Person: psh71
Note: CH EH LS PE
Number: 21425
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21425
File-URL: http://www.nber.org/papers/w21425.pdf
File-Format: application/pdf
Publication-Status: published as The Medicaid Program, Thomas Buchmueller, John C. Ham, Lara D. Shore-Sheppard. in Economics of Means-Tested Transfer Programs in the United States, Volume 1, Moffitt. 2016
Abstract: In both its costs and the number of its enrollees, Medicaid is the largest means-tested transfer program in the United States. It is also a fundamental part of the health care system, providing health insurance to low-income families, indigent seniors, disabled adults and, in some states, low-income adults more broadly. This paper reviews the history and structure of the Medicaid program and the large body of economic research that it has spawned in the nearly half century since it was established. We begin by summarizing the program’s history, goals and current rules. We then present program statistics, mainly related to enrollment and expenditures. Finally we turn to the research on the impact of Medicaid on a broad range of outcomes, discussing theoretical and methodological issues important for understanding these effects and reviewing the empirical literature, describing what has been learned thus far, investigating areas where studies seem to reach different conclusions and pointing to areas where we believe additional research would be fruitful.
Handle: RePEc:nbr:nberwo:21425
Template-Type: ReDIF-Paper 1.0
Title: Jump Starting the Euro Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery?
Classification-JEL: E62; F41; F45
Author-Name: Olivier Blanchard
Author-Person: pbl2
Author-Name: Christopher J. Erceg
Author-Person: per53
Author-Name: Jesper Lindé
Author-Person: pli302
Note: EFG IFM
Number: 21426
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21426
File-URL: http://www.nber.org/papers/w21426.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Blanchard & Christopher J. Erceg & Jesper Lindé, 2017. "Jump-Starting the Euro-Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery?," NBER Macroeconomics Annual, University of Chicago Press, vol. 31(1), pages 103-182.
Abstract: We show that a fiscal expansion by the core economies of the euro area would have a large and positive impact on periphery GDP assuming that policy rates remain low for a prolonged period. Under our preferred model specification, an expansion of core government spending equal to one percent of euro area GDP would boost periphery GDP by over 1 percent in a liquidity trap lasting three years, nearly half as large as the effect on core GDP. Accordingly, under a standard ad hoc loss function involving output and inflation gaps, increasing core spending would generate substantial welfare improvements, especially in the periphery. The benefits are considerably smaller under a utility-based welfare measure, reflecting in part that higher net exports play a material role in raising periphery GDP.
Handle: RePEc:nbr:nberwo:21426
Template-Type: ReDIF-Paper 1.0
Title: Can Foreign Exchange Intervention Stem Exchange Rate Pressures from Global Capital Flow Shocks?
Classification-JEL: F31; F38; F41
Author-Name: Olivier Blanchard
Author-Person: pbl2
Author-Name: Gustavo Adler
Author-Person: pad129
Author-Name: Irineu de Carvalho Filho
Author-Person: pir8
Note: EFG IFM
Number: 21427
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21427
File-URL: http://www.nber.org/papers/w21427.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Blanchard & Gustavo Adler & Irineu Carvalho Filho, 2015. "Can Foreign Exchange Intervention Stem Exchange Rate Pressures from Global Capital Flow Shocks?," IMF Working Papers, vol 15(159).
Abstract: Many emerging market economies have relied on foreign exchange intervention (FXI) in response to gross capital inflows. In this paper, we study whether FXI has been an effective tool to dampen the effects of these inflows on the exchange rate. To deal with endogeneity issues, we look at the response of different countries to plausibly exogenous gross inflows, and explore the cross country variation of FXI and exchange rate responses. Consistent with the portfolio balance channel, we find that larger FXI leads to less exchange rate appreciation in response to gross inflows.
Handle: RePEc:nbr:nberwo:21427
Template-Type: ReDIF-Paper 1.0
Title: Worms at Work: Long-run Impacts of a Child Health Investment
Classification-JEL: I00; I10; I20; J24; O15
Author-Name: Sarah Baird
Author-Person: pba929
Author-Name: Joan Hamory Hicks
Author-Name: Michael Kremer
Author-Person: pkr20
Author-Name: Edward Miguel
Author-Person: pmi499
Note: DEV ED EH
Number: 21428
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21428
File-URL: http://www.nber.org/papers/w21428.pdf
File-Format: application/pdf
Publication-Status: published as Sarah Baird & Joan Hamory Hicks & Michael Kremer & Edward Miguel, 2016. "Worms at Work: Long-run Impacts of a Child Health Investment," The Quarterly Journal of Economics, vol 131(4), pages 1637-1680.
Abstract: This study estimates long-run impacts of a child health investment, exploiting community-wide experimental variation in school-based deworming. The program increased labor supply among men and education among women, with accompanying shifts in labor market specialization. Ten years after deworming treatment, men who were eligible as boys stay enrolled for more years of primary school, work 17% more hours each week, spend more time in non-agricultural self-employment, are more likely to hold manufacturing jobs, and miss one fewer meal per week. Women who were in treatment schools as girls are approximately one quarter more likely to have attended secondary school, halving the gender gap. They reallocate time from traditional agriculture into cash crops and non-agricultural self-employment. We estimate a conservative annualized financial internal rate of return to deworming of 32%, and show that mass deworming may generate more in future government revenue than it costs in subsidies.
Handle: RePEc:nbr:nberwo:21428
Template-Type: ReDIF-Paper 1.0
Title: Intergenerational Transmission of Gender Attitudes: Evidence from India
Classification-JEL: J16; O1
Author-Name: Diva Dhar
Author-Name: Tarun Jain
Author-Person: pja191
Author-Name: Seema Jayachandran
Author-Person: pja86
Note: CH DEV
Number: 21429
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21429
File-URL: http://www.nber.org/papers/w21429.pdf
File-Format: application/pdf
Publication-Status: published as Diva Dhar & Tarun Jain & Seema Jayachandran, 2019. "Intergenerational Transmission of Gender Attitudes: Evidence from India," The Journal of Development Studies, vol 55(12), pages 2572-2592.
Abstract: This paper examines the intergenerational transmission of gender attitudes in India, a setting where discrimination against women and girls is severe. We use survey data on gender attitudes (specifically, views about the appropriate roles and rights of women and girls) collected from adolescents attending 314 schools in the state of Haryana, and their parents. We find that when a parent holds a more discriminatory attitude, his or her child is about 15 to 20 percentage points more likely to hold the view. As a benchmark, classmates' average gender attitudes have a similar effect size. We find that mothers influence children's gender attitudes more than fathers do. Parental attitudes also affect their children's aspirations; girls with more discriminatory parents are less likely to want to continue their schooling beyond high school.
Handle: RePEc:nbr:nberwo:21429
Template-Type: ReDIF-Paper 1.0
Title: Hysteresis and the European Unemployment Problem Revisited
Classification-JEL: E24; E31; E32
Author-Name: Jordi Galí
Author-Person: pga43
Note: EFG IFM ME
Number: 21430
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21430
File-URL: http://www.nber.org/papers/w21430.pdf
File-Format: application/pdf
Abstract: The unemployment rate in the euro area appears to contain a significant nonstationary component, suggesting that some shocks have permanent effects on that variable. I explore possible sources of this nonstationarity through the lens of a New Keynesian model with unemployment, and assess their empirical relevance.
Handle: RePEc:nbr:nberwo:21430
Template-Type: ReDIF-Paper 1.0
Title: What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations
Classification-JEL: J08; J24
Author-Name: David Card
Author-Person: pca271
Author-Name: Jochen Kluve
Author-Person: pkl108
Author-Name: Andrea Weber
Author-Person: pwe32
Note: LS
Number: 21431
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21431
File-URL: http://www.nber.org/papers/w21431.pdf
File-Format: application/pdf
Publication-Status: published as David Card & Jochen Kluve & Andrea Weber, 2018. "What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations," Journal of the European Economic Association, vol 16(3), pages 894-931.
Abstract: We summarize the estimates from over 200 recent studies of active labor market programs. We classify the estimates by type of program and participant group, and distinguish between three different post-program time horizons. Using regression models for the estimated program effect (for studies that model the probability of employment) and for the sign and significance of the estimated effect (for all the studies in our sample) we conclude that: (1) average impacts are close to zero in the short run, but become more positive 2-3 years after completion of the program; (2) the time profile of impacts varies by type of program, with larger average gains for programs that emphasize human capital accumulation; (3) there is systematic heterogeneity across participant groups, with larger impacts for females and participants who enter from long term unemployment; (4) active labor market programs are more likely to show positive impacts in a recession.
Handle: RePEc:nbr:nberwo:21431
Template-Type: ReDIF-Paper 1.0
Title: Are Universities Becoming More Unequal?
Classification-JEL: I22; I23
Author-Name: Yan Lau
Author-Name: Harvey S. Rosen
Author-Person: pro55
Note: ED PE
Number: 21432
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21432
File-URL: http://www.nber.org/papers/w21432.pdf
File-Format: application/pdf
Abstract: Observers have expressed concern about growing inequality in resources across universities. But are universities really becoming more unequal? We argue that the typical approach of examining endowment growth alone is not sensible. In line with the literature on household inequality, we focus instead on a comprehensive income measure. We find that although there is considerable inequality among institutions, concerns about the inexorable growth of inequality are overblown. Whether one looks at income, endowment wealth, or expenditure, inequality has been high but stable, exhibiting only negligible increases in recent years. Furthermore, there has been little mobility within the higher education sector.
Handle: RePEc:nbr:nberwo:21432
Template-Type: ReDIF-Paper 1.0
Title: Clearing Up the Fiscal Multiplier Morass: Prior and Posterior Analysis
Classification-JEL: C11; E62; E63
Author-Name: Eric M. Leeper
Author-Person: ple3
Author-Name: Nora Traum
Author-Person: ptr159
Author-Name: Todd B. Walker
Author-Person: pwa179
Note: EFG
Number: 21433
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21433
File-URL: http://www.nber.org/papers/w21433.pdf
File-Format: application/pdf
Publication-Status: published as Eric M. Leeper & Nora Traum & Todd B. Walker, 2017. "Clearing Up the Fiscal Multiplier Morass," American Economic Review, vol 107(8), pages 2409-2454.
Abstract: We use Bayesian prior and posterior analysis of a monetary DSGE model, extended to include fiscal details and two distinct monetary-fiscal policy regimes, to quantify government spending multipliers in U.S. data. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Posterior mean estimates of short-run output multipliers are comparable across regimes—about 1.4 on impact—but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal—means of 1.9 versus 0.7 in present value.
Handle: RePEc:nbr:nberwo:21433
Template-Type: ReDIF-Paper 1.0
Title: Does Development Aid Undermine Political Accountability? Leader and Constituent Responses to a Large-Scale Intervention
Classification-JEL: O1; O43; P16; Q56
Author-Name: Raymond P. Guiteras
Author-Person: pgu357
Author-Name: Ahmed Mushfiq Mobarak
Author-Person: pmo232
Note: DEV POL
Number: 21434
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21434
File-URL: http://www.nber.org/papers/w21434.pdf
File-Format: application/pdf
Abstract: Comprehensive evaluation requires tracking indirect effects of interventions, such as politicians and constituents reacting to the arrival of a development program. We study political economy responses to a large scale intervention in Bangladesh, where 346 communities consisting of 16,600 households were randomly assigned to control, information or subsidy treatments to encourage investments in improved sanitation. In one intervention where the leaders’ role in program allocation was not clear to constituents, leaders react by spending more time in treatment areas, and treated constituents appear to attribute credit to their local leader for a randomly assigned program. In contrast, in another lottery where subsidy assignment is clearly and transparently random, the lottery winners do not attribute any extra credit to the politician relative to lottery losers. These reactions are consistent with a model in which constituents have imperfect information about leader ability. A third intervention returns to a random subset of treated households to inform them that the program was externally funded and randomly assigned. This simple, scalable information treatment eliminates the excess credit that leaders received in villages that received subsidies. These results suggest that while politicians may respond to try to take credit for development programs, it is not easy for them do so. Political accountability is not easily undermined by development aid.
Handle: RePEc:nbr:nberwo:21434
Template-Type: ReDIF-Paper 1.0
Title: People and Machines: A Look at the Evolving Relationship Between Capital and Skill In Manufacturing 1860-1930 Using Immigration Shocks
Classification-JEL: J24; N61; O33
Author-Name: Jeanne Lafortune
Author-Name: José Tessada
Author-Person: pte30
Author-Name: Ethan Lewis
Author-Person: ple579
Note: DAE LS
Number: 21435
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21435
File-URL: http://www.nber.org/papers/w21435.pdf
File-Format: application/pdf
Publication-Status: published as Jeanne Lafortune & Ethan Lewis & José Tessada, 2019. "People and Machines: A Look at the Evolving Relationship between Capital and Skill in Manufacturing, 1860–1930, Using Immigration Shocks," The Review of Economics and Statistics, vol 101(1), pages 30-43.
Abstract: This paper estimates the elasticity of substitution between capital and skill using variation across U.S. counties in immigration-induced skill mix changes between 1860 and 1930. We find that capital began as a q-complement for skilled and unskilled workers, and then dramatically increased its relative complementary with skilled workers around 1890. Simulations of a parametric production function calibrated to our estimates imply the level of capital-skill complementarity after 1890 likely allowed the U.S. economy to absorb the large wave of less-skilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology.
Handle: RePEc:nbr:nberwo:21435
Template-Type: ReDIF-Paper 1.0
Title: Unsticking the Flypaper Effect in an Uncertain World
Classification-JEL: E21; E62; H62; H77
Author-Name: Carlos A. Vegh
Author-Person: pve34
Author-Name: Guillermo Vuletin
Author-Person: pvu7
Note: IFM
Number: 21436
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21436
File-URL: http://www.nber.org/papers/w21436.pdf
File-Format: application/pdf
Publication-Status: published as Carlos A. Vegh & Guillermo Vuletin, 2015. "Unsticking the flypaper effect in an uncertain world," Journal of Public Economics, vol 131, pages 142-155.
Abstract: We provide a novel explanation for the flypaper effect based on insurance arguments. In our model, the flypaper effect arises due to the differential response of precautionary savings to private income or fiscal transfers shocks in an uncertain world with incomplete markets. The model generates two testable implications: (i) the flypaper effect is a decreasing function of the correlation between fiscal transfers and private income, and (ii) such relationship is stronger the higher is the volatility of fiscal transfers and/or private income. An empirical analysis of Argentinean provinces for the period 1963-2006 finds strong support for the model's implications.
Handle: RePEc:nbr:nberwo:21436
Template-Type: ReDIF-Paper 1.0
Title: The Distributional Effects of U.S. Clean Energy Tax Credits
Classification-JEL: D30; H23; H24; H50; Q41; Q48
Author-Name: Severin Borenstein
Author-Person: pbo78
Author-Name: Lucas W. Davis
Author-Person: pda367
Note: EEE PE
Number: 21437
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21437
File-URL: http://www.nber.org/papers/w21437.pdf
File-Format: application/pdf
Publication-Status: published as The Distributional Effects of U.S. Clean Energy Tax Credits, Severin Borenstein, Lucas W. Davis. in Tax Policy and the Economy, Volume 30, Brown. 2016
Abstract: Since 2006, U.S. households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other "clean energy" investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. By comparing to previous work on the distributional consequences of pricing greenhouse gas emissions, we conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.
Handle: RePEc:nbr:nberwo:21437
Template-Type: ReDIF-Paper 1.0
Title: Mobile Politicians: Opportunistic Career Moves and Moral Hazard
Classification-JEL: D72; K0
Author-Name: Duha T. Altindag
Author-Person: pal449
Author-Name: Naci Mocan
Author-Person: pmo270
Note: LE LS POL
Number: 21438
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21438
File-URL: http://www.nber.org/papers/w21438.pdf
File-Format: application/pdf
Abstract: We exploit the randomness generated by a seat allocation mechanism utilized in Parliamentary elections that determines those politicians who get elected from a given district by a small margin, and those who lose. Using detailed information on personal attributes of more than 2,000 elected Members of the Parliament (MPs) and the votes received by each political party in every district and each of the five consecutive Parliamentary elections in Turkey between 1991 and 2011, we show that elected MPs are more likely to switch parties after an election if they faced electoral uncertainty and experienced a narrowly-won victory. The tendency to switch parties goes up as it becomes more lucrative to hold the post of MP. The impact of election uncertainty on party-switching is greater for younger MPs, and for those who are less educated. The propensity to switch due to uncertainty is higher if the MP is a member of the governing party, but only if the seat is valuable (if the majority of the party in the Parliament is slim). Politicians switch parties after an election to improve their ex-ante re-election probability in the following election. Although switching parties during a legislative session (between elections) for personal career concerns creates moral hazard, we find that party-switching MPs are more likely to get elected in the next election. These results point to forward-looking opportunistic behavior of politicians regarding their strategy to win future elections, and they indicate that politicians switch parties primarily for career concerns and for financial benefits that are associated with longer tenure in the Parliament. The results also signify that competition between political parties continues after the election, in the form of gaining seats in the Parliament post- election by transferring elected representatives of competing parties. This constitutes another dimension of the political agency problem.
Handle: RePEc:nbr:nberwo:21438
Template-Type: ReDIF-Paper 1.0
Title: Who's Getting Globalized? The Size and Implications of Intra-national Trade Costs
Classification-JEL: F1; F6; O1
Author-Name: David Atkin
Author-Name: Dave Donaldson
Note: DEV ITI
Number: 21439
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21439
File-URL: http://www.nber.org/papers/w21439.pdf
File-Format: application/pdf
Abstract: How large are the intra-national trade costs that separate consumers in remote locations of developing countries from global markets? What do those barriers imply for the intra-national incidence of the gains from falling international trade barriers? We develop a new methodology for answering these questions and apply it to newly collected CPI micro-data from Ethiopia and Nigeria (as well as to the US). In order to overcome three well-known challenges that arise when using price gaps to estimate trade costs, we: (i) work exclusively with a sample of goods that are identified at the barcode-level (to mitigate bias due to unobserved quality differences over space); (ii) collect novel data on the origin location of each product in our sample (to focus only on the pairs of locations that actually identify trade costs); and (iii) use estimates of cost pass-through to correct for mark-ups that potentially vary over space (to extract trade costs from price variation in an environment with potentially oligopolistic intermediaries). Without these corrections, we find that our estimates of the cost of distance would be biased downwards by a factor of approximately four. Our preferred estimates imply that the effect of log distance on trade costs within Ethiopia or Nigeria is four to five times larger than in the US. We also use our pass-through estimates to calculate the incidence of surplus increases due to falling world prices. We find that intermediaries capture the majority of the surplus, and that their share is even higher in distant locations, suggesting that remote consumers see only a small part of the gains from falling international trade barriers.
Handle: RePEc:nbr:nberwo:21439
Template-Type: ReDIF-Paper 1.0
Title: Long Run Health Repercussions of Drought Shocks: Evidence from South African Homelands
Classification-JEL: I15; N37; O13; O15; Q54
Author-Name: Taryn Dinkelman
Author-Person: pdi279
Note: CH DEV LS
Number: 21440
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21440
File-URL: http://www.nber.org/papers/w21440.pdf
File-Format: application/pdf
Publication-Status: published as Taryn Dinkelman, 2016. "Long run health repercussions of drought shocks: Evidence from South African homelands," The Economic Journal, , pages n/a-n/a.
Abstract: Drought is Africa’s most prevalent natural disaster and is becoming an increasingly common source of income shocks around the world. This paper presents new evidence from Africa that droughts are an important component of long run variation in health human capital. I use Census data to estimate the effects of early childhood exposure to drought on later-life disabilities among South Africans confined to homelands during apartheid. By exploiting almost forty years of quasi-random variation in local droughts experienced by different cohorts in different districts, I find that drought exposure in infancy raises later-life disability rates by 3.5 to 5.2%, with effects concentrated in physical and mental disabilities, and largest for males. An exploration of spatial heterogeneity in drought effects suggests that limits to mobility imposed on homelands may have contributed to these negative effects. My findings are relevant for low-income settings where households have limited access to formal and informal coping mechanisms and face high costs of avoiding droughts through migration.
Handle: RePEc:nbr:nberwo:21440
Template-Type: ReDIF-Paper 1.0
Title: Do Consumers Recognize the Value of Fuel Economy? Evidence from Used Car Prices and Gasoline Price Fluctuations
Classification-JEL: H23
Author-Name: James M. Sallee
Author-Person: psa1187
Author-Name: Sarah West
Author-Person: pwe92
Author-Name: Wei Fan
Note: EEE PE
Number: 21441
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21441
File-URL: http://www.nber.org/papers/w21441.pdf
File-Format: application/pdf
Publication-Status: published as James M. Sallee & Sarah E. West & Wei Fan, 2016. "Do consumers recognize the value of fuel economy? Evidence from used car prices and gasoline price fluctuations," Journal of Public Economics, .
Abstract: Debate about the appropriate design of energy policy hinges critically on whether consumers might undervalue energy efficiency, due to myopia or some other manifestation of limited rationality. We contribute to this debate by measuring consumers' willingness to pay for fuel economy using a novel identification strategy and high quality microdata from wholesale used car auctions. We leverage differences in future fuel costs across otherwise identical vehicles that have different current mileage, and therefore different remaining lifetimes. By seeing how price differences across high and low mileage vehicles of different fuel economies change in response to shocks to the price of gasoline, we estimate the relationship between vehicle prices and future fuel costs. Our data suggest that used automobile prices move one for one with changes in present discounted future fuel costs, which implies that consumers fully value fuel economy.
Handle: RePEc:nbr:nberwo:21441
Template-Type: ReDIF-Paper 1.0
Title: Does Compulsory Licensing Discourage Invention? Evidence From German Patents After WWI
Classification-JEL: N3; N32; N34; O3; O34; O38
Author-Name: Joerg Baten
Author-Person: pba132
Author-Name: Nicola Bianchi
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE LE PR
Number: 21442
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21442
File-URL: http://www.nber.org/papers/w21442.pdf
File-Format: application/pdf
Publication-Status: published as Joerg Baten, Nicola Bianchi, Petra Moser, Compulsory licensing and innovation – Historical evidence from German patents after WWI, Journal of Development Economics, Volume 126, 2017, Pages 231-242, ISSN 0304-3878, https://doi.org/10.1016/j.jdeveco.2017.01.002.
Abstract: This paper investigates whether compulsory licensing – which allows governments to license patents without the consent of patent-owners – discourages invention. Our analysis exploits new historical data on German patents to examine the effects of compulsory licensing under the US Trading-with-the-Enemy Act on invention in Germany. We find that compulsory licensing was associated with a 28 percent increase in invention. Historical evidence indicates that, as a result of war-related demands, fields with licensing were negatively selected, so OLS estimates may underestimate the positive effects of compulsory licensing on future inventions.
Handle: RePEc:nbr:nberwo:21442
Template-Type: ReDIF-Paper 1.0
Title: Patent Citations and the Size of the Inventive Step - Evidence from Hybrid Corn
Classification-JEL: O3; O31; O34; Q16; Q55
Author-Name: Petra Moser
Author-Person: pmo257
Author-Name: Joerg Ohmstedt
Author-Name: Paul W. Rhode
Author-Person: prh14
Note: DAE PR
Number: 21443
Creation-Date: 2015-07
Order-URL: http://www.nber.org/papers/w21443
File-URL: http://www.nber.org/papers/w21443.pdf
File-Format: application/pdf
Publication-Status: published as Patent Citations—An Analysis of Quality Differences and Citing Practices in Hybrid Corn Petra Moser, Joerg Ohmstedt, and Paul W. Rhode Management Science 201864:4 , 1926-1940
Abstract: Patents are the main source of data on innovation, but there are persistent concerns that patents may be a noisy and biased measure. An important challenge arises from unobservable variation in the size of the inventive step that is covered by a patent. The count of later patents that cite a patent as relevant prior art – so called forward citations – have become the standard measure to control for such variation. Citations may, however, also be a noisy and biased measure for the size of the inventive step. To address this issue, this paper examines field trial data for patented improvements in hybrid corn. Field trials report objective measures for improvements in hybrid corn, which we use to quantify the size of the inventive step. These data show a robust correlation between citations and improvements in yields, as the bottom line measure for improvements in hybrid corn. This correlation is robust to alternative measures for improvements in hybrid corn, and a broad range of other tests.We also investigate the process, by which patents generate citations. This analysis reveals that hybrids that serve as an input for genetically-related follow-on inventions are more likely to receive self-citations (by the same firm), which suggests that self-citations are a good predictor for follow-on invention.
Handle: RePEc:nbr:nberwo:21443
Template-Type: ReDIF-Paper 1.0
Title: Towards a General Theory of Deep Downturns
Classification-JEL: D59; D90; E20; E21; E30; E32; E44; E49; E50; E52; E60; F41; G01
Author-Name: Joseph E. Stiglitz
Note: EFG
Number: 21444
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21444
File-URL: http://www.nber.org/papers/w21444.pdf
File-Format: application/pdf
Publication-Status: published as International Economic Association Series. Towards a General Theory of Deep Downturns Presidential Address from the 17th World Congress of the International Economic Association in 2014 Authors: Stiglitz, Joseph E. DOI 10.1007/978-1-137-58691-9
Abstract: This paper, an extension of the Presidential Address to the International Economic Association, evaluates alternative strands of macro-economics in terms of the three basic questions posed by deep downturns: What is the source of large perturbations? How can we explain the magnitude of volatility? How do we explain persistence? The paper argues that while real business cycles and New Keynesian theories with nominal rigidities may help explain certain historical episodes, alternative strands of New Keynesian economics focusing on financial market imperfections, credit, and real rigidities provides a more convincing interpretation of deep downturns, such as the Great Depression and the Great Recession, giving a more plausible explanation of the origins of downturns, their depth and duration. Since excessive credit expansions have preceded many deep downturns, particularly important is an understanding of finance, the credit creation process and banking, which in a modern economy are markedly different from the way envisioned in more traditional models.
Handle: RePEc:nbr:nberwo:21444
Template-Type: ReDIF-Paper 1.0
Title: Not so Disconnected: Exchange Rates and the Capital Stock
Classification-JEL: F3; G0
Author-Name: Tarek Alexander Hassan
Author-Person: pha489
Author-Name: Thomas Mertens
Author-Name: Tony Zhang
Note: AP EFG IFM
Number: 21445
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21445
File-URL: http://www.nber.org/papers/w21445.pdf
File-Format: application/pdf
Publication-Status: published as Not So Disconnected: Exchange Rates and the Capital Stock, Tarek A. Hassan, Thomas M. Mertens, Tony Zhang. in NBER International Seminar on Macroeconomics 2015, Devereux, Giavazzi, and West. 2016
Publication-Status: published as Hassan, Tarek A. & Mertens, Thomas M. & Zhang, Tony, 2016. "Not so disconnected: Exchange rates and the capital stock," Journal of International Economics, Elsevier, vol. 99(S1), pages 43-57.
Abstract: We investigate the link between stochastic properties of exchange rates and differences in capital-output ratios across industrialized countries. To this end, we endogenize capital accumulation within a standard model of exchange rate determination with nontraded goods. The model predicts that currencies of countries that are more systemic for the world economy (countries that face particularly volatile shocks or account for a large share of world GDP) appreciate when the price of traded goods in word markets is high. These currencies are better hedges against consumption risk faced by international investors because they appreciate in "bad" states of the world. As a consequence, more systemic countries face a lower cost of capital and accumulate more capital per worker. We estimate our model using data from seven industrialized countries with freely floating exchange rate regimes between 1984-2010 and show that cross-country variation in the stochastic properties of exchange rates accounts for 72% of the cross-country variation in capital-output ratios. In this sense, the stochastic properties of exchange rates map to fundamentals in the way predicted by the model.
Handle: RePEc:nbr:nberwo:21445
Template-Type: ReDIF-Paper 1.0
Title: Income and Wealth Effects on Private-Label Demand: Evidence From the Great Recession
Classification-JEL: D1; D12; E21; E3; L0; L00; L1; L10; L11; L16
Author-Name: Jean-Pierre Dubé
Author-Name: Günter J. Hitsch
Author-Name: Peter E. Rossi
Author-Person: pro227
Note: EFG IO
Number: 21446
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21446
File-URL: http://www.nber.org/papers/w21446.pdf
File-Format: application/pdf
Publication-Status: published as Jean-Pierre Dubé & Günter J. Hitsch & Peter E. Rossi, 2018. "Income and Wealth Effects on Private-Label Demand: Evidence from the Great Recession," Marketing Science, vol 37(1), pages 22-53.
Abstract: We measure the causal effects of income and wealth on the demand for private-label products. Prior research suggests that these effects are large and, in particular, that private-label demand rises during recessions. Our empirical analysis is based on a comprehensive household-level transactions database matched with price information from store-level scanner data and wealth data based on local house value indices. The Great Recession provides a key source of the variation in our data, with a large and geographically diverse impact on household incomes over time. We estimate income and wealth effects using “within” variation of income and wealth at the household level. Our estimates can be interpreted as income and wealth effects consistent with a consumer demand model based on utility maximization. We establish a precisely measured negative effect of income on private-label shares. The effect of wealth is negative but not precisely measured. However, the estimated effect sizes are small, in contrast with prior academic work and industry views. An examination of the possible supply-side response to the recession shows only small changes in the relative price of national-brand and private-label products. Our estimates also reveal a large positive trend in private-label shares that predates the Great Recession. We examine some possible factors underlying this trend, but find no evidence that this trend is systematically related to specific private-label quality tiers or to the overall rate of private-label versus national-brand product introductions.
Handle: RePEc:nbr:nberwo:21446
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Measurement Error: A Method to Qualitatively Validate Survey Data
Classification-JEL: C81; C93; I32; K4; O1
Author-Name: Christopher Blattman
Author-Person: pbl37
Author-Name: Julian C. Jamison
Author-Name: Tricia Koroknay-Palicz
Author-Name: Katherine Rodrigues
Author-Name: Margaret Sheridan
Note: DEV
Number: 21447
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21447
File-URL: http://www.nber.org/papers/w21447.pdf
File-Format: application/pdf
Publication-Status: published as Blattman, Christopher & Jamison, Julian & Koroknay-Palicz, Tricia & Rodrigues, Katherine & Sheridan, Margaret, 2016. "Measuring the measurement error: A method to qualitatively validate survey data," Journal of Development Economics, Elsevier, vol. 120(C), pages 99-112.
Abstract: Field experiments rely heavily on self-reported data, but subjects may misreport behaviors, especially sensitive ones such as crime. If treatment influences survey responses, it biases experimental estimates. We develop a validation technique that uses intensive qualitative work to assess survey measurement error. Subjects were assigned to receive cash, therapy, both, or neither. According to survey responses, receiving both treatments dramatically reduced crime and other sensitive behaviors. Local researchers spent several days with a random subsample of subjects following their endline surveys, building trust and seeking verbal confirmation of six behaviors: theft, drug use, homelessness, gambling, and two expenditures. This validation suggests that subjects in the control and cash only groups underreported sensitive behaviors and expenditures in the survey relative to the other treatment arms. We bound survey-based treatment effects estimates, and find the impacts of cash and therapy on crime may be larger than suggested by surveys alone.
Handle: RePEc:nbr:nberwo:21447
Template-Type: ReDIF-Paper 1.0
Title: Incomplete Markets and Aggregate Demand
Classification-JEL: D52; E0
Author-Name: Iván Werning
Author-Person: pwe141
Note: EFG IFM ME
Number: 21448
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21448
File-URL: http://www.nber.org/papers/w21448.pdf
File-Format: application/pdf
Abstract: I study aggregate consumption dynamics under incomplete markets, focusing on the relationship between consumption and the path for interest rates. I first provide a general aggregation result under extreme illiquidity (no borrowing and no outside assets), deriving a generalized Euler relation involving the real interest rate, current and future aggregate consumption. This provides a tractable way of incorporating incomplete markets in macroeconomic models, dealing only with aggregates. Although this relation does not necessarily coincide with the standard representative-agent Euler equation, I show that it does for an important benchmark specification. When this is the case, idiosyncratic uncertainty and incomplete markets leave their imprint by affecting the discount factor in this representation, but the sensitivity of consumption to current and future interest rates is unaffected. An immediate corollary is that “forward guidance” (lower future interest rates) is as powerful as in representative agent models. I show that the same representation holds with positive liquidity (borrowing and outside assets) when utility is logarithmic. I show that away from these benchmark cases, consumption is likely to become more sensitive to interest rate, and especially future interest rates. Finally, I apply my approach to a real business cycle economy, providing an exact analytical aggregation result that complements existing numerical results.
Handle: RePEc:nbr:nberwo:21448
Template-Type: ReDIF-Paper 1.0
Title: Hedge Funds: A Dynamic Industry In Transition
Classification-JEL: G01; G11; G12; G20; G23; G24
Author-Name: Mila Getmansky
Author-Name: Peter A. Lee
Author-Name: Andrew W. Lo
Author-Person: plo171
Note: AP EFG
Number: 21449
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21449
File-URL: http://www.nber.org/papers/w21449.pdf
File-Format: application/pdf
Publication-Status: published as Mila Getmansky & Peter A. Lee & Andrew W. Lo, 2015. "Hedge Funds: A Dynamic Industry in Transition," Annual Review of Financial Economics, vol 7(1), pages 483-577.
Abstract: The hedge-fund industry has grown rapidly over the past two decades, offering investors unique investment opportunities that often reflect more complex risk exposures than those of traditional investments. In this article we present a selective review of the recent academic literature on hedge funds as well as updated empirical results for this industry. Our review is written from several distinct perspectives: the investor's, the portfolio manager's, the regulator's, and the academic's. Each of these perspectives offers a different set of insights into the financial system, and the combination provides surprisingly rich implications for the Efficient Markets Hypothesis, investment management, systemic risk, financial regulation, and other aspects of financial theory and practice.
Handle: RePEc:nbr:nberwo:21449
Template-Type: ReDIF-Paper 1.0
Title: The Long-Run Impact of the Dissolution of the English Monasteries
Classification-JEL: N43; N63; N93; O14; Q15
Author-Name: Leander Heldring
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Sebastian Vollmer
Note: DAE
Number: 21450
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21450
File-URL: http://www.nber.org/papers/w21450.pdf
File-Format: application/pdf
Publication-Status: published as Leander Heldring & James A Robinson & Sebastian Vollmer, 2021. "The Long-Run Impact of the Dissolution of the English Monasteries," The Quarterly Journal of Economics, vol 136(4), pages 2093-2145.
Abstract: We examine the long-run economic impact of the Dissolution of the English monasteries in 1535, during the Reformation. Since monastic lands were previously not marketed and relatively unencumbered by inefficient types of customary tenures linked to feudalism, the Dissolution provides variation in the longevity of feudal institutions, which is plausibly linked to labor and social mobility, the productivity of agriculture and ultimately the location of the Industrial Revolution. We show that parishes impacted by the Dissolution subsequently experienced a ‘rise of the Gentry’, had higher innovation and yields in agriculture, a greater share of the population working outside of agriculture, and ultimately higher levels of industrialization. Where Catholics lingered, there was less development. Our results are consistent with explanations of the Agricultural and Industrial Revolutions which emphasize the commercialization of society as a key pre-condition for taking advantage of technological change and new economic opportunities.
Handle: RePEc:nbr:nberwo:21450
Template-Type: ReDIF-Paper 1.0
Title: An Evaluation of The Mellon Mays Undergraduate Fellowship's Effect on PhD Production at Non-UNCF Institutions
Classification-JEL: I23
Author-Name: Sarah J. Prenovitz
Author-Name: Gary R. Cohen
Author-Name: Ronald G. Ehrenberg
Author-Person: peh2
Author-Name: George H. Jakubson
Note: ED
Number: 21451
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21451
File-URL: http://www.nber.org/papers/w21451.pdf
File-Format: application/pdf
Publication-Status: published as Sarah J. Prenovitz & Gary R. Cohen & Ronald G. Ehrenberg & George H. Jakubson, 2016. "An evaluation of the Mellon Mays Undergraduate Fellowship's effect on PhD production at non-UNCF institutions," Economics of Education Review, .
Abstract: The Mellon Mays Undergraduate Fellowship Program (MMUF) was established in 1988 to encourage underrepresented minority (URM) students to pursue PhD study with an eye towards entering academia. Fellows have completed PhDs at high rates relative to other students, but they are selected for their interest and potential, so this reflects both the effects of the program and the abilities of the students themselves. In order to understand one impact of the program we investigate its causal effect - how many of its fellows earned PhDs who would not have done so without the MMUF’s support. In this paper we use restricted access administrative data from the Mellon Foundation and the National Science Foundation’s Survey of Earned Doctorates to investigate the effect of the MMUF on PhD completions by underrepresented minority students who graduate from participating institutions. We find no evidence that participation in the program causes a statistically significant increase in the PhD production rate of URM students and increases in larger than 0.4 percentage points lie outside a 95% confidence interval using our unweighted baseline estimates. We also do not find evidence that increasing the intensity of the program by adding more fellows increases the PhD production rate, which is particularly notable as this estimate is upward-biased: the number of fellows likely reflects the strength of the candidate pool in a given year.
Handle: RePEc:nbr:nberwo:21451
Template-Type: ReDIF-Paper 1.0
Title: The Logic of Agglomeration
Classification-JEL: J2; J6; L1; L2; L6; O1; O3; R10; R3
Author-Name: Gilles Duranton
Author-Person: pdu48
Author-Name: William R. Kerr
Author-Person: pke127
Note: PR
Number: 21452
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21452
File-URL: http://www.nber.org/papers/w21452.pdf
File-Format: application/pdf
Abstract: This review discusses frontier topics in economic geography as they relate to firms and agglomeration economies. We focus on areas where empirical research is scarce but possible. We first outline a conceptual framework for city formation that allows us to contemplate what empiricists might study when using firm-level data to compare the functioning of cities and industries with each other. We then examine a second model of the internal structure of a cluster to examine possibilities with firm-level data for better exposing the internal operations of clusters. An overwhelming theme of our review is the vast scope for enhancements of our picture of agglomeration with the new data that are emerging.
Handle: RePEc:nbr:nberwo:21452
Template-Type: ReDIF-Paper 1.0
Title: Capital Allocation and Productivity in South Europe
Classification-JEL: D24; E22; F41; O16; O47
Author-Name: Gita Gopinath
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Loukas Karabarbounis
Author-Person: pka357
Author-Name: Carolina Villegas-Sanchez
Author-Person: pvi348
Note: EFG IFM PR
Number: 21453
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21453
File-URL: http://www.nber.org/papers/w21453.pdf
File-Format: application/pdf
Publication-Status: published as Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017. "Capital Allocation and Productivity in South Europe*," The Quarterly Journal of Economics, vol 132(4), pages 1915-1967.
Abstract: Starting in the early 1990s, countries in southern Europe experienced low productivity growth alongside declining real interest rates. We use data for manufacturing firms in Spain between 1999 and 2012 to document a significant increase in the dispersion of the return to capital across firms, a stable dispersion of the return to labor, and a significant increase in productivity losses from capital misallocation over time. We develop a model with size-dependent financial frictions that is consistent with important aspects of firms' behavior in production and balance sheet data. We illustrate how the decline in the real interest rate, often attributed to the euro convergence process, leads to a significant decline in sectoral total factor productivity as capital inflows are misallocated toward firms that have higher net worth but are not necessarily more productive. We show that similar trends in dispersion and productivity losses are observed in Italy and Portugal but not in Germany, France, and Norway.
Handle: RePEc:nbr:nberwo:21453
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Two Influential Early Childhood Interventions on Health and Healthy Behaviors
Classification-JEL: C12; C93; I12; I13; J13; J24
Author-Name: Gabriella Conti
Author-Person: pco273
Author-Name: James J. Heckman
Author-Name: Rodrigo Pinto
Author-Person: ppi451
Note: CH EH LS
Number: 21454
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21454
File-URL: http://www.nber.org/papers/w21454.pdf
File-Format: application/pdf
Publication-Status: published as Gabriella Conti & James J. Heckman & Rodrigo Pinto, 2016. "The Effects of Two Influential Early Childhood Interventions on Health and Healthy Behaviour," Economic Journal, Royal Economic Society, vol. 126(596), pages 28-65, October.
Abstract: This paper examines the long-term impacts on health and healthy behaviors of two of the oldest and most widely cited U.S. early childhood interventions evaluated by the method of randomization with long-term follow-up: the Perry Preschool Project (PPP) and the Carolina Abecedarian Project (ABC). There are pronounced gender effects strongly favoring boys, although there are also effects for girls. Dynamic mediation analyses show a significant role played by improved childhood traits, above and beyond the effects of experimentally enhanced adult socioeconomic status. These results show the potential of early life interventions for promoting health.
Handle: RePEc:nbr:nberwo:21454
Template-Type: ReDIF-Paper 1.0
Title: Technology Entry in the Presence of Patent Thickets
Classification-JEL: K11; L20; O31; O34
Author-Name: Bronwyn H. Hall
Author-Person: pha54
Author-Name: Christian Helmers
Author-Person: phe349
Author-Name: Georg von Graevenitz
Author-Person: pvo46
Note: PR
Number: 21455
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21455
File-URL: http://www.nber.org/papers/w21455.pdf
File-Format: application/pdf
Publication-Status: published as Bronwyn H Hall & Georg von Graevenitz & Christian Helmers, 2021. "Technology Entry in the Presence of Patent Thickets," Oxford Economic Papers, Oxford University Press, vol. 73(2), pages 953-953.
Publication-Status: published as Bronwyn H Hall & Georg von Graevenitz & Christian Helmers, 2021. "Technology entry in the presence of patent thickets [Our divided patent system?]," Oxford Economic Papers, Oxford University Press, vol. 73(2), pages 903-926.
Abstract: We analyze the effect of patent thickets on entry into technology areas by firms in the UK. We present a model that describes incentives to enter technology areas characterized by varying technological opportunity, complexity, and the potential for hold-up due to the presence of patent thickets. We show empirically that our measure of patent thickets is associated with a reduction of first time patenting in a given technology area controlling for the level of technological complexity and opportunity. Technological areas characterized by more technological complexity and opportunity, in contrast, see more entry. Our evidence indicates that patent thickets raise entry costs, which leads to less entry into technologies regardless of a firm’s size.
Handle: RePEc:nbr:nberwo:21455
Template-Type: ReDIF-Paper 1.0
Title: External and Public Debt Crises
Classification-JEL: F3; H7; K1
Author-Name: Cristina Arellano
Author-Person: par171
Author-Name: Andrew Atkeson
Author-Person: pat52
Author-Name: Mark Wright
Author-Person: pwr6
Note: EFG IFM PE
Number: 21456
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21456
File-URL: http://www.nber.org/papers/w21456.pdf
File-Format: application/pdf
Publication-Status: published as External and Public Debt Crises, Cristina Arellano, Andrew Atkeson, Mark Wright. in NBER Macroeconomics Annual 2015, Volume 30, Eichenbaum and Parker. 2016
Abstract: The recent debt crises in Europe and the U.S. states feature similar sharp increases in spreads on government debt but also show important differences. In Europe, the crisis occurred at high government indebtedness levels and had spillovers to the private sector. In the United States, state government indebtedness was low, and the crisis had no spillovers to the private sector. We show theoretically and empirically that these different debt experiences result from the interplay between differences in the ability of governments to interfere in private external debt contracts and differences in the flexibility of state fiscal institutions.
Handle: RePEc:nbr:nberwo:21456
Template-Type: ReDIF-Paper 1.0
Title: Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement
Classification-JEL: C73; D72; D74
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Alexander Wolitzky
Note: POL
Number: 21457
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21457
File-URL: http://www.nber.org/papers/w21457.pdf
File-Format: application/pdf
Publication-Status: published as Daron Acemoglu & Alexander Wolitzky, 2020. "Sustaining Cooperation: Community Enforcement versus Specialized Enforcement," Journal of the European Economic Association, vol 18(2), pages 1078-1122.
Abstract: We introduce the possibility of direct punishment by specialized enforcers into a model of community enforcement. Specialized enforcers need to be given incentives to carry out costly punishments. Our main result shows that, when the specialized enforcement technology is sufficiently effective, cooperation is best sustained by a “single enforcer punishment equilibrium,” where any deviation by a regular agent is punished only once, and only by enforcers. In contrast, enforcers themselves are disciplined (at least in part) by community enforcement. The reason why there is no community enforcement following deviations by regular agent is that such actions, by reducing future cooperation, would decrease the amount of punishment that enforcers are willing to impose on deviators. Conversely, when the specialized enforcement technology is ineffective, optimal equilibria do punish deviations by regular agents with community enforcement. The model thus predicts that societies with more advanced enforcement technologies should rely on specialized enforcement, while less technologically advanced societies should rely on community enforcement. Our results hold both under perfect monitoring of actions and under various types of private monitoring.
Handle: RePEc:nbr:nberwo:21457
Template-Type: ReDIF-Paper 1.0
Title: House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data
Classification-JEL: E44; G21; L26; M13; R12; R31; R32
Author-Name: Sari Kerr
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Ramana Nanda
Author-Person: pna187
Note: CF EFG LS PR
Number: 21458
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21458
File-URL: http://www.nber.org/papers/w21458.pdf
File-Format: application/pdf
Publication-Status: published as Sari Pekkala Kerr & William R. Kerr & Ramana Nanda, 2022. "House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data," Journal of Monetary Economics, .
Abstract: During 1992-2007, house price growth is strongly correlated with local entrepreneurship. We show with Census Bureau data that most of this entry is related to construction and real estate; these entrants tend to be small and short-lived. Using a 1998 Texas reform that allowed home equity lending for the first time in the state, we isolate that entrepreneurship through the collateral channel tends to be longer-lived and more balanced across sectors. The collateral channel is a tenth or less of the entry associated with house price increases, driven by a small share of homeowners who are constrained without price growth.
Handle: RePEc:nbr:nberwo:21458
Template-Type: ReDIF-Paper 1.0
Title: From Local to Global: External Validity in a Fertility Natural Experiment
Classification-JEL: C18; C31; C9; F63; J13
Author-Name: Rajeev Dehejia
Author-Person: pde179
Author-Name: Cristian Pop-Eleches
Author-Person: ppo349
Author-Name: Cyrus Samii
Note: CH DEV LS
Number: 21459
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21459
File-URL: http://www.nber.org/papers/w21459.pdf
File-Format: application/pdf
Publication-Status: forthcoming in the Journal of Business & Economic Statistics.
Abstract: We study issues related to external validity for treatment effects using over 100 replications of the Angrist and Evans (1998) natural experiment on the effects of sibling sex composition on fertility and labor supply. The replications are based on census data from around the world going back to 1960. We decompose sources of error in predicting treatment effects in external contexts in terms of macro and micro sources of variation. In our empirical setting, we find that macro covariates dominate over micro covariates for reducing errors in predicting treatments, an issue that past studies of external validity have been unable to evaluate. We develop methods for two applications to evidence-based decision-making, including determining where to locate an experiment and whether policy-makers should commission new experiments or rely on an existing evidence base for making a policy decision.
Handle: RePEc:nbr:nberwo:21459
Template-Type: ReDIF-Paper 1.0
Title: Long Run Trends in Unemployment and Labor Force Participation in China
Classification-JEL: J64; O15; O53
Author-Name: Shuaizhang Feng
Author-Name: Yingyao Hu
Author-Person: phu177
Author-Name: Robert Moffitt
Author-Person: pmo48
Note: PE
Number: 21460
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21460
File-URL: http://www.nber.org/papers/w21460.pdf
File-Format: application/pdf
Publication-Status: published as Shuaizhang Feng & Yingyao Hu & Robert Moffitt, 2017. "Long run trends in unemployment and labor force participation in urban China," Journal of Comparative Economics, vol 45(2), pages 304-324.
Abstract: Unemployment rates in countries across the world are typically positively correlated with GDP. China is an unusual outlier from the pattern, with abnormally low, and suspiciously stable, unemployment rates according to its official statistics. This paper calculates, for the first time, China’s unemployment rate from 1988 to 2009 using a more reliable, nationally representative household survey in China. The unemployment rates we calculate differ dramatically from those supplied in official data and are much more consistent with what is known about China’s labor market and how it has changed over time in response to structural changes and other significant events. The rate averaged 3.9% in 1988-1995, when the labor market was highly regulated and dominated by state-owned enterprises, but rose sharply during the period of mass layoff from 1995- 2002, reaching an average of 10.9% in the subperiod from 2002 to 2009. We can also calculate labor force participation rates, which are not available in official statistics at all. We find that they declined throughout the whole period, particularly in 1995-2002 when the unemployment rate increased most significantly. We also report results for different demographic groups, different regions, and different cohorts.
Handle: RePEc:nbr:nberwo:21460
Template-Type: ReDIF-Paper 1.0
Title: Employee Financial Literacy and Retirement Plan Behavior: A Case Study
Classification-JEL: D91; J26; J32; J33
Author-Name: Robert Clark
Author-Name: Annamaria Lusardi
Author-Person: plu347
Author-Name: Olivia S. Mitchell
Author-Person: pmi73
Note: AG
Number: 21461
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21461
File-URL: http://www.nber.org/papers/w21461.pdf
File-Format: application/pdf
Publication-Status: published as Robert Clark & Annamaria Lusardi & Olivia S. Mitchell, 2017. "Employee Financial Literacy And Retirement Plan Behavior: A Case Study," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 248-259, January.
Abstract: This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the system’s defined contribution (DC) plan. We have appended to the administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are more financially literate than the general population; furthermore, the most financially savvy are also most likely to participate in and contribute the most to their plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. Finally, we examine changes in employee plan behavior a year after the financial literacy survey and compare it to the baseline. We find that employees who completed an educational module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey.
Handle: RePEc:nbr:nberwo:21461
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of Funding Costs Spillovers in the EURO-zone with Application to Systemic Risk
Classification-JEL: G1; G2; L0
Author-Name: Pietro Bonaldi
Author-Person: pbo475
Author-Name: Ali Hortaçsu
Author-Name: Jakub Kastl
Author-Person: pka793
Note: AP IFM IO
Number: 21462
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21462
File-URL: http://www.nber.org/papers/w21462.pdf
File-Format: application/pdf
Abstract: We propose a framework for estimation of spillovers between funding costs of individual banks. The estimation proceeds in three steps: First, using data from liquidity auctions of the European Central Bank, we estimate the funding costs in a given week for each individual bank. In the second step, we apply the adaptive elastic net (a LASSO type estimator) to this panel to estimate the financial network. Finally, using the estimated network we propose new measures of the systemicness and vulnerability of each bank. Our measure of systemicness has quite a natural interpretation, since it can roughly be viewed as the total externality a bank would impose on the funding costs of all other banks in the system. We estimate that most of the banks have fairly weak links and, therefore, if one were to suffer an adverse shock there would likely be a rather limited effect on the other ones. On the other hand, there are a few banks that are quite central: an increase in their funding costs would result in a very significant increase (up to 95 bp per 100 bp shock) in the funding costs of the other banks. Our vulnerability scores estimated using data from 2007-2008 are positively correlated with the probability of a bank being bailed out later.
Handle: RePEc:nbr:nberwo:21462
Template-Type: ReDIF-Paper 1.0
Title: Better Predictions, Better Allocations: Scientific Advances and Adaptation to Climate Change
Classification-JEL: D8; D83; E21; H41; H43; Q5; Q54
Author-Name: Mark C. Freeman
Author-Name: Ben Groom
Author-Person: pgr253
Author-Name: Richard Zeckhauser
Author-Person: pze7
Note: EEE PE
Number: 21463
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21463
File-URL: http://www.nber.org/papers/w21463.pdf
File-Format: application/pdf
Publication-Status: published as Mark C. Freeman & Ben Groom & Richard J. Zeckhauser, 2015. "Better predictions, better allocations: scientific advances and adaptation to climate change," Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences, vol 373(2055).
Abstract: The initial hope for climate science was that an improved understanding of what the future might bring would lead to appropriate public policies and effective international climate agreements. Even if that hope is not realized, as now seems likely, scientific advances leading to a more refined assessment of the uncertainties surrounding the future impacts of climate change would facilitate more appropriate adaptation measures. Such measures might involve shifting modes or locales of production, for example. This article focuses on two broader tools: consumption smoothing in anticipation of future losses, and physical adaptation measures to reduce damages. It shows that informative signals on climate-change effects lead to better decisions in the use of each tool.
Handle: RePEc:nbr:nberwo:21463
Template-Type: ReDIF-Paper 1.0
Title: The Ongoing Evolution of US Retail: A Format Tug-of-War
Classification-JEL: D4; L1; L81
Author-Name: Ali Hortaçsu
Author-Name: Chad Syverson
Author-Person: psy13
Note: IO PR
Number: 21464
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21464
File-URL: http://www.nber.org/papers/w21464.pdf
File-Format: application/pdf
Publication-Status: published as Ali Hortaçsu & Chad Syverson, 2015. "The Ongoing Evolution of US Retail: A Format Tug-of-War," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 89-112, Fall.
Abstract: We review major changes in the economics of the US retail sector over the past 15-20 years and discuss what these portend for the future evolution of retail. The sector has been shrinking in relative size over the long term, though this stopped around the onset of the Great Recession. Retail has experienced stronger-than-average productivity growth that has not been accompanied by commensurate wage growth. The main forces shaping the retail landscape in recent decades have been the expansions of two formats: e-commerce and warehouse clubs. While both formats have been the subject of study and discussion, we find evidence that warehouse clubs have had to this point a greater effect on retail than e-commerce has. This impact has been manifested in changes in the retail sector’s scale, concentration, dynamism, and urbanization. Thus while e-commerce will continue to expand and physical retail will further evolve in the coming years, the physical format is unlikely to meet its demise soon.
Handle: RePEc:nbr:nberwo:21464
Template-Type: ReDIF-Paper 1.0
Title: The Incidence of Taxes on Sugar-Sweetened Beverages: The Case of Berkeley, California
Classification-JEL: H2; H22; H71; I1; I12; I18
Author-Name: John Cawley
Author-Person: pca6
Author-Name: David Frisvold
Author-Person: pfr63
Note: CH EH LE PE
Number: 21465
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21465
File-URL: http://www.nber.org/papers/w21465.pdf
File-Format: application/pdf
Publication-Status: published as Cawley, John and David Frisvold. 2017. "The Incidence of Taxes on Sugar-Sweetened Beverages: The Case of Berkeley, California." Journal of Policy Analysis and Management, 36(2): 303-326.
Abstract: Obesity and diet-related chronic disease are increasing problems worldwide. In response, many governments have enacted or are considering taxes on energy-dense foods. Perhaps the most commonly-recommended policy is a tax on sugar-sweetened beverages (SSBs). This paper estimates the extent to which a tax on SSBs is passed through to consumers in the form of higher prices. We examine the first city-level tax on SSBs in the U.S., which was enacted by the voters of Berkeley, California in November, 2014. We collected the prices of various brands and sizes of SSBs and other beverages before and after the implementation of the tax from a near-census of convenience stores and supermarkets in Berkeley, California. We also collected prices from stores in a control city: San Francisco, where in a similar voter referendum failed despite majority support. Estimates from difference-in-differences models indicate that, across all brands and sizes of products examined, 43.1 percent (95 percent confidence interval: 27.7 percent - 58.4 percent) of the Berkeley tax was passed on to consumers. The estimates also are consistent with cross-border shopping. For each mile of distance between the store and the closest store selling untaxed SSBs, pass-through rose 33.3 percent for 2-liter bottles and 25.8 percent for 12-packs of 12-ounce cans.
Handle: RePEc:nbr:nberwo:21465
Template-Type: ReDIF-Paper 1.0
Title: When is Nonfundamentalness in VARs a Real Problem? An Application to News Shocks
Classification-JEL: E3
Author-Name: Paul Beaudry
Author-Person: pbe35
Author-Name: Patrick Fève
Author-Person: pfv1
Author-Name: Alain Guay
Author-Person: pgu8
Author-Name: Franck Portier
Author-Person: ppo12
Note: EFG
Number: 21466
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21466
File-URL: http://www.nber.org/papers/w21466.pdf
File-Format: application/pdf
Abstract: When the VAR representation of a times series has a non-fundamental representation, standard SVAR techniques cannot be used to exactly identify the effects of structural shocks. This problem is know to potentially arise when one of the structural shocks represents news about the future. However, as we shall show, in many case the non-fundamental representation of a time series may be very close to its fundamental representation implying that standard SVAR techniques may provide a very good approximation of the effects of structural shocks even when the non-fundamentalness is formally present. This leads to the question: When is non-fundamentalness a real problem? In this paper we derive and illustrate a diagnostic based on a $R^2$ which provides a simple means of detecting whether non-fundamentalness is likely to be a quantitatively important problem in an applied settings. We use the identification of technological news shocks in US data as our running example.
Handle: RePEc:nbr:nberwo:21466
Template-Type: ReDIF-Paper 1.0
Title: Contributions to Defined Contribution Pension Plans
Classification-JEL: D14; J32
Author-Name: James J. Choi
Note: AG PE
Number: 21467
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21467
File-URL: http://www.nber.org/papers/w21467.pdf
File-Format: application/pdf
Publication-Status: published as James J. Choi, 2015. "Contributions to Defined Contribution Pension Plans," Annual Review of Financial Economics, vol 7(1), pages 161-178.
Abstract: Defined contribution (DC) pensions are an increasingly important means of financing retirement consumption. Because individuals often have substantial discretion over how much is contributed to their DC pension, studying DC contribution choices provides general insights into the determinants of individual economic decision-making. The literature has found strong deviations from many predictions of classical frictionless optimizing models. I provide an overview of the U.S. DC pension system and review the literature on the effect of matching contributions, automatic enrollment, active choice deadlines, choice overload, financial literacy, peer effects, mental accounting, and personal experience on individuals’ DC contributions.
Handle: RePEc:nbr:nberwo:21467
Template-Type: ReDIF-Paper 1.0
Title: Testing Models of Social Learning on Networks: Evidence from a Lab Experiment in the Field
Classification-JEL: C91; C92; C93; D83
Author-Name: Arun G. Chandrasekhar
Author-Person: pch1351
Author-Name: Horacio Larreguy
Author-Person: pla1013
Author-Name: Juan Pablo Xandri
Note: DEV LS PR TWP
Number: 21468
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21468
File-URL: http://www.nber.org/papers/w21468.pdf
File-Format: application/pdf
Abstract: Agents often use noisy signals from their neighbors to update their beliefs about a state of the world. The effectiveness of social learning relies on the details of how agents aggregate information from others. There are two prominent models of information aggregation in networks: (1) Bayesian learning, where agents use Bayes' rule to assess the state of the world and (2) DeGroot learning, where agents instead consider a weighted average of their neighbors' previous period opinions or actions. Agents who engage in DeGroot learning often double-count information and may not converge in the long run. We conduct a lab experiment in the field with 665 subjects across 19 villages in Karnataka, India, designed to structurally test which model best describes social learning. Seven subjects were placed into a network with common knowledge of the network structure. Subjects attempted to learn the underlying (binary) state of the world, having received independent identically distributed signals in the first period. Thereafter, in each period, subjects made guesses about the state of the world, and these guesses were transmitted to their neighbors at the beginning of the following round. We structurally estimate a model of Bayesian learning, relaxing common knowledge of Bayesian rationality by allowing agents to have incomplete information as to whether others are Bayesian or DeGroot. Our estimates show that, despite the flexibility in modeling learning in these networks, agents are robustly best described by DeGroot-learning models wherein they take a simple majority of previous guesses in their neighborhood.
Handle: RePEc:nbr:nberwo:21468
Template-Type: ReDIF-Paper 1.0
Title: Risks to the Returns to Medical Innovation: The Case of Myriad Genetics
Classification-JEL: H51; H57; I18; O31; O32; O34
Author-Name: Jeffrey Clemens
Author-Name: Stan Veuger
Author-Person: pve299
Note: EH PR
Number: 21469
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21469
File-URL: http://www.nber.org/papers/w21469.pdf
File-Format: application/pdf
Publication-Status: published as Jeffrey Clemens & Stan Veuger, 2016. "RISKS TO THE RETURNS TO MEDICAL INNOVATION: THE CASE OF MYRIAD GENETICS," Contemporary Economic Policy, .
Abstract: We describe the broad range of uncertainties faced by the developers of medical technologies. Empirically, we estimate the asset market incidence of two realizations of uncertainties we classify as within-market policy risks. The events we analyze concern the intellectual property of Myriad Genetics, Inc., an American molecular diagnostics firm. In June 2013, the Supreme Court invalidated several of Myriad's intellectual property claims. Subsequently, the Center for Medicare and Medicaid Services (CMS) re-evaluated the reimbursements it pays for the services at issue in the Supreme Court's ruling. Each of these events moved Myriad's market capitalization by several hundred million dollars, or on the order of 20 percent. Myriad's exposure to the realization of these events reflected the concentration of its revenue streams among the affected services. We discuss the implications of the risks we analyze for the total volume of medical innovation and for its organization across firms.
Handle: RePEc:nbr:nberwo:21469
Template-Type: ReDIF-Paper 1.0
Title: Making Summer Matter: The Impact of Youth Employment on Academic Performance
Classification-JEL: I2; J24; J38
Author-Name: Amy Ellen Schwartz
Author-Person: psc654
Author-Name: Jacob Leos-Urbel
Author-Name: Joel McMurry
Author-Person: pmc329
Author-Name: Matthew Wiswall
Author-Person: pwi246
Note: CH ED
Number: 21470
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21470
File-URL: http://www.nber.org/papers/w21470.pdf
File-Format: application/pdf
Publication-Status: published as Amy Ellen Schwartz & Jacob Leos‐Urbel & Joel McMurry & Matthew Wiswall, 2021. "Making summer matter: The impact of youth employment on academic performance," Quantitative Economics, Econometric Society, vol. 12(2), pages 477-504, May.
Abstract: This paper examines New York City’s Summer Youth Employment Program (SYEP). SYEP provides jobs to youth ages 14-24, and due to high demand for summer jobs, allocates slots through a random lottery system. We match student-level data from the SYEP program with educational records from the NYC Department of Education and use the random lottery to estimate the effects of SYEP participation on a number of academic outcomes, including test taking and performance. We find that SYEP participation has positive impacts on student academic outcomes, and these effects are particularly large for students who participate in SYEP multiple times.
Handle: RePEc:nbr:nberwo:21470
Template-Type: ReDIF-Paper 1.0
Title: Distributional Effects of Monetary Policy in Emerging Market Economies
Classification-JEL: E25; E52; E58; F41
Author-Name: Eswar Prasad
Author-Person: ppr1
Author-Name: Boyang Zhang
Author-Person: pzh528
Note: IFM
Number: 21471
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21471
File-URL: http://www.nber.org/papers/w21471.pdf
File-Format: application/pdf
Abstract: We develop a two-sector, heterogeneous-agent model with incomplete financial markets to study the distributional effects and aggregate welfare implications of alternative monetary policy rules in emerging market economies. Relative to inflation targeting, exchange rate management benefits households in the tradable goods sector but in the long run these households are worse off due to higher consumption volatility. A fixed exchange rate reduces the welfare of these households and aggregate welfare when the economy is hit by positive shocks to nontradable goods productivity or foreign interest rates. Fiscal policy can more efficiently achieve similar short-run distributional objectives as exchange rate management.
Handle: RePEc:nbr:nberwo:21471
Template-Type: ReDIF-Paper 1.0
Title: Intrafirm Trade and Vertical Fragmentation in U.S. Multinational Corporations
Classification-JEL: F0
Author-Name: Natalia Ramondo
Author-Person: pra566
Author-Name: Veronica Rappoport
Author-Person: pra565
Author-Name: Kim J. Ruhl
Author-Person: pru22
Note: ITI
Number: 21472
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21472
File-URL: http://www.nber.org/papers/w21472.pdf
File-Format: application/pdf
Publication-Status: published as Ramondo, Natalia & Rappoport, Veronica & Ruhl, Kim J., 2016. "Intrafirm trade and vertical fragmentation in U.S. multinational corporations," Journal of International Economics, Elsevier, vol. 98(C), pages 51-59.
Abstract: Using firm-level data, we document two new facts regarding intrafirm trade and the activities of the foreign affiliates of U.S. multinational corporations. First, intrafirm trade is concentrated among a small number of large affiliates within large multinational corporations; the median affiliate ships nothing to the rest of the corporation. Second, we find that the input-output coefficient linking the parent’s and affiliate’s industries of operation—a characteristic commonly associated with production fragmentation— is not related to a corresponding intrafirm flow of goods.
Handle: RePEc:nbr:nberwo:21472
Template-Type: ReDIF-Paper 1.0
Title: The Growing Importance of Social Skills in the Labor Market
Classification-JEL: J24; J31
Author-Name: David J. Deming
Author-Person: pde497
Note: ED LS
Number: 21473
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21473
File-URL: http://www.nber.org/papers/w21473.pdf
File-Format: application/pdf
Publication-Status: published as David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market*," The Quarterly Journal of Economics, vol 132(4), pages 1593-1640.
Abstract: The labor market increasingly rewards social skills. Between 1980 and 2012, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Math-intensive but less social jobs - including many STEM occupations - shrank by 3.3 percentage points over the same period. Employment and wage growth was particularly strong for jobs requiring high levels of both math skill and social skill. To understand these patterns, I develop a model of team production where workers “trade tasks” to exploit their comparative advantage. In the model, social skills reduce coordination costs, allowing workers to specialize and work together more efficiently. The model generates predictions about sorting and the relative returns to skill across occupations, which I investigate using data from the NLSY79 and the NLSY97. Using a comparable set of skill measures and covariates across survey waves, I find that the labor market return to social skills was much greater in the 2000s than in the mid 1980s and 1990s.
Handle: RePEc:nbr:nberwo:21473
Template-Type: ReDIF-Paper 1.0
Title: Self Control and Commitment: Can Decreasing the Liquidity of a Savings Account Increase Deposits?
Classification-JEL: D03; D14; D91
Author-Name: John Beshears
Author-Name: James J. Choi
Author-Name: Christopher Harris
Author-Name: David Laibson
Author-Person: pla164
Author-Name: Brigitte C. Madrian
Author-Person: pma384
Author-Name: Jung Sakong
Note: AG PE
Number: 21474
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21474
File-URL: http://www.nber.org/papers/w21474.pdf
File-Format: application/pdf
Abstract: If individuals have self-control problems, they may take up commitment contracts that restrict their spending. We experimentally investigate how contract design affects the demand for commitment contracts. Each participant divides money between a liquid account, which permits unrestricted withdrawals, and a commitment account with withdrawal restrictions that are randomized across participants. When the two accounts pay the same interest rate, the most illiquid commitment account attracts more money than any of the other commitment accounts. We show theoretically that this pattern is consistent with the presence of sophisticated present-biased agents, who prefer more illiquid commitment accounts even if they are subject to uninsurable marginal utility shocks drawn from a broad class of distributions. When the commitment account pays a higher interest rate than the liquid account, the relationship between illiquidity and deposits is flat, suggesting that agents without present bias and/or naïve present-biased agents are also present in our sample.
Handle: RePEc:nbr:nberwo:21474
Template-Type: ReDIF-Paper 1.0
Title: Self-Signaling and Prosocial Behavior: a Cause Marketing Mobile Field Experiment
Classification-JEL: C7; C72; C9; C93; D03; D11; D12; D8; D81; M3; M30; M31
Author-Name: Jean-Pierre Dubé
Author-Name: Xueming Luo
Author-Name: Zheng Fang
Note: IO
Number: 21475
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21475
File-URL: http://www.nber.org/papers/w21475.pdf
File-Format: application/pdf
Publication-Status: published as Self-Signaling and Prosocial Behavior: A Cause Marketing Experiment Jean-Pierre Dubé, Xueming Luo, and Zheng Fang Marketing Science 201736:2 , 161-186
Abstract: We empirically test an information economics based theory of social preferences in which ego utility and self-signaling can potentially crowd out the effect of consumption utility on choices. Two large-scale, randomized controlled field experiments involving a consumer good and charitable donations are conducted using a subject pool of actual consumers. We find that bundling relatively large charitable donations with a consumer good can generate non-monotonic regions of demand. Consumers also self-report significantly lower ratings of “feeling good about themselves” when a large donation is bundled with a large price discount for the good. The combined evidence supports the self-signaling theory whereby price discounts crowd out a consumer’s self-inference of altruism from buying a good bundled with a charitable donation. Alternative theories of motivation crowding are unable to fit the non-monotonic moments in the data. A structural model of self-signaling is fit to the data to quantify the economic magnitude of ego utility and its role in driving consumer decisions.
Handle: RePEc:nbr:nberwo:21475
Template-Type: ReDIF-Paper 1.0
Title: The Equilibrium Real Funds Rate: Past, Present and Future
Classification-JEL: E32; E43; E52
Author-Name: James D. Hamilton
Author-Person: pha60
Author-Name: Ethan S. Harris
Author-Name: Jan Hatzius
Author-Name: Kenneth D. West
Author-Person: pwe16
Note: EFG ME
Number: 21476
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21476
File-URL: http://www.nber.org/papers/w21476.pdf
File-Format: application/pdf
Publication-Status: published as James D. Hamilton & Ethan S. Harris & Jan Hatzius & Kenneth D. West, 2016. "The Equilibrium Real Funds Rate: Past, Present, and Future," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(4), pages 660-707, November.
Abstract: We examine the behavior, determinants, and implications of the equilibrium level of the real federal funds rate, defined as the rate consistent with full employment and stable inflation in the medium term. We draw three main conclusions. First, the uncertainty around the equilibrium rate is large, and its relationship with trend GDP growth much more tenuous than widely believed. Our narrative and econometric analysis using cross-country data and going back to the 19th Century supports a wide range of plausible central estimates for the current level of the equilibrium rate, from a little over 0% to the pre-crisis consensus of 2%. Second, despite this uncertainty, we are skeptical of the “secular stagnation” view that the equilibrium rate will remain near zero for many years to come. The evidence for secular stagnation before the 2008 crisis is weak, and the disappointing post-2008 recovery is better explained by protracted but ultimately temporary headwinds from the housing supply overhang, household and bank deleveraging, and fiscal retrenchment. Once these headwinds had abated by early 2014, US growth did in fact accelerate to a pace well above potential. Third, the uncertainty around the equilibrium rate implies that a monetary policy rule with more inertia than implied by standard versions of the Taylor rule could be associated with smaller deviations of output and inflation from the Fed’s objectives. Our simulations using the Fed staff’s FRB/US model show that explicit recognition of this uncertainty results in a later but steeper normalization path for the funds rate compared with the median “dot” in the FOMC’s Summary of Economic Projections.
Handle: RePEc:nbr:nberwo:21476
Template-Type: ReDIF-Paper 1.0
Title: Parental Incentives and Early Childhood Achievement: A Field Experiment in Chicago Heights
Classification-JEL: I20; J01
Author-Name: Roland G. Fryer, Jr.
Author-Person: pfr43
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: John A. List
Author-Person: pli176
Note: CH ED LS
Number: 21477
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21477
File-URL: http://www.nber.org/papers/w21477.pdf
File-Format: application/pdf
Abstract: This article describes a randomized field experiment in which parents were provided financial incentives to engage in behaviors designed to increase early childhood cognitive and executive function skills through a parent academy. Parents were rewarded for attendance at early childhood sessions, completing homework assignments with their children, and for their child’s demonstration of mastery on interim assessments. This intervention had large and statistically significant positive impacts on both cognitive and non-cognitive test scores of Hispanics and Whites, but no impact on Blacks. These differential outcomes across races are not attributable to differences in observable characteristics (e.g. family size, mother’s age, mother’s education) or to the intensity of engagement with the program. Children with above median (pre-treatment) non cognitive scores accrue the most benefits from treatment.
Handle: RePEc:nbr:nberwo:21477
Template-Type: ReDIF-Paper 1.0
Title: Can Policy Facilitate Partial Retirement? Evidence from Germany
Classification-JEL: J26
Author-Name: Peter Berg
Author-Name: Mary K. Hamman
Author-Name: Matthew Piszczek
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: AG LS PE
Number: 21478
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21478
File-URL: http://www.nber.org/papers/w21478.pdf
File-Format: application/pdf
Abstract: In 1996, Germany introduced the Altersteilzeit (ATZ) law, which encouraged longer working lives through partial retirement incentives. Using matched pension system and establishment survey data, we estimate changes in part-time employment and retirement after ATZ. We find the policy induced growth in part-time work for men and extended men's expected duration of employment by 1.8 years. As the policy evolved to include an abrupt retirement option, the worklife gain for men fell to 1.2 years. Among women, part-time employment grew less and employment duration changed little initially but later declined by 0.2 years when abrupt retirement became available.
Handle: RePEc:nbr:nberwo:21478
Template-Type: ReDIF-Paper 1.0
Title: The Impact of R&D Subsidy on Innovation: a Study of New Zealand Firms
Classification-JEL: O31; O34; O38
Author-Name: Adam B. Jaffe
Author-Person: pja49
Author-Name: Trinh Le
Author-Person: ple325
Note: PR
Number: 21479
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21479
File-URL: http://www.nber.org/papers/w21479.pdf
File-Format: application/pdf
Publication-Status: published as Trinh Le & Adam B. Jaffe (2016) The impact of R&D subsidy on innovation: evidence from New Zealand firms, Economics of Innovation and New Technology, 26:5, 429-452, DOI: 10.1080/10438599.2016.1213504
Abstract: This paper examines the impact of government assistance through R&D grants on innovation output for firms in New Zealand. Using a large database that links administrative and tax data with survey data, we are able to control for large number of firm characteristics and thus minimise selection bias. We find that receipt of an R&D grant significantly increases the probability that a firm in the manufacturing and service sectors applies for a patent during 2005–2009, but no positive impact is found on the probability of applying for a trademark. Using only firms that participated in the Business Operation Survey, we find that receiving a grant almost doubles the probability that a firm introduces new goods and services to the world while its effects on process innovation and any product innovation are relatively much weaker. Moreover, there is little evidence that grant receipt has differential effects between small to medium (<50 employees) and larger firms. These findings are broadly in line with recent international evidence from Japan, Canada and Italy which found positive impacts of public R&D subsidy on patenting activity and the introduction of new products.
Handle: RePEc:nbr:nberwo:21479
Template-Type: ReDIF-Paper 1.0
Title: Correlated Beliefs, Returns, and Stock Market Volatility
Classification-JEL: D8; G12; G15; G17
Author-Name: Joel M. David
Author-Person: pda513
Author-Name: Ina Simonovska
Author-Person: psi395
Note: AP CF EFG IFM
Number: 21480
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21480
File-URL: http://www.nber.org/papers/w21480.pdf
File-Format: application/pdf
Publication-Status: published as Joel M. David & Ina Simonovska, 2015. "Correlated beliefs, returns, and stock market volatility," Journal of International Economics, vol ().
Publication-Status: published as Correlated Beliefs, Returns, and Stock Market Volatility, Joel M. David, Ina Simonovska. in NBER International Seminar on Macroeconomics 2015, Devereux, Giavazzi, and West. 2016
Abstract: Firm-level stock returns exhibit comovement above that in fundamentals, and the gap tends to be higher in developing countries. We investigate whether correlated beliefs among sophisticated, but imperfectly informed, traders can account for the patterns of return correlations across countries. We take a unique approach by turning to direct data on market participants’ information - namely, real-time firm-level earnings forecasts made by equity market analysts. The correlations of firm-level forecasts exceed those of fundamentals and are strongly related to return correlations across countries. A calibrated information-based model demonstrates that the correlation of beliefs implied by analyst forecasts leads to return correlations broadly in line with the data, both in levels and across countries - the correlation between predicted and actual is 0.63. Our findings have implications for market-wide volatility - the model-implied correlations alone can explain 44% of the cross-section of aggregate volatility. The results are robust to controlling for a number of alternative factors put forth by the existing literature.
Handle: RePEc:nbr:nberwo:21480
Template-Type: ReDIF-Paper 1.0
Title: When Incentives Backfire: Spillover Effects in Food Choice
Classification-JEL: C93; I1; J13
Author-Name: Manuela Angelucci
Author-Person: pan79
Author-Name: Silvia Prina
Author-Name: Heather Royer
Author-Person: pro423
Author-Name: Anya Samek
Author-Person: psa1068
Note: CH EH LS PE
Number: 21481
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21481
File-URL: http://www.nber.org/papers/w21481.pdf
File-Format: application/pdf
Publication-Status: published as Manuela Angelucci, Silvia Prina, Heather Royer, Anya Samek, “Incentives and Unintended Consequences: Spillover Effects in Food Choice” American Economic Journal: Economic Policy, Vol. 11, No. 4, November 2019 (pp. 66-95)
Abstract: How do peers influence the impact of incentives? Despite much work on incentives, little is known about the spillover effects of incentives. We investigate two mechanisms by which these effects can occur: through peers' actions and peers' incentives. In a field experiment on snack choice (grapes versus cookies), we randomize who receives incentives, the fraction of peers incentivized, and whether or not it can be observed that peers' choices are incentivized among over 1,500 children in the school lunchroom. Incentives increase the likelihood of initially choosing grapes. However, peer spillover effects can be large enough to undo these positive effects.
Handle: RePEc:nbr:nberwo:21481
Template-Type: ReDIF-Paper 1.0
Title: The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings
Classification-JEL: H0
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Matthew R. Levy
Author-Name: Colleen Flaherty Manchester
Author-Name: Aaron Sojourner
Author-Person: pso238
Author-Name: Joshua Tasoff
Note: AG PE
Number: 21482
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21482
File-URL: http://www.nber.org/papers/w21482.pdf
File-Format: application/pdf
Abstract: There is considerable variation in retirement savings within income, age, and educational categories. Using a broad sample of the U.S. population, we elicit time preference parameters from a quasi-hyperbolic discounting model, and perceptions of exponential growth. We find that present bias (PB), the tendency to value utility in the present over the future in a dynamically inconsistent way, and exponential-growth bias (EGB), the tendency to neglect compounding, are prevalent and distinct latent variables. PB, EGB, and the long-run discount factor are all highly significant in predicting retirement savings, even while controlling for measures of IQ and general financial literacy as well as a rich set of demographic controls. We find that lack of self-awareness of these biases has an additional independent negative impact on retirement savings. We assess potential threats to a causal interpretation of our results with a hypothetical choice experiment and several robustness exercises. Finally, we explore potential mechanisms for our findings. If the relationship we estimate is causal, our estimates suggest that eliminating PB and EGB would be associated with an increase in retirement savings of 12%, or as high as 70% using estimates that account for classical measurement error.
Handle: RePEc:nbr:nberwo:21482
Template-Type: ReDIF-Paper 1.0
Title: Family Spillovers of Long-Term Care Insurance
Classification-JEL: H5; H75; I13; J12; J14; J22
Author-Name: Norma B. Coe
Author-Person: pco329
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Courtney Harold Van Houtven
Author-Person: pva63
Note: AG CH EH LS PE
Number: 21483
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21483
File-URL: http://www.nber.org/papers/w21483.pdf
File-Format: application/pdf
Publication-Status: published as Norma Coe & Courtney Van Houtven & Gopi Goda, 2020. "Family Spillovers and Long-Term Care Insurance," Innovation in Aging, vol 4(Supplement_1), pages 686-686.
Abstract: We examine how long-term care insurance (LTCI) affects family outcomes expected to be sensitive to LTCI, including utilization of informal care and spillover effects on children. An instrumental variables approach allows us to address the endogeneity of LTCI coverage. LTCI coverage induces less informal caregiving, suggesting the presence of intra-family moral hazard. We also find that children are less likely to co-reside or live nearby parents with LTCI and more likely to work full-time, suggesting that significant economic gains from private LTCI could accrue to the younger generation.
Handle: RePEc:nbr:nberwo:21483
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Social Security Income on Cognitive Function at Older Ages
Classification-JEL: H55; I12
Author-Name: Padmaja Ayyagari
Author-Person: pay52
Author-Name: David Frisvold
Author-Person: pfr63
Note: AG EH PE
Number: 21484
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21484
File-URL: http://www.nber.org/papers/w21484.pdf
File-Format: application/pdf
Publication-Status: published as Padmaja Ayyagari & David Frisvold, 2016. "The Impact of Social Security Income on Cognitive Function at Older Ages," American Journal of Health Economics, vol 2(4), pages 463-488.
Abstract: Prior literature has documented a positive association between income and cognitive function at older ages, however, the extent to which this association represents causal effects is unknown. In this study, we use an exogenous change in Social Security income due to amendments to the Social Security Act in the 1970s to identify the causal impact of Social Security income on cognitive function of elderly individuals. We find that higher benefits led to significant improvements in cognitive function and that these improvements in cognition were clinically meaningful. Our results suggest that interventions even at advanced ages can slow the rate of decline in cognitive function.
Handle: RePEc:nbr:nberwo:21484
Template-Type: ReDIF-Paper 1.0
Title: Panel Data Hedonics: Rosen's First Stage as a "Sufficient Statistic"
Classification-JEL: D46; D61; H4; Q51; R3
Author-Name: H. Spencer Banzhaf
Author-Person: pba328
Note: EEE PE
Number: 21485
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21485
File-URL: http://www.nber.org/papers/w21485.pdf
File-Format: application/pdf
Publication-Status: published as H. Spencer Banzhaf, 2020. "PANEL DATA HEDONICS: ROSEN'S FIRST STAGE AS A “SUFFICIENT STATISTIC”," International Economic Review, vol 61(2), pages 973-1000.
Abstract: Traditional cross-sectional estimates of hedonic price functions can recover marginal willingness to pay for characteristics, but face endogeneity problems for estimating non-marginal welfare measures. I show that when panel data on household demands are available, one can construct a second-order approximation to non-marginal welfare measures using only the first-stage marginal prices. With repeated cross sections of product prices, the measure can be set identified or, under a single-crossing restriction, point identified. Bounds also can be constructed when there are mobility costs. Finally, a variant remains valid when individual preferences shift over time.
Handle: RePEc:nbr:nberwo:21485
Template-Type: ReDIF-Paper 1.0
Title: Leveraged Bubbles
Classification-JEL: C14; C32; E44; E51; G01; N10; N20
Author-Name: Òscar Jordà
Author-Person: pjo46
Author-Name: Moritz Schularick
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: AP DAE EFG IFM ME
Number: 21486
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21486
File-URL: http://www.nber.org/papers/w21486.pdf
File-Format: application/pdf
Publication-Status: published as Òscar Jordà & Moritz Schularick & Alan M. Taylor, 2015. "Leveraged bubbles," Journal of Monetary Economics, vol 76(), pages S1-S20.
Abstract: What risks do asset price bubbles pose for the economy? This paper studies bubbles in housing and equity markets in 17 countries over the past 140 years. History shows that not all bubbles are alike. Some have enormous costs for the economy, while others blow over. We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit booms, asset price bubbles increase financial crisis risks; upon collapse they tend to be followed by deeper recessions and slower recoveries. Credit-financed housing price bubbles have emerged as a particularly dangerous phenomenon.
Handle: RePEc:nbr:nberwo:21486
Template-Type: ReDIF-Paper 1.0
Title: Labor-Force Heterogeneity and Asset Prices: the Importance of Skilled Labor
Classification-JEL: E13; E22; E23; E24; E44; G12
Author-Name: Frederico Belo
Author-Name: Xiaoji Lin
Author-Person: pli453
Author-Name: Jun Li
Author-Name: Xiaofei Zhao
Note: AP
Number: 21487
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21487
File-URL: http://www.nber.org/papers/w21487.pdf
File-Format: application/pdf
Publication-Status: published as Frederico Belo & Jun Li & Xiaoji Lin & Xiaofei Zhao, 2017. "Labor-Force Heterogeneity and Asset Prices: The Importance of Skilled Labor," The Review of Financial Studies, vol 30(10), pages 3669-3709.
Abstract: We introduce labor-force heterogeneity in a neoclassical investment model. In the baseline model, we highlight the fact that labor adjustment costs are higher for high skilled workers than for low skilled workers. The model predicts that the negative hiring-expected return relation should be steeper in industries that rely more on high skilled workers because firm's hiring responds less elastically to changes in the discount rate when labor adjustment costs are higher. In an extended version of the model we show that the previous prediction also holds in the presence of additional sources of labor-force heterogeneity such as higher wage rigidity of high skilled workers. Empirically, we document that the negative hiring-expected return relation is between 1.7 and 3.2 times larger in industries that rely more on high skilled workers, than in industries that rely more on low skilled workers. This result is robust: it holds in U.S data, in international data, across sub-samples, and in both firm-level and portfolio-level analyses. Taken together, our results show that labor-force heterogeneity affects asset prices in financial markets.
Handle: RePEc:nbr:nberwo:21487
Template-Type: ReDIF-Paper 1.0
Title: Multilateral Trade Bargaining: A First Look at the GATT Bargaining Records
Classification-JEL: C78; D02; F13
Author-Name: Kyle Bagwell
Author-Person: pba409
Author-Name: Robert W. Staiger
Author-Person: pst85
Author-Name: Ali Yurukoglu
Author-Person: pyu85
Note: IO ITI
Number: 21488
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21488
File-URL: http://www.nber.org/papers/w21488.pdf
File-Format: application/pdf
Publication-Status: published as Kyle Bagwell & Robert W. Staiger & Ali Yurukoglu, 2020. "Multilateral Trade Bargaining: A First Look at the GATT Bargaining Records," American Economic Journal: Applied Economics, vol 12(3), pages 72-105.
Abstract: This paper empirically examines recently declassified data from the GATT/WTO on tariff bargaining. We document eight stylized facts about these interconnected high-stakes international negotiations. We use detailed product-level offer and counteroffer data to examine several questions about trade policy, including whether preferential tariffs were a stumbling block towards liberalization, and whether the relaxation of bilateral reciprocity to multilateral reciprocity aided liberalization. We organize the empirical analysis around a theoretical model of multi-party trade negotiations motivated by the terms-of-trade theory and respecting the institutional features of most-favored-nation status and reciprocity.
Handle: RePEc:nbr:nberwo:21488
Template-Type: ReDIF-Paper 1.0
Title: Conflicts of Interest and the Realtor Commission Puzzle
Classification-JEL: D4; L1; L8; R2; R3
Author-Name: Panle Jia Barwick
Author-Person: pji114
Author-Name: Parag A. Pathak
Author-Name: Maisy Wong
Author-Person: pwo209
Note: IO LE
Number: 21489
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21489
File-URL: http://www.nber.org/papers/w21489.pdf
File-Format: application/pdf
Publication-Status: published as Barwick, Panle Jia, Parag A. Pathak, and Maisy Wong. 2017. "Conflicts of Interest and Steering in Residential Brokerage." American Economic Journal: Applied Economics, 9 (3): 191-222. DOI: 10.1257/app.20160214
Abstract: This paper documents uniformity in real estate commission rates across markets and time using a dataset on realtor commissions for 653,475 residential listings in eastern Massachusetts from 1998-2011. Newly established real estate brokerage offices charging low commissions grow more slowly than comparable entrants with higher commissions. Properties listed with lower commission rates experience less favorable transaction outcomes: they are 5% less likely to sell and take 12% longer to sell. These adverse outcomes reflect decreased willingness of buyers' agents to intermediate low commission properties (steering) rather than heterogeneous seller preferences or reduced effort of listing agents. While all agents and offices prefer properties with high commissions, firms and agents with large market shares purchase a disproportionately small fraction of low commission properties. The negative outcomes for low commissions provide empirical support for regulatory concerns that steering reinforces the uniformity of commissions.
Handle: RePEc:nbr:nberwo:21489
Template-Type: ReDIF-Paper 1.0
Title: Scraped Data and Sticky Prices
Classification-JEL: E30; E60
Author-Name: Alberto Cavallo
Author-Person: pca605
Note: IFM ME
Number: 21490
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21490
File-URL: http://www.nber.org/papers/w21490.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Cavallo, 2018. "Scraped Data and Sticky Prices," The Review of Economics and Statistics, vol 100(1), pages 105-119.
Abstract: This paper introduces Scraped Data as a new source of micro-price information to measure price stickiness. Scraped data, collected from online retailers, have no time averaging or imputed prices that can affect pricing statistics in traditional sources of micro-price data. Using daily prices of 80 thousand products collected in five countries with varying degrees of inflation, including the US, I find that relative to previous findings in the literature, scraped online prices tend to be stickier, with fewer price changes close to zero percent, and with hump-shaped hazard functions that initially increase over time. I show that the sampling characteristics of the data, which minimize measurement biases, explain most of the differences with the literature. Using the cross-section of countries, I also show that only the relative frequency of price increases over decreases correlates with inflation.
Handle: RePEc:nbr:nberwo:21490
Template-Type: ReDIF-Paper 1.0
Title: The Pricing of Short-Term market Risk: Evidence from Weekly Options
Classification-JEL: C01; C14; C52; C58; G12; G13; G17; G32
Author-Name: Torben G. Andersen
Author-Name: Nicola Fusari
Author-Name: Viktor Todorov
Note: AP
Number: 21491
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21491
File-URL: http://www.nber.org/papers/w21491.pdf
File-Format: application/pdf
Publication-Status: published as ANDERSEN, T. G., FUSARI, N. and TODOROV, V. (2017), Short‐Term Market Risks Implied by Weekly Options. The Journal of Finance, 72: 1335-1386. doi:10.1111/jofi.12486
Abstract: We study short-term market risks implied by weekly S&P 500 index options. The introduction of weekly options has dramatically shifted the maturity profile of traded options over the last five years, with a substantial proportion now having expiry within one week. Economically, this reflects a desire among investors for actively managing their exposure to very short-term risks. Such short-dated options provide an easy and direct way to study market volatility and jump risks. Unlike longer-dated options, they are largely insensitive to the risk of intertemporal shifts in the economic environment, i.e., changes in the investment opportunity set. Adopting a novel general semi-nonparametric approach, we uncover variation in the shape of the negative market jump tail risk which is not spanned by market volatility. Incidents of such tail shape shifts coincide with serious mispricing of standard parametric models for longer-dated options. As such, our approach allows for easy identification of periods of heightened concerns about negative tail events on the market that are not always "signaled" by the level of market volatility and elude standard asset pricing models.
Handle: RePEc:nbr:nberwo:21491
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Rules and Discretion in a World Economy
Classification-JEL: D02; D82; E6; H1; P16
Author-Name: Marina Halac
Author-Person: pha1103
Author-Name: Pierre Yared
Author-Person: pya107
Note: EFG POL
Number: 21492
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21492
File-URL: http://www.nber.org/papers/w21492.pdf
File-Format: application/pdf
Publication-Status: published as Marina Halac & Pierre Yared, 2018. "Fiscal Rules and Discretion in a World Economy," American Economic Review, vol 108(8), pages 2305-2334.
Abstract: Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules – chosen jointly by a group of countries – to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates. Surplus limits enhance welfare, and increased savings by some countries or outside economies can hurt the rest.
Handle: RePEc:nbr:nberwo:21492
Template-Type: ReDIF-Paper 1.0
Title: Equilibrium Price Dispersion Across and Within Stores
Classification-JEL: D43
Author-Name: Guido Menzio
Author-Person: pme246
Author-Name: Nicholas Trachter
Author-Person: ptr184
Note: EFG IO
Number: 21493
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21493
File-URL: http://www.nber.org/papers/w21493.pdf
File-Format: application/pdf
Publication-Status: published as Guido Menzio & Nicholas Trachter, 2017. "Equilibrium price dispersion across and within stores," Review of Economic Dynamics, .
Abstract: We develop a search-theoretic model of the product market that generates price dispersion across and within stores. Buyers differ with respect to their ability to shop around, both at different stores and at different times. The fact that some buyers can shop from only one seller while others can shop from multiple sellers causes price dispersion across stores. The fact that the buyers who can shop from multiple sellers are more likely to be able to shop at inconvenient times (e.g., on Monday morning) causes price dispersion within stores. Specifically, it causes sellers to post different prices for the same good at different times in order to discriminate between different types of buyers.
Handle: RePEc:nbr:nberwo:21493
Template-Type: ReDIF-Paper 1.0
Title: Double Liability at Early American Banks
Classification-JEL: G21; K2; N21
Author-Name: Howard Bodenhorn
Author-Person: pbo547
Note: CF DAE LE
Number: 21494
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21494
File-URL: http://www.nber.org/papers/w21494.pdf
File-Format: application/pdf
Abstract: Limited liability is a defining feature of the modern corporation, but it was not always so. By the early 1850s about one-half of all states imposed double liability on bank shareholders. This paper shows that double liability was adopted as deposits increased relative to banknotes and in conjunction with free banking; that double liability was associated with more concentrated bank shareholdings, but had little effect on share liquidity; that it increased the price of bank debt; and, that a regulatory change toward greater shareholder liability increased bank leverage ratios. In forcing bank shareholders to have more “skin in the game,” double liability changed bank investor, creditor and managerial behaviors.
Handle: RePEc:nbr:nberwo:21494
Template-Type: ReDIF-Paper 1.0
Title: Efficiency and Information Transmission in Bilateral Trading
Classification-JEL: D82; D83; G14
Author-Name: Robert Shimer
Author-Person: psh9
Author-Name: Iván Werning
Author-Person: pwe141
Note: AP CF EFG
Number: 21495
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21495
File-URL: http://www.nber.org/papers/w21495.pdf
File-Format: application/pdf
Publication-Status: published as Robert Shimer & Iván Werning, 2019. "Efficiency and Information Transmission in Bilateral Trading," Review of Economic Dynamics, .
Abstract: We study pairwise trading mechanisms in the presence of private information and limited commitment, whereby either trader can walk away from a proposed trade when he learns the trading price. We show that when one trader's information is relevant for the other trader's value of the asset, optimal trading arrangements may necessarily conceal the traders' information. While limited commitment itself may not be costly, it shapes how prices transmit information.
Handle: RePEc:nbr:nberwo:21495
Template-Type: ReDIF-Paper 1.0
Title: Peer-to-Peer Markets
Classification-JEL: D02; D47; L86
Author-Name: Liran Einav
Author-Person: pei64
Author-Name: Chiara Farronato
Author-Name: Jonathan Levin
Author-Person: ple318
Note: IO LE LS PR
Number: 21496
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21496
File-URL: http://www.nber.org/papers/w21496.pdf
File-Format: application/pdf
Publication-Status: published as Liran Einav & Chiara Farronato & Jonathan Levin, 2016. "Peer-to-Peer Markets," Annual Review of Economics, vol 8(1), pages 615-635.
Abstract: Peer-to-peer markets such as eBay, Uber, and Airbnb allow small suppliers to compete with traditional providers of goods or services. We view the primary function of these markets as making it easy for buyers to find sellers and engage in convenient, trustworthy transactions. We discuss elements of market design that make this possible, including search and matching algorithms, pricing, and reputation systems. We then develop a simple model of how these markets enable entry by small or flexible suppliers, and the resulting impact on existing firms. Finally, we consider the regulation of peer-to-peer markets, and the economic arguments for different approaches to licensing and certification, data, and employment regulation.
Handle: RePEc:nbr:nberwo:21496
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Hospital/Physician Integration on Hospital Choice
Classification-JEL: I11
Author-Name: Laurence C. Baker
Author-Name: M. Kate Bundorf
Author-Name: Daniel P. Kessler
Note: EH
Number: 21497
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21497
File-URL: http://www.nber.org/papers/w21497.pdf
File-Format: application/pdf
Publication-Status: published as Laurence C. Baker & M. Kate Bundorf & Daniel P. Kessler, 2016. "The Effect of Hospital/Physician Integration on Hospital Choice," Journal of Health Economics, .
Abstract: In this paper, we estimate how hospital ownership of physicians’ practices affects their patients’ hospital choices. We match data on the hospital admissions of Medicare beneficiaries, including the identity of their admitting physician, with data on the identity of the owner of the admitting physician’s practice. We find that a hospital's ownership of an admitting physician’s practice dramatically increases the probability that the physician's patients will choose the owning hospital. We also find that patients are more likely to choose a high-cost, low-quality hospital when their admitting physician’s practice is owned by that hospital.
Handle: RePEc:nbr:nberwo:21497
Template-Type: ReDIF-Paper 1.0
Title: Diversification through Trade
Classification-JEL: E32; F4; F41; F44; F6; F62
Author-Name: Francesco Caselli
Author-Person: pca205
Author-Name: Miklós Koren
Author-Name: Milan Lisicky
Author-Person: pli1013
Author-Name: Silvana Tenreyro
Author-Person: pte171
Note: EFG IFM ITI
Number: 21498
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21498
File-URL: http://www.nber.org/papers/w21498.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Caselli & Miklós Koren & Milan Lisicky & Silvana Tenreyro, 2020. "Diversification Through Trade*," The Quarterly Journal of Economics, vol 135(1), pages 449-502.
Abstract: A widely held view is that openness to international trade leads to higher GDP volatility, as trade increases specialization and hence exposure to sector-specific shocks. We revisit the common wisdom and argue that when country-wide shocks are important, openness to international trade can lower GDP volatility by reducing exposure to domestic shocks and allowing countries to diversify the sources of demand and supply across countries. Using a quantitative model of trade, we assess the importance of the two mechanisms (sectoral specialization and cross-country diversification) and provide a new answer to the question of whether and how international trade affects economic volatility.
Handle: RePEc:nbr:nberwo:21498
Template-Type: ReDIF-Paper 1.0
Title: Is the FDA Too Conservative or Too Aggressive?: A Bayesian Decision Analysis of Clinical Trial Design
Classification-JEL: C11; C12; C44; I10; I12; I13; I18
Author-Name: Vahid Montazerhodjat
Author-Name: Andrew W. Lo
Author-Person: plo171
Note: EH
Number: 21499
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21499
File-URL: http://www.nber.org/papers/w21499.pdf
File-Format: application/pdf
Publication-Status: published as Isakov, Leah & Lo, Andrew W. & Montazerhodjat, Vahid, 2019. "Is the FDA too conservative or too aggressive?: A Bayesian decision analysis of clinical trial design," Journal of Econometrics, Elsevier, vol. 211(1), pages 117-136.
Abstract: Implicit in the drug-approval process is a trade-off between Type I and Type II error. We explore the application of Bayesian decision analysis (BDA) to minimize the expected cost of drug approval, where relative costs are calibrated using U.S. Burden of Disease Study 2010 data. The results for conventional fixed-sample randomized clinical-trial designs suggest that for terminal illnesses with no existing therapies such as pancreatic cancer, the standard threshold of 2.5% is substantially more conservative than the BDA-optimal threshold of 27.9%. However, for relatively less deadly conditions such as prostate cancer, 2.5% is more risk-tolerant or aggressive than the BDA-optimal threshold of 1.2%. We compute BDA-optimal sizes for 25 of the most lethal diseases and show how a BDA-informed approval process can incorporate all stakeholders’ views in a systematic, transparent, internally consistent, and repeatable manner.
Handle: RePEc:nbr:nberwo:21499
Template-Type: ReDIF-Paper 1.0
Title: Identification in Differentiated Products Markets
Classification-JEL: C3; C35; C36; C52; C57; D12; D22; D43; L13
Author-Name: Steven T. Berry
Author-Person: pbe18
Author-Name: Philip Haile
Author-Person: pha381
Note: ED EEE EH IO ITI
Number: 21500
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21500
File-URL: http://www.nber.org/papers/w21500.pdf
File-Format: application/pdf
Publication-Status: published as Steven Berry & Philip Haile, 2016. "Identification in Differentiated Products Markets," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 27-52, October.
Abstract: Empirical models of demand for–and, often, supply of–differentiated products are widely used in practice, typically employing parametric functional forms and distributions of consumer heterogeneity. We review some recent work studying identification in a broad class of such models. This work shows that parametric functional forms and distributional assumptions are not essential for identification. Rather, identification relies primarily on the standard requirement that instruments be available for the endogenous variables–here, typically, prices and quantities. We discuss the kinds of instruments needed for identification and how the reliance on instruments can be reduced by nonparametric functional form restrictions or better data. We also discuss results on discrimination between alternative models of oligopoly competition.
Handle: RePEc:nbr:nberwo:21500
Template-Type: ReDIF-Paper 1.0
Title: Health Care Spending: Historical Trends and New Directions
Classification-JEL: I1; I11; I12; I13; I18
Author-Name: Alice Chen
Author-Name: Dana Goldman
Author-Person: pgo681
Note: EH
Number: 21501
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21501
File-URL: http://www.nber.org/papers/w21501.pdf
File-Format: application/pdf
Publication-Status: published as Alice Chen & Dana Goldman, 2016. "Health Care Spending: Historical Trends and New Directions," Annual Review of Economics, vol 8(1).
Abstract: Over the last five decades, broad changes in the US health care system have dramatically influenced growth in health care expenditures. These structural changes have also influenced the trajectory of the health economics research. This paper reviews some of the seminal health economics papers (measured by citations) and identifies the salient factors driving the growth of medical expenditures. We find that the research identified – and was strongly influenced by – four eras of expenditure growth: (1) coverage expansion; (2) experimentation with financial incentives; (3) the managed care backlash; and (4) a golden era of declining expenditure growth. We conclude by discussing some themes from this research suggesting optimism that, going forward, we can curb excess expenditure growth above GDP growth without harming population health.
Handle: RePEc:nbr:nberwo:21501
Template-Type: ReDIF-Paper 1.0
Title: Tri-Party Repo Pricing
Classification-JEL: G1; G12
Author-Name: Grace Xing Hu
Author-Name: Jun Pan
Author-Person: ppa1004
Author-Name: Jiang Wang
Note: AP
Number: 21502
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21502
File-URL: http://www.nber.org/papers/w21502.pdf
File-Format: application/pdf
Publication-Status: published as Grace Xing Hu & Jun Pan & Jiang Wang, 2021. "Tri-Party Repo Pricing," Journal of Financial and Quantitative Analysis, vol 56(1), pages 337-371.
Abstract: In this paper, we examine the pricing determinants in the systemically important tri-party repo market. Taking advantage of the recently available N-MFP reports filed by money market funds, we construct a novel dataset that contains tri-party repo transactions between money market funds and dealer banks. We find a large cross-sectional heterogeneity in repo pricing, reflected most significantly in the haircuts of repos backed by equity and corporate bonds. Surprisingly, it is the fund families, not bank dealers, who are the dominant factor in determining the pricing. Moreover, the repo market exhibits significant segmentation, with fund families adopting three different pricing schemes: counter-party sensitive, counter-party and collateral sensitive, and uniform. Most fund families use uniform haircuts by fixing a constant haircut, which itself varies across families, for all repos within each asset class, regardless of the quality of collateral or counter-party. Investigating further on the lending/borrowing relationship between fund families and dealers, we find that, when faced with such a rich pricing pattern, dealers do not shop around for a better haircut and are inclined to maintain a stable relationship with their lenders. Finally, for repos backed by Treasury securities, there is little variation in both haircuts and spreads, regardless of the fund family.
Handle: RePEc:nbr:nberwo:21502
Template-Type: ReDIF-Paper 1.0
Title: The Dawn of an ‘Age of Deposits’ in the United States
Classification-JEL: E21; G21; N21
Author-Name: Matthew Jaremski
Author-Person: pja349
Author-Name: Peter L. Rousseau
Author-Person: pro64
Note: DAE
Number: 21503
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21503
File-URL: http://www.nber.org/papers/w21503.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Jaremski & Peter L. Rousseau, 2017. "The Dawn of an ‘Age of Deposits’ in the United States," Journal of Banking & Finance, .
Abstract: U.S. Bank deposits by individuals grew from 4% of GDP at the time of the National Banking Acts in 1863-64 to 23% by the time of the Federal Reserve’s founding. A comprehensive collection of bank- level data shows that most gains occurred immediately after the Acts, Specie Resumption in 1879, and the Election of 1896, and occurred across banks of all ages and types. Checking accounts, clearinghouses, rising incomes, and urbanization contributed to the increasing preference for deposits, but greater confidence in banks also seems to have been central, with highly capitalized banks from earlier entry cohorts seeing the largest gains.
Handle: RePEc:nbr:nberwo:21503
Template-Type: ReDIF-Paper 1.0
Title: The Gains from Input Trade in Firm-Based Models of Importing
Classification-JEL: D21; D22; F11; F12; F14; F62
Author-Name: Joaquin Blaum
Author-Person: pbl132
Author-Name: Claire LeLarge
Author-Person: ple907
Author-Name: Michael Peters
Note: ITI
Number: 21504
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21504
File-URL: http://www.nber.org/papers/w21504.pdf
File-Format: application/pdf
Abstract: Trade in intermediate inputs allows firms to lower their costs of production by using better, cheaper, or novel inputs from abroad. Quantifying the aggregate impact of input trade, however, is challenging. As importing firms differ markedly in how much they buy in foreign markets, results based on aggregate models do not apply. We develop a methodology to quantify the gains from input trade for a class of firm-based models of importing. We derive a sufficiency result: the change in consumer prices induced by input trade is fully determined from the joint distribution of value added and domestic expenditure shares in material spending across firms. We provide a simple formula that can be readily evaluated given the micro-data. In an application to French data, we find that consumer prices of manufacturing products would be 27% higher in the absence of input trade.
Handle: RePEc:nbr:nberwo:21504
Template-Type: ReDIF-Paper 1.0
Title: Business Practices in Small Firms in Developing Countries
Classification-JEL: L26; M20; O12
Author-Name: David McKenzie
Author-Person: pmc29
Author-Name: Christopher Woodruff
Author-Person: pwo165
Note: DEV PR
Number: 21505
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21505
File-URL: http://www.nber.org/papers/w21505.pdf
File-Format: application/pdf
Publication-Status: published as David McKenzie & Christopher Woodruff, 2017. "Business Practices in Small Firms in Developing Countries," Management Science, vol 63(9), pages 2967-2981.
Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? We develop 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria and Sri Lanka. We show that variation in business practices explains as much of the variation in outcomes – sales, profits and labor productivity and TFP – in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The effect of business practices is robust to including numerous measures of the owner’s human capital. We find that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices. Competition has less robust effects.
Handle: RePEc:nbr:nberwo:21505
Template-Type: ReDIF-Paper 1.0
Title: Islam, Inequality and Pre-Industrial Comparative Development
Classification-JEL: F10; O1; Z0; Z12
Author-Name: Stelios Michalopoulos
Author-Person: pmi314
Author-Name: Alireza Naghavi
Author-Person: pna108
Author-Name: Giovanni Prarolo
Author-Person: ppr102
Note: DEV EFG POL
Number: 21506
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21506
File-URL: http://www.nber.org/papers/w21506.pdf
File-Format: application/pdf
Publication-Status: published as Michalopoulos, Stelios & Naghavi, Alireza & Prarolo, Giovanni, 2016. "Islam, inequality and pre-industrial comparative development," Journal of Development Economics, Elsevier, vol. 120(C), pages 86-98.
Abstract: This study explores the interaction between trade and geography in shaping the Islamic economic doctrine. We build a model where an unequal distribution of land quality in presence of trade opportunities conferred differential gains from trade across regions, fostering predatory behavior by groups residing in the poorly endowed territories. We show that in such an environment it was mutually beneficial to institute an economic system of income redistribution featuring income transfers in return for safe passage to conduct trade. A commitment problem, however, rendered a merely static redistribution scheme unsustainable. Islam developed a set of dynamic redistributive rules that were self-enforcing, in regions where arid lands dominated the landscape. While such principles fostered the expansion of trade within the Muslim world they limited the accumulation of wealth by the commercial elite, shaping the economic trajectory of Islamic lands in the pre-industrial era.
Handle: RePEc:nbr:nberwo:21506
Template-Type: ReDIF-Paper 1.0
Title: Implementing Structural Reforms in Abenomics: How to Reduce the Cost of Doing Business in Japan
Classification-JEL: G38; H25; K22; L51; O43; O53; P16
Author-Name: Jamal I. Haidar
Author-Person: pha650
Author-Name: Takeo Hoshi
Author-Person: pho107
Note: CF POL
Number: 21507
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21507
File-URL: http://www.nber.org/papers/w21507.pdf
File-Format: application/pdf
Abstract: Improving the environment for business is an important part of the growth strategy of Abenomics. As the goal for this effort, the Abe Administration aims to improve Japan’s rank in the World Bank Doing Business Ranking to one of the top three among OECD. This paper clarifies what it takes for Japan to achieve the goal. By looking at details of the World Bank Doing Business ranking, we identify various reforms that Japan could implement to improve the ranking. Then, we classify the reforms into six groups depending on whether the reform requires legal changes and on political resistance that the reform is likely to face. By just doing the reforms that do not require legal changes and are not likely to face strong political opposition, Japan can improve the ranking to 13th. To be in the top 3, Japan would need to implement all the reforms that are not likely to face strong political resistance. The conclusions, however, are based on the assumption that the conditions in the other countries do not change, which is unrealistic. Thus, Japan would need to carry out all the reforms including those with high political resistance to be among the top three.
Handle: RePEc:nbr:nberwo:21507
Template-Type: ReDIF-Paper 1.0
Title: Intra Firm Bargaining and Shapley Values
Classification-JEL: D21; J30
Author-Name: Björn Brügemann
Author-Person: pbr182
Author-Name: Pieter Gautier
Author-Person: pga16
Author-Name: Guido Menzio
Author-Person: pme246
Note: EFG
Number: 21508
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21508
File-URL: http://www.nber.org/papers/w21508.pdf
File-Format: application/pdf
Publication-Status: published as Björn Brügemann, Pieter Gautier, Guido Menzio; Intra Firm Bargaining and Shapley Values, The Review of Economic Studies
Abstract: The paper revisits the problem of wage bargaining between a firm and multiple workers. We show that the Subgame Perfect Equilibrium of the extensive-form game proposed by Stole and Zwiebel (1996a) does not imply a profile of wages and profits that coincides with the Shapley values as claimed in their classic paper. We propose an alternative extensive-form bargaining game, the Rolodex Game, that follows a simple and realistic protocol and that, under some mild restrictions, admits a unique Subgame Perfect Equilibrium generating a profile of wages and profits that are equal to the Shapley values. The vast applied literature that refers to the Stole and Zwiebel game to give a game-theoretic foundation to the use of the Shapley values as the outcome of the bargain between a firm and multiple workers should instead refer to the Rolodex game.
Handle: RePEc:nbr:nberwo:21508
Template-Type: ReDIF-Paper 1.0
Title: The Effects of Test-based Retention on Student Outcomes over Time: Regression Discontinuity Evidence from Florida
Classification-JEL: H52; I21; I28
Author-Name: Guido Schwerdt
Author-Person: psc164
Author-Name: Martin R. West
Author-Name: Marcus A. Winters
Note: ED
Number: 21509
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21509
File-URL: http://www.nber.org/papers/w21509.pdf
File-Format: application/pdf
Publication-Status: published as Guido Schwerdt & Martin R. West & Marcus A. Winters, 2017. "The effects of test-based retention on student outcomes over time: Regression discontinuity evidence from Florida," Journal of Public Economics, vol 152, pages 154-169.
Abstract: Many American states require that students lacking basic reading proficiency after third grade be retained and remediated. We exploit a discontinuity in retention probabilities under Florida's test-based promotion policy to study its effects on student outcomes through high school. We find large positive effects on achievement that fade out entirely when retained students are compared to their same-age peers, but remain substantial through grade 10 when compared to students in the same grade. Being retained in third grade due to missing the promotion standard increases students' grade point averages and leads them to take fewer remedial courses in high school but has no effect on their probability of graduating.
Handle: RePEc:nbr:nberwo:21509
Template-Type: ReDIF-Paper 1.0
Title: The Value of Socialized Medicine: The Impact of Universal Primary Healthcare Provision on Mortality Rates in Turkey
Classification-JEL: I0; I1; I11; I13; I14; I18; J13; J14
Author-Name: Resul Cesur
Author-Name: Pınar Mine Güneş
Author-Person: pgu497
Author-Name: Erdal Tekin
Author-Person: pte12
Author-Name: Aydogan Ulker
Author-Person: pul9
Note: CH EH
Number: 21510
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21510
File-URL: http://www.nber.org/papers/w21510.pdf
File-Format: application/pdf
Publication-Status: published as Cesur, Resul & Güneş, Pınar Mine & Tekin, Erdal & Ulker, Aydogan, 2017. "The value of socialized medicine: The impact of universal primary healthcare provision on mortality rates in Turkey," Journal of Public Economics, Elsevier, vol. 150(C), pages 75-93.
Abstract: This paper examines the impact of universal, free, and easily accessible primary healthcare on population health as measured by age-specific mortality rates, focusing on a nationwide socialized medicine program implemented in Turkey. The Family Medicine Program (FMP), launched in 2005, assigns each Turkish citizen to a specific state-employed family physician who offers a wide range of primary healthcare services that are free-of-charge. Furthermore, these services are provided at family health centers, which operate on a walk-in basis and are located within the neighborhoods in close proximity to the patients. To identify the causal impact of the FMP, we exploit the variation in its introduction across provinces and over time. Our estimates indicate that the FMP caused the mortality rate to decrease by 25.6% among infants, 7.7% among the elderly, and 22.9% among children ages 1-4. These estimates translate into 2.6, 1.29, and 0.13 fewer deaths among infants, the elderly, and children ages 1-4, respectively. Furthermore, the effects appear to strengthen over time. We also show evidence to suggest that the FMP has contributed to an equalization of mortality across provinces. Finally, our calculations indicate that each family physician saves about 0.15, 0.46, and 0.005 lives among infants, the elderly, and children ages 1- 4 per province every year.
Handle: RePEc:nbr:nberwo:21510
Template-Type: ReDIF-Paper 1.0
Title: Missing Unmarried Women
Classification-JEL: J16; O15
Author-Name: Siwan Anderson
Author-Person: pan256
Author-Name: Debraj Ray
Author-Person: pra6
Note: DEV
Number: 21511
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21511
File-URL: http://www.nber.org/papers/w21511.pdf
File-Format: application/pdf
Publication-Status: published as Siwan Anderson & Debraj Ray, 2019. "Missing Unmarried Women," Journal of the European Economic Association, vol 17(5), pages 1585-1616.
Abstract: That unmarried individuals die at a faster rate than married individuals at all ages is well documented. Unmarried women in developing countries face particularly severe vulnerabilities, so that excess mortality faced by the unmarried is more extreme for women in these regions compared to developed countries. We provide systematic estimates of the excess female mortality faced by older unmarried women in developing regions. We place these estimates in the context of the missing women phenomenon. There are approximately 1.5 million missing women between the ages of 30 and 60 years old each year. We find that 35% of these missing women of adult age can be attributed to not being married. These estimates vary by region. India has the largest proportion of missing adult women who are without a husband, followed by the countries in East Africa. By contrast, China has almost no missing unmarried women. We show that 70% of missing unmarried women are of reproductive age and that it is the relatively high mortality rates of these young unmarried women (compared to their married counterparts) that drive this phenomenon.
Handle: RePEc:nbr:nberwo:21511
Template-Type: ReDIF-Paper 1.0
Title: Mortgage Refinancing, Consumer Spending, and Competition: Evidence from the Home Affordable Refinancing Program
Classification-JEL: E21; E65; G18; G21; H3; L85
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: Gene Amromin
Author-Person: pam179
Author-Name: Souphala Chomsisengphet
Author-Name: Tim Landvoigt
Author-Name: Tomasz Piskorski
Author-Person: ppi49
Author-Name: Amit Seru
Author-Person: pse308
Author-Name: Vincent Yao
Author-Person: pya131
Note: CF EFG IO ME AP PE
Number: 21512
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21512
File-URL: http://www.nber.org/papers/w21512.pdf
File-Format: application/pdf
Publication-Status: published as Sumit Agarwal & Gene Amromin & Souphala Chomsisengphet & Tim Landvoigt & Tomasz Piskorski & Amit Seru & Vincent Yao, 2023. "Mortgage Refinancing, Consumer Spending, and Competition: Evidence from the Home Affordable Refinance Program," The Review of Economic Studies, vol 90(2), pages 499-537.
Abstract: Using loan-level mortgage data merged with consumer credit records, we examine the ability of the government to impact mortgage refinancing activity and spur consumption by focusing on the Home Affordable Refinance Program (HARP). The policy relaxed housing equity constraints by extending government credit guarantee on insufficiently collateralized mortgages refinanced by intermediaries. Difference-in-difference tests based on program eligibility criteria reveal a significant increase in refinancing activity by HARP. More than three million eligible borrowers with primarily fixed-rate mortgages refinanced under HARP, receiving an average reduction of 1.45% in interest rate that amounts to $3,000 in annual savings. Durable spending by borrowers increased significantly after refinancing and regions more exposed to the program saw a relative increase in non-durable and durable consumer spending, a decline in foreclosure rates, and faster recovery in house prices. A variety of identification strategies suggest that competitive frictions in the refinancing market partly hampered the program’s impact: the take-up rate and annual savings among those who refinanced were reduced by 10% to 20%. These effects were amplified for the most indebted borrowers, the key target of the program. These findings have implications for future policy interventions, pass-through of monetary policy through household balance-sheets and design of the mortgage market.
Handle: RePEc:nbr:nberwo:21512
Template-Type: ReDIF-Paper 1.0
Title: Does Health Plan Generosity Enhance Hospital Market Power?
Classification-JEL: I11
Author-Name: Laurence C. Baker
Author-Name: M. Kate Bundorf
Author-Name: Daniel P. Kessler
Note: EH LE
Number: 21513
Creation-Date: 2015-08
Order-URL: http://www.nber.org/papers/w21513
File-URL: http://www.nber.org/papers/w21513.pdf
File-Format: application/pdf
Publication-Status: published as Laurence C. Baker & M. Kate Bundorf & Daniel P. Kessler, 2015. "Does health plan generosity enhance hospital market power?," Journal of Health Economics, vol 44(), pages 54-62.
Abstract: We test whether the generosity of employer-sponsored health insurance facilitates the exercise of market power by hospitals. We construct indices of health plan generosity and the price and volume of hospital services using data from Truven MarketScan for 601 counties from 2001-2007. We use variation in the industry and union status of covered workers within a county over time to identify the causal effects of generosity. Although OLS estimates fail to reject the hypothesis that generosity facilitates the exercise of hospital market power, IV estimates show a statistically significant and economically important positive effect of plan generosity on hospital prices in uncompetitive markets, but not in competitive markets. Our results suggest that most of the aggregate effect of hospital market structure on prices found in previous work may be coming from areas with generous plans.
Handle: RePEc:nbr:nberwo:21513
Template-Type: ReDIF-Paper 1.0
Title: Does Foreign Entry Spur Innovation?
Classification-JEL: F2; M16; O16; P23
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Author-Name: Jan Svejnar
Author-Person: psv8
Author-Name: Katherine Terrell
Author-Person: pte51
Note: ITI
Number: 21514
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21514
File-URL: http://www.nber.org/papers/w21514.pdf
File-Format: application/pdf
Abstract: Using large firm-level and industry-level data sets from eighteen countries, we find that foreign direct investment (FDI) and trade have positive spillover effects on product and technology innovation by domestic firms in emerging markets. The FDI effect is more pronounced for firms from advanced economies. However, while we detect the spillover effects with micro data at the firm-level, when we use linkage variables computed from input-output tables at the industry level we find much weaker, and usually insignificant, effects. These patterns are important for policy, suggesting that spillovers are localized to firms engaged directly with multinationals and in trade, rather than affecting all domestic firms in industries with FDI presence.
Handle: RePEc:nbr:nberwo:21514
Template-Type: ReDIF-Paper 1.0
Title: Investing in Schools: Capital Spending, Facility Conditions, and Student Achievement
Classification-JEL: H75; I22; I24
Author-Name: Paco Martorell
Author-Name: Kevin M. Stange
Author-Person: pst739
Author-Name: Isaac McFarlin
Note: ED LS PE
Number: 21515
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21515
File-URL: http://www.nber.org/papers/w21515.pdf
File-Format: application/pdf
Publication-Status: published as Paco Martorell & Kevin Stange & Isaac McFarlin, 2016. "Investing in schools: Capital spending, facility conditions, and student achievement," Journal of Public Economics, .
Abstract: Public investments in repairs, modernization, and construction of schools cost billions. However, little is known about the nature of school facility investments, whether it actually changes the physical condition of public schools, and the subsequent causal impacts on student achievement. We study the achievement effects of nearly 1,400 capital campaigns initiated and financed by local school districts, comparing districts where school capital bonds were either narrowly approved or defeated by district voters. Overall, we find little evidence that school capital campaigns improve student achievement. Our event-study analyses focusing on students that attend targeted schools and therefore exposed to major campus renovations also generate very precise zero estimates of achievement effects. Thus, locally financed school capital campaigns – the predominant method through which facility investments are made – may represent a limited tool for realizing substantial gains in student achievement or closing achievement gaps.
Handle: RePEc:nbr:nberwo:21515
Template-Type: ReDIF-Paper 1.0
Title: The Response of Deferred Executive Compensation to Changes in Tax Rates
Classification-JEL: G30; H24; H32; J33
Author-Name: Aspen Gorry
Author-Person: pgo400
Author-Name: Kevin A. Hassett
Author-Person: pha378
Author-Name: R. Glenn Hubbard
Author-Person: phu97
Author-Name: Aparna Mathur
Author-Person: pma1162
Note: PE
Number: 21516
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21516
File-URL: http://www.nber.org/papers/w21516.pdf
File-Format: application/pdf
Publication-Status: published as Aspen Gorry & Kevin A. Hassett & R. Glenn Hubbard & Aparna Mathur, 2015. "The response of deferred executive compensation to changes in tax rates," Journal of Public Economics, vol ().
Publication-Status: published as The Response of Deferred Executive Compensation to Changes in Tax Rates, Aspen Gorry, Kevin A. Hassett, R. Glenn Hubbard, Aparna Mathur. in Personal Income Taxation and Household Behavior (TAPES), Gordon and Keuschnigg. 2016
Abstract: Given the increasing use of stock options in executive compensation, we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes. To account for this option in the empirical analysis, we explore deferral by estimating how executives’ choice of compensation between current and deferred income depends on changes in tax policy. Our empirical results suggest a significant impact of taxes on the composition of executive compensation.
Handle: RePEc:nbr:nberwo:21516
Template-Type: ReDIF-Paper 1.0
Title: Experimenting with Measurement Error: Techniques with Applications to the Caltech Cohort Study
Classification-JEL: C81; C9; D8; J71
Author-Name: Ben Gillen
Author-Name: Erik Snowberg
Author-Person: psn15
Author-Name: Leeat Yariv
Note: DEV LS POL
Number: 21517
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21517
File-URL: http://www.nber.org/papers/w21517.pdf
File-Format: application/pdf
Publication-Status: published as Ben Gillen & Erik Snowberg & Leeat Yariv, 2019. "Experimenting with Measurement Error: Techniques with Applications to the Caltech Cohort Study," Journal of Political Economy, vol 127(4), pages 1826-1863.
Abstract: Measurement error is ubiquitous in experimental work. It leads to imperfect statistical controls, attenuated estimated effects of elicited behaviors, and biased correlations between characteristics. We develop simple statistical techniques for dealing with experimental measurement error. These techniques are applied to data from the Caltech Cohort Study, which conducts repeated incentivized surveys of the Caltech student body. We illustrate the impact of measurement error by replicating three classic experiments, and showing that results change substantially when measurement error is taken into account. Collectively, these results show that failing to properly account for measurement error may cause a field-wide bias: it may lead scholars to identify "new" effects and phenomena that are actually similar to those previously documented.
Handle: RePEc:nbr:nberwo:21517
Template-Type: ReDIF-Paper 1.0
Title: Was the Forex Fixing Fixed?
Classification-JEL: D43; D47; F30; F31; F33; G12; G15
Author-Name: Takatoshi Ito
Author-Name: Masahiro Yamada
Note: IFM
Number: 21518
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21518
File-URL: http://www.nber.org/papers/w21518.pdf
File-Format: application/pdf
Abstract: “Fixing” of the exchange rate (price) is a rule among the Forex market participating institutions to set a reference/settlement price for the day. Major fixings occur at 9:55 am Tokyo time for transactions between Japanese banks and their customers, and at 4:00 pm London time for transactions between European and US banks and their customers. The two fixings have different regulations and institutions. The London fix is calculated as a median price during the one minute window around 4:00 pm. We empirically examine the movement of prices around the time of fixing. Regulators in the UK and the US have accused banks for collusive behaviors to manipulating the price around the London fixing time. It has been mentioned in the media that there was evidence of “chats” among traders of different institutions for collusion. But, is there evidence in price behavior? We found little evidence of volatile movement (or spikes) in prices around the fixing time. In fact, liquidity provision at the fixing time is larger than other times, which makes the price impact of any trade smaller. At the Tokyo fixing, however, financial institutions can fix the price by themselves based on the market price. Although the market provides deep liquidity at the Tokyo fixing as well, such financial institutions had announced prices to be more favorable for banks up until 2008. Such deviation of the fixing price from the market price might be related to the settlement needs of importers, and banks wanting to reduce the risk of being caught in the dollar shortage later in the day.
Handle: RePEc:nbr:nberwo:21518
Template-Type: ReDIF-Paper 1.0
Title: Can Universal Screening Increase the Representation of Low Income and Minority Students in Gifted Education?
Classification-JEL: I21
Author-Name: David Card
Author-Person: pca271
Author-Name: Laura Giuliano
Author-Person: pgi111
Note: ED LS
Number: 21519
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21519
File-URL: http://www.nber.org/papers/w21519.pdf
File-Format: application/pdf
Publication-Status: published as Universal screening for gifted education David Card, Laura Giuliano Proceedings of the National Academy of Sciences Nov 2016, 113 (48) 13678-13683; DOI: 10.1073/pnas.1605043113
Abstract: Low income and minority students are under-represented in gifted education programs. One explanation for this pattern is that the usual process for identifying gifted students, through parent and teacher referrals, systematically misses many potentially qualified disadvantaged students. We use the experiences in a large urban school district following the introduction of a universal screening program for second grade students to study this hypothesis. With no change in the standards for gifted eligibility the screening program led to large increases in the fractions of economically disadvantaged students and minorities placed in gifted programs. Comparisons of the newly identified gifted students with those who would have been placed in the absence of screening show that blacks and Hispanics, free/reduced price lunch participants, English language learners, and girls are all systematically "under-referred" in the traditional parent/teacher referral system.
Handle: RePEc:nbr:nberwo:21519
Template-Type: ReDIF-Paper 1.0
Title: A Coasian Model of International Production Chains
Classification-JEL: F10; L23
Author-Name: Thibault Fally
Author-Person: pfa184
Author-Name: Russell Hillberry
Author-Person: phi69
Note: ITI
Number: 21520
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21520
File-URL: http://www.nber.org/papers/w21520.pdf
File-Format: application/pdf
Publication-Status: published as Thibault Fally & Russell Hillberry, 2018. "A Coasian model of international production chains," Journal of International Economics, .
Abstract: International supply chains require coordination of numerous activities across multiple countries and firms. We adapt a model of supply chains and apply it to an international trade setting. In each chain, the measure of tasks completed within a firm is determined by transaction costs and the cost of coordinating more activities within the firm. The structural parameters that govern these costs explain variation in supply-chain length and gross-output-to-value-added ratios, and determine countries' comparative advantage along and across supply chains. We calibrate the model to match key observables in East Asia, and evaluate implications of changes in model parameters for trade, welfare, the length of supply chains and countries' relative position within them.
Handle: RePEc:nbr:nberwo:21520
Template-Type: ReDIF-Paper 1.0
Title: Toilets Can Work: Short and Medium Run Health Impacts of Addressing Complementarities and Externalities in Water and Sanitation
Classification-JEL: I15; O13; Q53; Q56
Author-Name: Esther Duflo
Author-Person: pdu166
Author-Name: Michael Greenstone
Author-Person: pgr38
Author-Name: Raymond Guiteras
Author-Person: pgu357
Author-Name: Thomas Clasen
Note: EEE EH
Number: 21521
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21521
File-URL: http://www.nber.org/papers/w21521.pdf
File-Format: application/pdf
Abstract: Poor water quality and sanitation are leading causes of mortality and disease in developing countries. However, interventions providing toilets in rural areas have not substantially improved health, likely because of incomplete coverage and low usage. This paper estimates the impact of an integrated water and sanitation improvement program in rural India that provided household-level water connections, latrines, and bathing facilities to all households in approximately 100 villages. The estimates suggest that the intervention was effective, reducing treated diarrhea episodes by 30-50%. These results are evident in the short term and persist for 5 years or more. The annual cost is approximately US$60 per household.
Handle: RePEc:nbr:nberwo:21521
Template-Type: ReDIF-Paper 1.0
Title: Dead Poet's Property - How Does Copyright Influence Price?
Classification-JEL: K00; N33; O3
Author-Name: Xing Li
Author-Name: Megan MacGarvie
Author-Person: pma1307
Author-Name: Petra Moser
Author-Person: pmo257
Note: DAE IO PR
Number: 21522
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21522
File-URL: http://www.nber.org/papers/w21522.pdf
File-Format: application/pdf
Abstract: This article exploits a differential increase in copyright under the UK Copyright Act of 1814 - in favor of books by dead authors – to examine the influence of longer copyrights on price. Difference-in-differences analyses, which compare changes in the price of books by dead and living authors, indicate a substantial increase in price in response to an extension in copyright length. By comparison, placebo regressions for books by dead authors that did not benefit from the extension indicate no differential increase. Historical evidence suggests that longer copyrights increase price by improving publishers’ ability to practice intertemporal price discrimination.
Handle: RePEc:nbr:nberwo:21522
Template-Type: ReDIF-Paper 1.0
Title: School Vouchers: A Survey of the Economics Literature
Classification-JEL: H4; I2
Author-Name: Dennis Epple
Author-Person: pep21
Author-Name: Richard E. Romano
Author-Person: pro223
Author-Name: Miguel Urquiola
Author-Person: pur10
Note: CH ED PE
Number: 21523
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21523
File-URL: http://www.nber.org/papers/w21523.pdf
File-Format: application/pdf
Publication-Status: published as Dennis Epple & Richard E. Romano & Miguel Urquiola, 2017. "School Vouchers: A Survey of the Economics Literature," Journal of Economic Literature, American Economic Association, vol. 55(2), pages 441-492, June.
Abstract: We review the theoretical, computational, and empirical research on school vouchers, with a focus on the latter. In this substantial body of work, many studies find insignificant effects of vouchers on educational outcomes; however, multiple positive findings support continued exploration. Specifically, the empirical research on small scale programs does not suggest that awarding students a voucher is a systematically reliable way to improve educational outcomes. Nevertheless, in some settings, or for some subgroups or outcomes, vouchers can have a substantial positive effect on those who use them. Studies of large scale voucher programs find student sorting as a result of their implementation, although of varying magnitude. Evidence on both small scale and large scale programs suggests that competition induced by vouchers leads public schools to improve. Moreover, research is making progress on understanding how vouchers may be designed to limit adverse effects from sorting while preserving positive effects related to competition. Finally, our sense is that work originating in a single case (e.g., a given country) or in a single research approach (e.g., experimental designs) will not provide a full understanding of voucher effects; fairly wide ranging empirical and theoretical work will be necessary to make progress.
Handle: RePEc:nbr:nberwo:21523
Template-Type: ReDIF-Paper 1.0
Title: Optimal Taxation with Behavioral Agents
Classification-JEL: D03; H0
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Xavier Gabaix
Author-Person: pga174
Note: EFG PE
Number: 21524
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21524
File-URL: http://www.nber.org/papers/w21524.pdf
File-Format: application/pdf
Publication-Status: published as Emmanuel Farhi & Xavier Gabaix, 2020. "Optimal Taxation with Behavioral Agents," American Economic Review, vol 110(1), pages 298-336.
Abstract: This paper develops a theory of optimal taxation with behavioral agents. We use a general behavioral framework that encompasses a wide range of behavioral biases such as misperceptions, internalities and mental accounting. We revisit the three pillars of optimal taxation: Ramsey (linear commodity taxation to raise revenues and redistribute), Pigou (linear commodity taxation to correct externalities) and Mirrlees (nonlinear income taxation). We show how the canonical optimal tax formulas are modified and lead to a rich set of novel economic insights. We also show how to incorporate nudges in the optimal taxation frameworks, and jointly characterize optimal taxes and nudges. We explore the Diamond-Mirrlees productive efficiency result and the Atkinson-Stiglitz uniform commodity taxation proposition, and find that they are more likely to fail with behavioral agents.
Handle: RePEc:nbr:nberwo:21524
Template-Type: ReDIF-Paper 1.0
Title: The Distributional Consequences of Public School Choice
Classification-JEL: H44; I20
Author-Name: Christopher Avery
Author-Person: pav7
Author-Name: Parag A. Pathak
Note: ED LS PE
Number: 21525
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21525
File-URL: http://www.nber.org/papers/w21525.pdf
File-Format: application/pdf
Publication-Status: published as Christopher Avery & Parag A. Pathak, 2021. "The Distributional Consequences of Public School Choice," American Economic Review, vol 111(1), pages 129-152.
Abstract: School choice systems aspire to delink residential location and school assignments by allowing children to apply to schools outside of their neighborhood. However, the introduction of choice programs affect incentives to live in certain neighborhoods, which may undermine the goals of choice programs. We investigate this possibility by developing a model of public school and residential choice. We consider two variants, one with an exogenous outside option and one endogenizing the outside option by considering interactions between two adjacent towns. In both cases, school choice rules narrow the range between the highest and lowest quality schools compared to neighborhood assignment rules, and these changes in school quality are capitalized into equilibrium housing prices. This compressed distribution generates incentives for both the highest and lowest types to move out of cities with school choice, typically producing worse outcomes for low types than neighborhood assignment rules. Paradoxically, even when choice results in improvement in the worst performing schools, the lowest type residents may not benefit.
Handle: RePEc:nbr:nberwo:21525
Template-Type: ReDIF-Paper 1.0
Title: Banks’ Internal Capital Markets and Deposit Rates
Classification-JEL: G21
Author-Name: Itzhak Ben-David
Author-Name: Ajay Palvia
Author-Person: ppa933
Author-Name: Chester Spatt
Note: CF
Number: 21526
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21526
File-URL: http://www.nber.org/papers/w21526.pdf
File-Format: application/pdf
Publication-Status: published as Itzhak Ben-David & Ajay Palvia & Chester Spatt, 2017. "Banks’ Internal Capital Markets and Deposit Rates," Journal of Financial and Quantitative Analysis, vol 52(05), pages 1797-1826.
Abstract: A common view is that deposit rates are determined primarily by supply: depositors require higher deposit rates from risky banks, thereby creating market discipline. An alternative perspective is that market discipline is limited (e.g., due to deposit insurance and/or enhanced capital regulation) and that internal demand for funding by banks determines rates. Using branch-level deposit rate data, we find little evidence for market discipline as rates are similar across bank capitalization levels. In contrast, banks’ loan growth has a causal effect on deposit rates: e.g., branches’ deposit rates are correlated with loan growth in other states in which their bank has some presence, suggesting internal capital markets help reallocate the bank’s funding.
Handle: RePEc:nbr:nberwo:21526
Template-Type: ReDIF-Paper 1.0
Title: Identification of Counterfactuals in Dynamic Discrete Choice Models
Classification-JEL: C5; Q1
Author-Name: Myrto Kalouptsidi
Author-Name: Paul T. Scott
Author-Person: psc715
Author-Name: Eduardo Souza-Rodrigues
Note: EEE EH IO LS
Number: 21527
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21527
File-URL: http://www.nber.org/papers/w21527.pdf
File-Format: application/pdf
Abstract: Dynamic discrete choice (DDC) models are not identified nonparametrically, but the non-identification of models does not necessarily imply the non-identification of counterfactuals. We derive novel results for the identification of counterfactuals in DDC models, such as non- additive changes in payoffs or changes to agents' choice sets. In doing so, we propose a general framework that allows the investigation of the identification of a broad class of counterfactuals (covering virtually any counterfactual encountered in applied work). To illustrate the results, we consider a firm entry/exit problem numerically, as well as an empirical model of agricultural land use. In each case, we provide examples of both identified and non-identified counterfactuals of interest.
Handle: RePEc:nbr:nberwo:21527
Template-Type: ReDIF-Paper 1.0
Title: Monetary Exchange in Over-the-Counter Markets: A Theory of Speculative Bubbles, the Fed Model, and Self-fulfilling Liquidity Crises
Classification-JEL: D83; E31; E52; E58; G12
Author-Name: Ricardo Lagos
Author-Person: pla18
Author-Name: Shengxing Zhang
Author-Person: pzh152
Note: AP ME
Number: 21528
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21528
File-URL: http://www.nber.org/papers/w21528.pdf
File-Format: application/pdf
Abstract: We develop a model of monetary exchange in over-the-counter markets to study the effects of monetary policy on asset prices and standard measures of financial liquidity, such as bid-ask spreads, trade volume, and the incentives of dealers to supply immediacy, both by participating in the market-making activity and by holding asset inventories on their own account. The theory predicts that asset prices carry a speculative premium that reflects the asset's marketability and depends on monetary policy as well as the microstructure of the market where it is traded. These liquidity considerations imply a positive correlation between the real yield on stocks and the nominal yield on Treasury bonds---an empirical observation long regarded anomalous. The theory also exhibits rational expectations equilibria with recurring belief driven events that resemble liquidity crises, i.e., times of sharp persistent declines in asset prices, trade volume, and dealer participation in market-making activity, accompanied by large increases in spreads and abnormally long trading delays.
Handle: RePEc:nbr:nberwo:21528
Template-Type: ReDIF-Paper 1.0
Title: Support for Redistribution in an Age of Rising Inequality: New Stylized Facts and Some Tentative Explanations
Classification-JEL: D63; H23; J14; J15
Author-Name: Vivekinan Ashok
Author-Name: Ilyana Kuziemko
Author-Name: Ebonya Washington
Note: AG PE POL
Number: 21529
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21529
File-URL: http://www.nber.org/papers/w21529.pdf
File-Format: application/pdf
Publication-Status: published as Vivekinan Ashok & Ilyana Kuziemko & Ebonya Washington, 2016. "Support for Redistribution in an Age of Rising Inequality: New Stylized Facts and Some Tentative Explanations," Brookings Papers on Economic Activity, vol 2015(1), pages 367-433.
Abstract: Despite the large increases in economic inequality since 1970, American survey respondents exhibit no increase in support for redistribution, in contrast to the predictions from standard theories of redistributive preferences. We replicate these results but further demonstrate substantial heterogeneity by demographic groups. In particular, the two groups who have most moved against income redistribution are the elderly and African-Americans. We find little evidence that these subgroup trends are explained by relative economic gains or growing cultural conservatism, two common explanations. We further show that the elderly trend is uniquely American, at least relative to other developed countries with comparable survey data. While we are unable to provide definitive evidence on the cause of these two groups' declining redistributive support, we offer additional correlations which may offer fruitful directions for future research on the topic. One story consistent with the data on elderly trends is that older Americans worry that redistribution will come at their expense, in particular via cuts to Medicare. We find that the elderly have grown increasingly opposed to government provision of health insurance and that controlling for this tendency explains about 40% of their declining support for redistribution. For blacks, controlling for their declining support of race-targeted aid explains nearly 45% of their differential decline in redistributive preferences (raising the question of why support for race-targeted aid has fallen during a period when black economic catch-up to whites has stalled).
Handle: RePEc:nbr:nberwo:21529
Template-Type: ReDIF-Paper 1.0
Title: Public Audit Oversight and Reporting Credibility: Evidence from the PCAOB Inspection Regime
Classification-JEL: G14; G18; G38; K22; M41; M42; M48
Author-Name: Brandon Gipper
Author-Name: Christian Leuz
Author-Person: ple259
Author-Name: Mark Maffett
Note: AP CF LE
Number: 21530
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21530
File-URL: http://www.nber.org/papers/w21530.pdf
File-Format: application/pdf
Publication-Status: published as Brandon Gipper & Christian Leuz & Mark Maffett & Andrew Karolyi, 2020. "Public Oversight and Reporting Credibility: Evidence from the PCAOB Audit Inspection Regime," The Review of Financial Studies, vol 33(10), pages 4532-4579.
Abstract: This paper studies the impact of public audit oversight on financial reporting credibility. We analyze changes in market responses to earnings news after public audit oversight is introduced, exploiting that the regime onset depends on fiscal year-ends, auditors, and the rollout of auditor inspections. We find that investors respond more strongly to earnings news following public audit oversight. Corroborating these findings, we find an increase in volume responses to 10-K filings after the new regime. Our results show that public audit oversight can enhance reporting credibility and that this credibility is priced in capital markets.
Handle: RePEc:nbr:nberwo:21530
Template-Type: ReDIF-Paper 1.0
Title: Assessing Incentives for Adverse Selection in Health Plan Payment Systems
Classification-JEL: I11; I13; I18
Author-Name: Timothy J. Layton
Author-Person: pla866
Author-Name: Randall P. Ellis
Author-Person: pel45
Author-Name: Thomas G. McGuire
Note: EH
Number: 21531
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21531
File-URL: http://www.nber.org/papers/w21531.pdf
File-Format: application/pdf
Abstract: Health insurance markets face two forms of adverse selection problems. On the demand side, adverse selection leads to plan price distortions and inefficient sorting of consumers across health plans. On the supply side, adverse selection creates incentives for plans to inefficiently distort benefits to attract profitable enrollees. These problems can be addressed by features of health plan payment systems such as reinsurance, risk adjustment, and premium categories. In this paper, we develop Harberger- type measures of the efficiency consequences of price and benefit distortions under a given payment system. Our measures are valid, that is, based on explicit economic models of adverse selection. Our measures are complete, in that they are able to incorporate multiple features of plan payment systems. Finally, they are practical, in that they are based on the ex ante data available to regulators and researchers during the design phase of payment system development, prior to observing actual insurer and consumer behavior. After developing the measures, we illustrate their use by comparing the performance of the payment system planned for implementation in the ACA Marketplaces in 2017 to several policy alternatives. We show that, in protecting against both types of selection problems, a payment system that incorporates reinsurance and prospective risk adjustment out-performs the planned payment system which includes only concurrent risk adjustment.
Handle: RePEc:nbr:nberwo:21531
Template-Type: ReDIF-Paper 1.0
Title: The Impact of Foreclosure Delay on U.S. Employment
Classification-JEL: E24; J0; R3
Author-Name: Kyle F. Herkenhoff
Author-Name: Lee E. Ohanian
Author-Person: poh1
Note: EFG LS
Number: 21532
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21532
File-URL: http://www.nber.org/papers/w21532.pdf
File-Format: application/pdf
Publication-Status: published as Kyle F. Herkenhoff & Lee E. Ohanian, 2018. "The impact of foreclosure delay on U.S. employment," Review of Economic Dynamics, .
Abstract: This paper documents that the time required to initiate and complete a home foreclosure rose from about 9 months on average prior to the Great Recession to an average of 15 months during the Great Recession and afterward. We refer to these changes as foreclosure delay. We also document that many borrowers who are in foreclosure ultimately exit foreclosure and keep their homes by making up for missed mortgage payments. We analyze the impact of foreclosure delay on the U.S. labor market as an implicit credit line from a lender to a borrower (mortgagor) within a search model. In the model, foreclosure delay provides unemployed mortgagors with additional time to search for a high-paying job. We find that foreclosure delay decreases mortgagor employment by about 0.75 percentage points, nearly doubles the stock of delinquent mortgages, increases the rate of homeownership by about 0.3 percentage points, and increases job match quality, as mortgagors search longer. Severe foreclosure delays, such as those observed in Florida and New Jersey, can depress mortgagor employment by up to 1.3 percentage points. The model results are consistent with PSID and SCF data that show that employment rates rise for delinquent mortgagors once the mortgagor is in the foreclosure process.
Handle: RePEc:nbr:nberwo:21532
Template-Type: ReDIF-Paper 1.0
Title: Mispricing Factors
Classification-JEL: G02; G12; G14
Author-Name: Robert F. Stambaugh
Author-Person: pst282
Author-Name: Yu Yuan
Author-Person: pyu149
Note: AP
Number: 21533
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21533
File-URL: http://www.nber.org/papers/w21533.pdf
File-Format: application/pdf
Publication-Status: published as Robert F. Stambaugh & Yu Yuan, 2017. "Mispricing Factors," The Review of Financial Studies, vol 30(4), pages 1270-1315.
Abstract: A four-factor model with two "mispricing" factors, in addition to market and size factors, accommodates a large set of anomalies better than notable four- and five-factor alternative models. Moreover, our size factor reveals a small-firm premium nearly twice usual estimates. The mispricing factors aggregate information across 11 prominent anomalies by averaging rankings within two clusters exhibiting the greatest co-movement in long-short returns. Investor sentiment predicts the mispricing factors, especially their short legs, consistent with a mispricing interpretation and the asymmetry in ease of buying versus shorting. Replacing book-to-market with a single composite mispricing factor produces a better-performing three-factor model.
Handle: RePEc:nbr:nberwo:21533
Template-Type: ReDIF-Paper 1.0
Title: State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data
Classification-JEL: H25; H71; H73
Author-Name: Xavier Giroud
Author-Name: Joshua Rauh
Note: CF PE
Number: 21534
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21534
File-URL: http://www.nber.org/papers/w21534.pdf
File-Format: application/pdf
Publication-Status: published as Xavier Giroud & Joshua Rauh, 2019. "State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data," Journal of Political Economy, vol 127(3), pages 1262-1316.
Abstract: In a sample of over 27 million establishments of U.S. firms with activities in more than one state, we estimate the impact of state business taxation on business activity. Only firms organized as subchapter C corporations are subject to the corporate tax code, whereas the income of partnerships, sole-proprietorships, and S corporations is passed through annually to the firm's owners and taxed at individual rates. For C corporations, both employment at existing establishments (intensive margin) and the number of establishments in the state (extensive margin) have corporate tax elasticities of -0.4. Pass-through entities, which serve as a control group for the corporate tax reforms, respond only to the personal tax code, with tax elasticities of -0.2 to -0.3. Around half of the effects are driven by reallocation of productive resources to other states where the treated firms have establishments. Capital shows similar patterns but is 36% less elastic than labor. A narrative approach confirms that the results are robust and strongest in the sample of tax changes that were implemented due to inherited budget deficits, long-run goals, or cross-state variation caused by Federal tax reforms.
Handle: RePEc:nbr:nberwo:21534
Template-Type: ReDIF-Paper 1.0
Title: Currency Unions and Trade: A Post-EMU Mea Culpa
Classification-JEL: F15; F33
Author-Name: Reuven Glick
Author-Person: pgl13
Author-Name: Andrew K. Rose
Author-Person: pro71
Note: IFM ITI
Number: 21535
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21535
File-URL: http://www.nber.org/papers/w21535.pdf
File-Format: application/pdf
Abstract: In our European Economic Review (2002) paper, we used pre-1998 data on countries participating in and leaving currency unions to estimate the effect of currency unions on trade using (then-) conventional gravity models. In this paper, we use a variety of empirical gravity models to estimate the currency union effect on trade and exports, using recent data which includes the European Economic and Monetary Union (EMU). We have three findings. First, our assumption of symmetry between the effects of entering and leaving a currency union seems reasonable in the data but is uninteresting. Second, EMU typically has a smaller trade effect than other currency unions; it has a mildly stimulating effect at best. Third and most importantly, estimates of the currency union effect on trade are sensitive to the exact econometric methodology; the lack of consistent and robust evidence undermines confidence in our ability to reliably estimate the effect of currency union on trade.
Handle: RePEc:nbr:nberwo:21535
Template-Type: ReDIF-Paper 1.0
Title: The East Indian Monopoly and the Transition from Limited Access in England, 1600-1813
Classification-JEL: N00; N13; N43; N73
Author-Name: Dan Bogart
Author-Person: pbo326
Note: DAE
Number: 21536
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21536
File-URL: http://www.nber.org/papers/w21536.pdf
File-Format: application/pdf
Abstract: Many markets are limited by laws and customs enforced by political and religious authorities. North, Wallis, and Weingast (2009) argue that the transition from limited access requires a series of steps like rule of law for elites and the creation of perpetually lived organizations. This paper studies how these steps were taken in England in the case of the East Indian market. The East India Company had a legal monopoly over all trade between England and modern day India and China, but its privileges and property were far from secure. The king and parliament authorized interlopers to enter the Company’s market and forced the Company to make loans to retain its monopoly. A secure monopoly only emerged in the mid-eighteenth century when political stability and fiscal capacity increased. However, liberalization of the market had to wait several more decades. A fiscal and political partnership between the government and the Company kept its monopoly stable until a confluence of events in 1813 brought it to an end.
Handle: RePEc:nbr:nberwo:21536
Template-Type: ReDIF-Paper 1.0
Title: Like Me, Buy Me: The Effect of Soft Power on Exports
Classification-JEL: F14; F59
Author-Name: Andrew K. Rose
Author-Person: pro71
Note: ITI
Number: 21537
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21537
File-URL: http://www.nber.org/papers/w21537.pdf
File-Format: application/pdf
Publication-Status: published as Andrew K. Rose, 2016. "Like Me, Buy Me: The Effect of Soft Power on Exports," Economics & Politics, .
Abstract: In this paper I quantify a gain that a country receives when its global influence is considered to be admirable by others. I use a standard gravity model of bilateral exports, a panel of data from 2006 through 2013, and an annual survey conducted for the BBC by GlobeScan which asks people in up to 46 countries about whether each of up to 17 countries were perceived to have “a mainly positive or negative influence in the world.” Holding other things constant, a country’s exports are higher if it is perceived by the importer to be exerting more positive global influence. This effect is statistically and economically significant; a one percent net increase in perceived positive influence raises exports by around .8 percent. Succinctly, countries receive a commercial return on their soft power.
Handle: RePEc:nbr:nberwo:21537
Template-Type: ReDIF-Paper 1.0
Title: On the Optimal Provision of Social Insurance: Progressive Taxation versus Education Subsidies in General Equilibrium
Classification-JEL: E62; H21; H24
Author-Name: Dirk Krueger
Author-Person: pkr7
Author-Name: Alexander Ludwig
Author-Person: plu177
Note: EFG PE
Number: 21538
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21538
File-URL: http://www.nber.org/papers/w21538.pdf
File-Format: application/pdf
Publication-Status: published as Krueger, Dirk & Ludwig, Alexander, 2016. "On the optimal provision of social insurance: Progressive taxation versus education subsidies in general equilibrium," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 72-98.
Abstract: In this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk, but distort the education decision of households. Optimally chosen tertiary education subsidies mitigate these distortions. We highlight the quantitative importance of general equilibrium feedback effects from policies to relative wages of skilled and unskilled workers: subsidizing higher education increases the share of workers with a college degree thereby reducing the college wage premium which has important redistributive benefits. We also argue that a full characterization of the transition path is crucial for policy evaluation. We find that optimal education policies are always characterized by generous tuition subsidies, but the optimal degree of income tax progressivity depends crucially on whether transitional costs of policies are explicitly taken into account and how strongly the college premium responds to policy changes in general equilibrium.
Handle: RePEc:nbr:nberwo:21538
Template-Type: ReDIF-Paper 1.0
Title: Trading Down and the Business Cycle
Classification-JEL: E1; E2; E3
Author-Name: Nir Jaimovich
Author-Person: pja325
Author-Name: Sergio Rebelo
Author-Name: Arlene Wong
Author-Person: pwo217
Note: EFG
Number: 21539
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21539
File-URL: http://www.nber.org/papers/w21539.pdf
File-Format: application/pdf
Publication-Status: published as Nir Jaimovich & Sergio Rebelo & Arlene Wong, 2019. "Trading Down and the Business Cycle," Journal of Monetary Economics, .
Abstract: We document two facts. First, during the Great Recession, consumers traded down in the quality of the goods and services they consumed. Second, the production of low-quality goods is less labor intensive than that of high-quality goods. When households traded down, labor demand fell, increasing the severity of the recession. We find that the trading-down phenomenon accounts for a substantial fraction of the fall in U.S. employment in the recent recession. We show that embedding quality choice in a business-cycle model improves the model's amplification and comovement properties.
Handle: RePEc:nbr:nberwo:21539
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Liberal Democracy
Classification-JEL: P48
Author-Name: Sharun Mukand
Author-Person: pmu142
Author-Name: Dani Rodrik
Author-Person: pro60
Note: DEV PE POL
Number: 21540
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21540
File-URL: http://www.nber.org/papers/w21540.pdf
File-Format: application/pdf
Publication-Status: published as Sharun W Mukand & Dani Rodrik, 2020. "The Political Economy of Liberal Democracy," The Economic Journal, vol 130(627), pages 765-792.
Abstract: We distinguish between three sets of rights – property rights, political rights, and civil rights – and provide a taxonomy of political regimes. The distinctive nature of liberal democracy is that it protects civil rights (equality before the law for minorities) in addition to the other two. Democratic transitions are typically the product of a settlement between the elite (who care mostly about property rights) and the majority (who care mostly about political rights). Such settlements rarely produce liberal democracy, as the minority has neither the resources nor the numbers to make a contribution at the bargaining table. We develop a formal model to sharpen the contrast between electoral and liberal democracies and highlight circumstances under which liberal democracy can emerge. We discuss informally the difference between social mobilizations sparked by industrialization and decolonization. Since the latter revolve around identity cleavages rather than class cleavages, they are less conducive to liberal politics.
Handle: RePEc:nbr:nberwo:21540
Template-Type: ReDIF-Paper 1.0
Title: Regulation of Insurance with Adverse Selection and Switching Costs: Evidence from Medicare Part D.
Classification-JEL: H0; H50; H51; I1; I13; L51; L78
Author-Name: Maria Polyakova
Author-Person: ppo520
Note: AG EH IO PE
Number: 21541
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21541
File-URL: http://www.nber.org/papers/w21541.pdf
File-Format: application/pdf
Publication-Status: published as Maria Polyakova, 2016. "Regulation of Insurance with Adverse Selection and Switching Costs: Evidence from Medicare Part D," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 165-95, July.
Abstract: I take advantage of regulatory and pricing dynamics in Medicare Part D to empirically explore interactions among adverse selection, switching costs, and regulation. I first document novel evidence of adverse selection and switching costs within Part D using detailed administrative data. I then estimate a contract choice and pricing model in order to quantify the importance of switching costs for risk-sorting, and for policies that may affect risk sorting. I first find that in Part D, switching costs help sustain an adversely-selected equilibrium and are likely to mute the ability of ACA policies to improve risk allocation across contracts, leading to higher premiums for some enrollees. I then estimate that, overall, decreasing the cost of active decision-making in the Part D environment could lead to a substantial gain in consumer surplus of on average $400-$600 per capita, which is around 20%-30% of average annual per capita drug spending.
Handle: RePEc:nbr:nberwo:21541
Template-Type: ReDIF-Paper 1.0
Title: Shale Public Finance: Local Government Revenues and Costs Associated with Oil and Gas Development
Classification-JEL: H25; H71; H72; H76; Q32; Q33; Q41; Q43; Q48
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Daniel Raimi
Author-Person: pra970
Note: EEE PE
Number: 21542
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21542
File-URL: http://www.nber.org/papers/w21542.pdf
File-Format: application/pdf
Abstract: Oil and gas development associated with shale resources has increased substantially in the United States, with important implications for local governments. These governments tend to experience increased revenue from a variety of sources, such as severance taxes distributed by the state government, local property taxes and sales taxes, direct payments from oil and gas companies, and in-kind contributions from those companies. Local governments also tend to face increased demand for services such as road repairs due to heavy truck traffic and from population growth associated with the oil and gas sector. This paper describes the major oil- and gas related revenues and service demands (i.e., costs) that county and municipal governments have experienced in Arkansas, Colorado, Louisiana, Montana, North Dakota, Pennsylvania, Texas, and Wyoming. Based on extensive interviews with officials in the most heavily affected parts of these states, along with analysis of financial data, it appears that most county and municipal governments have experienced net financial benefits, though some in western North Dakota and eastern Montana appear to have experienced net negative fiscal impacts. Some municipalities in rural Colorado and Wyoming also struggled to manage fiscal impacts during recent oil and gas booms, though these challenges faded as drilling activity slowed.
Handle: RePEc:nbr:nberwo:21542
Template-Type: ReDIF-Paper 1.0
Title: Workfare and Human Capital Investment: Evidence from India
Classification-JEL: I2; I38; J1; O12
Author-Name: Manisha Shah
Author-Person: psh195
Author-Name: Bryce Millett Steinberg
Author-Person: pst810
Note: CH DEV ED LS
Number: 21543
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21543
File-URL: http://www.nber.org/papers/w21543.pdf
File-Format: application/pdf
Publication-Status: published as Manisha Shah & Bryce Millett Steinberg, 2021. "Workfare and Human Capital Investment," Journal of Human Resources, vol 56(2), pages 380-405.
Abstract: We examine the effect of India's National Rural Employment Guarantee Scheme (NREGS), one of the largest workfare programs in the world, on human capital investment. Since NREGS increases labor demand, it could increase the opportunity cost of schooling, lowering human capital investment even as incomes increase. We exploit the staged rollout of the program across districts for causal identification. Using a household survey of test scores and schooling outcomes for approximately 2.5 million rural children in India, we show that each year of exposure to NREGS decreases school enrollment by 2 percentage points and math scores by 2% of a standard deviation amongst children aged 13-16. In addition, while the impacts of NREGS on human capital are similar for boys and girls, adolescent boys are primarily substituting into market work when they leave school while adolescent girls are substituting into unpaid domestic work. We find mixed results for younger children. We conclude that anti-poverty programs which raise wages could have the unintended effect of lowering human capital investment.
Handle: RePEc:nbr:nberwo:21543
Template-Type: ReDIF-Paper 1.0
Title: The Financial Feasibility of Delaying Social Security: Evidence from Administrative Tax Data
Classification-JEL: D14; H31; H55
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: Shanthi Ramnath
Author-Person: pra1048
Author-Name: John B. Shoven
Author-Name: Sita Nataraj Slavov
Author-Person: pna81
Note: AG PE
Number: 21544
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21544
File-URL: http://www.nber.org/papers/w21544.pdf
File-Format: application/pdf
Publication-Status: published as GOPI SHAH GODA & SHANTHI RAMNATH & JOHN B. SHOVEN & SITA NATARAJ SLAVOV, 2018. "The financial feasibility of delaying Social Security: evidence from administrative tax data," Journal of Pension Economics and Finance, vol 17(04), pages 419-436.
Abstract: Despite the large and growing returns to deferring Social Security benefits, most individuals claim Social Security before the full retirement age, currently age 66. In this paper, we use a panel of administrative tax data on likely primary earners to explore some potential hypotheses of why individuals fail to delay claiming Social Security, including liquidity constraints and private information regarding one’s expected future lifetime. We find that approximately 31-34% of beneficiaries who claim prior to the full retirement age have assets in Individual Retirement Accounts (IRAs) that would fund at least 2 additional years of Social Security benefits, and 24-26% could fund at least 4 years of Social Security deferral with IRA assets alone. Our analysis suggests that these percentages would be considerably higher if other assets were taken into account. We find evidence that those who claim prior to the full retirement age have higher subjective and actual mortality rates than those who claim later, suggesting that private information about expected future lifetimes may influence claiming behavior.
Handle: RePEc:nbr:nberwo:21544
Template-Type: ReDIF-Paper 1.0
Title: Fetal Malnutrition And Academic Success: Evidence From Muslim Immigrants In Denmark
Classification-JEL: I12; I14; I24; J15
Author-Name: Jane Greve
Author-Person: pgr294
Author-Name: Marie Louise Schultz-Nielsen
Author-Person: psc345
Author-Name: Erdal Tekin
Author-Person: pte12
Note: CH ED EH
Number: 21545
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21545
File-URL: http://www.nber.org/papers/w21545.pdf
File-Format: application/pdf
Publication-Status: published as Jane Greve & Marie Louise Schultz-Nielsen & Erdal Tekin, 2017. "Fetal malnutrition and academic success: Evidence from Muslim immigrants in Denmark," Economics of Education Review, vol 60, pages 20-35.
Abstract: This paper examines the impact of potential fetal malnutrition on the academic proficiency of Muslim students in Denmark. We account for the endogeneity of fetal malnutrition by using the exposure to the month of Ramadan during time in utero as a natural experiment, under the assumption that some Muslim women might have fasted during Ramadan when they were pregnant. In some of our specifications, we use a sample of students from predominantly non-Muslim countries as an additional control group to address potential seasonality in cognitive outcomes in a difference-in-differences framework. Our outcome measures are the standardized test scores from the national exams on the subjects of Danish, English, Math, and Science administered by the Danish Ministry of Education. Our results indicate that fetal exposure to Ramadan has a negative impact on the achievement scores of Muslim students, especially females. Our analysis further reveals that most of these effects are concentrated on the children with low socioeconomic status (SES) background. These results indicate that fetal insults such as exposure to malnutrition may not only hamper the cognitive development of children subject to such conditions, but it may also complicate the efforts of policy-makers in improving the human capital, health, and labor market outcomes of low-SES individuals. Our findings highlight the importance of interventions designed to help economically disadvantaged women during pregnancy.
Handle: RePEc:nbr:nberwo:21545
Template-Type: ReDIF-Paper 1.0
Title: Dark Costs, Missing Data: Shedding Some Light on Services Trade
Classification-JEL: F10; F14
Author-Name: James E. Anderson
Author-Person: pan2
Author-Name: Ingo Borchert
Author-Person: pbo303
Author-Name: Aaditya Mattoo
Author-Person: pma885
Author-Name: Yoto V. Yotov
Author-Person: pyo93
Note: ITI
Number: 21546
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21546
File-URL: http://www.nber.org/papers/w21546.pdf
File-Format: application/pdf
Publication-Status: published as James E. Anderson & Ingo Borchert & Aaditya Mattoo & Yoto V. Yotov, 2018. "Dark Costs, Missing Data: Shedding Some Light on Services Trade," European Economic Review, .
Abstract: A structural gravity model is used to estimate barriers to services trade across many sectors, countries and time. Since the disaggregated output data needed to flexibly infer border barriers are often missing for services, we derive a novel methodology for projecting output data. The empirical implementation sheds light on the role of institutions, geography, size and digital infrastructure as determinants of border barriers. We find that border barriers have generally fallen over time but there are differences across sectors and countries. Notably, border effects for the smallest economies have remained stable, giving rise to a divergent pattern across countries.
Handle: RePEc:nbr:nberwo:21546
Template-Type: ReDIF-Paper 1.0
Title: Are We Approaching an Economic Singularity? Information Technology and the Future of Economic Growth
Classification-JEL: O3; O33; O4; O47
Author-Name: William D. Nordhaus
Author-Person: pno115
Note: EFG PR
Number: 21547
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21547
File-URL: http://www.nber.org/papers/w21547.pdf
File-Format: application/pdf
Publication-Status: published as William D. Nordhaus, 2021. "Are We Approaching an Economic Singularity? Information Technology and the Future of Economic Growth," American Economic Journal: Macroeconomics, vol 13(1), pages 299-332.
Abstract: What are the prospects for long-run economic growth? The present study looks at a recently launched hypothesis, which I label Singularity. The idea here is that rapid growth in computation and artificial intelligence will cross some boundary or Singularity after which economic growth will accelerate sharply as an ever-accelerating pace of improvements cascade through the economy. The paper develops a growth model that features Singularity and presents several tests of whether we are rapidly approaching Singularity. The key question for Singularity is the substitutability between information and conventional inputs. The tests suggest that the Singularity is not near.
Handle: RePEc:nbr:nberwo:21547
Template-Type: ReDIF-Paper 1.0
Title: Optimal Debt and Profitability in the Tradeoff Theory
Classification-JEL: G3; G32
Author-Name: Andrew B. Abel
Author-Person: pab10
Note: CF
Number: 21548
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21548
File-URL: http://www.nber.org/papers/w21548.pdf
File-Format: application/pdf
Publication-Status: published as ABEL, A. B. (2018), Optimal Debt and Profitability in the Trade‐Off Theory. The Journal of Finance, 73: 95-143. doi:10.1111/jofi.12590
Abstract: I develop a dynamic model of leverage with tax deductible interest and an endogenous cost of default. The interest rate includes a premium to compensate lenders for expected losses in default. A borrowing constraint is generated by lenders’ unwillingness to lend an amount that would trigger immediate default. When the borrowing constraint is not binding, the tradeoff theory of debt holds: optimal debt equates the marginal tax shield and the marginal expected cost of default. Contrary to conventional interpretation, but consistent with empirical findings, increases in current or future profitability reduce the optimal leverage ratio when the tradeoff theory holds.
Handle: RePEc:nbr:nberwo:21548
Template-Type: ReDIF-Paper 1.0
Title: The Analytics of Investment, q, and Cash Flow
Classification-JEL: D21; E22; G31
Author-Name: Andrew B. Abel
Author-Person: pab10
Note: CF EFG ME
Number: 21549
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21549
File-URL: http://www.nber.org/papers/w21549.pdf
File-Format: application/pdf
Abstract: In this paper I analyze the relationships among investment, q, and cash flow in a tractable stochastic model in which marginal q and average q are identically equal. After analyzing the impact of changes in the distribution of the marginal operating profit of capital, I extend the model to include measurement error and analyze the cash-flow coefficient in regressions of investment on q and cash flow. In empirical studies, the estimated cash-flow coefficient is generally positive and larger for rapidly growing firms. Such findings are typically interpreted as evidence of financial frictions facing firms. I derive closed-form expressions for the cash-flow coefficient that are positive and larger for faster growing firms, yet there are no financial frictions in the model.
Handle: RePEc:nbr:nberwo:21549
Template-Type: ReDIF-Paper 1.0
Title: Crowding Out in Ricardian Economies
Classification-JEL: E62; G11; H6
Author-Name: Andrew B. Abel
Author-Person: pab10
Note: CF EFG ME PE
Number: 21550
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21550
File-URL: http://www.nber.org/papers/w21550.pdf
File-Format: application/pdf
Publication-Status: published as Andrew B. Abel, 2017. "Crowding out in Ricardian economies," Journal of Monetary Economics, vol 87, pages 52-66.
Abstract: The crowding-out coefficient is the ratio of the reduction in privately-issued bonds to the increase in government bonds that are issued to finance a tax cut. If (1) Ricardian equivalence holds, and (2) households do not simultaneously borrow risklessly and have positive gross positions in other riskless assets, the crowding-out coefficient equals the fraction of the aggregate tax cut that accrues to households that borrow. In the conventional case in which all households receive equal tax cuts, the crowding-out coefficient equals the fraction of households that borrow. In the United States, about 75% of households borrow, so the crowding-out coefficient is predicted to be 0.75, which differs from econometric estimates that are around 0.5. I explore extensions of the model, such as a departure from Ricardian Equivalence or the introduction of cross-sectional variation in taxes, that might account for this difference.
Handle: RePEc:nbr:nberwo:21550
Template-Type: ReDIF-Paper 1.0
Title: Superstitions, Street Traffic, and Subjective Well-Being
Classification-JEL: R41; R48
Author-Name: Michael L. Anderson
Author-Person: pan105
Author-Name: Fangwen Lu
Author-Person: plu299
Author-Name: Yiran Zhang
Author-Name: Jun Yang
Author-Name: Ping Qin
Note: DEV EEE PE
Number: 21551
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21551
File-URL: http://www.nber.org/papers/w21551.pdf
File-Format: application/pdf
Publication-Status: published as Michael L. Anderson & Fangwen Lu & Yiran Zhang & Jun Yang & Ping Qin, 2016. "Superstitions, Street Traffic, and Subjective Well-Being," Journal of Public Economics, .
Abstract: Congestion plays a central role in urban and transportation economics. Existing estimates of congestion costs rely on stated or revealed preferences studies. We explore a complementary measure of congestion costs based on self-reported happiness. Exploiting quasi-random variation in daily congestion in Beijing that arises because of superstitions about the number four, we estimate a strong effect of daily congestion on self-reported happiness. When benchmarking this effect against the relationship between income and self-reported happiness we compute implied congestion costs that are several times larger than conventional estimates. Several factors, including the value of reliability and externalities on non-travelers, can reconcile our alternative estimates with the existing literature.
Handle: RePEc:nbr:nberwo:21551
Template-Type: ReDIF-Paper 1.0
Title: Tax Evasion across Industries: Soft Credit Evidence from Greece
Classification-JEL: G21; H26
Author-Name: Nikolaos Artavanis
Author-Name: Adair Morse
Author-Name: Margarita Tsoutsoura
Author-Person: pts24
Note: CF LE PE
Number: 21552
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21552
File-URL: http://www.nber.org/papers/w21552.pdf
File-Format: application/pdf
Abstract: We document that in semiformal economies, banks lend to tax-evading individuals based on the bank's assessment of the individual's true income. This observation leads to a novel approach to estimate tax evasion. We use microdata on household credit from a Greek bank, and replicate the bank underwriting model to infer the banks estimate of individuals' true income. We estimate that 43%-45% of self-employed income goes unreported and thus untaxed. For 2009, this implies 28.2 billion euros of unreported income, implying foregone tax revenues of over 11 billion euros or 30% of the deficit. Our method innovation allows for estimating the industry distribution of tax evasion in settings where uncovering the incidence of hidden cash transactions is difficult using other methods. Primary tax-evading industries are professional services — medicine, law, engineering, education, and media. We conclude with evidence that contemplates the importance of institutions, paper trail and political willpower for the persistence of tax evasion.
Handle: RePEc:nbr:nberwo:21552
Template-Type: ReDIF-Paper 1.0
Title: Banker Preferences, Interbank Connections, and the Enduring Structure of the Federal Reserve System
Classification-JEL: E58; N21; N22
Author-Name: Matthew S. Jaremski
Author-Person: pja349
Author-Name: David C. Wheelock
Note: DAE
Number: 21553
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21553
File-URL: http://www.nber.org/papers/w21553.pdf
File-Format: application/pdf
Publication-Status: published as Matthew Jaremski & David C. Wheelock, 2017. "Banker preferences, interbank connections, and the enduring structure of the Federal Reserve System," Explorations in Economic History, vol 66, pages 21-43.
Abstract: Established by a three person committee in 1914, the structure of the Federal Reserve System has remained essentially unchanged ever since, despite criticism at the time and over ensuing decades. With Congress now considering reforms to the System, this paper examines the original selection of cities for Reserve Banks and branches, and of district boundaries. We show that each aspect of the Fed’s structure reflected the preferences of national banks, including adjustments to district boundaries after 1914. Further, using newly-collected data on interbank connections, we find that banker preferences mirrored established correspondent relationships. The Federal Reserve was thus formed on top of the structure that it was meant to replace.
Handle: RePEc:nbr:nberwo:21553
Template-Type: ReDIF-Paper 1.0
Title: The Effects of the Tax Deduction for Postsecondary Tuition: Implications for Structuring Tax-Based Aid
Classification-JEL: C21; C55; H2; H24; H26; I22; I23; I26
Author-Name: Caroline M. Hoxby
Author-Person: pho46
Author-Name: George B. Bulman
Author-Person: pbu422
Note: ED LS PE
Number: 21554
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21554
File-URL: http://www.nber.org/papers/w21554.pdf
File-Format: application/pdf
Publication-Status: published as Caroline M. Hoxby & George B. Bulman, 2015. "The Effects of the Tax Deduction for Postsecondary Tuition: Implications for Structuring Tax-Based Aid," Economics of Education Review, vol ().
Abstract: The federal tax deduction for tuition potentially increases investments in postsecondary education at minimal administrative cost. We assess whether it actually does this using regression discontinuity methods on the income cutoffs that govern eligibility for the deduction. Although many eligible households take nearly the maximum deduction allowed, we find no evidence that it affects attending college (at all), attending full- versus part-time, attending four- versus two-year college, the resources experienced in college, the amount paid for college, or student loans. Our analysis suggests that the deduction's inefficacy may be due to issues of salience, timing, and the method of receipt. We argue that the deduction might increase college-going if it were modified in simple ways that would not increase costs but would make it more likely to relax liquidity constraints and be perceived as a price change (which they is) as opposed to an income change. We outline how such modifications could be tested. This study has independent applied econometrics interest because households who would be just above a cut-off manage their incomes so that they fall slightly below it. This income management generates bias due to reverse causality, and we explore how to choose "doughnut-holes" that avoid bias without undue loss of statistical power.
Handle: RePEc:nbr:nberwo:21554
Template-Type: ReDIF-Paper 1.0
Title: Demographics and Aggregate Household Saving in Japan, China, and India
Classification-JEL: E2; J1
Author-Name: Chadwick C. Curtis
Author-Person: pcu166
Author-Name: Steven Lugauer
Author-Person: plu182
Author-Name: Nelson C. Mark
Author-Person: pma186
Note: AG CH DEV IFM
Number: 21555
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21555
File-URL: http://www.nber.org/papers/w21555.pdf
File-Format: application/pdf
Publication-Status: published as Curtis, Chadwick C. & Lugauer, Steven & Mark, Nelson C., 2017. "Demographics and aggregate household saving in Japan, China, and India," Journal of Macroeconomics, Elsevier, vol. 51(C), pages 175-191.
Abstract: We present a model of household life-cycle saving decisions in order to quantify the impact of demographic changes on aggregate household saving rates in Japan, China, and India. The observed age distributions help explain the contrasting saving patterns over time across the three countries. In the model simulations, the growing number of retirees suppresses Japanese saving rates, while decreasing family size increases saving for both China and India. Projecting forward, the model predicts lower household saving rates in Japan and China.
Handle: RePEc:nbr:nberwo:21555
Template-Type: ReDIF-Paper 1.0
Title: The Global Productivity Slump: Common and Country-Specific Factors
Classification-JEL: E0; E1; O3
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Donghyun Park
Author-Person: ppa611
Author-Name: Kwanho Shin
Author-Person: psh131
Note: IFM
Number: 21556
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21556
File-URL: http://www.nber.org/papers/w21556.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Donghyun Park & Kwanho Shin, 2017. "The Global Productivity Slump: Common and Country-Specific Factors," Asian Economic Papers, vol 16(3), pages 1-41.
Abstract: Productivity growth is slowing around the world. In 2014, according to the Conference Board’s Total Economy Data Base, the growth of total factor productivity (TFP) hovered around zero for the third straight year, down from 1 per cent in 1996-2006 and ½ per cent in 2007-12. In this paper we identify previous episodes of sharp and sustained decelerations in TFP growth using data for a large sample of countries and years. TFP slumps are ubiquitous: we find as many as 77 such episodes, depending on definition, in low-, middle- and high-income countries. Low levels of educational attainment, unusually high investment rates and weak political systems are among the significant country-specific correlates of TFP slumps, while increases in risk (higher TED spreads) and energy-price shocks are among the significant global factors.
Handle: RePEc:nbr:nberwo:21556
Template-Type: ReDIF-Paper 1.0
Title: Dividend Dynamics, Learning, and Expected Stock Index Returns
Classification-JEL: G10; G11; G12
Author-Name: Ravi Jagannathan
Author-Person: pja91
Author-Name: Binying Liu
Note: AP
Number: 21557
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21557
File-URL: http://www.nber.org/papers/w21557.pdf
File-Format: application/pdf
Publication-Status: published as RAVI JAGANNATHAN & BINYING LIU, 2019. "Dividend Dynamics, Learning, and Expected Stock Index Returns," The Journal of Finance, vol 74(1), pages 401-448.
Abstract: We present a latent variable model of dividends that predicts, out-of-sample, 39.5% to 41.3% of the variation in annual dividend growth rates between 1975 and 2016. Further, when learning about dividend dynamics is incorporated into a long-run risks model, the model predicts, out-of-sample, 25.3% to 27.1% of the variation in annual stock index returns over the same time horizon, and learning contributes approximately half of the predictability in returns. These findings support the view that both investors' aversion to long-run risks and their learning about these risks are important in determining the stock index prices and expected returns.
Handle: RePEc:nbr:nberwo:21557
Template-Type: ReDIF-Paper 1.0
Title: How to Construct Nationally Representative Firm Level Data from the Orbis Global Database: New Facts and Aggregate Implications
Classification-JEL: E0; F0; O1
Author-Name: Sebnem Kalemli-Ozcan
Author-Person: pka37
Author-Name: Bent Sorensen
Author-Person: pso113
Author-Name: Carolina Villegas-Sanchez
Author-Person: pvi348
Author-Name: Vadym Volosovych
Author-Person: pvo44
Author-Name: Sevcan Yesiltas
Author-Person: pye103
Note: EFG IFM PR
Number: 21558
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21558
File-URL: http://www.nber.org/papers/w21558.pdf
File-Format: application/pdf
Abstract: We construct nationally representative firm-level longitudinal data for European countries using financial statements from the Orbis database. We validate our data by comparing its coverage and firm size distribution to official statistics. We showcase two applications to show the importance of firm representativeness in understanding macroeconomic outcomes. First, we show that small-and-medium-sized firms (SMEs) account for a large share of aggregate economic activity. Second, we document that firm representativeness is important for calculating industry concentration trends over time as the share of economic activity accounted by top firms in an industry changes with the firm samples used.
Handle: RePEc:nbr:nberwo:21558
Template-Type: ReDIF-Paper 1.0
Title: Towards a History of the Junk Bond Market, 1910-1955
Classification-JEL: N12
Author-Name: Peter F. Basile
Author-Name: Sung Won Kang
Author-Name: John Landon-Lane
Author-Person: pla84
Author-Name: Hugh Rockoff
Author-Person: pro65
Note: DAE
Number: 21559
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21559
File-URL: http://www.nber.org/papers/w21559.pdf
File-Format: application/pdf
Abstract: We present a new monthly index of the yield on junk (high yield) bonds from 1910-1955. We then use the index to reexamine some of the main debates about the financial history of the interwar years. A close look at junk bond yields: (1) strengthens the view that the decline in lending standards in the late 1920s was modest at best: (2) casts doubt on the view that the banking crisis that began in 1930 disrupted financial markets because banks liquidated their holdings of risky bonds; (3) strengthens the view that the cost of capital rose substantially in the early 1930s and remained high for the rest of the decade; (4) casts doubt on the view that financial markets entered a liquidity trap in the second half of the 1930s; and (5) strengthens the case for believing that junk bond yields contain some information useful for making economic forecasts.
Handle: RePEc:nbr:nberwo:21559
Template-Type: ReDIF-Paper 1.0
Title: The Disability Employment Puzzle: A Field Experiment on Employer Hiring Behavior
Classification-JEL: J14; J24; J71; J78; K39
Author-Name: Mason Ameri
Author-Name: Lisa Schur
Author-Name: Meera Adya
Author-Name: Scott Bentley
Author-Name: Patrick McKay
Author-Name: Douglas Kruse
Author-Person: pkr335
Note: LE LS
Number: 21560
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21560
File-URL: http://www.nber.org/papers/w21560.pdf
File-Format: application/pdf
Publication-Status: published as Mason Ameri & Lisa Schur & Meera Adya & F. Scott Bentley & Patrick McKay & Douglas Kruse, 2018. "The Disability Employment Puzzle: A Field Experiment on Employer Hiring Behavior," ILR Review, vol 71(2), pages 329-364.
Abstract: People with disabilities have low employment and wage levels, and some studies suggest employer discrimination is a contributing factor. Following the method of Bertrand and Mullainathan (2003), new evidence is presented from a field experiment that sent applications in response to 6,016 advertised accounting positions from well-qualified fictional applicants, with one-third of cover letters disclosing that the applicant has a spinal cord injury, one-third disclosing the presence of Asperger’s Syndrome, and one-third not mentioning disability. These specific disabilities were chosen because they would not be expected to limit productivity in accounting, helping rule out productivity-based explanations for any differences in employer responses. Half of the resumes portrayed a novice accountant, and half portrayed an experienced one. The fictional applicants with disabilities received 26% fewer expressions of employer interest than those without disabilities, with little difference between the two types of disability. The disability gap was concentrated among more experienced applicants, and among private companies with fewer than 15 employees that are not covered by the ADA, although comparable state statutes cover about half of them. Comparisons above and below disability law coverage thresholds point to a possible positive effect of the ADA on employer responses to applicants with disabilities, but no clear effects of state laws. The overall pattern of findings is consistent with the idea that disability discrimination continues to impede employment prospects of people with disabilities, and more attention needs to be paid to employer behavior and the demand side of the labor market for people with disabilities.
Handle: RePEc:nbr:nberwo:21560
Template-Type: ReDIF-Paper 1.0
Title: Country-Specific Preferences and Employment Rates in Europe
Classification-JEL: J22; J61; Z10
Author-Name: Simone Moriconi
Author-Person: pmo574
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: LS
Number: 21561
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21561
File-URL: http://www.nber.org/papers/w21561.pdf
File-Format: application/pdf
Publication-Status: published as Simone Moriconi & Giovanni Peri, 2019. "Country-Specific Preferences and Employment Rates in Europe," European Economic Review, .
Abstract: European countries exhibit significant differences in employment rates of adult males. Differences in labor-leisure preferences, partly determined by cultural values that vary across countries, can be responsible for part of these differences. However, differences in labor market institutions, productivity, and skills of the labor force are also crucial factors and likely correlated with preferences. In this paper we use variation among first- and second-generation cross-country European migrants to isolate the effect of culturally transmitted labor-leisure preferences on individual employment rates. If migrants maintain some of their country of origin labor-leisure preferences as they move to different labor market conditions, we can separate the impact of preferences from the effect of other factors. We find country-specific labor-leisure preferences explain about 24% of the top-bottom variation in employment rates across European countries.
Handle: RePEc:nbr:nberwo:21561
Template-Type: ReDIF-Paper 1.0
Title: How Does Household Income Affect Child Personality Traits and Behaviors?
Classification-JEL: H24; H3; H31; I14; I3; I38; J24
Author-Name: Randall Akee
Author-Person: pak85
Author-Name: Emilia Simeonova
Author-Person: psi303
Author-Name: E. Jane Costello
Author-Name: William Copeland
Note: CH EH
Number: 21562
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21562
File-URL: http://www.nber.org/papers/w21562.pdf
File-Format: application/pdf
Publication-Status: published as Randall Akee & William Copeland & E. Jane Costello & Emilia Simeonova, 2018. "How Does Household Income Affect Child Personality Traits and Behaviors?," American Economic Review, vol 108(3), pages 775-827.
Abstract: Existing research has investigated the effect of early childhood educational interventions on the child’s later-life outcomes. These studies have found limited impact of supplementary programs on children’s cognitive skills, but sustained effects on personality traits. We examine how a positive change in unearned household income affects children’s emotional and behavioral health and personality traits. Our results indicate that there are large beneficial effects of improved household financial wellbeing on children’s emotional and behavioral health and positive personality trait development. Moreover, we find that these effects are most pronounced for children who are lagging behind their peers in these measures before the intervention. Increasing household incomes reduce differences across adolescents with different levels of initial emotional-behavioral symptoms and personality traits. We also examine potential channels through which the increased household income may contribute to these positive changes. Parenting and relationships within the family appear to be an important mechanism. We also find evidence that a sub-sample of the population moves to census tracts with better income levels and educational attainment.
Handle: RePEc:nbr:nberwo:21562
Template-Type: ReDIF-Paper 1.0
Title: Efficiently Inefficient Markets for Assets and Asset Management
Classification-JEL: D4; D53; D83; G02; G12; G14; G23; L10
Author-Name: Nicolae B. Gârleanu
Author-Name: Lasse H. Pedersen
Author-Person: ppe174
Note: AP
Number: 21563
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21563
File-URL: http://www.nber.org/papers/w21563.pdf
File-Format: application/pdf
Publication-Status: published as NICOLAE GÂRLEANU & LASSE HEJE PEDERSEN, 2018. "Efficiently Inefficient Markets for Assets and Asset Management," The Journal of Finance, vol 73(4), pages 1663-1712.
Abstract: We consider a model where investors can invest directly or search for an asset manager, information about assets is costly, and managers charge an endogenous fee. The efficiency of asset prices is linked to the efficiency of the asset management market: if investors can find managers more easily, more money is allocated to active management, fees are lower, and asset prices are more efficient. Informed managers outperform after fees, uninformed managers underperform after fees, and the net performance of the average manager depends on the number of "noise allocators." Finally, we show why large investors should be active and discuss broader implications and welfare considerations.
Handle: RePEc:nbr:nberwo:21563
Template-Type: ReDIF-Paper 1.0
Title: Low-Frequency Econometrics
Classification-JEL: C12; C22; C32
Author-Name: Ulrich K. Müller
Author-Name: Mark W. Watson
Author-Person: pwa582
Note: TWP
Number: 21564
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21564
File-URL: http://www.nber.org/papers/w21564.pdf
File-Format: application/pdf
Abstract: Many questions in economics involve long-run or trend variation and covariation in time series. Yet, time series of typical lengths contain only limited information about this long-run variation. This paper suggests that long-run sample information can be isolated using a small number of low-frequency trigonometric weighted averages, which in turn can be used to conduct inference about long-run variability and covariability. Because the low-frequency weighted averages have large sample normal distributions, large sample valid inference can often be conducted using familiar small sample normal inference procedures. Moreover, the general approach is applicable for a wide range of persistent stochastic processes that go beyond the familiar I(0) and I(1) models.
Handle: RePEc:nbr:nberwo:21564
Template-Type: ReDIF-Paper 1.0
Title: The Price of Responsibility: The Impact of Health Reform on Non-Poor Uninsureds
Classification-JEL: I11; I13; I18
Author-Name: Mark Pauly
Author-Name: Adam Leive
Author-Person: ple1011
Author-Name: Scott Harrington
Note: EH
Number: 21565
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21565
File-URL: http://www.nber.org/papers/w21565.pdf
File-Format: application/pdf
Abstract: This paper estimates the change in net (of subsidy) financial burden (“the price of responsibility”) and in welfare that would be experienced by a large nationally representative sample of the “non-poor” uninsured if they were to purchase Silver or Bronze plans on the ACA exchanges. The sample is the set of full-year uninsured persons represented in the Current Population Survey for the pre-ACA period with incomes above 138 percent of the federal poverty level. The estimated change in financial burden compares out-of-pocket payments by income stratum in the pre-ACA period with the sum of premiums (net of subsidy) and expected cost sharing (net of subsidy) for benchmark Silver and Bronze plans, under various assumptions about the extent of increased spending associated with obtaining coverage. In addition to changes in the financial burden, our welfare estimates incorporate the value of additional care consumed and the change in risk premiums for changes in exposure to out-of-pocket payments associated with coverage, under various assumptions about risk aversion. We find that the average financial burden will increase for all income levels once insured. Subsidy-eligible persons with incomes below 250 percent of the poverty threshold likely experience welfare improvements that offset the higher financial burden, depending on assumptions about risk aversion and the value of additional consumption of medical care. However, even under the most optimistic assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience both higher financial burden and lower estimated welfare; indicating a positive “price of responsibility” for complying with the individual mandate. The percentage of the sample with estimated welfare increases is close to matching observed take-up rates by the previously uninsured in the exchanges.
Handle: RePEc:nbr:nberwo:21565
Template-Type: ReDIF-Paper 1.0
Title: Model Uncertainty and the Effect of Shall-Issue Right-to-Carry Laws on Crime
Classification-JEL: H0; K0
Author-Name: Steven N. Durlauf
Author-Person: pdu117
Author-Name: Salvador Navarro
Author-Person: pna222
Author-Name: David A. Rivers
Author-Person: pri210
Note: ED EFG
Number: 21566
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21566
File-URL: http://www.nber.org/papers/w21566.pdf
File-Format: application/pdf
Publication-Status: published as Steven N. Durlauf & Salvador Navarro & David A. Rivers, 2016. "Model uncertainty and the effect of shall-issue right-to-carry laws on crime," European Economic Review, vol 81(), pages 32-67.
Abstract: This paper explores the role of model uncertainty in explaining the different findings in the literature regarding the effect of shall-issue right-to-carry concealed weapons laws on crime. In particular, we systematically examine how different modeling assumptions affect the results. We find little support for some widely used assumptions in the literature (e.g., population weights), but find that allowing for the effect of the law to be heterogeneous across both counties and over time is important for explaining the observed patterns of crime. In terms of model uncertainty, we find that there is substantial variation in the estimated effects for each model across all dimensions of the model space. This suggests that one should be cautious in using the results from any particular model to inform policy decisions.
Handle: RePEc:nbr:nberwo:21566
Template-Type: ReDIF-Paper 1.0
Title: Do Banks Pass Through Credit Expansions to Consumers Who Want to Borrow?
Classification-JEL: D82; E5; G01; G2; L1
Author-Name: Sumit Agarwal
Author-Person: pag47
Author-Name: Souphala Chomsisengphet
Author-Name: Neale Mahoney
Author-Name: Johannes Stroebel
Note: AP CF EFG IFM IO ME PE
Number: 21567
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21567
File-URL: http://www.nber.org/papers/w21567.pdf
File-Format: application/pdf
Publication-Status: published as Sumit Agarwal & Souphala Chomsisengphet & Neale Mahoney & Johannes Stroebel, 2018. "Do Banks Pass through Credit Expansions to Consumers Who want to Borrow?*," The Quarterly Journal of Economics, vol 133(1), pages 129-190.
Abstract: We propose a new approach to studying the pass-through of credit expansion policies that focuses on frictions, such as asymmetric information, that arise in the interaction between banks and borrowers. We decompose the effect of changes in banks’ cost of funds on aggregate borrowing into the product of banks’ marginal propensity to lend (MPL) to borrowers and those borrowers’ marginal propensity to borrow (MPB), aggregated over all borrowers in the economy. We apply our framework by estimating heterogeneous MPBs and MPLs in the U.S. credit card market. Using panel data on 8.5 million credit cards and 743 credit limit regression discontinuities, we find that the MPB is declining in credit score, falling from 59% for consumers with FICO scores below 660 to essentially zero for consumers with FICO scores above 740. We use a simple model of optimal credit limits to show that a bank’s MPL depends on a small number of "sufficient statistics" that capture forces such as asymmetric information, and that can be estimated using our credit limit discontinuities. For the lowest FICO score consumers, higher credit limits sharply reduce profits from lending, limiting banks’ optimal MPL to these consumers. The negative correlation between MPB and MPL reduces the impact of changes in banks’ cost of funds on aggregate household borrowing, and highlights the importance of frictions in bank-borrower interactions for understanding the pass-through of credit expansions.
Handle: RePEc:nbr:nberwo:21567
Template-Type: ReDIF-Paper 1.0
Title: TAs Like Me: Racial Interactions between Graduate Teaching Assistants and Undergraduates
Classification-JEL: I2; I23
Author-Name: Lester Lusher
Author-Person: plu402
Author-Name: Doug Campbell
Author-Person: pca584
Author-Name: Scott Carrell
Author-Person: pca439
Note: ED LS PE
Number: 21568
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21568
File-URL: http://www.nber.org/papers/w21568.pdf
File-Format: application/pdf
Publication-Status: published as Lester Lusher & Doug Campbell & Scott Carrell, 2018. "TAs like me: Racial interactions between graduate teaching assistants and undergraduates," Journal of Public Economics, vol 159, pages 203-224.
Abstract: Over the past 40 years, higher education institutions in the U.S. have experienced a dramatic shift in the racial composition of students enrolled in both undergraduate and graduate programs. Using administrative data from a large, diverse university in California, we identify the extent to which the academic outcomes of undergraduates are affected by the race/ethnicity of their graduate student teaching assistants (TAs). To overcome selection issues in course taking, we exploit the timing of TA assignments, which occur after students enroll in a course, and we estimate models with both class and student fixed effects. Results show a positive and significant increase in course grades when students are assigned TAs of a similar race/ethnicity. These effects are largest in classes where TAs are given advanced copies of exams and when exams had no multiple choice questions. We also find that assignment to similar race TAs positively affect both section and office hour attendance, suggesting that TA-student match quality and role model effects are the primary drivers of the results.
Handle: RePEc:nbr:nberwo:21568
Template-Type: ReDIF-Paper 1.0
Title: Gradualism in Monetary Policy: A Time-Consistency Problem?
Classification-JEL: E44; E52; E58
Author-Name: Jeremy C. Stein
Author-Person: pst43
Author-Name: Adi Sunderam
Note: AP CF EFG ME
Number: 21569
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21569
File-URL: http://www.nber.org/papers/w21569.pdf
File-Format: application/pdf
Abstract: We develop a model of monetary policy with two key features: (i) the central bank has private information about its long-run target for the policy rate; and (ii) the central bank is averse to bond-market volatility. In this setting, discretionary monetary policy is gradualist, or inertial, in the sense that the central bank only adjusts the policy rate slowly in response to changes in its privately-observed target. Such gradualism reflects an attempt to not spook the bond market. However, this effort ends up being thwarted in equilibrium, as long-term rates rationally react more to a given move in short rates when the central bank moves more gradually. The same desire to mitigate bond-market volatility can lead the central bank to lower short rates sharply when publicly-observed term premiums rise. In both cases, there is a time-consistency problem, and society would be better off appointing a central banker who cares less about the bond market. We also discuss the implications of our model for forward guidance once the economy is away from the zero lower bound.
Handle: RePEc:nbr:nberwo:21569
Template-Type: ReDIF-Paper 1.0
Title: Improving Risk Equalization with Constrained Regression
Classification-JEL: I10; I11; I13; I18
Author-Name: Richard van Kleef
Author-Name: Thomas McGuire
Author-Name: Rene van Vliet
Author-Name: Wynand van de Ven
Note: EH
Number: 21570
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21570
File-URL: http://www.nber.org/papers/w21570.pdf
File-Format: application/pdf
Publication-Status: published as van Kleef, R.C., McGuire, T.G., van Vliet, R.C.J.A. et al. Eur J Health Econ (2017) 18: 1137. https://doi.org/10.1007/s10198-016-0859-1 https://doi.org/10.1007/s10198-016-0859-1
Abstract: Several countries rely on regulated health plan competition to combine affordability of health plans with incentives for cost containment and quality improvement. Typically, these policies include premium regulation supplemented with risk equalization to compensate health plans for predictable variation in medical spending. An extensive empirical literature shows, however, that even the state-of-the-art risk equalization models undercompensate some risk groups and overcompensate others, leaving systematic incentives for risk selection. A natural approach to reducing under or overcompensation for a group is to include membership in that group as an indicator in the risk equalization model. For several types of indicators, however, inclusion can be problematic or infeasible. This paper introduces and illustrates an alternative approach to reducing over or undercompensation in such cases: constraining the estimated coefficients of the risk equalization model so as to limit over or undercompensation. Our empirical illustration is based on administrative data on medical spending and risk characteristics of nearly all individuals with basic health insurance in the Netherlands. We evaluate empirically the benefits of constraints in terms of reduced under or overcompensation on indicators omitted from the Dutch risk equalization model and their costs in terms of increased under or overcompensation on indicators included in the model. Our findings imply that the benefits of introducing constraints can be worth the costs. Constrained regression adds a tool for developing risk equalization models that can improve the overall economic performance of health plan payment schemes.
Handle: RePEc:nbr:nberwo:21570
Template-Type: ReDIF-Paper 1.0
Title: Non-Cognitive Deficits and Young Adult Outcomes: The Long-Run Impacts of a Universal Child Care Program
Classification-JEL: I1; J13; K42
Author-Name: Michael Baker
Author-Person: pba400
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Kevin Milligan
Author-Person: pmi14
Note: CH
Number: 21571
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21571
File-URL: http://www.nber.org/papers/w21571.pdf
File-Format: application/pdf
Abstract: Past research has demonstrated that positive increments to the non-cognitive development of children can have long-run benefits. We test the symmetry of this contention by studying the effects of a sizeable negative shock to non-cognitive skills due to the introduction of universal child care in Quebec. We first confirm earlier findings showing reduced contemporaneous non-cognitive development following the program introduction in Quebec, with little impact on cognitive test scores. We then show these non-cognitive deficits persisted to school ages, and also that cohorts with increased child care access subsequently had worse health, lower life satisfaction, and higher crime rates later in life. The impacts on criminal activity are concentrated in boys. Our results reinforce previous evidence on the central role of non-cognitive skills for long-run success.
Handle: RePEc:nbr:nberwo:21571
Template-Type: ReDIF-Paper 1.0
Title: Banks, Politics, and Political Parties: From Partisan Banking to Open Access in Early Massachusetts
Classification-JEL: G2; G28; N0; N11; O1; O5
Author-Name: Qian Lu
Author-Name: John Joseph Wallis
Note: DAE
Number: 21572
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21572
File-URL: http://www.nber.org/papers/w21572.pdf
File-Format: application/pdf
Publication-Status: published as Banks, Politics, and Political Parties: From Partisan Banking to Open Access in Early Massachusetts, Qian Lu, John Joseph Wallis. in Organizations, Civil Society, and the Roots of Development, Lamoreaux and Wallis. 2017
Abstract: The United States was the first nation to allow open access to the corporate form to its citizens. The state of Massachusetts was not only one of the first states to provide its members with legally sanctioned tools to create organizations and enable open access but, on a per capita basis, had many more banks and other corporations than other states as early as the 1820s. Nonetheless, Massachusetts did not open access easily. This paper documents that until 1812, bank charters were only available to members of the Federalist Party in Massachusetts. When the Democratic-Republicans gained control of the state legislature and governor’s mansion in 1811-12, they chartered two new Democratic-Republican banks and threatened to eliminate most of the Federalist bank. The paper documents the close association of politicians and bankers. Before 1811, close to three-quarters of all the bankers we can identify had been or would eventually become a state legislator. The evolving relationships between politics and banking, the eventual opening of banking, and the wealth of bankers are tracked into the 1850s.
Handle: RePEc:nbr:nberwo:21572
Template-Type: ReDIF-Paper 1.0
Title: Dumping and Antidumping Duties
Classification-JEL: F13
Author-Name: Bruce A. Blonigen
Author-Person: pbl165
Author-Name: Thomas J. Prusa
Author-Person: ppr249
Note: ITI
Number: 21573
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21573
File-URL: http://www.nber.org/papers/w21573.pdf
File-Format: application/pdf
Publication-Status: published as B.A. Blonigen, T.J. Prusa, Chapter 3 - Dumping and Antidumping Duties, Editor(s): Kyle Bagwell, Robert W. Staiger, Handbook of Commercial Policy, North-Holland, Volume 1, Part B, 2016, Pages 107-159, ISSN 2214-3122, ISBN 9780444639226, https://doi.org/10.1016/bs.hescop.2016.04.008.
Abstract: The majority of the world’s countries have antidumping (AD) statutes in place, hundreds of AD actions occur annually across these countries, and AD criteria and procedures have been codified in the General Agreement on Tariffs and Trade and its successor, the World Trade Organization. AD’s unique characteristics along with its high incidence of use make it a particularly apt policy for studying numerous trade theories and political economy models. We review the economics literature on dumping and antidumping activity, with particular emphasis on the evolution of the literature and the most recent contributions. We also point the reader to resources and rich data available to study AD, as well as our thoughts (in a concluding section) on where scholars should next focus their attention in this literature.
Handle: RePEc:nbr:nberwo:21573
Template-Type: ReDIF-Paper 1.0
Title: What is a Sustainable Public Debt?
Classification-JEL: E62; F34; F42; H21; H6; H87
Author-Name: Pablo D'Erasmo
Author-Person: pde385
Author-Name: Enrique G. Mendoza
Author-Person: pme30
Author-Name: Jing Zhang
Author-Person: pzh153
Note: IFM
Number: 21574
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21574
File-URL: http://www.nber.org/papers/w21574.pdf
File-Format: application/pdf
Publication-Status: published as P. D’Erasmo, E.G. Mendoza, J. Zhang, Chapter 32 - What is a Sustainable Public Debt?, Editor(s): John B. Taylor, Harald Uhlig, Handbook of Macroeconomics, Elsevier, Volume 2, 2016, Pages 2493-2597, ISSN 1574-0048, ISBN 9780444594877, https://doi.org/10.1016/bs.hesmac.2016.03.013.
Abstract: The question of what is a sustainable public debt is paramount in the macroeconomic analysis of fiscal policy. This question is usually posed as asking whether the outstanding public debt and its projected path are consistent with those of the government's revenues and expenditures (i.e. whether fiscal solvency conditions hold). We identify critical flaws in the traditional approach to evaluate debt sustainability, and examine three alternative approaches that provide useful econometric and model-simulation tools to analyze debt sustainability. The first approach is Bohn's non-structural empirical framework based on a fiscal reaction function that characterizes the dynamics of sustainable debt and primary balances. The second is a structural approach based on a calibrated dynamic general equilibrium framework with a fully specified fiscal sector, which we use to quantify the positive and normative effects of fiscal policies aimed at restoring fiscal solvency in response to changes in debt. The third approach deviates from the others in assuming that governments cannot commit to repay their domestic debt, and can thus optimally decide to default even if debt is sustainable in terms of fiscal solvency. We use these three approaches to analyze debt sustainability in the United States and Europe after the recent surge in public debt following the 2008 crisis, and find that all three raise serious questions.
Handle: RePEc:nbr:nberwo:21574
Template-Type: ReDIF-Paper 1.0
Title: Risk, Unemployment, and the Stock Market: A Rare-Event-Based Explanation of Labor Market Volatility
Classification-JEL: E24; E32; G12
Author-Name: Mete Kilic
Author-Name: Jessica A. Wachter
Author-Person: pwa346
Note: AP EFG
Number: 21575
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21575
File-URL: http://www.nber.org/papers/w21575.pdf
File-Format: application/pdf
Publication-Status: published as Mete Kilic & Jessica A Wachter, 2018. "Risk, Unemployment, and the Stock Market: A Rare-Event-Based Explanation of Labor Market Volatility," The Review of Financial Studies, vol 31(12), pages 4762-4814.
Abstract: What is the driving force behind the cyclical behavior of unemployment and vacancies? What is the relation between job-creation incentives of firms and stock market valuations? We answer these questions in a model with time-varying risk, modeled as a small and variable probability of an economic disaster. A high probability implies greater risk and lower future growth, lowering the incentives of firms to invest in hiring. During periods of high risk, stock market valuations are low and unemployment rises. The model thus explains volatility in equity and labor markets, and the relation between the two.
Handle: RePEc:nbr:nberwo:21575
Template-Type: ReDIF-Paper 1.0
Title: Monetary Policy, Bond Risk Premia, and the Economy
Classification-JEL: E32; E43; E44; E52; G12
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 21576
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21576
File-URL: http://www.nber.org/papers/w21576.pdf
File-Format: application/pdf
Publication-Status: published as Ireland, Peter N., 2015. "Monetary policy, bond risk premia, and the economy," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 124-140.
Abstract: This paper develops an affine model of the term structure of interest rates in which bond yields are driven by observable and unobservable macroeconomic factors. It imposes restrictions to identify the effects of monetary policy and other structural disturbances on output, inflation, and interest rates and to decompose movements in long-term rates into terms attributable to changing expected future short rates versus risk premia. The estimated model highlights a broad range of channels through which monetary policy affects risk premia and the economy, risk premia affect monetary policy and the economy, and the economy affects monetary policy and risk premia.
Handle: RePEc:nbr:nberwo:21576
Template-Type: ReDIF-Paper 1.0
Title: Public Universities, Equal Opportunity, and the Legacy of Jim Crow: Evidence from North Carolina
Classification-JEL: I2
Author-Name: Charles T. Clotfelter
Author-Person: pcl34
Author-Name: Helen F. Ladd
Author-Person: pla158
Author-Name: Jacob L. Vigdor
Author-Person: pvi23
Note: ED
Number: 21577
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21577
File-URL: http://www.nber.org/papers/w21577.pdf
File-Format: application/pdf
Abstract: College attendance and completion in the U.S. are strongly correlated with race and socioeconomic background. Do public postsecondary institutions themselves exacerbate pre-college disparities, or reduce them? We address this question using longitudinal data linking the records of students at North Carolina’s public four-year universities to their public K-12 records. As a result of an institutional structure forged during the period of Jim Crow segregation, black students who attend the state’s public university system are likely to experience markedly more racial isolation in college than they did in middle school. Another, more positive consequence of this structure is to boost in-state public four-year college enrollment and graduation by African-American students relative to white students with similar backgrounds. Conditional on enrolling in one of the state’s public universities, however, black students lag behind whites in grades and graduation rates. Regarding socioeconomic background, we find that lower-status youth are less likely to enter the system and less likely to succeed once they enter than those with higher status. The socioeconomic gap in graduation rates among matriculants has, however, declined in recent years.
Handle: RePEc:nbr:nberwo:21577
Template-Type: ReDIF-Paper 1.0
Title: As the Wind Blows: The Effects of Long-Term Exposure to Air Pollution on Mortality
Classification-JEL: I12; Q53
Author-Name: Michael L. Anderson
Author-Person: pan105
Note: AG EEE EH PE
Number: 21578
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21578
File-URL: http://www.nber.org/papers/w21578.pdf
File-Format: application/pdf
Publication-Status: published as Michael L Anderson, 2020. "As the Wind Blows: The Effects of Long-Term Exposure to Air Pollution on Mortality," Journal of the European Economic Association, vol 18(4), pages 1886-1927.
Abstract: There is strong evidence that short-run fluctuations in air pollution negatively impact infant health and contemporaneous adult health, but there is less evidence on the causal link between long-term exposure to air pollution and increased adult mortality. This project estimates the impact of long-term exposure to air pollution on mortality by leveraging quasi-random variation in pollution levels generated by wind patterns near major highways. We combine geocoded data on the residence of every decedent in Los Angeles over three years, high-frequency wind data, and Census Short Form data. Using these data, we estimate the effect of downwind exposure to highway-generated pollutants on the age-specific mortality rate by using bearing to the nearest major highway as an instrument for pollution exposure. We find that doubling the percentage of time spent downwind of a highway increases mortality among individuals 75 and older by 3.6 to 6.8 percent. These estimates are robust and economically significant.
Handle: RePEc:nbr:nberwo:21578
Template-Type: ReDIF-Paper 1.0
Title: Neophilia Ranking of Scientific Journals
Classification-JEL: I1; O3; O31
Author-Name: Mikko Packalen
Author-Person: ppa648
Author-Name: Jay Bhattacharya
Note: EH PR
Number: 21579
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21579
File-URL: http://www.nber.org/papers/w21579.pdf
File-Format: application/pdf
Publication-Status: published as Mikko Packalen & Jay Bhattacharya, 2017. "Neophilia ranking of scientific journals," Scientometrics, vol 110(1), pages 43-64.
Abstract: The ranking of scientific journals is important because of the signal it sends to scientists about what is considered most vital for scientific progress. Existing ranking systems focus on measuring the influence of a scientific paper (citations)—these rankings do not reward journals for publishing innovative work that builds on new ideas. We propose an alternative ranking based on the proclivity of journals to publish papers that build on new ideas, and we implement this ranking via a text-based analysis of all published biomedical papers dating back to 1946. Our results show that our neophilia ranking is distinct from citation-based rankings. Prior theoretical work suggests an active role for our neophilia index in science policy. Absent an explicit incentive to pursue novel science, scientists under-invest in innovative work because of a coordination problem: for work on a new idea to flourish, many scientists must decide to adopt it in their work. Rankings that are based purely on influence thus do not provide sufficient incentives for publishing innovative work. By contrast, adoption of the neophilia index as part of journal-ranking procedures by funding agencies and university administrators would provide an explicit incentive for journals to publish innovative work and thus help solve the coordination problem by increasing scientists’ incentives to pursue innovative work.
Handle: RePEc:nbr:nberwo:21579
Template-Type: ReDIF-Paper 1.0
Title: Losing Medicaid: What happens to hospitalizations?
Classification-JEL: I13
Author-Name: Sebastian Tello Trillo
Author-Person: pte312
Author-Name: Ausmita Ghosh
Author-Name: Kosali Simon
Author-Person: psi314
Author-Name: Johanna Catherine Maclean
Author-Person: pma1327
Note: EH
Number: 21580
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21580
File-URL: http://www.nber.org/papers/w21580.pdf
File-Format: application/pdf
Abstract: There is substantial evidence on the impact of gaining insurance on healthcare service utilization and financing. Less is known about effects of losing insurance, but there are reasons to expect non-symmetric impacts of insurance losses relative to gains. The dearth of causal evidence on insurance loss is concerning in light of the current unwinding of the temporary COVID-19 pandemic era Medicaid expansions. While research on the 2023 Medicaid contraction will build over time, here we draw lessons from a previous large−scale sudden Medicaid eligibility contraction that occurred in Tennessee in 2005, to understand impacts of losing Medicaid on the use and financing of hospitalizations. We find that hospital service utilization declined in Tennessee post-policy by 4.6%, and that among hospitalizations that occurred, the use of insurance generally and Medicaid specifically to pay for services fell. Patients replaced 28% of the Medicaid loss of hospitalizations with increased use of other public insurance. These findings suggest that Medicaid insurance contractions meaningfully reduce hospital use but that patients may be able to substitute with other public insurance options.
Handle: RePEc:nbr:nberwo:21580
Template-Type: ReDIF-Paper 1.0
Title: Household Debt and Business Cycles Worldwide
Classification-JEL: E17; E2; E21; E32; E44; G01; G21
Author-Name: Atif R. Mian
Author-Person: pmi415
Author-Name: Amir Sufi
Author-Person: psu303
Author-Name: Emil Verner
Author-Person: pve458
Note: AP CF EFG IFM ME PR
Number: 21581
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21581
File-URL: http://www.nber.org/papers/w21581.pdf
File-Format: application/pdf
Publication-Status: published as Atif Mian & Amir Sufi & Emil Verner, 2017. "Household Debt and Business Cycles Worldwide*," The Quarterly Journal of Economics, vol 132(4), pages 1755-1817.
Abstract: An increase in the household debt to GDP ratio in the medium run predicts lower subsequent GDP growth, higher unemployment, and negative growth forecasting errors in a panel of 30 countries from 1960 to 2012. Consistent with the “credit supply hypothesis,” we show that low mortgage spreads predict an increase in the household debt to GDP ratio and a decline in subsequent GDP growth when used as an instrument. The negative relation between the change in household debt to GDP and subsequent output growth is stronger for countries that face stricter monetary policy constraints as measured by a less flexible exchange rate regime, proximity to the zero lower bound, or more external borrowing. A rise in the household debt to GDP ratio is contemporaneously associated with a consumption boom followed by a reversal in the trade deficit as imports collapse. We also uncover a global household debt cycle that partly predicts the severity of the global growth slowdown after 2007. Countries with a household debt cycle more correlated with the global household debt cycle experience a sharper decline in growth after an increase in domestic household debt.
Handle: RePEc:nbr:nberwo:21581
Template-Type: ReDIF-Paper 1.0
Title: Internalizing Global Value Chains: A Firm-Level Analysis
Classification-JEL: D23; F14; F23; L20
Author-Name: Laura Alfaro
Author-Person: pal64
Author-Name: Pol Antràs
Author-Person: pan181
Author-Name: Davin Chor
Author-Person: pch787
Author-Name: Paola Conconi
Author-Person: pco305
Note: IO ITI
Number: 21582
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21582
File-URL: http://www.nber.org/papers/w21582.pdf
File-Format: application/pdf
Publication-Status: published as Laura Alfaro & Pol Antràs & Davin Chor & Paola Conconi, 2019. "Internalizing Global Value Chains: A Firm-Level Analysis," Journal of Political Economy, vol 127(2), pages 508-559.
Abstract: In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. We describe a property-rights model of firm boundary choices along the value chain that generalizes Antràs and Chor (2013). To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with Input-Output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage, as well as by the firm's productivity. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.
Handle: RePEc:nbr:nberwo:21582
Template-Type: ReDIF-Paper 1.0
Title: What Drives Home Market Advantage?
Classification-JEL: F14; F23; L11; L16; L62
Author-Name: A. Kerem Cosar
Author-Person: pco958
Author-Name: Paul L. E. Grieco
Author-Name: Shengyu Li
Author-Name: Felix Tintelnot
Author-Person: pti73
Note: IO ITI PR
Number: 21583
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21583
File-URL: http://www.nber.org/papers/w21583.pdf
File-Format: application/pdf
Publication-Status: published as A. Kerem Coşar, Paul L.E. Grieco, Shengyu Li, Felix Tintelnot, What drives home market advantage?, Journal of International Economics, Volume 110, 2018, Pages 135-150, ISSN 0022-1996, https://doi.org/10.1016/j.jinteco.2017.11.001.
Abstract: In the automobile industry, as in many tradable goods markets, firms usually earn their highest market share within their domestic market. The goal of this paper is to disentangle the supply- and demand-driven sources of the home market advantage. While trade costs, foreign production costs, and taste heterogeneity all matter for market outcomes, we find that a preference for home brands is the single most important driver of home market advantage - even after controlling for brand histories and dealer networks. Furthermore, we also find that consumers favor domestically producing brands regardless of the historical brand origin.
Handle: RePEc:nbr:nberwo:21583
Template-Type: ReDIF-Paper 1.0
Title: Principal Component Analysis of High Frequency Data
Classification-JEL: C22; C55; C58; G01
Author-Name: Yacine Aït-Sahalia
Author-Person: pai23
Author-Name: Dacheng Xiu
Note: AP
Number: 21584
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21584
File-URL: http://www.nber.org/papers/w21584.pdf
File-Format: application/pdf
Publication-Status: published as Yacine Aït-Sahalia & Dacheng Xiu, 2019. "Principal Component Analysis of High-Frequency Data," Journal of the American Statistical Association, vol 114(525), pages 287-303.
Abstract: We develop the necessary methodology to conduct principal component analysis at high frequency. We construct estimators of realized eigenvalues, eigenvectors, and principal components and provide the asymptotic distribution of these estimators. Empirically, we study the high frequency covariance structure of the constituents of the S&P 100 Index using as little as one week of high frequency data at a time. The explanatory power of the high frequency principal components varies over time. During the recent financial crisis, the first principal component becomes increasingly dominant, explaining up to 60% of the variation on its own, while the second principal component drives the common variation of financial sector stocks.
Handle: RePEc:nbr:nberwo:21584
Template-Type: ReDIF-Paper 1.0
Title: The Cost of Uncertainty about the Timing of Social Security Reform
Classification-JEL: C61; E21; E60; H30; H55
Author-Name: Frank N. Caliendo
Author-Person: pca956
Author-Name: Aspen Gorry
Author-Person: pgo400
Author-Name: Sita Slavov
Author-Person: pna81
Note: AG PE
Number: 21585
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21585
File-URL: http://www.nber.org/papers/w21585.pdf
File-Format: application/pdf
Publication-Status: published as Frank N. Caliendo & Aspen Gorry & Sita Slavov, 2019. "The Cost of Uncertainty about the Timing of Social Security Reform," European Economic Review, .
Abstract: We develop a model to study optimal decision making in the face of uncertainty about the timing and structure of a future event. The model is used to study optimal decision making and welfare when individuals face uncertainty about when and how Social Security will be reformed. When individuals save optimally for retirement, the welfare cost of uncertainty about the timing and structure of reform is just a few basis points of total lifetime consumption. In contrast, the cost of reform uncertainty can be greater than 1% of total lifetime consumption for individuals who do not save.
Handle: RePEc:nbr:nberwo:21585
Template-Type: ReDIF-Paper 1.0
Title: In-Kind Taxes, Behavior, and Comparative Advantage
Classification-JEL: H56; K2; L51
Author-Name: Casey B. Mulligan
Author-Person: pmu64
Note: LE LS PE
Number: 21586
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21586
File-URL: http://www.nber.org/papers/w21586.pdf
File-Format: application/pdf
Abstract: This paper treats taxation in kind (IKT) as an example of price regulation, emphasizing IKT-avoidance behavior, and its interactions with the other costs of price controls. This emphasis fundamentally changes efficiency conclusions, and adds new ones. IKTs do not in fact randomly sample suppliers. Large-scale IKTs, and not small-scale ones, may have especially large average efficiency costs. Ransoms or “commutation fees” are an IKT policy option, but are only efficiency enhancing in specific situations: more heterogeneity among suppliers, and avoidance technologies that result in avoidance behaviors that are poor signals of a supplier’s opportunity cost. Avoidance behaviors are one reason why the social costs of wars and other public projects involving IKTs may have been underestimated.
Handle: RePEc:nbr:nberwo:21586
Template-Type: ReDIF-Paper 1.0
Title: Housing Booms and Busts, Labor Market Opportunities, and College Attendance
Classification-JEL: E24; I21; J24
Author-Name: Kerwin Kofi Charles
Author-Name: Erik Hurst
Author-Person: phu87
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Note: ED LS
Number: 21587
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21587
File-URL: http://www.nber.org/papers/w21587.pdf
File-Format: application/pdf
Publication-Status: published as Kerwin Kofi Charles & Erik Hurst & Matthew J. Notowidigdo, 2018. "Housing Booms and Busts, Labor Market Opportunities, and College Attendance," American Economic Review, vol 108(10), pages 2947-2994.
Abstract: We study how the recent national housing boom and bust affected college enrollment and attainment during the 2000s. We exploit cross-city variation in local housing booms, and use a variety of data sources and empirical methods, including models that use plausibly exogenous variation in housing demand identified by sharp structural breaks in local housing prices. We show that the housing boom improved labor market opportunities for young men and women, thereby raising their opportunity cost of college-going. According to standard human capital theories, this effect should have reduced college-going overall, but especially for persons at the margin of attendance. We find that the boom substantially lowered college enrollment and attainment for both young men and women, with the effects concentrated at two-year colleges. We find that the positive employment and wage effects of the boom were generally undone during the bust. However, attainment for the particular cohorts of college-going age during the housing boom remain persistently low after the end of the bust, suggesting that reduced educational attainment may be an enduring effect of the housing cycle. We estimate that the housing boom explains roughly 30 percent of the recent slowdown in college attainment.
Handle: RePEc:nbr:nberwo:21587
Template-Type: ReDIF-Paper 1.0
Title: The Wage Impact of the Marielitos: A Reappraisal
Classification-JEL: J2; J31; J61
Author-Name: George J. Borjas
Author-Person: pbo44
Note: LS
Number: 21588
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21588
File-URL: http://www.nber.org/papers/w21588.pdf
File-Format: application/pdf
Publication-Status: published as George J. Borjas, 2017. "The Wage Impact of the : A Reappraisal," ILR Review, vol 70(5), pages 1077-1110.
Abstract: This paper brings a new perspective to the analysis of the Mariel supply shock, revisiting the question armed with the accumulated insights from the literature on the economic impact of immigration. A crucial lesson from that literature is that any credible attempt to measure the wage impact must carefully match the skills of the immigrants with those of the pre-existing workers. At least 60 percent of the Marielitos were high school dropouts. A reappraisal of the Mariel evidence, specifically examining wages in this low-skill group, overturns the finding that Mariel did not affect Miami’s wage structure. The wage of high school dropouts in Miami dropped dramatically, by 10 to 30 percent, suggesting an elasticity of wages with respect to the number of workers between -0.5 and -1.5.
Handle: RePEc:nbr:nberwo:21588
Template-Type: ReDIF-Paper 1.0
Title: Climate Tipping Points and Solar Geoengineering
Classification-JEL: C61; H23; Q54; Q58
Author-Name: Garth Heutel
Author-Person: phe315
Author-Name: Juan Moreno Cruz
Author-Person: pmo742
Author-Name: Soheil Shayegh
Author-Person: psh1024
Note: EEE
Number: 21589
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21589
File-URL: http://www.nber.org/papers/w21589.pdf
File-Format: application/pdf
Publication-Status: published as Garth Heutel & Juan Moreno-Cruz & Soheil Shayegh, 2016. "Climate Tipping Points and Solar Geoengineering," Journal of Economic Behavior & Organization, .
Abstract: We study optimal climate policy when climate tipping points and solar geoengineering are present. Solar geoengineering reduces temperatures without reducing greenhouse gas emissions. Climate tipping points are irreversible and uncertain events that cause large damages. We analyze three different rules related to the availability of solar geoengineering: a ban, using solar geoengineering as insurance against the risk of tipping points, or using solar geoengineering only as remediation in the aftermath of a tipping point. We model three distinct types of tipping points: two that alter the climate system and one that yields a direct economic cost. Using an analytic model, we find that an optimal policy, which minimizes expected losses from the tipping point, includes both emissions reductions and solar geoengineering from the onset. Using a numerical simulation model, we quantify optimal policy and various outcomes under the alternative scenarios. The presence of tipping points leads to more mitigation and more solar geoengineering use and lower temperatures.
Handle: RePEc:nbr:nberwo:21589
Template-Type: ReDIF-Paper 1.0
Title: A Nonlinear Certainty Equivalent Approximation Method for Dynamic Stochastic Problems
Classification-JEL: C61; C63; C68; E31; E52
Author-Name: Yongyang Cai
Author-Person: pca961
Author-Name: Kenneth Judd
Author-Person: pju19
Author-Name: Jevgenijs Steinbuks
Note: TWP
Number: 21590
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21590
File-URL: http://www.nber.org/papers/w21590.pdf
File-Format: application/pdf
Publication-Status: published as Yongyang Cai & Kenneth Judd & Jevgenijs Steinbuks, 2017. "A nonlinear certainty equivalent approximation method for dynamic stochastic problems," Quantitative Economics, vol 8(1), pages 117-147.
Abstract: This paper introduces a nonlinear certainty equivalent approximation method for dynamic stochastic problems. We first use a novel, stable and efficient method for computing the optimal policy functions for deterministic dynamic optimization problems, and then use them as certainty-equivalent approximations for the stochastic versions. Our examples demonstrate that it can be applied to solve high-dimensional problems with up to four hundred state variables with an acceptable accuracy. This method can also be applied to solve problems with inequality constraints that occasionally bind. These features make the nonlinear certainty equivalent approximation method suitable for solving complex economic problems, where other algorithms, such as log-linearization, fail or are far less tractable.
Handle: RePEc:nbr:nberwo:21590
Template-Type: ReDIF-Paper 1.0
Title: Immigrant Employment and Earnings Growth in Canada and the U.S.: Evidence from Longitudinal Data
Classification-JEL: J15; J18
Author-Name: Neeraj Kaushal
Author-Person: pka320
Author-Name: Yao Lu
Author-Name: Nicole Denier
Author-Name: Julia Shu-Huah Wang
Author-Name: Stephen J. Trejo
Author-Person: ptr78
Note: LS PE
Number: 21591
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21591
File-URL: http://www.nber.org/papers/w21591.pdf
File-Format: application/pdf
Publication-Status: published as Neeraj Kaushal & Yao Lu & Nicole Denier & Julia Shu-Huah Wang & Stephen J. Trejo, 2016. "Immigrant employment and earnings growth in Canada and the USA: evidence from longitudinal data," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1249-1277, October.
Abstract: We study the short-term trajectories of employment, hours worked, and real wages of immigrants in Canada and the U.S. using nationally representative longitudinal datasets covering 1996-2008. Models with person fixed effects show that on average immigrant men in Canada do not experience any relative growth in these three outcomes compared to men born in Canada. Immigrant men in the U.S., on the other hand, experience positive annual growth in all three domains relative to U.S. born men. This difference is largely on account of low-educated immigrant men, who experience faster or longer periods of relative growth in employment and wages in the U.S. than in Canada. We further compare longitudinal and cross-sectional trajectories and find that the latter over-estimate wage growth of earlier arrivals, presumably reflecting selective return migration.
Handle: RePEc:nbr:nberwo:21591
Template-Type: ReDIF-Paper 1.0
Title: Education Research and Administrative Data
Classification-JEL: I20
Author-Name: David N. Figlio
Author-Person: pfi57
Author-Name: Krzysztof Karbownik
Author-Person: pka688
Author-Name: Kjell G. Salvanes
Author-Person: psa3
Note: CH ED
Number: 21592
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21592
File-URL: http://www.nber.org/papers/w21592.pdf
File-Format: application/pdf
Publication-Status: published as D. Figlio, K. Karbownik, K.G. Salvanes, Chapter 2 - Education Research and Administrative Data, Editor(s): Eric A. Hanushek, Stephen Machin, Ludger Woessmann, Handbook of the Economics of Education, Elsevier, Volume 5, 2016, Pages 75-138, ISSN 1574-0692, ISBN 9780444634597, https://doi.org/10.1016/B978-0-444-63459-7.00002-6.
Abstract: Thanks to extraordinary and exponential improvements in data storage and computing capacities, it is now possible to collect, manage, and analyze data in magnitudes and in manners that would have been inconceivable just a short time ago. As the world has developed this remarkable capacity to store and analyze data, so have the world’s governments developed large-scale, comprehensive data files on tax programs, workforce information, benefit programs, health, and education. While these data are collected for purely administrative purposes, they represent remarkable new opportunities for expanding our knowledge. This chapter describes some of the benefits and challenges associated with the use of administrative data in education research. We also offer specific case studies of data that have been developed in both the Nordic countries and the United States, and offer an (incomplete) inventory of data sets used by social scientists to study education questions on every inhabited continent on earth.
Handle: RePEc:nbr:nberwo:21592
Template-Type: ReDIF-Paper 1.0
Title: Estimation of Multivariate Probit Models via Bivariate Probit
Classification-JEL: C3; I1
Author-Name: John Mullahy
Note: EH
Number: 21593
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21593
File-URL: http://www.nber.org/papers/w21593.pdf
File-Format: application/pdf
Publication-Status: published as John Mullahy, 2016. "Estimation of Multivariate Probit Models via Bivariate Probit," The Stata Journal: Promoting communications on statistics and Stata, vol 16(1), pages 37-51.
Abstract: Models having multivariate probit and related structures arise often in applied health economics. When the outcome dimensions of such models are large, however, estimation can be challenging owing to numerical computation constraints and/or speed. This paper suggests the utility of estimating multivariate probit (MVP) models using a chain of bivariate probit estimators. The proposed approach offers two potential advantages over standard multivariate probit estimation procedures: significant reductions in computation time; and essentially unlimited dimensionality of the outcome set. The time savings arise because the proposed approach does not rely simulation methods; the dimension advantage arises because only pairs of outcomes are considered at each estimation stage. Importantly, the proposed approach provides a consistent estimator of all the MVP model's parameters under the same assumptions required for consistent estimation based on standard methods, and simulation exercises suggest no loss of estimator precision.
Handle: RePEc:nbr:nberwo:21593
Template-Type: ReDIF-Paper 1.0
Title: Does Education Reduce Teen Fertility? Evidence from Compulsory Schooling Laws
Classification-JEL: I1; I18; I24; J13
Author-Name: Philip DeCicca
Author-Person: pde303
Author-Name: Harry Krashinsky
Author-Person: pkr111
Note: ED EH LS
Number: 21594
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21594
File-URL: http://www.nber.org/papers/w21594.pdf
File-Format: application/pdf
Publication-Status: published as Philip DeCicca & Harry Krashinsky, 2019. "Does Education Reduce Teen Fertility? Evidence from Compulsory Schooling Laws," Journal of Health Economics, .
Abstract: While less-educated women are more likely to give birth as teenagers, there is scant evidence the relationship is causal. We investigate this possibility using variation in compulsory schooling laws (CSLs) to identify the impact of formal education on teen fertility for a large sample of women drawn from multiple waves of the Canadian Census. We find that greater CSL-induced schooling reduces the probability of giving birth as a teenager by roughly two to three percentage points. We find evidence that education affects the timing of births in a way that strongly implies an “incarceration” effect of education. In particular, we find large negative impacts of education on births to young women aged seventeen and eighteen, but little evidence of an effect after these ages, consistent with the idea that being enrolled in school deters fertility in a contemporaneous manner. Our findings are robust to the inclusion of several province-level characteristics including multiple dimensions of school quality, expenditures on public programs and region-specific time trends.
Handle: RePEc:nbr:nberwo:21594
Template-Type: ReDIF-Paper 1.0
Title: Structural Change with Long-run Income and Price Effects
Classification-JEL: E2; O11; O4; O5
Author-Name: Diego A. Comin
Author-Person: pco55
Author-Name: Danial Lashkari
Author-Name: Martí Mestieri
Author-Person: pme510
Note: DAE DEV EFG PR
Number: 21595
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21595
File-URL: http://www.nber.org/papers/w21595.pdf
File-Format: application/pdf
Publication-Status: published as Diego Comin & Danial Lashkari & Martí Mestieri, 2021. "Structural Change With Long‐Run Income and Price Effects," Econometrica, Econometric Society, vol. 89(1), pages 311-374, January.
Abstract: We present a new multi-sector growth model that features nonhomothetic, constant-elasticity-of-substitution preferences, and accommodates long-run demand and supply drivers of structural change for an arbitrary number of sectors. The model is consistent with the decline in agriculture, the hump-shaped evolution of manufacturing, and the rise of services over time. We estimate the demand system derived from the model using household-level data from the U.S. and India, as well as historical aggregate-level panel data for 39 countries during the postwar period. The estimated model parsimoniously accounts for the broad patterns of sectoral reallocation observed among rich, miracle and developing economies. Our estimates support the presence of strong nonhomotheticity across time, income levels, and countries. We find that income effects account for the bulk of the within-country evolution of sectoral reallocation.
Handle: RePEc:nbr:nberwo:21595
Template-Type: ReDIF-Paper 1.0
Title: What Can We Learn About the Effects of Food Stamps on Obesity in the Presence of Misreporting?
Classification-JEL: C01; H4; I1; I28
Author-Name: Lorenzo Almada
Author-Name: Ian M. McCarthy
Author-Name: Rusty Tchernis
Author-Person: ptc4
Note: EH PE
Number: 21596
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21596
File-URL: http://www.nber.org/papers/w21596.pdf
File-Format: application/pdf
Publication-Status: published as Lorenzo Almada & Ian McCarthy & Rusty Tchernis, 2016. "What Can We Learn about the Effects of Food Stamps on Obesity in the Presence of Misreporting?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 997-1017.
Abstract: There is an increasing perception among policy makers that food stamp benefits contribute positively to adult obesity rates. We show that these results are heavily dependent on one's assumptions regarding the accuracy of reported food stamp participation. When allowing for misreporting, we find no evidence that SNAP participation significantly increases the probability of being obese or overweight among adults. Our results also highlight the inherent bias and inconsistency of common point estimates when ignoring misreporting, with treatment effects from instrumental variable methods exceeding the non-parametric upper bounds by over 200% in some cases.
Handle: RePEc:nbr:nberwo:21596
Template-Type: ReDIF-Paper 1.0
Title: Social Networks, Ethnicity, and Entrepreneurship
Classification-JEL: D21; D22; D85; F22; J15; L14; L26; M13
Author-Name: William R. Kerr
Author-Person: pke127
Author-Name: Martin Mandorff
Note: LS PR
Number: 21597
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21597
File-URL: http://www.nber.org/papers/w21597.pdf
File-Format: application/pdf
Publication-Status: published as William R. Kerr & Martin Mandorff, 2023. "Social Networks, Ethnicity, and Entrepreneurship," Journal of Human Resources, vol 58(1), pages 183-220.
Abstract: We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, Koreans are 34 times more concentrated in self-employment for dry cleaning than other immigrant groups, and Gujarati-speaking Indians are 84 times more concentrated in managing motels. We quantify that smaller and more socially isolated ethnic groups display higher rates of entrepreneurial concentration. This is consistent with a model of social interactions where nonwork relationships facilitate the acquisition of sector-specific skills and result in occupational stratification along ethnic lines via concentrated entrepreneurship.
Handle: RePEc:nbr:nberwo:21597
Template-Type: ReDIF-Paper 1.0
Title: Achievement Effects of Individual Performance Incentives in a Teacher Merit Pay Tournament
Classification-JEL: H75; I21; J33; J38
Author-Name: Margaret Brehm
Author-Name: Scott A. Imberman
Author-Person: pim24
Author-Name: Michael F. Lovenheim
Author-Person: plo162
Note: ED PE
Number: 21598
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21598
File-URL: http://www.nber.org/papers/w21598.pdf
File-Format: application/pdf
Publication-Status: published as Brehm, Margaret & Imberman, Scott A. & Lovenheim, Michael F., 2017. "Achievement effects of individual performance incentives in a teacher merit pay tournament," Labour Economics, Elsevier, vol. 44(C), pages 133-150.
Abstract: This paper estimates the effect of the individual incentives teachers face in a teacher-based value-added merit pay tournament on student achievement. We first build an illustrative model in which teachers use proximity to an award threshold to update their information about their own ability, which informs their expected marginal return to effort. The model predicts that those who are closer to an award cutoff in a given year will increase effort and thus will have higher achievement gains in the subsequent year. However, if value-added scores are too noisy, teachers will not respond. Using administrative teacher-student linked data, we test this prediction employing a method akin to the bunching estimator of Saez (2010). Specifically, we examine whether teachers who are proximal to a cutoff in one year exhibit excess gains in test score growth in the next year. Our results show consistent evidence that teachers do not respond to the incentives they face under this program. In line with our model, we argue that a likely reason for the lack of responsiveness is that the value-added measures used to determine awards were too noisy to provide informative feedback about one's ability. This highlights the importance of value-added precision in the design of incentive pay systems.
Handle: RePEc:nbr:nberwo:21598
Template-Type: ReDIF-Paper 1.0
Title: Inflation, Output, and Markup Dynamics with Forward-Looking Wage and Price Setters
Classification-JEL: E00; E1; E4
Author-Name: Louis Phaneuf
Author-Person: pph3
Author-Name: Eric R. Sims
Author-Person: psi336
Author-Name: Jean Gardy Victor
Note: EFG ME
Number: 21599
Creation-Date: 2015-09
Order-URL: http://www.nber.org/papers/w21599
File-URL: http://www.nber.org/papers/w21599.pdf
File-Format: application/pdf
Publication-Status: published as Louis Phaneuf & Eric Sims & Jean Gardy Victor, 2018. "Inflation, Output and Markup Dynamics with Purely Forward-Looking Wage and Price Setters," European Economic Review, .
Abstract: We formulate a medium-scale DSGE model that emphasizes a strong interplay between a roundabout production structure and a working capital channel that requires firms to borrow funds to finance the costs of all their variable inputs and not just the wage bill. Despite an absence of backward-looking price and wage indexation, our model is able to account for (i) a persistent and hump-shaped response of inflation to a monetary policy shock, (ii) a large and persistent response of output to a monetary policy shock, (iii) a mild "price puzzle," (iv) a procyclical price markup conditional on a monetary shock, (v) non-inertial responses of inflation to non-monetary shocks, and (vi) a negative unconditional autocorrelation of the first difference of inflation that is consistent with the data. A medium-scale model relying on backward indexation of wages and prices to past inflation fails along several of these dimensions.
Handle: RePEc:nbr:nberwo:21599
Template-Type: ReDIF-Paper 1.0
Title: Diabetes and Diet: Behavioral Response and the Value of Health
Classification-JEL: I12; J17
Author-Name: Emily Oster
Author-Person: pos39
Note: EH
Number: 21600
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21600
File-URL: http://www.nber.org/papers/w21600.pdf
File-Format: application/pdf
Abstract: Individuals with obesity often appear reluctant to undertake dietary changes. Evaluating the reasons for this reluctance, as well as appropriate policy responses, is hampered by a lack of data on behavioral response to dietary advice. I use household scanner data to estimate food purchase response to a diagnosis of diabetes, a common complication of obesity. I infer diabetes diagnosis within the scanner data from purchases of glucose testing products. Households engage in statistically significant but small calorie reductions following diagnosis. The changes are sufficient to lose 4 to 8 pounds in the first year, but are only about 10% of what would be suggested by a doctor. The scanner data allows detailed analysis of changes by food type. In the first month after diagnosis, healthy foods increase and unhealthy foods decrease. However, only the decreases in unhealthy food persist. Changes are most pronounced on large, unhealthy, food categories. Those individuals whose pre-diagnosis diet is concentrated in one or a few foods groups show bigger subsequent calorie reductions, with these reductions occurring primarily occurring in these largest food groups. I suggest the facts may be consistent with a psychological framework in which rule-based behavior change is more successful. I compare the results to a policy of taxes or subsidies.
Handle: RePEc:nbr:nberwo:21600
Template-Type: ReDIF-Paper 1.0
Title: Does Eliminating the Earnings Test Increase the Incidence of Low Income Among Older Women?
Classification-JEL: H2; J14; J22
Author-Name: Theodore Figinski
Author-Name: David Neumark
Author-Person: pne16
Note: AG LS PE
Number: 21601
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21601
File-URL: http://www.nber.org/papers/w21601.pdf
File-Format: application/pdf
Publication-Status: published as Theodore Figinski & David Neumark, 2018. "Does Eliminating the Earnings Test Increase the Incidence of Low Income Among Older Women?," Research on Aging, vol 40(1), pages 27-53.
Abstract: Reducing or eliminating Social Security’s Retirement Earnings Test (RET) can encourage labor supply of older individuals receiving benefits. However, these reforms can encourage earlier claiming of Social Security benefits, permanently lowering future benefits. We explore the consequences, for older women, of eliminating the RET from the Full Retirement Age to age 69 (in 2000), relying on the inter-cohort variation in exposure to changes in the RET to estimate these effects. The evidence is consistent with the conclusion that eliminating the RET increased the likelihood of having very low incomes among women in their mid-70s and older – ages at which the lower benefits from claiming earlier could outweigh higher income in the earlier period when women or their husbands increased their labor supply.
Handle: RePEc:nbr:nberwo:21601
Template-Type: ReDIF-Paper 1.0
Title: Using Behavioral Insights to Increase Parental Engagement: The Parents and Children Together (PACT) Intervention
Classification-JEL: D03; I20; I28; J24
Author-Name: Susan E. Mayer
Author-Name: Ariel Kalil
Author-Name: Philip Oreopoulos
Author-Person: por38
Author-Name: Sebastian Gallegos
Author-Person: pga303
Note: CH ED LS
Number: 21602
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21602
File-URL: http://www.nber.org/papers/w21602.pdf
File-Format: application/pdf
Publication-Status: published as Susan E. Mayer & Ariel Kalil & Philip Oreopoulos & Sebastian Gallegos, 2019. "Using Behavioral Insights to Increase Parental Engagement," Journal of Human Resources, vol 54(4), pages 900-925.
Abstract: Parent engagement with their children plays an important role in children’s eventual economic success and numerous studies have documented large gaps in parent engagement between low- and higher-income families. While we know remarkably little about what motivates parents to engage in their children’s development, recent research suggests that ignoring or discounting the future may inhibit parental investment, while certain behavioral tools may help offset this tendency. This paper reports results from a randomized field experiment designed to increase the time that parents of children in subsidized preschool programs spend reading to their children using an electronic reading application that audio and video records parents as they read. The treatment included three behavioral tools (text reminders, goal-setting, and social rewards) as well as information about the importance of reading to children. The treatment increased usage of the reading application by one standard deviation after the six-week intervention. Our evidence suggests that the large effect size is not accounted for by the information component of the intervention and that the treatment impact was much greater for parents who are more present-oriented than for parents who are less present-oriented.
Handle: RePEc:nbr:nberwo:21602
Template-Type: ReDIF-Paper 1.0
Title: Healthcare Exceptionalism? Performance and Allocation in the U.S. Healthcare Sector
Classification-JEL: D22; D24; I11
Author-Name: Amitabh Chandra
Author-Person: pch893
Author-Name: Amy Finkelstein
Author-Person: pfi264
Author-Name: Adam Sacarny
Author-Person: psa1606
Author-Name: Chad Syverson
Author-Person: psy13
Note: AG EH IO PE PR
Number: 21603
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21603
File-URL: http://www.nber.org/papers/w21603.pdf
File-Format: application/pdf
Publication-Status: published as Chandra, Amitabh, Amy Finkelstein, Adam Sacarny, and Chad Syverson. 2016. "Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector." American Economic Review, 106 (8): 2110-44. DOI: 10.1257/aer.20151080
Abstract: The conventional wisdom in health economics is that idiosyncratic features of the healthcare sector leave little scope for market forces to allocate consumers to higher performance producers. However, we find robust evidence across a variety of conditions and performance measures that higher quality hospitals tend to have higher market shares at a point in time and expand more over time. Moreover, we find that the relationship between performance and allocation is stronger among patients who have greater scope for hospital choice, suggesting a role for patient demand in allocation in the hospital sector. Our findings suggest that the healthcare sector may have more in common with “traditional” sectors subject to standard market forces than is often assumed.
Handle: RePEc:nbr:nberwo:21603
Template-Type: ReDIF-Paper 1.0
Title: Health Effects of Economic Crises
Classification-JEL: E32; I1; I12; I18; J68
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: EFG EH LS PE
Number: 21604
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21604
File-URL: http://www.nber.org/papers/w21604.pdf
File-Format: application/pdf
Publication-Status: published as Christopher J. Ruhm, 2016. "Health Effects of Economic Crises," Health Economics, vol 25, pages 6-24.
Abstract: This analysis summarizes prior research and uses national, state and county level data from the United States from 1976-2013 to examine whether the mortality effects of economic crises differ in kind from those of the more typical fluctuations. The tentative conclusion is that economic crises affect mortality rates (and presumably other measures of health) in the same way as less severe downturns: namely, they lead to improvements in physical health. The effects of severe national recessions in the United States, appear to have a beneficial effect on mortality that is roughly twice as strong as that predicted due to the elevated unemployment rates alone while the higher predicted rate of suicides during typical periods of economic weakness is approximately offset during severe recessions. No consistent pattern is obtained for more localized economic crises occurring at the state level – some estimates suggest larger protective mortality effects while others indicate offsetting deleterious consequences.
Handle: RePEc:nbr:nberwo:21604
Template-Type: ReDIF-Paper 1.0
Title: A New Measure of College Quality to Study the Effects of College Sector and Peers on Degree Attainment
Classification-JEL: I21; I23
Author-Name: Jonathan Smith
Author-Name: Kevin Stange
Author-Person: pst739
Note: ED LS PE
Number: 21605
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21605
File-URL: http://www.nber.org/papers/w21605.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Smith & Kevin Stange, 2016. "A New Measure of College Quality to Study the Effects of College Sector and Peers on Degree Attainment," Education Finance and Policy, vol 11(4), pages 369-403.
Abstract: Students starting at a two-year college are much less likely to graduate with a college degree than similar students who start at a four-year college but the sources of this attainment gap are largely unexplained. In this paper we simultaneously investigate the attainment consequences of sector choice and peer quality among over 3 million recent high school graduates. This analysis is enabled by data on all PSAT test-takers between 2004 and 2006 from which we develop a novel measure of peer ability for most two-year and four-year colleges in the United States- the average PSAT of enrolled students. We document substantial variation in average peer quality at two-year colleges across and within states and non-trivial overlap across sectors, neither of which has previously been documented. We find that half the gap in bachelor’s attainment rates between students who start at two-year versus four-year institutions is explained by differences in peers, leaving room for structural barriers to transferring between institutions to also play an important role. Also, having better peers is associated with higher attainment in both sectors, though its effects are quite a bit larger in the four-year sector. Thus, the allocation of students between and within sectors, some of which is driven by state policy decisions, has important consequences for the educational attainment of the nation’s workforce.
Handle: RePEc:nbr:nberwo:21605
Template-Type: ReDIF-Paper 1.0
Title: Migration State and Welfare State: Competition vs. Coordination in an Economic Union
Classification-JEL: F2; F42; H1
Author-Name: Assaf Razin
Author-Person: pra388
Author-Name: Efraim Sadka
Author-Person: psa492
Note: IFM DAE
Number: 21606
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21606
File-URL: http://www.nber.org/papers/w21606.pdf
File-Format: application/pdf
Abstract: We develop a political-economy model of economic union and compare the competion regime to the coordination regime. Key policy differences emerge between the two regimes: concerning the generosity of the welfare state and the skill composition of migration. We argue that the differences between the U.S. and the EU - the degree of coordination among the member states - contribute to the observed policy differences, as the model predicts.
Handle: RePEc:nbr:nberwo:21606
Template-Type: ReDIF-Paper 1.0
Title: Long-Term Educational Consequences of Vocational Training in Colombia: Impacts on Young Trainees and Their Relatives
Classification-JEL: J24; J38; J6; O17; O54
Author-Name: Adriana Kugler
Author-Person: pku361
Author-Name: Maurice Kugler
Author-Person: pku86
Author-Name: Juan Saavedra
Author-Name: Luis Omar Herrera Prada
Note: DEV ED LS
Number: 21607
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21607
File-URL: http://www.nber.org/papers/w21607.pdf
File-Format: application/pdf
Publication-Status: published as “The Long-term Impacts and Spillovers of Training for Disadvantaged Youth,” (with Maurice Kugler, Juan E. Saavedra and Luis Omar Herrera), forthcoming Journal of Human Resources, online publication in January (2020)
Abstract: We use administrative data and a randomization design to examine the long-term educational impacts of a large-scale vocational training program for disadvantaged youth in Colombia on trainees and their relatives. Up to eleven years after randomization, trainees were more likely to enroll in formal tertiary education, and their relatives more likely to complete secondary schooling. Various empirical tests suggest that, for females, vocational training helped relax credit constraints stemming from the direct costs of tertiary education. For males, the evidence suggests that additional tertiary education investments arise from the program improving field-specific knowledge and/or information about field-specific returns to tertiary education. Focusing only on labor-market outcomes and not accounting for these long-term tertiary education impacts on participants substantially understates the social desirability of the Colombian vocational training program. By contrast, including tertiary education impacts on participants increases the program’s internal rate of return for women from 22.2% to 23.5% and for men from 10.2% to 20.5%.
Handle: RePEc:nbr:nberwo:21607
Template-Type: ReDIF-Paper 1.0
Title: The Ups and Downs of Turkish Growth, 2002-2015: Political Dynamics, the European Union and the Institutional Slide
Classification-JEL: E65; O52
Author-Name: Daron Acemoglu
Author-Person: pac16
Author-Name: Murat Ucer
Note: ITI
Number: 21608
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21608
File-URL: http://www.nber.org/papers/w21608.pdf
File-Format: application/pdf
Abstract: We document a change in the character and quality of Turkish economic growth with a turning point around 2007 and link this change to the reversal in the nature of economic institutions, which underwent a series of growth-enhancing reforms following Turkey's financial crisis in 2001, but then started moving in the opposite direction in the second half of 2000s. This institutional reversal, we argue, is itself a consequence of a turnaround in political factors. The first phase coincided with a deepening in Turkish democracy under the prodding and the guidance of the European Union, and witnessed the waning of the military's influence and the broadening of effective political participation. As Turkey-European Union relations collapsed and internal political dynamics removed the checks against the domination of the governing party, in power since 2002, these political dynamics went into reverse and paved the way for the institutional slide that is largely responsible for the lower-paced and lower-quality growth Turkey has been experiencing since about 2007.
Handle: RePEc:nbr:nberwo:21608
Template-Type: ReDIF-Paper 1.0
Title: The Relationship between Health and Schooling: What’s New?
Classification-JEL: I10; I12
Author-Name: Michael Grossman
Author-Person: pgr107
Note: EH
Number: 21609
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21609
File-URL: http://www.nber.org/papers/w21609.pdf
File-Format: application/pdf
Publication-Status: published as Nordic Journal of Health Economics 3, No. 1 (2015), pp. 7-17
Publication-Status: published as Michael Grossman, 2008. "The Relationship Between Health and Schooling," Eastern Economic Journal, vol 34(3), pages 281-292.
Abstract: Many studies suggest that years of formal schooling completed is the most important correlate of good health. There is much less consensus as to whether this correlation reflects causality from more schooling to better health. The relationship may be traced in part to reverse causality and may also reflect “omitted third variables” that cause health and schooling to vary in the same direction. The past five years (2010-2014) have witnessed the development of a large literature focusing on the issue just raised. I deal with that literature and what can be learned from it in this paper. I conclude that there is enough conflicting evidence in the studies that I have reviewed to warrant more research on the question of whether more schooling does in fact cause better health outcomes.
Handle: RePEc:nbr:nberwo:21609
Template-Type: ReDIF-Paper 1.0
Title: The Gift of Time? School Starting Age and Mental Health
Classification-JEL: I1; I2
Author-Name: Thomas S. Dee
Author-Name: Hans Henrik Sievertsen
Author-Person: psi360
Note: CH ED EH
Number: 21610
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21610
File-URL: http://www.nber.org/papers/w21610.pdf
File-Format: application/pdf
Publication-Status: published as Thomas S. Dee & Hans Henrik Sievertsen, 2018. "The gift of time? School starting age and mental health," Health Economics, vol 27(5), pages 781-802.
Abstract: In many developed countries, children now begin their formal schooling at an older age. However, a growing body of empirical studies provides little evidence that such schooling delays improve educational and economic outcomes. This study presents new evidence on whether school starting age influences student outcomes by relying on linked Danish survey and register data that include several distinct, widely used, and validated measures of mental health that are reported out-of-school among similarly aged children. We estimate the causal effects of delayed school enrollment using a "fuzzy" regression-discontinuity design based on exact dates of birth and the fact that, in Denmark, children typically enroll in school during the calendar year in which they turn six. We find that a one-year delay in the start of school dramatically reduces inattention/hyperactivity at age 7 (effect size = -0.7), a measure of self regulation with strong negative links to student achievement. We also find that this large and targeted effect persists at age 11. However, the estimated effects of school starting age on other mental-health constructs, which have weaker links to subsequent student achievement, are smaller and less persistent.
Handle: RePEc:nbr:nberwo:21610
Template-Type: ReDIF-Paper 1.0
Title: Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment
Classification-JEL: D14; G02; G21; Z10; Z12
Author-Name: Leonardo Bursztyn
Author-Person: pbu249
Author-Name: Stefano Fiorin
Author-Person: pfi338
Author-Name: Daniel Gottlieb
Author-Person: pgo110
Author-Name: Martin Kanz
Author-Person: pka733
Note: CF DEV LE POL
Number: 21611
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21611
File-URL: http://www.nber.org/papers/w21611.pdf
File-Format: application/pdf
Publication-Status: published as Leonardo Bursztyn & Stefano Fiorin & Daniel Gottlieb & Martin Kanz, 2019. "Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment," Journal of Political Economy, vol 127(4), pages 1641-1683.
Abstract: We study the role of morality in debt repayment, using an experiment with the credit card customers of a large Islamic bank in Indonesia. In our main treatment, clients receive a text message stating that “non-repayment of debts by someone who is able to repay is an injustice.” This moral appeal decreases the share of delinquent customers by 4.4 percentage points from a baseline of 66 percent, and reduces default among the customers with the highest ex-ante credit risk. Additional treatments help benchmark the effects against those of direct financial incentives, understand the underlying mechanisms, and rule out competing explanations, such as reminder effects, priming religion, signaling the lender's commitment to debt collection, and provision of new information.
Handle: RePEc:nbr:nberwo:21611
Template-Type: ReDIF-Paper 1.0
Title: Discrimination and Worker Evaluation
Classification-JEL: J71
Author-Name: Costas Cavounidis
Author-Person: pca1225
Author-Name: Kevin Lang
Author-Person: pla83
Note: LS
Number: 21612
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21612
File-URL: http://www.nber.org/papers/w21612.pdf
File-Format: application/pdf
Abstract: We develop a model of self-sustaining discrimination in wages, coupled with higher unemployment and shorter employment duration among blacks. While white workers are hired and retained indefinitely without monitoring, black workers are monitored and fired if a negative signal is received. The fired workers, who return to the pool of job-seekers, lower the average productivity of black job-seekers, perpetuating the cycle of lower wages and discriminatory monitoring. Under suitable parameter values the model has two steady states, one corresponding to each population group. Discrimination can persist even if the productivity of blacks exceeds that of whites.
Handle: RePEc:nbr:nberwo:21612
Template-Type: ReDIF-Paper 1.0
Title: Chinese Yellow Dust and Korean Infant Health
Classification-JEL: H23; I12; Q51; Q53; Q54
Author-Name: Deokrye Baek
Author-Name: Duha T. Altindag
Author-Person: pal449
Author-Name: Naci Mocan
Author-Person: pmo270
Note: CH EEE EH
Number: 21613
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21613
File-URL: http://www.nber.org/papers/w21613.pdf
File-Format: application/pdf
Publication-Status: published as Duha T. Altindag, Deokrye Baek, Naci Mocan, Chinese Yellow Dust and Korean infant health, Social Science & Medicine, Volume 186, 2017, Pages 78-86, ISSN 0277-9536, https://doi.org/10.1016/j.socscimed.2017.05.031.
Abstract: Naturally-occurring yellow sand outbreaks, which are produced by winds flowing to Korea from China and Mongolia, create air pollution. Although there is seasonal pattern of this phenomenon, there exists substantial variation in its timing, strength and location from year to year. Thus, exposure to the intensity of air pollution exhibits significant randomness and unpredictability. To warn residents about air pollution in general, and about these dust storms in particular, Korean authorities issue different types of public alerts. Using birth certificate data on more than 1.5 million babies born between 2003 and 2011, we investigate the impact of air pollution, and the avoidance behavior triggered by pollution alerts on various birth outcomes. We find that exposure to air pollution during pregnancy has a significant negative impact on birth weight, the gestation weeks of the baby, and the propensity of the baby being low weight. Public alerts about air quality during pregnancy have a separate positive effect on fetal health. We show that Korean women do not time their pregnancy according to expected yellow dust exposure, and that educated women’s pregnancy timing is not different from those who are less-educated. The results provide evidence for the effectiveness of pollution alert systems in promoting public health. They also underline the importance of taking into account individuals’ avoidance behavior when estimating the impact of air quality on birth outcomes. Specifically, we show that the estimated impact of air pollution on infant health is reduced by half when the preventive effect of public health warnings is not accounted for.
Handle: RePEc:nbr:nberwo:21613
Template-Type: ReDIF-Paper 1.0
Title: Are Low Interest Rates Deflationary? A Paradox of Perfect-Foresight Analysis
Classification-JEL: E31; E43; E52
Author-Name: Mariana García-Schmidt
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG ME
Number: 21614
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21614
File-URL: http://www.nber.org/papers/w21614.pdf
File-Format: application/pdf
Publication-Status: published as Mariana García-Schmidt & Michael Woodford, 2019. "Are Low Interest Rates Deflationary? A Paradox of Perfect-Foresight Analysis," American Economic Review, vol 109(1), pages 86-120.
Abstract: We illustrate a pitfall that can result from the common practice of assessing alternative monetary policies purely by considering the perfect foresight equilibria (PFE) consistent with the proposed rule. In a standard New Keynesian model, such analysis may seem to support the “Neo-Fisherian” proposition according to which low nominal interest rates can cause inflation to be lower. We propose instead an explicit cognitive process by which agents may form their expectations of future endogenous variables. Under some circumstances, a PFE can arise as a limiting case of our more general concept of reflective equilibrium, when the process of reflection is pursued sufficiently far. But we show that an announced intention to fix the nominal interest rate for a long enough period of time creates a situation in which reflective equilibrium need not resemble any PFE. In our view, this makes PFE predictions not plausible outcomes in the case of such policies. Our alternative approach implies that a commitment to keep interest rates low should raise inflation and output, though by less than some PFE analyses apply.
Handle: RePEc:nbr:nberwo:21614
Template-Type: ReDIF-Paper 1.0
Title: Oil and Gas Revenue Allocation to Local Governments in Eight States
Classification-JEL: H25; H71; H72; Q4; Q41; Q43; Q48
Author-Name: Richard G. Newell
Author-Person: pne29
Author-Name: Daniel Raimi
Author-Person: pra970
Note: EEE PE
Number: 21615
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21615
File-URL: http://www.nber.org/papers/w21615.pdf
File-Format: application/pdf
Publication-Status: published as Richard G. Newell, Daniel Raimi, US state and local oil and gas revenue sources and uses, Energy Policy, Volume 112, 2018, Pages 12-18, ISSN 0301-4215, https://doi.org/10.1016/j.enpol.2017.10.002.
Abstract: This report examines how oil and gas production generates revenue for local governments in eight states through four key mechanisms: (i) state taxes or fees on oil and gas production; (ii) local property taxes on oil and gas property; (iii) leasing of state-owned land; and (iv) leasing of federally-owned land. To compare across states, we show the percentage of total revenue generated by oil and gas production that flows to local governments from these revenue sources. We also connect these calculations to related research to assess whether state and local policies are providing sufficient revenue for local governments to manage increased costs associated with shale development. We find that in most cases, existing policies appear to provide adequate revenue for local governments to manage increased costs associated with growing oil and gas activity. As of 2014, revenues fall short of the costs imposed on local governments in some highly rural regions experiencing rapid, large-scale development, notably the Bakken region of North Dakota and Montana, select counties in Texas, and select local governments in Colorado and Wyoming. Collaboration between industry and local governments, especially on road repairs, could reduce public costs.
Handle: RePEc:nbr:nberwo:21615
Template-Type: ReDIF-Paper 1.0
Title: Movies, Margins and Marketing: Encouraging the Adoption of Iron-Fortified Salt
Classification-JEL: I12; I15
Author-Name: Abhijit Banerjee
Author-Name: Sharon Barnhardt
Author-Name: Esther Duflo
Author-Person: pdu166
Note: EH
Number: 21616
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21616
File-URL: http://www.nber.org/papers/w21616.pdf
File-Format: application/pdf
Publication-Status: published as Movies, Margins, and Marketing: Encouraging the Adoption of Iron-Fortified Salt, Abhijit Banerjee, Sharon Barnhardt, Esther Duflo. in Insights in the Economics of Aging, Wise. 2017
Abstract: A set of randomized experiments shed light on how markets and information influence household decisions to adopt nutritional innovations. Of 400 Indian villages, we randomly assigned half to an intervention where all shopkeepers were offered the option to sell a new salt, fortified with both iron and iodine (and not just iodine) at 50% discount. Within treatment villages, we conducted additional interventions: an increase in retailer margin (for one or several shopkeepers), the screening of an “edutainment” movie on the benefits of double-fortified salt, a flyer informing households of the product’s availability, and free distribution to a subset of households. We find that two interventions – showing the short film and offering an incentive to all shopkeepers – significantly increased usage: both by 5.5 percentage points, or over 50%, over take up without intervention, three years after launch. For comparison, only about half of households given the salt for free actually consumed it.
Handle: RePEc:nbr:nberwo:21616
Template-Type: ReDIF-Paper 1.0
Title: The Robustness of Tests for Consumer Choice Inconsistencies
Classification-JEL: D12; I11; J14
Author-Name: Jason Abaluck
Author-Name: Jonathan Gruber
Author-Person: pgr20
Note: AG EH PE
Number: 21617
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21617
File-URL: http://www.nber.org/papers/w21617.pdf
File-Format: application/pdf
Publication-Status: published as Abaluck, Jason, and Jonathan Gruber. 2016. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Reply." American Economic Review, 106 (12): 3962-87. DOI: 10.1257/aer.20151318
Abstract: We explore the in- and out- of sample robustness of tests for consumer choice inconsistencies based on parameter restrictions in parametric models, with a focus on tests proposed by Ketcham, Kuminoff and Powers (2015). We start by arguing that non-parametric alternatives are inherently conservative with respect to detecting mistakes (and one specific test proposed by KKP is incorrect). We then consider several proposed robustness checks of parametric models and argue that they do not separately identify misspecification and choice inconsistencies. We also show that, when implemented using a comprehensive goodness of fit measure, the Keane and Wolpin (2007) test of out of sample forecasting demonstrates that a model allowing for choice inconsistencies forecasts substantially better than one that does not. Finally, we explore the robustness of our 2011 results to alternative normative assumptions.
Handle: RePEc:nbr:nberwo:21617
Template-Type: ReDIF-Paper 1.0
Title: Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response
Classification-JEL: H55; J01; J63; R23
Author-Name: Andrew Foote
Author-Person: pfo269
Author-Name: Michel Grosz
Author-Name: Ann Huff Stevens
Author-Person: pst180
Note: AG LS
Number: 21618
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21618
File-URL: http://www.nber.org/papers/w21618.pdf
File-Format: application/pdf
Publication-Status: published as Locate Your Nearest Exit: Mass Layoffs and Local Labor Market Response Andrew Foote, Michel Grosz, and Ann Stevens ILR Review First Published January 31, 2018 https://doi.org/10.1177/0019793917753095
Abstract: Large shocks to local labor markets can cause long-lasting changes to employment, unemployment and the local labor force. This study examines the relationship between mass layoffs and the long-run size of the local labor force. It considers four main channels through which the local labor force may adjust: in-migration, out-migration, retirement, and disability insurance enrollment. We show that these channels account for over half of the labor force reductions following a mass layoff event. By measuring the residual difference between these channels and net labor force change, we also show that labor force non-participation accounted for much of the local labor force response in the period during and after the Great Recession.
Handle: RePEc:nbr:nberwo:21618
Template-Type: ReDIF-Paper 1.0
Title: Are Capital Inflows Expansionary or Contractionary? Theory, Policy Implications, and Some Evidence
Classification-JEL: F21; F23
Author-Name: Olivier Blanchard
Author-Person: pbl2
Author-Name: Jonathan D. Ostry
Author-Person: pos23
Author-Name: Atish R. Ghosh
Author-Person: pgh16
Author-Name: Marcos Chamon
Author-Person: pch173
Note: DEV IFM ITI ME
Number: 21619
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21619
File-URL: http://www.nber.org/papers/w21619.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Blanchard & Jonathan D. Ostry & Atish R. Ghosh & Marcos Chamon, 2017. "Are Capital Inflows Expansionary or Contractionary? Theory, Policy Implications, and Some Evidence," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(3), pages 563-585, August.
Abstract: The workhorse open-economy macro model suggests that capital inflows are contractionary because they appreciate the currency and reduce net exports. Emerging market policy makers however believe that inflows lead to credit booms and rising output, and the evidence appears to go their way. To reconcile theory and reality, we extend the set of assets included in the Mundell-Fleming model to include both bonds and non-bonds. At a given policy rate, inflows may decrease the rate on non-bonds, reducing the cost of financial intermediation, potentially offsetting the contractionary impact of appreciation. We explore the implications theoretically and empirically, and find support for the key predictions in the data.
Handle: RePEc:nbr:nberwo:21619
Template-Type: ReDIF-Paper 1.0
Title: Do People Shape Cities, or Do Cities Shape People? The Co-evolution of Physical, Social, and Economic Change in Five Major U.S. Cities
Classification-JEL: C8; R20; Y10
Author-Name: Nikhil Naik
Author-Name: Scott Duke Kominers
Author-Person: pko394
Author-Name: Ramesh Raskar
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: César A. Hidalgo
Author-Person: phi113
Note: LS
Number: 21620
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21620
File-URL: http://www.nber.org/papers/w21620.pdf
File-Format: application/pdf
Abstract: Urban change involves transformations in the physical appearance and the social composition of neighborhoods. Yet, the relationship between the physical and social components of urban change is not well understood due to the lack of comprehensive measures of neighborhood appearance. Here, we introduce a computer vision method to quantify change in physical appearance of streetscapes and generate a dataset of physical change for five large American cities. We combine this dataset with socioeconomic indicators to explore whether demographic and economic changes precede, follow, or co-occur with changes in physical appearance. We find that the strongest predictors of improvement in a neighborhood’s physical appearance are population density and share of college-educated adults. Other socioeconomic characteristics, like median income, share of vacant homes, and monthly rent, do not predict improvement in physical appearance. We also find that neighborhood appearances converge to the initial appearances of bordering areas, supporting the Burgess “invasion” theory. In addition, physical appearance is more likely to improve in neighborhoods proximal to the central business district. Finally, we find modest support for “tipping” and “filtering” theories of urban change.
Handle: RePEc:nbr:nberwo:21620
Template-Type: ReDIF-Paper 1.0
Title: Optimal Product Variety in Radio Markets
Classification-JEL: L1; L11; L13; L82
Author-Name: Steven Berry
Author-Person: pbe18
Author-Name: Alon Eizenberg
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO
Number: 21621
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21621
File-URL: http://www.nber.org/papers/w21621.pdf
File-Format: application/pdf
Publication-Status: published as Steven Berry & Alon Eizenberg & Joel Waldfogel, 2016. "Optimal product variety in radio markets," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 463-497, 08.
Abstract: A vast theoretical literature shows that inefficient market structures may arise in free entry equilibria. The inefficiency may manifest itself in the number, variety, or quality of products. Previous empirical work demonstrated that excessive entry may obtain in local radio markets. Our paper extends that literature by relaxing the assumption that stations are symmetric, allowing instead for endogenous station differentiation along both horizontal and vertical dimensions. Importantly, we allow station quality to be an unobserved station characteristic. We compute the optimal market structures in local radio markets and find that, in most broadcasting formats, a social planner who takes into account the welfare of market participants (stations and advertisers) would eliminate 50%-60% of the stations observed in equilibrium. In 80%-95% of markets that have high quality stations in the observed equilibrium, welfare could be unambiguously improved by converting one such station into low quality broadcasting. In contrast, it is never unambiguously welfare-enhancing to convert an observed low quality station into a high quality one. This suggests local over-provision of quality in the observed equilibrium, in addition to the finding of excessive entry.
Handle: RePEc:nbr:nberwo:21621
Template-Type: ReDIF-Paper 1.0
Title: The Migration Response to Increasing Temperatures
Classification-JEL: F22; Q1; R12
Author-Name: Cristina Cattaneo
Author-Name: Giovanni Peri
Author-Person: ppe210
Note: DEV EEE LS
Number: 21622
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21622
File-URL: http://www.nber.org/papers/w21622.pdf
File-Format: application/pdf
Publication-Status: published as Cattaneo, Cristina & Peri, Giovanni, 2016. "The migration response to increasing temperatures," Journal of Development Economics, Elsevier, vol. 122(C), pages 127-146.
Abstract: Climate change, especially the warming trend experienced by several countries, could affect agricultural productivity. As a consequence the income of rural populations will change, and with them the incentives for people to remain in rural areas. Using data from 116 countries between 1960 and 2000, we analyze the effect of differential warming trends across countries on the probability of either migrating out of the country or from rural to urban areas. We find that higher temperatures increased emigration rates to urban areas and to other countries in middle income economies. In poor countries, higher temperatures reduced the probability of emigration to cities or to other countries, consistently with the presence of severe liquidity constraints. In middle-income countries, migration represents an important margin of adjustment to global warming, potentially contributing to structural change and even increasing income per worker. Such a mechanism, however, does not seem to work in poor economies.
Handle: RePEc:nbr:nberwo:21622
Template-Type: ReDIF-Paper 1.0
Title: Policies for a Better-fed World
Classification-JEL: I1; I15; I28; I38
Author-Name: Abhijit Banerjee
Note: DEV
Number: 21623
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21623
File-URL: http://www.nber.org/papers/w21623.pdf
File-Format: application/pdf
Publication-Status: published as Abhijit Banerjee, 2016. "Policies for a better-fed world," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 3-17, February.
Abstract: A wide range of interventions, from subsidized grains all the way to conditions on nutrition in conditional cash transfers, have either been tried or put in place in different countries in order to fight under-nutrition. A number of important policy experiments in recent years, directly or indirectly, offer important insights into how best to design these interventions. This essay is an attempt to pull together some of those insights, with the aim of saying something about what the optimal design should look like.
Handle: RePEc:nbr:nberwo:21623
Template-Type: ReDIF-Paper 1.0
Title: Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution
Classification-JEL: E24; Q33; Q35; Q43
Author-Name: James Feyrer
Author-Person: pfe139
Author-Name: Erin T. Mansur
Author-Person: pma874
Author-Name: Bruce Sacerdote
Note: EEE EFG LS
Number: 21624
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21624
File-URL: http://www.nber.org/papers/w21624.pdf
File-Format: application/pdf
Publication-Status: published as James Feyrer & Erin T. Mansur & Bruce Sacerdote, 2017. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution," American Economic Review, American Economic Association, vol. 107(4), pages 1313-1334, April.
Abstract: The combining of horizontal drilling and hydrofracturing unleashed a boom in oil and natural gas production in the US. This technological shift interacts with local geology to create an exogenous shock to county income and employment. We measure the effects of these shocks within the county where production occurs and track their geographic propagation. Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs. Thus, over a third of the fracking revenue stays within the regional economy. Our results suggest new oil and gas extraction led to an increase in aggregate US employment of 725,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession.
Handle: RePEc:nbr:nberwo:21624
Template-Type: ReDIF-Paper 1.0
Title: The Mortality Consequences of Distinctively Black Names
Classification-JEL: I1; J15; N31; N32
Author-Name: Lisa Cook
Author-Person: pco838
Author-Name: Trevon Logan
Author-Person: plo110
Author-Name: John Parman
Author-Person: ppa1012
Note: DAE
Number: 21625
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21625
File-URL: http://www.nber.org/papers/w21625.pdf
File-Format: application/pdf
Publication-Status: published as Cook, Lisa D. & Logan, Trevon D. & Parman, John M., 2016. "The mortality consequences of distinctively black names," Explorations in Economic History, Elsevier, vol. 59(C), pages 114-125.
Abstract: Race-specific given names have been linked to a range of negative outcomes in contemporary studies, but little is known about their long term consequences. Building on recent research which documents the existence of a national naming pattern for African American males in the late nineteenth and early twentieth centuries (Cook, Logan and Parman 2014), we analyze long-term consequences of distinctively racialized names. Using over three million death certificates from Alabama, Illinois, Missouri and North Carolina from 1802 to 1970, we find a robust within-race mortality difference for African American men who had distinctively black names. Having an African American name added more than one year of life relative to other African American males. The result is robust to controlling for the age pattern of mortality over time and environmental factors which could drive the mortality relationship. The result is not consistently present for infant and child mortality, however. As much as 10% of the historical between-race mortality gap would have been closed if every black man were given a black name. Suggestive evidence implies that cultural factors not captured by socioeconomic or human capital measures may be related to the mortality differential.
Handle: RePEc:nbr:nberwo:21625
Template-Type: ReDIF-Paper 1.0
Title: Phasing Out the GSEs
Classification-JEL: E0; E21; E62; G00; G12; G18; G21; G28
Author-Name: Vadim Elenev
Author-Person: pel251
Author-Name: Tim Landvoigt
Author-Name: Stijn Van Nieuwerburgh
Author-Person: pva368
Note: AP CF EFG ME
Number: 21626
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21626
File-URL: http://www.nber.org/papers/w21626.pdf
File-Format: application/pdf
Publication-Status: published as Elenev, Vadim & Landvoigt, Tim & Van Nieuwerburgh, Stijn, 2016. "Phasing out the GSEs," Journal of Monetary Economics, Elsevier, vol. 81(C), pages 111-132.
Abstract: We develop a new model of the mortgage market where both borrowers and lenders can default. Risk tolerant savers act as intermediaries between risk averse depositors and impatient borrowers. The government plays a crucial role by providing both mortgage guarantees and deposit insurance. Underpriced government mortgage guarantees lead to more and riskier mortgage originations as well as to high financial sector leverage. Mortgage crises occasionally turn into financial crises and government bailouts due to the fragility of the intermediaries' balance sheets. Increasing the price of the mortgage guarantee "crowds in" the private sector, reduces financial fragility, leads to fewer but safer mortgages, lowers house prices, and raises mortgage and risk-free interest rates. Due to a more robust financial sector, consumption smoothing improves and aggregate welfare increases. While borrowers are nearly indifferent to a world with or without mortgage guarantees, savers are substantially better off. While aggregate welfare increases, so does wealth inequality.
Handle: RePEc:nbr:nberwo:21626
Template-Type: ReDIF-Paper 1.0
Title: Natural Gas Prices and Coal Displacement: Evidence from Electricity Markets
Classification-JEL: L5; L71; L94; Q4; Q5
Author-Name: Christopher R. Knittel
Author-Person: pkn5
Author-Name: Konstantinos Metaxoglou
Author-Name: Andre Trindade
Note: EEE IO
Number: 21627
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21627
File-URL: http://www.nber.org/papers/w21627.pdf
File-Format: application/pdf
Abstract: We examine the environmental impact of the post-2005 natural gas glut in the United States due to the shale gas boom. Our focus is on quantifying short-term coal-to-gas switching decisions by different types of electric power plants in response to changes in the relative price of the two fuels. In particular, we study the following entities: investor-owned utilities (IOUs) and independent power producers (IPPs) in restructured markets coordinated by Independent System Operators, as well as IOUs in traditional vertically-integrated markets. Using alternative data aggregations and model specifications, we find that IOUs operating in traditional markets are more sensitive to changes in fuel prices than both IOUs and IPPs in restructured markets. We attribute our findings to differences in available gas-fired generating capacity with the most cost-efficient technology: electricity generators reduced their rate of investment in the restructured markets post restructuring. The heterogeneity in the response of fuel consumption to prices has implications for carbon dioxide (CO2) emissions for the entities considered. Using simple back-of-the-envelope calculations, the almost 70% drop in the price of natural gas between June 2008 and the end of 2012 translates to as much as 33% reduction in CO2 emissions for IOUs in traditional markets, but only up to 19% for IOUs in restructured markets.
Handle: RePEc:nbr:nberwo:21627
Template-Type: ReDIF-Paper 1.0
Title: Catching Cheating Students
Classification-JEL: K42
Author-Name: Steven D. Levitt
Author-Person: ple59
Author-Name: Ming-Jen Lin
Author-Person: pli194
Note: LE PE
Number: 21628
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21628
File-URL: http://www.nber.org/papers/w21628.pdf
File-Format: application/pdf
Publication-Status: published as Ming‐Jen Lin & Steven D. Levitt, 2020. "Catching Cheating Students," Economica, London School of Economics and Political Science, vol. 87(348), pages 885-900, October.
Abstract: We develop a simple algorithm for detecting exam cheating between students who copy off one another’s exam. When this algorithm is applied to exams in a general science course at a top university, we find strong evidence of cheating by at least 10 percent of the students. Students studying together cannot explain our findings. Matching incorrect answers prove to be a stronger indicator of cheating than matching correct answers. When seating locations are randomly assigned, and monitoring is increased, cheating virtually disappears.
Handle: RePEc:nbr:nberwo:21628
Template-Type: ReDIF-Paper 1.0
Title: Measuring Health Insurance Benefits: The Case of People with Disabilities
Classification-JEL: D31; H24; I18; J31
Author-Name: Richard V. Burkhauser
Author-Person: pbu180
Author-Name: Jeff Larrimore
Author-Person: pla377
Author-Name: Sean Lyons
Note: EH PE
Number: 21629
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21629
File-URL: http://www.nber.org/papers/w21629.pdf
File-Format: application/pdf
Publication-Status: published as Burkhauser, Richard V., Jeff Larrimore and Sean Lyons. Forthcoming. “Measuring Health Insurance Benefits: The Case of People with Disabilities.” Contemporary Economic Policy.
Abstract: Since 2012 the Congressional Budget Office has included an estimate of the market value of government-provided health insurance coverage in its measures of household income. We follow this practice for both public and private health insurance to capture the impact of greater access to government-provided health insurance for working-age people with disabilities, whose value rose in 2010 dollars from $11.7B in 1980 to $114.3B in 2012. We then consider the more general implications of incorporating estimates of the market price of insurance, equivalent to that provided by the government, into policy analyses in a post-Affordable Care Act world.
Handle: RePEc:nbr:nberwo:21629
Template-Type: ReDIF-Paper 1.0
Title: Can't Pay or Won't Pay? Unemployment, Negative Equity, and Strategic Default
Classification-JEL: G21; G33; R3; R51
Author-Name: Kristopher Gerardi
Author-Person: pge160
Author-Name: Kyle F. Herkenhoff
Author-Name: Lee E. Ohanian
Author-Person: poh1
Author-Name: Paul S. Willen
Author-Person: pwi457
Note: EFG ED
Number: 21630
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21630
File-URL: http://www.nber.org/papers/w21630.pdf
File-Format: application/pdf
Publication-Status: published as Kristopher Gerardi & Kyle F. Herkenhoff & Lee E. Ohanian & Paul S. Willen, 2018. "Can’t Pay or Won’t Pay? Unemployment, Negative Equity, and Strategic Default," The Review of Financial Studies, vol 31(3), pages 1098-1131.
Abstract: This paper exploits matched data from the PSID on borrower mortgages with income and demographic data to quantify the relative importance of negative equity, versus lack of ability to pay, as affecting default between 2009 and 2013. These data allow us to construct household budgets sets that provide better measures of ability to pay. We use instrumental variables to quantify the impact of ability to pay, including job loss and disability, versus negative equity. Changes in ability to pay have the largest estimated effects. Job loss has an equivalent effect on default likelihood as a 35 percent decline in equity.
Handle: RePEc:nbr:nberwo:21630
Template-Type: ReDIF-Paper 1.0
Title: Bullying among Adolescents: The Role of Cognitive and Non-Cognitive Skills
Classification-JEL: C34; C38; I21; J24
Author-Name: Miguel Sarzosa
Author-Person: psa603
Author-Name: Sergio Urzúa
Note: CH DEV ED
Number: 21631
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21631
File-URL: http://www.nber.org/papers/w21631.pdf
File-Format: application/pdf
Abstract: Bullying is a behavioral phenomenon that has received increasing attention in recent times. This paper uses a structural model with latent skills and longitudinal information from Korean youths to identify the determinants and effects of bullying. We find that, unlike cognitive skills, non-cognitive skills significantly reduce the chances of being bullied during high school. We use the model to estimate average treatment effects of being bullied at age 15 on several outcomes measured at age 18. We show that bullying is very costly. It increases the probability of smoking as well as the likelihood of feeling sick, depressed, stressed and unsatisfied with life. It also reduces college enrollment and increases the dislike of school. We document that differences in non-cognitive and cognitive skill endowments palliate or exacerbate these consequences. Finally, we explore whether investing in non-cognitive skills could reduce the occurrence of bullying. Our findings indicate that the investment in skill development is key in any policy intended to fight the behavior.
Handle: RePEc:nbr:nberwo:21631
Template-Type: ReDIF-Paper 1.0
Title: What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics
Classification-JEL: D12; G22; H51; I11; I13
Author-Name: Zarek C. Brot-Goldberg
Author-Person: pbr639
Author-Name: Amitabh Chandra
Author-Person: pch893
Author-Name: Benjamin R. Handel
Author-Name: Jonathan T. Kolstad
Author-Person: pko1088
Note: EH IO PE
Number: 21632
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21632
File-URL: http://www.nber.org/papers/w21632.pdf
File-Format: application/pdf
Publication-Status: published as Zarek C. Brot-Goldberg & Amitabh Chandra & Benjamin R. Handel & Jonathan T. Kolstad, 2017. "What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics*," The Quarterly Journal of Economics, vol 132(3), pages 1261-1318.
Abstract: Measuring consumer responsiveness to medical care prices is a central issue in health economics and a key ingredient in the optimal design and regulation of health insurance markets. We study consumer responsiveness to medical care prices, leveraging a natural experiment that occurred at a large self-insured firm which required all of its employees to switch from an insurance plan that provided free health care to a non-linear, high deductible plan. The switch caused a spending reduction between 11.79%-13.80% of total firm-wide health spending. We decompose this spending reduction into the components of (i) consumer price shopping (ii) quantity reductions and (iii) quantity substitutions, finding that spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g. preventive services) and potentially wasteful care (e.g. imaging services). We then leverage the unique data environment to study how consumers respond to the complex structure of the high-deductible contract. We find that consumers respond heavily to spot prices at the time of care, and reduce their spending by 42% when under the deductible, conditional on their true expected end-of-year shadow price and their prior year end-of-year marginal price. In the first-year post plan change, 90% of all spending reductions occur in months that consumers began under the deductible, with 49% of all reductions coming for the ex ante sickest half of consumers under the deductible, despite the fact that these consumers have quite low shadow prices. There is no evidence of learning to respond to the true shadow price in the second year post-switch.
Handle: RePEc:nbr:nberwo:21632
Template-Type: ReDIF-Paper 1.0
Title: Measuring Economic Policy Uncertainty
Classification-JEL: D80; E22; E66; G18; L50
Author-Name: Scott R. Baker
Author-Person: pba1441
Author-Name: Nicholas Bloom
Author-Person: pbl55
Author-Name: Steven J. Davis
Author-Person: pda15
Note: AP EFG PE POL
Number: 21633
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21633
File-URL: http://www.nber.org/papers/w21633.pdf
File-Format: application/pdf
Publication-Status: published as Scott R. Baker, Nicholas Bloom, and Steven J. Davis. 2016. "Measuring Economic Policy Uncertainty." Quarterly Journal of Economics, vol 131(4), pages 1593-1636.
Abstract: We develop a new index of economic policy uncertainty (EPU) based on newspaper coverage frequency. Several types of evidence – including human readings of 12,000 newspaper articles – indicate that our index proxies for movements in policy-related economic uncertainty. Our US index spikes near tight presidential elections, Gulf Wars I and II, the 9/11 attacks, the failure of Lehman Brothers, the 2011 debt-ceiling dispute and other major battles over fiscal policy. Using firm-level data, we find that policy uncertainty raises stock price volatility and reduces investment and employment in policy-sensitive sectors like defense, healthcare, and infrastructure construction. At the macro level, policy uncertainty innovations foreshadow declines in investment, output, and employment in the United States and, in a panel VAR setting, for 12 major economies. Extending our US index back to 1900, EPU rose dramatically in the 1930s (from late 1931) and has drifted upwards since the 1960s.
Handle: RePEc:nbr:nberwo:21633
Template-Type: ReDIF-Paper 1.0
Title: Insider Trading and Innovation
Classification-JEL: F63; F65; G14; G18; O3; O47
Author-Name: Ross Levine
Author-Person: ple61
Author-Name: Chen Lin
Author-Person: pli551
Author-Name: Lai Wei
Note: CF DEV EFG IFM PR
Number: 21634
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21634
File-URL: http://www.nber.org/papers/w21634.pdf
File-Format: application/pdf
Publication-Status: published as Ross Levine & Chen Lin & Lai Wei, 2017. "Insider Trading and Innovation," The Journal of Law and Economics, vol 60(4), pages 749-800.
Abstract: This paper assesses whether legal systems that protect outside investors from corporate insiders increase or decrease the rate of technological innovation. Based on over 75,000 industry-country-year observations across 94 economies from 1976 to 2006, we find that enforcing insider trading laws spurs innovation—as measured by patent intensity, scope, impact, generality, and originality. Consistent with theories that insider trading slows innovation by impeding the valuation of innovative activities, the relationship between enforcing insider trading laws and innovation is much larger in industries that are naturally innovative and opaque, and equity issuances also rise much more in these industries after a country starts enforcing its insider trading laws.
Handle: RePEc:nbr:nberwo:21634
Template-Type: ReDIF-Paper 1.0
Title: Pollution, Infectious Disease, and Mortality: Evidence from the 1918 Spanish Influenza Pandemic
Classification-JEL: I15; I18; N32; N52; Q40; Q53
Author-Name: Karen Clay
Author-Person: pcl25
Author-Name: Joshua Lewis
Author-Person: ple910
Author-Name: Edson Severnini
Author-Person: pse663
Note: DAE EEE
Number: 21635
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21635
File-URL: http://www.nber.org/papers/w21635.pdf
File-Format: application/pdf
Publication-Status: published as Karen Clay & Joshua Lewis & Edson Severnini, 2018. "Pollution, Infectious Disease, and Mortality: Evidence from the 1918 Spanish Influenza Pandemic," The Journal of Economic History, vol 78(04), pages 1179-1209.
Abstract: The 1918 Influenza Pandemic killed millions worldwide and hundreds of thousands in the United States. This paper studies the impact of air pollution on pandemic mortality. The analysis combines a panel dataset on infant and all-age mortality with a novel measure of air pollution based on the burning of coal in a large sample of U.S. cities. We estimate that air pollution contributed significantly to pandemic mortality. Cities that used more coal experienced tens of thousands of excess deaths in 1918 relative to cities that used less coal with similar pre-pandemic socioeconomic conditions and baseline health. Factors related to poverty, public health, and the timing of onset also affected pandemic mortality. The findings support recent medical evidence on the link between air pollution and influenza infection, and suggest that poor air quality was an important cause of mortality during the pandemic.
Handle: RePEc:nbr:nberwo:21635
Template-Type: ReDIF-Paper 1.0
Title: Economics and the Modern Economic Historian
Classification-JEL: B0; N0
Author-Name: Ran Abramitzky
Author-Person: pab108
Note: DAE
Number: 21636
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21636
File-URL: http://www.nber.org/papers/w21636.pdf
File-Format: application/pdf
Publication-Status: published as Ran Abramitzky, 2015. "Economics and the Modern Economic Historian," The Journal of Economic History, vol 75(04), pages 1240-1251.
Abstract: I reflect on the role of modern economic history in economics. I document a substantial increase in the percentage of papers devoted to economic history in the top-5 economic journals over the last few decades. I discuss how the study of the past has contributed to economics by providing ground to test economic theory, improve economic policy, understand economic mechanisms, and answer big economic questions. Recent graduates in economic history appear to have roughly similar prospects to those of other economists in the economics job market. I speculate how the increase in availability of high quality micro level historical data, the decline in costs of digitizing data, and the use of computationally intensive methods to convert large-scale qualitative information into quantitative data might transform economic history in the future.
Handle: RePEc:nbr:nberwo:21636
Template-Type: ReDIF-Paper 1.0
Title: Modeling Uncertainty in Climate Change: A Multi-Model Comparison
Classification-JEL: O44; Q48; Q54
Author-Name: Kenneth Gillingham
Author-Person: pgi147
Author-Name: William D. Nordhaus
Author-Person: pno115
Author-Name: David Anthoff
Author-Person: pan171
Author-Name: Geoffrey Blanford
Author-Name: Valentina Bosetti
Author-Person: pbo275
Author-Name: Peter Christensen
Author-Person: pch1683
Author-Name: Haewon McJeon
Author-Name: John Reilly
Author-Person: pre355
Author-Name: Paul Sztorc
Note: EEE
Number: 21637
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21637
File-URL: http://www.nber.org/papers/w21637.pdf
File-Format: application/pdf
Abstract: The economics of climate change involves a vast array of uncertainties, complicating both the analysis and development of climate policy. This study presents the results of the first comprehensive study of uncertainty in climate change using multiple integrated assessment models. The study looks at model and parametric uncertainties for population, total factor productivity, and climate sensitivity. It estimates the pdfs of key output variables, including CO2 concentrations, temperature, damages, and the social cost of carbon (SCC). One key finding is that parametric uncertainty is more important than uncertainty in model structure. Our resulting pdfs also provide insights on tail events.
Handle: RePEc:nbr:nberwo:21637
Template-Type: ReDIF-Paper 1.0
Title: How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility?
Classification-JEL: J31; J51; J62
Author-Name: Richard Freeman
Author-Person: pfr23
Author-Name: Eunice Han
Author-Name: David Madland
Author-Name: Brendan V. Duke
Note: LS
Number: 21638
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21638
File-URL: http://www.nber.org/papers/w21638.pdf
File-Format: application/pdf
Abstract: This paper examines unionism’s relationship to the size of the middle class and its relationship to intergenerational mobility. We use the PSID 1985 and 2011 files to examine the change in the share of workers in a middle-income group (defined by persons having incomes within 50% of the median) and use a shift-share decomposition to explore how the decline of unionism contributes to the shrinking middle class. We also use the files to investigate the correlation between parents’ union status and the incomes of their children. Additionally, we use federal income tax data to examine the geographical correlation between union density and intergenerational mobility. We find: 1) union workers are disproportionately in the middle-income group or above, and some reach middle-income status due to the union wage premium; 2) the offspring of union parents have higher incomes than the offspring of otherwise comparable non-union parents, especially when the parents are low-skilled; 3) offspring from communities with higher union density have higher average incomes relative to their parents compared to offspring from communities with lower union density. These findings show a strong, though not necessarily causal, link between unions, the middle class, and intergenerational mobility.
Handle: RePEc:nbr:nberwo:21638
Template-Type: ReDIF-Paper 1.0
Title: The Promise and Potential of Linked Employer-Employee Data for Entrepreneurship Research
Classification-JEL: J21; L26
Author-Name: Christopher Goetz
Author-Person: pgo745
Author-Name: Henry Hyatt
Author-Name: Erika McEntarfer
Author-Person: pmc155
Author-Name: Kristin Sandusky
Author-Person: psa1351
Note: LS PR
Number: 21639
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21639
File-URL: http://www.nber.org/papers/w21639.pdf
File-Format: application/pdf
Publication-Status: published as The Promise and Potential of Linked Employer-Employee Data for Entrepreneurship Research, Christopher Goetz, Henry Hyatt, Erika McEntarfer, Kristin Sandusky. in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, Haltiwanger, Hurst, Miranda, and Schoar. 2017
Abstract: In this paper, we highlight the potential for linked employer-employee data to be used in entrepreneurship research, describing new data on business start-ups, their founders and early employees, and providing examples of how they can be used in entrepreneurship research. Linked employer-employee data provides a unique perspective on new business creation by combining information on the business, workforce, and individual. By combining data on both workers and firms, linked data can investigate many questions that owner-level or firm-level data cannot easily answer alone - such as composition of the workforce at start-ups and their role in explaining business dynamics, the flow of workers across new and established firms, and the employment paths of the business owners themselves.
Handle: RePEc:nbr:nberwo:21639
Template-Type: ReDIF-Paper 1.0
Title: Retaking in High Stakes Exams: Is Less More?
Classification-JEL: C35; I23
Author-Name: Kala Krishna
Author-Person: pkr26
Author-Name: Sergey Lychagin
Author-Name: Verónica Frisancho Robles
Author-Person: pfr267
Note: ED IO
Number: 21640
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21640
File-URL: http://www.nber.org/papers/w21640.pdf
File-Format: application/pdf
Publication-Status: published as Kala Krishna & Sergey Lychagin & Veronica Frisancho, 2018. "RETAKING IN HIGH STAKES EXAMS: IS LESS MORE?," International Economic Review, vol 59(2), pages 449-477.
Abstract: Placement, both in university and in the civil service, according to performance in competitive exams is the norm in much of the world. Repeat taking of such exams is common despite the private and social costs it imposes. We develop and estimate a structural model of exam retaking using data from Turkey's university placement exam. We find that limiting retaking, though individually harmful given the equilibrium, actually increases expected welfare across the board. This result comes from a general equilibrium effect: retakers crowd the market and impose negative spillovers on others by raising acceptance cutoffs.
Handle: RePEc:nbr:nberwo:21640
Template-Type: ReDIF-Paper 1.0
Title: Partial Identification in Applied Research: Benefits and Challenges
Classification-JEL: C5; C50; C57
Author-Name: Kate Ho
Author-Person: pho493
Author-Name: Adam M. Rosen
Author-Person: pro441
Note: EH IO LS
Number: 21641
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21641
File-URL: http://www.nber.org/papers/w21641.pdf
File-Format: application/pdf
Abstract: Advances in the study of partial identification allow applied researchers to learn about parameters of interest without making assumptions needed to guarantee point identification. We discuss the roles that assumptions and data play in partial identification analysis, with the goal of providing information to applied researchers that can help them employ these methods in practice. To this end, we present a sample of econometric models that have been used in a variety of recent applications where parameters of interest are partially identified, highlighting common features and themes across these papers. In addition, in order to help illustrate the combined roles of data and assumptions, we present numerical illustrations for a particular application, the joint determination of wages and labor supply. Finally we discuss the benefits and challenges of using partially identifying models in empirical work and point to possible avenues of future research.
Handle: RePEc:nbr:nberwo:21641
Template-Type: ReDIF-Paper 1.0
Title: The Anatomy of Physician Payments: Contracting Subject to Complexity
Classification-JEL: H44; H51; H57; I11; I13; L98
Author-Name: Jeffrey Clemens
Author-Name: Joshua D. Gottlieb
Author-Name: Tímea Laura Molnár
Author-Person: pmo1294
Note: AG EH ME PE
Number: 21642
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21642
File-URL: http://www.nber.org/papers/w21642.pdf
File-Format: application/pdf
Abstract: Why do private insurers closely link their physician payment rates to the Medicare fee schedule despite its well-known limitations? We ask to what extent this relationship reflects the use of Medicare's relative price menu as a benchmark, in order to reduce transaction costs in a complex pricing environment. We analyze 91 million claims from a large private insurer, which represent $7.8 billion in spending over four years. We estimate that 75 percent of services, accounting for 55 percent of spending, are benchmarked to Medicare's relative prices. The Medicare-benchmarked share is higher for services provided by small physician groups. It is lower for capital-intensive treatment categories, for which Medicare's average-cost reimbursements deviate most from marginal cost. When the insurer deviates from Medicare's relative prices, it adjusts towards the marginal costs of treatment. Our results suggest that providers and private insurers coordinate around Medicare's menu of relative payments for simplicity, but innovate when the value of doing so is likely highest.
Handle: RePEc:nbr:nberwo:21642
Template-Type: ReDIF-Paper 1.0
Title: When Evidence is Not Enough: Findings from a Randomized Evaluation of Evidence-Based Literacy Instruction (EBLI)
Classification-JEL: I0; I20; I21; I28
Author-Name: Brian Jacob
Note: CH ED LS PE
Number: 21643
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21643
File-URL: http://www.nber.org/papers/w21643.pdf
File-Format: application/pdf
Publication-Status: published as Brian Jacob, 2017. "When evidence is not enough: Findings from a randomized evaluation of Evidence-Based Literacy Instruction (EBLI)," Labour Economics, vol 45, pages 5-16.
Abstract: This paper reports the results of an experimental evaluation of Evidence Based Literacy Instruction (EBLI). Developed over 15 years ago, EBLI aims to provide teachers with instructional strategies to improve reading accuracy, fluency and comprehension. Sixty-three teachers in grades 2-5 in seven Michigan charter schools were randomly assigned within school-grade blocks to receive EBLI training or a business-as-usual control condition. Comparing students in treatment and control classrooms during the 2014-15 school year, we find no significant impact on reading performance. Teacher survey responses and interviews with program staff suggest that several implementation challenges may have played a role in the null findings.
Handle: RePEc:nbr:nberwo:21643
Template-Type: ReDIF-Paper 1.0
Title: Wealth, Tastes, and Entrepreneurial Choice
Classification-JEL: D21; D22; E24; L26
Author-Name: Erik G. Hurst
Author-Person: phu87
Author-Name: Benjamin W. Pugsley
Author-Person: ppu56
Note: EFG PR
Number: 21644
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21644
File-URL: http://www.nber.org/papers/w21644.pdf
File-Format: application/pdf
Publication-Status: published as Wealth, Tastes, and Entrepreneurial Choice, Erik G. Hurst, Benjamin W. Pugsley. in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, Haltiwanger, Hurst, Miranda, and Schoar. 2017
Abstract: The non-pecuniary benefits of managing a small business are a first order consideration for many nascent entrepreneurs, yet the preference for business ownership is mostly ignored in models of entrepreneurship and occupational choice. In this paper, we study a population with varying entrepreneurial tastes and wealth in a simple general equilibrium model of occupational choice. This choice yields several important results: (1) entrepreneurship can be thought of as a normal good, generating wealth effects independent of financing constraints, (2) non-pecuniary entrepreneurs select into small scale firms, (3) subsidies designed to stimulate more business entry can have regressive distributional effects. Despite abstracting from other important considerations such as risk, financing constraints, and innovation, we show that non-pecuniary compensation is particularly relevant in discussions of small businesses.
Handle: RePEc:nbr:nberwo:21644
Template-Type: ReDIF-Paper 1.0
Title: Trading Votes for Votes. A Decentralized Matching Algorithm
Classification-JEL: C92; D7; D72
Author-Name: Alessandra Casella
Author-Person: pca496
Author-Name: Thomas Palfrey
Author-Person: ppa1164
Note: PE POL
Number: 21645
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21645
File-URL: http://www.nber.org/papers/w21645.pdf
File-Format: application/pdf
Abstract: Vote-trading is common practice in committees and group decision-making. Yet we know very little about its properties. Inspired by the similarity between the logic of sequential rounds of pairwise vote-trading and matching algorithms, we explore three central questions that have parallels in the matching literature: (1) Does a stable allocation of votes always exists? (2) Is it reachable through a decentralized algorithm? (3) What welfare properties does it possess? We prove that a stable allocation exists and is always reached in a finite number of trades, for any number of voters and issues, for any separable preferences, and for any rule on how trades are prioritized. Its welfare properties however are guaranteed to be desirable only under specific conditions. A laboratory experiment confirms that stability has predictive power on the vote allocation achieved via sequential pairwise trades, but lends only weak support to the dynamic algorithm itself.
Handle: RePEc:nbr:nberwo:21645
Template-Type: ReDIF-Paper 1.0
Title: The International Price System
Classification-JEL: E31; F0; F41
Author-Name: Gita Gopinath
Note: EFG IFM ITI ME
Number: 21646
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21646
File-URL: http://www.nber.org/papers/w21646.pdf
File-Format: application/pdf
Abstract: I define and provide empirical evidence for an “International Price System” in global trade employing data for thirty-five developed and developing countries. This price system is characterized by two features. First, the overwhelming share of world trade is invoiced in very few currencies, with the dollar the dominant currency. Second, international prices, in their currency of invoicing, are not very sensitive to exchange rates at horizons of up to two years. In this system, a good proxy for a country's inflation sensitivity to exchange rate fluctuations is the fraction of its imports invoiced in a foreign currency. U.S. inflation is consequently more insulated from exchange rate shocks, while other countries are highly sensitive to it. Exchange rate depreciations (appreciations) make U.S. exports cheaper (expensive), while for other countries they mainly raise (lower) mark-ups and hence profits. U.S. monetary policy has spillover effects on inflation in other countries, while spillovers from other countries monetary policies on to U.S. inflation are more muted.
Handle: RePEc:nbr:nberwo:21646
Template-Type: ReDIF-Paper 1.0
Title: Pollution and Mortality in the 19th Century
Classification-JEL: I10; N33; N53; Q53
Author-Name: W. Walker Hanlon
Author-Person: pha1094
Note: DAE
Number: 21647
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21647
File-URL: http://www.nber.org/papers/w21647.pdf
File-Format: application/pdf
Abstract: Mortality was extremely high in the industrial cities of the 19th century, but little is known about the role played by pollution in generating this pattern, due largely to a lack of direct pollution measures. I overcome this problem by combining data on the local composition of industries in Britain with information on the intensity with which industries used polluting inputs. Using this new measure, I show that pollution had a strong impact on mortality as far back as the 1850s. Industrial pollution explains 30-40% of the relationship between mortality and population density in 1851-60, and nearly 60% of this relationship in 1900. Growing industrial coal use from 1851-1900 reduced life expectancy by at least 0.57 years. A back-of-the envelope estimate suggests that the value of this loss of life, expressed as a one-time cost, was equal to at least 0.33-1.00 of annual GDP in 1900. Overall, these results show that industrial pollution was a major cause of mortality in the 19th century, particularly in urban areas, and that industrial growth during this period came at a substantial cost to health.
Handle: RePEc:nbr:nberwo:21647
Template-Type: ReDIF-Paper 1.0
Title: Private Safety-Net Clinics: Effects of Financial Pressures and Community Characteristics on Closures
Classification-JEL: D22; I11; L31
Author-Name: Suhui Li
Author-Name: Avi Dor
Author-Name: Jesse M. Pines
Author-Name: Mark S. Zocchi
Author-Name: Renee Y. Hsia
Note: EH
Number: 21648
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21648
File-URL: http://www.nber.org/papers/w21648.pdf
File-Format: application/pdf
Abstract: In order to better understand what threatens vulnerable populations’ access to primary care, it is important to understand the factors associated with closing safety-net clinics. This paper examines how a clinic’s financial position, productivity, and community characteristics are associated with its risk of closure. We examine patterns of closures among private-run primary care clinics (PCCs) in California between 2006 and 2012. We use a discrete-time proportional hazard model to assess relative hazard ratios of covariates, and a random-effect hazard model to adjust for unobserved heterogeneity among PCCs. We find that lower net income from patient care, smaller amount of government grants, and lower productivity were associated with significantly higher risk of PCC closure. We also find that federally qualified health centers (FQHCs) and non-FQHCs generally faced the same risk factors of closure. These results underscore the critical role of financial incentives in the long-term viability of safety-net clinics.
Handle: RePEc:nbr:nberwo:21648
Template-Type: ReDIF-Paper 1.0
Title: Self-Selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics
Classification-JEL: F22; J61
Author-Name: George J. Borjas
Author-Person: pbo44
Author-Name: Ilpo Kauppinen
Author-Person: pka877
Author-Name: Panu Poutvaara
Author-Person: ppo31
Note: LS
Number: 21649
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21649
File-URL: http://www.nber.org/papers/w21649.pdf
File-Format: application/pdf
Publication-Status: published as George J Borjas & Ilpo Kauppinen & Panu Poutvaara, 2019. "Self-selection of Emigrants: Theory and Evidence on Stochastic Dominance in Observable and Unobservable Characteristics," The Economic Journal, vol 129(617), pages 143-171.
Abstract: We show that the Roy model has more precise predictions about the self-selection of migrants than previously realized. The same conditions that have been shown to result in positive or negative selection in terms of expected earnings also imply a stochastic dominance relationship between the earnings distributions of migrants and non-migrants. We use the Danish full population administrative data to test the predictions. We find strong evidence of positive self-selection of emigrants in terms of pre-emigration earnings: the income distribution for the migrants almost stochastically dominates the distribution for the non-migrants. This result is not driven by immigration policies in destination countries. Decomposing the self-selection in total earnings into self-selection in observable characteristics and self-selection in unobservable characteristics reveals that unobserved abilities play the dominant role.
Handle: RePEc:nbr:nberwo:21649
Template-Type: ReDIF-Paper 1.0
Title: The Efficiency Consequences of Health Care Privatization: Evidence from Medicare Advantage Exits
Classification-JEL: H51; I13; I18; L33
Author-Name: Mark Duggan
Author-Person: pdu194
Author-Name: Jonathan Gruber
Author-Person: pgr20
Author-Name: Boris Vabson
Author-Person: pva834
Note: AG EH PE
Number: 21650
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21650
File-URL: http://www.nber.org/papers/w21650.pdf
File-Format: application/pdf
Publication-Status: published as Duggan, Mark, Jonathan Gruber, and Boris Vabson. 2018. "The Consequences of Health Care Privatization: Evidence from Medicare Advantage Exits." American Economic Journal: Economic Policy, 10 (1): 153-86. DOI: 10.1257/pol.20160068
Abstract: There is considerable controversy over the use of private insurers to deliver public health insurance benefits. We investigate the efficiency consequences of patients enrolling in Medicare Advantage (MA), private managed care organizations that compete with the traditional fee-for-service Medicare program. We use exogenous shocks to MA enrollment arising from plan exits from New York counties in the early 2000s, and utilize unique data that links hospital inpatient utilization to Medicare enrollment records. We find that individuals who were forced out of MA plans due to plan exit saw very large increases in hospital utilization. These increases appear to arise through plans both limiting access to nearby hospitals and reducing elective admissions, yet they are not associated with any measurable reduction in hospital quality or patient mortality.
Handle: RePEc:nbr:nberwo:21650
Template-Type: ReDIF-Paper 1.0
Title: Business in the United States: Who Owns it and How Much Tax Do They Pay?
Classification-JEL: D31; D33; E25; E62; H2; H22; H25; M2
Author-Name: Michael Cooper
Author-Name: John McClelland
Author-Name: James Pearce
Author-Name: Richard Prisinzano
Author-Person: ppr103
Author-Name: Joseph Sullivan
Author-Name: Danny Yagan
Author-Person: pya379
Author-Name: Owen Zidar
Author-Person: pzi93
Author-Name: Eric Zwick
Note: CF IO PE
Number: 21651
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21651
File-URL: http://www.nber.org/papers/w21651.pdf
File-Format: application/pdf
Publication-Status: published as Business in the United States: Who Owns It, and How Much Tax Do They Pay?, Michael Cooper, John McClelland, James Pearce, Richard Prisinzano, Joseph Sullivan, Danny Yagan, Owen Zidar, Eric Zwick. in Tax Policy and the Economy, Volume 30, Brown. 2016
Abstract: “Pass-through” businesses like partnerships and S-corporations now generate over half of U.S. business income and account for much of the post-1980 rise in the top- 1% income share. We use administrative tax data from 2011 to identify pass-through business owners and estimate how much tax they pay. We present three findings. (1) Relative to traditional business income, pass-through business income is substantially more concentrated among high-earners. (2) Partnership ownership is opaque: 20% of the income goes to unclassifiable partners, and 15% of the income is earned in circularly owned partnerships. (3) The average federal income tax rate on U.S. pass- through business income is 19%|much lower than the average rate on traditional corporations. If pass-through activity had remained at 1980's low level, strong but straightforward assumptions imply that the 2011 average U.S. tax rate on total U.S. business income would have been 28% rather than 24%, and tax revenue would have been approximately $100 billion higher.
Handle: RePEc:nbr:nberwo:21651
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Public Funding on Research Output: the New Zealand Marsden Fund
Classification-JEL: O31; O34; O38
Author-Name: Jason Gush
Author-Name: Adam B. Jaffe
Author-Person: pja49
Author-Name: Victoria Larsen
Author-Name: Athene Laws
Author-Person: pla779
Note: PE PR
Number: 21652
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21652
File-URL: http://www.nber.org/papers/w21652.pdf
File-Format: application/pdf
Publication-Status: published as Jason Gush, Adam Jaffe, Victoria Larsen & Athene Laws (2017) The effect of public funding on research output: the New Zealand Marsden Fund, New Zealand Economic Papers, DOI: 10.1080/00779954.2017.1325921
Abstract: We estimate the impact of participating in the NZ Marsden Fund on research output trajectories, by comparing the subsequent performance of funded researchers to those who submitted proposals but were not funded. We control for selection bias using the evaluations of the proposals generated by the grant selection process. We carry out the analysis in two data frames. First we consider the researcher teams behind 1263 second-round proposals submitted 2003-2008, and look at the post-proposal publication and citation performance of the team as a whole, as a function of pre-proposal performance, the ranking of the proposal by the panel, and the funding. This estimation does not deal with individual researchers’ multiple proposals and funding over time. To disentangle these effects, we consider the 1500 New Zealand researchers who appeared on any of these proposals, and estimate a model predicting annual individual performance as a function of previous performance, recent proposal activity, ranking of any recent proposals, and funding received through recent proposals. Overall, we find that funding is associated with a 6-15% increase in publications and a 22-26% increase in citation-weighted papers for research teams. For individuals, funding is associated with a 3-5% increase in annual publications, and a 5-8% increase in citation-weighted papers for 5 years after grant; however, the lag structure and persistence of this effect post-grant is difficult to pin down. Surprisingly, we find no systematic evidence that the evaluation of proposals by the Marsden system is predictive of subsequent success. We conclude that the Marsden Fund is modestly successful in increasing scientific performance, but that the selection process does not appear to be effective in discriminating among second-round proposals in terms of their likely success.
Handle: RePEc:nbr:nberwo:21652
Template-Type: ReDIF-Paper 1.0
Title: Streaming Reaches Flood Stage: Does Spotify Stimulate or Depress Music Sales?
Classification-JEL: L11; L82
Author-Name: Luis Aguiar
Author-Person: pag120
Author-Name: Joel Waldfogel
Author-Person: pwa46
Note: IO LE
Number: 21653
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21653
File-URL: http://www.nber.org/papers/w21653.pdf
File-Format: application/pdf
Publication-Status: published as Luis Aguiar & Joel Waldfogel, 2017. "As streaming reaches flood stage, does it stimulate or depress music sales?," International Journal of Industrial Organization, .
Abstract: Streaming music services have exploded in popularity in the past few years, variously raising optimism and concern about their impacts on recorded music revenue. On the one hand, streaming services allow sellers to engage in bundling with the promise of increasing revenues, profits, and consumer surplus. Successful bundling would indeed translate some of the interest in music not generating revenue through individual track sales - unpaid consumption and deadweight loss - into willingness to pay for the bundled offering. On the other hand, streaming may displace traditional individual track sales. Even if they displace sales, streams may however still raise overall revenue if the streaming payment is large enough in relation to the extent of sales displacement. We make use of the growth in Spotify use during the years 2013-2015 to measure its impact on unpaid consumption and on the sales of recorded music. We find that Spotify use displaces permanent downloads. In particular, 137 Spotify streams appear to reduce track sales by 1 unit. Consistent with the existing literature, our analysis also shows that Spotify displaces music piracy. Given the current industry’s revenue from track sales ($0.82 per sale) and the average payment received per stream ($0.007 per stream), our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue. In other words, our analysis shows that interactive streaming appears to be revenue-neutral for the recorded music industry.
Handle: RePEc:nbr:nberwo:21653
Template-Type: ReDIF-Paper 1.0
Title: Effects of Payment Reform in More versus Less Competitive Markets
Classification-JEL: D21; D22; D4; D78; I11; I13; L2
Author-Name: Neeraj Sood
Author-Person: pso62
Author-Name: Abby Alpert
Author-Name: Kayleigh Barnes
Author-Name: Peter Huckfeldt
Author-Name: Jose Escarce
Note: EH
Number: 21654
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21654
File-URL: http://www.nber.org/papers/w21654.pdf
File-Format: application/pdf
Publication-Status: published as Neeraj Sood & Abby Alpert & Kayleigh Barnes & Peter Huckfeldt & José J. Escarce, 2017. "Effects of payment reform in more versus less competitive markets," Journal of Health Economics, vol 51, pages 66-83.
Abstract: Policymakers are increasingly interested in reducing healthcare costs and inefficiencies through innovative payment strategies. These strategies may have heterogeneous impacts across geographic areas, potentially reducing or exacerbating geographic variation in healthcare spending. In this paper, we exploit a major payment reform for home health care to examine whether reductions in reimbursement lead to differential changes in treatment intensity and provider costs depending on the level of competition in a market. Using Medicare claims, we find that while providers in more competitive markets had higher average costs in the pre-reform period, these markets experienced larger proportional reductions in treatment intensity and costs after the reform relative to less competitive markets. This led to a convergence in spending across geographic areas. We find that much of the reduction in provider costs is driven by greater exit of “high-cost” providers in more competitive markets.
Handle: RePEc:nbr:nberwo:21654
Template-Type: ReDIF-Paper 1.0
Title: The Analysis of Field Choice in College and Graduate School: Determinants and Wage Effects
Classification-JEL: I23; I26; J24
Author-Name: Joseph G. Altonji
Author-Person: pal266
Author-Name: Peter Arcidiacono
Author-Name: Arnaud Maurel
Author-Person: pma1091
Note: ED LS PE
Number: 21655
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21655
File-URL: http://www.nber.org/papers/w21655.pdf
File-Format: application/pdf
Publication-Status: published as J.G. Altonji, P. Arcidiacono, A. Maurel, Chapter 7 - The Analysis of Field Choice in College and Graduate School: Determinants and Wage Effects, Editor(s): Eric A. Hanushek, Stephen Machin, Ludger Woessmann, Handbook of the Economics of Education, Elsevier, Volume 5, 2016, Pages 305-396, ISSN 1574-0692, ISBN 9780444634597, https://doi.org/10.1016/B978-0-444-63459-7.00007-5.
Abstract: As the workforce has become more educated, educational decisions are no longer just about whether to acquire more, but rather what type of education to pursue. In college, individuals somewhat specialize through their choice of college major. Further specialization occurs in graduate school. This chapter investigates how majors and graduate school affect labor market outcomes as well as how the individuals make these potentially important decisions. To do so, we develop a dynamic model of educational decision-making. In light of the model, we examine the estimation issues associated with obtaining causal effects of educational choices on earnings. We then examine ways that authors have overcome the selection problem as well as the approaches authors have taken to estimate the process by which these educational decisions are made.
Handle: RePEc:nbr:nberwo:21655
Template-Type: ReDIF-Paper 1.0
Title: Do Students Know Best? Choice, Classroom Time, and Academic Performance
Classification-JEL: I20; I23
Author-Name: Theodore J. Joyce
Author-Person: pjo112
Author-Name: Sean Crockett
Author-Person: pcr145
Author-Name: David A. Jaeger
Author-Person: pja17
Author-Name: Onur Altindag
Author-Person: pal706
Author-Name: Stephen D. O'Connell
Author-Person: poc22
Author-Name: Dahlia K. Remler
Note: ED EH PE
Number: 21656
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21656
File-URL: http://www.nber.org/papers/w21656.pdf
File-Format: application/pdf
Abstract: We compare student academic performance in traditional twice-a-week and compressed once-a-week lecture formats in introductory microeconomics between one semester in which students were randomly assigned into the formats and another semester when students were allowed to choose their format. In each semester we offered the same course with the sections taught at the same times in the same classrooms by the same professors using the same book, software and lecture slides. Our study design is modeled after a doubly randomized preference trial (DRPT), which provides insights regarding external validity beyond what is possible from a single randomized study. Our goal is to assess whether having a choice modifies the treatment effect of format. Students in the compressed format of the randomized arm of the study scored -0.19 standard deviations less on the combined midterm and final (p<.01) and -0.14 standard deviation less in choice arm (p<.01). There was little evidence of selection bias in choice of format. Future analyses of online learning formats employing randomization should consider DRPT designs to enhance the generalizability of results.
Handle: RePEc:nbr:nberwo:21656
Template-Type: ReDIF-Paper 1.0
Title: Measuring Changes in the Bilateral Technology Gaps between China, India and the U.S. 1979 - 2008
Classification-JEL: O41; O47; O57; P5
Author-Name: Keting Shen
Author-Name: Jing Wang
Author-Name: John Whalley
Author-Person: pwh8
Note: DEV PR
Number: 21657
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21657
File-URL: http://www.nber.org/papers/w21657.pdf
File-Format: application/pdf
Publication-Status: published as Keting Shen, Jing Wang, and John Whalley (2017) Measuring Changes in the Bilateral Technology Gaps between China, India and the US 1979–2008. The Economies of China and India: pp. 343-364. https://doi.org/10.1142/9789813220713_0014
Abstract: Popular literature suggests a rapid narrowing of the technology gap between China and the U.S. based on large percentage increases in Chinese patent applications, and equally large increases in college registrants and completed PhDs (especially in sciences) in China in recent years. Little literature attempts to measure the technology gap directly using estimates of country aggregate technologies. This gap is usually thought to be smaller than differences in GDP per capita since the later reflect both differing factor endowments and technology parameters. This paper assesses changes in China’s technology gaps both with the U.S. and India between 1979 and 2008, comparing the technology level of these economies using a CES production framework in which the technology gap is reflected in the change of technology parameters. Our measure is related to but differs from the Malmquist index. We determine the parameter values for country technology by using calibration procedures. Our calculations suggest that the technology gap between China and the U.S. is significantly larger than that between India and the U.S. for the period before 2008. The pairwise gaps between the U.S. and China, and the U.S. and India remain large while narrowing at a slower rate than GDP per worker. Although China has a higher growth rate of total factor productivity than India over the period, the bilateral technology gap between China and India is still in India’s favor. India had higher income per worker than China in the 1970’s, and China’s much more rapid physical and human capital accumulation has allowed China to move ahead, but a bilateral technology gap remains.
Handle: RePEc:nbr:nberwo:21657
Template-Type: ReDIF-Paper 1.0
Title: Evaluating Public Programs with Close Substitutes: The Case of Head Start
Classification-JEL: H43
Author-Name: Patrick Kline
Author-Name: Christopher Walters
Note: CH ED LS PE TWP
Number: 21658
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21658
File-URL: http://www.nber.org/papers/w21658.pdf
File-Format: application/pdf
Publication-Status: published as Patrick Kline & Christopher R. Walters, 2016. "Evaluating Public Programs with Close Substitutes: The Case of Head Start," The Quarterly Journal of Economics, vol 131(4), pages 1795-1848.
Abstract: This paper empirically evaluates the cost-effectiveness of Head Start, the largest early-childhood education program in the United States. Using data from the Head Start Impact Study (HSIS), we show that Head Start draws roughly a third of its participants from competing preschool programs, many of which receive public funds. Accounting for the public savings associated with reduced enrollment in other subsidized preschools substantially increases estimates of the program's rate of return. To parse Head Start's test score impacts relative to home care and competing preschools, we selection correct test scores in each care environment using excluded interactions between experimental offer status and household characteristics. We find that Head Start's effects are greater for children who would not otherwise attend preschool and for children that are less likely to participate in the program.
Handle: RePEc:nbr:nberwo:21658
Template-Type: ReDIF-Paper 1.0
Title: Employment and Training Programs
Classification-JEL: H11; I28; J24
Author-Name: Burt S. Barnow
Author-Name: Jeffrey Smith
Author-Person: psm73
Note: LS PE
Number: 21659
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21659
File-URL: http://www.nber.org/papers/w21659.pdf
File-Format: application/pdf
Publication-Status: published as Employment and Training Programs, Burt S. Barnow, Jeffrey Smith. in Economics of Means-Tested Transfer Programs in the United States, Volume 2, Moffitt. 2016
Abstract: This chapter considers means-tested employment and training programs in the United States. We focus in particular on large, means-tested federal programs, including the Job Training Partnership Act (JTPA), its successor the Workforce Investment Act (WIA), that program’s recent replacement, the Workforce Innovation and Opportunity Act (WIOA), the long-running Job Corps program, and the Trade Adjustment Assistance (TAA) program. The first part of the chapter provides details on program history, organization, expenditures, eligibility rules, services, and participant characteristics. In the second part of the chapter, we discuss the applied econometric methods typically used to evaluate these programs, which in the United States means primarily social experiments and methods such as matching that rely on an assumption of “selection on observed variables.” The third part of the chapter reviews the literature evaluating these programs, highlighting both methodological and substantive lessons learned as well as open questions. The fourth part of the chapter considers what lessons the evaluation literature provides on program operation, especially how to best allocate particular services to particular participants. The final section concludes with the big picture lessons from this literature and discussion of promising directions for future research.
Handle: RePEc:nbr:nberwo:21659
Template-Type: ReDIF-Paper 1.0
Title: Political Economy of Debt and Growth
Classification-JEL: D72; E6; E62; H6; H72
Author-Name: Marco Battaglini
Author-Person: pba170
Author-Name: Levon Barseghyan
Author-Person: pba303
Note: PE POL
Number: 21660
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21660
File-URL: http://www.nber.org/papers/w21660.pdf
File-Format: application/pdf
Publication-Status: published as Barseghyan, Levon & Battaglini, Marco, 2016. "Political economy of debt and growth," Journal of Monetary Economics, Elsevier, vol. 82(C), pages 36-51.
Abstract: We present a theory of endogenous fiscal policy and growth. Fiscal policy — debt, income tax, spending on local public goods and public investment — is determined through legislative bargaining. Economic growth depends directly on public investment, private investment in human capital and, via learning-by-doing, labor supply. The model predicts that the economy converges to a balanced growth path in which consumption, private investment, public investment, public goods provision, public debt and productivity grow at the same constant rate. The transition to the balanced growth path is characterized by what we call the shrinking government effect: public debt grows faster than GDP, provisions of public goods and infrastructure grow slower than GDP and the tax rate declines. We use the model to study the impact of austerity programs which impose a ceiling on the amount of public debt a country can issue.
Handle: RePEc:nbr:nberwo:21660
Template-Type: ReDIF-Paper 1.0
Title: The Coming Wave: Where Do Emerging Market Investors Put Their Money?
Classification-JEL: F21; G11; G15
Author-Name: G. Andrew Karolyi
Author-Person: pka329
Author-Name: David T. Ng
Author-Person: png43
Author-Name: Eswar S. Prasad
Author-Person: ppr1
Note: IFM
Number: 21661
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21661
File-URL: http://www.nber.org/papers/w21661.pdf
File-Format: application/pdf
Publication-Status: published as G. Andrew Karolyi & David T. Ng & Eswar S. Prasad, 2020. "The Coming Wave: Where Do Emerging Market Investors Put Their Money?," Journal of Financial and Quantitative Analysis, vol 55(4), pages 1369-1414.
Abstract: We examine how emerging market (EM) investors allocate their stock portfolios internationally. Using both country-level and institution-level data, we find that the coming wave of EM investors systematically over- and under-weight their holdings in some target countries. These abnormal foreign allocation biases of EM investors offer robust support of the information endowment hypothesis of van Nieuwerburgh and Veldkamp (2009). Specifically, past capital and trade flows from a foreign country to the home country create an information endowment (or advantage) that lead home country investments to be overweight that foreign country. At the institutional level, information advantage proxies based on relationships between EM institutional investors and the headquarters of their parent companies have strong explanatory power for international portfolio allocations. The results remain robust after controlling for other factors like geographic and other measures of economic proximity, economic and capital market development, market integration, market returns and correlation, and corporate governance. The information advantage effect is stronger for EM investors for which external portfolios exhibit a higher degree of concentration.
Handle: RePEc:nbr:nberwo:21661
Template-Type: ReDIF-Paper 1.0
Title: Exchange Market Pressure in OECD and Emerging Economies: Domestic vs. External Factors and Capital Flows in the Old and New Normal
Classification-JEL: F3; F31; F33; F38
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Mahir Binici
Author-Person: pbi168
Note: IFM
Number: 21662
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21662
File-URL: http://www.nber.org/papers/w21662.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Mahir Binici, 2015. "Exchange market pressure in OECD and emerging economies: Domestic vs. external factors and capital flows in the old and new normal," Journal of International Money and Finance, vol ().
Abstract: We study the ways domestic and external global factors (such as risk appetite, global liquidity, U.S. monetary policy, and commodity prices) affected the exchange market pressure before and after the global financial crisis as well as the role of these factors during the Federal Reserve’s tapering episode. Utilizing a comprehensive database on capital controls, we investigate whether control measures have a significant impact on mitigating exchange market pressure associated with capital flows [net and gross]. Using quarterly data over the 2000–2014 period and a dynamic panel model estimation, we find that external factors played a significant role in driving exchange market pressure for both OECD countries and emerging market countries, with a larger impact on the latter. While the effect of net capital flows on exchange market pressure is muted, short-term gross portfolio inflows and outflows comprise important factors that account for exchange market pressure. Short-term portfolio flows and long-term foreign direct investment flows have a significant impact on exchange market pressure for emerging market economies and no significant effect for OECD countries. Capital controls seem to significantly reduce the exchange market pressure although the economic size of this impact is highly dependent on the institutional quality.
Handle: RePEc:nbr:nberwo:21662
Template-Type: ReDIF-Paper 1.0
Title: Local Instruments, Global Extrapolation: External Validity of the Labor Supply-Fertility Local Average Treatment Effect
Classification-JEL: C26; J01; J1; J13; J22
Author-Name: James Bisbee
Author-Name: Rajeev Dehejia
Author-Person: pde179
Author-Name: Cristian Pop-Eleches
Author-Person: ppo349
Author-Name: Cyrus Samii
Note: CH LS
Number: 21663
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21663
File-URL: http://www.nber.org/papers/w21663.pdf
File-Format: application/pdf
Publication-Status: published as James Bisbee & Rajeev Dehejia & Cristian Pop-Eleches & Cyrus Samii, 2017. "Local Instruments, Global Extrapolation: External Validity of the Labor Supply-Fertility Local Average Treatment Effect," Journal of Labor Economics, University of Chicago Press, vol. 35(S1), pages 99-147.
Abstract: We investigate whether local average treatment effects (LATE’s) can be extrapolated to new settings. We extend the analysis and framework of Dehejia, Pop-Eleches, and Samii (2015), which examines the external validity of the Angrist-Evans (1998) reduced-form natural experiment of having two first children of the same sex on the probability of an incremental child and on mother’s labor supply. We estimate Angrist and Evans's (1998) same-sex instrumental variable strategy in 139 country-year censuses using data from the Integrated Public Use Micro Sample International. We compare each country-year's LATE, as a hypothetical target, to the LATE extrapolated from other country-years (using the approach suggested by Angrist and Fernandez-Val 2010). Paralleling our findings in Dehejia, Pop-Eleches, and Samii (2015), we find that with a sufficiently large reference sample, we extrapolate the treatment effect reasonably well, but the degree of accuracy depends on the extent of covariate similarity between the target and reference settings. Our results suggest that – at least for our application – there is hope for external validity.
Handle: RePEc:nbr:nberwo:21663
Template-Type: ReDIF-Paper 1.0
Title: The Pitfalls of External Dependence: Greece, 1829-2015
Classification-JEL: F3; G01; H6; N10; N13; N14
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Christoph Trebesch
Author-Person: ptr108
Note: IFM ME
Number: 21664
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21664
File-URL: http://www.nber.org/papers/w21664.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Christoph Trebesch, 2015. "The Pitfalls of External Dependence: Greece, 1829–2015," Brookings Papers on Economic Activity, vol 2015(2), pages 307-328.
Abstract: Two centuries of Greek debt crises highlight the pitfalls of relying on external financing. Since its independence in 1829, the Greek government has defaulted four times on its external creditors – with striking historical parallels. Each crisis is preceded by a period of heavy borrowing from foreign private creditors. As repayment difficulties arise, foreign governments step in, help to repay the private creditors, and demand budget cuts and adjustment programs as a condition for the official bailout loans. Political interference from abroad mounts and a prolonged episode of debt overhang and financial autarky follows. We conclude that these cycles of external debt and dependence are a perennial theme of Greek history, as well as in other countries that have been “addicted” to foreign savings.
Handle: RePEc:nbr:nberwo:21664
Template-Type: ReDIF-Paper 1.0
Title: Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark
Classification-JEL: J30; J32; J33
Author-Name: Itzik Fadlon
Author-Person: pfa513
Author-Name: Jessica A. Laird
Author-Name: Torben Heien Nielsen
Note: AG LS PE
Number: 21665
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21665
File-URL: http://www.nber.org/papers/w21665.pdf
File-Format: application/pdf
Publication-Status: published as Itzik Fadlon & Jessica Laird & Torben Heien Nielsen, 2016. "Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark," American Economic Journal: Applied Economics, vol 8(3), pages 196-216.
Abstract: This paper studies how firms set contributions to employer-provided 401(k)-type pension plans. Using a reform that decreased the subsidy for contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evidence that employers' contributions are based on their employees' savings preferences. We find an immediate decrease in employer contributions to capital accounts, whose magnitude increased in the share of employees directly affected by the reform. This response was large relative to average employee responses within private IRA-type plans and was accompanied by a similar-magnitude shift of employer contributions to annuity accounts.
Handle: RePEc:nbr:nberwo:21665
Template-Type: ReDIF-Paper 1.0
Title: How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome
Classification-JEL: I10; I18; O34
Author-Name: Bhaven Sampat
Author-Person: psa1696
Author-Name: Heidi L. Williams
Author-Person: pwi239
Note: AG EH IO LE PE PR
Number: 21666
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21666
File-URL: http://www.nber.org/papers/w21666.pdf
File-Format: application/pdf
Publication-Status: published as Bhaven Sampat & Heidi L. Williams, 2019. "How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome," American Economic Review, vol 109(1), pages 203-236.
Abstract: We investigate whether patents on human genes have affected follow-on scientific research and product development. Using administrative data on successful and unsuccessful patent applications submitted to the US Patent and Trademark Office, we link the exact gene sequences claimed in each application with data measuring follow-on scientific research and commercial investments. Using this data, we document novel evidence of selection into patenting: patented genes appear more valuable—prior to being patented—than non-patented genes. This evidence of selection motivates two quasi-experimental approaches, both of which suggest that on average gene patents have had no quantitatively important effect on follow-on innovation.
Handle: RePEc:nbr:nberwo:21666
Template-Type: ReDIF-Paper 1.0
Title: House Prices and Consumer Spending
Classification-JEL: D14; D91; E21; E32; E6; R21
Author-Name: David Berger
Author-Person: pbe977
Author-Name: Veronica Guerrieri
Author-Person: pgu220
Author-Name: Guido Lorenzoni
Author-Person: plo185
Author-Name: Joseph Vavra
Author-Person: pva480
Note: CF EFG LS ME PE
Number: 21667
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21667
File-URL: http://www.nber.org/papers/w21667.pdf
File-Format: application/pdf
Publication-Status: published as David Berger, Veronica Guerrieri, Guido Lorenzoni, Joseph Vavra; House Prices and Consumer Spending, The Review of Economic Studies, , rdx060, https://doi.org/10.1093/restud/rdx060
Abstract: Recent empirical work shows large consumption responses to house price movements. This is at odds with a prominent theoretical view which, using the logic of the permanent income hypothesis, argues that consumption responses should be small. We show that, in contrast to this view, workhorse models of consumption with incomplete markets calibrated to rich cross-sectional micro facts actually predict large consumption responses, in line with the data. To explain this result, we show that consumption responses to permanent house price shocks can be approximated by a simple and robust rule-of-thumb formula: the marginal propensity to consume out of temporary income times the value of housing. In our model, consumption responses depend on a number of factors such as the level and distribution of debt, the size and history of house price shocks, and the level of credit supply. Each of these effects is naturally explained with our simple formula.
Handle: RePEc:nbr:nberwo:21667
Template-Type: ReDIF-Paper 1.0
Title: Income Inequality and Asset Prices under Redistributive Taxation
Classification-JEL: E24; G1; H2; J24; J31; J38
Author-Name: Lubos Pastor
Author-Person: ppa276
Author-Name: Pietro Veronesi
Note: AP LS PE
Number: 21668
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21668
File-URL: http://www.nber.org/papers/w21668.pdf
File-Format: application/pdf
Publication-Status: published as Pástor, Lˇuboš & Veronesi, Pietro, 2016. "Income inequality and asset prices under redistributive taxation," Journal of Monetary Economics, Elsevier, vol. 81(C), pages 1-20.
Abstract: Our simple model features agents heterogeneous in skill and risk aversion, incomplete financial markets, and redistributive taxation. In equilibrium, agents become entrepreneurs if their skill is sufficiently high or risk aversion sufficiently low. Under heavier taxation, entrepreneurs are more skilled and less risk-averse, on average. Through these selection effects, the tax rate is positively related to aggregate productivity and negatively related to the equity risk premium. Both income inequality and stock prices initially increase but eventually decrease with the tax rate. Investment risk, stock market participation, and skill heterogeneity all contribute to inequality. Cross-country empirical evidence supports the model’s predictions.
Handle: RePEc:nbr:nberwo:21668
Template-Type: ReDIF-Paper 1.0
Title: Is It Harder for Older Workers to Find Jobs? New and Improved Evidence from a Field Experiment
Classification-JEL: J14; J26; J7; K31
Author-Name: David Neumark
Author-Person: pne16
Author-Name: Ian Burn
Author-Person: pbu419
Author-Name: Patrick Button
Author-Person: pbu318
Note: AG LE LS PE
Number: 21669
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21669
File-URL: http://www.nber.org/papers/w21669.pdf
File-Format: application/pdf
Publication-Status: published as David Neumark & Ian Burn & Patrick Button, 2019. "Is It Harder for Older Workers to Find Jobs? New and Improved Evidence from a Field Experiment," Journal of Political Economy, vol 127(2), pages 922-970.
Abstract: We design and implement a large-scale field experiment – a resume correspondence study – to address a number of potential limitations of existing field experiments testing for age discrimination, which may bias their results. One limitation that may bias these studies towards finding discrimination is the practice of giving older and younger applicants similar experience in the job to which they are applying, making them “otherwise comparable.” The second limitation arises because greater unobserved differences in human capital investment of older applicants may bias existing field experiments against finding age discrimination. We also study ages closer to retirement than in past studies, and use a richer set of job profiles for older workers to test for differences associated with transitions to less demanding jobs (“bridge jobs”) at older ages. Based on evidence from over 40,000 job applications, we find robust evidence of age discrimination in hiring against older women, especially those near retirement age. But we find that there is considerably less evidence of age discrimination against men after correcting for the potential biases this study addresses.
Handle: RePEc:nbr:nberwo:21669
Template-Type: ReDIF-Paper 1.0
Title: Global Imbalances and Policy Wars at the Zero Lower Bound
Classification-JEL: E0; F3; F4; G01
Author-Name: Ricardo J. Caballero
Author-Person: pca44
Author-Name: Emmanuel Farhi
Author-Person: pfa207
Author-Name: Pierre-Olivier Gourinchas
Author-Person: pgo28
Note: AP EFG IFM ME
Number: 21670
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21670
File-URL: http://www.nber.org/papers/w21670.pdf
File-Format: application/pdf
Publication-Status: published as Ricardo J Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2021. "Global Imbalances and Policy Wars at the Zero Lower Bound," The Review of Economic Studies, vol 88(6), pages 2570-2621.
Abstract: This paper explores the consequences of extremely low real interest rates in a world with integrated but heterogenous capital markets, nominal rigidities and an effective lower bound (a ZLB for simplicity). We establish four main results: (i) At the ZLB, creditor countries export their recession abroad, which we illustrate with a new Metzler diagram in quantities; (ii) Beggar-thy-neighbor currency and trade wars provide stimulus to the undertaking country at the expense of other countries; (iii) (Safe) public debt issuances and increases in government spending anywhere are expansionary everywhere; (iv) When there is a scarcity of safe assets, net issuers of safe assets import the recession from abroad.
Handle: RePEc:nbr:nberwo:21670
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons
Classification-JEL: C44; C53; D12; L94; Q41; Q48
Author-Name: Hunt Allcott
Author-Person: pal171
Author-Name: Judd B. Kessler
Note: EEE PE
Number: 21671
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21671
File-URL: http://www.nber.org/papers/w21671.pdf
File-Format: application/pdf
Publication-Status: published as Hunt Allcott & Judd B. Kessler, 2019. "The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons," American Economic Journal: Applied Economics, vol 11(1), pages 236-276.
Abstract: “Nudge”-style interventions are often deemed “successful” if they cause large behavior change, but they are rarely subjected to full social welfare evaluations. We combine a field experiment with a simple theoretical framework to evaluate the welfare effects of one especially policy-relevant intervention, home energy social comparison reports. In our sample, the reports increase social welfare, although traditional evaluation approaches overstate welfare gains by a factor of 3.7. Overall, the welfare gains from home energy reports might be overstated by $620 million. We develop a prediction algorithm for optimal targeting; this would double the welfare gains.
Handle: RePEc:nbr:nberwo:21671
Template-Type: ReDIF-Paper 1.0
Title: Economic Cycles in Ancient China
Classification-JEL: N1; N15
Author-Name: Yaguang Zhang
Author-Name: Guo Fan
Author-Name: John Whalley
Author-Person: pwh8
Note: EFG
Number: 21672
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21672
File-URL: http://www.nber.org/papers/w21672.pdf
File-Format: application/pdf
Abstract: We discuss business cycles in ancient China. Data on Ancient China business cycles are sparse and incomplete and so our discussion is qualitative rather than quantitative. Essentially, ancient debates focused on two types of cycles: long run political or dynastic cycles of many decades, and short run nature induced cycles. Discussion of the latter show strong parallels to Jevons’ conception of sun spot cycles. The former has no clear contemporary analogue, were often deep in impact and of long duration. The discussion of both focused on agricultural economies. Ancient discussion on intervention focused on counter cyclical measures, including stockpiling, and predated Keynes and the discussion in the 1930s by centuries. Also, a strongly held belief emerged that cycles create their own cycles to follow, and that cycles are part of the inevitable economic order, a view consistent with Mitchell’s view of the business cycle in the 1940s. Current debates on how best to respond to the ongoing global financial crisis draw in part on historical precedents, but these are largely limited to the last 150 years for OECD countries and with major focus on the 1990’s. Here we also probe material on Ancient China to see what is relevant.
Handle: RePEc:nbr:nberwo:21672
Template-Type: ReDIF-Paper 1.0
Title: Windfall Gains and Stock Market Participation
Classification-JEL: D1; G02; G11
Author-Name: Joseph S. Briggs
Author-Name: David Cesarini
Author-Name: Erik Lindqvist
Author-Person: pli309
Author-Name: Robert Östling
Author-Person: pst401
Note: AP
Number: 21673
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21673
File-URL: http://www.nber.org/papers/w21673.pdf
File-Format: application/pdf
Publication-Status: published as Joseph Briggs & David Cesarini & Erik Lindqvist & Robert Östling, 2020. "Windfall Gains and Stock Market Participation," Journal of Financial Economics, .
Abstract: We estimate the causal effect of wealth on stock market participation using administrative data on Swedish lottery players. A $150,000 windfall gain increases stock ownership probability among pre-lottery non-participants by 12 percentage points, while pre-lottery stock holders are unaffected. The effect is immediate, seemingly permanent and heterogeneous in intuitive ways. Standard lifecycle models predict wealth effects far too large to match our causal estimates under common calibrations. Additional analyses suggest a limited role for explanations such as procrastination or real-estate investment. Overall, results suggest that “nonstandard” beliefs or preferences contribute to the nonparticipation of households across many demographic groups.
Handle: RePEc:nbr:nberwo:21673
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Gains from Macro-Insurance Against Natural Disasters
Classification-JEL: F36; G15; G22
Author-Name: Eduardo Borensztein
Author-Name: Eduardo Cavallo
Author-Name: Olivier Jeanne
Author-Person: pje59
Note: IFM
Number: 21674
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21674
File-URL: http://www.nber.org/papers/w21674.pdf
File-Format: application/pdf
Publication-Status: published as Eduardo Borensztein & Eduardo Cavallo & Olivier Jeanne, 2016. "The Welfare Gains from Macro-Insurance Against Natural Disasters," Journal of Development Economics, .
Abstract: This paper uses a dynamic optimization model to estimate the welfare gains that a small open economy can derive from insuring against natural disasters with catastrophe (CAT) bonds. We calibrate the model by reference to the risk of earthquakes, floods and storms in developing countries. We find that the countries most vulnerable to these risks would find it optimal to use CAT bonds for insurance only if the cost of issuing these bonds were significantly smaller than it is in the data. The welfare gains from CAT bonds range from small to substantial depending on how insurance affects the country's external borrowing constraint. The option of using CAT bonds may bring a welfare gain of several percentage points of annual consumption by improving external debt sustainability. These large gains disappear if the country can opportunistically default on its external debt.
Handle: RePEc:nbr:nberwo:21674
Template-Type: ReDIF-Paper 1.0
Title: Do Employers Prefer Migrant Workers? Evidence from a Chinese Job Board
Classification-JEL: J71; O15; R23
Author-Name: Peter Kuhn
Author-Person: pku26
Author-Name: Kailing Shen
Author-Person: psh250
Note: LS
Number: 21675
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21675
File-URL: http://www.nber.org/papers/w21675.pdf
File-Format: application/pdf
Publication-Status: published as Peter Kuhn & Kailing Shen, 2015. "Do employers prefer migrant workers? Evidence from a Chinese job board," IZA Journal of Labor Economics, vol 4(1).
Abstract: We study urban, private sector Chinese employers’ preferences between workers with and without a local permanent residence permit (hukou) using callback information from an Internet job board. We find that these employers prefer migrant workers to locals who are identically matched to the job’s requirements; these preferences are strongest in jobs requiring lower levels of education and offering low pay. While migrant-native payroll tax differentials might account for some of this gap, we argue that the patterns are hard to explain without some role for a migrant productivity advantage in less skilled jobs. Possible sources of this advantage include positive selection of nonlocals into migration, negative selection of local workers into formal search for unskilled private sector jobs, efficiency wage effects related to unskilled migrants’ limited access to the urban social safety net, and intertemporal labor and effort substitution by temporary migrants that makes them more desirable workers.
Handle: RePEc:nbr:nberwo:21675
Template-Type: ReDIF-Paper 1.0
Title: Using Linked Survey and Administrative Data to Better Measure Income: Implications for Poverty, Program Effectiveness and Holes in the Safety Net
Classification-JEL: C42; C81; I32; I38
Author-Name: Bruce D. Meyer
Author-Person: pme273
Author-Name: Nikolas Mittag
Note: AG CH LS PE
Number: 21676
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21676
File-URL: http://www.nber.org/papers/w21676.pdf
File-Format: application/pdf
Publication-Status: published as Bruce D. Meyer & Nikolas Mittag, 2019. "Using Linked Survey and Administrative Data to Better Measure Income: Implications for Poverty, Program Effectiveness, and Holes in the Safety Net," American Economic Journal: Applied Economics, vol 11(2), pages 176-204.
Abstract: We examine the consequences of underreporting of transfer programs for prototypical analyses of low-income populations using the Current Population Survey (CPS), the source of official poverty and inequality statistics. We link administrative data for food stamps, TANF, General Assistance, and subsidized housing from New York State to the CPS at the individual level. Program receipt in the CPS is missed for over one-third of housing assistance recipients, 40 percent of food stamp recipients and 60 percent of TANF and General Assistance recipients. Dollars of benefits are also undercounted for reporting recipients, particularly for TANF, General Assistance and housing assistance. We find that the survey data sharply understate the income of poor households. Underreporting in the survey data also greatly understates the effects of anti-poverty programs and changes our understanding of program targeting. Using the combined data rather than survey data alone, the poverty reducing effect of all programs together is nearly doubled while the effect of housing assistance is tripled. We also re-examine the coverage of the safety net, specifically the share of people without work or program receipt. Using the administrative measures of program receipt rather than the survey ones often reduces the share of single mothers falling through the safety net by one-half or more.
Handle: RePEc:nbr:nberwo:21676
Template-Type: ReDIF-Paper 1.0
Title: Comparative Advantage, International Trade, and Fertility
Classification-JEL: F16; J13; O11
Author-Name: Quy-Toan Do
Author-Person: pdo159
Author-Name: Andrei A. Levchenko
Author-Person: ple223
Author-Name: Claudio Raddatz
Author-Person: pra328
Note: CH DEV ITI
Number: 21677
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21677
File-URL: http://www.nber.org/papers/w21677.pdf
File-Format: application/pdf
Publication-Status: published as Do, Quy-Toan & Levchenko, Andrei A. & Raddatz, Claudio, 2016. "Comparative advantage, international trade, and fertility," Journal of Development Economics, Elsevier, vol. 119(C), pages 48-66.
Abstract: We analyze theoretically and empirically the impact of comparative advantage in international trade on fertility. We build a model in which industries differ in the extent to which they use female relative to male labor, and countries are characterized by Ricardian comparative advantage in either female-labor or male-labor intensive goods. The main prediction of the model is that countries with comparative advantage in female-labor intensive goods are characterized by lower fertility. This is because female wages, and therefore the opportunity cost of children are higher in those countries. We demonstrate empirically that countries with comparative advantage in industries employing primarily women exhibit lower fertility. We use a geography-based instrument for trade patterns to isolate the causal effect of comparative advantage on fertility.
Handle: RePEc:nbr:nberwo:21677
Template-Type: ReDIF-Paper 1.0
Title: Patent Assertions: Are We Any Closer to Aligning Reward to Contribution?
Classification-JEL: K21; L0
Author-Name: Fiona Scott Morton
Author-Name: Carl Shapiro
Author-Person: psh275
Note: IO LE
Number: 21678
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21678
File-URL: http://www.nber.org/papers/w21678.pdf
File-Format: application/pdf
Publication-Status: published as Fiona Scott Morton and Carl Shapiro, "Patent Assertions: Are We Any Closer to Aligning Reward to Contribution?" Innovation Policy and the Economy 2016 16:, 89-133
Abstract: The 2011 America Invents Act was the most significant reform to the United States patent system in over fifty years. However, the AIA did not address a number of major problems associated with patent litigation in the United States. In this paper, we provide an economic analysis of post-AIA developments relating to Patent Assertion Entities (PAEs) and Standard-Essential Patents (SEPs). For PAEs and SEPs, we examine the alignment, or lack of alignment, between the rewards provided to patent holders and their social contributions. Our report is mixed. Regarding PAEs, we see significantly improved alignment between rewards and contributions, largely due to a series of rulings by the Supreme Court. Legislation currently under consideration in Congress would further limit certain litigation tactics used by PAEs that generate rewards unrelated to contribution. We also see some notable developments relating to SEPs, especially with the recent reform to the patent policies of the IEEE, a leading Standard-Setting Organization (SSO) and with several recent court decisions clarifying what constitutes a Fair, Reasonable and Non-Discriminatory (FRAND) royalty rate. However, other steps that could better align rewards with contributions on the SEP front have largely stalled out, particularly because other major SSOs do not seem poised to follow the lead of the IEEE. Antitrust enforcement in this area could further improve the alignment of rewards and contributions.
Handle: RePEc:nbr:nberwo:21678
Template-Type: ReDIF-Paper 1.0
Title: Pricing with Limited Knowledge of Demand
Classification-JEL: D40; D80; D81
Author-Name: Maxime C. Cohen
Author-Name: Georgia Perakis
Author-Name: Robert S. Pindyck
Author-Person: ppi130
Note: IO PR
Number: 21679
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21679
File-URL: http://www.nber.org/papers/w21679.pdf
File-Format: application/pdf
Abstract: How should a firm price a new product for which little is known about demand? We propose a simple pricing rule: the firm only estimates the maximum price it can charge and still expect to sell at least some units, and then sets price as though the actual demand curve were linear. We show that if the true demand curve is one of many commonly used demand functions, or even if it is a more complex function, and if marginal cost is known and constant, the firm can expect its profit to be close to what it would earn if it knew the true demand curve. We derive analytical performance bounds for a variety of demand functions, and calculate expected profit performance for randomly generated demand curves.
Handle: RePEc:nbr:nberwo:21679
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Stimulus in Economic Unions: What Role for States?
Classification-JEL: E62; H77
Author-Name: Gerald Carlino
Author-Person: pca459
Author-Name: Robert P. Inman
Note: PE
Number: 21680
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21680
File-URL: http://www.nber.org/papers/w21680.pdf
File-Format: application/pdf
Publication-Status: published as Fiscal Stimulus in Economic Unions: What Role for States?, Gerald Carlino, Robert P. Inman. in Tax Policy and the Economy, Volume 30, Brown. 2016
Abstract: The Great Recession and the subsequent passage of the American Recovery and Reinvestment Act returned fiscal policy, and particularly the importance of state and local governments, to the center stage of macroeconomic policy-making. This paper addresses three questions for the design of intergovernmental macroeconomic fiscal policies. First, are such policies necessary? Analysis of US state fiscal policies show state deficits (in particular from tax cuts) can stimulate state economies in the short-run, but that there are significant job spillovers to neighboring states. Second, to internalize these spillovers, what central government fiscal policies are most effective for stimulating income and job growth? Both federal tax cuts and transfers to households and firms and intergovernmental transfers to states for lower income assistance are effective, with one and two year multipliers greater than 2.0. Third, how are states, as politically independent agents, motivated to provide increased transfers to lower income households? The answer is matching (price subsidy) assistance for such spending. The intergovernmental aid is spent immediately by the states and supports assistance to those most likely to spend new transfers.
Handle: RePEc:nbr:nberwo:21680
Template-Type: ReDIF-Paper 1.0
Title: Maybe Next Month? Temperature Shocks, Climate Change, and Dynamic Adjustments in Birth Rates
Classification-JEL: I12; J13; Q54
Author-Name: Alan Barreca
Author-Person: pba1012
Author-Name: Olivier Deschenes
Author-Person: pde468
Author-Name: Melanie Guldi
Author-Person: pgu209
Note: CH EEE LS
Number: 21681
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21681
File-URL: http://www.nber.org/papers/w21681.pdf
File-Format: application/pdf
Abstract: Dynamic adjustments could be a useful strategy for mitigating the costs of acute environmental shocks when timing is not a strictly binding constraint. To investigate whether such adjustments could apply to fertility, we estimate the effects of temperature shocks on birth rates in the United States between 1931 and 2010. Our innovative approach allows for presumably random variation in the distribution of daily temperatures to affect birth rates up to 24 months into the future. We find that additional days above 80 °F cause a large decline in birth rates approximately 8 to 10 months later. The initial decline is followed by a partial rebound in births over the next few months implying that populations can mitigate the fertility cost of temperature shocks by shifting conception month. This dynamic adjustment helps explain the observed decline in birth rates during the spring and subsequent increase during the summer. The lack of a full rebound suggests that increased temperatures due to climate change may reduce population growth rates in the coming century. As an added cost, climate change will shift even more births to the summer months when third trimester exposure to dangerously high temperatures increases. Based on our analysis of historical changes in the temperature-fertility relationship, we conclude air conditioning could be used to substantially offset the fertility costs of climate change.
Handle: RePEc:nbr:nberwo:21681
Template-Type: ReDIF-Paper 1.0
Title: What Determines End-of-Life Assets? A Retrospective View
Classification-JEL: E21; J14
Author-Name: James Poterba
Author-Person: ppo19
Author-Name: Steven Venti
Author-Name: David A. Wise
Author-Person: pwi45
Note: AG PE
Number: 21682
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21682
File-URL: http://www.nber.org/papers/w21682.pdf
File-Format: application/pdf
Abstract: We consider assets when individuals were last observed prior to death in the Health and Retirement Study (HRS) and trace assets backwards to the age when these individuals were first observed. For most individuals, assets in the last year observed (LYO) were very similar to assets in the first year observed (FYO). In particular, most of those who were last observed with very low asset levels also had low assets when first observed. We also estimate the relationship between an individual’s asset change between the first and last date of observation, that individual’s education and health status when first observed, and that individual’s within-sample changes in health and family composition. We obtain estimates for HRS respondents who were 51 to 61 in 1992 and for AHEAD respondents who were age 70 and over in 1993.
Handle: RePEc:nbr:nberwo:21682
Template-Type: ReDIF-Paper 1.0
Title: Rosca Meets Formal Credit Market
Classification-JEL: D44; G21; O16; O17
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: Rongzhu Ke
Author-Person: pke41
Author-Name: Li-An Zhou
Author-Person: pzh156
Note: DEV PE
Number: 21683
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21683
File-URL: http://www.nber.org/papers/w21683.pdf
File-Format: application/pdf
Abstract: Rotating Savings and Credit Association (Rosca) is an important informal financial institution in many parts of the world used by participants to share income risks. What is the role of Rosca when formal credit market is introduced? We develop a model in which risk-averse participants attempt to hedge against their private income shocks with access to both Rosca and the formal credit and investigate their interactions. Using the gap of the borrowing and saving interest rates as a measure of the imperfectness of the credit market, we compare three cases: (i) Rosca without credit market; (ii) Rosca with a perfect credit market; (iii) Rosca with an imperfect credit market. We show that a perfect credit market completely crowds out the role of Rosca. However, when credit market is present but imperfect, we show that Rosca and the formal credit market can complement each other in improving social welfare. Interestingly, we find that the social welfare in an environment with both Rosca and formal credit market does not necessarily increase monotonically as the imperfectness of the credit market converges to zero.
Handle: RePEc:nbr:nberwo:21683
Template-Type: ReDIF-Paper 1.0
Title: Liquidity Risk, Bank Networks, and the Value of Joining the Federal Reserve System
Classification-JEL: G21; G28; N22
Author-Name: Charles W. Calomiris
Author-Person: pca421
Author-Name: Matthew Jaremski
Author-Person: pja349
Author-Name: Haelim Park
Author-Name: Gary Richardson
Author-Person: pri185
Note: DAE
Number: 21684
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21684
File-URL: http://www.nber.org/papers/w21684.pdf
File-Format: application/pdf
Publication-Status: published as ANDERSON, H. , CALOMIRIS, C. W., JAREMSKI, M. and RICHARDSON, G. (2018), Liquidity Risk, Bank Networks, and the Value of Joining the Federal Reserve System. Journal of Money, Credit and Banking, 50: 173-201. doi:10.1111/jmcb.12457
Abstract: Reducing systemic liquidity risk related to seasonal swings in loan demand was one reason for the founding of the Federal Reserve System. Existing evidence on the post-Federal Reserve increase in the seasonal volatility of aggregate lending and the decrease in seasonal interest rate swings suggests that it succeeded in that mission. Nevertheless, less than 8 percent of state-chartered banks joined the Federal Reserve in its first decade. Some have speculated that nonmembers could avoid higher costs of the Federal Reserve’s reserve requirements while still obtaining access indirectly to the Federal Reserve discount window through contacts with Federal Reserve members. We find that individual bank attributes related to the extent of banks’ ability to mitigate seasonal loan demand variation predict banks’ decisions to join the Federal Reserve. Consistent with the notion that banks could obtain indirect access to the discount window through interbank transfers, we find that a bank’s position within the interbank network (as a user or provider of liquidity) predicts the timing of its entry into the Federal Reserve System and the effect of Federal Reserve membership on its lending behavior. We also find that indirect access to the Federal Reserve was not as good as direct access. Federal Reserve member banks saw a greater increase in lending than nonmember banks.
Handle: RePEc:nbr:nberwo:21684
Template-Type: ReDIF-Paper 1.0
Title: Asymmetry of Information within Family Networks
Classification-JEL: D12; O12; O15
Author-Name: Joachim De Weerdt
Author-Person: pde342
Author-Name: Garance Genicot
Author-Person: pge26
Author-Name: Alice Mesnard
Note: DEV
Number: 21685
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21685
File-URL: http://www.nber.org/papers/w21685.pdf
File-Format: application/pdf
Publication-Status: published as Joachim De Weerdt & Garance Genicot & Alice Mesnard, 2019. "Asymmetry of Information within Family Networks," Journal of Human Resources, vol 54(1), pages 225-254.
Abstract: This paper studies asymmetry of information and transfers within a unique data set of 712 extended family networks from Tanzania. Using cross-reports on asset holdings, we construct measures of misperception of income among all pairs of households belonging to the same network. We show that there is significant asymmetry of information and no evidence of major systematic over-evaluation or under-evaluation of income in our data, although there is a slight over-evaluation on the part of migrants regarding non-migrants. We develop a static model of asymmetric information that contrasts altruism, pressure and exchange as motives to transfer. The model makes predictions about the correlations between misperceptions and transfers under these competing explanations. Testing these predictions in the data uncovers the active role played by the recipient. Our findings suggest that the recipient sets the terms of the transfers, either by exerting pressure to give on the donor or by holding the bargaining power during the exchange of services with the donor.
Handle: RePEc:nbr:nberwo:21685
Template-Type: ReDIF-Paper 1.0
Title: The Choice Channel of Financial Innovation
Classification-JEL: E21; E43; E44; G11; G12
Author-Name: Felipe S. Iachan
Author-Person: pia34
Author-Name: Plamen T. Nenov
Author-Name: Alp Simsek
Note: AP EFG IFM ME
Number: 21686
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21686
File-URL: http://www.nber.org/papers/w21686.pdf
File-Format: application/pdf
Publication-Status: published as Felipe S. Iachan & Plamen T. Nenov & Alp Simsek, 2021. "The Choice Channel of Financial Innovation," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(2), pages 333-372, April.
Abstract: Financial innovation in recent decades has expanded portfolio choice. We investigate how greater choice affects investors’ savings and asset returns. We establish a choice channel by which greater portfolio choice increases investors’ savings—by enabling them to earn the aggregate risk premium or to take speculative positions. In equilibrium, portfolio customization (access to risky assets beyond the market portfolio) reduces the risk-free rate. Participation (access to the market portfolio) reduces the risk premium but typically increases the risk-free rate. Empirically, stock market participants in the U.S. save more than nonparticipants, and have increasingly dispersed portfolio returns, consistent with the choice channel.
Handle: RePEc:nbr:nberwo:21686
Template-Type: ReDIF-Paper 1.0
Title: Where Does Voucher Funding Go? How Large-Scale Subsidy Programs Affect Private-School Revenue, Enrollment, and Prices
Classification-JEL: H2; I2; I22
Author-Name: Daniel M. Hungerman
Author-Person: phu114
Author-Name: Kevin Rinz
Author-Person: pri405
Note: CH ED LS PE
Number: 21687
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21687
File-URL: http://www.nber.org/papers/w21687.pdf
File-Format: application/pdf
Publication-Status: published as Daniel M. Hungerman & Kevin Rinz, 2016. "Where does voucher funding Go? How large-scale subsidy Programs Affect Private-School revenue, enrollment, and prices," Journal of Public Economics, vol ().
Abstract: Using a new dataset constructed from nonprofit tax-returns, this paper explores how vouchers and other large-scale programs subsidizing private school attendance have affected the fiscal outcomes of private schools and the affordability of a private education. We find that subsidy programs created a large transfer of public funding to private schools, suggesting that every dollar of funding increased revenue by a dollar or more. Turning to the incidence of subsidies and the impact of subsidies on enrollment, our findings depend on the type of program introduced, with programs restricting eligibility to certain groups of students creating relatively large enrollment gains and small price increases compared to unrestricted programs. We calculate elasticities of demand and supply for private schools, and discuss welfare effects.
Handle: RePEc:nbr:nberwo:21687
Template-Type: ReDIF-Paper 1.0
Title: Greek Budget Realities: No Easy Options
Classification-JEL: E62; F42; F43; F45; H63
Author-Name: Christopher L. House
Author-Person: pho56
Author-Name: Linda L. Tesar
Author-Person: pte111
Note: IFM ME
Number: 21688
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21688
File-URL: http://www.nber.org/papers/w21688.pdf
File-Format: application/pdf
Publication-Status: published as Christopher L. House & Linda L. Tesar, 2015. "Greek Budget Realities: No Easy Option," Brookings Papers on Economic Activity, vol 2015(2), pages 329-347.
Abstract: As of August 2015, Greece’s loan repayments due to external creditors through 2057 summed to €319.5 billion, requiring an average debt payment on a flow basis of 4.1 percent of 2014 Greek GDP. This paper examines the economic impact of increases in distortionary taxes on consumption, capital and labor income as well as reductions in government expenditures sufficient to increase Greece’s primary balance by one percent of 2014 GDP – roughly a quarter of Greece’s total debt obligations. In the baseline case calibrated to the Greek economy, all of the tax and expenditure policies we consider produce declines in output in both the short- and long-run. Projections of the primary surplus based on static revenue scoring grossly overestimate the amount of actual revenue that Greece would raise due to the endogenous adjustment of capital and labor. Meeting the debt repayment schedule is substantially more costly because Greece is a small economy that is integrated with the larger European economy. Failure to incorporate the impact of capital and labor mobility results in a significant overestimate of future revenue. Delaying the implementation of tax increases or government expenditure cuts can help mitigate the short-run fall in output, but such delays require greater economic hardship in the long run.
Handle: RePEc:nbr:nberwo:21688
Template-Type: ReDIF-Paper 1.0
Title: Factors Determining Callbacks to Job Applications by the Unemployed: An Audit Study
Classification-JEL: J6; J62
Author-Name: Henry S. Farber
Author-Name: Dan Silverman
Author-Person: psi181
Author-Name: Till von Wachter
Author-Person: pvo196
Note: LS
Number: 21689
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21689
File-URL: http://www.nber.org/papers/w21689.pdf
File-Format: application/pdf
Publication-Status: published as Factors Determining Callbacks to Job Applications by the Unemployed: An Audit Study Henry S. Farber, Dan Silverman, and Till M. von Wachter RSF 2017 3:3, 168-201
Abstract: We use an audit study approach to investigate how unemployment duration, age, and holding a low-level “interim” job affect the likelihood that experienced college-educated females applying for an administrative support job receive a callback from a potential employer. First, the results show no relationship between callback rates and the duration of unemployment. Second, workers age 50 and older are significantly less likely to receive a callback. Third, taking an interim job significantly reduces the likelihood of receiving a callback. Finally, employers who have higher callback rates respond less to observable differences across workers in determining whom to call back. We interpret these results in the context of a model of employer learning about applicant quality.
Handle: RePEc:nbr:nberwo:21689
Template-Type: ReDIF-Paper 1.0
Title: Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity
Classification-JEL: G32; K22; O16
Author-Name: Murillo Campello
Author-Person: pca164
Author-Name: Mauricio Larrain
Author-Person: pla621
Note: CF DEV IFM LE
Number: 21690
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21690
File-URL: http://www.nber.org/papers/w21690.pdf
File-Format: application/pdf
Publication-Status: published as Murillo Campello & Mauricio Larrain, 2016. "Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity," Review of Financial Studies, vol 29(2), pages 349-383.
Abstract: Recent reforms across Eastern European countries gave more flexibility and information for parties to engage in secured debt transactions. The menu of assets legally accepted as collateral was enlarged to include movable assets (e.g., machinery and equipment). Generalized difference-in-differences tests show that firms operating more movable assets borrowed more as a result of such reforms. Those firms also invested more, hired more, and became more efficient and profitable following the changes in the contracting environment. The financial deepening we document triggered important reallocation effects: Firms affected by the reforms increased their share of fixed assets and employment in the economy.
Handle: RePEc:nbr:nberwo:21690
Template-Type: ReDIF-Paper 1.0
Title: Contracting and the Division of the Gains from Trade
Classification-JEL: F10; F12; F14
Author-Name: Andrew B. Bernard
Author-Name: Swati Dhingra
Author-Person: pdh18
Note: ITI
Number: 21691
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21691
File-URL: http://www.nber.org/papers/w21691.pdf
File-Format: application/pdf
Abstract: This paper examines the microstructure of import markets and the division of the gains from trade among consumers, importers and exporters. When exporters and importers transact through anonymous markets, double marginalization and business stealing among competing importers lead to lower profits. Trading parties can overcome these inefficiencies by investing in richer contractual arrangements such as bilateral contracts that eliminate double marginalization and joint contracts that also internalize business stealing. Introducing these contractual choices into a trade model with heterogeneous exporters and importers, we show that trade liberalization increases the incentive to engage in joint contracts, thus raising the profits of exporters and importers at the expense of consumer welfare. We examine the implications of the model for prices, quantities and exporter-importer matches in Colombian import markets before and after the US-Colombia free trade agreement. US exporters that started to enjoy duty-free access were more likely to increase their average price, decrease their quantity exported and reduce the number of import partners.
Handle: RePEc:nbr:nberwo:21691
Template-Type: ReDIF-Paper 1.0
Title: Unequal Bequests
Classification-JEL: D13; J12; K36
Author-Name: Marco Francesconi
Author-Person: pfr88
Author-Name: Robert A. Pollak
Author-Person: ppo36
Author-Name: Domenico Tabasso
Note: AG LS
Number: 21692
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21692
File-URL: http://www.nber.org/papers/w21692.pdf
File-Format: application/pdf
Publication-Status: published as Marco Francesconi & Robert A. Pollak & Domenico Tabasso, 2023. "Unequal bequests," European Economic Review, .
Abstract: Using data from the Health and Retirement Study, we make two contributions to the literature on end-of-life transfers. First, we show that unequal bequests are much more prevalent than generally recognized, with more than one-third of parents with wills planning to divide their estates unequally among their children. Plans for unequal division are particularly concentrated in complex families, i.e., families with stepchildren and families with genetic children with whom parents have limited or no contact. Second, we find that many older Americans have no wills. Although the probability of having a will increases with age, 30 percent of individuals aged 70 plus are without a will and, of the people who died between 1995 and 2012, nearly 40 percent died intestate.
Handle: RePEc:nbr:nberwo:21692
Template-Type: ReDIF-Paper 1.0
Title: Bubble Investing: Learning from History
Classification-JEL: G01; G14; N2
Author-Name: William N. Goetzmann
Author-Person: pgo59
Note: AP
Number: 21693
Creation-Date: 2015-10
Order-URL: http://www.nber.org/papers/w21693
File-URL: http://www.nber.org/papers/w21693.pdf
File-Format: application/pdf
Publication-Status: published as Goetzmann William N. Research Foundation Books 2016 2016:3, 149-168
Abstract: History is important to the study of financial bubbles precisely because they are extremely rare events, but history can be misleading. The rarity of bubbles in the historical record makes the sample size for inference small. Restricting attention to crashes that followed a large increase in market level makes negative historical outcomes salient. In this paper I examine the frequency of large, sudden increases in market value in a broad panel data of world equity markets extending from the beginning of the 20th century. I find the probability of a crash conditional on a boom is only slightly higher than the unconditional probability. The chances that a market gave back it gains following a doubling in value are about 10%. In simple terms, bubbles are booms that went bad. Not all booms are bad.
Handle: RePEc:nbr:nberwo:21693
Template-Type: ReDIF-Paper 1.0
Title: The U.S. Debt Restructuring of 1933: Consequences and Lessons
Classification-JEL: E43; E44; E65
Author-Name: Sebastian Edwards
Author-Person: ped3
Author-Name: Francis A. Longstaff
Author-Person: plo283
Author-Name: Alvaro Garcia Marin
Author-Person: pga581
Note: AP DAE IFM
Number: 21694
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21694
File-URL: http://www.nber.org/papers/w21694.pdf
File-Format: application/pdf
Abstract: In 1933, the U.S. unilaterally restructured its debt by declaring that it would no longer honor the gold clause in Treasury securities. We study the effects of the abrogation of the gold clause on sovereign debt markets, the Treasury's ability to issue new debt, investors' willingness to hold Treasury bonds, and on the Treasury's borrowing costs. We find that the restructuring was followed by a flight to quality in the sovereign market. Despite this, there was little effect on the Treasury's ability to sell new debt or the willingness of investors to roll over restructured debt. The Treasury incurred a marginally higher cost of capital by issuing new bonds without the gold clause.
Handle: RePEc:nbr:nberwo:21694
Template-Type: ReDIF-Paper 1.0
Title: Overconfidence And Preferences For Competition
Classification-JEL: C93; D81; D84; I21; J16
Author-Name: Ernesto Reuben
Author-Person: pre29
Author-Name: Paola Sapienza
Author-Person: psa155
Author-Name: Luigi Zingales
Note: CF LS
Number: 21695
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21695
File-URL: http://www.nber.org/papers/w21695.pdf
File-Format: application/pdf
Publication-Status: published as ERNESTO REUBEN & PAOLA SAPIENZA & LUIGI ZINGALES, 2024. "Overconfidence and Preferences for Competition," The Journal of Finance, vol 79(2), pages 1087-1121.
Abstract: We study whether and when preferences for competition are a positive economic trait among high-earners and to what extent this trait can explain the gender gap in income among MBAs. Consistent with the experimental evidence, preferences for competition are a positive economic trait only for non-overconfident individuals. Preferences for competition correlate with income only at graduation when bonuses are guaranteed and not a function of performance. Overconfident, competition loving MBAs have lower compensation and income growth, and experience greater exit from high-reward industries and more frequent job interruptions. Preferences for competition do not explain the gender pay gap among MBAs.
Handle: RePEc:nbr:nberwo:21695
Template-Type: ReDIF-Paper 1.0
Title: Size Discovery
Classification-JEL: D47; D82; G14
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Haoxiang Zhu
Author-Person: pzh997
Note: AP
Number: 21696
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21696
File-URL: http://www.nber.org/papers/w21696.pdf
File-Format: application/pdf
Publication-Status: published as Darrell Duffie & Haoxiang Zhu, 2017. "Size Discovery," The Review of Financial Studies, vol 30(4), pages 1095-1150.
Abstract: Size-discovery trade mechanisms allow large quantities of an asset to be exchanged at a price that does not respond to price pressure. Primary examples include “workup” in Treasury markets, “matching sessions” in corporate bond and CDS markets, and block-trading “dark pools” in equity markets. By freezing the execution price and giving up on market-clearing, size-discovery mechanisms overcome concerns by large investors over their price impacts. Price-discovery mechanisms clear the market, but cause investors to internalize their price impacts, inducing costly delays in the reduction of position imbalances. We show how augmenting a price-discovery mechanism with a size-discovery mechanism improves allocative efficiency.
Handle: RePEc:nbr:nberwo:21696
Template-Type: ReDIF-Paper 1.0
Title: Caloric Requirements and Food Consumption Patterns of the Poor
Classification-JEL: I3; I31; I32; J1; O1; O53; R2
Author-Name: Shari Eli
Author-Person: pel149
Author-Name: Nicholas Li
Author-Person: pli738
Note: DEV
Number: 21697
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21697
File-URL: http://www.nber.org/papers/w21697.pdf
File-Format: application/pdf
Abstract: How much do calorie requirements vary across households and how do they affect food consumption patterns? Since caloric intake is a widely-used indicator of poverty and welfare, investigating changes in caloric requirements and food consumption patterns is important, especially for the poor. Combining anthropometric and time-use data for India, we construct a quantitative measure of individual and household caloric requirements. We then link our estimates of caloric requirements with consumption data to examine how caloric requirements coupled with household expenditures shape food demand. Our applications include the measurement of hunger and the role of caloric requirements in explaining food consumption puzzles related to household-scale and changes in caloric intake over time.
Handle: RePEc:nbr:nberwo:21697
Template-Type: ReDIF-Paper 1.0
Title: Which Alpha?
Classification-JEL: G11; G12
Author-Name: Francisco Barillas
Author-Name: Jay Shanken
Author-Person: psh114
Note: AP
Number: 21698
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21698
File-URL: http://www.nber.org/papers/w21698.pdf
File-Format: application/pdf
Publication-Status: published as Francisco Barillas & Jay Shanken, 2017. "Which Alpha?," Review of Financial Studies, Society for Financial Studies, vol. 30(4), pages 1316-1338.
Abstract: A common approach to comparing asset pricing models with traded factors involves a competition between models in pricing test-asset returns. We find that such practice, while seemingly reasonable, cannot be relied on to determine which is the superior model for several widely accepted criteria including statistical likelihood, Sharpe ratios and a modified HJ distance. All that matters for model comparison is the extent to which each model is able to price the factors in the other model. Given this information, test assets are actually irrelevant, whether the models are nested or non-nested.
Handle: RePEc:nbr:nberwo:21698
Template-Type: ReDIF-Paper 1.0
Title: Immigration, Human Capital Formation and Endogenous Economic Growth
Classification-JEL: F22; F43; O15; O4
Author-Name: Isaac Ehrlich
Author-Person: peh1
Author-Name: Jinyoung Kim
Author-Person: pki140
Note: DEV EFG LS
Number: 21699
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21699
File-URL: http://www.nber.org/papers/w21699.pdf
File-Format: application/pdf
Publication-Status: published as Isaac Ehrlich & Jinyoung Kim, 2015. "Immigration, Human Capital Formation, and Endogenous Economic Growth," Journal of Human Capital, University of Chicago Press, vol. 9(4), pages 518 - 563.
Abstract: Census data from international sources covering 77% of the world’s migrant population indicate that the skill composition of migrants in major destination countries, including the US, has been rising over the last 4 decades. Moreover, the population share of skilled migrants has been approaching or exceeding that of skilled natives. We offer theoretical propositions and empirical tests consistent with these trends via a general-equilibrium model of endogenous growth where human capital, population, income growth and distribution, and migration trends are endogenous. We derive new insights about the impact of migration on long-term income growth and distribution, and the net benefits to natives in both destination and source countries.
Handle: RePEc:nbr:nberwo:21699
Template-Type: ReDIF-Paper 1.0
Title: Momentum in Imperial Russia
Classification-JEL: G10; G12; G14; G23; N2
Author-Name: William Goetzmann
Author-Person: pgo59
Author-Name: Simon Huang
Note: AP
Number: 21700
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21700
File-URL: http://www.nber.org/papers/w21700.pdf
File-Format: application/pdf
Publication-Status: published as William Goetzmann & Simon Huaang, 2018. "Momentum in Imperial Russia," Journal of Financial Economics, .
Abstract: Some of the leading theories of momentum have different empirical predictions about its profitability conditional on market composition and structure. The overconfidence explanation provided by Daniel, Hirshleifer, and Subrahmanyam (1998), for example, predicts lower momentum profits in markets with more sophisticated investors. The information-based theory of Hong and Stein (1999) predicts lower momentum profits in markets with lower informational frictions. The institutional theory of Vayanos and Woolley (2013) predicts lower momentum profits in markets with less agency. In this paper, we use a dataset from a major 19th century equity market to test these predictions. Over this period, there was no evidence of delegated management in Imperial Russia. A regulatory change in 1893 made speculating on the St. Petersburg stock market more accessible to small investors. We find a momentum effect that is similar in magnitude to those in modern markets and stronger during the post-1893 period than during the pre-1893 period, consistent with the overconfidence theory of momentum.
Handle: RePEc:nbr:nberwo:21700
Template-Type: ReDIF-Paper 1.0
Title: How Do Right-To-Carry Laws Affect Crime Rates? Coping With Ambiguity Using Bounded-Variation Assumptions
Classification-JEL: K14; K42; Z18
Author-Name: Charles F. Manski
Author-Person: pma111
Author-Name: John V. Pepper
Author-Person: ppe216
Note: LE
Number: 21701
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21701
File-URL: http://www.nber.org/papers/w21701.pdf
File-Format: application/pdf
Publication-Status: forthcoming in Review of Economic and Statistics
Abstract: Despite dozens of studies, research on crime in the United States has struggled to reach consensus about the impact of right-to-carry (RTC) gun laws. Empirical results are highly sensitive to seemingly minor variations in the data and model. How then should research proceed? We think that policy analysis is most useful if researchers perform inference under a spectrum of assumptions of varying identifying power, recognizing the tension between the strength of assumptions and their credibility. With this in mind, we formalize and apply a class of assumptions that flexibly restrict the degree to which policy outcomes may vary across time and space. Our bounded variation assumptions weaken in various respects the invariance assumptions commonly made by researchers who assume that certain features of treatment response are constant across space or time. Using bounded variation assumptions, we present empirical analysis of the effect of RTC laws on violent and property crimes. We allow the effects to vary across crimes, years and states. To keep the analysis manageable, we focus on drawing inferences for three states –Virginia, Maryland, and Illinois. We find there are no simple answers; empirical findings are sensitive to assumptions, and vary over crimes, years, and states. With some assumptions, the data do not reveal whether RTC laws increase or decrease the crime rate. With others, RTC laws are found to increase some crimes, decrease other crimes, and have effects that vary over time for others.
Handle: RePEc:nbr:nberwo:21701
Template-Type: ReDIF-Paper 1.0
Title: Training and Search On the Job
Classification-JEL: D21; D43; D83; E24; J24; J31; J33; J41; J62; J63; J64
Author-Name: Rasmus Lentz
Author-Person: ple474
Author-Name: Nicolas Roys
Author-Person: pro324
Note: EFG
Number: 21702
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21702
File-URL: http://www.nber.org/papers/w21702.pdf
File-Format: application/pdf
Publication-Status: published as Rasmus Lentz & Nicolas Roys, 2016. "Training and Search On the Job," Federal Reserve Bank of St. Louis, Working Papers, vol 2016(025).
Abstract: The paper studies human capital accumulation over workers' careers in an on the job search setting with heterogenous firms. In renegotiation proof employment contracts, more productive firms provide more training. Both general and specific training induce higher wages within jobs, and with future employers, even conditional on the future employer type. Because matches do not internalize the specific capital loss from employer changes, specific human capital can be over-accumulated, more so in low type firms. While validating the Acemoglu and Pischke (1999) mechanisms, the analysis nevertheless arrives at the opposite conclusion: That increased labor market friction reduces training in equilibrium.
Handle: RePEc:nbr:nberwo:21702
Template-Type: ReDIF-Paper 1.0
Title: Why did the Democrats Lose the South? Bringing New Data to an Old Debate
Classification-JEL: D72; H23; J15; N92
Author-Name: Ilyana Kuziemko
Author-Name: Ebonya Washington
Note: DAE PE POL
Number: 21703
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21703
File-URL: http://www.nber.org/papers/w21703.pdf
File-Format: application/pdf
Publication-Status: published as Ilyana Kuziemko & Ebonya Washington, 2018. "Why Did the Democrats Lose the South? Bringing New Data to an Old Debate," American Economic Review, vol 108(10), pages 2830-2867.
Abstract: After generations of loyalty, Southern whites left the Democratic party en masse in the second half of the twentieth century. To what extent did Democrats' 1960s Civil Rights initiatives trigger this exodus, versus Southern economic development, rising political polarization or other trends that made the party unattractive to Southern whites? The lack of data on racial attitudes and political preferences spanning the 1960s Civil Rights era has hampered research on this central question of American political economy. We uncover and employ such data, drawn from Gallup surveys dating back to 1958. From 1958 to 1961, conservative racial views strongly predict Democratic identification among Southern whites, a correlation that disappears after President Kennedy introduces sweeping Civil Rights legislation in 1963. We find that defection among racially conservative whites explains all (three-fourths) of the decline in relative white Southern Democratic identification between 1958 and 1980 (2000). We offer corroborating quantitative analysis—drawn from sources such as Gallup questions on presidential approval and hypothetical presidential match-ups as well as textual analysis of newspapers—for the central role of racial views in explaining white Southern dealignment from the Democrats as far back as the 1940s.
Handle: RePEc:nbr:nberwo:21703
Template-Type: ReDIF-Paper 1.0
Title: Mobile Messaging for Offline Group Formation in Prosocial Activities: A Large Field Experiment
Classification-JEL: D8; I18
Author-Name: Tianshu Sun
Author-Name: Guodong (Gordon) Gao
Author-Name: Ginger Zhe Jin
Note: IO
Number: 21704
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21704
File-URL: http://www.nber.org/papers/w21704.pdf
File-Format: application/pdf
Publication-Status: published as Tianshu Sun & Guodong (Gordon) Gao & Ginger Zhe Jin, 2019. "Mobile Messaging for Offline Group Formation in Prosocial Activities: A Large Field Experiment," Management Science, vol 65(6), pages 2717-2736.
Abstract: In this paper, we use mobile messaging to leverage recipients’ social ties and encourage offline prosocial activities in groups. In particular, we conduct a randomized field experiment with 80,000 blood donors and study how behavioral interventions and economic rewards motivate offline group formation. We find that two commonly used interventions—reminder messages and individual reward—are ineffective in motivating group formation because they do not compensate donors for the cost of bringing friends. In contrast, we find that group reward—a new reward that is contingent on a donor bringing a friend—is effective in motivating group formation. Furthermore, group reward tends to attract different types of donors, especially those who are traditionally less active in online social settings but have more local social ties. Structural estimation further reveals the underlying mechanisms, suggesting that group reward is four times more cost-effective than individual reward in driving total donation. Our study suggests that motivating offline group formation is a promising approach to boost prosocial activities.
Handle: RePEc:nbr:nberwo:21704
Template-Type: ReDIF-Paper 1.0
Title: Research Design Meets Market Design: Using Centralized Assignment for Impact Evaluation
Classification-JEL: C26; D47; I20
Author-Name: Atila Abdulkadiroglu
Author-Name: Joshua D. Angrist
Author-Person: pan29
Author-Name: Yusuke Narita
Author-Person: pna742
Author-Name: Parag A. Pathak
Note: ED LS PE TWP
Number: 21705
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21705
File-URL: http://www.nber.org/papers/w21705.pdf
File-Format: application/pdf
Publication-Status: published as Atila Abdulkadiroğlu & Joshua D. Angrist & Yusuke Narita & Parag A. Pathak, 2017. "Research Design Meets Market Design: Using Centralized Assignment for Impact Evaluation," Econometrica, Econometric Society, vol. 85, pages 1373-1432, September.
Abstract: A growing number of school districts use centralized assignment mechanisms to allocate school seats in a manner that reflects student preferences and school priorities. Many of these assignment schemes use lotteries to ration seats when schools are oversubscribed. The resulting random assignment opens the door to credible quasi-experimental research designs for the evaluation of school effectiveness. Yet the question of how best to separate the lottery-generated variation integral to such designs from non-random preferences and priorities remains open. This paper develops easily-implemented empirical strategies that fully exploit the random assignment embedded in the widely-used deferred acceptance mechanism and its variants. We use these methods to evaluate charter schools in Denver, one of a growing number of districts that integrate charter and traditional public schools in a unified assignment system. The resulting estimates show large achievement gains from charter school attendance. Our approach expands the scope for impact evaluation by maximizing the number of students and schools that can be studied using random assignment. We also show how to use DA to identify causal effects in models with multiple school sectors.
Handle: RePEc:nbr:nberwo:21705
Template-Type: ReDIF-Paper 1.0
Title: Commuting, Migration and Local Employment Elasticities
Classification-JEL: F16; J6; J61; R0
Author-Name: Ferdinando Monte
Author-Name: Stephen J. Redding
Author-Person: pre64
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: ITI LS
Number: 21706
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21706
File-URL: http://www.nber.org/papers/w21706.pdf
File-Format: application/pdf
Publication-Status: published as Ferdinando Monte & Stephen J. Redding & Esteban Rossi-Hansberg, 2018. "Commuting, Migration, and Local Employment Elasticities," American Economic Review, vol 108(12), pages 3855-3890.
Abstract: To understand the elasticity of employment to local labor demand shocks, we develop a quantitative general equilibrium model that incorporates spatial linkages in goods markets (trade) and factor markets (commuting and migration). We show that local employment elasticities differ substantially across U.S. counties and commuting zones in ways that are not well explained by standard empirical controls but are captured by commuting measures. We provide independent evidence for these predictions from million dollar plants and find that empirically-observed reductions in commuting costs generate welfare gains of around 3.3 percent and employment reallocations from -20 to 30 percent.
Handle: RePEc:nbr:nberwo:21706
Template-Type: ReDIF-Paper 1.0
Title: Business Groups in Canada: Their Rise and Fall, and Rise and Fall Again
Classification-JEL: G3; L22; N22
Author-Name: Randall Morck
Author-Person: pmo146
Author-Name: Gloria Y. Tian
Note: CF
Number: 21707
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21707
File-URL: http://www.nber.org/papers/w21707.pdf
File-Format: application/pdf
Abstract: Family-controlled pyramidal business groups were important in Canada early in the 20th century, amid rapid catch-up industrialization, but largely gave way to widely held free-standing firms by mid- century. In the 1970s and early 1980s – an era of high inflation, financial reversal, unprecedented state intervention, and explicit emulation of continental European institutions – pyramidal groups abruptly regained prominence. The largest of these were politically well-connected and highly leveraged. The two largest collapsed in the early 1990s in a recession characterized by very high real interest rates. The smaller groups that survived were more vertically integrated and less diversified at the time. Widely held freestanding firms and Anglo-Saxon concepts of the role of the state soon regained predominance.
Handle: RePEc:nbr:nberwo:21707
Template-Type: ReDIF-Paper 1.0
Title: Work Incentives in the Social Security Disability Benefit Formula
Classification-JEL: H31; H53; J22; J26
Author-Name: Gopi Shah Goda
Author-Person: pgo431
Author-Name: John B. Shoven
Author-Name: Sita Slavov
Author-Person: pna81
Note: AG LS
Number: 21708
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21708
File-URL: http://www.nber.org/papers/w21708.pdf
File-Format: application/pdf
Publication-Status: published as GODA, G., SHOVEN, J., & SLAVOV, S. (2018). Work incentives in the Social Security Disability benefit formula. Journal of Pension Economics and Finance, 1-25. doi:10.1017/S1474747218000136
Abstract: We examine the connection between taxes paid and benefits accrued under the Social Security Disability Insurance (SSDI) program on both the intensive and extensive margins. We perform these calculations for stylized workers given the existing benefit structure and disability hazard rates. On the intensive margin, we examine the effect of an additional dollar of earnings on the marginal payroll taxes contributed and future benefits earned. We find that the present discounted value of disability benefits received from an additional dollar of earnings, net of the SSDI payroll tax, generally declines with age, becoming negative around age 40 and reaching almost zero at age 63. On the extensive margin, we determine the effect of working an additional year on the additional payroll taxes and future benefits as a percentage of income. The return to working an additional year at an income level just large enough to earn Social Security credits for the year is large and positive through age 60. However, the return to working an additional full year is substantially smaller and becomes negative at approximately age 57. Thus, older workers face strong incentives to earn enough to obtain creditable coverage through age 60, but they face disincentives for additional earnings. In addition, workers ages 61 and older face work disincentives at any level of earnings. We repeat this analysis for stylized workers at different levels of earnings and find that, while the program transfers resources from high earners to low earners, the workers experience similar patterns in the returns to working.
Handle: RePEc:nbr:nberwo:21708
Template-Type: ReDIF-Paper 1.0
Title: Discretion in Hiring
Classification-JEL: J24; M51
Author-Name: Mitchell Hoffman
Author-Person: pho265
Author-Name: Lisa B. Kahn
Author-Name: Danielle Li
Note: LS
Number: 21709
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21709
File-URL: http://www.nber.org/papers/w21709.pdf
File-Format: application/pdf
Publication-Status: published as Mitchell Hoffman & Lisa B Kahn & Danielle Li, 2018. "Discretion in Hiring*," The Quarterly Journal of Economics, vol 133(2), pages 765-800.
Abstract: Job testing technologies enable firms to rely less on human judgement when making hiring decisions. Placing more weight on test scores may improve hiring decisions by reducing the influence of human bias or mistakes but may also lead firms to forgo the potentially valuable private information of their managers. We study the introduction of job testing across 15 firms employing low-skilled service sector workers. When faced with similar applicant pools, we find that managers who appear to hire against test recommendations end up with worse average hires. This suggests that managers often overrule test recommendations because they are biased or mistaken, not only because they have superior private information.
Handle: RePEc:nbr:nberwo:21709
Template-Type: ReDIF-Paper 1.0
Title: Central bank Credibility Before and After the Crisis
Classification-JEL: C31; E31; E58
Author-Name: Michael D. Bordo
Author-Person: pbo243
Author-Name: Pierre L. Siklos
Author-Person: psi78
Note: DAE ME
Number: 21710
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21710
File-URL: http://www.nber.org/papers/w21710.pdf
File-Format: application/pdf
Publication-Status: published as Michael D. Bordo & Pierre L. Siklos, 2017. "Central Bank Credibility before and after the Crisis," Open Economies Review, Springer, vol. 28(1), pages 19-45, February.
Abstract: A new measure of credibility is constructed as a function of the differential between observed inflation and some estimate of the inflation rate that the central bank targets. The target is assumed to be met flexibly. Credibility is calculated for a large group of both advanced and emerging countries from 1980 to 2014. Financial crises reduce central bank credibility and central banks with strong institutional feaures tend to do better when hit by a shock of the magnitude of the 2007-2008 financial crisis. The VIX, adopting an inflation target and central bank transparency, are the most reliable determinants of credibility. Similarly, real economic growth has a significant influence on central bank credibility even in inflation targeting economies.
Handle: RePEc:nbr:nberwo:21710
Template-Type: ReDIF-Paper 1.0
Title: Climate Engineering Economics
Classification-JEL: Q54
Author-Name: Garth Heutel
Author-Person: phe315
Author-Name: Juan Moreno-Cruz
Author-Person: pmo742
Author-Name: Katharine Ricke
Note: EEE
Number: 21711
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21711
File-URL: http://www.nber.org/papers/w21711.pdf
File-Format: application/pdf
Publication-Status: published as Garth Heutel & Juan Moreno-Cruz & Katharine Ricke, 2016. "Climate Engineering Economics," Annual Review of Resource Economics, vol 8(1).
Abstract: This article reviews and evaluates the nascent literature on the economics of climate engineering. The literature distinguishes between two broad types of climate engineering: solar radiation management and carbon dioxide removal. We review the science and engineering characteristics of these technologies and analyze the implications of those characteristics on economic policy design. We discuss optimal policy and carbon price, inter-regional and inter-generational equity issues, strategic interaction in the design of international environmental agreements, and the sources of risk and uncertainty surrounding these technologies. Along with mitigation and adaptation, climate engineering technologies can be incorporated into future domestic and global climate policy design. More research on the topic is needed.
Handle: RePEc:nbr:nberwo:21711
Template-Type: ReDIF-Paper 1.0
Title: Host-MNC Relations in Resource-Rich Countries
Classification-JEL: O13; Q32
Author-Name: Natasha Chichilnisky-Heal
Author-Name: Geoffrey Heal
Author-Person: phe40
Note: DEV EEE POL
Number: 21712
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21712
File-URL: http://www.nber.org/papers/w21712.pdf
File-Format: application/pdf
Abstract: We discuss the relationship between a resource-rich developing country and a multi-national corporation (MNC) that is developing its resources for the international market. We model the connections between transparency, permeability (defined as the amount of resource rent that leaves the country) and economic development, considering the cases of democracy and autocracy. We begin by considering the role of permeability in domestic politics, showing that a decrease in permeability will always benefit the incumbent, whether the country is a democracy or an autocracy. We then suggest that the relation between the host and the MNC has the features of a classical and quite intractable version of the hold-up problem, and that this may provide the MNC with incentives to influence political outcomes within the host country by whatever means are at its disposal. The hold-up problem can be overcome by the use of a Bilateral Investment Treaty that restricts the host country's ability to alter the terms of any agreement into which it has entered, and we investigate why a country might enter into a treaty that limits its freedom of action in this way. A possible answer is to be found in the capacity of a small number of poor countries to “tip” an equilibrium where none sign such treaties to one where all sign, in the process making all worse off. Our analysis provides a micro foundation for the “obsolescing bargain model” of host-MNC relations.
Handle: RePEc:nbr:nberwo:21712
Template-Type: ReDIF-Paper 1.0
Title: Work and Consumption in an Era of Unbalanced Technological Advance
Classification-JEL: E21; E24
Author-Name: Benjamin M. Friedman
Note: ME
Number: 21713
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21713
File-URL: http://www.nber.org/papers/w21713.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin M. Friedman, 2017. "Work and consumption in an era of unbalanced technological advance," Journal of Evolutionary Economics, vol 27(2), pages 221-237.
Abstract: Keynes’s “Grandchildren” essay famously predicted both a rapid increase in productivity and a sharp shrinkage of the workweek – to fifteen hours – over the century from 1930. Keynes was right (so far) about output per capita, but wrong about the workweek. The key reason is that he failed to allow for changing distribution. With widening inequality, median income (and therefore the income of most families) has risen, and is now rising, much more slowly than he anticipated. The failure of the workweek to shrink as he predicted follows. Other factors, including habit formation, socially induced consumption preferences, and network effects are part of the story too. Combining the analysis of Keynes, Meade and Galbraith suggests a way forward for economic policy under the prevailing circumstances.
Handle: RePEc:nbr:nberwo:21713
Template-Type: ReDIF-Paper 1.0
Title: Prescription Drug Advertising and Drug Utilization: The Role of Medicare Part D
Classification-JEL: H51; I10; I18
Author-Name: Abby Alpert
Author-Name: Darius Lakdawalla
Author-Person: pla295
Author-Name: Neeraj Sood
Author-Person: pso62
Note: EH
Number: 21714
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21714
File-URL: http://www.nber.org/papers/w21714.pdf
File-Format: application/pdf
Publication-Status: published as Abby Alpert & Darius Lakdawalla & Neeraj Sood, 2023. "Prescription drug advertising and drug utilization: The role of Medicare Part D," Journal of Public Economics, vol 221.
Abstract: Pharmaceutical firms currently spend over $4 billion on direct-to-consumer advertising (DTCA) of prescription drugs, a nearly 30-fold increase since 1993 that has led to much debate about its value to patients. We examine how DTCA influences drug utilization along the extensive and intensive margins by exploiting a large and plausibly exogenous shock to DTCA driven by the introduction of Medicare Part D in 2006. Using data on advertising for local media markets from Nielsen, we show that Part D led to large relative increases in DTCA in geographic areas with a high concentration of Medicare beneficiaries compared to areas with a low concentration. We examine the effects of this sudden differential increase in advertising on non-elderly individuals to isolate the effects of advertising on drug utilization from the direct effects of Part D. Using data from pharmacy claims, we find substantial differential increases in drug utilization that mirror the increases in DTCA after Part D. These effects are driven both by increased take-up of treatment and improved drug adherence. Our results imply significant spillovers from Medicare Part D onto the under-65 population and an important role for non-price factors in influencing prescription drug utilization.
Handle: RePEc:nbr:nberwo:21714
Template-Type: ReDIF-Paper 1.0
Title: How Strong are Ethnic Preferences?
Classification-JEL: C90; H41; O43
Author-Name: Lars Ivar Oppedal Berge
Author-Name: Kjetil Bjorvatn
Author-Person: pbj10
Author-Name: Simon Galle
Author-Name: Edward Miguel
Author-Person: pmi499
Author-Name: Daniel N. Posner
Author-Name: Bertil Tungodden
Author-Person: ptu94
Author-Name: Kelly Zhang
Note: DEV POL
Number: 21715
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21715
File-URL: http://www.nber.org/papers/w21715.pdf
File-Format: application/pdf
Abstract: Ethnic divisions have been shown to adversely affect economic performance and political stability, especially in Africa, but the underlying reasons remain contested, with multiple mechanisms potentially playing a role. We utilize lab experiments to isolate the role of one such mechanism—ethnic preferences—which has been central in both theory and in the conventional wisdom about the impact of ethnic differences. We employ an unusually rich research design, collecting multiple rounds of experimental data with a large sample of 1,300 subjects in Nairobi; employing within-lab priming conditions; and utilizing both standard and novel experimental measures, as well as implicit association tests. The econometric approach was pre-specified in a registered pre-analysis plan. Most of our tests yield no evidence of differential altruism towards coethnics relative to non-coethnics. The results run strongly against the common presumption of extensive ethnic bias among ordinary Kenyans, and suggest that other mechanisms may be more important in explaining the negative association between ethnic diversity and economic and political outcomes.
Handle: RePEc:nbr:nberwo:21715
Template-Type: ReDIF-Paper 1.0
Title: RMBI or RMBR: Is the Renminbi Destined to Become a Global or Regional Currency?
Classification-JEL: F0; F02
Author-Name: Barry Eichengreen
Author-Person: pei2
Author-Name: Domenico Lombardi
Note: IFM
Number: 21716
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21716
File-URL: http://www.nber.org/papers/w21716.pdf
File-Format: application/pdf
Publication-Status: published as Barry Eichengreen & Domenico Lombardi, 2017. "RMBI or RMBR? Is the Renminbi Destined to Become a Global or Regional Currency?," Asian Economic Papers, MIT Press, vol. 16(1), pages 35-59, February.
Abstract: Previous studies have focused on when the renminbi will play a significant role as an international currency, but less attention has been paid to where. We fill this gap by contrasting two answers to the question. One is that the renminbi will assume the role of a global currency similar to the U.S. dollar. Supporters point to China’s widely diversified trade and financial flows and to its institutional initiatives, not just in Asia but around the world. The other is that the renminbi will play a regional role in Asia equivalent to that of the euro in greater Europe. Proponents of this view argue that China has a natural advantage in leveraging regional supply chains and deepening its links with other Asian countries as well as in developing regional institutions. Asia, they argue on these grounds, will become the natural habitat for the renminbi.
Handle: RePEc:nbr:nberwo:21716
Template-Type: ReDIF-Paper 1.0
Title: Measuring and Changing Control: Women’s Empowerment and Targeted Transfers
Classification-JEL: D13; J16; O12
Author-Name: Ingvild Almås
Author-Person: pal396
Author-Name: Alex Armand
Author-Person: par334
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Pedro Carneiro
Author-Person: pca130
Note: CH DEV EFG LS
Number: 21717
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21717
File-URL: http://www.nber.org/papers/w21717.pdf
File-Format: application/pdf
Publication-Status: published as Ingvild Almås & Alex Armand & Orazio Attanasio & Pedro Carneiro, 2018. "Measuring and Changing Control: Women's Empowerment and Targeted Transfers," The Economic Journal, vol 128(612), pages F609-F639.
Abstract: This paper studies how targeted cash transfers to women affect their empowerment. We use a novel identification strategy to measure women's willingness to pay to receive cash transfers instead of their partner receiving it. We apply this among women living in poor households in urban Macedonia. We match experimental data with a unique policy intervention (CCT) in Macedonia offering poor households cash transfers conditional on having their children attending secondary school. The program randomized whether the transfer was offered to household heads or mothers at municipality level, providing us with an exogenous source of variation in (offered) transfers. We show that women who were offered the transfer reveal a lower willingness to pay, and we show that this is in line with theoretical predictions.
Handle: RePEc:nbr:nberwo:21717
Template-Type: ReDIF-Paper 1.0
Title: Nonlinear Pricing in Village Economies
Classification-JEL: D42; D43; D82; I38; O12; O13; O22
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Elena Pastorino
Author-Person: ppa196
Note: DEV IO LS
Number: 21718
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21718
File-URL: http://www.nber.org/papers/w21718.pdf
File-Format: application/pdf
Publication-Status: published as Orazio Attanasio & Elena Pastorino, 2020. "Nonlinear Pricing in Village Economies," Econometrica, Econometric Society, vol. 88(1), pages 207-263, January.
Abstract: This paper analyzes and estimates the impact of quantity discounts for basic staples in rural Mexico. We propose a model of price discrimination that nests those of Maskin and Riley (1984) and Jullien (2000), in which consumers differ in their tastes and, due to subsistence constraints, in their ability to pay for a good. We show that, under mild conditions, a model in which consumers face heterogeneous subsistence or budget constraints is equivalent to one in which consumers have access to heterogeneous outside options. We then rely on known results (Jullien (2000)) to characterize the equilibrium price schedule. We analyze the effects of nonlinear pricing on market participation, as well as the impact of a market-wide income transfer on the price schedule, when consumers are differentially budget constrained. Such a transfer, which is a common policy in developing countries, stimulates consumption by increasing households’ ability to pay but also typically leads to an increase in the intensity of price discrimination. We prove that the structural parameters of the model are identified from data on prices and quantities in a given market. The intuition behind this identification result is that the equilibrium price schedule in a market is a function of the distribution of consumers’ willingness and ability to pay, which, in turn, is related to the distribution of quantities. We estimate the parameters of the model using data from municipalities and localities in Mexico on three commodities, rice, kidney beans, and sugar, which are consumed by most households and are part of the evaluation component of the well-known conditional cash transfer program Progresa. The model fits the data remarkably well. Interestingly, we find that nonlinear pricing is beneficial to a large number of households, especially those who consume small quantities, relative to linear pricing. Available evidence indicates that the program had no effect on average prices. We show, however, that the program has affected the slope (in quantity) of the price schedule, which has become steeper as implied by our model, and has thus lead to an increase in the degree of price discrimination. We also show that, empirically, accounting for the impact of the hazard function of the distribution of quantities on prices, as consistent with our model, explains a large fraction of the shift in the price schedule induced by the program.
Handle: RePEc:nbr:nberwo:21718
Template-Type: ReDIF-Paper 1.0
Title: The Tail that Wags the Economy: Beliefs and Persistent Stagnation
Classification-JEL: D84; E32
Author-Name: Julian Kozlowski
Author-Person: pko790
Author-Name: Laura Veldkamp
Author-Person: pve40
Author-Name: Venky Venkateswaran
Author-Person: pve303
Note: CF EFG
Number: 21719
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21719
File-URL: http://www.nber.org/papers/w21719.pdf
File-Format: application/pdf
Publication-Status: published as Julian Kozlowski & Laura Veldkamp & Venky Venkateswaran, 2020. "The Tail That Wags the Economy: Beliefs and Persistent Stagnation," Journal of Political Economy, vol 128(8), pages 2839-2879.
Abstract: The Great Recession was a deep downturn with long-lasting effects on credit, employment and output. While narratives about its causes abound, the persistence of GDP below pre-crisis trends remains puzzling. We propose a simple persistence mechanism that can be quantfied and combined with existing models. Our key premise is that agents don't know the true distribution of shocks, but use data to estimate it non-parametrically. Then, transitory events, especially extreme ones, generate persistent changes in beliefs and macro outcomes. Embedding this mechanism in a neoclassical model, we find that it endogenously generates persistent drops in economic activity after tail events.
Handle: RePEc:nbr:nberwo:21719
Template-Type: ReDIF-Paper 1.0
Title: Insiders and Outsiders: Local Ethnic Politics and Public Goods Provision
Classification-JEL: H11; H4; H41; H42; O1
Author-Name: Kaivan Munshi
Author-Person: pmu269
Author-Name: Mark Rosenzweig
Author-Person: pro558
Note: DEV POL
Number: 21720
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21720
File-URL: http://www.nber.org/papers/w21720.pdf
File-Format: application/pdf
Abstract: We examine the role of ethnic politics at the local level in supplying public goods within a framework that incorporates two sides to ethnic groups: an inclusionary side associated with internal cooperation and an exclusionary side associated with the disregard for others. The inclusionary aspect of ethnic politics results in the selection of more able political representatives who exert more effort, resulting in an increased supply of non-excludable public goods. The exclusionary aspect of ethnic politics results in the capture of targetable public resources by insiders; i.e. the representative's own group, at the expense of outsiders. Using newly available Indian data, covering all the major states over three election terms at the most local (ward) level, we provide empirical evidence that is consistent with both sides of ethnic politics. Counterfactual simulations using structural estimates of the model are used to quantify the impact of alternative policies that, based on our theory and the empirical results, are expected to increase the supply of public goods.
Handle: RePEc:nbr:nberwo:21720
Template-Type: ReDIF-Paper 1.0
Title: Wealth Distribution and Social Mobility in the US: A Quantitative Approach
Classification-JEL: E21
Author-Name: Jess Benhabib
Author-Person: pbe53
Author-Name: Alberto Bisin
Author-Person: pbi10
Author-Name: Mi Luo
Note: EFG
Number: 21721
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21721
File-URL: http://www.nber.org/papers/w21721.pdf
File-Format: application/pdf
Publication-Status: published as Jess Benhabib & Alberto Bisin & Mi Luo, 2019. "Wealth Distribution and Social Mobility in the US: A Quantitative Approach," American Economic Review, vol 109(5), pages 1623-1647.
Abstract: This paper attempts to quantitatively identify the factors that drive wealth dynamics in the U.S. and are consistent with its observed skewed cross-sectional distribution and social mobility. We concentrate on three critical factors: a skewed and persistent distribution of earnings, differential saving and bequest rates across wealth levels, and capital income risk. All of these factors are necessary for matching both distribution and mobility, with a distinct role in inducing wealth accumulation near the borrowing constraints, contributing to the thick top tail of wealth, and affecting upward and/or downward social mobility.
Handle: RePEc:nbr:nberwo:21721
Template-Type: ReDIF-Paper 1.0
Title: US Monetary Policy and the Global Financial Cycle
Classification-JEL: E44; E58; F33; F42; G15
Author-Name: Silvia Miranda-Agrippino
Author-Person: pmi740
Author-Name: Hélène Rey
Author-Person: pre8
Note: AP CF IFM ME
Number: 21722
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21722
File-URL: http://www.nber.org/papers/w21722.pdf
File-Format: application/pdf
Publication-Status: published as Silvia Miranda-Agrippino & Hélène Rey, 2020. "U.S. Monetary Policy and the Global Financial Cycle," Review of Economic Studies, Oxford University Press, vol. 87(6), pages 2754-2776.
Abstract: US monetary policy shocks induce comovements in the international financial variables that characterize the “Global Financial Cycle.” One global factor explaining an important share of the variation of risky asset prices around the world decreases significantly after a US monetary contraction. Monetary tightening in the US leads to significant deleveraging of global financial intermediaries, a decline in the provision of domestic credit globally, strong retrenchments of international credit flows, and tightening of foreign financial conditions. Countries with floating exchange rate regimes are subject to similar financial spillovers.
Handle: RePEc:nbr:nberwo:21722
Template-Type: ReDIF-Paper 1.0
Title: Impacts of Being Downwind of a Coal-Fired Power Plant on Infant Health at Birth: Evidence from the Precedent-Setting Portland Rule
Classification-JEL: H23; I1
Author-Name: Muzhe Yang
Author-Name: Shin-Yi Chou
Note: EH
Number: 21723
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21723
File-URL: http://www.nber.org/papers/w21723.pdf
File-Format: application/pdf
Abstract: We conduct the first study on the impacts of prenatal exposure to a uniquely identified large polluter, a coal-fired power plant located near the border of two states, on the birth outcomes of the downwind state. For mothers who live as far as 20 to 40 miles away but downwind of the power plant, being exposed to power plant emissions, in particular sulfur dioxide, during the first month of pregnancy could increase the likelihood of having full-term babies but with low birth weight, an indicator of slow fetal growth, by as much as 42 percent. This adverse impact could be driven by reactive sulfur species-induced intrauterine oxidative stress, arising from maternal exposure to emissions of sulfur dioxide, whose travelling from the emission source to the downwind region has been confirmed in the Portland Rule. In light of EPA’s continual efforts in regulating power plant emissions, our study is aimed at broadening the scope of cross-border pollution analysis by taking into account adverse infant heath impacts from upwind polluters, which can burden the downwind states disproportionately.
Handle: RePEc:nbr:nberwo:21723
Template-Type: ReDIF-Paper 1.0
Title: The Option Value of Human Capital: Higher Education and Wage Inequality
Classification-JEL: E24; I24; J24
Author-Name: Sang Yoon (Tim) Lee
Author-Person: ple914
Author-Name: Yongseok Shin
Author-Person: psh383
Author-Name: Donghoon Lee
Author-Person: ple372
Note: ED EFG LS
Number: 21724
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21724
File-URL: http://www.nber.org/papers/w21724.pdf
File-Format: application/pdf
Abstract: Going to college is a risky investment in human capital. However, we highlight two options inherently embedded in college education that mitigate this risk: (i) college students can quit without completing four-year degrees after learning about their post-graduation wages and (ii) college graduates can take jobs that do not require four-year degrees (i.e., underemployment). These options reduce the chances of falling in the lower end of the wage distribution as a college graduate, rendering standard mean-variance calculations misleading. We show that the interaction between these options and the rising wage dispersion, especially among college graduates, is key to understanding the muted response of college enrollment and graduation rates to the substantial increase in the college wage premium in the United States since 1980. Furthermore, we find that subsidies inducing marginal students to attend colleges will have a negligible net benefit: Such students are far more likely to drop out of college or become underemployed even with a four-year degree, implying only small wage gains from college education.
Handle: RePEc:nbr:nberwo:21724
Template-Type: ReDIF-Paper 1.0
Title: It’s About Time: Effects of the Affordable Care Act Dependent Coverage Mandate On Time Use
Classification-JEL: H0; I1; J2
Author-Name: Gregory Colman
Author-Person: pco455
Author-Name: Dhaval Dave
Author-Person: pda245
Note: ED EH LS PE
Number: 21725
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21725
File-URL: http://www.nber.org/papers/w21725.pdf
File-Format: application/pdf
Publication-Status: published as Gregory Colman & Dhaval Dave, 2018. "IT'S ABOUT TIME: EFFECTS OF THE AFFORDABLE CARE ACT DEPENDENT COVERAGE MANDATE ON TIME USE," Contemporary Economic Policy, vol 36(1), pages 44-58.
Abstract: One of the main purposes of the Patient Protection and Affordable Care Act (ACA) is to enable Americans to make more productive use of their time. This is apparent in the rationale given for the ACA’s extension of dependent care coverage, which requires employer-sponsored insurance plans that cover the children of insured workers to continue to cover these dependents until they turn 26. While a number of studies have examined the effect of the ACA’s dependent coverage provision on work, none that we are aware has examined other uses of time. If, as predicted, the provision reduced the amount of time young adults work, the question arises, what have these young adults done with this time? A related question is whether the change has made them better off. We use the American Time Use Survey (2003-2013) to assess how the ACA’s dependent coverage mandate has affected labor supply among young adults, and to provide some of the first evidence on time use other than working, such as educational activities, obtaining medical care, and pursuing leisure activities. Estimates suggest that the ACA’s dependent coverage provision has reduced labor supply and job-lock, as well as the duration of the average doctor’s visit, including time spent waiting for and receiving medical care, among persons ages 19-25. The latter effect is consistent with a substitution from hospital ER utilization to greater routine physician care. The extra time has gone into socializing, and to a lesser extent, into education and job search. Availability of insurance and change in work time appear to have increased young adults’ subjective well-being, enabling them to spend time on activities they view as more meaningful than those they did before insurance became available.
Handle: RePEc:nbr:nberwo:21725
Template-Type: ReDIF-Paper 1.0
Title: Inflation and Activity – Two Explorations and their Monetary Policy Implications
Classification-JEL: E31; E32; E50
Author-Name: Olivier Blanchard
Author-Person: pbl2
Author-Name: Eugenio Cerutti
Author-Person: pce135
Author-Name: Lawrence Summers
Author-Person: psu137
Note: ME
Number: 21726
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21726
File-URL: http://www.nber.org/papers/w21726.pdf
File-Format: application/pdf
Publication-Status: published as Olivier Blanchard & Eugenio Cerutti & Lawrence Summers, 2015. "Inflation and Activity - Two Explorations and their Monetary Policy Implications," IMF Working Papers, vol 15(230).
Abstract: We explore two issues triggered by the crisis. First, in most advanced countries, output remains far below the pre-recession trend, suggesting hysteresis. Second, while inflation has decreased, it has decreased less than anticipated, suggesting a breakdown of the relation between inflation and activity. To examine the first, we look at 122 recessions over the past 50 years in 23 countries. We find that a high proportion of them have been followed by lower output or even lower growth. To examine the second, we estimate a Phillips curve relation over the past 50 years for 20 countries. We find that the effect of unemployment on inflation, for given expected inflation, decreased until the early 1990s, but has remained roughly stable since then. We draw implications of our findings for monetary policy.
Handle: RePEc:nbr:nberwo:21726
Template-Type: ReDIF-Paper 1.0
Title: Access to Schooling and the Black-White Incarceration Gap in the Early 20th Century US South: Evidence from Rosenwald Schools
Classification-JEL: I20; N32
Author-Name: Katherine Eriksson
Author-Person: per213
Note: DAE
Number: 21727
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21727
File-URL: http://www.nber.org/papers/w21727.pdf
File-Format: application/pdf
Abstract: A large gap in incarceration rates between black and white men has been evident since the early 20th century. This paper examines the effect of access to primary schooling on black incarceration in this period. I use the construction of 5,000 schools in the US South, funded by philanthropist Julius Rosenwald, as a quasi-natural experiment that increased the educational attainment of southern black students. I link individuals across Census waves in order to assign exposure to a Rosenwald school during childhood and to measure adult incarceration. I find that one year of access to a Rosenwald school decreased the probability of being a prisoner by 0.1 percentage points (seven percent of the mean). Using other data from archival and government sources, I find that Rosenwald schools affected juvenile crime and all categories of adult crime. I argue that most of the reduction in incarceration comes from increased opportunity costs of crime through higher educational attainment but also investigate school quality and migration responses. Effects are largest in counties which have less racist attitudes and which have a more literate population. These results contribute to a broader literature on racial gaps in social outcomes in the US throughout the 20th century.
Handle: RePEc:nbr:nberwo:21727
Template-Type: ReDIF-Paper 1.0
Title: Common Currency versus Currency Union: The U.S. Continental Dollar and Denominational Structure, 1775-1776
Classification-JEL: E42; E52; H77; N11
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE ME
Number: 21728
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21728
File-URL: http://www.nber.org/papers/w21728.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb, “Common Currency versus Currency Union: The U.S. Continental Dollar and Denominational Structure, 1775-1779,” in Nathalie Champroux, Georges Depeyrot, Aykiz Dogan, and Jurgen Nautz, eds., Construction and Deconstruction of Monetary Unions: Lessons from the Past (Wetteren, Belgium: MONETA, 2018), pp. 15-34.
Abstract: I use denominational structure (the spacing and size of monetary units) to explain how the Continental Congress attempted to manage a successful common currency when sub-national political entities were allowed to have separate currencies and run independent monetary policies. Congress created a common currency that was too large to use in ordinary transactions. Congress hoped this currency would be held for post-war redemption and would not circulate as money during the war. As such, it would not contribute to wartime inflation. By contrast, individual state currencies were emitted in small enough denominations to function as the domestic medium of exchange.
Handle: RePEc:nbr:nberwo:21728
Template-Type: ReDIF-Paper 1.0
Title: Gentrification and the Rising Returns to Skill
Classification-JEL: R21; R30
Author-Name: Lena Edlund
Author-Person: ped9
Author-Name: Cecilia Machado
Author-Person: pma2528
Author-Name: Maria Micaela Sviatschi
Note: LS
Number: 21729
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21729
File-URL: http://www.nber.org/papers/w21729.pdf
File-Format: application/pdf
Publication-Status: published as Lena Edlund & Cecilia Machado & Maria Sviatschi, 2022. "Gentrification and the Rising Returns to Skill," Economica, vol 89(354), pages 258-292.
Abstract: In 1980, housing prices in large US cities rose with distance from the city center. By 2010, that relationship had reversed. We propose that the inversion can be traced to more hours worked by the skilled. Scarce non-market time downgrades the importance of residential space and upgrades that of proximity to work, factors favoring the central-city location. Geo- coded census micro data covering the 27 largest US cities and the period 1980-2010 support our hypothesis: full-time skilled workers are more likely to locate in the city center and their growth can account for the observed price changes.
Handle: RePEc:nbr:nberwo:21729
Template-Type: ReDIF-Paper 1.0
Title: Piketty's Book and Macro Models of Wealth Inequality
Classification-JEL: D14; E21; H2
Author-Name: Mariacristina De Nardi
Author-Person: pde51
Author-Name: Giulio Fella
Author-Person: pfe171
Author-Name: Fang Yang
Author-Person: pya115
Note: PE
Number: 21730
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21730
File-URL: http://www.nber.org/papers/w21730.pdf
File-Format: application/pdf
Publication-Status: published as De Nardi, Mariacristina & Giulio , Fella & Yang, Fang, 2016. "Piketty’s Book and Macro Models of Wealth Inequality," Chicago Fed Letter, Federal Reserve Bank of Chicago.
Abstract: Piketty's book, Capital in the Twenty-First Century, discusses several factors affecting wealth inequality: rates of return on capital, output growth rates, tax progressivity, top income shares, and heterogeneity in saving rates and inheritances. This paper studies the role of various forces affecting savings in quantitative models of wealth inequality, discusses their successes and failures in accounting for the observed facts, and compares these model's implications with Piketty's conclusions.
Handle: RePEc:nbr:nberwo:21730
Template-Type: ReDIF-Paper 1.0
Title: Dynamic Directed Random Matching
Classification-JEL: C78; D83; E41; G12
Author-Name: Darrell Duffie
Author-Person: pdu341
Author-Name: Lei Qiao
Author-Name: Yeneng Sun
Note: AP
Number: 21731
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21731
File-URL: http://www.nber.org/papers/w21731.pdf
File-Format: application/pdf
Publication-Status: published as Darrell Duffie & Lei Qiao & Yeneng Sun, 2018. "Dynamic directed random matching," Journal of Economic Theory, vol 174, pages 124-183.
Abstract: We develop a general and unified model in which a continuum of agents conduct directed random searches for counterparties. Our results provide the first probabilistic foundation for static and dynamic models of directed search (including the matching-function approach) that are common in search-based models of financial markets, monetary theory, and labor economics. The agents' types are shown to be independent discrete-time Markov processes that incorporate the effects of random mutation, random matching with match-induced type changes, and with the potential for enduring partnerships that may have randomly timed break-ups. The multi-period cross-sectional distribution of types is shown to be deterministic and is calculated using the exact law of large numbers.
Handle: RePEc:nbr:nberwo:21731
Template-Type: ReDIF-Paper 1.0
Title: Dynamics of the U.S. Price Distribution
Classification-JEL: E3; E31; E32; E5; E52; L16
Author-Name: David Berger
Author-Person: pbe977
Author-Name: Joseph Vavra
Author-Person: pva480
Note: EFG IO ME
Number: 21732
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21732
File-URL: http://www.nber.org/papers/w21732.pdf
File-Format: application/pdf
Publication-Status: published as David Berger & Joseph Vavra, 2018. "Dynamics of the U.S. price distribution," European Economic Review, vol 103, pages 60-82.
Abstract: We use microdata underlying U.S. consumer, producer and import price indices to document how the distribution of price changes evolves over time. Two striking features characterize pricing at each stage of production: 1) Frequency is countercyclical. 2) Frequency is correlated with variance. Conversely, other statistics which have received recent attention, like kurtosis, do not exhibit uniform patterns across our datasets. What implications do our empirical results have for monetary policy? Using a flexible accounting framework which collapses the high-dimensional distribution of price changes into a single measure of aggregate price flexibility, we show that flexibility is highly variable and countercyclical.
Handle: RePEc:nbr:nberwo:21732
Template-Type: ReDIF-Paper 1.0
Title: Job Creation, Small vs. Large vs. Young, and the SBA
Classification-JEL: H81
Author-Name: J. David Brown
Author-Person: pbr53
Author-Name: John S. Earle
Author-Person: pea6
Author-Name: Yana Morgulis
Note: PR
Number: 21733
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21733
File-URL: http://www.nber.org/papers/w21733.pdf
File-Format: application/pdf
Publication-Status: published as Job Creation, Small versus Large versus Young, and the SBA, J. David Brown, John S. Earle, Yana Morgulis. in Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, Haltiwanger, Hurst, Miranda, and Schoar. 2017
Abstract: Analyzing a list of all Small Business Administration (SBA) loans in 1991 to 2009 linked with annual information on all U.S. employers from 1976 to 2012, we apply detailed matching and regression methods to estimate the variation in SBA loan effects on job creation and firm survival across firm age and size groups. The number of jobs created per million dollars of loans generally increases with size and decreases in age. The results imply that fast-growing firms (“gazelles”) experience the greatest financial constraints to growth, while the growth of small, mature firms is least financially constrained. The estimated association between survival and loan amount is larger for younger and smaller firms facing the “valley of death”.
Handle: RePEc:nbr:nberwo:21733
Template-Type: ReDIF-Paper 1.0
Title: Explaining Foreign Holdings of Asia's Debt Securities: The Feldstein-Horioka Paradox Revisited
Classification-JEL: F21; F32; F34; F65; G01; G15; O53
Author-Name: Charles Yuji Horioka
Author-Person: pho41
Author-Name: Akiko Terada-Hagiwara
Author-Person: pha183
Author-Name: Takaaki Nomoto
Note: DEV EFG IFM
Number: 21734
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21734
File-URL: http://www.nber.org/papers/w21734.pdf
File-Format: application/pdf
Publication-Status: published as Charles Yuji Horioka & Akiko Terada-Hagiwara & Takaaki Nomoto, 2016. "Explaining Foreign Holdings of Asia's Debt Securities: The Feldstein-Horioka Paradox Revisited," Asian Economic Journal, vol 30(1), pages 3-24.
Abstract: In this paper, we find that home bias is still present in all economies and regions, especially in the case of short-term debt securities, but that there are substantial variations among economies and regions in the strength of home bias, with the Eurozone economies, the US, and developing Asia showing relatively weak home bias and advanced Asia, especially Japan, showing relatively strong home bias. We then examine trends over time in foreign holdings of debt securities and find that capital has been flowing from the US and the Eurozone economies to both advanced Asia (especially Japan) and developing Asia and that foreign holdings of debt securities have been increasing in advanced as well as developing Asia but for different reasons. The main reason in the case of advanced Asia (especially Japan) appears to be higher risk-adjusted returns, whereas the main reason in the case of developing Asia appears to be the growth of debt securities markets combined with relatively weak home bias and (in the case of short-term securities) lower exchange rate volatility. Finally, we find that since the Global Financial Crisis, foreign holdings of debt securities have declined (i.e., that home bias has strengthened) in all economies and regions except developing Asia, where they have increased (except for a temporary decline in 2008) but where their share is still much lower than the optimal share warranted by the capital asset pricing market model.
Handle: RePEc:nbr:nberwo:21734
Template-Type: ReDIF-Paper 1.0
Title: Global Collaborative Patents
Classification-JEL: F02; F22; F23; F60; J15; O19; O31; O32; O33; O34
Author-Name: Sari Pekkala Kerr
Author-Name: William R. Kerr
Author-Person: pke127
Note: PR
Number: 21735
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21735
File-URL: http://www.nber.org/papers/w21735.pdf
File-Format: application/pdf
Publication-Status: published as Sari Pekkala Kerr & William R. Kerr, 2018. "Global Collaborative Patents," The Economic Journal, vol 128(612), pages F235-F272.
Abstract: We study the prevalence and traits of global collaborative patents for U.S. public companies, where the inventor team is located both within and outside of the United States. Collaborative patents are frequently observed when a corporation is entering into a new foreign region for innovative work, especially in settings where intellectual property protection is weak. We also connect collaborative patents to the ethnic composition of the firm's U.S. inventors and cross-border mobility of inventors within the firm. The inventor team composition has important consequences for how the new knowledge is exploited within and outside of the firm.
Handle: RePEc:nbr:nberwo:21735
Template-Type: ReDIF-Paper 1.0
Title: Declining Wealth and Work Among Male Veterans in the Health and Retirement Study
Classification-JEL: D31; E21; H55; J14; J26; J32; J45
Author-Name: Alan L. Gustman
Author-Person: pgu327
Author-Name: Thomas L. Steinmeier
Author-Name: Nahid Tabatabai
Note: AG LS PE
Number: 21736
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21736
File-URL: http://www.nber.org/papers/w21736.pdf
File-Format: application/pdf
Publication-Status: published as Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2016. "Declining Wealth and Work among Male Veterans in the Health and Retirement Study," The Journal of Retirement, vol 4(1), pages 77-98.
Abstract: The composition, wealth and employment of male veterans and nonveterans are analyzed for four cohorts from the Health and Retirement Study, ages 51 to 56 in 1992, 1998, 2004 and 2010. Half of the men in the two oldest cohorts served in the military. Only 16 percent of the men in the youngest cohort, the only cohort subject to the All-Volunteer Military, served. One fifth to one third of the members of each cohort who served saw combat, mainly in Viet Nam and in the First Gulf War. Among those 51 to 56 in 1992, veterans were better educated, healthier, wealthier, and more likely to be working than nonveterans. By the 2010 cohort, 51 to 56 year old veterans had lost their educational advantage over nonveterans, were less healthy, less wealthy and less likely to be working. After standardizing in multiple regressions for the influence of major observable characteristics, for the original 1992 HRS cohort the wealth of veterans is no longer higher than the wealth of nonveterans. In contrast, the wealth of veterans from the youngest cohort, those 51 to 56 in 2010, remains about 10 to 13 percent below the wealth of nonveterans from that cohort. There also is a decline from older to younger cohorts of veterans compared to nonveterans in the probability of being not retired, of working more than 35 hours per week, and in the likelihood of holding a job for more than 10 years. Comparisons are made within the group of veterans by years of service, officer rank and other covariates.
Handle: RePEc:nbr:nberwo:21736
Template-Type: ReDIF-Paper 1.0
Title: Self-Oriented Monetary Policy, Global Financial Markets and Excess Volatility of International Capital Flows
Classification-JEL: E3; E5; F3; F5; G1
Author-Name: Ryan Banerjee
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Giovanni Lombardo
Author-Person: plo165
Note: IFM
Number: 21737
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21737
File-URL: http://www.nber.org/papers/w21737.pdf
File-Format: application/pdf
Publication-Status: published as Ryan Banerjee & Michael B. Devereux & Giovanni Lombardo, 2016. "Self-oriented monetary policy, global financial markets and excess volatility of international capital flows," Journal of International Money and Finance, vol ().
Abstract: This paper explores the nature of macroeconomic spillovers from advanced economies to emerging market economies (EMEs) and the consequences for independent use of monetary policy in EMEs. We first empirically document the effects of US monetary policy shocks on a sample group of EMEs. A contractionary monetary shock leads a retrenchment in EME capital flows, a fall in EME GDP, and an exchange rate depreciation. We construct a the- oretical model which can help to account for these findings. In the model, macroeconomic spillovers are exacerbated by financial frictions. We assess the extent to which domestic monetary policy can mitigate the negative spillovers from foreign shocks. Absent financial frictions, international spillovers are minor, and an inflation targeting rule represents an ef- fective policy for the EME. With frictions in financial intermediation, however, spillovers are substantially magnified, and an inflation targeting rule has little advantage over an exchange rate peg. However, an optimal monetary policy markedly improves on the performance of naive inflation targeting or an exchange rate peg. Furthermore, optimal policies don’t need to be coordinated across countries. Under the specific set of assumptions maintained in our model, a non-cooperative, self-oriented optimal policy gives results very similar to those of a global cooperative optimal policy.
Handle: RePEc:nbr:nberwo:21737
Template-Type: ReDIF-Paper 1.0
Title: Sign Restrictions in Bayesian FaVARs with an Application to Monetary Policy Shocks
Classification-JEL: C22; E5
Author-Name: Pooyan Amir Ahmadi
Author-Person: pam53
Author-Name: Harald Uhlig
Author-Person: puh1
Note: EFG ME
Number: 21738
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21738
File-URL: http://www.nber.org/papers/w21738.pdf
File-Format: application/pdf
Abstract: We propose a novel identification strategy of imposing sign restrictions directly on the impulse responses of a large set of variables in a Bayesian factor-augmented vector autoregression. We conceptualize and formalize conditions under which every additional sign restriction imposed can be qualified as either relevant or irrelevant for structural identification up to a limiting case of point identification. Deriving exact conditions we establish that, (i) in a two dimensional factor model only two out of potentially infinite sign restrictions are relevant and (ii) in contrast, in cases of higher dimension every additional sign restriction can be relevant improving structural identification. The latter result can render our approach a blessing in high dimensions. In an empirical application for the US economy we identify monetary policy shocks imposing conventional wisdom and find modest real effects avoiding various unreasonable responses specifically present and pronounced combining standard recursive identification with FAVARs.
Handle: RePEc:nbr:nberwo:21738
Template-Type: ReDIF-Paper 1.0
Title: Regulation and Market Liquidity
Classification-JEL: E43; E52; E58; G18; G28
Author-Name: Francesco Trebbi
Author-Person: ptr40
Author-Name: Kairong Xiao
Note: AP POL
Number: 21739
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21739
File-URL: http://www.nber.org/papers/w21739.pdf
File-Format: application/pdf
Publication-Status: published as Francesco Trebbi & Kairong Xiao, 2019. "Regulation and Market Liquidity," Management Science, INFORMS, vol. 67(5), pages 1949-1968, May.
Abstract: The aftermath of the 2008-09 U.S. financial crisis has been characterized by regulatory intervention of unprecedented scale. Although the necessity of a realignment of incentives and constraints of financial markets participants became a shared posterior after the near collapse of the U.S. financial system, considerable doubts have been subsequently raised on the welfare consequences of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and its various subcomponents, such as the Volcker Rule. The possibility of permanently inhibiting the market making capacity of large banks, with dire consequences in terms of under-provision of market liquidity, has been repeatedly raised. This paper presents systematic evidence from four different estimation strategies of the absence of breakpoints in market liquidity for fixed-income asset classes and across multiple liquidity measures, with special attention given to the corporate bond market. The analysis is performed without imposing restrictions on the exact dating of breaks (i.e. allowing for anticipatory response or lagging reactions to regulation) and focusing both on levels and dynamic latent factors. We report both single breakpoint and multiple breakpoint tests and analyze the liquidity of corporate bonds matched to their main underwriters making markets on those assets. Post-crisis U.S. regulatory intervention does not appear to have produced structural deteriorations in market liquidity.
Handle: RePEc:nbr:nberwo:21739
Template-Type: ReDIF-Paper 1.0
Title: Human Capital Development and Parental Investment in India
Classification-JEL: I14; I15; I25; I32; J13; J24; O15
Author-Name: Orazio Attanasio
Author-Person: pat7
Author-Name: Costas Meghir
Author-Person: pme144
Author-Name: Emily Nix
Note: CH DEV
Number: 21740
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21740
File-URL: http://www.nber.org/papers/w21740.pdf
File-Format: application/pdf
Publication-Status: published as Orazio Attanasio & Costas Meghir & Emily Nix, 2020. "Human Capital Development and Parental Investment in India," The Review of Economic Studies, vol 87(6), pages 2511-2541.
Abstract: We estimate production functions for cognition and health for children aged 1-12 in India, based on the Young Lives Survey. India has over 70 million children aged 0-5 who are at risk of developmental deficits. The inputs into the production functions include parental background, prior child cognition and health, and child investments, which are taken as endogenous. Estimation is based on a nonlinear factor model, based on multiple measurements for both inputs and child outcomes. Our results show an important effect of early health on child cognitive development, which then becomes persistent. Parental investments affect cognitive development at all ages, but more so for younger children. Investments also have an impact on health at early ages only.
Handle: RePEc:nbr:nberwo:21740
Template-Type: ReDIF-Paper 1.0
Title: Identifying the Cost of a Public Health Success: Arsenic Well Water Contamination and Productivity in Bangladesh
Classification-JEL: I15
Author-Name: Mark M. Pitt
Author-Person: ppi1
Author-Name: Mark R. Rosenzweig
Author-Person: pro558
Author-Name: Nazmul Hassan
Note: DEV EH
Number: 21741
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21741
File-URL: http://www.nber.org/papers/w21741.pdf
File-Format: application/pdf
Publication-Status: published as Mark M Pitt & Mark R Rosenzweig & M Nazmul Hassan, 2021. "Identifying the Costs of a Public Health Success: Arsenic Well Water Contamination and Productivity in Bangladesh," The Review of Economic Studies, vol 88(5), pages 2479-2526.
Abstract: We exploit recent molecular genetics evidence on the genetic basis of arsenic excretion and unique information on family links among respondents living in different environments from a large panel survey within a theoretical framework incorporating optimizing behavior to uncover the hidden costs of arsenic poisoning in Bangladesh. We provide for the first time estimates of the effects of the ingestion and retention of inorganic arsenic on direct measures of cognitive and physical capabilities as well as on the schooling attainment, occupational structure, entrepreneurship and incomes of the rural Bangladesh population. We also provide new estimates of the effects of the consumption of foods grown and cooked in arsenic-contaminated water on individual arsenic concentrations. The estimates are based on arsenic biomarkers obtained from a sample of members of rural households in Bangladesh who are participants in a long-term panel survey following respondents and their coresident household members over a period of 26 years.
Handle: RePEc:nbr:nberwo:21741
Template-Type: ReDIF-Paper 1.0
Title: Lessons Learned from Three Decades of Experience with Cap-and-Trade
Classification-JEL: Q40; Q48; Q54; Q58
Author-Name: Richard Schmalensee
Author-Person: psc313
Author-Name: Robert Stavins
Author-Person: pst167
Note: EEE
Number: 21742
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21742
File-URL: http://www.nber.org/papers/w21742.pdf
File-Format: application/pdf
Publication-Status: published as Richard Schmalensee & Robert N. Stavins, 2017. "Lessons Learned from Three Decades of Experience with Cap and Trade," Review of Environmental Economics and Policy, vol 11(1), pages 59-79.
Abstract: This essay provides an overview of the major emissions trading programs of the past thirty years on which significant documentation exists, and draws a number of important lessons for future applications of this environmental policy instrument. References to a larger number of other emissions trading programs that have been implemented or proposed are included
Handle: RePEc:nbr:nberwo:21742
Template-Type: ReDIF-Paper 1.0
Title: Agency Business Cycles
Classification-JEL: D86; E24; E32
Author-Name: Mikhail Golosov
Author-Person: pgo200
Author-Name: Guido Menzio
Author-Person: pme246
Note: EFG
Number: 21743
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21743
File-URL: http://www.nber.org/papers/w21743.pdf
File-Format: application/pdf
Abstract: We propose a new business cycle theory. Firms need to randomize over firing or keeping workers who have performed poorly in the past, in order to give them an ex-ante incentive to exert effort. Firms have an incentive to coordinate the outcome of their randomizations, as coordination allows them to load the firing probability on states of the world in which it is costlier for workers to become unemployed and, hence, allows them to reduce overall agency costs. In the unique robust equilibrium, firms use a sunspot to coordinate the randomization outcomes and the economy experiences endogenous, stochastic aggregate fluctuations.
Handle: RePEc:nbr:nberwo:21743
Template-Type: ReDIF-Paper 1.0
Title: Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America
Classification-JEL: F21; F32; F41; F44
Author-Name: Lee E. Ohanian
Author-Person: poh1
Author-Name: Paulina Restrepo-Echavarria
Author-Person: pre260
Author-Name: Mark L. J. Wright
Author-Person: pwr6
Note: EFG IFM
Number: 21744
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21744
File-URL: http://www.nber.org/papers/w21744.pdf
File-Format: application/pdf
Publication-Status: published as Lee E. Ohanian & Paulina Restrepo-Echavarria & Mark L. J. Wright, 2018. "Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America," American Economic Review, vol 108(12), pages 3541-3582.
Abstract: Since 1950, the economies of East Asia grew rapidly but received little inter-national capital, while Latin America received considerable international capitaleven as their economies stagnated. The literature typically explains the failureof capital to flow to high growth regions as resulting from international capitalmarket imperfections. This paper proposes a broader thesis that country-specificdistortions, such as domestic labor and capital market distortions, also impactcapital flows. We develop a DSGE model of Asia, Latin America, and the Rest ofthe World that features an open-economy business cycle accounting framework tomeasure these domestic and international distortions, and to quantify their con-tributions to international capital flows. We find that domestic distortions havebeen the predominant drivers of international capital flows, and that the generalequilibrium effects of these distortions are very large. International capital market distortions also matter, but less.
Handle: RePEc:nbr:nberwo:21744
Template-Type: ReDIF-Paper 1.0
Title: Short-run Effects of Parental Job Loss on Child Health
Classification-JEL: I1; I12; I13; J0; J6
Author-Name: Jessamyn Schaller
Author-Person: psc907
Author-Name: Mariana Zerpa
Author-Person: pze64
Note: CH EH LS
Number: 21745
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21745
File-URL: http://www.nber.org/papers/w21745.pdf
File-Format: application/pdf
Publication-Status: published as just accepted American Journal of Health Economics
Abstract: Recent research suggests that parental job loss has negative effects on children's outcomes, including their academic achievement and long-run educational and labor market outcomes. In this paper we turn our attention to the effects of parental job loss on children's health. We combine health data from 16 waves of the Medical Expenditure Panel Survey, which allows us to use a fixed effects specification and still have a large sample of parental job displacements. We find that paternal job loss is detrimental to the physical and mental health of children in low-socioeconomic status (SES) families, increasing their incidence of injuries and mental disorders. We separately find that maternal job loss leads to reductions in the incidence of infectious illness among children in high-SES families, possibly resulting from substitution of maternal care for market-based childcare services. Increases in public health insurance coverage compensate for a large share of the loss in private coverage that follows parental displacement, and we find no significant changes in routine or diagnostic medical care.
Handle: RePEc:nbr:nberwo:21745
Template-Type: ReDIF-Paper 1.0
Title: The Relationship between Establishment Training and the Retention of Older Workers: Evidence from Germany
Classification-JEL: J15; J18; J2; J21; J24; J26
Author-Name: Peter B. Berg
Author-Name: Mary K. Hamman
Author-Name: Matthew M. Piszczek
Author-Name: Christopher J. Ruhm
Author-Person: pru7
Note: AG LS PE
Number: 21746
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21746
File-URL: http://www.nber.org/papers/w21746.pdf
File-Format: application/pdf
Publication-Status: published as Peter B. Berg & Mary K. Hamman & Matthew M. Piszczek & Christopher J. Ruhm, 2016. "The Relationship between Establishment Training and the Retention of Older Workers: Evidence from Germany," International Labour Review, .
Abstract: In the coming years, a substantial portion of Germany’s workforce will retire, making it difficult for businesses to meet human capital needs. Training older workers may be a successful strategy for managing this demographic transition. This study examines relationships between establishment training programs, wages, and retirement among older men and women. Using unique matched establishment-employee data from Germany, the authors find that when establishments offer special training programs targeted at older workers, women—and especially lower wage women—are less likely to retire. Results suggest this relationship may be due to greater wage growth. For men, findings suggest establishment offer of inclusion in standard training programs may improve retention of low wage men, but analysis of pre-existing differences in establishment retirement patterns suggests this relationship may not be causal. Our research suggests targeted training programs likely play an important role in retaining and advancing careers of low wage older women.
Handle: RePEc:nbr:nberwo:21746
Template-Type: ReDIF-Paper 1.0
Title: Paid Family Leave, Fathers’ Leave-Taking, and Leave-Sharing in Dual-Earner Households
Classification-JEL: J08; J13; J18; J2
Author-Name: Ann Bartel
Author-Name: Maya Rossin-Slater
Author-Name: Christopher Ruhm
Author-Person: pru7
Author-Name: Jenna Stearns
Author-Person: pst822
Author-Name: Jane Waldfogel
Note: CH LS PE
Number: 21747
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21747
File-URL: http://www.nber.org/papers/w21747.pdf
File-Format: application/pdf
Publication-Status: published as Ann P. Bartel & Maya Rossin-Slater & Christopher J. Ruhm & Jenna Stearns & Jane Waldfogel, 2018. "Paid Family Leave, Fathers’ Leave-Taking, and Leave-Sharing in Dual-Earner Households," Journal of Policy Analysis and Management, vol 37(1), pages 10-37.
Abstract: This paper provides quasi-experimental evidence on the impact of paid leave legislation on fathers’ leave-taking, as well as on the division of leave between mothers and fathers in dual-earner households. Using difference-in-difference and difference-in-difference-in-difference designs, we study California’s Paid Family Leave (CA-PFL) program, which is the first source of government-provided paid parental leave available to fathers in the United States. Our results show that fathers in California are 0.9 percentage points—or 46 percent relative to the pre-treatment mean—more likely to take leave in the first year of their children’s lives when CA-PFL is available. We also examine how parents allocate leave in households where both parents work. We find that CA-PFL increases father-only leave-taking (i.e., father on leave while mother is at work) by 50 percent and joint leave-taking (i.e., both parents on leave at the same time) by 28 percent. These effects are much larger for fathers of sons than for fathers of daughters, and almost entirely driven by fathers of first-born children and fathers in occupations with a high share of female workers.
Handle: RePEc:nbr:nberwo:21747
Template-Type: ReDIF-Paper 1.0
Title: Leveraging Lotteries for School Value-Added: Testing and Estimation
Classification-JEL: I20; J24
Author-Name: Joshua Angrist
Author-Person: pan29
Author-Name: Peter Hull
Author-Person: phu366
Author-Name: Parag A. Pathak
Author-Name: Christopher Walters
Note: ED LS
Number: 21748
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21748
File-URL: http://www.nber.org/papers/w21748.pdf
File-Format: application/pdf
Publication-Status: published as Joshua D. Angrist & Peter D. Hull & Parag A. Pathak & Christopher R. Walters, 2017. "Leveraging Lotteries for School Value-Added: Testing and Estimation," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 871-919.
Abstract: Conventional value-added models (VAMs) compare average test scores across schools after regression-adjusting for students’ demographic characteristics and previous scores. This paper tests for VAM bias using a procedure that asks whether VAM estimates accurately predict the achievement consequences of random assignment to specific schools. Test results from admissions lotteries in Boston suggest conventional VAM estimates are biased, which motivates the development of a hierarchical model describing the joint distribution of school value-added, bias, and lottery compliance. We use this model to assess the substantive importance of bias in conventional VAM estimates and to construct hybrid value-added estimates that optimally combine ordinary least squares and lottery-based instrumental variables estimates of VAM parameters. The hybrid estimation strategy provides a general recipe for combining non-experimental and quasi-experimental estimates. While still biased, hybrid school value-added estimates have lower mean squared error than conventional VAM estimates. Simulations calibrated to the Boston data show that, bias notwithstanding, policy decisions based on conventional VAMs are likely to generate substantial achievement gains. Hybrid estimates that incorporate lotteries yield further gains.
Handle: RePEc:nbr:nberwo:21748
Template-Type: ReDIF-Paper 1.0
Title: A Demand System Approach to Asset Pricing
Classification-JEL: G12; G23
Author-Name: Ralph S.J. Koijen
Author-Person: pko589
Author-Name: Motohiro Yogo
Author-Person: pyo20
Note: AP IO
Number: 21749
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21749
File-URL: http://www.nber.org/papers/w21749.pdf
File-Format: application/pdf
Publication-Status: published as Ralph S. J. Koijen & Motohiro Yogo, 2019. "A Demand System Approach to Asset Pricing," Journal of Political Economy, vol 127(4), pages 1475-1515.
Abstract: We develop an asset pricing model with flexible heterogeneity in asset demand across investors, designed to match institutional and household holdings. A portfolio choice model implies characteristics-based demand when returns have a factor structure and expected returns and factor loadings depend on the assets’ own characteristics. We propose an instrumental variables estimator for the characteristics-based demand system to address the endogeneity of demand and asset prices. Using US stock market data, we illustrate how the model could be used to understand the role of institutions in asset market movements, volatility, and predictability.
Handle: RePEc:nbr:nberwo:21749
Template-Type: ReDIF-Paper 1.0
Title: Forward Guidance in the Yield Curve: Short Rates versus Bond Supply
Classification-JEL: G12; G18
Author-Name: Robin Greenwood
Author-Name: Samuel Hanson
Author-Person: pha1258
Author-Name: Dimitri Vayanos
Author-Person: pva498
Note: AP ME
Number: 21750
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21750
File-URL: http://www.nber.org/papers/w21750.pdf
File-Format: application/pdf
Abstract: We present a model of the yield curve in which the central bank can provide market participants with forward guidance on both future short rates and on future Quantitative Easing (QE) operations, which affect bond supply. Forward guidance on short rates works through the expectations hypothesis, while forward guidance on QE works through expected future bond risk premia. If a QE operation is expected to be undone in the near term, then its announcement will have a hump-shaped effect on the yield and forward-rate curves; otherwise the effect may be increasing with maturity. Humps associated to QE announcements typically occur at maturities longer than those associated to short-rate announcements, even when the effects of the former are expected to last over a shorter horizon. We use our model to re-examine the empirical evidence on QE announcements in the US.
Handle: RePEc:nbr:nberwo:21750
Template-Type: ReDIF-Paper 1.0
Title: Economics of Means-Tested Transfer Programs: Introduction
Classification-JEL: I3
Author-Name: Robert Moffitt
Author-Person: pmo48
Note: PE
Number: 21751
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21751
File-URL: http://www.nber.org/papers/w21751.pdf
File-Format: application/pdf
Publication-Status: published as Economics of Means-Tested Transfer Programs in the United States, Volume II, Preface Robert A. Moffitt
Abstract: This volume collects a series of essays by prominent economists on each of the major means-tested, or welfare, programs in the United States: the Medicaid, Earned Income Tax Credit, Supplemental Nutrition Assistance, Temporary Assistance for Needy Families, Supplemental Security Income, Subsidized Housing, Training, and Early Education programs. Each essay covers the institutional history of a program, the policy issues surrounding it, its rules and regulations, its history of expenditure and caseloads, and, most importantly, a summary of the research that economists have conducted on the program and the findings from that research. The volume is an update of a popular first volume in 2003 which became a reference Handbook on the shelf of all economists and policy-makers who work on, or who are interested in, transfer programs in the United States. The new volume focuses primarily on the changes in programs which have occurred since 2003 and the results of new research since that date. The volume will be a timely contribution to on-going policy discussions in Washington and elsewhere, bringing the available evidence to bear on the many issues surrounding those programs.
Handle: RePEc:nbr:nberwo:21751
Template-Type: ReDIF-Paper 1.0
Title: Get With the Program: Software-Driven Innovation in Traditional Manufacturing
Classification-JEL: O14; O31; O32; O33
Author-Name: Lee G. Branstetter
Author-Person: pbr854
Author-Name: Matej Drev
Author-Name: Namho Kwon
Note: ITI PR
Number: 21752
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21752
File-URL: http://www.nber.org/papers/w21752.pdf
File-Format: application/pdf
Publication-Status: published as Get with the Program: Software-Driven Innovation in Traditional Manufacturing Lee G. Branstetter, Matej Drev, and Namho Kwon Management Science , Articles in Advance
Abstract: This paper documents the increasing importance of software for successful innovation in manufacturing sectors well beyond the traditional definition of electronics and information technology. Using panel data for 229 publicly listed firms from 18 countries across four manufacturing industries over the period 1981-2005, we find significant variation across firms in the software intensity of their innovative activity. Firms that exhibit a higher level of software intensity generate more patents per R&D dollar, and their investment in R&D is more highly valued by equity markets. We present evidence that geographic differences in the abundance of skilled software labor are an important factor in determining sample firms’ software intensity and performance.
Handle: RePEc:nbr:nberwo:21752
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Comparative Advantage
Classification-JEL: F14
Author-Name: Gordon H. Hanson
Author-Person: pha80
Author-Name: Nelson Lind
Author-Name: Marc-Andreas Muendler
Author-Person: pmu63
Note: DEV IFM ITI
Number: 21753
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21753
File-URL: http://www.nber.org/papers/w21753.pdf
File-Format: application/pdf
Abstract: This paper characterizes the dynamic empirical properties of country export capabilities in order to inform modelling of the long-run behavior of comparative advantage. The starting point for our analysis is two strong empirical regularities in international trade that have previously been studied incompletely and in isolation to one another. The literature has noted a tendency for countries to concentrate exports in a few sectors. We show that this concentration arises from a heavy-tailed distribution of industry export capabilities that is approximately log normal and whose shape is stable across countries, sectors, and time. Likewise, previous research has detected a tendency for mean reversion in national industry productivities. We establish that mean reversion in export capability, rather than indicative of convergence in productivities or degeneracy in comparative advantage, is instead consistent with a well behaved stochastic growth process that delivers a stationary distribution of country export advantage. In literature on the growth of cities and firms, economists have used stochastic processes to study the determinants of the long-run size distributions. Our contribution is to develop an analogous empirical framework for identifying the parameters that govern the stationary distribution of export capability. The main result of this analysis is that a generalized gamma distribution, which nests many commonly studied distributions, provides a tight fit of the data but log normality offers a reasonable approximation. Importantly, the stochastic process that generates log normality can be estimated in its discretized form by simple linear regression. Log linearity allows for an extension of our approach to multivariate diffusions, in which one can permit innovations to productivity to be transmitted intersectorally and internationally, as in recent models of trade and growth.
Handle: RePEc:nbr:nberwo:21753
Template-Type: ReDIF-Paper 1.0
Title: Citations in Economics: Measurement, Uses and Impacts
Classification-JEL: A11; A14; J31
Author-Name: Daniel S. Hamermesh
Author-Person: pha78
Note: LS
Number: 21754
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21754
File-URL: http://www.nber.org/papers/w21754.pdf
File-Format: application/pdf
Publication-Status: published as Daniel S. Hamermesh, 2018. "Citations In Economics: Measurement, Uses, and Impacts," Journal of Economic Literature, vol 56(1), pages 115-156.
Abstract: I describe and compare sources of data on citations in economics and the statistics that can be constructed from them. Constructing data sets of the post-publication citation histories of articles published in the “Top 5” journals in the 1970s and the 2000s, I examine distributions and life cycles of citations, compare citation histories of articles in different sub-specialties in economics and present evidence on the history and heterogeneity of those journals’ impacts and the marginal citation productivity of additional coauthors. I use a new data set of the lifetime citation histories of over 1000 economists from 30 universities to rank economics departments by various measures and to demonstrate the importance of intra- and inter-departmental heterogeneity in productivity. Throughout, the discussion summarizes earlier work. I survey research on the impacts of citations on salaries and non-monetary rewards and discuss how citations reflect judgments about research quality in economics.
Handle: RePEc:nbr:nberwo:21754
Template-Type: ReDIF-Paper 1.0
Title: Tax Revenue Trends in Asia and Latin America: A Comparative Analysis
Classification-JEL: F6
Author-Name: Joshua Aizenman
Author-Person: pai8
Author-Name: Yothin Jinjarak
Author-Name: Jungsuk Kim
Author-Name: Donghyun Park
Author-Person: ppa611
Note: IFM
Number: 21755
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21755
File-URL: http://www.nber.org/papers/w21755.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman & Yothin Jinjarak & Jungsuk Kim & Donghyun Park, 2019. "Tax Revenue Trends in Latin America and Asia: A Comparative Analysis," Emerging Markets Finance and Trade, vol 55(2), pages 427-449.
Abstract: We take stock of and compare tax revenue trends in Asia and Latin America. The tax revenues to GDP ratios increased significantly in both regions in the 2000s, although they remain visibly below European levels. Our analysis portrays a complex picture of the tax collection challenges facing developing countries. Overall, there remains sizable heterogeneity in the revenue performance of developing countries, and across regions. While progress has been made, the gap between the advanced economies and developing countries suggests ample room for future fiscal developments, and for more disaggregated studies of the tax mobilization challenges facing developing countries in the aftermath of the global financial crisis.
Handle: RePEc:nbr:nberwo:21755
Template-Type: ReDIF-Paper 1.0
Title: Immigrants and Gender Roles: Assimilation vs. Culture
Classification-JEL: J13; J16; J22; J24; J61
Author-Name: Francine D. Blau
Author-Person: pbl16
Note: LS
Number: 21756
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21756
File-URL: http://www.nber.org/papers/w21756.pdf
File-Format: application/pdf
Publication-Status: published as Francine Blau, 2015. "Immigrants and gender roles: assimilation vs. culture," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-21, December.
Abstract: This paper examines evidence on the role of assimilation versus source country culture in influencing immigrant women’s behavior in the United States—looking both over time with immigrants’ residence in the United States and across immigrant generations. It focuses particularly on labor supply but, for the second generation, also examines fertility and education. We find considerable evidence that immigrant source country gender roles influence immigrant and second generation women’s behavior in the United States. This conclusion is robust to various efforts to rule out the effect of other unobservables and to distinguish the effect of culture from that of social capital. These results support a growing literature that suggests that culture matters for economic behavior. At the same time, the results suggest considerable evidence of assimilation of immigrants. Immigrant women narrow the labor supply gap with native-born women with time in the United States, and, while our results suggest an important role for intergenerational transmission, they also indicate considerable convergence of immigrants to native levels of schooling, fertility, and labor supply across generations.
Handle: RePEc:nbr:nberwo:21756
Template-Type: ReDIF-Paper 1.0
Title: Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach
Classification-JEL: H21; H22; H23; J2; J21; J23
Author-Name: Kory Kroft
Author-Person: pkr410
Author-Name: Kavan J. Kucko
Author-Name: Etienne Lehmann
Author-Person: ple98
Author-Name: Johannes F. Schmieder
Note: LS PE
Number: 21757
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21757
File-URL: http://www.nber.org/papers/w21757.pdf
File-Format: application/pdf
Publication-Status: published as Kory Kroft & Kavan Kucko & Etienne Lehmann & Johannes Schmieder, 2020. "Optimal Income Taxation with Unemployment and Wage Responses: A Sufficient Statistics Approach," American Economic Journal: Economic Policy, vol 12(1), pages 254-292.
Abstract: This paper reassesses whether the optimal income tax program features an Earned Income Tax Credit (EITC) or a Negative Income Tax (NIT) at the bottom of the income distribution, in the presence of unemployment and wage responses to taxation. The paper makes two key contributions. First, it derives a sufficient statistics optimal tax formula in a general model that incorporates unemployment and endogenous wages. This formula nests a broad variety of structures of the labor market, such as competitive models with fixed or flexible wages and models with matching frictions. Our results show that the sufficient statistics to be estimated are: the macro employment response with respect to taxation and the micro and macro participation responses with respect to taxation. We show that an EITC-like policy is optimal provided that the welfare weight on the working poor is larger than the ratio of the micro participation elasticity to the macro participation elasticity. The second contribution is to estimate the sufficient statistics that are inputs to the optimal tax formula using a standard quasi-experimental research design. We estimate these reduced-form parameters using policy variation in tax liabilities stemming from the U.S. tax and transfer system for over 20 years. Using our empirical estimates, we implement our sufficient statistics formula and show that the optimal tax at the bottom more closely resembles an NIT relative to the case where unemployment and wage responses are not taken into account.
Handle: RePEc:nbr:nberwo:21757
Template-Type: ReDIF-Paper 1.0
Title: An Experimental Study of Decentralized Link Formation with Competition
Classification-JEL: D03; D49; O17
Author-Name: Margherita Comola
Author-Name: Marcel Fafchamps
Author-Person: pfa2
Note: DEV
Number: 21758
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21758
File-URL: http://www.nber.org/papers/w21758.pdf
File-Format: application/pdf
Abstract: We design a laboratory experiment to investigate bilateral link formation in a setting where payoffs are pair-specific. Our link formation rule is decentralized and players can make link offers and counter-offers, as in a Beckerian marriage market. The game is designed in such a way that a stable equilibrium configuration exists and does not depend on conditions such as initial configuration or order of move. We test whether the theoretical equilibrium is obtained under experimental conditions, and which individual motivations and decision-making techniques lead players to depart from myopic best response. We find that players are remarkably good at attaining a stable equilibrium configuration, which happens in 86% of the games. Results show that complete information speeds up the game via self-censoring, and that sub-optimal choices are mostly driven by over-thinking behavior and reluctance to accept to link with players who have been disloyal earlier in the game.
Handle: RePEc:nbr:nberwo:21758
Template-Type: ReDIF-Paper 1.0
Title: Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets
Classification-JEL: D8; D82; G22; I11; I13
Author-Name: Benjamin R. Handel
Author-Name: Jonathan T. Kolstad
Author-Person: pko1088
Author-Name: Johannes Spinnewijn
Author-Person: psp199
Note: EH IO PE
Number: 21759
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21759
File-URL: http://www.nber.org/papers/w21759.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin R. Handel & Jonathan T. Kolstad & Johannes Spinnewijn, 2019. "Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets," The Review of Economics and Statistics, vol 101(2), pages 326-340.
Abstract: A large literature has analyzed pricing inefficiencies in health insurance markets due to adverse selection, typically assuming informed, active consumers on the demand side of the market. However, recent evidence suggests that many consumers have information frictions that lead to suboptimal health plan choices. As a result, policies such as information provision, plan recommendations, and smart defaults to improve consumer choices are being implemented in many applied contexts. In this paper we develop a general framework to study insurance market equilibrium and evaluate policy interventions in the presence of choice frictions. Friction-reducing policies can increase welfare by facilitating better matches between consumers and plans, but can decrease welfare by increasing the correlation between willingness-to-pay and costs, exacerbating adverse selection. We identify relationships between the underlying distributions of consumer (i) costs (ii) surplus from risk protection and (iii) choice frictions that determine whether friction-reducing policies will be on net welfare increasing or reducing. We extend the analysis to study how policies to improve consumer choices interact with the supply-side policy of risk-adjustment transfers and show that the effectiveness of the latter policy can have important implications for the effectiveness of the former. We implement the model empirically using proprietary data on insurance choices, utilization, and consumer information from a large firm. We leverage structural estimates from prior work with these data and highlight how the model's micro-foundations can be estimated in practice. In our specific setting, we find that friction-reducing policies exacerbate adverse selection, essentially leading to the market fully unraveling, and reduce welfare. Risk-adjustment transfers are complementary, substantially mitigating the negative impact of friction-reducing policies, but having little effect in their absence.
Handle: RePEc:nbr:nberwo:21759
Template-Type: ReDIF-Paper 1.0
Title: State Taxes and Spatial Misallocation
Classification-JEL: E6; F12; H71; R13
Author-Name: Pablo D. Fajgelbaum
Author-Name: Eduardo Morales
Author-Name: Juan Carlos Suárez Serrato
Author-Person: psu476
Author-Name: Owen M. Zidar
Author-Person: pzi93
Note: EFG IFM ITI PE PR
Number: 21760
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21760
File-URL: http://www.nber.org/papers/w21760.pdf
File-Format: application/pdf
Publication-Status: published as Pablo D Fajgelbaum & Eduardo Morales & Juan Carlos Suárez Serrato & Owen Zidar, 2019. "State Taxes and Spatial Misallocation," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 333-376.
Abstract: We study state taxes as a potential source of spatial misallocation in the United States. We build a spatial general equilibrium framework that incorporates salient features of the U.S. state tax system, and use changes in state tax rates between 1980 and 2010 to estimate the model parameters that determine how worker and firm location respond to changes in state taxes. We find that heterogeneity in state tax rates leads to aggregate welfare losses. In terms of consumption equivalent units, harmonizing state taxes increases worker welfare by 0.6 percent if government spending is held constant, and by 1.2 percent if government spending responds endogenously. Harmonization of state taxes within Census regions achieves most of these gains. We also use our model to study the general equilibrium effects of recently implemented and proposed tax reforms.
Handle: RePEc:nbr:nberwo:21760
Template-Type: ReDIF-Paper 1.0
Title: Divorce: What Does Learning Have to Do with It?
Classification-JEL: J12; J63; J64
Author-Name: Ioana Marinescu
Author-Person: pma336
Note: LS
Number: 21761
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21761
File-URL: http://www.nber.org/papers/w21761.pdf
File-Format: application/pdf
Publication-Status: published as Ioana Marinescu, 2016. "Divorce: What does learning have to do with it?," Labour Economics, vol 38(), pages 90-105.
Abstract: Learning about marriage quality has been proposed as a key mechanism for explaining how the probability of divorce evolves with marriage duration, and why people often cohabit before getting married. I develop four theoretical models of divorce, three of which include learning. I use data from the Survey of Income and Program Participation to test reduced form implications of these models. The data is inconsistent with models including a substantial amount of learning. On the other hand, the data is consistent with a model without any learning, but where marriage quality changes over time.
Handle: RePEc:nbr:nberwo:21761
Template-Type: ReDIF-Paper 1.0
Title: The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries
Classification-JEL: J22; J26
Author-Name: David Cesarini
Author-Name: Erik Lindqvist
Author-Person: pli309
Author-Name: Matthew J. Notowidigdo
Author-Person: pno182
Author-Name: Robert Östling
Author-Person: pst401
Note: LS
Number: 21762
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21762
File-URL: http://www.nber.org/papers/w21762.pdf
File-Format: application/pdf
Publication-Status: published as David Cesarini & Erik Lindqvist & Matthew J. Notowidigdo & Robert Östling, 2017. "The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries," American Economic Review, vol 107(12), pages 3917-3946.
Abstract: We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. We find winning a lottery prize modestly reduces labor earnings, with the reduction being immediate, persistent, and similar by age, education, and sex. A calibrated dynamic model of individual labor supply implies an average lifetime marginal propensity to earn out of unearned income of -0.11, and labor-supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.
Handle: RePEc:nbr:nberwo:21762
Template-Type: ReDIF-Paper 1.0
Title: When do Firms Go Green? Comparing Command and Control Regulations with Price Incentives in India
Classification-JEL: O14; O33; O44; Q4; Q52
Author-Name: Ann Harrison
Author-Person: pha441
Author-Name: Benjamin Hyman
Author-Person: phy29
Author-Name: Leslie Martin
Author-Person: pma2185
Author-Name: Shanthi Nataraj
Author-Person: pna467
Note: EEE ITI
Number: 21763
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21763
File-URL: http://www.nber.org/papers/w21763.pdf
File-Format: application/pdf
Abstract: There are two commonly accepted views about command-and-control (CAC) environmental regulation. First, CAC delivers environmental outcomes at very high cost. Second, in a developing country with weak regulatory institutions, CACs may not even yield environmental benefits: regulators can force firms to install pollution abatement equipment, but cannot ensure that they use it. We examine India's experience and find evidence that CAC policies achieved substantial environmental benefits at a relatively low cost. Constructing an establishment-level panel from 1998 to 2009, we find that the CAC regulations imposed by India's Supreme Court on 17 cities improved air quality with little effect on establishment productivity. We document a strong effect of deterred entry of high-polluting industries into regulated cities; however little effect on the overall level of manufacturing output, employment, or productivity in those cities. We also find sustained reductions in within-establishment coal use, with no evidence of leakage into other fuels. To benchmark our results, we use variation in coal prices to compare the CAC policies to price incentives. We show that CAC regulations were primarily effective at reducing coal consumption of large urban polluters, while a coal tax is likely to have a broader impact across all establishment types. Our estimated coal price elasticity suggests that a 15-30% excise tax would be needed to generate reductions in coal consumption equivalent to those produced by these CAC policies.
Handle: RePEc:nbr:nberwo:21763
Template-Type: ReDIF-Paper 1.0
Title: Wage Dispersion and Search Behavior: The Importance of Non-Wage Job Values
Classification-JEL: J31; J32; J64
Author-Name: Robert E. Hall
Author-Name: Andreas I. Mueller
Author-Person: pmu176
Note: EFG LS
Number: 21764
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21764
File-URL: http://www.nber.org/papers/w21764.pdf
File-Format: application/pdf
Publication-Status: published as Wage Dispersion and Search Behavior: The Importance of Non-Wage Job Values Robert E. Hall and Andreas I Mueller Journal of Political Economy 0 0:ja
Abstract: We use a rich new body of data on the experiences of unemployed jobseekers to determine the sources of wage dispersion and to create a search model consistent with the acceptance decisions the jobseekers made. Heterogeneity in non-wage job values or amenities among jobseekers and jobs is a central feature of our model. From the data and the model, we identify the distributions of four key variables: offered wages, offered non-wage job values, the value of the jobseeker's non-work alternative, and the jobseeker's personal productivity. We find that, conditional on personal productivity, the standard deviation of offered log-wages is moderate, at 0.24, whereas the dispersion of the non-wage component of offered job values is substantially larger, at 0.34. The resulting dispersion of offered job values is 0.38. We also find high dispersion of personal productivity, at 0.43.
Handle: RePEc:nbr:nberwo:21764
Template-Type: ReDIF-Paper 1.0
Title: Democratic Rulemaking
Classification-JEL: K0; K23
Author-Name: John M. de Figueiredo
Author-Name: Edward H. Stiglitz
Note: LE
Number: 21765
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21765
File-URL: http://www.nber.org/papers/w21765.pdf
File-Format: application/pdf
Publication-Status: published as de Figueiredo, John M., and Jed Stiglitz (2017). “Democratic Rulemaking,” in ed. Francesco Parisi, Oxford Handbook on Law and Economics, Chapter 3, Volume 3: 37-58.
Abstract: This paper examines to what extent agency rulemaking is democratic. It reviews theories of administrative rulemaking in light of two normative benchmarks: a “democratic” benchmark based on voter preferences, and a “republican” benchmark based on the preferences of elected representatives. It then evaluates how the empirical evidence lines up in light of these two approaches. The paper concludes with a discussion of avenues for future research.
Handle: RePEc:nbr:nberwo:21765
Template-Type: ReDIF-Paper 1.0
Title: Early Childhood Education
Classification-JEL: C93; I28; J13
Author-Name: Sneha Elango
Author-Name: Jorge Luis García
Author-Person: pga872
Author-Name: James J. Heckman
Author-Name: Andrés Hojman
Note: CH ED
Number: 21766
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21766
File-URL: http://www.nber.org/papers/w21766.pdf
File-Format: application/pdf
Publication-Status: published as Early Childhood Education, Sneha Elango, Jorge Luis García, James J. Heckman, Andrés Hojman. in Economics of Means-Tested Transfer Programs in the United States, Volume 2, Moffitt. 2016
Abstract: This paper organizes and synthesizes the literature on early childhood education and childcare. In it, we go beyond meta-analysis and reanalyze primary data sources in a common framework. We consider the evidence from means-tested demonstration programs, large-scale means-tested programs and universal programs without means testing. We discuss which programs are beneficial and whether they are cost-effective for certain populations. The evidence from high-quality demonstration programs targeted toward disadvantaged children shows beneficial effects. Returns exceed costs, even accounting for the deadweight loss of collecting taxes. When proper policy counterfactuals are constructed, Head Start has beneficial effects on disadvantaged children compared to home alternatives. Universal programs benefit disadvantaged children.
Handle: RePEc:nbr:nberwo:21766
Template-Type: ReDIF-Paper 1.0
Title: Climate Change and Long-Run Discount Rates: Evidence from Real Estate
Classification-JEL: G11; G12; R30
Author-Name: Stefano Giglio
Author-Person: pgi162
Author-Name: Matteo Maggiori
Author-Person: pma2176
Author-Name: Johannes Stroebel
Author-Name: Andreas Weber
Note: AP EEE EFG PE
Number: 21767
Creation-Date: 2015-11
Order-URL: http://www.nber.org/papers/w21767
File-URL: http://www.nber.org/papers/w21767.pdf
File-Format: application/pdf
Publication-Status: published as Stefano Giglio & Matteo Maggiori & Krishna Rao & Johannes Stroebel & Andreas Weber & Stijn Van Nieuwerburgh, 2021. "Climate Change and Long-Run Discount Rates: Evidence from Real Estate," The Review of Financial Studies, vol 34(8), pages 3527-3571.
Abstract: The optimal investment to mitigate climate change crucially depends on the discount rate used to evaluate the investment’s uncertain future benefits. The appropriate discount rate is a function of the horizon over which these benefits accrue and the riskiness of the investment. In this paper, we estimate the term structure of discount rates for an important risky asset class, real estate, up to the very long horizons relevant for investments in climate change abatement. We show that this term structure is steeply downward-sloping, reaching 2.6% at horizons beyond 100 years. We explore the implications of these new data within both a general asset pricing framework that decomposes risks and returns by horizon and a structural model calibrated to match a variety of asset classes. Our analysis demonstrates that applying average rates of return that are observed for traded assets to investments in climate change abatement is misleading. We also show that the discount rates for investments in climate change abatement that reduce aggregate risk, as in disaster-risk models, are bounded above by our estimated term structure for risky housing, and should be below 2.6% for long-run benefits. This upper bound rules out many discount rates suggested in the literature and used by policymakers. Our framework also distinguishes between the various mechanisms the environmental literature has proposed for generating downward-sloping discount rates.
Handle: RePEc:nbr:nberwo:21767
Template-Type: ReDIF-Paper 1.0
Title: Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades
Classification-JEL: F10; F11; F12; F13; F15; F17; F60; F62
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Robert C. Feenstra
Author-Person: pfe116
Author-Name: John Romalis
Author-Name: Alan M. Taylor
Author-Person: pta46
Note: ITI
Number: 21768
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21768
File-URL: http://www.nber.org/papers/w21768.pdf
File-Format: application/pdf
Abstract: We show in a multi-sector, heterogeneous-firm trade model that the effect of tariffs on entry, especially in the presence of production linkages, can reverse the traditional positive optimal tariff argument. We then use a new tariff dataset, and apply it to a 189-country, 15-sector version of our model, to quantify the trade, entry, and welfare effects of trade liberalization over the period 1990–2010. We find that the impact on firm entry was larger in Advanced relative to Emerging and Developing countries; that slightly more than three-quarters of the total gains from trade are a consequence of the reductions in MFN tariffs (the Uruguay Round), with two-thirds of the remainder due to preferential trade agreements and one third due to the hypothetical movement to free trade; and that free trade would bring gains for some Emerging and Developing countries, in particular. Ten economies in our sample – including China, Hong Kong, India, Israel, Vietnam, and five more remote countries – would have benefited from going beyond free trade to subsidizing their imports in 1990, since their optimal tariffs are negative.
Handle: RePEc:nbr:nberwo:21768
Template-Type: ReDIF-Paper 1.0
Title: Patent Rights, Innovation and Firm Exit
Classification-JEL: K41; L24; O31; O32; O34
Author-Name: Alberto Galasso
Author-Person: pga404
Author-Name: Mark Schankerman
Note: IO LE PR
Number: 21769
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21769
File-URL: http://www.nber.org/papers/w21769.pdf
File-Format: application/pdf
Publication-Status: published as Alberto Galasso & Mark Schankerman, 2018. "Patent rights, innovation, and firm exit," The RAND Journal of Economics, vol 49(1), pages 64-86.
Abstract: We study the causal impact of patent invalidation on subsequent innovation and exit by the patent holder. The analysis is based on patent litigation at the U.S. Court of Appeals for the Federal Circuit, and exploits the random allocation of judges to control for endogeneity of the judicial decision. Invalidation causes the patent holder to reduce subsequent patenting over a five-year window by 50 percent on average, but the effect is heterogeneous. The impact is large for small and medium-sized firms, particularly in technology fields where they face many large competitors, and for patents central to their technology portfolio. We find no significant effect for large firms. Invalidation also significantly increases the likelihood that small firms exit from patenting entirely.
Handle: RePEc:nbr:nberwo:21769
Template-Type: ReDIF-Paper 1.0
Title: Economic Gains for U.S. States from Educational Reform
Classification-JEL: I21; J24; O47
Author-Name: Eric A. Hanushek
Author-Person: pha97
Author-Name: Jens Ruhose
Author-Person: pru186
Author-Name: Ludger Woessmann
Author-Person: pwo29
Note: CH ED EFG LS PE
Number: 21770
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21770
File-URL: http://www.nber.org/papers/w21770.pdf
File-Format: application/pdf
Abstract: There is limited existing evidence justifying the economic case for state education policy. Using newly-developed measures of the human capital of each state that allow for internal migration and foreign immigration, we estimate growth regressions that incorporate worker skills. We find that educational achievement strongly predicts economic growth across U.S. states over the past four decades. Based on projections from our growth models, we show the enormous scope for state economic development through improving the quality of schools. While we consider the impact for each state of a range of educational reforms, an improvement that moves each state to the best-performing state would in the aggregate yield a present value of long-run economic gains of over four times current GDP.
Handle: RePEc:nbr:nberwo:21770
Template-Type: ReDIF-Paper 1.0
Title: Comparing Asset Pricing Models
Classification-JEL: G11; G12
Author-Name: Francisco Barillas
Author-Name: Jay Shanken
Author-Person: psh114
Note: AP
Number: 21771
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21771
File-URL: http://www.nber.org/papers/w21771.pdf
File-Format: application/pdf
Publication-Status: published as FRANCISCO BARILLAS & JAY SHANKEN, 2018. "Comparing Asset Pricing Models," The Journal of Finance, vol 73(2), pages 715-754.
Abstract: A Bayesian asset-pricing test is derived that is easily computed in closed-form from the standard F-statistic. Given a set of candidate traded factors, we develop a related test procedure that permits an analysis of model comparison, i.e., the computation of model probabilities for the collection of all possible pricing models that are based on subsets of the given factors. We find that the recent models of Hou, Xue and Zhang (2015a,b) and Fama and French (2015a,b) are both dominated by five and six-factor models that include a momentum factor, along with value and profitability factors that are updated monthly.
Handle: RePEc:nbr:nberwo:21771
Template-Type: ReDIF-Paper 1.0
Title: Explaining Consumption Excess Sensitivity with Near-Rationality: Evidence from Large Predetermined Payments
Classification-JEL: D12; D14; D91; E21; H31
Author-Name: Lorenz Kueng
Author-Person: pku506
Note: AP EFG LS ME PE
Number: 21772
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21772
File-URL: https://www.nber.org/papers/w21772
File-Format: application/pdf
Abstract: Using new transaction data I find that consumption is excessively sensitive to salient, predetermined, large and regular payments from the Alaska Permanent Fund, with a large average marginal propensity to consume (MPC) of 30% for nondurables and services. This excess sensitivity is very heterogeneous: The deviation from the standard consumption model is largest for households for whom the loss from failing to smooth consumption is smallest in terms of equivalent variation. The estimated MPCs are monotonically decreasing in the loss and increasing in income for households with sufficient liquidity. I show that the economically and statistically significant excess sensitivity is consistent with households following near-rational alternative plans. For macroeconomic policies, such as an economic stimulus program, these near-rational alternatives might represent the more relevant behavior than the standard consumption model.
Handle: RePEc:nbr:nberwo:21772
Template-Type: ReDIF-Paper 1.0
Title: Pareto Weights as Wedges in Two-Country Models
Classification-JEL: F31; F41
Author-Name: David Backus
Author-Person: pba242
Author-Name: Chase Coleman
Author-Name: Axelle Ferriere
Author-Person: pfe389
Author-Name: Spencer Lyon
Note: IFM
Number: 21773
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21773
File-URL: http://www.nber.org/papers/w21773.pdf
File-Format: application/pdf
Publication-Status: published as David Backus & Chase Coleman & Axelle Ferriere & Spencer Lyon, 2016. "Pareto weights as wedges in two-country models," Journal of Economic Dynamics and Control, .
Abstract: In models with recursive preferences, endogenous variation in Pareto weights would be interpreted as wedges from the perspective of a frictionless model with additive preferences. We describe the behavior of the (relative) Pareto weight in a two-country world and explore its interaction with consumption and the real exchange rate.
Handle: RePEc:nbr:nberwo:21773
Template-Type: ReDIF-Paper 1.0
Title: Obstfeld and Rogoff's International Macro Puzzles: A Quantitative Assessment
Classification-JEL: E3; F17; F4
Author-Name: Jonathan Eaton
Author-Person: pea5
Author-Name: Samuel S. Kortum
Author-Person: pko74
Author-Name: Brent Neiman
Author-Person: pne85
Note: EFG IFM ITI
Number: 21774
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21774
File-URL: http://www.nber.org/papers/w21774.pdf
File-Format: application/pdf
Publication-Status: published as Jonathan Eaton & Samuel Kortum & Brent Neiman, 2016. "Obstfeld and Rogoff's International Macro Puzzles: A Quantitative Assessment," Journal of Economic Dynamics and Control, .
Abstract: Obstfeld and Rogoff (2001) propose that trade frictions lie behind key puzzles in international macroeconomics. We take a dynamic multicountry model of international trade, production, and investment to data from 19 countries to assess this proposition quantitatively. Using the framework developed in Eaton, Kortum, Neiman, and Romalis (2016), we revisit the puzzles in a counterfactual world without trade frictions in manufactures. Removing these trade frictions goes a long way toward resolving a number of the puzzles: The dependence of domestic investment on domestic saving falls by half or disappears entirely, mitigating the Feldstein-Horioka (1980) puzzle. Changes in nominal GDPs in U.S. dollars become less variable across countries and line up with changes in real GDPs as much as with real exchange rates, mitigating the exchange rate disconnect puzzle. Less dramatically, changes in consumption become more correlated across countries, mitigating the consumption correlations puzzle and changes in real exchange rates become less variable across countries, mitigating the relative purchasing power parity puzzle.
Handle: RePEc:nbr:nberwo:21774
Template-Type: ReDIF-Paper 1.0
Title: Learning Entrepreneurship From Other Entrepreneurs?
Classification-JEL: J24; M13; R11
Author-Name: Luigi Guiso
Author-Person: pgu58
Author-Name: Luigi Pistaferri
Author-Person: ppi39
Author-Name: Fabiano Schivardi
Author-Person: psc82
Note: PR
Number: 21775
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21775
File-URL: http://www.nber.org/papers/w21775.pdf
File-Format: application/pdf
Publication-Status: published as Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2021. "Learning Entrepreneurship from Other Entrepreneurs?," Journal of Labor Economics, vol 39(1), pages 135-191.
Abstract: We document that individuals who grew up in areas with high density of firms are more likely, as adults, to become entrepreneurs, controlling for the density of firms in their current location. Conditional on becoming entrepreneurs, the same individuals are also more likely to be successful entrepreneurs, as measured by business income or firm productivity. Strikingly, firm density at entrepreneur’s young age is more important than current firm density for business performance. These results are not driven by better access to external finance or intergenerational occupation choices. They are instead consistent with entrepreneurial capabilities being at least partly learnable through social contacts. In keeping with this interpretation, we find that entrepreneurs who at the age of 18 lived in areas with a higher firm density tend to adopt better managerial practices (enhancing productivity) later in life.
Handle: RePEc:nbr:nberwo:21775
Template-Type: ReDIF-Paper 1.0
Title: Where Has All The Skewness Gone? The Decline In High-Growth (Young) Firms In The U.S.
Classification-JEL: E24; J63; L26
Author-Name: Ryan A. Decker
Author-Name: John Haltiwanger
Author-Person: pha231
Author-Name: Ron S. Jarmin
Author-Person: pja54
Author-Name: Javier Miranda
Author-Person: pmi185
Note: EFG LS PR
Number: 21776
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21776
File-URL: http://www.nber.org/papers/w21776.pdf
File-Format: application/pdf
Publication-Status: published as Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2016. "Where has all the skewness gone? The decline in high-growth (young) firms in the U.S.," European Economic Review, vol ().
Abstract: The pace of business dynamism and entrepreneurship in the U.S. has declined over recent decades. We show that the character of that decline changed around 2000. Since 2000 the decline in dynamism and entrepreneurship has been accompanied by a decline in high-growth young firms. Prior research has shown that the sustained contribution of business startups to job creation stems from a relatively small fraction of high-growth young firms. The presence of these high-growth young firms contributes to a highly (positively) skewed firm growth rate distribution. In 1999, a firm at the 90th percentile of the employment growth rate distribution grew about 31 percent faster than the median firm. Moreover, the 90-50 differential was 16 percent larger than the 50-10 differential reflecting the positive skewness of the employment growth rate distribution. We show that the shape of the firm employment growth distribution changes substantially in the post-2000 period. By 2007, the 90-50 differential was only 4 percent larger than the 50-10, and it continued to exhibit a trend decline through 2011. The overall decline reflects a sharp drop in the 90th percentile of the growth rate distribution accounted for by the declining share of young firms and the declining propensity for young firms to be high-growth firms.
Handle: RePEc:nbr:nberwo:21776
Template-Type: ReDIF-Paper 1.0
Title: Stages of Diversification: France, 1836-1938
Classification-JEL: F62; F63; N23; N73
Author-Name: Stéphane Becuwe
Author-Person: pbe759
Author-Name: Bertrand Blancheton
Author-Person: pbl63
Author-Name: Christopher M. Meissner
Author-Person: pme45
Note: DAE
Number: 21777
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21777
File-URL: http://www.nber.org/papers/w21777.pdf
File-Format: application/pdf
Publication-Status: published as Stéphane Becuwe & Bertrand Blancheton & Christopher M Meissner, 2018. "Stages of diversification: France, 1836–1938," European Review of Economic History, Oxford University Press, vol. 22(4), pages 430-461.
Abstract: A large literature has documented an association between economic growth and export diversification. We study this question in France between 1836 and 1938. The period witnessed the onset of modern economic growth and sharp changes in the level of international competition. We use a new long term database on French foreign trade at a high level of disaggregation. At the dawn of the first Globalization, France appears to have specialized along Ricardian lines, exporting a handful of textile products in large quantities. There is a decrease in specialization from 1860 to World War I along the lines of modern studies. Changes in trade costs along with economic growth help explain the evolution of France’s comparative advantage. The decline of export concentration is associated with a chronic deficit in the balance of trade during the Belle Époque and the major part of the interwar period particularly after 1927.
Handle: RePEc:nbr:nberwo:21777
Template-Type: ReDIF-Paper 1.0
Title: Big Data and Big Cities: The Promises and Limitations of Improved Measures of Urban Life
Classification-JEL: C18; C55; C80; C83; R10; R11; R23
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Scott Duke Kominers
Author-Person: pko394
Author-Name: Michael Luca
Author-Name: Nikhil Naik
Note: LE POL
Number: 21778
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21778
File-URL: http://www.nber.org/papers/w21778.pdf
File-Format: application/pdf
Publication-Status: published as Edward L. Glaeser & Scott Duke Kominers & Michael Luca & Nikhil Naik, 2016. "BIG DATA AND BIG CITIES: THE PROMISES AND LIMITATIONS OF IMPROVED MEASURES OF URBAN LIFE," Economic Inquiry, .
Abstract: New, “big” data sources allow measurement of city characteristics and outcome variables higher frequencies and finer geographic scales than ever before. However, big data will not solve large urban social science questions on its own. Big data has the most value for the study of cities when it allows measurement of the previously opaque, or when it can be coupled with exogenous shocks to people or place. We describe a number of new urban data sources and illustrate how they can be used to improve the study and function of cities. We first show how Google Street View images can be used to predict income in New York City, suggesting that similar image data can be used to map wealth and poverty in previously unmeasured areas of the developing world. We then discuss how survey techniques can be improved to better measure willingness to pay for urban amenities. Finally, we explain how Internet data is being used to improve the quality of city services.
Handle: RePEc:nbr:nberwo:21778
Template-Type: ReDIF-Paper 1.0
Title: Working through the Distribution: Money in the Short and Long Run
Classification-JEL: E0; E4; E52
Author-Name: Guillaume Rocheteau
Author-Person: pro264
Author-Name: Pierre-Olivier Weill
Author-Person: pwe79
Author-Name: Tsz-Nga Wong
Author-Person: pwo181
Note: EFG ME
Number: 21779
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21779
File-URL: http://www.nber.org/papers/w21779.pdf
File-Format: application/pdf
Abstract: We construct a tractable model of monetary exchange with search and bargaining that features a non- degenerate distribution of money holdings in which one can study the short-run and long-run effects of changes in the money supply. While money is neutral in the long run, a one-time money injection in a centralized market with flexible prices generates an increase in aggregate real balances in the short run, a decrease in the rate of return of money, and a redistribution of consumption levels across agents. The price level in the short run varies in a non-monotonic fashion with the size of the money injection, e.g., small injections can lead to short-run deflation while large injections generate inflation. We extend our model to include employment risk and show that repeated money injections can raise output and welfare when unemployment is high.
Handle: RePEc:nbr:nberwo:21779
Template-Type: ReDIF-Paper 1.0
Title: Listen to your Doctor, or else!: Medication Under-use and Overuse and Long-term Health Outcomes of Danish Diabetes Patients
Classification-JEL: I1; O33
Author-Name: Gisela Hostenkamp
Author-Name: Frank R. Lichtenberg
Author-Person: pli76
Note: EH
Number: 21780
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21780
File-URL: http://www.nber.org/papers/w21780.pdf
File-Format: application/pdf
Abstract: We use Danish diabetes registry and health insurance data to analyze the extent, consequences, and determinants of under-use and overuse of oral anti-diabetic drugs. Less than half of patients consume the appropriate amount of medication--between 90% and 110% of the amount prescribed by their doctors. The life expectancy of patients consuming the appropriate amount is 2.5 years greater than that of patients consuming less than 70% of the prescribed amount, and 3.2 years greater than that of patients consuming more than 130% of the prescribed amount, controlling for time since diagnosis, insulin dependence, comorbidities, age, gender and education. Patients consuming the appropriate amount are also less likely to be hospitalized than under- or over-users. Pharmaceutical innovation appears to have reduced medication under-use and overuse: patients using newer drugs are significantly more likely to consume the appropriate amount, controlling for socioeconomic factors, average number of pills and average daily out-of-pocket costs. Defined Daily Doses published by the World Health Organization substantially overstate the appropriate level of consumption of these medications. Patients who don’t adhere to recommended medication regimens may also disregard other physician instructions. Medication under-use and overuse could easily be monitored to identify patients at risk and enact interventions.
Handle: RePEc:nbr:nberwo:21780
Template-Type: ReDIF-Paper 1.0
Title: Improving College Access in the United States: Barriers and Policy Responses
Classification-JEL: I22; I23; I24
Author-Name: Lindsay C. Page
Author-Name: Judith Scott-Clayton
Note: ED
Number: 21781
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21781
File-URL: http://www.nber.org/papers/w21781.pdf
File-Format: application/pdf
Publication-Status: published as Lindsay C. Page & Judith Scott-Clayton, 2016. "Improving college access in the United States: Barriers and policy responses," Economics of Education Review, vol 51, pages 4-22.
Abstract: Socioeconomic gaps in college enrollment and attainment have widened over time, despite increasing returns to postsecondary education and significant policy efforts to improve access. We describe the barriers that students face during the transition to college and review the evidence on potential policy solutions. We focus primarily on research that examines causal relationships using experimental or quasi-experimental methods, though we draw upon descriptive evidence to provide context. Our review is distinctive in three respects. First, in addition to the literature on financial aid, we examine the evidence on informational and behavioral interventions, academic programs, and affirmative action policies intended to improve college access. Second, we incorporate a wealth of recent research not included in prior reviews. Finally, we conceptualize college access broadly, as including not just whether but also where students attend and whether they have access to college-level courses. We conclude with a discussion of implications for policy and research.
Handle: RePEc:nbr:nberwo:21781
Template-Type: ReDIF-Paper 1.0
Title: The GATT's Starting Point: Tariff Levels circa 1947
Classification-JEL: F13
Author-Name: Chad P. Bown
Author-Name: Douglas A. Irwin
Author-Person: pir25
Note: DEV ITI
Number: 21782
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21782
File-URL: http://www.nber.org/papers/w21782.pdf
File-Format: application/pdf
Abstract: How high were import tariffs when GATT participants began negotiations to reduce them in 1947? Establishing this starting point is key to determining how successful the GATT has been in bringing down trade barriers. If the average tariff level was about 40 percent, as commonly reported, the implied early tariff reductions were substantial, but this number has never been verified. This paper examines the evidence on tariff levels in the late 1940s and early 1950s and finds that the average tariff level going into the first Geneva Round of 1947 was about 22 percent. We also find that tariffs fell by relatively more in the late 1940s and early 1950s for a core group of GATT participants (the United States, United Kingdom, Canada and Australia) than they did for many other important countries, including the set of other (non-core) GATT participants.
Handle: RePEc:nbr:nberwo:21782
Template-Type: ReDIF-Paper 1.0
Title: Externalities and Benefit Design in Health Insurance
Classification-JEL: I13; L2
Author-Name: Amanda Starc
Author-Name: Robert J. Town
Author-Person: pto430
Note: EH IO
Number: 21783
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21783
File-URL: http://www.nber.org/papers/w21783.pdf
File-Format: application/pdf
Publication-Status: published as Amanda Starc & Robert J Town, 2020. "Externalities and Benefit Design in Health Insurance," The Review of Economic Studies, vol 87(6), pages 2827-2858.
Abstract: Insurance plan design has important implications for consumer welfare. In this paper, we model insurance design in the Medicare prescription drug coverage market and show that strategic private insurer incentives impose a fiscal externality on the traditional Medicare program. We document that plans covering medical expenses have more generous drug coverage than plans that are only responsible for prescription drug spending, which translates into higher drug utilization by enrollees. The effect is driven by drugs that reduce medical expenditure and treat chronic conditions. Our equilibrium model of plan design endogenizes plan characteristics and accounts for selection; the model estimates confirm that differential incentives to internalize medical care offsets can explain disparities across plans. Counterfactuals show that strategic insurer incentives are as important as selection in determining endogenous plan characteristics.
Handle: RePEc:nbr:nberwo:21783
Template-Type: ReDIF-Paper 1.0
Title: Short-Term Pain for Long-Term Gain: Market Deregulation and Monetary Policy in Small Open Economies
Classification-JEL: E24; E32; E52; F41; J64; L51
Author-Name: Matteo Cacciatore
Author-Person: pca950
Author-Name: Romain Duval
Author-Person: pdu64
Author-Name: Giuseppe Fiori
Author-Person: pfi91
Author-Name: Fabio Ghironi
Author-Person: pgh2
Note: EFG IFM ME
Number: 21784
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21784
File-URL: http://www.nber.org/papers/w21784.pdf
File-Format: application/pdf
Publication-Status: published as Matteo Cacciatore & Romain Duval & Giuseppe Fiori & Fabio Ghironi, 2016. "Short-term pain for long-term gain: market deregulation and monetary policy in small open economies," Journal of International Money and Finance, vol ().
Abstract: This paper explores the effects of labor and product market reforms in a New Keynesian, small open economy model with labor market frictions and endogenous producer entry. We show that it takes time for reforms to pay off, typically at least a couple of years. This is partly because the benefits materialize through firm entry and increased hiring, both of which are gradual processes, while any reform-driven layoffs are immediate. Some reforms—such as reductions in employment protection—increase unemployment temporarily. Implementing a broad package of labor and product market reforms minimizes transition costs. Importantly, reforms do not have noticeable deflationary effects, suggesting that the inability of monetary policy to deliver large interest rate cuts in their aftermath—either because of the zero bound on policy rates or because of membership in a monetary union—may not be a relevant obstacle to reform. Alternative simple monetary policy rules do not have a large effect on transition costs.
Handle: RePEc:nbr:nberwo:21784
Template-Type: ReDIF-Paper 1.0
Title: Colonial Virginia’s Paper Money Regime, 1755-1774: a Forensic Accounting Reconstruction of the Data
Classification-JEL: C82; E51; N11
Author-Name: Farley Grubb
Author-Person: pgr272
Note: DAE
Number: 21785
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21785
File-URL: http://www.nber.org/papers/w21785.pdf
File-Format: application/pdf
Publication-Status: published as Farley Grubb (2017) Colonial Virginia's paper money regime, 1755–74: A forensic accounting reconstruction of the data, Historical Methods: A Journal of Quantitative and Interdisciplinary History, 50:2, 96-112, DOI: 10.1080/01615440.2016.1256241
Abstract: I reconstruct the data on Virginia’s paper money regime using forensic accounting techniques. I correct the existing data on the amounts authorized and outstanding. In addition, I reconstruct yearly data on previously unknown aspects of Virginia’s paper money regime, including printings, net new emissions, redemptions and removals, denominational structures, expected tax revenues, and specie accumulating in the treasury for paper money redemption. These new data form the foundation for narratives written on the social, economic, and political history of Virginia, as well as for testing models of colonial paper money performance.
Handle: RePEc:nbr:nberwo:21785
Template-Type: ReDIF-Paper 1.0
Title: Forbearance by Contract: How Building and Loans Mitigated the Mortgage Crisis of the 1930s
Classification-JEL: G23; N22; R31
Author-Name: Sebastián Fleitas
Author-Person: pfl83
Author-Name: Price Fishback
Author-Person: pfi13
Author-Name: Kenneth Snowden
Author-Person: psn37
Note: DAE
Number: 21786
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21786
File-URL: http://www.nber.org/papers/w21786.pdf
File-Format: application/pdf
Abstract: During the Great Depression, Building and Loans (B&Ls), the leading home lenders, had a structure that mitigated the crisis. Borrowers were owners of the B&L and dissolution of the institution required a two-thirds majority vote. Using panel data from New Jersey in the 1930s, we find that this voting rule delayed dissolution by about one year. The year delay allowed one-fourth of the borrowers in the at-risk B&L to pay off their loans, but nonborrowers lost share value. The net loss was roughly -0.67 percent of the value of all New Jersey B&L assets in the mid-1930s.
Handle: RePEc:nbr:nberwo:21786
Template-Type: ReDIF-Paper 1.0
Title: Air Pollution and Criminal Activity: Evidence from Chicago Microdata
Classification-JEL: K42; Q53
Author-Name: Evan Herrnstadt
Author-Name: Erich Muehlegger
Author-Person: pmu479
Note: EEE LE PE
Number: 21787
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21787
File-URL: http://www.nber.org/papers/w21787.pdf
File-Format: application/pdf
Abstract: A large and growing literature documents the adverse impacts of pollution on health, productivity, educational attainment and socioeconomic outcomes. This paper provides the first quasi-experimental evidence that air pollution causally affects criminal activity. We exploit detailed location data on over two million serious crimes reported to the Chicago police department over a twelve-year period. We identify the causal effect of pollution on criminal activity by comparing crime on opposite sides of major interstates on days when the wind blows orthogonally the direction of the interstate and find that violent crime is 2.2 percent higher on the downwind side. Consistent with evidence from psychology on the relationship between pollution and aggression, the effect is unique to violent crimes – we find no effect of pollution on the commission of property crime.
Handle: RePEc:nbr:nberwo:21787
Template-Type: ReDIF-Paper 1.0
Title: Does Science Advance One Funeral at a Time?
Classification-JEL: I23; O31; O33
Author-Name: Pierre Azoulay
Author-Name: Christian Fons-Rosen
Author-Person: pfo194
Author-Name: Joshua S. Graff Zivin
Author-Person: pgr314
Note: PR
Number: 21788
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21788
File-URL: http://www.nber.org/papers/w21788.pdf
File-Format: application/pdf
Publication-Status: published as Pierre Azoulay & Christian Fons-Rosen & Joshua S. Graff Zivin, 2019. "Does Science Advance One Funeral at a Time?," American Economic Review, vol 109(8), pages 2889-2920.
Abstract: We study the extent to which eminent scientists shape the vitality of their areas of scientific inquiry by examining entry rates into the subfields of 452 academic life scientists who pass away prematurely. Consistent with previous research, the flow of articles by collaborators into affected fields decreases precipitously after the death of a star scientist. In contrast, we find that the flow of articles by non-collaborators increases by 8.6% on average. These additional contributions are disproportionately likely to be highly cited. They are also more likely to be authored by scientists who were not previously active in the deceased superstar's field. Intellectual, social, and resource barriers all impede entry, with outsiders only entering subfields that offer a less hostile landscape for the support and acceptance of “foreign” ideas. Overall, our results suggest that once in control of the commanding heights of their fields, star scientists tend to hold on to their exalted position a bit too long.
Handle: RePEc:nbr:nberwo:21788
Template-Type: ReDIF-Paper 1.0
Title: Voter Preferences and Political Change: Evidence from Shale Booms
Classification-JEL: P16
Author-Name: Viktar Fedaseyeu
Author-Person: pfe478
Author-Name: Erik Gilje
Author-Name: Philip E. Strahan
Note: POL
Number: 21789
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21789
File-URL: http://www.nber.org/papers/w21789.pdf
File-Format: application/pdf
Abstract: Local interests change sharply after the energy booms that began in 2003, when hydraulic fracturing spurred extraction of formerly uneconomic oil and gas reserves. Support for conservative interests rises and Republican political candidates gain votes after booms, leading to a near doubling in the probability of a change in incumbency. All of this change occurs at the expense of Democrats. Voting records of U.S. House members from boom districts become sharply more conservative across a wide range of issues, including issues unrelated to energy policy. At the level of the individual, marginal candidates skew their voting behavior somewhat toward more conservative causes, but generally not enough to maintain power. Thus, even when the stakes are high and politicians risk losing power, ideology trumps ambition.
Handle: RePEc:nbr:nberwo:21789
Template-Type: ReDIF-Paper 1.0
Title: Menthol Cigarette Advertising and Cigarette Demand
Classification-JEL: I12
Author-Name: Donald Kenkel
Author-Person: pke44
Author-Name: Alan Mathios
Author-Person: pma2278
Author-Name: Hua Wang
Note: EH
Number: 21790
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21790
File-URL: http://www.nber.org/papers/w21790.pdf
File-Format: application/pdf
Publication-Status: published as Advertising and Health: A Case Study of Menthol Cigarette Advertising and Cigarette Demand Donald Kenkel , Alan Mathios , and Hua Wang American Journal of Health Economics 0 0:0, 1-24
Abstract: The FDA is considering using its regulatory authority over the tobacco industry to promote public health by restricting the advertising of menthol cigarettes. In this paper we contribute new empirical evidence on the effects of magazine advertisements for menthol cigarettes on cigarette demand. Unlike previous research on cigarette advertising and demand, we use individual-level data and a measure of advertising exposure based on each consumer’s magazine-reading habits. These data allow us to control for individual heterogeneity that influences both advertising exposure and cigarette demand. We exploit quasi-experimental variation in advertising exposure in the 2000s created by sharply different supply-side variation in menthol and non-menthol advertising. We examine the importance of controlling for heterogeneity by estimating simple models relating advertising exposure to behavior and then adding specifications that take advantage of the richness of our individual-level data. We examine advertising effects on multiple margins of cigarette demand. Our empirical results do not provide any evidence that menthol advertising in magazines affects cigarette demand at various margins: the probability of menthol use; smoking participation; the number of cigarettes smoked per day; the probability of a past-year quit attempt; and anti-smoking attitudes among teens.
Handle: RePEc:nbr:nberwo:21790
Template-Type: ReDIF-Paper 1.0
Title: A New Dilemma: Capital Controls and Monetary Policy in Sudden Stop Economies
Classification-JEL: E44; E58; F38; F41
Author-Name: Michael B. Devereux
Author-Person: pde32
Author-Name: Eric R. Young
Author-Person: pyo3
Author-Name: Changhua Yu
Author-Person: pyu151
Note: IFM
Number: 21791
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21791
File-URL: http://www.nber.org/papers/w21791.pdf
File-Format: application/pdf
Abstract: The dangers of high capital flow volatility and sudden stops have led economists to promote the use of capital controls as an addition to monetary policy in emerging market economies. This paper studies the benefits of capital controls and monetary policy in an open economy with financial frictions, nominal rigidities, and sudden stops. We focus on a time-consistent policy equilibrium. We find that during a crisis, an optimal monetary policy should sharply diverge from price stability. Without commitment, policymakers will also tax capital inflows in a crisis. But this is not optimal from an ex-ante social welfare perspective. An outcome without capital inflow taxes, using optimal monetary policy alone to respond to crises, is superior in welfare terms, but not time-consistent. If policy commitment were in place, capital inflows would be subsidized during crises. We also show that an optimal policy will never involve macro-prudential capital inflow taxes as a precaution against the risk of future crises (whether or not commitment is available).
Handle: RePEc:nbr:nberwo:21791
Template-Type: ReDIF-Paper 1.0
Title: Controlling for the Compromise Effect Debiases Estimates of Risk Preference Parameters
Classification-JEL: B49; D03; D14; D83; G11
Author-Name: Jonathan P. Beauchamp
Author-Name: Daniel J. Benjamin
Author-Person: pbe959
Author-Name: Christopher F. Chabris
Author-Name: David I. Laibson
Author-Person: pla164
Note: AG
Number: 21792
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21792
File-URL: http://www.nber.org/papers/w21792.pdf
File-Format: application/pdf
Abstract: The compromise effect arises when options near the "middle" of a choice set are more appealing. The compromise effect poses conceptual and practical problems for economic research: by influencing choices, it distorts revealed preferences, biasing researchers' inferences about deep (i.e., domain general) preferences. We propose and estimate an econometric model that disentangles and identifies both deep preferences and the context-dependent compromise effect. We demonstrate our method using data from an experiment with 550 participants who made choices over lotteries from multiple price lists. Following prior work, we manipulate the compromise effect by varying the middle options of each multiple price list and then estimate risk preferences without modelling the compromise effect. These naïve parameter estimates are not robust: they change as the compromise effect is manipulated. To eliminate this bias, we incorporate the compromise effect directly into our econometric model. We show that this method generates robust estimates of risk preference parameters that are no longer sensitive to compromise-effect manipulations. This method can be applied to other settings that exhibit the compromise effect.
Handle: RePEc:nbr:nberwo:21792
Template-Type: ReDIF-Paper 1.0
Title: International Coordination and Precautionary Policies
Classification-JEL: F36; F41; F42
Author-Name: Joshua Aizenman
Author-Person: pai8
Note: IFM
Number: 21793
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21793
File-URL: http://www.nber.org/papers/w21793.pdf
File-Format: application/pdf
Publication-Status: published as Joshua Aizenman, 2016. "International Coordination and Precautionary Policies," International Economic Journal, vol 30(3), pages 379-391.
Abstract: This paper highlights the rare conditions leading to international cooperation, and the reasons why eliciting this cooperation may be beneficial in preventing adverse tail shocks from spiraling into global depressions. In normal times, deeper macro cooperation among countries is associated with welfare gains akin to Harberger’s second-order magnitude triangle, making the odds of cooperation low. When bad tail events induce imminent and correlated threats of destabilizing financial markets, the perceived losses have a first-order magnitude of terminating the total Marshalian surpluses. The apprehension of these losses in times of peril may elicit rare and beneficial macro cooperation. We close the paper by overviewing the obstacles preventing cooperation, and the proliferation of precautionary policies of emerging market economies as a second-best outcome of limited cooperation.
Handle: RePEc:nbr:nberwo:21793
Template-Type: ReDIF-Paper 1.0
Title: Urban Networks: Connecting Markets, People, and Ideas
Classification-JEL: F15; O18; R10; R58
Author-Name: Edward L. Glaeser
Author-Person: pgl9
Author-Name: Giacomo A. M. Ponzetto
Author-Person: ppo323
Author-Name: Yimei Zou
Note: EFG ITI PE PR
Number: 21794
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21794
File-URL: http://www.nber.org/papers/w21794.pdf
File-Format: application/pdf
Publication-Status: published as Evert Meijers & Martijn Burger & Edward L. Glaeser & Giacomo A. M. Ponzetto & Yimei Zou, 2016. "Urban networks: Connecting markets, people, and ideas," Papers in Regional Science, Wiley Blackwell, vol. 95(1), pages 17-59, 03.
Abstract: Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe’s mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three primary factors determine the trade-off between networks and big cities: local returns to scale in innovation, the elasticity of housing supply, and the importance of local amenities. Even if there are global increasing returns, the returns to local scale in innovation may be decreasing, and that makes networks more appealing than mega-cities. Inelastic housing supply makes it harder to supply more space in dense confines, which perhaps explains why networks are more popular in regulated Europe than in the American Sunbelt. Larger cities can dominate networks because of amenities, as long as the benefits of scale overwhelm the downsides of density. In our framework, the skilled are more likely to prefer mega-cities than the less skilled, and the long-run benefits of either mega-cities or networks may be quite different from the short-run benefits.
Handle: RePEc:nbr:nberwo:21794
Template-Type: ReDIF-Paper 1.0
Title: In Search of Ideas: Technological Innovation and Executive Pay Inequality
Classification-JEL: E22; G10; G30; J24; J3; M52
Author-Name: Carola Frydman
Author-Person: pfr240
Author-Name: Dimitris Papanikolaou
Author-Person: ppa463
Note: AP CF EFG PR
Number: 21795
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21795
File-URL: http://www.nber.org/papers/w21795.pdf
File-Format: application/pdf
Publication-Status: published as Carola Frydman & Dimitris Papanikolaou, 2018. "In search of ideas: Technological innovation and executive pay inequality," Journal of Financial Economics, .
Abstract: We develop a general equilibrium model that delivers realistic fluctuations in both the level as well as the dispersion in executive pay as a result of changes in the technology frontier. Our model recognizes that executives add value to the firm not only by participating in production decisions, but also by identifying new investment opportunities. The economic value of these two distinct components of the executive's job varies with the state of the economy. Improvements in technology that are specific to new vintages of capital raise the skill price of discovering new growth prospects -- and thus raise the compensation of executives relative to workers. If most of the dispersion in managerial skill lies in the ability to find new projects, dispersion in executive pay will also rise. Our model delivers testable predictions about the relation between executive pay and growth opportunities that are quantitatively consistent with the data.
Handle: RePEc:nbr:nberwo:21795
Template-Type: ReDIF-Paper 1.0
Title: Money and Output: Friedman and Schwartz Revisited
Classification-JEL: E31; E32; E51; E52
Author-Name: Michael T. Belongia
Author-Name: Peter N. Ireland
Author-Person: pir1
Note: ME
Number: 21796
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21796
File-URL: http://www.nber.org/papers/w21796.pdf
File-Format: application/pdf
Publication-Status: published as MICHAEL T. BELONGIA & PETER N. IRELAND, 2016. "Money and Output: Friedman and Schwartz Revisited," Journal of Money, Credit and Banking, vol 48(6), pages 1223-1266.
Abstract: More than fifty years ago, Friedman and Schwartz examined historical data for the United States and found evidence of pro-cyclical movements in the money stock, which led corresponding movements in output. We find similar correlations in more recent data; these appear most clearly when Divisia monetary aggregates are used in place of the Federal Reserve’s official, simple-sum measures. When we use information in Divisia money to estimate a structural vector autoregression, identified monetary policy shocks appear to have large and persistent effects on output and prices, with a lag that has lengthened considerably since the early 1980s.
Handle: RePEc:nbr:nberwo:21796
Template-Type: ReDIF-Paper 1.0
Title: Inferring Risk Perceptions and Preferences using Choice from Insurance Menus: Theory and Evidence
Classification-JEL: D8; I13
Author-Name: Keith Marzilli Ericson
Author-Name: Philipp Kircher
Author-Person: pki184
Author-Name: Johannes Spinnewijn
Author-Person: psp199
Author-Name: Amanda Starc
Note: EH IO PE
Number: 21797
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21797
File-URL: http://www.nber.org/papers/w21797.pdf
File-Format: application/pdf
Publication-Status: published as Keith Marzilli Ericson & Philipp Kircher & Johannes Spinnewijn & Amanda Starc, 2021. "Inferring Risk Perceptions and Preferences Using Choice from Insurance Menus: Theory and Evidence," The Economic Journal, vol 131(634), pages 713-744.
Abstract: Demand for insurance can be driven by high risk aversion or high risk. We show how to separately identify risk preferences and risk types using only choices from menus of insurance plans. Our revealed preference approach does not rely on rational expectations, nor does it require access to claims data. We show what can be learned non-parametrically from variation in insurance plans, offered separately to random cross-sections or offered as part of the same menu to one cross-section. We prove that our approach allows for full identification in the textbook model with binary risks and extend our results to continuous risks. We illustrate our approach using the Massachusetts Health Insurance Exchange, where choices provide informative bounds on the type distributions, especially for risks, but do not allow us to reject homogeneity in preferences.
Handle: RePEc:nbr:nberwo:21797
Template-Type: ReDIF-Paper 1.0
Title: The Evolution of Culture and Institutions: Evidence from the Kuba Kingdom
Classification-JEL: D03; N47
Author-Name: Sara Lowes
Author-Person: plo464
Author-Name: Nathan Nunn
Author-Person: pnu17
Author-Name: James A. Robinson
Author-Person: pro179
Author-Name: Jonathan Weigel
Note: DAE DEV POL
Number: 21798
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21798
File-URL: http://www.nber.org/papers/w21798.pdf
File-Format: application/pdf
Publication-Status: published as Sara Lowes & Nathan Nunn & James A. Robinson & Jonathan L. Weigel, 2017. "The Evolution of Culture and Institutions: Evidence From the Kuba Kingdom," Econometrica, Econometric Society, vol. 85, pages 1065-1091, July.
Abstract: We use variation in historical state centralization to examine the impact of institutions on cultural norms. The Kuba Kingdom, established in Central Africa in the early 17th century by King Shyaam, had more developed state institutions than the other independent villages and chieftaincies in the region. It had an unwritten constitution, separation of political powers, a judicial system with courts and juries, a police force and military, taxation, and significant public goods provision. Comparing individuals from the Kuba Kingdom to those from just outside the Kingdom, we find that centralized formal institutions are associated with weaker norms of rule-following and a greater propensity to cheat for material gain.
Handle: RePEc:nbr:nberwo:21798
Template-Type: ReDIF-Paper 1.0
Title: A History of U.S. Debt Limits
Classification-JEL: E6; H6; N21; N41
Author-Name: George J. Hall
Author-Person: pha118
Author-Name: Thomas J. Sargent
Author-Person: psa83
Note: DAE EFG ME POL
Number: 21799
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21799
File-URL: http://www.nber.org/papers/w21799.pdf
File-Format: application/pdf
Publication-Status: published as Brief history of US debt limits before 1939 George J. Hall, Thomas J. Sargent Proceedings of the National Academy of Sciences Mar 2018, 115 (12) 2942-2945; DOI: 10.1073/pnas.1719687115
Abstract: Congress first imposed an aggregate debt limit in 1939 when it delegated decisions about designing US debt instruments to the Treasury. Before World War I, Congress designed each bond and specified a maximum amount of each bond that the Treasury could issue. It usually specified purposes for which proceeds could be spent. We construct and interpret a Federal debt limit before 1939.
Handle: RePEc:nbr:nberwo:21799
Template-Type: ReDIF-Paper 1.0
Title: Specialization in Bank Lending: Evidence from Exporting Firms
Classification-JEL: F14; G21
Author-Name: Daniel Paravisini
Author-Name: Veronica Rappoport
Author-Person: pra565
Author-Name: Philipp Schnabl
Author-Person: psc789
Note: CF ITI
Number: 21800
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21800
File-URL: http://www.nber.org/papers/w21800.pdf
File-Format: application/pdf
Publication-Status: published as DANIEL PARAVISINI & VERONICA RAPPOPORT & PHILIPP SCHNABL, 2023. "Specialization in Bank Lending: Evidence from Exporting Firms," The Journal of Finance, vol 78(4), pages 2049-2085.
Abstract: We develop an empirical approach for identifying specialization in bank lending using granular data on borrower activities. We illustrate the approach by characterizing bank specialization by export market, combining bank, loan, and export data for all firms in Peru. We find that all banks specialize in at least one export market, that firms take the pattern of bank specialization into account when selecting their lending banks, and that credit supply shocks disproportionately affect a firm’s exports to markets where the lender specializes in. Thus, bank specialization makes credit difficult to substitute, which has consequences for competition in credit markets and the transmission of credit shocks to the real economy.
Handle: RePEc:nbr:nberwo:21800
Template-Type: ReDIF-Paper 1.0
Title: The Labor Market Effects of a Refugee Wave: Applying the Synthetic Control Method to the Mariel Boatlift
Classification-JEL: J3; J61
Author-Name: Giovanni Peri
Author-Person: ppe210
Author-Name: Vasil Yasenov
Note: ITI LS
Number: 21801
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21801
File-URL: http://www.nber.org/papers/w21801.pdf
File-Format: application/pdf
Publication-Status: published as Giovanni Peri & Vasil Yasenov, 2019. "The Labor Market Effects of a Refugee Wave," Journal of Human Resources, vol 54(2), pages 267-309.
Abstract: We apply the Synthetic Control Method to re-examine the labor market effects of the Mariel Boatlift, first studied by David Card (1990). This method improves on previous studies by choosing a control group of cities that best matches Miami’s labor market trends pre-Boatlift and providing more reliable inference. Using a sample of non-Cuban high-school dropouts we find no significant difference in the wages of workers in Miami relative to its control after 1980. We also show that by focusing on small sub-samples and matching the control group on a short pre-1979 series, as done in Borjas (2017), one can find large wage differences between Miami and control because of large measurement error.
Handle: RePEc:nbr:nberwo:21801
Template-Type: ReDIF-Paper 1.0
Title: Corporate Governance and Blockchains
Classification-JEL: G20; G3
Author-Name: David Yermack
Author-Person: pye42
Note: CF LE
Number: 21802
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21802
File-URL: http://www.nber.org/papers/w21802.pdf
File-Format: application/pdf
Publication-Status: published as David Yermack; Corporate Governance and Blockchains, Review of Finance, Volume 21, Issue 1, 1 March 2017, Pages 7–31, https://doi.org/10.1093/rof/rfw074
Abstract: Blockchains represent a novel application of cryptography and information technology to ag-eold problems of financial record-keeping, and they may lead to far-reaching changes in corporate governance. Many major players in the financial industry have began to invest in this new technology, and stock exchanges have proposed using blockchains as a new method for trading corporate equities and tracking their ownership. This essay evaluates the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other parties involved in corporate governance. The lower cost, greater liquidity, more accurate record-keeping, and transparency of ownership offered by blockchains may significantly upend the balance of power among these cohorts.
Handle: RePEc:nbr:nberwo:21802
Template-Type: ReDIF-Paper 1.0
Title: Uncertainty and Business Cycles: Exogenous Impulse or Endogenous Response?
Classification-JEL: E00; E32; E44; G01; G12
Author-Name: Sydney C. Ludvigson
Author-Person: plu153
Author-Name: Sai Ma
Author-Person: pma2173
Author-Name: Serena Ng
Author-Person: png6
Note: AP EFG ME
Number: 21803
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21803
File-URL: http://www.nber.org/papers/w21803.pdf
File-Format: application/pdf
Publication-Status: published as Sydney C. Ludvigson & Sai Ma & Serena Ng, 2021. "Uncertainty and Business Cycles: Exogenous Impulse or Endogenous Response?," American Economic Journal: Macroeconomics, vol 13(4), pages 369-410.
Abstract: Uncertainty about the future rises in recessions. But is uncertainty a source of business cycles or an endogenous response to them, and does the type of uncertainty matter? We propose a novel SVAR identification strategy to address these questions via inequality constraints on the structural shocks. We find that sharply higher macroeconomic uncertainty in recessions is often an endogenous response to output shocks, while uncertainty about financial markets is a likely source of output fluctuations. But the findings also suggest that macroeconomic uncertainty plays an important role in recessions, by substantially amplifying downturns caused by other shocks.
Handle: RePEc:nbr:nberwo:21803
Template-Type: ReDIF-Paper 1.0
Title: Total Returns to Single Family Rentals
Classification-JEL: G0; G11; R0; R30
Author-Name: Andrea Eisfeldt
Author-Person: pei27
Author-Name: Andrew Demers
Note: AP CF EFG
Number: 21804
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21804
File-URL: http://www.nber.org/papers/w21804.pdf
File-Format: application/pdf
Abstract: The market value of US Single Family Rental assets totals more than $2.3 trillion. We provide the first systematic analysis of total returns to Single Family Rentals in a long, broad, and granular panel. Total returns are approximately equalized across US cities at 8.5%, similar to average equity returns. On average, net rental yields and house price appreciation each contribute half total returns. However, they are negatively correlated in the cross section of cities. High-price-tier cities accrued more capital gains, while low-price-tier cities had higher net rental yields. Within cities, lower-price-tier zip codes have higher total returns.
Handle: RePEc:nbr:nberwo:21804
Template-Type: ReDIF-Paper 1.0
Title: The International Monetary Fund: 70 Years of Reinvention
Classification-JEL: E50; F33; F40; F55; G01; G15; G2; N0
Author-Name: Carmen M. Reinhart
Author-Person: pre33
Author-Name: Christoph Trebesch
Author-Person: ptr108
Note: IFM ME
Number: 21805
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21805
File-URL: http://www.nber.org/papers/w21805.pdf
File-Format: application/pdf
Publication-Status: published as Carmen M. Reinhart & Christoph Trebesch, 2016. "The International Monetary Fund: 70 Years of Reinvention," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 3-28, Winter.
Abstract: A sketch of the International Monetary Fund’s 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a “demand driven” theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively “new” IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became they key focus since the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing nations and now migrated to advanced ones. As a consequence, the IMF has engaged in “serial lending”, with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency, most widespread among low income countries in chronic arrears to the official sector, but most evident in the case of Greece since 2010. We conclude that these practices impair the IMF’s role as an international lender of last resort.
Handle: RePEc:nbr:nberwo:21805
Template-Type: ReDIF-Paper 1.0
Title: Double for Nothing? Experimental Evidence on the Impact of an Unconditional Teacher Salary Increase on Student Performance in Indonesia
Classification-JEL: C93; I21; J31; J45; O15
Author-Name: Joppe de Ree
Author-Person: pde330
Author-Name: Karthik Muralidharan
Author-Person: pmu102
Author-Name: Menno Pradhan
Author-Person: ppr157
Author-Name: Halsey Rogers
Author-Person: pro315
Note: CH DEV ED LS PE
Number: 21806
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21806
File-URL: http://www.nber.org/papers/w21806.pdf
File-Format: application/pdf
Abstract: How does a large unconditional increase in salary affect employee performance in the public sector? We present the first experimental evidence on this question in the context of a unique policy change in Indonesia that led to a permanent doubling of base teacher salaries. Using a large-scale randomized experiment across a representative sample of Indonesian schools that accelerated this doubling of pay for teachers in treatment schools, we find that the doubling of pay significantly improved teacher satisfaction with their income, reduced the incidence of teachers holding outside jobs, and reduced self-reported financial stress. Nevertheless, after two and three years, the doubling in pay led to no improvements in measures of teacher effort, and had no impact whatsoever on student learning outcomes. Thus, contrary to the predictions of various efficiency wage models of employee behavior (including gift-exchange, reciprocity, and reduced shirking), as well as those of a model where effort on pro-social tasks is a normal good with a positive income elasticity, we find that large unconditional increases in salaries of incumbent teachers had no meaningful positive impact on student learning.
Handle: RePEc:nbr:nberwo:21806
Template-Type: ReDIF-Paper 1.0
Title: Economic Impossibilities for our Grandchildren?
Classification-JEL: B22; N10
Author-Name: Kevin Hjortshøj O'Rourke
Author-Person: por7
Note: DAE
Number: 21807
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21807
File-URL: http://www.nber.org/papers/w21807.pdf
File-Format: application/pdf
Abstract: The paper looks at the development of the secular stagnation thesis, in the context of the economic history of the time. It explores some 19th century antecedents of the thesis, before turning to its interwar development. Not only Alvin Hansen, but Keynes and Hicks were involved in the conversations that led to Hansen's eventual statement of the thesis that we are familiar with. The argument made sense in the context of the interwar period, but more so in Britain than the US.
Handle: RePEc:nbr:nberwo:21807
Template-Type: ReDIF-Paper 1.0
Title: The Globalization of Angel Investments: Evidence across Countries
Classification-JEL: G24; O31
Author-Name: Josh Lerner
Author-Person: ple60
Author-Name: Antoinette Schoar
Author-Person: psc180
Author-Name: Stanislav Sokolinski
Author-Name: Karen Wilson
Note: CF PR
Number: 21808
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21808
File-URL: http://www.nber.org/papers/w21808.pdf
File-Format: application/pdf
Publication-Status: published as Josh Lerner & Antoinette Schoar & Stanislav Sokolinski & Karen Wilson, 2018. "The globalization of angel investments: Evidence across countries," Journal of Financial Economics, vol 127(1), pages 1-20.
Abstract: This paper examines investments made by 13 angel groups across 21 countries. We compare applicants just above and below the funding cutoff and find that these angel investors have a positive impact on the growth, performance, and survival of firms as well as their follow-on fundraising. The positive impact of angel financing is independent of the level of venture activity and entrepreneur-friendliness in the country. However, we find that the development stage and maturity of startups that apply for angel funding (and those that are ultimately funded) is inversely correlated with the entrepreneurship-friendliness of the country, which may reflect self-censoring by very early-stage firms that do not expect to receive funding in these environments.
Handle: RePEc:nbr:nberwo:21808
Template-Type: ReDIF-Paper 1.0
Title: Historical Origins of a Major Killer: Cardiovascular Disease in the American South
Classification-JEL: I15; N32
Author-Name: Richard H. Steckel
Author-Person: pst352
Author-Name: Garrett Senney
Note: CH DAE DEV
Number: 21809
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21809
File-URL: http://www.nber.org/papers/w21809.pdf
File-Format: application/pdf
Abstract: When building major organs the fetus responds to signals via the placenta that forecast post-natal nutrition. A mismatch between expectations and reality creates physiological stress and elevates several noninfectious chronic diseases. Applying this concept, we investigate the historical origins of cardiovascular disease (CVD) in the American South using rapid income growth from 1950 to 1980 as a proxy for socioeconomic forces that created unbalanced physical growth among southern children born after WWII. Using state-level data on income growth, smoking, obesity and education, we explain over 70% of the variance in current CVD mortality rates across the country.
Handle: RePEc:nbr:nberwo:21809
Template-Type: ReDIF-Paper 1.0
Title: The Dynamics of Adjustable-Rate Subprime Mortgage Default: A Structural Estimation
Classification-JEL: D12; D14; G2; G21; G33
Author-Name: Hanming Fang
Author-Person: pfa17
Author-Name: You Suk Kim
Author-Name: Wenli Li
Author-Person: pli1040
Note: CF PE
Number: 21810
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21810
File-URL: http://www.nber.org/papers/w21810.pdf
File-Format: application/pdf
Abstract: We present a dynamic structural model of subprime adjustable-rate mortgage (ARM) borrowers making payment decisions taking into account possible consequences of different degrees of delinquency from their lenders. We empirically implement the model using unique data sets that contain information on borrowers' mortgage payment history, their broad balance sheets, and lender responses. Our investigation of the factors that drive borrowers' decisions reveals that subprime ARMs are not all alike. For loans originated in 2004 and 2005, the interest rate resets associated with ARMs, as well as the housing and labor market conditions were not as important in borrowers' delinquency decisions as in their decisions to pay off their loans. For loans originated in 2006, interest rate resets, housing price declines, and worsening labor market conditions all contributed importantly to their high delinquency rates. Counterfactual policy simulations reveal that even if the Libor rate could be lowered to zero by aggressive traditional monetary policies, it would have a limited effect on reducing the delinquency rates. We find that automatic modification mortgage designs under which the monthly payment or the principal balance of the loans are automatically reduced when housing prices decline can be effective in reducing both delinquency and foreclosure. Importantly, we find that automatic modification mortgages with a cushion, under which the monthly payment or principal balance reductions are triggered only when housing price declines exceed a certain percentage may result in a Pareto improvement in that borrowers and lenders are both made better off than under the baseline, with a lower delinquency and foreclosure rates. Our counterfactual analysis also suggests that limited commitment power on the part of the lenders to loan modification policies may be an important reason for the relatively small rate of modifications observed during the housing crisis.
Handle: RePEc:nbr:nberwo:21810
Template-Type: ReDIF-Paper 1.0
Title: Productivity and Organization in Portuguese Firms
Classification-JEL: D22; D24; F16; J24; J31; L23
Author-Name: Lorenzo Caliendo
Author-Person: pca537
Author-Name: Giordano Mion
Author-Name: Luca David Opromolla
Author-Person: pop6
Author-Name: Esteban Rossi-Hansberg
Author-Person: pro72
Note: ITI
Number: 21811
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21811
File-URL: http://www.nber.org/papers/w21811.pdf
File-Format: application/pdf
Publication-Status: published as Lorenzo Caliendo & Giordano Mion & Luca David Opromolla & Esteban Rossi-Hansberg, 2020. "Productivity and Organization in Portuguese Firms," Journal of Political Economy, vol 128(11), pages 4211-4257.
Abstract: The productivity of firms is, at least partly, determined by a firm’s actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and firm production quantity and input data for Portuguese firms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantity- based productivity increases by about 8%, while revenue-based productivity drops by around 7%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity.
Handle: RePEc:nbr:nberwo:21811
Template-Type: ReDIF-Paper 1.0
Title: Globalization and Its (Dis-)Content: Trade Shocks and Voting Behavior
Classification-JEL: D72; F16; J2
Author-Name: Christian Dippel
Author-Name: Robert Gold
Author-Person: pgo648
Author-Name: Stephan Heblich
Author-Person: phe224
Note: ITI LS POL
Number: 21812
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21812
File-URL: http://www.nber.org/papers/w21812.pdf
File-Format: application/pdf
Abstract: We identify the causal effect of trade-integration with China and Eastern Europe on voting in Germany from 1987 to 2009. Looking at the entire political spectrum, we find that only extreme-right parties respond significantly to trade integration. Their vote share increases with import competition and decreases with export access opportunities. We unpack mechanisms using reduced form evidence and a causal mediation analysis. Two-thirds of the total effect of trade integration on voting appears to be driven by observable labor market adjustments, primarily changes in manufacturing employment. These results are mirrored in an individual-level analysis in the German Socioeconomic Panel.
Handle: RePEc:nbr:nberwo:21812
Template-Type: ReDIF-Paper 1.0
Title: The Plaza Accord, 30 Years Later
Classification-JEL: F33; F42; N1
Author-Name: Jeffrey Frankel
Author-Person: pfr12
Note: DAE IFM
Number: 21813
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21813
File-URL: http://www.nber.org/papers/w21813.pdf
File-Format: application/pdf
Abstract: The paper reviews an event of 30 years ago from the perspective of today: a successful G-5 initiative to reverse what had been an overvalued dollar. The “Plaza Accord” is best viewed not as the precise product of the meeting on September 22, 1985, but as shorthand for a historic change in US policy that began when James Baker became Treasury Secretary in January of that year. The change had the desired effect, bringing down the dollar and reducing the trade deficit. In recent years concerted foreign exchange intervention, of the sort undertaken by the G-7 in 1985 and periodically over the subsequent decade, has died out. Indeed the G-7 in 2013, fearing “currency manipulation,” specifically agreed to refrain from intervention in a sort of “anti-Plaza accord.” But some day coordinated foreign exchange intervention will return.
Handle: RePEc:nbr:nberwo:21813
Template-Type: ReDIF-Paper 1.0
Title: Inflation Targeting Does Not Anchor Inflation Expectations: Evidence from Firms in New Zealand
Classification-JEL: E3; E4; E5
Author-Name: Saten Kumar
Author-Name: Hassan Afrouzi
Author-Name: Olivier Coibion
Author-Person: pco205
Author-Name: Yuriy Gorodnichenko
Author-Person: pgo175
Note: EFG ME
Number: 21814
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21814
File-URL: http://www.nber.org/papers/w21814.pdf
File-Format: application/pdf
Publication-Status: published as Saten Kumar & Hassan Afrouzi & Olivier Coibion & Yuriy Gorodnichenko, 2015. "Inflation Targeting Does Not Anchor Inflation Expectations: Evidence from Firms in New Zealand," Brookings Papers on Economic Activity, vol 2015(2), pages 151-225.
Abstract: We study the (lack of) anchoring of inflation expectations in New Zealand using a new survey of firms. Managers of these firms display little anchoring of inflation expectations, despite twenty-five years of inflation targeting by the Reserve Bank of New Zealand, a fact which we document along a number of dimensions. Managers are unaware of the identities of central bankers as well as central banks’ objectives, and are generally poorly informed about recent inflation dynamics. Their forecasts of future inflation reflect high levels of uncertainty and are extremely dispersed as well as volatile at both short and long-run horizons. Similar results can be found in the U.S. using currently available surveys as shown in Binder (2015).
Handle: RePEc:nbr:nberwo:21814
Template-Type: ReDIF-Paper 1.0
Title: The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured
Classification-JEL: I11; L10; L11
Author-Name: Zack Cooper
Author-Person: pco742
Author-Name: Stuart V. Craig
Author-Name: Martin Gaynor
Author-Person: pga1
Author-Name: John Van Reenen
Author-Person: pva45
Note: EH
Number: 21815
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21815
File-URL: http://www.nber.org/papers/w21815.pdf
File-Format: application/pdf
Publication-Status: published as Zack Cooper & Stuart V Craig & Martin Gaynor & John Van Reenen, 2019. "The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured*," The Quarterly Journal of Economics, vol 134(1), pages 51-107.
Abstract: We use insurance claims data covering 28 percent of individuals with employer-sponsored health insurance in the US to study the variation in health spending on the privately insured, examine the structure of insurer-hospital contracts, and analyze the variation in hospital prices across the nation. Health spending per privately insured beneficiary differs by a factor of three across geographic areas and has a very low correlation with Medicare spending. For the privately insured, half of the spending variation is driven by price variation across regions and half is driven by quantity variation. Prices vary substantially across regions, across hospitals within regions, and even within hospitals. For example, even for a near homogenous service such as lower-limb MRIs, about a fifth of the total case-level price variation occurs within a hospital in the cross-section. Hospital market structure is strongly associated with price levels and contract structure. Prices at monopoly hospitals are 12 percent higher than those in markets with four or more rivals. Monopoly hospitals also have contracts that load more risk on insurers (e.g. they have more cases with prices set as a share of their charges). In concentrated insurer markets the opposite occurs – hospitals have lower prices and bear more financial risk. Examining the 366 merger and acquisitions that occurred between 2007 and 2011, we find that prices increased by over 6 percent when the merging hospitals were geographically close (e.g. 5 miles or less apart), but not when the hospitals were geographically distant (e.g. over 25 miles apart).
Handle: RePEc:nbr:nberwo:21815
Template-Type: ReDIF-Paper 1.0
Title: Measuring the Effects of Unconventional Monetary Policy on Asset Prices
Classification-JEL: E44; E52; E58
Author-Name: Eric T. Swanson
Author-Person: psw16
Note: AP EFG ME
Number: 21816
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21816
File-URL: http://www.nber.org/papers/w21816.pdf
File-Format: application/pdf
Publication-Status: published as Eric T. Swanson, 2016. "Measuring the effects of unconventional monetary policy on asset prices," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 19(2), pages 78-100, August.
Abstract: I adapt the methods of Gurkaynak, Sack, and Swanson (2005) to estimate two dimensions of monetary policy during the 2009-2015 zero lower bound period in the U.S. I show that, after a suitable rotation, these two dimensions can be interpreted as "forward guidance" and "large-scale asset purchases" (LSAPs). I estimate the sizes of the forward guidance and LSAP components of each FOMC announcement between January 2009 and June 2015, and show that those estimates correspond closely to identifiable features of major FOMC announcements over that period. Forward guidance has relatively small effects on the longest-maturity Treasury yields and essentially no effect on corporate bond yields, while LSAPs have large effects on those yields but essentially no effect on short-term Treasuries. Both types of policies have significant effects on medium-term Treasury yields, stock prices, and exchange rates.
Handle: RePEc:nbr:nberwo:21816
Template-Type: ReDIF-Paper 1.0
Title: Financial Integration and Growth in a Risky World
Classification-JEL: F21; F3; F43
Author-Name: Nicolas Coeurdacier
Author-Person: pco481
Author-Name: Hélène Rey
Author-Person: pre8
Author-Name: Pablo Winant
Author-Person: pwi205
Note: AP IFM
Number: 21817
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21817
File-URL: http://www.nber.org/papers/w21817.pdf
File-Format: application/pdf
Publication-Status: published as Nicolas Coeurdacier & Héléne Rey & Pablo Winant, 2019. "Financial Integration and Growth in a Risky World," Journal of Monetary Economics, .
Abstract: The debate on the benefits of financial integration is revisited in a two-country neoclassical growth model with aggregate uncertainty. Gains from more efficient capital allocation and gains from risk sharing are accounted for simultaneously|together with their interaction. Global numerical methods allow for meaningful welfare comparisons. Gains from integration are quantitatively small, even for riskier and capital scarce emerging economies. These countries import capital for efficiency reasons before exporting it for self-insurance, leading to capital ows and growth reversals along the transition. This opens the door to a richer set of empirical implications than previously considered in the literature.
Handle: RePEc:nbr:nberwo:21817
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Cost of Perceived Policy Uncertainty: Evidence from Social Security
Classification-JEL: D89; H55
Author-Name: Erzo F.P. Luttmer
Author-Person: plu27
Author-Name: Andrew A. Samwick
Author-Person: psa395
Note: AG PE
Number: 21818
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21818
File-URL: http://www.nber.org/papers/w21818.pdf
File-Format: application/pdf
Publication-Status: published as Erzo F. P. Luttmer & Andrew A. Samwick, 2018. "The Welfare Cost of Perceived Policy Uncertainty: Evidence from Social Security," American Economic Review, vol 108(2), pages 275-307.
Abstract: Policy uncertainty can reduce individual welfare when individuals have limited opportunities to mitigate or insure against consumption fluctuations induced by the policy uncertainty. For this reason, policy uncertainty surrounding future Social Security benefits may have important welfare costs. We field an original survey to measure the degree of policy uncertainty in Social Security and to estimate the impact of this uncertainty on individual welfare. On average, our survey respondents expect to receive only about 60 percent of the benefits they are supposed to get under current law. We document the wide variation around the expectation for most respondents and the heterogeneity in the perceived distributions of future benefits across respondents. This uncertainty has real costs. Our central estimates show that on average individuals would be willing to forego around 6 percent of the benefits they are supposed to get under current law to remove the policy uncertainty associated with their future benefits. This translates to a risk premium from policy uncertainty equal to 10 percent of expected benefits.
Handle: RePEc:nbr:nberwo:21818
Template-Type: ReDIF-Paper 1.0
Title: Knowledge of Future Job Loss and Implications for Unemployment Insurance
Classification-JEL: H0
Author-Name: Nathaniel Hendren
Note: AG EH IO LS PE
Number: 21819
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21819
File-URL: http://www.nber.org/papers/w21819.pdf
File-Format: application/pdf
Publication-Status: published as Nathaniel Hendren, 2017. "Knowledge of Future Job Loss and Implications for Unemployment Insurance," American Economic Review, vol 107(7), pages 1778-1823.
Abstract: This paper studies the implications of individuals’ knowledge of future job loss for the existence of an unemployment insurance (UI) market. Learning about job loss leads to consumption decreases and spousal labor supply increases. This suggests existing willingness to pay estimates for UI understate its value. But, it yields new estimation methodologies that account for and exploit responses to learning about future job loss. Although my new willingness to pay estimates exceed previous estimates, I estimate much larger frictions imposed by private information. This suggests privately-traded UI policies would be too adversely selected to be profitable, at any price.
Handle: RePEc:nbr:nberwo:21819
Template-Type: ReDIF-Paper 1.0
Title: Credit Frictions and Optimal Monetary Policy
Classification-JEL: E44; E52
Author-Name: Vasco Cúrdia
Author-Person: pcr38
Author-Name: Michael Woodford
Author-Person: pwo3
Note: EFG ME
Number: 21820
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21820
File-URL: http://www.nber.org/papers/w21820.pdf
File-Format: application/pdf
Publication-Status: published as Vasco Cúrdia & Michael Woodford, 2016. "Credit Frictions and Optimal Monetary Policy," Journal of Monetary Economics, .
Abstract: We extend the basic (representative-household) New Keynesian [NK] model of the monetary transmission mechanism to allow for a spread between the interest rate available to savers and borrowers, that can vary for either exogenous or endogenous reasons. We find that the mere existence of a positive average spread makes little quantitative difference for the predicted effects of particular policies. Variation in spreads over time is of greater significance, with consequences both for the equilibrium relation between the policy rate and aggregate expenditure and for the relation between real activity and inflation. Nonetheless, we find that the target criterion—a linear relation that should be maintained between the inflation rate and changes in the output gap—that characterizes optimal policy in the basic NK model continues to provide a good approximation to optimal policy, even in the presence of variations in credit spreads. Such a "flexible inflation target" can be implemented by a central-bank reaction function that is similar to a forward-looking Taylor rule, but adjusted for changes in current and expected future credit spreads.
Handle: RePEc:nbr:nberwo:21820
Template-Type: ReDIF-Paper 1.0
Title: The Political Economy of Government Debt
Classification-JEL: E62
Author-Name: Alberto Alesina
Author-Person: pal207
Author-Name: Andrea Passalacqua
Note: POL
Number: 21821
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21821
File-URL: http://www.nber.org/papers/w21821.pdf
File-Format: application/pdf
Abstract: This paper critically reviews the literature which explains why and under which circumstances governments accumulate more debt than it would be consistent with optimal fiscal policy. We also discuss numerical rules or institutional designs which might lead to a moderation of these distortions.
Handle: RePEc:nbr:nberwo:21821
Template-Type: ReDIF-Paper 1.0
Title: Fiscal Analysis is Darned Hard
Classification-JEL: E52; E61; E62; E63
Author-Name: Eric M. Leeper
Author-Person: ple3
Note: EFG
Number: 21822
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21822
File-URL: http://www.nber.org/papers/w21822.pdf
File-Format: application/pdf
Abstract: Dramatic fiscal developments in the wake of the 2008 financial crisis and global recession led researchers to recognize how little we know about fiscal policies and their impacts. This essay argues that fiscal analysis that aims to address pertinent issues and provide useful inputs to policymakers is intrinsically hard. I illustrate this with examples torn from the economic headlines in many countries. I identify some essential ingredients for useful fiscal analysis and point to examples in the literature that integrate some of those ingredients. Recent methodological advances give reason to be optimistic about fiscal analyses in the future.
Handle: RePEc:nbr:nberwo:21822
Template-Type: ReDIF-Paper 1.0
Title: Striving for Balance in Economics: Towards a Theory of the Social Determination of Behavior
Classification-JEL: A12; D00; D01; D03; D20; D50; Z13
Author-Name: Karla Hoff
Author-Person: pho255
Author-Name: Joseph E. Stiglitz
Note: DEV
Number: 21823
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21823
File-URL: http://www.nber.org/papers/w21823.pdf
File-Format: application/pdf
Publication-Status: published as Hoff, Karla & Stiglitz, Joseph E., 2016. "Striving for balance in economics: Towards a theory of the social determination of behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PB), pages 25-57.
Abstract: This paper is an attempt to broaden the standard economic discourse by importing insights into human behavior not just from psychology, but also from sociology and anthropology. Whereas the concept of the decision-maker is the rational actor in standard economics and, in early work in behavioral economics, the quasi-rational actor influenced by the context of the moment of decision-making, in some recent work in behavioral economics the decision-maker could be called the enculturated actor. This actor's preferences and cognition are subject to two deep social influences: (a) the social contexts to which he has become exposed and, especially accustomed; and (b) the cultural mental models—including categories, identities, narratives, and worldviews—that he uses to process information. We trace how these factors shape individual behavior through the endogenous determination of both preferences and the lenses through which individuals see the world—their perception, categorization, and interpretation of situations. We offer a tentative taxonomy of the social determinants of behavior and describe results of controlled and natural experiments that only a broader view of the social determinants of behavior can plausibly explain. The perspective suggests new tools to promote well-being and economic development.
Handle: RePEc:nbr:nberwo:21823
Template-Type: ReDIF-Paper 1.0
Title: The Quantity-Quality Trade-off and the Formation of Cognitive and Non-cognitive Skills
Classification-JEL: J13; J24
Author-Name: Chinhui Juhn
Author-Person: pju42
Author-Name: Yona Rubinstein
Author-Person: pru68
Author-Name: C. Andrew Zuppann
Author-Person: pzu37
Note: CH ED LS
Number: 21824
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21824
File-URL: http://www.nber.org/papers/w21824.pdf
File-Format: application/pdf
Abstract: We estimate the impact of increases in family size on childhood and adult outcomes using matched mother-child data from the National Longitudinal Survey of Youth 1979. Using twins as an instrumental variable and panel data to control for omitted factors we find that families face a substantial quantity-quality trade-off: increases in family size decrease parental investment, decrease childhood cognitive abilities, and increase behavioral problems. The negative effects on cognitive abilities are much larger for girls while the detrimental effects on behavior are larger for boys. We also find evidence of heterogeneous effects by mother's AFQT score, with the negative effects on cognitive scores being much larger for children of mothers with low AFQT scores.
Handle: RePEc:nbr:nberwo:21824
Template-Type: ReDIF-Paper 1.0
Title: The Personnel Economics of the State
Classification-JEL: D73; J45; O12
Author-Name: Frederico Finan
Author-Person: pfi199
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Rohini Pande
Author-Person: ppa900
Note: DEV LS PE
Number: 21825
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21825
File-URL: http://www.nber.org/papers/w21825.pdf
File-Format: application/pdf
Abstract: Governments play a central role in facilitating economic development. Yet while economists have long emphasized the importance of government quality, historically they have paid less attention to the internal workings of the state and the individuals who provide the public services. This paper reviews a nascent but growing body of field experiments that explores the personnel economics of the state. To place the experimental findings in context, we begin by documenting some stylized facts about how public sector employment differs from that in the private sector. In particular, we show that in most countries throughout the world, public sector employees enjoy a significant wage premium over their private sector counterparts. Moreover, this wage gap is largest among low-income countries, which tends to be precisely where governance issues are most severe. These differences in pay, together with significant information asymmetries within government organizations in low-income countries, provide a prima facie rationale for the emphasis of the recent field experiments on three aspects of the state–employee relationship: selection, incentive structures, and monitoring. We review the findings on all three dimensions and then conclude this survey with directions for future research.
Handle: RePEc:nbr:nberwo:21825
Template-Type: ReDIF-Paper 1.0
Title: Household Location Decisions and the Value of Climate Amenities
Classification-JEL: Q5; Q51
Author-Name: Paramita Sinha
Author-Name: Maureen L. Cropper
Author-Person: pcr77
Author-Name: Martha Caulkins
Note: EEE
Number: 21826
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21826
File-URL: http://www.nber.org/papers/w21826.pdf
File-Format: application/pdf
Publication-Status: published as Paramita Sinha & Martha L. Caulkins & Maureen L. Cropper, 2017. "Household location decisions and the value of climate amenities," Journal of Environmental Economics and Management, .
Abstract: We value climate amenities by estimating a discrete location choice model for US households. The utility of each metropolitan statistical area (MSA) depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household head’s birthplace. We use the estimated trade-off among wages, housing costs, and climate amenities to value changes in mean winter and summer temperatures. We find that households sort among MSAs as a result of heterogeneous tastes for winter and summer temperatures. Preferences for winter and summer temperatures are negatively correlated: households that prefer milder winters, on average, prefer cooler summers, and households that prefer colder winters prefer warmer summers. Households in the Midwest region, on average, have lower marginal willingness to pay to increase winter and reduce summer temperatures than households in the Pacific and South Atlantic census divisions. We use our results to value changes in winter and summer temperatures for the period 2020 to 2050 under the B1 (climate-friendly) and A2 (more extreme) climate scenarios. On average, households are willing to pay 1 percent of income to avoid the B1 scenario and 2.4 percent of income to avoid the A2 scenario.
Handle: RePEc:nbr:nberwo:21826
Template-Type: ReDIF-Paper 1.0
Title: Changing Faculty Employment at Four-Year Colleges and Universities in the United States
Classification-JEL: I23; J23
Author-Name: Liang Zhang
Author-Name: Ronald G. Ehrenberg
Author-Person: peh2
Author-Name: Xiangmin Liu
Note: ED LS
Number: 21827
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21827
File-URL: http://www.nber.org/papers/w21827.pdf
File-Format: application/pdf
Abstract: We use panel data models to examine variations and changes over time in faculty employment at four-year colleges and universities in the United States. The share of part-time faculty among total faculty has continued to grow over the last two decades, while the share of full-time lecturers and instructors has been relatively stable. Meanwhile, the share of non-tenure track faculty among faculty with professorial ranks has been growing. Dynamic panel data models suggest that employment levels of different types of faculty respond to a variety of economic and institutional factors. Colleges and universities have increasingly employed faculty whose salaries and benefits are relatively inexpensive; the slowly deteriorating financial situations at most colleges and universities have led to an increasing reliance on a contingent academic workforce.
Handle: RePEc:nbr:nberwo:21827
Template-Type: ReDIF-Paper 1.0
Title: College Party Culture and Sexual Assault
Classification-JEL: I23; K42
Author-Name: Jason M. Lindo
Author-Person: pli492
Author-Name: Peter M. Siminski
Author-Person: psi343
Author-Name: Isaac D. Swensen
Note: ED EH PE
Number: 21828
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21828
File-URL: http://www.nber.org/papers/w21828.pdf
File-Format: application/pdf
Publication-Status: published as Jason M. Lindo & Peter Siminski & Isaac D. Swensen, 2018. "College Party Culture and Sexual Assault," American Economic Journal: Applied Economics, vol 10(1), pages 236-265.
Abstract: This paper considers the degree to which events that intensify partying increase sexual assault. Estimates are based on panel data from campus and local law-enforcement agencies and an identification strategy that exploits plausibly random variation in the timing of Division 1 football games. The estimates indicate that these events increase daily reports of rape with 17-24 year old victims by 28 percent. The effects are driven largely by 17-24 year old offenders and by offenders unknown to the victim, but we also find significant effects on incidents involving offenders of other ages and on incidents involving offenders known to the victim.
Handle: RePEc:nbr:nberwo:21828
Template-Type: ReDIF-Paper 1.0
Title: The Paradox of Civilization: Pre-Institutional Sources of Security and Prosperity
Classification-JEL: D74; N4; Z1
Author-Name: Ernesto Dal Bó
Author-Person: pda416
Author-Name: Pablo Hernández
Author-Person: phe693
Author-Name: Sebastián Mazzuca
Note: DEV POL
Number: 21829
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21829
File-URL: http://www.nber.org/papers/w21829.pdf
File-Format: application/pdf
Abstract: The rise of civilizations involved the dual emergence of economies that could produce surplus (“prosperity”) and states that could protect surplus (“security”). But the joint achievement of security and prosperity had to escape a paradox: prosperity attracts predation, and higher insecurity discourages the investments that create prosperity. We study the trade-offs facing a proto-state on its path to civilization through a formal model informed by the anthropological and historical literatures on the origin of civilizations. We emphasize pre-institutional forces, such as physical aspects of the geographical environment, that shape productive and defense capabilities. The solution of the civilizational paradox relies on high defense capabilities, natural or manmade. We show that higher initial productivity and investments that yield prosperity exacerbate conflict when defense capability is fixed, but may allow for security and prosperity when defense capability is endogenous. Some economic shocks and military innovations deliver security and prosperity while others force societies back into a trap of conflict and stagnation. We illustrate the model by analyzing the rise of civilization in Sumeria and Egypt, the first two historical cases, and the civilizational collapse at the end of the Bronze Age.
Handle: RePEc:nbr:nberwo:21829
Template-Type: ReDIF-Paper 1.0
Title: The Minimum Wage and the Great Recession: Evidence from the Current Population Survey
Classification-JEL: E24; J21; J31; J38; K31
Author-Name: Jeffrey Clemens
Note: EFG LS PE
Number: 21830
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21830
File-URL: http://www.nber.org/papers/w21830.pdf
File-Format: application/pdf
Abstract: I analyze recent federal minimum wage increases using the Current Population Survey. The relevant minimum wage increases were differentially binding across states, generating natural comparison groups. I first estimate a standard difference-in-differences model on samples restricted to relatively low-skilled individuals, as described by their ages and education levels. I also employ a triple-difference framework that utilizes continuous variation in the minimum wage's bite across skill groups. In both frameworks, estimates are robust to adopting a range of alternative strategies, including matching on the size of states' housing declines, to account for variation in the Great Recession's severity across states. My baseline estimate is that this period's full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points. This estimate accounts for 43 percent of the sustained, 13 percentage point decline in this skill group's employment rate and a 0.49 percentage point decline in employment across the full population ages 16 to 64.
Handle: RePEc:nbr:nberwo:21830
Template-Type: ReDIF-Paper 1.0
Title: An Empirical Analysis of Racial Segregation in Higher Education
Classification-JEL: I24; I28; J15
Author-Name: Peter Hinrichs
Author-Person: phi184
Note: ED LS
Number: 21831
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21831
File-URL: http://www.nber.org/papers/w21831.pdf
File-Format: application/pdf
Abstract: This descriptive paper documents how segregation between blacks and whites across colleges in the United States has evolved since the 1960s. It also explores potential channels through which changes are occurring, and it uses recent data to study the issue of segregation within colleges. The main findings are as follows: (1) White exposure to blacks has been rising since the 1960s, whereas black exposure to whites increased sharply in the late 1960s and early 1970s and has fluctuated since then. Meanwhile, black-white dissimilarity and the Theil index fell sharply in the late 1960s and early 1970s and have fallen more gradually since. (2) There has been regional convergence, although colleges in the South remain more segregated than those in any other region when measured by dissimilarity, by the Theil index, or by black exposure to whites. (3) A major channel for the decline in segregation is the declining share of blacks attending historically black colleges and universities. (4) Although there is segregation within universities, most segregation across major × university cells occurs across universities.
Handle: RePEc:nbr:nberwo:21831
Template-Type: ReDIF-Paper 1.0
Title: The Welfare Effects of Vertical Integration in Multichannel Television Markets
Classification-JEL: L13; L42; L51; L82
Author-Name: Gregory S. Crawford
Author-Person: pcr19
Author-Name: Robin S. Lee
Author-Person: ple409
Author-Name: Michael D. Whinston
Author-Person: pwh46
Author-Name: Ali Yurukoglu
Author-Person: pyu85
Note: IO
Number: 21832
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21832
File-URL: http://www.nber.org/papers/w21832.pdf
File-Format: application/pdf
Publication-Status: published as Gregory S. Crawford & Robin S. Lee & Michael D. Whinston & Ali Yurukoglu, 2018. "The Welfare Effects of Vertical Integration in Multichannel Television Markets," Econometrica, Econometric Society, vol. 86(3), pages 891-954, May.
Abstract: We investigate the welfare effects of vertical integration of regional sports networks (RSNs) with programming distributors in U.S. multichannel television markets. Vertical integration can enhance efficiency by reducing double marginalization and increasing carriage of channels, but can also harm welfare due to foreclosure and incentives to raise rivals' costs. We estimate a structural model of viewership, subscription, distributor pricing, and affiliate fee bargaining using a rich dataset on the U.S. cable and satellite television industry (2000-2010). We use these estimates to analyze the impact of simulated vertical mergers and divestitures of RSNs on competition and welfare, and examine the efficacy of regulatory policies introduced by the U.S. Federal Communications Commission to address competition concerns in this industry.
Handle: RePEc:nbr:nberwo:21832
Template-Type: ReDIF-Paper 1.0
Title: Screening and Adverse Selection in Frictional Markets
Classification-JEL: D41; D42; D43; D82; D83; D86; L13
Author-Name: Benjamin Lester
Author-Person: ple283
Author-Name: Ali Shourideh
Author-Name: Venky Venkateswaran
Author-Person: pve303
Author-Name: Ariel Zetlin-Jones
Note: EH IO
Number: 21833
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21833
File-URL: http://www.nber.org/papers/w21833.pdf
File-Format: application/pdf
Publication-Status: published as Benjamin Lester & Ali Shourideh & Venky Venkateswaran & Ariel Zetlin-Jones, 2019. "Screening and Adverse Selection in Frictional Markets," Journal of Political Economy, vol 127(1), pages 338-377.
Abstract: We incorporate a search-theoretic model of imperfect competition into an otherwise standard model of asymmetric information with unrestricted contracts. We develop a methodology that allows for a sharp analytical characterization of the unique equilibrium, and then use this characterization to explore the interaction between adverse selection, screening, and imperfect competition. We show how the structure of equilibrium contracts—and hence the relationship between an agent’s type, the quantity he trades, and the corresponding price—is jointly determined by the severity of adverse selection and the concentration of market power. This suggests that quantifying the effects of adverse selection requires controlling for the market structure. We also show that increasing competition and reducing informational asymmetries can be detrimental to welfare. This suggests that recent attempts to increase competition and reduce opacity in markets that suffer from adverse selection could potentially have negative, unforeseen consequences.
Handle: RePEc:nbr:nberwo:21833
Template-Type: ReDIF-Paper 1.0
Title: Sharing Risk with the Government: How Taxes Affect Corporate Risk Taking
Classification-JEL: G32; H32
Author-Name: Alexander Ljungqvist
Author-Person: plj2
Author-Name: Liandong Zhang
Author-Person: pzh464
Author-Name: Luo Zuo
Note: CF
Number: 21834
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21834
File-URL: http://www.nber.org/papers/w21834.pdf
File-Format: application/pdf
Publication-Status: published as ALEXANDER LJUNGQVIST & LIANDONG ZHANG & LUO ZUO, 2017. "Sharing Risk with the Government: How Taxes Affect Corporate Risk Taking," Journal of Accounting Research, vol 55(3), pages 669-707.
Abstract: Using 113 staggered changes in corporate income tax rates across U.S. states, we provide evidence on how taxes affect corporate risk-taking decisions. Higher taxes reduce expected profits more for risky projects than for safe ones, as the government shares in a firm’s upside but not in its downside. Consistent with this prediction, we find that risk taking is sensitive to taxes, albeit asymmetrically: the average firm reduces risk in response to a tax increase (primarily by changing its operating cycle and reducing R&D risk) but does not respond to a tax cut. We trace the asymmetry back to constraints on risk taking imposed by creditors. Finally, tax loss-offset rules moderate firms’ sensitivity to taxes by allowing firms to partly share downside risk with the government.
Handle: RePEc:nbr:nberwo:21834
Template-Type: ReDIF-Paper 1.0
Title: Incentive Design in Education: An Empirical Analysis
Classification-JEL: D82; I21; J33; M52
Author-Name: Hugh Macartney
Author-Name: Robert McMillan
Author-Name: Uros Petronijevic
Author-Person: ppe805
Note: CH ED LS PE
Number: 21835
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21835
File-URL: http://www.nber.org/papers/w21835.pdf
File-Format: application/pdf
Abstract: While incentive schemes to elicit greater effort in organizations are widespread, the incentive strength-effort mapping is difficult to ascertain in practice, hindering incentive design. We propose a new semi-parametric method for uncovering this relationship in an education context, using exogenous incentive variation and rich administrative data. The estimated effort response forms the basis of a counterfactual approach tracing the effects of various accountability systems on the full distribution of scores. We show higher average performance comes with greater score dispersion for a given accountability scheme, and that incentive designs not yet enacted can improve performance further, relevant to education reform.
Handle: RePEc:nbr:nberwo:21835
Template-Type: ReDIF-Paper 1.0
Title: Effects of ACA Medicaid Expansions on Health Insurance Coverage and Labor Supply
Classification-JEL: H42; I13; J22
Author-Name: Robert Kaestner
Author-Person: pka42
Author-Name: Bowen Garrett
Author-Person: pga231
Author-Name: Anuj Gangopadhyaya
Author-Name: Caitlyn Fleming
Note: EH
Number: 21836
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21836
File-URL: http://www.nber.org/papers/w21836.pdf
File-Format: application/pdf
Publication-Status: published as Robert Kaestner & Bowen Garrett & Jiajia Chen & Anuj Gangopadhyaya & Caitlyn Fleming, 2017. "Effects of ACA Medicaid Expansions on Health Insurance Coverage and Labor Supply," Journal of Policy Analysis and Management, vol 36(3), pages 608-642.
Abstract: We examined the effect of the expansion of Medicaid eligibility under the Affordable Care Act on health insurance coverage and labor supply of low-educated and low-income adults. We found that the Medicaid expansions were associated with large (e.g., 50 percent) increases in Medicaid coverage and corresponding decreases in the proportion uninsured. There was relatively little change in private insurance coverage, although the expansions tended to decrease such coverage slightly. In terms of labor supply, estimates indicated that the Medicaid expansions had little effect on work effort despite the substantial changes in health insurance coverage. Most estimates suggested that the expansions increased work effort, although not significantly.
Handle: RePEc:nbr:nberwo:21836
Template-Type: ReDIF-Paper 1.0
Title: Contracting out the Last-Mile of Service Delivery: Subsidized Food Distribution in Indonesia
Classification-JEL: D73; H57
Author-Name: Abhijit Banerjee
Author-Name: Rema Hanna
Author-Person: pha883
Author-Name: Jordan C. Kyle
Author-Name: Benjamin A. Olken
Author-Person: pol170
Author-Name: Sudarno Sumarto
Author-Person: psu251
Note: DEV POL
Number: 21837
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21837
File-URL: http://www.nber.org/papers/w21837.pdf
File-Format: application/pdf
Abstract: Outsourcing government service provision to private firms can improve efficiency and reduce rents, but there are risks that non-contractible quality will decline and that reform could be blocked by vested interests exactly where potential gains are greatest. We examine these issues by conducting a randomized field experiment in 572 Indonesian localities in which a procurement process was introduced that allowed citizens to bid to take over the implementation of a subsidized rice distribution program. This led 17 percent of treated locations to switch distributors. Introducing the possibility of outsourcing led to a 4.6 percent reduction in the markup paid by households. Quality did not suffer and, if anything, households reported the quality of the rice improved. Bidding committees may have avoided quality problems by choosing bidders who had relevant experience as traders, even if they proposed slightly higher prices. Mandating higher levels of competition by encouraging additional bidders further reduced prices. We document offsetting effects of having high rents at baseline: when the initial price charged was high and when baseline satisfaction levels were low, entry was higher and committees were more likely to replace the status quo distributor; but, incumbents measured to be more dishonest on an experimental measure of cheating were also more likely to block the outsourcing process. We find no effect on price or quality of providing information about program functioning without the opportunity to privatize, implying that the observed effect was not solely due to increased transparency. On net, the results suggest that contracting out has the potential to improve performance, though the magnitude of the effects may be partially muted due to push back from powerful elites.
Handle: RePEc:nbr:nberwo:21837
Template-Type: ReDIF-Paper 1.0
Title: Endogenous Volatility at the Zero Lower Bound: Implications for Stabilization Policy
Classification-JEL: E32; E52
Author-Name: Susanto Basu
Author-Person: pba274
Author-Name: Brent Bundick
Author-Person: pbu286
Note: EFG ME
Number: 21838
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21838
File-URL: http://www.nber.org/papers/w21838.pdf
File-Format: application/pdf
Abstract: At the zero lower bound, the central bank's inability to offset shocks endogenously generates volatility. In this setting, an increase in uncertainty about future shocks causes significant contractions in the economy and may lead to non-existence of an equilibrium. The form of the monetary policy rule is crucial for avoiding catastrophic outcomes. State-contingent optimal monetary and fiscal policies can attenuate this endogenous volatility by stabilizing the distribution of future outcomes. Fluctuations in uncertainty and the zero lower bound help our model match the unconditional and stochastic volatility in the recent macroeconomic data.
Handle: RePEc:nbr:nberwo:21838
Template-Type: ReDIF-Paper 1.0
Title: Free to Choose: Can School Choice Reduce Student Achievement?
Classification-JEL: I20
Author-Name: Atila Abdulkadiroglu
Author-Name: Parag A. Pathak
Author-Name: Christopher R. Walters
Note: ED LS PE
Number: 21839
Creation-Date: 2015-12
Order-URL: http://www.nber.org/papers/w21839
File-URL: http://www.nber.org/papers/w21839.pdf
File-Format: application/pdf
Publication-Status: published as Atila Abdulkadiroğlu & Parag A. Pathak & Christopher R. Walters, 2018. "Free to Choose: Can School Choice Reduce Student Achievement?," American Economic Journal: Applied Economics, vol 10(1), pages 175-206.
Abstract: A central argument for school choice is that families value the freedom to exercise choice and can make wise decisions. This principle may underlie why lottery-based school evaluations, which exploit over-subscription due to excess demand, have almost always reported positive or zero achievement effects. This paper reports on a striking empirical counterexample to these results. We evaluate the Louisiana Scholarship Program (LSP), a school voucher plan providing public funds for disadvantaged students to attend private schools of their choice. We exploit random assignment of LSP vouchers at oversubscribed private schools to estimate the program’s effects on test scores. LSP participation substantially reduces academic achievement: attendance at an LSP-eligible private school lowers math scores by 0.4 standard deviations and increases the likelihood of a failing math score by 50 percent. Voucher effects for reading, science and social studies are also negative and large. Participating private schools charge below-average tuition, and the program’s negative math effects are concentrated among participating schools with lower tuition. Negative voucher effects may be due in part to selection of low-quality private schools into the program.
Handle: RePEc:nbr:nberwo:21839