Abstract
					We quantify the labor supply responses of prime-aged adults to the
presence of pensioners in their households, using longitudinal data
collected in South Africa. We compare households and individuals
before and after pension receipt and pension loss, which allows us
to control for a host of unobservable household and individual characteristics
that may determine labor market behavior. We find large
cash transfers to the elderly lead to increased employment among
prime-aged adults, which occurs primarily through labor migration.
The pension's impact is attributable to the increase in household
resources it represents, which can be used to stake migrants until
they become self-sufficient, and to the presence of pensioners who
can care for small children, which allows prime-aged adults to look
for work elsewhere. (JEL H23, H55, I38, J22, O15)
Abstract
					The fetal origins hypothesis asserts that nutrient deprivation in utero
can raise chronic disease risk. Within economics, this hypothesis has
gained acceptance as a leading explanation for the correlations between
birth weight, a proxy for fetal nutrient intake, and adult outcomes.
Exploiting birth-weight differences between twins using (a) a newlycreated
dataset of twins from 1960-1982 California birth records and
(b) the Early Childhood Longitudinal Study Birth Cohort, I find birth
weight is related to educational attainment, later pregnancy complications,
and the birth weight of the next generation. These effects are generally
small. However, the protective effects of birth weight vary across
the birth-weight distribution. (JEL: I12, I21, J13)
Abstract
					Cognitive dissonance theory predicts that the act of voting for a
candidate
leads to a more favorable opinion of the candidate in the
future. We find support for the empirical relevance of cognitive dissonance
to political attitudes. We examine the presidential opinion
ratings of voting-age eligibles and ineligibles two years after the president's
election. We find that eligibles show two to three times greater
polarization of opinions than comparable ineligibles. We find smaller
effects when we compare polarization in opinions of senators elected
during high turnout presidential campaign years with senators elected
during nonpresidential campaign years. (JEL D72)
Abstract
					A randomized evaluation in rural Kenya finds, contrary to the
previous literature, that providing textbooks did not raise average
test scores. Textbooks did increase the scores of the best students
(those with high pretest scores) but had little effect on other students.
Textbooks are written in English, most students' third language,
and many students could not use them effectively. More generally,
the curriculum in Kenya, and in many other developing countries,
tends to be oriented toward academically strong students, leaving
many students behind in societies that combine a centralized educational
system; the heterogeneity in student preparation associated
with rapid educational expansion; and disproportionate elite power.
(JEL O15, I21, I28, J13)
Abstract
					This paper reports on an experimental evaluation of strategies
designed to improve academic performance among college freshmen.
One treatment group was offered academic support services. Another
was offered financial incentives for good grades. A third group combined
both interventions. Service use was highest for women and for
subjects in the combined group. The combined treatment also raised
the grades and improved the academic standing of women. These differentials
persisted through the end of second year, though incentives
were given in the first year only. This suggests study skills among some
treated women increased. In contrast, the program had no effect on
men. (JEL I21, I28)
Abstract
					We estimate the effect of alcohol consumption on mortality using
the minimum drinking age in a regression discontinuity design. We
find large and immediate increases in drinking at age 21, including
a 21 percent increase in recent drinking days. We also find a
discrete 9 percent increase in the mortality rate at age 21, primarily
due to motor vehicle accidents, alcohol-related deaths, and suicides.
We estimate a 10 percent increase in the number of drinking days
for young adults results in a 4.3 percent increase in mortality. Our
results suggest policies that reduce drinking among young adults
can have substantial public health benefits. (JEL I12, I18)
Abstract
					This paper integrates theories of political budget cycles with theories
of tactical electoral redistribution to test for political capture in a
novel way. Studying banks in India, I find that government-owned
bank lending tracks the electoral cycle, with agricultural credit
increasing by 5-10 percentage points in an election year. There is
significant cross-sectional targeting, with large increases in districts
in which the election is particularly close. This targeting does not
occur in nonelection years or in private bank lending. I show capture
is costly: elections affect loan repayment, and election-year credit
booms do not measurably affect agricultural output. (JEL D72, O13,
O17, Q14, Q18)
Abstract
					In France, as in the US, a mother's labor market participation is
influenced by the sex composition of her two eldest siblings. This
paper shows that it is also affected by the sex composition of the
eldest siblings of the other mothers living in the same close neighborhood.
Using the sex composition of neighbors' eldest siblings as
an instrumental variable, we identify a significant elasticity of own
labor market participation to neighbors' participation. We present
supportive evidence by comparing the estimates under two regimes
for family benefits (pre- and post-1994 reform) and using quarter of
birth as an alternative instrument. (JEL J16, J22)
Abstract
					We offer evidence of gender selection within the United States.
Analysis of comprehensive birth data shows unusually high boy-birth
percentages after 1980 among later children (most notably third and
fourth children) born to Chinese and Asian Indian mothers. Based
upon linked data from California, Asian Indian mothers are found
to be significantly more likely to have a terminated pregnancy and to
give birth to a boy when they have previously only given birth to girls.
The observed boy-birth percentages are consistent with over 2,000
"missing" Chinese and Indian girls in the United States between
1991 and 2004. (JEL J11, J16)
Abstract
					We conducted a field experiment to measure the effect of exposure
to newspapers on political behavior and opinion. Before the 2005
Virginia gubernatorial election, we randomly assigned individuals to
a Washington Post free subscription treatment, a Washington Times
free subscription treatment, or a control treatment. We find no effect
of either paper on political knowledge, stated opinions, or turnout in
post-election survey and voter data. However, receiving either paper
led to more support for the Democratic candidate, suggesting that
media slant mattered less in this case than media exposure. Some evidence
from voting records also suggests that receiving either paper led
to increased 2006 voter turnout. (JEL D72, L82)
Abstract
					This paper evaluates income tax reforms in China and India. The
combination of fast income growth and under-indexed tax schedule
in China implies the fraction of the Chinese population subject to
income tax has increased from less than 0.1 percent in 1986 to about
20 percent in 2008, while it has stagnated around 2-3 percent in
India. Chinese income tax revenues, as a share of GDP, increased
from less than 0.1 percent in 1986 to about 1.5 percent in 2005 and
2.5 percent in 2008, while the constant adaptation of exemption
levels and income brackets in India have caused them to stagnate
around 0.5 percent of GDP. (JEL D31, H24, 015, 023, P23, P35)
Abstract
					We investigate the role of racial group loyalty on generosity in a
broadly representative sample of the US adult population. We use
an audiovisual presentation to manipulate beliefs about the race,
income, and worthiness of Hurricane Katrina victims. Respondents
then decide how to divide $100 between themselves and Katrina
victims. We find no effects of victims' race on giving on average.
However, respondents who report feeling close to their racial or ethnic
group give substantially more when victims are of the same race,
while respondents who do not feel close to their group give substantially
less. (JEL D64, J15, Q54)
Abstract
					We exploit a unique outlet-level dataset from a multinational chain
with over 2,500 outlets in 43 countries to investigate the effects of
labor regulations that protect employment. The dataset contains
information on output, materials, and labor costs at a weekly frequency
over several years, allowing us to examine the consequences
of labor market rigidity at a much more detailed level than has been
possible to date. We find that higher labor market rigidity is associated
with significantly higher levels of hysteresis. We also find some
evidence that labor costs are less responsive to sales revenue in more
highly regulated markets. (JEL: E24, J08, J23, K31, M51)
Abstract
					This paper demonstrates that administrative data may be inferior to
survey data under particular circumstances. We examine the effect
of state laws governing the minimum age of marriage in the United
States. The estimated effects of these laws are much smaller when
based on retrospective reports from census versus administrative
records from Vital Statistics data. This discrepancy appears due
to systematic avoidance behavior of two kinds. Some young people
marry in states with less restrictive laws; others appear to have misrepresented
their age on their marriage certificate. Our results have
important implications regarding legal avoidance and the use of
administrative data. (JEL J12 K36)
Abstract
					This paper applies principles from evolutionary biology to the study
of unions. We show that unions that implement the preferred wage
and organizing policies of workers will be displaced in evolutionary
competition by unions that either extract less from firms, allowing
them to live longer, or spend more on union organizing, or both.
This implies that unions with constitutional incumbency advantages
that allow leaders to depart from members' preferences may have a
selective advantage, allowing them to grow at the expense of unions
lacking such provisions. Evidence from the history of American
unions supports these predictions. (JEL A12, J51)
Abstract
					We report on a field experiment providing random grants to microenterprise
owners. The grants generated large profit increases for male
owners but not for female owners. We show that the gender gap does
not simply mask differences in ability, risk aversion, entrepreneurial
attitudes, or differences in reporting behavior, but there is some evidence
that the gender gap is larger in female-dominated industries.
The data are not consistent with a unitary household model, and
imply an inefficiency of resource allocation within households. We
show evidence that this inefficiency is reduced in more cooperative
households. (JEL D13, D14, J16, L25, L26, O12, O16)
Abstract
					Low-achieving students in many school districts are retained in a
grade to allow them to gain the academic or social skills that teachers
believe are necessary to succeed academically. In this paper,
we use plausibly exogenous variation in retention generated by a
test-based promotion policy to assess the causal impact of grade
retention on high school completion. We find that retention among
younger students does not affect the likelihood of high school completion,
but that retaining low-achieving eighth grade students in
elementary school substantially increases the probability that these
students will drop out of high school. (JEL I21, J13)
Abstract
					In 1993, the Indian government introduced debt recovery tribunals
to speed up the resolution of debt recovery claims larger than
a threshold. This paper exploits the staggered introduction of tribunals
across states and the link between overdues and claim size
to implement a differences-in-differences strategy on project loan
data. It finds that the tribunals reduced delinquency for the average
loan by 28 percent. They also lowered the interest rates charged on
larger loans, holding constant borrower quality. This suggests that
the speedier processing of debt recovery suits can lower the cost of
credit. (JEL G21, K41, O16, O17)
Abstract
					We empirically analyze the illicit trade in cultural property and
antiques, taking advantage of different reporting incentives between
source and destination countries. We generate a measure of illicit
trafficking in these goods by comparing imports recorded in United
States' customs data and the (purportedly identical) trade recorded
by customs authorities in exporting countries. This reporting gap
is highly correlated with corruption levels of exporting countries.
This correlation is stronger for artifact-rich countries. As a placebo
test, we do not observe any such pattern for US imports of toys. We
report similar results for four other Western country markets. (JEL
F14, K42, Z11, Z13)
Abstract
					We estimate the effect of early child development on maternal labor
force participation. Mothers of poorly developing children may
remain at home to care for their children. Alternatively, mothers
may enter the labor force to pay for additional educational and
health resources. Which action dominates is the empirical question
we answer in this paper. We control for the potential endogeneity
of child development by using an instrumental variables approach,
uniquely exploiting exogenous variation in child development associated
with child handedness. We find that a one unit increase in
poor child development decreases maternal labor force participation
by approximately 10 percentage points. (JEL J13, J16, J22)
Abstract
					This paper provides new evidence on the long-term benefits of Head
Start using the National Longitudinal Survey of Youth. I compare
siblings who differ in their participation in the program, controlling
for a variety of pre-treatment covariates. I estimate that Head Start
participants gain 0.23 standard deviations on a summary index of
young adult outcomes. This closes one-third of the gap between children
with median and bottom quartile family income, and is about
80 percent as large as model programs such as Perry Preschool. The
long-term impact for disadvantaged children is large despite "fadeout"
of test score gains. (JEL H52, J13, I28, I38)
Abstract
					Large inflows of less educated immigrants may reduce wages paid
to comparably-educated, native-born workers. However, if less educated
foreign- and native-born workers specialize in different production
tasks, because of different abilities, immigration will cause
natives to reallocate their task supply, thereby reducing downward
wage pressure. Using occupational task-intensity data from the
O*NET dataset and individual US census data, we demonstrate that
foreign-born workers specialize in occupations intensive in manual-physical
labor skills while natives pursue jobs more intensive in
communication-language tasks. This mechanism can explain why
economic analyses find only modest wage consequences of immigration
for less educated native-born workers. (JEL J24, J31, J61)
Abstract
					This paper studies the response of fertility to the HIV/AIDS epidemic
in sub-Saharan Africa. I use repeated cross sections of the
Demographic and Health Surveys for 12 countries in sub-Saharan
Africa to examine this question empirically. Using individual birth
histories from these data, I construct estimates of the regional total
fertility rate over time. In a difference-in-differences approach, I
compare regional HIV prevalence to changes in total fertility rates
from the 1980s to the present. My results suggest that HIV/AIDS had
very little impact on fertility, both overall and in a sample of HIV-negative
women. (JEL I12, J13, O12)
Abstract
					This paper investigates the impact of television and radio on social
capital in Indonesia. I use two sources of variation in signal reception -- 
one based on Indonesia's mountainous terrain, and a second
based on the differential introduction of private television throughout
Indonesia. I find that increased signal reception, which leads to
more time watching television and listening to the radio, is associated
with less participation in social organizations and with lower
self-reported trust. Improved reception does not affect village governance,
at least as measured by discussions in village meetings and
by corruption in village road projects. (JEL L82, O15, Z13)
Abstract
					This paper uses random assignment in professional golf tournaments
to test for peer effects in the workplace. We find no evidence that
playing partners' ability affects performance, contrary to recent evidence
on peer effects in the workplace from laboratory experiments,
grocery scanners, and soft fruit pickers. In our preferred specification,
we can rule out peer effects larger than 0.043 strokes for a one
stroke increase in playing partners' ability. Our results complement
existing studies on workplace peer effects and are useful in explaining
how social effects vary across labor markets, across individuals,
and with the form of incentives faced. (JEL D83, J44, L83)
Abstract
					Understanding how heterogeneity in peer group composition affects
academic attainment has important implications for how schools
organize students in group settings. The random assignment of cadets
to companies at West Point affords an opportunity to investigate this
issue empirically. Estimates of the impact of peer group heterogeneity
in math SAT scores on freshmen-year academic performance
reveals that more heterogeneous peer groups have positive effects on
individual grades. High-ability peers account for most of the positive
effect, while low-ability peers have no measureable effect. (JEL I23,
J24, M54)
Abstract
					Using longitudinal elementary school teacher and student data, we
document that students have larger test score gains when their teachers
experience improvements in the observable characteristics of their
colleagues. Using within-school and within-teacher variation, we show
that a teacher's students have larger achievement gains in math and
reading when she has more effective colleagues (based on estimated
value-added from an out-of-sample pre-period). Spillovers are strongest
for less experienced teachers and persist over time, and historical
peer quality explains away about 20 percent of the own-teacher effect,
results that suggest peer learning. (JEL I21, J24, J45)
Abstract
					Economists have strong theoretical predictions about how in-kind
transfers, such as providing vouchers for food, impact consumption.
Despite the prominence of the theory, there is little empirical work
on responses to in-kind transfers, and most existing work fails to
support the canonical theoretical model. We employ difference-indifference
methods to estimate the impact of program introduction
on food spending. Consistent with predictions, we find that food
stamps reduce out-of-pocket food spending and increase overall
food expenditures. We also find that households are inframarginal
and respond similarly to one dollar in cash income and one dollar
in food stamps. (JEL D12, H23, I38)
Abstract
					Cognitive damage from iodine deficiency disorders (IDD) has important
implications for economic growth through its effect on human
capital. To gauge the magnitude of this influence, we evaluate the
impact on schooling of reductions in IDD from intensive iodine supplementation
in Tanzania. Our findings suggest a large effect of in
utero iodine on cognition and human capital: treated children attain
an estimated 0.35-0.56 years of additional schooling relative to siblings
and older and younger peers. Furthermore, the effect appears
to be substantially larger for girls, consistent with laboratory evidence
indicating greater cognitive sensitivity of female fetuses to
maternal thyroid deprivation. (JEL I12, I21, J16, O15)
Abstract
					Elementary consumer theory assumes prices affect demand only
because they affect the budget constraint (BC). Alternative models,
and some evidence, suggest prices can affect demand through other,
non-BC channels (e.g., by signaling quality). This paper uses a lab
and a field experiment to disentangle BC from non-BC effects of
prices on demand. In the lab, we find that although prices positively
affect stated willingness to pay, non-BC price elasticities are considerably
smaller than BC price elasticities, are often statistically
insignificant, and do not increase with product uncertainty. We do
not detect any non-BC effects in our field experiment. (JEL C93,
D12, M31)
Abstract
					We present new evidence on the randomization methods used in existing
experiments, and new simulations comparing these methods.
We
find that many papers do not describe the randomization in detail,
implying that better reporting is needed. Our simulations suggest
that in samples of 300 or more, the different methods perform similarly.
However, for very persistent outcome variables, and in smaller
samples, pair-wise matching and stratification perform best and
appear to dominate the rerandomization methods commonly used in
practice. The simulations also point to specific recommendations for
which variables to balance on, and for which controls to include in
the ex post analysis. (JEL C83, C93, O12)
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. Using both panel-data methods and case studies, we find that each additional uninsured person costs hospitals approximately $800 each year. Increases in the uninsured population also lower hospital profit margins, suggesting that hospitals do not pass along all uncompensated-care costs to other parties such as hospital employees or privately insured patients. A hospital's uncompensated-care costs also increase when a neighboring hospital closes.
Abstract
					We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but highly responsive to the "price of prejudice," i.e., to the opportunity cost of choosing a less productive worker on ethnic grounds. Discriminators are on average willing to forego 8 percent of their earnings to avoid a coworker of the other ethnic type. The evidence suggests that animus rather than statistical discrimination explains observed behavior.
Abstract
					We exploit a change in the compulsory schooling law in Turkey to estimate the causal effects of education on the prevalence of domestic violence. By adopting a regression discontinuity design, we find that the reform increased women's schooling by one year to one-and-a-half years and improved their labor market outcomes, with particularly strong effects for women raised in rural areas. The increase in education among rural women led to an increase in self-reported psychological violence and financial control behavior, without changes in physical violence, partner characteristics, or women's attitudes towards such violence.
Abstract
					Alcohol abuse is widely blamed for the very high rate of male mortality in Russia. I estimate a structural model of the demand for alcohol that incorporates two features of alcohol consumption, peer effects and habits. I use a kink in the policy regime of the excise tax on alcohol and regional variation in alcohol regulations to estimate a price elasticity of demand for alcohol. I find that peer influence and habits are critical determinants of the response of alcohol demand to price changes. The estimates imply that increases in alcohol prices would yield significant reductions in mortality.
Abstract
					Does new media promote accountability in nondemocratic countries, where offline media is often suppressed? We show that blog posts, which exposed corruption in Russian state-controlled companies, had a negative causal impact on their market returns. For identification, we exploit the precise timing of blog posts by looking at within-day results with company-day fixed effects. Furthermore, we show that the posts are ultimately associated with higher management turnover and less minority shareholder conflicts. Taken together, our results suggest that social media can discipline corruption even in a country with limited political competition and heavily censored traditional media.
Abstract
					A central argument for school choice is that parents can choose schools wisely. This principle may underlie why lottery-based school evaluations have almost always reported positive or zero achievement effects. This paper reports on a striking counterexample to these results. We use randomized lotteries to evaluate the Louisiana Scholarship Program, a voucher plan that provides public funds for disadvantaged students to attend private schools. LSP participation lowers math scores by 0.4 standard deviations and also reduces achievement in reading, science, and social studies. These effects may be due in part to selection of low-quality private schools into the program.
Abstract
					In many emerging democracies women are less likely to vote than men and, when they do vote, are likely to follow the wishes of male household and clan heads. We assess the impact of a voter awareness campaign on female turnout, candidate choice and party vote shares. Geographic clusters within villages were randomly assigned to treatment or control, and within treated clusters, some households were not targeted. Compared to women in control clusters, both targeted and untargeted women in treated clusters are 11 percentage points more likely to vote, and are also more likely to exercise independence in candidate choice, indicating large spillovers. Data from polling stations suggests that treating 10 women increased female turnout by about seven votes, resulting in a cost per vote of US$3.1. Finally, a 10 percent increase in the share of treated women at the polling station led to a 7 percent decrease in the share of votes of the winning party.
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.
Abstract
					Antiretroviral therapy (ART), a treatment for AIDS, is rapidly increasing life expectancy throughout sub-Saharan African countries affected by the AIDS epidemic. This change in life expectancy has potentially profound influences on life-cycle decisions. A longer life expectancy increases the value of human capital investment, while the effect on savings is theoretically ambiguous and life-cycle saving could increase or decrease. This paper uses spatial and temporal variation in ART availability to evaluate the impact of ART provision on savings and investment. We find that ART availability significantly increases savings, expenditures on education, and children's schooling, including among HIV-negative individuals who do not directly benefit from ART. These results are not driven by the direct health effects of treatment or reductions in caretaking responsibilities, but rather by reduced perceptions of mortality risk after ART has become available.
Abstract
					We construct a unique individual-level dataset linking preschool blood lead levels with third grade test scores for Rhode Island children born 1997–2005. Using two identification strategies, we show for the first time that reductions of lead from even historically low levels have significant positive effects. A one-unit decrease in average blood lead levels reduces the probability of being substantially below proficient in reading (math) by 0.96 (0.79) percentage points on a baseline of 12 (16) percent. Since disadvantaged children have greater exposure to lead, lead poisoning may be one of the causes of continuing disparities in test scores.
Abstract
					We study the impact of post-1990 school finance reforms, during the so-called "adequacy" era, on absolute and relative spending and achievement in low-income school districts. Using an event study research design that exploits the apparent randomness of reform timing, we show that reforms lead to sharp, immediate, and sustained increases in spending in low-income school districts. Using representative samples from the National Assessment of Educational Progress, we find that reforms cause increases in the achievement of students in these districts, phasing in gradually over the years following the reform. The implied effect of school resources on educational achievement is large.
Abstract
					Can financial incentives resolve the fertility-sex ratio trade-off faced by countries with persistent son preference and easy access to sex-selection technology? An Indian program, Devi Rupak, that seeks to lower fertility and the sex ratio is unable to do so. Although fertility decreases, the sex ratio at birth worsens as high son preference families are unwilling to forgo a son despite substantially higher benefits for a daughter. Thus, financial incentives may only play a limited role in the resolution of the fertility-sex ratio conflict.
Abstract
					Using new large-scale, administrative data matching remittances and monthly payroll disbursals, we demonstrate how migrants' earnings in the United Arab Emirates affect their remittances. We consider several types of income changes: Ramadan, weather shocks, a labor reform and returns to time in the UAE. We demonstrate that two key characteristics of the income changes that affect the income elasticity of remittances are the observability of the income and whether the income change is positive or negative. The results are consistent with a private information model where remittances are viewed as payments in an income-sharing contract.
Abstract
					We investigate the impact of a program providing asset transfers and business training to low income individuals in Chile, and asked whether a larger asset transfer would magnify the program's impact. We randomly assigned participation in a large scale, publicly run micro-entrepreneurship program and evaluated its effects over 45 months. The program improved business practices, employment, and labor income. In the short run, self-employment increased by 14.8/25.2 percentage points for a small/large asset transfer. In the long run, individuals assigned to a smaller transfer were 9 percentage points more likely to become wage workers, whereas those assigned to larger transfers tended to remain self-employed.
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.
Abstract
					We estimate the effect of grant aid on City University of New York (CUNY) students' borrowing and attainment using a regression discontinuity/kink design based on the federal Pell Grant formula. Each dollar of grant aid reduces loans by $1.80 among borrowers. We only find crowd-out of this magnitude in colleges that, like CUNY, "offer" no loan aid and require students to opt into borrowing. We develop and empirically support a model that shows opt-in or other fixed borrowing costs can lead grants to crowd out large amounts of loan aid, lowering some students attainment by reducing their liquid resources.
Abstract
					Hurricane Katrina destroyed over 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane's long-term economic impact on its victims. Hurricane Katrina had large and persistent impacts on where people live, but small and surprisingly transitory effects on employment and income. Within just a few years, Katrina victims' incomes actually surpass that of controls from similar unaffected cities. The strong economic performance of Hurricane Katrina victims is particularly remarkable given that the hurricane struck with essentially no warning.
Abstract
					We examine the effects on mortality and health due to a major Swedish educational reform that increased the years of compulsory schooling. Using the gradual phase-in of the reform between 1949 and 1962 across municipalities, we estimate insignificant effects of the reform on mortality in the affected cohort. From the confidence intervals, we can rule out effects larger than 1–1.4 months of increased life expectancy. We find no significant impacts on mortality for individuals of low socioeconomic status backgrounds, on deaths that are more likely to be affected by behavior, on hospitalizations, and consumption of prescribed drugs.
Abstract
					We experimentally test the impact of expanding access to basic bank accounts in Uganda, Malawi, and Chile. Over two years, 17, 10, and 3 percent of treatment individuals made five or more deposits, respectively. Average monthly deposits in treatment accounts were sizable among users, corresponding to the seventy-ninth, ninety-first, and ninety-sixth percentiles of baseline savings. Survey data show no discernible intention-to-treat effects on savings or any downstream outcomes, though we cannot reject large effect sizes for active users. Results suggest that policies merely focused on expanding access to basic accounts are unlikely to improve welfare noticeably on average.
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 a year after the Earthquake. Interestingly, 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. Furthermore, these men gamble more, which is consistent with the direction of changes in risk preferences. We find no such pattern for women.
Abstract
					Working with five Ethiopian firms, we randomized applicants to an industrial job offer, an "entrepreneurship" program of $300 plus business training, or control status. Industrial jobs offered more and steadier hours but low wages and risky conditions. The job offer doubled exposure to industrial work but, since most quit within months, had no impact on employment or income after a year. Applicants largely took industrial work to cope with adverse shocks. This exposure, meanwhile, significantly increased health problems. The entrepreneurship program raised earnings 33 percent and provided steadier hours. When barriers to self-employment were relieved, applicants preferred entrepreneurial to industrial labor.
Abstract
					Access to banks is rapidly increasing worldwide, and allows account-based instead of cash transfers. We conduct a randomized experiment documenting the impact of the payment method on savings behavior. In India, we allocate identical weekly payments into a bank account (treated) or in cash (control). Savings in the account increase by 131 percent within three months, and the effect is long lasting. We also show that cash payments increase consumption and that—once everyone is paid in cash again—the saving patterns no longer differ. We interpret these findings as a default effect, and we further discuss plausible mechanisms.
Abstract
					This paper provides revealed-preference estimates of the monetary value to workers of a lower unemployment rate at the time of job separation. By examining the decision between reenlisting and exiting the military, we find that service members would sacrifice 1.5-2 percent in earnings to avoid a 1 percentage point increase in the home-state unemployment rate during job search. Comparing these quantities to realized earnings losses for those who separate suggests that the value of non-work time and other factors (e.g., private and public transfers) offset less than one-third of the earnings losses caused by exiting the military into a weak labor market.
Abstract
					We investigate the effects of free trade agreements (FTAs) on tariffs of non-member countries. In our multi-country model, the formation of an FTA leads members to reduce their exports to the rest of the world. Such external trade diversion weakens the ability of non-members to manipulate their terms of trade vis-a-vis FTA members, a mechanism that induces them to lower their tariffs on FTA members. We empirically confirm this insight using industry-level trade data for 192 importing and 253 exporting countries, along with information on all FTAs formed in the world during 1989-2011.
Abstract
					Employing the universe of juvenile court decisions in a U.S. state between 1996 and 2012, we analyze the effects of emotional shocks associated with unexpected outcomes of football games played by a prominent college team in the state. We find that unexpected losses increase sentence lengths assigned by judges during the week following the game. Unexpected wins, or losses that were expected to be close contests ex ante have no impact. The effects of these emotional shocks are asymmetrically borne by black defendants. The impact of upset losses on sentence lengths is larger for defendants if their cases are handled by judges who received their bachelor's degrees from the university with which the football team is affiliated. 
Different falsification tests and a number of auxiliary analyses demonstrate the robustness of the findings. These results provide evidence for the impact of emotions in one domain on decisions in a completely unrelated domain among a uniformly highly educated group of individuals (judges) who make decisions after deliberation that involve high stakes (sentence lengths). They also point to the existence of a subtle and previously-unnoticed capricious application of sentencing.
Abstract
					The historical rise in female labor force participation has flattened in recent decades, but the proportion of mothers working full-time has increased. We provide the first empirical evidence that the increase in mothers' working hours is amplified through the influence of family peers. For identification, we exploit partially overlapping peer groups. Using Norwegian administrative data, we find positive and statistically significant family peer effects but only on the intensive margin of women's labor supply. These are in part driven by concerns about time allocation from early childhood and concerns about earnings from age five.
Abstract
					I investigate whether a school-based deworming intervention in Kenya had long-term effects on young children. I exploit positive externalities from the program to estimate impacts on younger children who were not directly treated. Ten years after the intervention, I find large cognitive effects—comparable to between 0.5 and 0.8 years of schooling—for children who were less than one year old when their communities received school-based mass deworming treatment. I find no effect on child height or stunting. I also estimate effects among children whose older siblings received treatment directly; in this subpopulation, cognition effects are nearly twice as large.
Abstract
					This paper reports on the results of a large infrastructure investment experiment in which $68 million in spending was randomly allocated across a set of low-income urban neighborhoods in Mexico. We show that the program resulted in substantial improvements in access to infrastructure and increases in private investment in housing. While a pre-committed index of social capital did not improve, we find an apparent decrease in the incidence of personal assault and teen misbehavior in neighborhoods where investments were made. The program increased the aggregate real estate value in program neighborhoods by two dollars for every dollar invested.
Abstract
					We investigate the effect of a financial lottery program in Lesotho with relatively low expected payments but a chance to win a high prize conditional on negative test results for sexually transmitted infections. The intervention resulted in a 21.4 percent reduction in HIV incidence over two years. Lottery incentives appear to be particularly effective in targeting individuals with ex ante risky sexual behavior, consistent with the hypothesis that lotteries are more valued by individuals willing to take risks.
Abstract
					Lead pollution is consistently linked to cognitive and behavioral impairments, yet little is known about the benefits of public health interventions for children exposed to lead. This paper estimates the long-term impacts of early-life interventions (e.g. lead remediation, nutritional assessment, medical evaluation, developmental surveillance, and public assistance referrals) recommended for lead-poisoned children. Using linked administrative data from Charlotte, NC, we compare outcomes for children who are similar across observable characteristics but differ in eligibility for intervention due to blood lead test results. We find that the negative outcomes previously associated with early-life exposure can largely be reversed by intervention.
Abstract
					I study the relative academic performance of students tracked or randomly assigned to South African university dormitories. Tracking reduces low-scoring students' GPAs and has little effect on high-scoring students, leading to lower and more dispersed GPAs. I also directly estimate peer effects using random variation in peer groups across dormitories. Living with higher-scoring peers raises students' GPAs, particularly for low-scoring students, and peer effects are stronger between socially proximate students. This shows that much of the treatment effect of tracking is attributable to peer effects. These results present a cautionary note about sorting students into academically homogeneous classrooms or neighborhoods.
Abstract
					African political leaders have a tendency to favor members of their own ethnic group. Yet for all other ethnic groups in a country, it is unclear whether having a similar ethnicity to the leader is beneficial. To shed light on this issue, I use a continuous measure of linguistic similarity to quantify the ethnic similarity of a leader to all ethnic groups in a country. Combined with panel data on 163 ethnic groups partitioned across 35 sub-Saharan countries, I use within-group time variation in similarity that results from a partitioned group's concurrent exposure to multiple national leaders. 
Findings show that ethnic favoritism is more widespread than previously believed: in addition to evidence of coethnic favoritism, I document evidence of non-coethnic favoritism that typically goes undetected in the absence of a continuous measure of similarity. I also find that patronage tends to be targeted toward ethnic regions rather than individuals of a particular ethnic group. I relate these results to the literature on coalition building, and provide evidence that ethnicity is one of the guiding principles behind high-level government appointments.
Abstract
					This paper examines mechanisms driving the more rapid increases in wage inequality in larger cities between 1980 and 2007. Production function estimates indicate strong evidence of capital-skill complementarity and increases in the skill bias of agglomeration economies in the context of rapid skill-biased technical change. Immigration shocks are the source of identifying variation across cities in changes to the relative supply of skilled versus unskilled labor. Estimates indicate that changes in the factor biases of agglomeration economies rationalize at least 80 percent of the more rapid increases in wage inequality in larger cities.
Abstract
					Lack of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social proximity and network centrality may affect cooperation. To assess the extent to which networks substitute for enforcement, we conducted high-stakes games across 34 Indian villages. We randomized subjects' partners and whether contracts were enforced to estimate how partners' relative network position differentially matters across contracting environments. While socially close pairs cooperate even without enforcement, distant pairs do not. Individuals with more central partners behave more cooperatively without enforcement. Capacity for cooperation in the absence of contract enforcement, therefore, depends on the subjects' network position.
Abstract
					This paper exploits a unique feature of China's history, the "sent-down youth" (SDY) program, to study the effects of access to internal migration. We show that temporary migration due to the SDY program created lasting inter-province links. We interact these links with two time-varying pull measures in potential destinations. Decades after the SDY program ended, increased access to migration in cities which sent SDY leads to higher rates of migration from provinces where those SDY temporarily resided. We find that improved access to migration leads to lower consumption volatility and lower asset-holding. Furthermore, household production shifts into high-risk, high-return activities.
Abstract
					How do domestic firms respond to the threat of foreign competition? This paper quantifies foreign competition threats by exploiting news of potential multinational investments from over 35,000 media outlets around the world. Using firm-specific measures of foreign competition threat, the analysis shows that domestic firms respond by upgrading productivity, raising innovation, and altering product composition. However, there is a U-shape relationship between initial productivity and productivity growth where the right and left tails upgrade productivity through innovation and product dropping, respectively. These responses constitute an economically important source of gains and convey new implications for the timing of economic policies.
Abstract
					This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and
 income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime.
Abstract
					We use a randomized controlled trial to demonstrate that inexperienced female microenterprise owners in a Kenyan slum benefit from mentorship by an experienced entrepreneur in the same community. Mentorship increases profits by 20 percent on average with initially large effects that fade as matches dissolve. We conduct a formal business education intervention, which has no effect on profits despite changes in business practice. Our results demonstrate that missing information is a salient barrier to profitability, but the type of information matters: access to the localized, specific knowledge of mentors increases profit while abstract, general information from the class does not.
Abstract
					Using a randomized experiment in Chile we study the impact role models have in the context of a training program for micro-entrepreneurs. We show that being in a group randomly chosen to be visited by a successful alumnus of the program increases household income one year after, mostly due to increased business participation and business income. We also randomized the provision of personalized "consulting sessions" vis-á-vis group sessions, and observe similar effects on income, with the role model intervention being significantly more cost effective and better suited for less experienced businesses.
Abstract
					This paper examines the economic consequences of terror attacks by exploiting the inherent randomness in the success or failure of terror attacks. The findings suggest that successful attacks, in comparison to failed attacks, reduce the number of jobs and total earnings in targeted counties by approximately 2 percent in the years following the attack. Analyzing the channels, I find that successful attacks affect, in particular, specific industries such as housing. Last, I show that successful attacks receive more media coverage and increase levels of consumer pessimism in terms of business conditions and buying conditions.
Abstract
					We study how relationship stability of couples is affected by an increase in fathers' involvement in staying home from work with young children. We make use of a parental leave reform in Sweden that earmarked one month of paid leave to each parent in a regression discontinuity difference-in-differences (RD-DD) framework. Couples who were affected by the reform increased the take-up of fathers' leave but also increased their probability of separation compared to unaffected couples. We argue that the separation effect can be explained by the degree of restrictiveness of the policy in combination with role conflicts in traditional family constellations.
Abstract
					Individuals with obesity and related conditions are often reluctant to change their diet. Evaluating the details of this reluctance is hampered by limited data. I use household scanner data to estimate food purchase response to a diagnosis of diabetes. I use a machine learning approach to infer diagnosis from purchases of diabetes-related products. On average, households show 
significant, but relatively small, calorie reductions. These reductions are concentrated in unhealthy foods, suggesting they reflect real efforts to improve diet. There is some heterogeneity in calorie changes across households, although this heterogeneity is not well predicted by demographics or baseline diet, despite large correlations between these factors and diagnosis. I suggest a theory of 
behavior change which may explain the limited overall change and the fact that heterogeneity is not predictable.
Abstract
					Do wealth shocks affect the health of elderly in developed countries? I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 1998–2011 Health and Retirement Study I construct wealth shocks as the interaction of stock holdings with stock market changes. These wealth shocks predict wealth changes and strongly affect health outcomes. A 10% wealth loss leads to an impairment of 2–3% of a standard deviation in physical health, mental health and survival rates.
Abstract
					We study whether incumbents facing uncontested elections channel public spending towards co-partisan officials more than is the case of incumbents that are worried about reelection. We draw on data on capital transfers allocated by Spanish regions to local governments during 1995–2007. Using a regression discontinuity design, we document strong and robust effects. We find that a 
mayor belonging to the party of the regional president obtains twice the amount in grants received by an opposition's mayor. This effect is much greater for regional incumbents that won the previous election by a large margin, but it disappears for highly competitive elections.
Abstract
					We propose a novel methodology to uncover the sorting pattern in labor markets. We identify the strength of sorting solely from a ranking of firms by profits. To discern the sign of sorting, we build a noisy ranking of workers from wage data. Our test for the sign of sorting is consistent even with noisy worker rankings. We apply our approach to a panel dataset that combines social security earnings records with detailed financial data for firms in the Veneto region of Italy. We find robust evidence of positive sorting. The correlation between worker and firm types is about 52%.
Abstract
					This paper studies whether distance shapes credit allocation by estimating the impact of bank branch closings during the 2000s on local access to credit. To generate plausibly exogenous variation in the incidence of closings, I use an instrument based on within-county, tract-level variation in exposure to post-merger branch consolidation. Closings lead to a persistent decline in local small business lending. Annual originations fall by $453K after a closing, off a baseline of $4.7 million, and remain depressed for up to 6 years. The effects are very localized, dissipating within 6 miles, and are especially severe during the financial crisis.
Abstract
					This paper provides experimental evidence on the effect of increased competition on prices and quality in the retail sector. We randomized the entry of 61 firms into 72 markets serving the beneficiaries of a conditional cash transfer program in the Dominican Republic. Six months after the intervention entry into the market led to reductions in prices ranging from 2 to 6 percent and to a statistically significant improvement in self-reported service quality. Prices dropped more in areas where the number of entrants was larger. Competition seems to have driven part of the clientele away from incumbent retailers.
Abstract
					Despite evidence from multiple randomized evaluations of microcredit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models. I find the impact on household business and consumption variables is unlikely to be transformative and may be negligible. I find reasonable external validity: true heterogeneity in effects is moderate, and approximately 60 percent of observed heterogeneity is sampling variation. Households with previous business experience have larger but more heterogeneous effects. Economic features of microcredit interventions predict variation in effects better than studies' evaluation protocols.
Abstract
					We combine a randomized experiment with administrative data to study the effects of mandatory job search periods in the Dutch welfare system. Job search periods postpone the first welfare benefits payment and encourage applicants to start searching for jobs actively. Job search periods substantially reduce benefits take up. The decline in benefits receipt is permanent, but fully compensated by increased earnings because of higher reemployment rates. We do not find detectable effects on health and crime outcomes, nor do we observe income declines for more vulnerable applicants. Our results suggest that job search periods are an effective instrument for targeting benefits to welfare applicants.
Abstract
					Social interactions may explain the large variance in criminal activity across neighborhoods and time. We present direct evidence of social spillovers in crime using random variation in neighborhood residence along opposite sides of a newly drawn school boundary. We first show evidence for agglomeration effects—within small neighborhood areas, grouping more disadvantaged students together in the same school increases total crime. We then show that these youths are more likely to be arrested for committing crimes together—to be "partners in crime". Our results show that neighborhood and school segregation increase crime by fostering social interactions between at-risk youth.
Abstract
					We investigate the effect of pollution on worker productivity in the service sector by focusing on two call centers in China. Using precise measures of each worker's daily output linked to daily measures of pollution and meteorology, we find that higher levels of air pollution decrease worker productivity. These results manifest themselves at levels of pollution commonly found in large cities throughout the developing and developed world.
Abstract
					We examine day-to-day fluctuations in worker-level output at two manufacturing sites in China. Ambient fine-particle (PM2.5) pollution is severe but significantly variable, largely due to exogenous atmospheric ventilation. We obtain an insignificant immediate output response from concurrent (same-shift) variation in particle pollution. We then allow worker outcomes to respond to day-to-day variation in pollution with up to 30 days of delay. We uncover statistically significant adverse output effects from more prolonged exposure, but effects are not large. A substantial +10 μg/m3 PM2.5 variation sustained over 25 days reduces daily output by 1%.
Abstract
					A field experiment in Sri Lanka provided wage subsidies to randomly chosen microenterprises to test whether hiring additional labor benefits such firms, and whether a short-term subsidy can have a lasting impact on firm employment. Using 12 rounds of surveys to track dynamics four years after treatment, we find that firms increased employment during the subsidy period. Treated firms were more likely to survive, but there was no lasting impact on employment, and no effect on profitability or sales either during or after the subsidy period. There is some heterogeneity in effects; the subsidies have more durable effect on manufacturers.
Abstract
					"Nudge"-style interventions are often deemed successful if they generate large behavior change at low cost, 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 gains because they ignore significant costs incurred by nudge recipients. Overall, home energy report welfare gains might be overstated by $620 million. We develop a prediction algorithm for optimal targeting; this approach would double the welfare gains.
Abstract
					I study the role of financial incentives as signals of job characteristics when these are unknown to potential applicants. To this end, I create experimental variation in expected earnings and use 
that to estimate the effect of financial incentives on candidates' perception of a brand-new health-promoter position in Uganda and on the resulting size and composition of the applicant pool. 
I find that more lucrative positions are perceived as entailing a lower positive externality for the community and discourage agents with strong pro-social preferences from applying. While 
higher financial incentives attract more applicants and increase the probability of filling a vacancy, the signal they convey reduces the ability to recruit the most socially motivated agents, who 
are found to stay longer on the job and to perform better.
Abstract
					We investigate whether preschool-age children exposed to Sesame Street when it aired in 1969 experienced improved educational and labor market outcomes. We exploit geographic variation in broadcast reception derived from technological factors, namely UHF versus VHF transmission. This variation is then related to Census data on grade-for-age status, educational attainment, and labor market outcomes. The results indicate that Sesame Street improved school performance, particularly for boys. The point estimates for long-term educational and labor market outcomes are generally imprecise.
Abstract
					This study tests for adverse selection in the Affordable Care Act (ACA) health insurance exchanges established in 2014 and quantifies the welfare consequences. Using a new statewide dataset of medical claims from Colorado, I use plausibly exogenous premium variation generated by geographic discontinuities to test for selection. Specifically, each $1 increase in monthly premiums causes a $0.85–0.95 increase in annual medical expenditures of the insured population in 2014, with attenuated effects in 2015. These estimates are consistent with the prevalence of chronic conditions and difference-in-differences estimates. The results offer the first quasi-experimental evidence of adverse selection in the ACA markets.
Abstract
					Most health insurance uses cost-sharing to reduce excess utilization. Supplemental insurance can blunt the impact of this cost-sharing, increasing utilization and exerting a negative externality on the primary insurer. This paper estimates the effect of private Medigap supplemental insurance on public Medicare spending using Medigap premium discontinuities in local medical markets that span state boundaries. Using administrative data on the universe of Medicare beneficiaries, we estimate that Medigap increases an individual's Medicare spending by 22.2 percent. We calculate that a 15 percent tax on Medigap premiums generates savings of $12.9 billion annually with a standard error of $4.9 billion.
Abstract
					Using linked employer-employee data for West Germany, I investigate the role of growing wage differentials between firms in the slowdown of gender wage convergence since the 1990s. The results show that two factors are at play: first, high-wage firms experience higher wage growth and employ disproportionately more men, and second, male firm premiums grow faster than female premiums in the same firms. These developments were catalyzed by a decline of union coverage, coupled with more firm-specific wage setting in collective bargaining agreements. Taken together, these conditions prevented the gender gap from narrowing by approximately 15 percent between the 1990s and 2000s.
Abstract
					We provide first evidence that a soft commitment device enhances progress in education and, more generally, improves the completion of complex tasks—such as passing exams. In our field experiment, students can sign a nonbinding agreement and commit to staying on track for graduation. We find that those who were offered the soft commitment device are more likely to sign up for, take part in, and pass exams. A pure reminder treatment does not change behavior, which suggests that the effects are not driven by increased salience. We also show that procrastinators benefit most from the commitment device.
Abstract
					The US tuberculosis (TB) movement pioneered many of the strategies of modern public health campaigns. Using newly transcribed mortality data at the municipal level for the period 1900–1917, we explore the effectiveness of public health measures championed by the TB movement, including the establishment of sanatoriums and open-air camps, prohibitions on public spitting and common cups, and requirements that local health officials be notified about TB cases. Our results suggest that these and other anti-TB measures can explain, at most, only a small portion of the overall decline in pulmonary TB mortality observed during the period under study.
Abstract
					We examine the consequences of survey underreporting of transfer programs for prototypical analyses of low-income populations. We link administrative data for four transfer programs to the CPS to correct its severe understatement of transfer dollars received. Using survey data sharply understates the income of poor households, distorts our understanding of program targeting, and greatly understates the effects of anti-poverty programs. Using the combined data, the poverty-reducing effect of all programs together is nearly doubled. The effect of housing assistance is tripled. Correcting survey error often reduces the share of single mothers falling through the safety net by one-half or more.
Abstract
					We examine intra-household gender-differentiated effects of property rights securitisation following West Bengal's tenancy registration program, using two independently gathered datasets. In both samples, higher program implementation increased male child survival rates in families without a firstborn son, but not in those that already have a firstborn male child. We argue this reflects intensified son preference as land rights improve, ostensibly to ensure a male heir to inherit land. Consistent with this, girls with firstborn brothers also experience increased survival, but not girls with firstborn sisters. The gender bias manifests both in infant mortality rates and the sex ratio at birth.
Abstract
					We analyze the impact of outdoor temperature on high-stakes decisions (immigration adjudications) made by professional decision-makers (US immigration judges). In our preferred specification, which includes spatial, temporal, and judge fixed effects, and controls for various potential confounders, a 10°F degree increase in case-day temperature reduces decisions favorable to the applicant by 6.55 percent. This is despite judgements being made indoors, "protected" by climate control. Results are consistent with established links from temperature to mood and risk appetite and have important implications for evaluating the influence of climate on "cognitive output."
Abstract
					Using a carefully designed series of public goods games, we compare, across monogamous and polygynous households, the willingness of husbands and wives to cooperate to maximize household gains. Compared to monogamous husbands and wives, polygynous husbands and wives are less cooperative, one with another, and co-wives are least cooperative, one with another. The husbands' and wives' behavior in a corresponding series of inter-household games indicates that these differences cannot be attributed to selection of less cooperative people into polygyny. Finally, behavior in polygynous households is more reciprocal and less apparently altruistic.
Abstract
					The paper tests the effects of plan making on job search and employment. In a field experiment with unemployed youths, participants who complete a detailed job search plan increase the number of job applications submitted (by 15 percent) but not the time spent searching, consistent with intention-behavior gaps observed at baseline. Job seekers in the plan-making group diversify their search strategy and use more formal search channels. This greater search efficiency and effectiveness translate into more job offers (30 percent) and employment (26 percent). Weekly reminders and peer support sub-treatments do not improve the impacts of plan making.
Abstract
					We compare health care spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their health care spending. Adjusting for enrollee mix, health care spending per enrollee in MA is 9 to 30 percent lower than in Traditional Medicare (TM), depending on the way we define "comparable" enrollees. Spending differences primarily reflect differences in health care utilization, with similar reductions for "high-value" and "low-value" care, rather than health care prices. We present evidence consistent with MA plans encouraging substitution to less expensive care and engaging in utilization management.
Abstract
					In 2013, the Supreme Court struck down parts of the Voting Rights Act that mandated federal oversight of election laws in discriminatory jurisdictions, prompting a spate of controversial new voting rules. Utilizing difference-in-differences to examine the act's 1975 revision, I provide the first estimates of the effects of "preclearance" oversight. I find that preclearance increased long-run voter turnout by 4-8 percentage points, due to lasting gains in minority participation. Surprisingly, Democratic support dropped sharply in areas subject to oversight. Using historical survey and newspaper data, I provide evidence that this was the result of political backlash among racially conservative whites.
Abstract
					In 2005 the city of Bogota, Colombia, introduced three conditional cash transfer programs for secondary schooling, randomly assigning socioeconomically disadvantaged students to different payment structures. We show, through administrative data, that forcing families to save one-third of the transfer increases long-term human capital accumulation by means of additional tertiary education—which is not incentivized—, casting doubt on conditionalities as a driving mechanism. Directly incentivizing on-time tertiary enrollment does no better than forcing families to save a portion of the transfer. Whereas forcing families to save increases enrollment in four-year universities, incentivizing tertiary enrollment only increases enrollment in low-quality colleges.
Abstract
					We show that costs of adjustment as opposed to low perceived value may explain why improved quality care practices diffuse slowly in the medical industry. Using a randomized field experiment conducted in Argentina, we find that temporary financial incentives paid to health clinics for the early initiation of prenatal care 
motivated providers to test and develop new strategies to locate and encourage pregnant women to seek care in the first trimester of pregnancy. These innovations 
raised the rate of early initiation of prenatal care by 34 percent while the incentives were being paid in the treatment period. We also find that this increase persisted 
for at least 24 months after the incentives ended. We show that this is consistent with the presence of up-front costs from adjusting care processes that made it too 
expensive to develop and implement new strategies to increase early initiation of care in the absence of the incentives. Despite large increases in early initiation of prenatal care, we find no effects on health outcomes.
Abstract
					Despite massive investments in teacher professional development (PD) programs in developing countries, there is little evidence on their effectiveness. We present results of a large-scale, randomized evaluation of a national PD program in China in which teachers were randomized to receive PD; PD plus follow-up; PD plus evaluation of the command of PD content; or no PD. Precise estimates indicate PD and associated interventions failed to improve teacher and student outcomes after one year. A detailed analysis of the causal chain shows teachers find PD content to be overly theoretical, and PD delivery too rote and passive, to be useful.
Abstract
					The delivery of basic health products and services remains abysmal in many parts of the world where child mortality is high. This paper shows the results from a large-scale randomized evaluation of a novel approach to health care delivery. In randomly selected villages, a sales agent was locally recruited and incentivized to conduct home visits, educate households on essential health behaviors, provide medical advice and referrals, and sell preventive and curative health products. Results after 3 years show substantial health impact: under 5-years child mortality was reduced by 27 percent at an estimated average cost of $68 per life-year saved.
Abstract
					We estimate effects of the Pell Grant—the largest US federal grant for college students—using administrative data from Texas public colleges and a discontinuity in grant generosity for low-income students. Within four-year institutions, eligibility for additional grant aid significantly increases first-time students' degree completion and later earnings. Our estimated impacts on earnings alone are enough to fully recoup government expenditures within 10 years, suggesting that financial aid likely pays for itself several times over.
Abstract
					We use lab experiments and field data from the Dutch Math Olympiad to show that women are more likely than men to stop competing if they lose. In a math competition in the lab, women are much less likely than men to choose competition again after losing in the first round. In the Math Olympiad, girls, but not boys, who fail to make the second round are less likely to compete again one year later. This gender difference in the reaction to competition outcomes may help to explain why fewer women make it to the top in business and academia.
Abstract
					Nationwide, graduation rates at community colleges are discouragingly low. This randomized experiment provides evidence that graduation rates can be increased dramatically. The City University of New York's (CUNY) Accelerated Study in Associate Programs (ASAP) is a comprehensive, integrated, 3-year program that has an estimated 18 percentage point effect on 3-year graduation rates, increases 6-year graduation rates by an estimated 10 percentage points, and helps students graduate more quickly. Graduation effect estimates of this magnitude are exceptional in randomized experiments conducted in higher education, offering hope of what is possible when serving low-income students.
Abstract
					We investigate the links between capital cities, conflict, and the quality of governance, starting from the assumption that incumbent elites are constrained by the threat of insurrection, and that the latter is rendered less effective by distance from the seat of political power. We show evidence that (i) conflict is more likely to emerge (and dislodge incumbents) closer to the capital, and (ii) isolated capitals are associated with misgovernance. The results hold only for relatively nondemocratic countries and for intrastate conflicts over government (as opposed to territory)—exactly the cases where our central assumption should apply.
Abstract
					Boys born to disadvantaged families have higher rates of disciplinary problems, lower achievement scores, and fewer high school completions than girls from comparable backgrounds. Using birth certificates matched to schooling records for Florida children born 1992–2002, we find that family disadvantage disproportionately
 impedes the pre-market development of boys. The differential effect of family disadvantage on boys is robust to specifications within schools and neighborhoods as 
well as across siblings within families. Evidence supports that this is the effect of the postnatal environment; family disadvantage is unrelated to the gender gap in 
neonatal health. We conclude that the gender gap among black children is larger than among white children in substantial part because black children are raised in more disadvantaged families.
Abstract
					We show that the design and decentralized scoring of New York's high school exit exams—the Regents Examinations—led to systematic manipulation of test scores just below important proficiency cutoffs. Exploiting a series of reforms that eliminated score manipulation, we find heterogeneous effects of test score manipulation on academic outcomes. While inflating a score increases the probability of a student graduating from high school by about 17 percentage points, the probability of taking advanced coursework declines by roughly 10 percentage points. We argue that these results are consistent with test score manipulation helping less advanced students on the margin of dropping out but hurting more advanced students that are not pushed to gain a solid foundation in the introductory material.
Abstract
					Through a field experiment at a seafood-processing plant, I examine how working alongside friends affects employee productivity and how this effect is heterogeneous with respect to an employee's personality. This paper presents two main findings. First, worker productivity declines when a friend is close enough to socialize with. Second, workers who are higher on the conscientiousness scale show smaller productivity declines when working alongside a friend. Estimates suggest that a median worker is willing to pay 4.5 percent of her wage to work next to friends.
Abstract
					Establishing a robust causal relationship between trade and income has been difficult. Frankel and Romer (1999) uses a geographic instrument to identify a positive effect of trade on income. 
Rodriguez and Rodrik (2001) shows that these results are not robust to controlling for omitted variables such as distance to the equator or institutions. This paper solves the omitted variable 
problem by generating a time-varying geographic instrument. Improvements in aircraft technology have caused the quantity of world trade carried by air to increase over time. Country pairs 
with relatively short air routes compared to sea routes benefit more from this change in technology. This heterogeneity can be used to generate a geography-based instrument for trade that 
varies over time. The time-series variation allows for controls for country fixed effects, eliminating the bias from time-invariant variables such as distance from the equator or historically 
determined institutions. Trade has a significant effect on income with an elasticity of roughly one-half. Differences in predicted trade growth can explain roughly 17 percent of the variation in 
cross-country income growth between 1960 and 1995.
Abstract
					Using unique data from one of Africa's largest informal settlements, the Kibera slum in Nairobi, we provide evidence of ethnic patronage in the determination of rental prices and investments. Slum residents pay higher rents and live in lower quality housing (measured via satellite pictures) when the landlord and the locality chief belong to the same ethnicity. Conversely, rental prices are lower, and investments higher when residents and chiefs are co-ethnics. Our identification relies on the exogenous appointment of chiefs and is supported by several tests, including a regression discontinuity design.
Abstract
					A health insurer's Medical Loss Ratio (MLR) is the share of premiums spent on medical claims, or the inverse markup over average claims cost. The Affordable Care Act introduced minimum MLR provisions for all health insurance sold in fully insured commercial markets, thereby capping insurer profit margins, but not levels. While intended to reduce premiums, we show this rule creates incentives to increase costs. Using variation created by the rule's introduction as a natural experiment, we find medical claims rose nearly one-for-one with distance below the regulatory threshold: 7 percent in the individual market and 2 percent in the group market. Premiums were unaffected.
Abstract
					We exploit seating rules in the European Parliament to identify peer effects in legislative voting. Sitting adjacently leads to a 7 percent reduction in the overall likelihood that two members of the European Parliament (MEPs) from the same party differ in their vote. Peer effects are markedly stronger among pairs of women, MEP pairs from the same country, and in close votes. Using variation in seating across the parliament's two venues (Brussels and Strasbourg), we show that peer effects are persistent: MEPs who have sat together in the past disagree less even when they are not seated adjacently.
Abstract
					Using Danish administrative data, we study the impacts of children on gender inequality in the labor market. The arrival of children creates a long-run gender gap in earnings of around 20 percent driven by hours worked, participation, and wage rates. We identify mechanisms driving these "child penalties" in terms of occupation, sector, and firm choices. We find that the fraction of gender inequality caused by child penalties has featured a dramatic increase over the last three to four decades. Finally, we show that child penalties are transmitted through generations, from parents to daughters, suggesting an influence of childhood environment on gender identity.
Abstract
					Vast organ shortages motivated recent efforts to increase the supply of transplantable organs, but we know little about the demand side of the market. We test the implications of a model of organ demand using the universe of US transplant data from 1987 to 2013. Exploiting variation in supply induced by state-level motorcycle helmet laws, we demonstrate that each organ that becomes available from a deceased donor in a particular region induces five transplant candidates to join that region's transplant wait list, while crowding out living-donor transplants. Even with the corresponding demand increase, positive supply shocks increase post-transplant survival rates.
Abstract
					In developing countries, NGOs and governments often rely on local groups for the delivery of financial and public services. This paper studies how the design of rules used for group leader selection affects leader identity and shapes service delivery. To do so, we randomly assign newly formed savings and loan groups to select their leaders using either a public discussion procedure or a private vote procedure. Leaders selected with a private vote are found to be less positively selected on socioeconomic characteristics. This results in groups that are more inclusive toward poor members, without being less economically efficient.
Abstract
					There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution. The long-run (3 or more years) minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between −0.220 and −0.459 across alternative specifications. The long-run minimum wage elasticities for the tenth and fifteenth unconditional quantiles of family income range between 0.152 and 0.430 depending on specification. A reduction in public assistance partly offsets these income gains, which are on average 66 percent as large when using an expanded income definition including tax credits and noncash transfers.
Abstract
					We study cheap talk by firms and responses by their consumers, focusing on unverifiable promises of charitable donations on eBay during 2005–2006. Cheap talk listings have lower sales probabilities but sell at higher prices when successful. The negative relationship between cheap talk and sales is concentrated in the months following Hurricane Katrina, a time when verifiable and unverifiable charity listings increased dramatically. Finally, we show that cheap talk sellers have lower quality ratings than those making verifiable donations. Our results suggest that buyers (justifiably) avoid cheap talk listings when credible quality signals are available, thus limiting the extent of cheap talk.
Abstract
					Using a new intranational dataset of monthly grain prices and production and a new approach to identify cost parameters, I estimate and solve a dynamic model of agricultural storage and trade covering all 42 countries of continental sub-Saharan Africa. I find median trade costs over five times higher than elsewhere in the world. The potential welfare gains from reducing these costs are substantial, are driven by lower food prices, and can be achieved efficiently by investing in well-targeted trade corridors. A static annual model underestimates trade costs and welfare effects by failing to identify when trade occurs.
Abstract
					We formalize pass-through over-shifting as a simple yet underutilized test for market power. We apply this test in the market for solar energy. Specifically, we estimate the pass-through of solar subsidies to solar system prices using rich micro-level transaction and subsidy data from California. Buyers of solar systems capture nearly the full subsidy, while there is more-than-complete pass-through to lessees. We conclude that solar markets are imperfectly competitive by ruling out alternative explanations for over-shifting and reinforce this conclusion with a test of solar demand curvature. This procedure can serve to detect market power beyond the solar market.
Abstract
					We study how changes in energy input costs for US manufacturers affect the relative welfare of manufacturing producers and consumers (i.e., incidence). We also develop a methodology to estimate the incidence of input taxes that accounts for incomplete pass-through, imperfect competition, and substitution among inputs. For the several industries we study, 70 percent of energy price-driven changes in input costs get passed through to consumers in the short to medium run. The share of the welfare cost that consumers bear is 25–75 percent smaller (and the share producers bear is larger) than models featuring complete pass-through and perfect competition would suggest.
Abstract
					We analyze the role of the media in coordinating and mobilizing insurgency against an authoritarian regime, in the context of the Nazi-fascist occupation of Italy during WWII. We study the effect of BBC radio on the intensity of internal resistance. By exploiting variations in monthly sunspot activity that affect the sky-wave propagation of BBC broadcasting toward Italy, we show that BBC radio had a strong impact on political violence. We provide further evidence to document that BBC radio played an important role in coordinating resistance activities but had no lasting role in motivating the population against the Nazi-fascist regime.
Abstract
					Government provision of disaster transfers is typically hampered by liquidity constraints and by weak rules and administrative capacity to disburse reconstruction resources. We show that by easing these hurdles, Mexico's indexed disaster fund (Fonden) considerably accelerates economic recovery after a disaster. To estimate Fonden impact on recovery, as measured by night lights, we exploit the heavy rainfall index that determines program eligibility. We find that for one year after a disaster, eligible municipalities are 6 percent brighter than those ineligible, with gains likely concentrated among less resilient municipalities. We additionally document how Fonden rules shield resources from political abuse.
Abstract
					This paper shows that consumers respond to prices for complex healthcare when they can easily assess out-of-pocket prices. Healthcare cost containment efforts increasingly incentivize price shopping despite a dearth of evidence that this steers consumers toward lower-priced care for major medical services. I show that consumers shift toward lower-priced hospitals in the highly simplified price information environment of insurance plans with tiered hospital networks. Consumers observe a single predictable, well-defined price that applies to a broad range of services within each of at most three hospital tiers. Within three years, expected partial-equilibrium savings reach 8–17 percent of baseline spending.
Abstract
					This paper estimates the effect of partisan electoral victories on stock and bond markets. We employ a regression-discontinuity-based event study in a sample of 758 worldwide post-1945 national elections, using existing data on parliamentary elections and newly collected data on presidential elections. Left-wing electoral victories cause significant and substantial short-term decreases in stock market valuations, while the response of sovereign bond markets is mostly muted. Stock market effects are stronger and more persistent in elections in which the left's proposed economic policy is more radical and in developing economies.
Abstract
					We study the effectiveness of intrahousehold insurance among married couples when the husband loses his job due to a mass layoff or plant closure. Empirical results based on Austrian administrative data show that husbands suffer persistent employment and earnings losses, while wives' labor supply increases moderately due to extensive margin responses. Wives' earnings gains recover only a tiny fraction of the household income loss, and in the short-term, public transfers and taxes are a more important form of insurance. We show that the presence of children in the household is a crucial determinant of the wives' labor supply response.
Abstract
					Some states have not adopted the Affordable Care Act (ACA) Medicaid expansions due to concerns that the expansions may impair access to care and utilization for those who are already insured. We investigate such negative spillovers using a large panel of Medicare beneficiaries. Across many subgroups and outcomes, we find no evidence that the expansions reduced utilization among Medicare beneficiaries and can rule out all but very small changes in utilization or spending. These results indicate that the expansions in Medicaid did not impair access to care or utilization for the Medicare population.
Abstract
					This paper quantifies the health impacts of petroleum leaks from underground storage tanks, the effectiveness of tank regulation, and the role of information as a policy tool in the same setting. Exposure to a leaking underground storage tank during gestation increases both the probability of low birthweight and preterm birth by 7–8 percent. Compliance with regulations requiring the adoption of preventative technologies mitigated the entire effect of leak exposure on low birthweight, and information increased avoidance and moving among highly educated mothers. Back-of-the-envelope calculations suggest the health benefits of preventative regulations exceed the upgrade cost to facilities.
Abstract
					Rapid urbanization is reshaping economies and intensifying spatial inequalities. In Bangladesh, we experimentally introduced mobile banking to very poor rural households and family members who had migrated to the city, testing whether mobile technology can reduce inequality by modernizing traditional ways to transfer money. One year later, for active mobile banking users, urban-to-rural remittances increased by 26 percent of the baseline mean. Rural consumption increased by 7.5 percent, and extreme poverty fell. Rural households borrowed less, saved more, sent additional migrants, and consumed more in the lean season. Urban migrants experienced less poverty and saved more but bore costs, reporting worse health.
Abstract
					I present evidence that unmet liquidity needs for indivisible, "lumpy," expenditures increase demand for betting as a second-best method of liquidity generation in the presence of financial constraints. With a sample of 1,708 sports bettors in Kampala, Uganda, I show that participants' targeted payouts are linked to anticipated expenditures, while winnings increase lumpy expenditures disproportionately. I show that a randomized savings treatment decreases demand for betting. And I use two lab-in-the-field experiments to show that unmet liquidity needs and saving ability are important mechanisms. These results cannot be explained by betting as a purely normal good.
Abstract
					Using two nationally representative datasets, we find large differences between Black and White children in teacher-reported measures of noncognitive skills. We show that teacher reports understate true Black-White skill gaps because of reference bias: teachers appear to rate children relative to others in the same school, and Black students have lower-skilled classmates on average than do White students. We pursue three approaches to addressing these reference biases. Each approach nearly doubles the estimated Black-White gaps in noncognitive skills, to roughly 0.9 standard deviations in third grade.
Abstract
					What is the optimal form of firm organization during "bad times"? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases 
(the "localist" view). On the other hand, the need to make tough decisions may favor centralized firms (the "centralist" view). Using two large micro datasets on decentralization in firms in ten OECD 
countries (WMS) and US establishments (MOPS administrative data), we find that firms that delegated more power from the central headquarters to local plant managers prior to the Great 
Recession outperformed their centralized counterparts in sectors that were hardest hit by the subsequent crisis (as measured by export growth and product durability). Results based on measures 
of turbulence based on product churn and stock market volatility provide further support to the localist view. This conclusion is robust to alternative explanations such as managerial fears of 
bankruptcy and changing coordination costs. Although decentralization will be suboptimal in many environments, it does appear to be beneficial for the average firm during bad times.
Abstract
					We study the effect of privatizing Medicaid drug benefits on drug prices and utilization. Drug spending would decrease by 21.3 percent if private insurers administered all drug benefits. One-third of the decrease is driven by private insurers' ability to negotiate prices with pharmacies. The remaining two-thirds is driven by the greater use of lower cost drugs, such as generics, and is only realized in states that give private insurers the flexibility to design drug benefits. Privatization does not reduce prescriptions per enrollee and spending cuts are smaller for drugs that lower medical spending.
Abstract
					Israel's 1994 adoption of free in vitro fertilization (IVF) provides a natural experiment for how fertility time horizons impact women's marriage timing and other outcomes. We find a substantial increase in average age at first marriage following the policy change, using both men and Arab-Israeli women as comparison groups. This shift appears to be driven by both increased marriages by older women and younger women delaying marriage. Age at first birth also increased. Placebo and robustness checks help pinpoint IVF as the source of the change. Our findings suggest age-limited fertility materially impacts women's life timing and outcomes relative to men.
Abstract
					We use a policy experiment in Indonesia to show how local political boundaries affect ethnic tension. Redrawing district borders along group lines reduces conflict. However, the gains in stability are undone or even reversed when new boundaries increase ethnic polarization. Greater polarization leads to more violence around majoritarian elections but has little effect around lower-stakes, proportional representation elections. These results point to distinct incentives for violence in winner-take-all settings with contestable public resources. Overall, our findings illustrate the promise and pitfalls of redrawing borders in diverse countries where it is infeasible for each group to have its own administrative unit.
Abstract
					This paper examines the impact of cell phone access on election fraud. I combine cell phone coverage maps with the location of polling centers during the 2009 Afghan presidential election to pinpoint which centers were exposed to coverage. Results from a spatial regression discontinuity design along the two-dimensional coverage boundary suggest that coverage deters corrupt behavior. Polling centers just inside coverage report a drop in the share of fraudulent votes of 4 percentage points, while the likelihood of a fraudulent station decreases by 8 percentage points. Analyses of the effect of coverage on citizen participation in election monitoring, election-related insurgent violence, and the tribal composition of villages suggest that the observed declines in fraud are likely attributed to cell phone access strengthening social monitoring capacity.
Abstract
					Improving "last-mile" public service delivery is a recurring challenge in developing countries. Could the widespread adoption of mobile phones provide a scalable, cost-effective means for improvement? We use a large-scale experiment to evaluate the impact of phone-based monitoring on a program that transferred nearly a billion dollars to 5.7 million Indian farmers. In randomly selected jurisdictions, officials were informed that program implementation would be measured via calls with beneficiaries. This led to a 7.8 percent reduction in the number of farmers who did not receive their transfers. The program was highly cost-effective, costing 3.6 cents for each additional dollar delivered.
Abstract
					We study whether subways alleviate road congestion by examining 45 subway line launches in China and by using detailed data on road speed. Our difference-in-differences estimation finds that in the first year after a subway line is launched, rush hour speed on nearby roads increases by about 4 percent. The effect is most prominent in initially congested roads and declines over distance to the new subway line. Evidence on road speed is corroborated with substitution patterns among modes of transportation. Using auxiliary data from Beijing, we calculate that the time savings for each automobile or bus commute from faster speed is worth US$0.10.
Abstract
					Using a 1993 Dutch policy reform and a regression discontinuity design, we find children of parents whose disability insurance (DI) eligibility was reduced are 11 percent less likely to participate in DI themselves, do not alter their use of other government programs, and earn 2 percent more as adults. The reduced transfers and increased taxes of children account for 40 percent of the fiscal savings relative to parents in present discounted value terms. Moreover, children of treated parents complete more schooling, have a lower probability of serious criminal arrests and incarceration, and take fewer mental health drugs as adults.
Abstract
					What is the relationship between disability programs and financial distress? We provide the first evidence on this relationship using several markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial events peak around the time of disability application. Using variation induced by an age-based eligibility rule, we find that disability allowance reduces the likelihood of bankruptcy by 20 percent, foreclosure by 33 percent, and home sale by 15 percent. We present evidence that these changes reflect true reductions in financial distress. Considering these extreme events increases the optimal disability benefit amount and suggests a shorter optimal waiting time between application and benefit receipt.
Abstract
					This paper utilizes the county-by-county rollout of China's New Rural Pension Scheme (NRPS) and finds that, among age-eligible people, the pension scheme leads to higher household income and food expenditure, less farmwork, better health, and lower mortality. In addition, the NRPS shifts age-ineligible adults from farmwork to nonfarmwork but does not significantly affect their income, expenditure, or health. No significant evidence shows that the NRPS affects private transfers or health behaviors. These findings provide relevant evidence of the impacts of social pensions on individual behaviors and welfare for developing countries today and developed countries in the past.
Abstract
					The Green Revolution, which bolstered agricultural yields and economic well-being in Asia and Latin America beginning in the 1960s, largely bypassed sub-Saharan Africa. We study the first randomized controlled trial of a government-implemented input subsidy program (ISP) in Africa intended to foment a Green Revolution. We find that this temporary subsidy for Mozambican maize farmers stimulates Green Revolution technology adoption and leads to increased maize yields. Effects of the subsidy persist in later unsubsidized years. In addition, social networks of subsidized farmers benefit from spillovers, experiencing increases in technology adoption, yields, and beliefs about the returns to the technologies. Spillovers account for the vast majority of subsidy-induced gains. ISPs alleviate informational market failures, stimulating learning about new technologies by subsidy recipients and their social networks.
Abstract
					Does political corruption erode civic values and foster dishonest behavior? I test this hypothesis in the context of Mexico by combining data on local government corruption and cheating on school tests. I find that, following revelations of corruption by local officials, secondary students' cheating on cognitive tests increases significantly. The effect is large and robust and persists for over a year after malfeasance is revealed. These findings are validated by evidence from individual survey data, which documents that individuals interviewed right after corruption is revealed report being less honest, less trustworthy, and more prone to thinking that cheating is necessary to succeed, compared to similar individuals interviewed just beforehand.
Abstract
					We study the relationship between physician organizational structures and prices negotiated with private insurers. Using variation caused by state-level judicial law changes, we show that a 10 percent increase in the enforceability of noncompete agreements (NCAs) causes 4.3 percent higher physician prices, and declines in practice sizes and concentration. Using two databases containing every physician establishment and firm between 1996 and 2007, linked to negotiated prices, we show that larger practices have lower prices for services with high fixed costs, consistent with economies of scale. In contrast, increases in firm concentration conditional on establishment concentration leads to higher prices.
Abstract
					A common concern with efforts to directly help some small businesses to grow is that their growth comes at the expense of their unassisted competitors. We test this possibility using a two-stage randomized experiment in Kenya that randomizes business training at the market level and then within markets to selected businesses. Three years after training, the treated businesses are selling more, earn higher profits, and their owners have higher well-being. Point estimates of the spillovers on the competing businesses are small and not statistically significant, and the markets as a whole have grown in terms of sales volume.
Abstract
					We provide new evidence on households' labor supply responses to fatal and severe nonfatal health shocks in the short run and medium run. To identify causal effects, we leverage administrative data on Danish families and construct counterfactuals using households that experience the same event a few years apart. Fatal events lead to considerable increases in surviving spouses' labor supply, which the evidence suggests is driven by families who experience significant income losses. Nonfatal shocks have no meaningful effects on spousal labor supply, consistent with their adequate insurance coverage. The results support self-insurance as a driving mechanism for the family labor supply responses.
Abstract
					Based on comprehensive grain price data, we employ a storage model to estimate consistent interest rates and compare capital market development between Britain and China. Interest rates for Britain were lower than China's on average by about 3 percentage points from 1770 to 1860. For country pairs with bilateral distance less than 200 kilometers, the regional capital market integration in the Yangzi Delta in China comes close to the British average; but at larger distances, spatial 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 development differences at an early date, so that capital market performance may be important for the Great Divergence that emerged between China and Western countries at this time.
Abstract
					This paper exploits a unique historical setting―the expansion of the telegraph network in nineteenth-century China when railroads were limited―to examine whether the reduction of information frictions stabilizes grain prices. Employing a difference-in-difference (DID) strategy, we find that the telegraph access (i) reduced both the magnitude and the incidence of extreme prices; (ii) mitigated price responses to local weather shocks but increased the responsiveness to shocks in other telegraph-connected regions; (iii) affected the price volatility in a mean-reverting pattern; i.e., volatility rose in previously price-stable regions, and volatility decreased in price-unstable regions.
Abstract
					We construct a database linking European royal kinship networks, monarchies, and wars to study the effect of family ties on conflict. To establish causality, we exploit decreases in connection caused by apolitical deaths of rulers' mutual relatives. These deaths are associated with substantial increases in the frequency and duration of war. We provide evidence that these deaths affect conflict only through changing the kinship network. Over our period of interest, the percentage of European monarchs with kinship ties increased threefold. Together, these findings help explain the well-documented decrease in European war frequency.
Abstract
					This paper studies how birth town migration networks affected long-run location decisions during historical US migration episodes. We develop a new method to estimate the strength of migration networks for each receiving and sending location. Our estimates imply that when one randomly chosen African American moved from a Southern birth town to a destination county, then 1.9 additional Black migrants made the same move on average. For White migrants from the Great Plains, the average is only 0.4. Networks were particularly important in connecting Black migrants with attractive employment opportunities and played a larger role in less costly moves.
Abstract
					Audits are a standard mechanism for reducing corruption in government investments. The quality of audits themselves, however, may be affected by relationships between auditor and target. 
We study whether provincial chief auditors in China show greater leniency in evaluating prefecture governments in their hometowns. In city-fixed-effect specifications―in which the role of 
shared background is identified from auditor turnover―we show that hometown auditors find 38 percent less in questionable monies. This hometown effect is similar throughout the auditor's 
tenure and is diminished for audits ordered by the provincial Organization Department as a result of the departure of top city officials. We argue that our findings are most readily explained by 
leniency toward local officials rather than an endogenous response to concerns of better enforcement by hometown auditors. We complement these city-level findings with firm-level analyses of 
earnings manipulation by state-owned enterprises (SOE) via real activity manipulation (a standard measure from the accounting literature), which we show is higher under hometown auditors.
Abstract
					Traders are often blamed for high prices, prompting government regulation. We study the effects of a government ban of a layer of financing intermediaries in edible oil supply chain in Bangladesh during 2011–2012. Contrary to the predictions of a standard model of an oligopolistic supply chain, the ban caused downstream wholesale and retail prices to rise, and pass-through of the changes in imported crude oil price to fall. These results can be explained by an extension of the standard model to incorporate trade credit frictions, where intermediaries expand credit access of downstream traders.
Abstract
					We investigate how the salience of an ethnic minority affects the majority group's voting behavior. We use the increased salience of Muslim communities during Ramadan as a natural experiment. Exploiting exogenous variation in the distance of election dates to Ramadan over the 1980–2013 period in Germany, our findings reveal an increased polarization. Vote shares for both right- and left-wing extremist parties increase in municipalities with mosques when an election takes place shortly after Ramadan. We use survey data to provide evidence on mechanisms: Ramadan increases respondents' perceived share of the foreign-born population and emphasizes cultural dissimilarities, ultimately worsening attitudes toward Muslims.
Abstract
					Rideshare drivers pay a proportion of their fares to a ride-hailing platform operator, a commission-based compensation model used by many service providers. To Uber drivers, this 
commission is known as the Uber fee. By contrast, traditional taxi drivers in most US cities make a fixed payment independent of their earnings, usually a weekly or daily medallion lease, 
keeping every fare dollar net of lease costs and other expenses. We assess these compensation models using an experiment that offered random samples of Boston Uber drivers 
opportunities to lease a virtual taxi medallion that eliminates the Uber fee. Some drivers were offered a negative fee. Drivers' labor supply response to our offers reveals a large intertemporal 
substitution elasticity, on the order of 1.2, and higher for those who accept lease contracts. At the same time, our virtual lease program was undersubscribed: many drivers who would have 
benefited from buying an inexpensive lease chose to sit out. We use these results to compute the average compensation required to make drivers indifferent between rideshare and taxi-style 
compensation contracts. The results suggest that rideshare drivers gain considerably from the opportunity to drive without leasing.
Abstract
					This paper studies the electoral consequences of television stardom through the career of Ronald Reagan. I utilize quasi-experimental variation in television reception to estimate the causal effect 
of celebrity exposure on political support. I find that Reagan's tenure as the host of a 1950s entertainment television program translated into support for his candidacy, in terms of votes and 
political donations, nearly two decades after the show's first airing. Placebo checks suggest that this impact is not driven by unobserved heterogeneity or omitted variable bias. The effect was 
especially pronounced in the 1976 Republican primary elections relative to the general presidential elections and partially dissipated in locations where Reagan was a known political entity. Using 
the American National Election Studies (ANES) surveys, I provide evidence on possible mechanisms. Consistent with rational updating, nonpolitical media increased voters' assessment of Reagan's 
character and leadership, personalizing political considerations in elections featuring him.
Abstract
					A central issue in designing incentive contracts is the decision to reward agents' input use versus outputs. The trade-off between risk and return to innovation in production can also lead agents with varying skill levels to perform differentially under different contracts. We study this issue experimentally, observing and verifying inputs and outputs in Indian maternity care. We find that both contract types achieve comparable reductions in postpartum hemorrhage rates, but payments for outputs were four times that of inputs. Providers with varying qualifications performed equivalently under input incentives, while providers with advanced qualifications may have performed better under output contracts.
Abstract
					A growing literature documents that air pollution adversely impacts health, productivity, and cognition. This paper provides the first evidence of a causal link between air pollution and aggressive behavior, as documented by violent crime. Using the geolocation of crimes in Chicago from 2001–2012, we compare crime upwind and downwind of major highways on days when wind blows orthogonally to the road. Consistent with research linking pollution to aggression, we find that air pollution increases violent crime on the downwind sides of interstates. Our results suggest that pollution may reduce welfare and affect behavior through a wider set of channels than previously considered.
Abstract
					To what degree can labor reallocation mitigate the economic consequences of weather-driven agricultural productivity shocks? I estimate that temperature-driven reductions in the demand for agricultural labor in India are associated with increases in nonagricultural employment. This suggests that the ability of nonagricultural sectors to absorb workers may play a key role in attenuating the economic consequences of agricultural productivity shocks. Exploiting firm-level variation in the propensity to absorb workers, I estimate relative expansions in manufacturing output in more flexible labor markets. Estimates suggest that, in the absence of labor reallocation, local economic losses could be up to 69 percent higher.
Abstract
					We assess whether imperfect knowledge of labor regulation hinders job creation at small and medium-sized firms. We partner with a labor law expert organization that provides information about labor regulation via newsletters and access to a specialized website. We randomly assign 1,800 firms to get access to this service for a 21-week period. Six months later, the average employment level at treatment firms was 12 percent higher than at control firms. The intervention decreased the perception that labor regulation is a constraint to hiring and increased optimal employment level.
Abstract
					We estimate the impact of the Social Security Annual Earnings Test (AET) on older workers' employment. The AET reduces social security claimants' current benefits in proportion to their earnings in excess of an exempt amount. Using a regression kink design and Social Security Administration data, we document that the discontinuous change in the benefit reduction rate at the exempt amount causes a corresponding change in the slope of the employment rate, suggesting that the extensive margin of labor supply is more sensitive to this policy than commonly thought. We develop a model and method that allow us to translate the behavioral responses into a lower bound estimate of 0.49 for the extensive margin elasticity, which implies more than a 1 percentage point increase in work in the absence of the AET.
Abstract
					This paper studies the effects of adding criminal offenders to a DNA database. Using a large expansion of Denmark's DNA database, we find that DNA registration reduces recidivism within the following year by up to 42 percent. It also increases the probability that offenders are identified if they recidivate, which we use to estimate the elasticity of crime with respect to the detection probability and find that a 1 percent higher detection probability reduces crime by more than 2 percent. We also find that DNA registration increases the likelihood that offenders find employment, enroll in education, and live in a more stable family environment.
Abstract
					Most measures of deprivation concentrate on deprivation among the living population and, thus, ignore premature mortality. This omission leads to a severe bias in the evaluation of deprivation. We propose two different measures that combine information on poverty and premature mortality of a population. These measures are consistent and satisfy a number of desirable properties unmet by all other measures combining early mortality and poverty. Moreover, one measure is readily computable with available data and easily interpretable. We show that omitting premature mortality leads to an underestimation of total deprivation in 2015 of at least 36 percent at the world level.
Abstract
					Bertrand, Kamenica, and Pan (2015) document that in the United States there is a discontinuity to the right of 0.5 in the distribution of households according to the female share of total earnings, which they attribute to the existence of a gender identity norm. We provide an alternative explanation for this discontinuity. Using linked employer-employee data from Finland, we show that the discontinuity emerges as a result of equalization and convergence of earnings in coworking couples, and it is associated with an increase in the relative earnings of women, rather than a decrease as predicted by the norm.
Abstract
					Small firms dominated the American economy in the nineteenth century, and they still dominate in many developing economies today. This paper tests whether geographic market segmentation due to underdeveloped intracity transportation technology precludes the emergence of large retail/wholesale stores. I exploit the natural experiment of Boston's rapid electrification from its previous horse-drawn streetcar system, which occurred between 1889 and 1896. Analyzing newly digitized data, I find that rail-connected locations experienced a sharp decline in the share of sole proprietorships among food retail/wholesale establishments after the electrification relative to off-rail locations. Changes in market access due to streetcar electrification can explain this effect.
Abstract
					We test the predictions of the rational addiction model, reconceptualized as rational habit formation, in the context of handwashing in rural India. To track handwashing, we design soap dispensers with timed sensors. We test for rational habit formation by informing some households about a future change in the returns to daily handwashing. Monitoring and incentives raise handwashing contemporaneously, and effects persist well after they end. In addition, people are rational about this habit formation: when they anticipate future monitoring, they increase their current handwashing. Average child weight and height increase for all study arms given soap dispensers.
Abstract
					This paper examines the long-run effects of the 1980–1982 recession on education and income. Using confidential census data, I estimate difference-in-difference regressions that exploit variation across counties in recession severity and across cohorts in age at the time of the recession. For individuals age 0–10 in 1979, a 10 percent decrease in earnings per capita in their county of birth reduces four-year college degree attainment by 15 percent and earnings in adulthood by 5 percent. Simple calculations suggest that in aggregate, the 1980–1982 recession led to 1.3–2.8 million fewer college graduates and $66–$139 billion less earned income per year.
Abstract
					Using the staggered introduction of smoking bans in the German hospitality industry over 2007–2008, I find a robust 2.4 percent decline in the daily earnings of workers in bars and restaurants associated with the most comprehensive smoking ban. This effect is unlikely to be driven by a decline in hospitality revenues or hours worked but is consistent with a simple model of compensating differentials.
Abstract
					We use data from Airbnb to identify the mechanisms underlying discrimination against ethnic minority hosts. Within the same neighborhood, hosts from minority groups charge 3.2 percent less for comparable listings. Since ratings provide guests with increasingly rich information about a listing's quality, we can measure the contribution of statistical discrimination, building upon Altonji and Pierret (2001). We find that statistical discrimination can account for the whole ethnic price gap: ethnic gaps would disappear if all unobservables were revealed. Also, three-quarters (2.5 points) of the initial ethnic gap can be attributed to inaccurate beliefs of potential guests about hosts' average group quality.
Abstract
					We examine how the adoption of information communication technology affects bilateral trade. The context is a public program in Norway that rolled out broadband access points leading to plausibly exogenous variation in the availability and adoption of broadband by firms. We find that broadband makes trade patterns more sensitive to distance and economic size. These results are consistent with a model of trade with variable elasticity of demand. The model predicts that adoption of a technology that lowers information frictions enlarges the choice set of exporters and importers. This makes demand more elastic with respect to trade costs and thus distance.
Abstract
					We investigate the effect of subway system openings on urban air pollution. On average, particulate concentrations are unchanged by subway openings. For cities with higher initial pollution levels, subway openings reduce particulates by 4 percent in the area surrounding a city center. The effect decays with distance to city center and persists over the longest time horizon that we can measure with our data, about four years. For highly polluted cities, we estimate that a new subway system provides an external mortality benefit of about $1 billion per year. For less polluted cities, the effect is indistinguishable from zero. Back of the envelope cost estimates suggest that reduced mortality due to lower air pollution offsets a substantial share of the construction costs of subways.
Abstract
					We study labor market returns to vocational versus general secondary education using a regression discontinuity design created by the centralized admissions process in Finland. Admission to the vocational track increases initial annual income, and this benefit persists at least through the mid-thirties, and present discount value calculations suggest that it is unlikely that life cycle returns will turn negative through retirement. Moreover, admission to the vocational track does not increase the likelihood of working in jobs at risk of replacement by automation or offshoring. Consistent with comparative advantage, we observe larger returns for people who express a preference for vocational education.
Abstract
					In an experiment in Mali, we tested whether patients pressure providers to prescribe unnecessary medical treatment. We varied patients' information about a discount for antimalarial tablets and measure demand for both tablets and costlier antimalarial injections. We find evidence of patient-driven demand: informing patients about the discount, instead of letting providers decide to share this information, increased discount use by 35 percent and overall malaria treatment by 10 percent. These marginal patients rarely had malaria, worsening the illness-treatment match. Providers did not use the information advantage to sell injections—their use fell in both information conditions.
Abstract
					We study how more negative historical exposure to the actions of nation-states—like war, occupation, and repression—affects the formation of regional identity. The quasi-exogenous division of the French regions Alsace and Lorraine allows us to implement a geographical regression discontinuity design at the municipal level. Using measures of stated and revealed preferences, we find that more negative experiences with nation-states are associated with a stronger regional identity in the short, medium, and long run. This is linked to preferences for more regional decision-making. Establishing regional organizations seems to be a key mechanism to maintaining and strengthening regional identity.
Abstract
					We study voters' response to marginal changes to the fine for electoral abstention in Peru, leveraging variation from a nationwide reform. A smaller fine has a robust, negative effect on voter turnout, partly through irregular changes in voter registration. However, representation is largely unaffected, as most of the lost votes are blank or invalid. We also show that the effect of an exemption from compulsory voting is substantially larger than that of a full fine reduction, suggesting that nonmonetary incentives are the main drivers behind the effectiveness of compulsory voting.
Abstract
					Inversions—in which the popular vote winner loses the election—have occurred in four US presidential races. We show that rather than being statistical flukes, inversions have been ex ante likely since the early 1800s. In elections yielding a popular vote margin within 1 point (one-eighth of presidential elections), about 40 percent will be inversions in expectation. We show this conditional probability is remarkably stable across historical periods—despite differences in which groups voted, which states existed, and which parties participated. Our findings imply that the United States has experienced so few inversions merely because there have been so few elections (and fewer close elections).
Abstract
					This paper studies the impact of immigration to the United States on the vote share for the Republican Party using county-level data from 1990 to 2016. Our main contribution is to show that an increase in high-skilled immigrants decreases the share of Republican votes, while an inflow of low-skilled immigrants increases it. These effects are mainly due to the indirect impact on existing citizens' votes, and this is independent of the origin country and race of immigrants. We find that the political effect of immigration is heterogeneous across counties and depends on their skill level, public spending, and noneconomic characteristics.
Abstract
					We investigate the wage return to studying economics by leveraging a policy that prevented students with low introductory grades from declaring a major. Students who barely met the grade point average threshold to major in economics earned $22,000 (46 percent) higher annual early-career wages than they would have with their second-choice majors. Access to the economics major shifts students' preferences toward business/finance careers, and about half of the wage return is explained by economics majors working in higher-paying industries. The causal return to majoring in economics is very similar to observational earnings differences in nationally representative data.
Abstract
					This paper studies how political fragmentation affects government stability. Using a regression discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not available. We interpret our results in light of a bargaining model of coalition formation featuring government instability.
Abstract
					In settings where social norms promote gender segregation, firms may find it costly to employ both men and women. These integration costs may hinder women's employment. We develop a methodology to test for the presence of fixed integration costs and estimate counterfactual women's employment at all-male firms where these costs bind. We apply our approach in Saudi Arabia and find that integration costs bind for the majority of firms. We show that Nitaqat, a gender-neutral quota program that incentivized the hiring of Saudi nationals at private sector firms, induced firms to integrate and dramatically increased Saudi women's employment.
Abstract
					This paper uses administrative data from Sweden to document trends in the labor market returns to skills. Between 1992 and 2013, the economic return to noncognitive skill⁠—a psychologist-assessed measure of teamwork and leadership skill⁠—roughly doubled. The return to cognitive skill was relatively stable and decreased modestly during the 2000s, however. Among men with similar levels of education, the return to noncognitive skill is higher than the return to cognitive skill. The increasing return to noncognitive skill is driven by changes at the top of the wage distribution and by sorting into higher-paying occupations.
Abstract
					Online professional networking platforms are widely used and may help workers to search for and obtain jobs. We run the first randomized evaluation of training work seekers to join and use one of the largest platforms, LinkedIn. Training increases the end-of-program employment rate by 10 percent (7 percentage points), and this effect persists for at least 12 months. The available employment, platform use, and job search data suggest that employment effects are explained by work seekers using the platform to acquire information about prospective employers and perhaps by work seekers accessing referrals and conveying information to prospective employers on the platform.
Abstract
					Using data on 25 major American cities for the period 1900⁠–⁠1940, we explore the effects of municipal-level public health efforts that were viewed as critical in the fight against foodborne and waterborne diseases. In addition to studying interventions such as treating sewage and setting bacteriological standards for milk, which have received little attention, we provide new evidence on the effects of water filtration and chlorination, extending the work of previous scholars. Although water filtration is associated with an 11⁠–⁠12 percent reduction in infant mortality, none of the other interventions under study appear to have contributed to the observed mortality declines.
Abstract
					We address points raised by Anderson, Charles, and Rees (2022), which comments on our prior work. After correcting unambiguous data mistakes, our revised estimates suggest that municipal water disinfection (filtration) explains 38 percent of the total mortality rate decline in our sample cities and years—a result not very different from our original estimate of 43 percent. However, effects on infant mortality rates are smaller than in our original analysis. Much of the difference between their analyses and ours is due to the coding of partial intervention years and to differences in population denominators, for which ideal data are difficult to find.
Abstract
					This rejoinder is written in response to the comment by Cutler and Miller (hereafter CM) on our paper, "Reexamining the Contribution of Public Health Efforts to the Decline in Urban Mortality" (Anderson, Charles, and Rees 2022). In their comment, CM acknowledge making unambiguous data transcription errors when constructing the infant mortality rates, assess the sensitivity of their filtration estimates to alternative intervention dates, and defend the population denominators they used to construct total mortality rates. In this rejoinder, we focus on the third issue, the population denominators.
Abstract
					Six percent of children in the United States enter foster care by age 18. We estimate the effects of foster care on children's outcomes by exploiting the quasi-random assignment of child welfare investigators in Michigan. We find that foster care improved children's safety and educational outcomes. Gains emerged after children exited the foster system when most were reunified with their birth parents, suggesting that improvements made by their parents were an important mechanism. These results indicate that safely reducing the use of foster care, a goal of recent federal legislation, requires more effective in-home, prevention-focused efforts.
Abstract
					To lower health care costs, Health Savings Accounts (HSAs) offer tax incentives encouraging people to trade off current consumption against future consumption. This paper tests whether consumers use HSAs as self-insurance over the life cycle. Using administrative data from a large employer and a regression discontinuity design, I estimate the marginal propensity to consume from HSA assets is 0.85 and reject the neoclassical benchmark of 0. Comparisons with 401(k) saving show most employees do not treat HSA money as fungible with retirement savings. In this setting, HSAs did not reduce health spending and instead increased the share that was financed tax-free.
Abstract
					We examine the health effects of the Lancashire Cotton Famine, a sharp downturn in Britain's cotton textile manufacturing regions that was induced by the US Civil War. Migration was an important response to this downturn, but as we document, migration also introduces a number of empirical challenges, which we overcome by introducing a new methodological approach. Our results indicate that the recession increased mortality among households employed in the cotton textile industry. We also document localized spillover effects on households providing nontradable services in the areas affected by the recession.
Abstract
					Formative experiences shape behavior for decades. We document a striking feature about those who came of driving age during the oil crises of the 1970s⁠—they drive less in the year 2000. The effect is not specific to these cohorts; price variation over time and across states indicates that gasoline price changes between ages 15–18 generally shift later-life travel behavior. Effects are not explained by recessions, income, or costly skill acquisition and are inconsistent with recency bias, mental plasticity, and standard habit-formation models. Instead, they likely reflect formation of preferences for driving or persistent changes in its perceived cost.
Abstract
					We provide causal evidence of an ex ante moral hazard effect of unemployment insurance (UI) by matching plausibly exogenous changes in UI benefit duration across state-weeks during the Great Recession to high-frequency productivity measures from individual supermarket cashiers. Estimating models with date and cashier-register fixed effects, we identify a modest but statistically significant negative relationship between UI benefits and worker productivity. This effect is strongest for more experienced and less productive cashiers, for whom UI expansions are especially relevant. Additional analyses from the American Time Use Survey reveal a similar increase in shirking during periods with increased UI benefit durations.
Abstract
					Using a strict, age-specific lockdown order for adults aged 65 and older in Turkey, we examine the mental health consequences of an extended period of tight mobility restrictions on senior adults. Adopting a regression discontinuity design, we find that the curfew-induced decline in mobility substantially worsened mental health outcomes, including somatic and nonsomatic symptoms of mental distress (approximately 0.2 standard deviation). Exploring potential channels, we document an increase in social and physical isolation, with no evidence of robust changes in labor market outcomes or intrahousehold conflict for this subpopulation.
Abstract
					We document that college completion rates have increased since the 1990s, after declining in the 1970s and 1980s. We find that most of the increase in graduation rates can be explained by grade inflation and that other factors, such as changing student characteristics and institutional resources, play little or no role. This is because GPA strongly predicts graduation, and GPAs have been rising since the 1990s. This finding holds in national survey data and in records from nine large public universities. We also find that at a public liberal arts college grades increased, holding performance on identical exams fixed.
Abstract
					This paper combines detailed geographic information and individual educational records in Chile to provide causal evidence that close neighbors significantly influence enrollment in university. I exploit the quasi-random variation generated by student loans eligibility rules and find that potential applicants are significantly more likely to attend and complete university when their closest neighbor—defined as the closest individual applying to university one year before—becomes eligible for a student loan and enrolls in university. These results highlight the importance of social influences on university enrollment and suggest that financial aid and university access policies may have important spillover effects.
Abstract
					This paper combines cross-sectional and longitudinal income data to present the evolution of absolute intergenerational income mobility in ten advanced economies in the twentieth century. Absolute mobility decreased during the second half of the twentieth century in all of these countries. Increasing income inequality and decreasing growth rates have both contributed to the decrease, yet growth is the dominant contributor in most countries. We show that detailed panel data are effectively unnecessary for estimating absolute mobility over the long run.
Abstract
					We document the intergenerational mobility of Black and White American men from 1880 through 2000 by building new historical datasets for the late nineteenth and early twentieth century and combining them with modern data to cover the middle and late twentieth century. We find large disparities in mobility, with White children having far better chances of escaping the bottom of the distribution than Black children in every generation. This mobility gap was more important in proximately determining each generation's racial gap than was the initial gap in parents' economic status.
Abstract
					We estimate intergenerational income mobility in Italy using administrative data from tax returns. Our estimates of mobility are higher than prior work using survey data and indirect methods. The rank-rank slope of parent-child income is 0.22, compared to 0.18 in Denmark and 0.34 in the United States. The probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 0.11. We uncover substantial geographical variation: upward mobility is much stronger in northern Italy, where provinces have higher measured school quality, more stable families, and more favorable labor market conditions.
Abstract
					To assess the importance of unequal access to medical expertise and services, we estimate the causal effects of having a child who is a doctor on parents' mortality and health care use. We use data from parents of almost 22,000 participants in admission lotteries to medical school in the Netherlands. Our findings indicate that informal access to medical expertise and services is not an important cause of differences in health care use and mortality.
Abstract
					In the context of Sweden, we show that having a doctor in the family raises preventive health investments throughout the life cycle, improves physical health, and prolongs life. Two quasi-experimental research designs—medical school admission lotteries and variation in the timing of medical degrees—support a causal interpretation of these effects. A hypothetical policy that would bring the same health behavior changes and benefits to all Swedes would close 18 percent of the mortality-income gradient. Our results suggest that socioeconomic differences in exposure to health-related expertise may meaningfully contribute to health inequality.
Abstract
					This paper analyzes the extent to which the political participation of Blacks can be traced to historical lynchings that took place from 1882 to 1930. Using county-level voter registration data, I show that Blacks who reside in southern counties that experienced a relatively higher number of historical lynchings have lower voter registration rates today. This relationship holds after accounting for a variety of historical and contemporary characteristics of counties. There exists evidence of the persistence of cultural voting norms among Blacks, yet this relationship does not exist for Whites.
Abstract
					We study school facility investments using administrative records from Los Angeles. Exploiting quasi-random variation in the timing of new facility openings and using a residential assignment instrument, we find positive impacts on test scores, attendance, and house prices. Effects are not driven by changes in class size, peers, teachers, or principals, but some evidence points toward increased facility quality. We evaluate program efficiency using implied future earnings and housing capitalization. For each dollar spent, the program generated $1.62 in household value, with about 24 percent coming directly through test score gains and 76 percent from capitalization of non-test-score amenities.
Abstract
					This paper documents the role of malaria in the diffusion of African slavery in the United States. The novel empirical evidence reveals that the introduction of malaria triggered a demand for malaria-resistant labor, which led to a massive expansion of African enslaved workers in the more malaria-infested areas. Further results document that among African slaves, more malaria-resistant individuals—i.e., those born in the most malaria-ridden regions of Africa—commanded significantly higher prices.
Abstract
					We show that children who are born at or just before the weekend are less likely to be breastfed, owing to poorer breastfeeding support services in hospitals at weekends. We use this variation to estimate the effect of breastfeeding on children's development in the first seven years of life, for a sample of births of low-educated mothers. We find large effects of breastfeeding on children's cognitive development but no effects on health or noncognitive development during the period of childhood we consider. Regarding mechanisms, we study how breastfeeding affects parental investments and the quality of the mother-child relationship.
Abstract
					While economists have posited that health investments increase earnings, isolating the causal effect of health is challenging due to reverse causality and unobserved heterogeneity. We examine the labor market effects of a randomized controlled trial, the Multiple Risk Factor Intervention Trial (MRFIT), which monitored nearly 13,000 men for over six years. We find that this intervention, which provided a bundle of treatments to reduce coronary heart disease mortality, increased earnings and family income. We find few differences in estimated gains by baseline health and occupation characteristics.
Abstract
					We conduct lab experiments to investigate demand for consumption agency in married couples from Pakistan. Most subjects are no better at guessing their spouse's preferences than those of a stranger, suggesting that individual executive agency has instrumental value. We find significant evidence of demand for agency in all experiments, varying with the cost and anticipated instrumental benefit of agency. But subjects often make choices incompatible with purely instrumental motives—e.g., paying for agency when knowing their partner assigned them their preferred choice. Female subjects are willing to exert agency even when they have little executive agency within their household.
Abstract
					Using novel data on peerage marriages in Britain, I find that low search costs and marriage-market segregation can generate sorting. Peers courted in the London Season, a matching technology introducing aristocratic bachelors to debutantes. When Queen Victoria went into mourning for her husband, the Season was interrupted (1861–1863), raising search costs and reducing market segregation. I exploit exogenous variation in women's probability to marry during the interruption from their age in 1861. The interruption increased peer-commoner intermarriage by 40 percent and reduced sorting along landed wealth by 30 percent. Eventually, this reduced peers' political power and affected public policy in late nineteenth-century England.
Abstract
					We use de-identified data from Facebook to study the nature of peer effects in the market for cell phones. To identify peer effects, we exploit variation in friends' new phone acquisitions resulting from random phone losses. A new phone purchase by a friend has a large and persistent effect on an individual's own demand for phones of the same brand. While peer effects increase the overall demand for phones, a friend's purchase of a particular phone brand can reduce an individual's own demand for phones from competing brands, in particular if they are running on a different operating system.
Abstract
					Previous work has shown that preferences are not always stable across time, but surprisingly little is known about the reasons for this instability. I examine whether variation in people's emotions over time predicts changes in risk attitudes. Using a large-panel dataset, I identify happiness, anger, and fear as significant correlates of within-person changes in risk attitudes. Robustness checks indicate a limited role for alternative explanations. An event study around the death of a parent or child further confirms a large relationship between emotions and risk attitudes.
Abstract
					Measurements of mortality change among less educated Americans can be biased because the least educated groups (e.g., dropouts) become smaller and more negatively selected over time. We show that mortality changes at constant education percentiles can be bounded with minimal assumptions. Middle-age mortality increases among non-Hispanic Whites from 1992 to 2018 are driven almost entirely by the bottom 10 percent of the education distribution. Drivers of mortality change differ substantially across groups. Deaths of despair explain most of the mortality change among young non-Hispanic Whites, but less among older Whites and non-Hispanic Blacks. Our bounds are applicable in many other contexts.
Abstract
					We measure how pass-through varies with competition in isolated oligopolistic markets with captive consumers. Using daily pricing data from gas stations on small Greek islands, we study how unanticipated and exogenous changes in excise duties are passed through to consumers in markets with different numbers of retailers. We find that pass-through increases from 0.4 in monopoly markets to 1 in markets with four or more competitors and remains constant thereafter. The speed of price adjustment is about 60 percent higher in more competitive markets. Finally, we show that geographic market definitions based on measures of distance across sellers often result in significant overestimation of the pass-through.
Abstract
					Interference across competing firms in RCTs can be informative about market structure. An experiment that subsidizes a random subset of traders who buy cocoa from farmers in Sierra Leone illustrates this idea. Interpreting treatment-control differences in prices and quantities purchased from farmers through a model of Cournot competition reveals differentiation between traders is low. Combining this result with quasi-experimental variation in world prices shows that the number of traders competing is 50 percent higher than the number operating in a village. Own-price and cross-price supply elasticities are high. Farmers face a competitive market in this first stage of the value chain.
Abstract
					We examine the effect of state laws on minimum payday loan durations that give some borrowers an additional pay cycle to repay their initial loan with no other changes to contract terms. Neoclassical models predict this "grace period" would reduce borrowers' need for costly loan rollovers. However, in reality, borrowers' repayment behavior with grace periods is very similar to borrowers with shorter loans, merely pushed out a few weeks. Potential explanations include heuristic repayment decisions and naive present focus. A calibrated model suggests that present-focused borrowers get less than one-half of the benefit from a grace period that time-consistent borrowers would.
Abstract
					Container ships travel between a fixed set of origins and destinations in round trips, inducing a negative correlation in their freight rates. I study the implications of this round trip effect on international trade and trade policy. I identify this effect and develop an instrument using it to estimate the impact of transport costs on trade. I simulate counterfactual import tariff increases in a quantitative model and quantify the importance of endogenizing transport costs with respect to this effect: an exogenous transport costs model predicts a trade balance improvement from protectionist policies, while the round trip model finds the opposite.
Abstract
					This paper studies the effects of campaign spending limits on the political entry, selection, and behavior of local politicians in Brazil. We analyze a reform that limits campaign spending for mayoral elections. The limits were implemented with a discontinuity that we exploit for causal identification. We find that stricter limits reduce reelection rates and increase political competition by attracting more candidates who are also less wealthy and rely less on self-financing. Despite their effects on electoral outcomes, stricter limits did not lead to significant short-run improvements in policy outcomes, such as in education and health.
Abstract
					We estimate the effect on recidivism of replacing time served in a common closed-cell prison with time served in an open-cell one. We deal with the endogenous assignment of inmates to different prison regimes using variation that is driven by nearby prisons' overcrowding. Switching regimes for a year reduces recidivism by around 6 percentage points. The effects are largest for inmates with low levels of education and are weak for violent and hardened criminals.
Abstract
					This paper studies the health effects of Swedish prison reforms that held sentences constant but increased the share of time inmates had to serve. The increased time served did not harm post-release health and actually reduced mortality risk. We find especially large decreases in mortality for offenders not previously incarcerated, younger offenders, and those more attached to the labor market. Risk of suicide and circulatory death fell for inmates with mental health problems and older inmates, respectively. In-prison health care utilization and program participation increased with time served, suggesting health care treatment and services as the key mechanism for mortality declines.
Abstract
					We use practice variation across physicians to uncover the role of medical care in causing opioid dependence. Using health records of 2 million US veterans with emergency department visits, we find that quasi-random assignment to a top (versus bottom) decile prescribing provider significantly increases subsequent opioid use and misuse rates. Instrumental variable results show that opioid prescription receipt leads to a 20 percent increase in the probability of long-term prescription opioid use and sizable increases in the development of opioid use disorder and opioid overdose mortality. We find suggestive evidence of transition into illicit opioids due to prescription opioid exposure.
Abstract
					Using General Sherman's March through Georgia, South Carolina, and North Carolina during the Civil War, we study the effect of capital destruction on medium- and long-run local economic activity, and the role of financial markets in recovery. We show that the march's capital destruction led to a large contraction in agricultural investment, farming asset prices, and manufacturing activity compared to neighboring counties. Elements of the decline in agriculture persisted through 1920. Exploiting variation in local access to antebellum credit, we argue that the underdevelopment of financial markets played a role in weakening the recovery.
Abstract
					While privatization of state-owned enterprises (SOEs) remains a popular policy tool in many countries, the impacts on workers are unclear. This paper studies the case of Brazil, which implemented a large privatization program in the 1990s. Following privatization, incumbent workers in privatized SOEs suffer a wage decline of roughly 25 percent relative to a matched control group. Additionally, private sector firms that are connected to privatized SOEs by labor mobility also reduce wages. A summary calculation suggests that privatization decreased the formal sector wage by 3 percent, with about two-thirds of this effect due to the indirect impact on private sector workers.
Abstract
					Do consumers react differently to zero prices? We test the presence of a zero-price effect in child health care and find that a zero price is special as it boosts demand discontinuously. A zero price affects resource allocations by encouraging healthier children to use more services and exacerbates behavioral hazard by increasing inappropriate use of antibiotics. A co-payment, of as small as US$2 per visit, alleviates these problems without substantially increasing financial risk. However, a zero price may be used to boost demand for highly cost-effective treatments. Zero and non-zero prices should be strategically chosen to achieve specific goals.
Abstract
					A central question in development economics is whether there are adequate checks and balances on the executive. This paper provides causal evidence of how increasing constraints on the executive—via removal of presidential discretion in judicial appointments—promotes the rule of law. The age structure of judges at the time of the reform and the mandatory retirement age law provide us with an exogenous source of variation in the termination of presidential discretion in judicial appointments. Overall, the results indicate that presidential appointment of judges deteriorates the rule of law. Even one degree of separation between the judiciary and the president matters.
Abstract
					Between the 1957 and 1983 labor market entry cohorts, median lifetime earnings declined by 10–19 percent for men and increased by 22–33 percent for women, albeit relative to very low median lifetime earnings for the early cohorts. The difference between newer and older cohorts comes from differences in median earnings at the time of labor market entry. Inequality in lifetime earnings has increased significantly within each gender group, but the closing lifetime gender gap has kept overall lifetime inequality flat. The increase among men is largely attributable to subsequent cohorts entering the labor market with progressively higher levels of inequality.
Abstract
					This article combines all available data to produce pretax and posttax income inequality series in 26 European countries from 1980 to 2017. Our estimates are consistent with macroeconomic growth and comparable with US distributional national accounts. Inequality grew in nearly all European countries, but much less than in the US. Contrary to a widespread view, we demonstrate that Europe's lower inequality levels cannot be explained by more equalizing tax and transfer systems. After accounting for indirect taxes and in-kind transfers, the US redistributes a greater share of national income to low-income groups than any European country. "Predistribution," not "redistribution," explains why Europe is less unequal than the United States.
Abstract
					Heyes and Saberian (2019) estimate from 2000–2004 data that outdoor temperature reduces US immigration judges' propensity to grant asylum. This estimate is the result of coding and data errors and of sample selection. Correcting the errors reduces the point estimate by two-thirds, with a wide 95 percent confidence interval straddling zero. Enlarging the sample to 1990–2019 flips the point estimate's sign and rules out the effect size reported by Heyes and Saberian with very high confidence. An analysis of all criminal sentencing decisions by US federal district judges from 1992 to 2003 yields no evidence of temperature or other weather effects either.
Abstract
					This paper evidenced the sensitivity of US immigration judge decisions to temperature in the city of arbitration on the date of a case's completion. This note serves to correct errors noted since publication. The results from both the main linear specifications are qualitatively unchanged, with estimated treatment effects similar in size to the original and retaining statistical significance at conventional levels. Some secondary results lose significance with the erosion of sample size. We also acknowledge the additional finding by Spamann (2022) with respect to external validity.
Abstract
					In the United States, most student loans follow a fixed payment schedule that falls early in borrowers' careers. This structure provides no insurance against earnings risk and may increase student loan defaults. Income-driven repayment (IDR) plans are designed to help distressed student borrowers by lowering their monthly payments to a share of income. Using random variation in a loan servicer's automatic dialing system, I find that IDR reduces delinquencies by 22 percentage points and decreases outstanding balances within eight months of take-up. I find suggestive long-run impacts on borrower credit scores, mortgage-holding rates, and other measures of financial health.
Abstract
					We use the introduction of the Texas Top Ten Percent rule to estimate the effect of access to a selective college on graduation and earnings outcomes for two groups of students. For highly ranked students at more disadvantaged high schools, who gained access under the policy, college enrollment and graduation increased. Less highly ranked students at more advantaged schools, who tended to lose access, shifted toward less-selective colleges under the policy, but did not see declines in overall college enrollment, graduation, or earnings. The policy thus benefited students targeted for admission without evidence of adverse effects on displaced students.
Abstract
					This paper exploits the idiosyncratic line of contact separating Allied and Soviet troops within East Germany at the end of WWII to study political resistance in a non-democracy. When Nazi Germany surrendered, 40 percent of what would become the authoritarian German Democratic Republic was initially under Allied control but was ceded to Soviet control less than two months later. Brief Allied exposure increased protests during the major 1953 uprising. We use novel data on the appointment of local mayors and a retrospective survey to argue that even a "glimpse of freedom" can foster civilian opposition to dictatorship.
Abstract
					Search frictions make worker turnover costly to firms. A three-month parental leave expansion in Sweden provides exogenous variation that we use to quantify firms' adjustment costs upon worker absence. The reform increased women's leave duration and likelihood of separating from pre-birth employers. Firms with greater exposure to the reform hired additional workers and increased coworkers to make it coworkers' hours, incurring wage costs corresponding to 10 full-time equivalent months in addition to replacing the workers. These adjustment costs varied by firms' availability of internal substitutes. We also analyze a daddy-month reform and find similar employer responses to male workers' leave, albeit smaller in magnitude.
Abstract
					This paper studies the impact of labor supply on the creation of new technology, exploiting a large exogenous shock to the US agricultural labor supply caused by the termination of the Bracero agreements between the US and Mexico at the end of 1964. Using a text-search algorithm allocating patents to crops, I show a negative labor-supply shock induced a sharp increase in innovation in technologies related to more affected crops. The effect is stronger for technology related to labor-intensive production tasks. Farm-value dynamics indicate that, despite the positive technology reaction, the policy change was undesirable for farm owners.
Abstract
					In the 1920s, the United States substantially reduced immigration by imposing country-specific entry quotas. We compare local labor markets differentially exposed to the quotas due to variation in the national-origin mix of their immigrant population. US-born workers in areas losing immigrants did not benefit relative to workers in less exposed areas. Instead, in urban areas, European immigrants were replaced with internal migrants and immigrants from Mexico and Canada. By contrast, farmers shifted toward capital-intensive agriculture, and the immigrant-intensive mining industry contracted. These differences highlight the uneven effects of the quota system at the local level.
Abstract
					This paper estimates the impact of daily weather on worker productivity by using household survey data to study interviewers. Using data from over 9,000 Demographic and Health Surveys interviewers in 46 countries, I find that interviewers complete 13.6 percent fewer interviews per hour on the hottest and most humid days. Workers maintain the same total output by starting earlier in the day and spending more time on each interview at the expense of spending more hours in the field with the same total pay. In addition, interviewers become differentially less productive on tasks that are less easily monitored.
Abstract
					We use variation in weather to study the long-term effects of activism during the original Earth Day on attitudes, environmental outcomes, and children's health. Unusually bad weather on April 22, 1970 is associated with weaker support for the environment 10 to 20 years later, particularly among those who were school aged in 1970. Bad weather on Earth Day is also associated with higher levels of carbon monoxide in the air and greater risk of congenital abnormalities in infants born in the following decades. These results identify benefits to volunteer activity that would be impossible to identify until years after the volunteering occurs.
Abstract
					We study whether and how peer referrals increase screening, testing, and identification of patients with tuberculosis, an infectious disease responsible for over one million deaths annually. In an experiment with 3,176 patients at 122 tuberculosis treatment centers in India, we find that small financial incentives raise the probability that existing patients refer prospective patients for screening and testing, resulting in cost-effective identification of new cases. Incentivized referrals operate through two mechanisms: peers have private information about individuals in their social networks to target for outreach, and they are more effective than health workers in inducing these individuals to get tested.
Abstract
					Exploiting an unemployment insurance reform in Brazil, we study incentive effects of UI in the presence of informal labor markets. We find that eligibility for UI benefits increases formal layoffs by 11 percent. Most of the additional layoffs are related to workers transitioning to informal employment. We further document formal layoff and recall patterns consistent with rent extraction from the UI system. Workers are laid off as they become eligible for UI benefits and recalled when benefits cease. These patterns are stronger for industries and municipalities with a high degree of labor market informality.
Abstract
					Farmers often buy water using fixed fees—rather than with marginal prices. We use two randomized controlled trials in Bangladesh to study the relationship between marginal prices, adoption of a water-saving technology, and water usage. Our first experiment shows that the technology only saves water when farmers face marginal prices. Our second experiment finds that an encouragement to voluntarily convert to hourly pumping charges does not save water. Taken together, efforts to conserve water work best when farmers face marginal prices, but simply giving an option for marginal pricing is insufficient to trigger water-saving investments and reduce irrigation demands.
Abstract
					We study how high school majors affect adult earnings using a regression discontinuity design. In Sweden students are admitted to majors in tenth grade based on their preference rankings and ninth grade GPA. We find engineering, natural science, and business majors yield higher earnings than social science and humanities, with major-specific returns also varying based on next-best alternatives. There is either a zero or a negative return to completing an academic program for students with a second-best nonacademic major. Most of the differences in adult earnings can be attributed to differences in occupation, and to a lesser extent, college major.
Abstract
					Does working while in school smooth students' transition into the labor market? We provide evidence on this question by leveraging a one-year work-study program that randomized job offers among over 90,000 student applicants in Uruguay. Program rules forbade employers from employing participants in the same job after program completion, and less than 5 percent of participants ever worked in the same firm again. Two years after the program, participants had 8 percent higher earnings. Our results suggest that the program's focus on work-related skills was a key mechanism for earnings impacts.
Abstract
					This paper studies an anticorruption policy—corporate debarment, or blacklisting—to understand how disclosing illicit corporate practices and the sanctions for these practices affect firm and worker outcomes. Exploiting a policy change in Brazil that imposed stricter penalties for corrupt firms, I find that debarment is associated with a sizable decline in employment and an increase in the probability of exiting the formal sector. I also document that workers' annual earnings fall after debarment. The impacts are driven by lost revenues from government contracts. The results shed light on the costs to workers in weighing the consequences of corruption crackdown.
Abstract
					This study measures the degree to which public expenditures on wildfire protection subsidize development in harm's way. We use administrative data on firefighting expenditures to measure the causal effect of nearby homes on the amount spent to extinguish wildfires. We use these estimates in an actuarial calculation yielding geographically differentiated expected implicit subsidies for homes across the western United States. The expected net present value of this subsidy can exceed 20 percent of home value, increases with fire hazard, and decreases surprisingly steeply with development density. We discuss potential behavioral responses by individuals and local governments using a simple economic model.
Abstract
					Using new establishment-by-occupation microdata, we show that the use of discretionary wage setting significantly expanded in the 1970s and 1980s. Increasingly, wages for blue-collar workers were not standardized by job title or seniority but instead subject to managerial discretion. When establishments abandoned standardized pay rates, wages fell, particularly for the lowest-paid workers in a job and for those in establishments that previously paid above market rates. This shift away from standardized pay rates, in context of a broader decline in worker bargaining power, accelerated the decline in real wages experienced by blue-collar workers in the 1980s.
Abstract
					Despite infrastructure's importance to the US economy, evidence on its cost trajectory over time is sparse. We document real spending per new mile over the history of the Interstate Highway System. We find that spending per mile increased more than threefold from the 1960s to the 1980s. This increase persists even conditional on pre-existing observable geographic cost determinants. We then provide suggestive evidence on why. Input prices explain little of the increase. Statistically, changes in income and housing prices explain about half of the increase. We find suggestive evidence that the rise of "citizen voice" in government decision-making increased spending per mile.
Abstract
					We implement a lab-in-the-field experiment with 334 Turkish loan officers to document gender discrimination in small business lending and unpack mechanisms. Officers review multiple real-life loan applications in which we randomize applicant gender. While unconditional approval rates are the same, officers are 26 percent more likely to require a guarantor when we present the same application as coming from a female instead of a male entrepreneur. A causal forest algorithm to estimate heterogeneous treatment effects reveals that discrimination is concentrated among young, inexperienced, and gender-biased officers. Discrimination mainly affects female loan applicants in male-dominated industries, indicating how financial frictions can perpetuate entrepreneurial gender segregation across sectors.
Abstract
					We analyze the effect of an increase in knowledge-intensive activities on spatial inequality in US cities. We leverage a predetermined network of patent citations to instrument for local innovation trends. Between 1990 and 2010, a one-standard-deviation increase in patent growth increases income segregation by 0.65 Gini points, corresponding to 0.31 standard deviations of the over-time change in income segregation. This effect mainly arises from the sorting of residents by income, occupation, and education. Local shocks to innovation induce a clustering of knowledge-intensive jobs and residents, amplified by the response of rents and amenities.
Abstract
					Calling to thank donors is considered a key fundraising strategy in the charitable giving industry. Yet the effectiveness of thank-you calls remains untested. We conduct field experiments with public television stations and a national nonprofit in which 500,000 new donors were randomized to receive a thank-you call or not. Fundraising professionals predicted that the calls—which followed standard practices in the industry—would increase donor retention by 80 percent. In stark contrast, we found a precisely estimated null effect of calls on donor retention.
Abstract
					We study Brazil's recent use of satellite technology to overcome law enforcement shortcomings resulting from weak institutional environments. DETER is a system that processes satellite imagery and issues near-real-time deforestation alerts to target environmental enforcement in the Amazon. We propose a novel instrumental variable approach for estimating enforcement's impact on deforestation. Clouds limiting DETER's capacity to detect clearings serve as a source of exogenous variation for the presence of environmental authorities. Findings indicate that monitoring and enforcement effectively curb deforestation. Results hold across several robustness checks.
Abstract
					We examine the impact of public sector salary disclosure laws on university faculty salaries in Canada. The laws, which enable public access to the salaries of individual faculty if they exceed specified thresholds, were introduced in different provinces at different times. Using detailed administrative data covering the majority of faculty in Canada, and an event-study research design that exploits within-province variation in exposure to the policy across institutions and academic departments, we find robust evidence that the laws reduced the gender pay gap between men and women by approximately 20–40 percent.
Abstract
					Using administrative panel data on the universe of Texas public school students, I analyze how shocks to local economic conditions affect education and employment decisions. I find that high school students at the bottom of the academic ability distribution worked and earned more in response to the fracking boom and that these earnings gains persisted through ages 24–25 despite the fact that the same students also became less likely to attend classes and graduate from high school. My results suggest that the opportunity cost of education is large for these students.
Abstract
					Emigration of young, highly educated individuals may deprive origin countries of entrepreneurs. We identify exogenous variation in emigration from Italy by interacting past diaspora networks and current economic pull factors in destination countries. We find that a 1 standard deviation increase in the emigration rate generates a 4.8 percent decline in firms' creation in the local labor market of origin. An accounting exercise decomposes the estimated effect into four components: subtraction of individuals with average entrepreneurial propensity, selection of young and college-educated among emigrants, negative spillovers on firm creation, and selection on unobservable characteristics positively associated with entrepreneurship.
Abstract
					We report the results of a field experiment that randomly placed unemployed young people as apprentices with small firms in Ghana and included no cash subsidy to firms (or workers) beyond in-kind recruitment services. Treated firms experienced increases in firm size of approximately half a worker and firm profits of approximately 10 percent for each apprentice placement offered, documenting frictions to novice hiring. We interpret the program as providing a novel worker screening technology to firms, as (voluntary) worker participation included nonmonetary application costs, echoing the widespread use of an entrance fee mechanism for hiring apprentices in the existing labor market.
Abstract
					This paper studies the impacts of work from home (WFH) in the housing market from both intercity and intracity perspectives. Our results confirm the theoretical prediction that WFH puts downward pressure on housing prices and rents in high-productivity counties, a result of workers starting to relocate to cheaper metro areas during the pandemic without forsaking their desirable jobs. We also show that WFH tends to flatten intracity house-price gradients, weakening the price premium associated with good job access.
Abstract
					Influenza and air pollution each pose significant health risks with global economic consequences. Their shared etiological pathways present a case of compounding health risk via interacting externalities. Using instrumental variables based on changing wind direction, we show that increased levels of contemporaneous pollution increase influenza hospitalizations. We exploit random variation in effectiveness of the influenza vaccine as an additional instrument to show that vaccine protection neutralizes this relationship. Thus, pollution control and vaccination campaigns jointly provide greater returns than those implied by addressing either in isolation. We show the importance of this consideration in addressing observed gaps in influenza incidence by race.
Abstract
					Transfers paid through annual tax refunds are a large but uncertain source of income for poor households. We document that low-income tax filers have substantial subjective uncertainty about these refunds. We investigate the determinants and consequences of refund uncertainty by linking survey, tax, and credit bureau data. On average, filers' expectations track realized refunds. More uncertain filers have larger differences between expected and realized refunds. Filers borrow in anticipation of their refunds, but more uncertain filers borrow less, consistent with precautionary behavior. A simple consumption-savings model suggests that refund uncertainty reduces the welfare benefits of the EITC by about 10 percent.
Abstract
					Following the Fukushima nuclear accident, Japan gradually shut down all its nuclear power plants, causing a countrywide power shortage. In response the government launched large-scale energy-saving campaigns to reduce electricity consumption. Exploiting the electricity-saving targets across regions and over time, we show that the campaigns significantly increased mortality, particularly during extremely hot days. The impact is primarily driven by people using less air conditioning, as encouraged by the government. Nonpecuniary incentives can explain most of the reduction in electricity consumption. Our findings suggest there exists a trade-off between climate change mitigation and climate change adaptation.
Abstract
					We leverage variation in the adoption of coeducation by US women's colleges to study how exposure to a mixed-gender collegiate environment affects women's human capital investments. Our event-study analyses of newly collected historical data find a 3.0–3.5 percentage point (30–33 percent) decline in the share of women majoring in STEM fields. While coeducation caused a large influx of male peers and a modest increase in male faculty, we find no evidence that it altered the composition of the female student body or other gender-neutral inputs. Extrapolation of our main estimate suggests that coeducational environments explain 36 percent of the current gender gap in STEM majors.
Abstract
					This paper studies the impact of adolescent peers who are central in their social network on the formation of social skills and academic performance of fellow students. I conduct a novel large-scale field experiment at selective public boarding schools in Peru with two treatments: (i) more socially central versus less socially central peers, and (ii) higher-achieving versus lower-achieving peers. Peer effects are more pronounced for social skills than academic performance, and both vary by gender. While socially central peers lead boys to better social skills, higher-achieving peers decrease girls' test scores. Gender differences in self-confidence can explain both findings.
Abstract
					Reformers are calling for greater oversight of police behavior, in part through enhanced use of civilian complaints. However, others counter that greater oversight could chill effective policing. We assess police officer response to administrative determinations of misconduct. Using Chicago data, we find strong evidence that a sustained allegation reduces that officer's future misconduct. We find no evidence that this effect is driven by incapacitation, such as assignment to desk duty, or by officer disengagement. We conclude that our findings are most consistent with improved officer conduct, in part from oversight and officer concerns over promotion, salary, and desirable assignments.
Abstract
					Courts routinely use low cash bail as a financial incentive to ensure released defendants appear in court and abstain from crime. This can create burdens for defendants with little empirical evidence on its efficacy. We exploit a prosecutor-driven reform that led to a sharp reduction in low cash bail and pretrial supervision, with no effect on pretrial detention, to test whether such incentive mechanisms succeed at their intended purpose. We find no evidence that financial collateral has a deterrent effect on failure to appear or pretrial crime. This paper also contributes to the literature on legal actor discretion, showing that nonbinding reforms may have limited impact on jail populations.
Abstract
					Electoral rules determine how voters' preferences are aggregated and translated into political representation. Using a regression discontinuity design, I contrast single- and two-round elections in Brazil. In two-round elections, the eventual winner must obtain at least 50 percent of the vote. I show that two-round elections provide incentives for candidates to secure a broader base of support and provide public goods more broadly. Candidates represent a more geographically diverse group of voters, public schools have more resources, and there is less variation in resources across schools. Effects appear to be driven by strategic responses of candidates rather than differential entry into races.
Abstract
					School segregation is determined both by residential sorting and local policies, such as the drawing of attendance boundaries and school siting. This paper develops an approach to understanding the relative importance of these factors by calculating the distance-minimizing assignment of students to schools and assessing whether actual assignments differ systematically by race. Using census data and attendance boundary maps for nearly 1,600 school districts, I find that attendance boundaries create 5 percent more integration than a distance-minimizing baseline, while school siting plays almost no role. Residential segregation alone explains more than 100 percent of school segregation in the United States.
Abstract
					Whether immigrants advance in labor markets during their life- times relative to natives is a fundamental question in the economics of immigration. We examine linked census records for five cohorts spanning 1850–1940, when immigration to the United States was at its peak. We find a U-shaped pattern of assimilation: immigrants were "catching up" to natives in the early and later cohorts, but not in between. This change was not due to shifts in immigrants' source countries. Instead, it was rooted in men's early-career occupations, which we associate with structural change, strengthening complementarities, and large immigration waves in the 1840s and 1900s.
Abstract
					We study whether social media can amplify antiminority sentiment with a focus on Donald Trump's political rise. Using an instrumental variable strategy based on Twitter's early adopters at the South by Southwest festival in 2007, we find that higher Twitter use in a county is associated with a sizeable increase in anti-Muslim hate crimes after the 2016 presidential primaries. Trump's tweets about Muslims predict increases in xenophobic tweets by his followers, cable news mentions of Muslims, and hate crimes on the following days. These results suggest that social media content can affect real-life outcomes.
Abstract
					We present robust evidence on adverse selection in hospitalization insurance for low-income individuals that received first-time access to insurance. A large randomized control trial from Pakistan allows us to separate adverse selection from moral hazard, estimate how selection changes at different points of the demand curve, and test simple measures to limit adverse selection. The results reveal substantial selection in individual policies, leading to welfare losses and the threat of a market breakdown. Bundling insurance policies at the household level or higher almost eliminates adverse selection, thus mitigating its welfare consequences and facilitating sustainable insurance supply.
Abstract
					Exploiting the random assignment of Medicaid beneficiaries to managed care plans, we find substantial plan-specific spending effects despite plans having identical cost sharing. Enrollment in the lowest-spending plan reduces spending by at least 25 percent—primarily through quantity reductions—relative to enrollment in the highest-spending plan. Rather than reducing "wasteful" spending, lower-spending plans broadly reduce medical service provision—including the provision of low-cost, high-value care—and worsen beneficiary satisfaction and health. Consumer demand follows spending: a 10 percent increase in plan-specific spending is associated with a 40 percent increase in market share. These facts have implications for the government's contracting problem and program cost growth.
Abstract
					Through a labeling intervention at a national retailer, we test three hypotheses for consumer aversion to generic over-the-counter drugs: lack of information on the comparability of generic and brand drugs, inattention to their price differences, and uncertainty about generic quality that can be reduced with information on peer purchase rates. With a difference-in-differences strategy, we find that posted information on the purchases of other customers increases generic purchase shares significantly, while other treatments have mixed results. Consumers without prior generic purchases appear particularly responsive to this information. These findings have policy implications for promoting evidence-based, cost-effective choices.
Abstract
					How much and through which channels do households self-insure against job loss? Combining data from a large bank and from government sources, we quantify a broad range of responses to job loss in a unified empirical framework. Cumulated over a two-year period, households reduce spending by 30 percent of their income loss. They mainly self-insure through adjustments of liquid balances, which account for 50 percent of the income loss. Other channels—spousal labor supply, private transfers, home equity extraction, mortgage refinancing, and consumer credit—contribute less to self-insurance. Both overall self-insurance and the channels vary with household characteristics in intuitive ways.
Abstract
					We study how a regulator can best target inspections. Our case study is a US Occupational Safety and Health Administration (OSHA) program that randomly allocated some inspections. On average, each inspection led to 2.4 (9 percent) fewer serious injuries over the next 5 years. Using new machine learning methods, we find that OSHA could have averted as much as twice as many injuries by targeting inspections to workplaces with the highest expected averted injuries and nearly as many by targeting the highest expected level of injuries. Either approach would have generated up to $850 million in social value over the decade we examine.
Abstract
					The poor live paycheck to paycheck and are repeatedly exposed to strong cyclical income fluctuations. We investigate whether such income fluctuations affect their risk preference. If risk preference temporarily changes around payday, optimal decisions made before payday may no longer be optimal afterward, which could reinforce poverty. By exploiting social security payday cycles in the United States, we find that the poor relying heavily on social security become more risk tolerant before payday. More than cognitive decline before payday, the deterioration of mental health and relative deprivation are likely to play a role. We find similar evidence among the Japanese elderly.
Abstract
					We analyze trends in cultural distances between groups in the United States defined by income, education, gender, race, and political ideology. We measure cultural distance as the ability to infer an individual's group based on media diet, consumer behavior, time use, social attitudes, or newborn's name. Gender difference in time-use decreased between 1965 and 1995 and has remained constant since. Differences in social attitudes by political ideology, and somewhat by income, have increased over the last four decades. Whites and non-Whites have diverged in consumer behavior. For all other demographic divisions and cultural dimensions, cultural distance has been broadly constant over time.
Abstract
					This paper studies the effects of immigration on crime and crime perceptions in Chile, where the foreign-born population tripled in less than ten years. We document null effects of immigration on crime but positive and significant effects on crime-related concerns and on preventive behavioral responses, such as investing in home security. We explore several channels and provide suggestive evidence related to low- versus high-education immigrants, ethnicity-related intergroup threats, and the role of local media.
Abstract
					Candidates' placements in polls and past elections can be powerful coordination devices for parties and voters. Using a regression discontinuity design in French two-round elections, we show that candidates who place first in the first round are more likely to stay in the race and win than those who placed second. These effects are even larger for ranking second versus third, and also present for third versus fourth. They stem from allied parties agreeing on which candidate should drop out, voters coordinating their choice, and the bandwagon effect of wanting to vote for the winner. We find similar results across 19 other countries.
Abstract
					Is dishonest behavior contagious? We answer this question by studying whether corruption scandals affect the propensity of supermarket customers to steal while using a self-service checkout system. Crucially, this system allows shoppers to engage in dishonest behavior by underreporting the value of their shopping cart. Exploiting data from random audits on shoppers, we show that the probability of stealing increases by 16 percent after a local corruption scandal breaks. This effect is not driven by any change in material incentives. Suggestive evidence shows that it is driven by a reduction in the self-imposed cost of stealing.
Abstract
					Marriage rates have become increasingly stratified by homeownership. We investigate this in a household model where investments in public goods reduce future earnings and, thus, divorce risk creates inefficiencies. Access to a joint savings technology, like a house, collateralizes marriage, providing insurance to the lower-earning partner and increasing specialization, public goods, and value from marriage. We use idiosyncratic variation in housing prices to show that homeownership access indeed leads to greater specialization. The model also predicts that policies that erode the marriage contract in other ways will make wealth a more important determinant of marriage, which we confirm empirically.
Abstract
					This paper shows that partisan cable news broadcasts have a causal effect on the size and composition of budgets in US localities. Using exogenous channel positioning as an instrument for viewership, we show that exposure to the conservative Fox News channel reduces revenues and expenditures. Multiple mechanisms drive these results: Fox News improves election chances for local Republicans, alters politician campaign agendas, and shifts voter policy preferences on fiscal issues. Consistent with the priorities of small-government conservatism, we find evidence that private provision compensates for the reduced public services. The "Fox News effect" extends beyond vote shares to rightward policy shifts.
Abstract
					In many developing economies, urban workers earn substantially more than rural workers with the same level of education. Why don't more rural workers migrate to cities? I use two field experiments in Kenya to show that low migration is partly due to underestimation of urban incomes, which is sustained by income hiding by migrants. Parents at the origin underestimate their migrant children's incomes by nearly half, and underestimation is greater when a migrant's remittance obligations are high. Providing information about urban earnings increases migration to the capital city by about 40 percent over two years.
Abstract
					South Asians traveling to richer Asian nations is the world's largest migration corridor. We track down applicants to a government lottery that randomly allocated visas to Bangladeshis for temporary labor contracts in Malaysia, five years later. Most lottery winners migrate, and migrants' earnings triple. Their remittance raises their family's standard of living in Bangladesh. The migrant's absence pauses marriage and childbirth and shifts decision-making power toward females. Migration removes enterprising individuals, lowering household entrepreneurship, but does not crowd out other family members' labor supply. A deferred migration offer never materialized for a subgroup. Their premigration investments in skills generate no returns in the domestic market.
Abstract
					We study people's willingness to trade off civil liberties for increased health security in the context of the COVID-19 pandemic by deploying representative surveys involving around 550,000 responses across 15 countries. We document significant heterogeneity across groups in willingness to sacrifice rights: citizens disadvantaged by income, education, or race are less willing to sacrifice rights than their more advantaged peers in every country. Leveraging naturally occurring variation and experimental approaches, we estimate a one standard deviation increase in health insecurity increases willingness to sacrifice civil liberties by 68–83 percent of the difference between the average Chinese and US citizen.
Abstract
					Can the extent of ethnic discrimination change quickly, and what circumstances and mechanisms make such changes possible? I address these questions by using scraped data to study the daily evolution of customer discrimination against Arab doctors in Israel from January 2020 to June 2021. Results show that: (1) the outbreak of the coronavirus crisis in March 2020 led to a dramatic decline in discrimination; (2) the eruption of a wave of ethnic riots in May 2021 had the opposite effect; (3) media coverage of the contribution of Arab doctors to the fight against the pandemic helped bring about the first change.
Abstract
					We sent fictitious applications to firms advertising job openings. We find that revealing a disability decreases callback rates by 25 percentage points. This result is not explained by accessibility constraints or lower productivity due to disability. We find that including a video résumé of a well-spoken applicant significantly increases callbacks by 10 percentage points for persons with and without disabilities, suggesting that discrimination is unaffected by quality signals in our context. Analysis of viewing activity suggests that employers seek less information when the applicant is disabled. Disclosing the disability later in the video increases employers' viewing time but leaves callback rates unchanged.
Abstract
					We study the effects of state hospital regulations intended to increase breastfeeding by requiring certain standards of care during the immediate postpartum hospital stay. We find that these regulations significantly increased breastfeeding initiation by 3.8 percentage points (5.1 percent) and the probability of breastfeeding at 3 and 6 months postpartum by approximately 7 percent. We also provide evidence that these breastfeeding-promoting policies significantly increased maternal time spent on child care, crowding out time spent on formal work. Observed reductions in employment are concentrated among mothers with infants between zero and three months of age.
Abstract
					Though racial affirmative action (AA) policies are widespread in college admissions, evidence on their effects before college is limited. We study a US Supreme Court ruling that reinstated AA in three states. Using nationwide SAT data, we separately identify positive effects of AA for Whites and underrepresented minorities. Using Texas administrative data, we find that AA narrowed racial gaps in grades, attendance, and college applications. Improvements in minorities precollege human capital and college applications are concentrated in the top half of the test score distribution among the students for whom the policy most increases the returns to human capital investment.
Abstract
					Thirty-four states prohibit price increases during emergencies, and individuals take costly actions to report violators. We measure experimentally the willingness to pay to report sellers who increase prices of personal protective equipment. Over 75 percent of subjects pay to report, even if others are willing to buy at those prices. We argue that reports contain information about a desire to prevent or punish third-party transactions at unfair or illicit prices. Reports are partially driven by a distaste for firm profits or markups, implying that the distribution of surplus between producers and consumers matters for welfare.
Abstract
					School systems around the world use achievement tests to assign students to schools, classes, and instructional resources, including remediation. Using a regression discontinuity design, we study a Florida policy that places middle school students who score below a proficiency cutoff into remedial classes. Students scoring below the cutoff receive more educational resources, but they are also placed in classes that are more segregated by race, socioeconomic status, and prior achievement. Increased tracking occurs not only in the remedial subject, but in other core subjects. These tracking effects are significantly larger and more likely to persist beyond the year of remediation for Black students.
Abstract
					We examine how foreign corruption regulation affects the economic benefits communities receive from extraction activities in the resource-rich areas of Africa. After a mid-2000s increase in enforcement of the US Foreign Corrupt Practices Act (FCPA), nighttime luminosity increases by 15 percent (5 percent) in communities within a 10-kilometer (25-kilometer) radius of affected extraction facilities. Cash-wage employment also increases significantly, suggesting that the economic benefits are not limited to electricity access. Consistent with foreign corruption regulation mitigating the political resource curse, we find that perceived corruption decreases following the rise in FCPA enforcement.
Abstract
					This paper identifies an important spillover associated with public health insurance: reduced incarceration. In 1990, Congress passed legislation that increased Medicaid eligibility for individuals born after September 30, 1983. We show that Black children born just after the cutoff are 5 percent less likely to be incarcerated by age 28, driven primarily by a decrease in incarcerations connected to financially motivated offenses. Children of other races, who experienced almost no gain in Medicaid coverage as a result of the policy, demonstrate no such decline. We find that reduced incarceration in adulthood substantially offsets the initial costs of expanding eligibility.
Abstract
					This paper examines how temporary exposure to a different ethnic region affects national integration, using original survey data from participants in Africa's largest national youth service program. Seven years later, participants randomly assigned to serve in a state with a different ethnic majority are five times more likely to live all across the country compared to those who served in their ethnic region. They have more interethnic romantic relationships and express greater national pride. Nevertheless, immersion in a different region strengthens participants' ethnic pride and favorable attitudes toward co-ethnics. The results suggest that national and ethnic identity can thrive together.
Abstract
					In matched pairs experiments in which one cluster per pair of clusters is assigned to treatment, to estimate treatment effects, researchers often regress their outcome on a treatment indicator and pair fixed effects, clustering standard errors at the unit-of-randomization level. We show that even if the treatment has no effect, a 5 percent–level t-test based on this regression will wrongly conclude that the treatment has an effect up to 16.5 percent of the time. To fix this problem, researchers should instead cluster standard errors at the pair level. Using simulations, we show that similar results apply to clustered experiments with small strata.
Abstract
					Government regulations are often imperfectly enforced by public officials. In this study, we exploit the introduction of air pollution monitors in China to investigate whether real-time monitoring of policy outcomes affects the enforcement of existing regulations. Using assignment criteria established by the central government and new georeferenced data on local enforcement activities, we show that monitoring (i) increases enforcement against local firms, (ii) improves the targeting of enforcement, and (iii) reduces aggregate pollution. These effects are driven by officials facing performance incentives and are stronger when there is limited scope for data manipulation, suggesting that real-time monitoring improves top-down accountability.
Abstract
					This paper analyzes a large-scale and long-running distance education program in Mexico. We estimate marginal treatment effects (MTEs) for learning in math and Spanish in telesecundarias relative to traditional Mexican secondary schools using an empirical framework that allows for unobserved sorting on gains. The estimated MTEs reveal that school choice is not random and that the average student experiences significant improvements in both math and Spanish after just one year of attendance in telesecundarias. We find that the existing policy reduces educational inequality, and our policy-relevant treatment effects show that expanding telesecundarias would yield significant improvements in academic performance.
Abstract
					Is the type of financial support provided to businesses more important than which businesses receive it? Loans and grants can lead to differences in optimal investments and in scope for moral hazard. We randomize 3,293 business loan applicants into receiving a loan, cash grant, in-kind grant, or nothing. All treatments equally increase income, yet there are large differences within a treatment group with impacts concentrated at the top of the distribution. Those who succeed with loans are observationally equivalent to those who succeed with grants, showcasing that owner heterogeneity is more important than the type of support received in microenterprise development.
Abstract
					Do gender attitudes influence interactions with female judges in US circuit courts? In this paper, we propose a judge-specific measure of gender attitudes based on use of gender-stereotyped language in the judge's authored opinions. Exploiting quasi-random assignment of judges to cases and conditioning on judges' characteristics, we validate the measure showing that higher-slant judges vote more conservatively in gender-related cases. Higher-slant judges interact differently with female colleagues: they are more likely to reverse lower court decisions if the lower court judge is a woman than a man, are less likely to assign opinions to female judges, and cite fewer female-authored opinions.
Abstract
					This paper explores the extent to which workers are willing to trade hours worked for leisure time shared with their spouse. We use the fact that the number and timing of paid vacation days to which French employees are entitled vary in a quasi-random way from year to year along with the dates of public holidays. Self-employed workers do not benefit from public holidays, but we show that a large fraction of them substitute a day of unpaid leisure for a day of paid work whenever their spouse gets an extra day of paid leave.
Abstract
					We estimate the effect of increasing the cost of informal jobs on formal firms' and workers' outcomes. We combine administrative records and household surveys and exploit exogenous variation in the cost of informality generated by over 480,000 random worksite inspections in Mexico. For informal workers, inspections temporarily increase the probability of being formalized at the inspected firm, but separations also rise. For formal workers, we find temporary increases in the probability of remaining formally employed at the inspected firm and in monthly wages. At the firm level, increasing the cost of informal jobs leads to persistently lower formal employment.
Abstract
					We conduct meta-analysis on a comprehensive set of studies of the impacts of US K-12 public school spending on student outcomes—estimating average marginal impacts and heterogeneity across contexts. On average, a policy increasing spending by $1,000 per pupil for four years improves test scores by 0.0316σ and college-going by 2.8 pp. Moving beyond averages, we use estimates of heterogeneity and observable policy differences to produce informative probability distributions of policy effects. Effects are smaller for economically advantaged populations, marginal effects of capital spending are similar to noncapital, and effects are similar across baseline spending levels and geography. Confounding and publication biases are minimal.
Abstract
					This paper studies how wages respond to a sudden change in employer concentration by using the deregulation of the Swedish pharmacy industry. The reform involved a substantial and policy-driven increase in the number of employers that varied by local labor market. Exploiting this variation, elasticities of wages with respect to labor market concentration are estimated between −0.025 and −0.061. The positive wage effects from reduced employer concentration are most prevalent for more mobile workers as well as younger and foreign-born workers. Overall, the paper finds that employer concentration matters for wages in a context where skills are industry specific.
Abstract
					We study how public anxiety over the threat of a disease outbreak can affect voter behavior by looking at the Ebola scare that hit the United States in 2014. Exploiting timing and locations of the four cases diagnosed in the country, we show that heightened concern about Ebola led to a lower Democratic vote share and lower turnout, despite no evidence of a general anti-incumbent effect (including President Obama). Voters displayed increasingly conservative attitudes on immigration, but not on other ideologically charged issues. Our findings indicate that emotional reactions can have a strong electoral impact, mediated by issues plausibly associated with the specific triggering factor.
Abstract
					We use linked parent-child administrative data for five countries in North America and Europe, as well as detailed survey data for two more, to investigate methodological challenges in the estimation of absolute income mobility. We show that the commonly used "copula and marginals" approximation methods perform well across countries in our sample, and the greatest challenges to their accuracy stem not from assumptions about relative mobility rates over time but from the use of nonrepresentative marginal income distributions. We also provide a multicountry analysis of sensitivity to specification decisions related to age of income measurement, income concept, family structure, and price index.
Abstract
					We construct series of posttax income for France over the 1900–2018 period and compare them with US series. We quantify the extent of redistribution—the reduction from pretax to posttax inequality—and estimate the contribution of redistribution in explaining differences in posttax inequality. We find that differences in pretax inequality drive most of the differences in posttax inequality between France and the United States, and that changes over time in both countries are mostly due to changes in pretax inequality. We highlight that the concept of redistribution can be empirically misleading for judging how policies reduce inequalities.
Abstract
					We study intergenerational mobility in India. We propose a new measure of upward mobility: the expected education rank of a child born to parents in the bottom half of the education distribution. This measure works well under data constraints common in developing countries and historical contexts. Intergenerational mobility in India has been constant and low since before liberalization. Among sons, we observe rising mobility for Scheduled Castes and declining mobility among Muslims. Daughters' intergenerational mobility is lower than sons', with less cross-group variation over time. A natural experiment suggests that affirmative action for Scheduled Castes has substantially improved their mobility.
Abstract
					By using hand-collected data on households' wealth assessments, we study multigenerational mobility in Florence during the late Middle Ages. We find that Florentine society was more mobile than one would expect but also that multigenerational mobility was lower than implied by two-generation estimates. We reconcile these findings by showing their consistency with a model where wealth transmission is governed by an unobserved latent factor. We also show that, given our estimates, this model is compatible with the long run persistence obtained by previous studies. Finally, we find that participation in marriage networks and politics correlates with persistence of economic status across generations.
Abstract
					This study measures the impact of rapidly placing single adults experiencing homelessness in housing programs on future homelessness, crime, and health. Using a caseworker placement tendencies design and a novel dataset constructed by linking administrative records from multiple public agencies in Los Angeles County, I estimate that rapidly placing individuals in housing programs significantly reduces the likelihood of future return to the homeless support system, crime, and reliance on emergency cash assistance, yet it does not have a detectable effect on health services utilization. These findings demonstrate that rapid housing placements can have both rehabilitative and potentially cost-saving impacts.
Abstract
					We examine the persistence of teachers' gender biases by following teachers over time in different classes. We find a very high correlation of gender biases for teachers across their classes. We find a substantial impact of gender bias on student performance in university admissions exams, choice of university field of study, and quality of the enrolled program. The effects on university choice outcomes are larger for girls, explaining some gender differences in STEM majors. Teachers with lower value-added are also more likely to be gender biased.
Abstract
					Information frictions limit the adoption of new agricultural technologies in developing countries. Efforts to improve learning involve spreading information from government agents to farmers. We show that when compared to this government approach, informing private input suppliers in India about a new seed variety increases farmer-level adoption by over 50 percent. Suppliers become more proactive in informing potential customers and carrying the new variety. They induce increased adoption by those with higher returns from the technology. Being motivated by expanded sales offers the most likely motive for these results.
Abstract
					Impact evaluations of behavioral interventions typically focus on target outcomes. Might interventions induce negative spillovers on other behaviors? I run a large field experiment in which individuals receive combinations of messages and incentives promoting two healthy behaviors, meditation and meal logging. I find that the interventions reduce completion rates of the opposite behavior by 19–29 percent. I find that interventions with larger target effects do not necessarily generate larger negative spillovers, and demonstrate implications for cost-effectiveness analysis. I investigate the mechanisms behind the observed spillovers.
Abstract
					The paper studies the effect of health on work among older workers by eliciting two- and four-year-ahead subjective probabilities of working under alternative health states. These measures predict work outcomes. Person-specific differences in working probabilities across health states can be interpreted as Subjective ex ante Treatment Effects (SeaTEs) in a potential outcomes framework and as taste for work within a discrete choice dynamic programming framework. There is substantial heterogeneity in expectations of work conditional on health. The paper shows how heterogeneity in taste for work correlated with health can bias regression estimates of the effect of health on retirement.
Abstract
					Combining rich data from the Norwegian media market with exogenous variation in the availability and adoption of broadband internet, this paper provides causal evidence on how the internet affected traditional print media. Broadband internet adoption triggered large reductions in print readership and circulation and equally large increases in online news readership. Despite strong substitution from print to online news consumption, newspaper revenues fell dramatically. Newspapers responded to this adverse technology shock along multiple dimensions, including cutting costs by reducing labor inputs and the physical newspaper size and changing the print product available to customers by reducing tabloid content share.
Abstract
					This paper examines how improving dental health affects economic, social, and psychological outcomes. In a randomized experiment, we provide a low-income group free dental care, including prostheses, and find significant and persistent impacts on men's and women's dental and self-perceived mental health. For women, treatment generates improvement in self-esteem, a higher likelihood of smiling when photographed, short-run improvements in employment and earnings, and improvement in partner interactions. We find no impact for men in these dimensions. Heterogeneity analyses suggest that treatment effects on labor market outcomes are larger for women with more severe visible dental issues at baseline.
Abstract
					A large body of literature studies how infrastructure facilitates trade. We ask whether infrastructure also facilitates migration. Using a general equilibrium trade model and rich spatial data, we study the impact of a large, plausibly exogenous shock to highways in Brazil on both goods and labor markets. We find the highway system increased welfare by 2.8 percent, of which 76 percent was due to reduced trade costs and 24 percent to reduced migration costs. An implication of costly migration is spatial heterogeneity in benefits: the range of welfare improvement is 1 to 15 percent, as opposed to uniform gains with perfect mobility.
Abstract
					This paper evaluates a randomized, over-the-phone counseling intervention aimed at mitigating the mental health impact of COVID-19 on a sample of 2,402 women across 357 villages in Bangladesh. We find that the provision of two hours of mental support plus information on COVID-19 improves mental health ten months postintervention, leading to reductions of 20 percent in the prevalence of moderate and severe stress and 33 percent in depression. Our results suggest that this type of low-cost intervention ($14 per person) can be effective in providing rapid psychological support to vulnerable groups in times of crises.
Abstract
					We study the labor market consequences of ethnic politics in African democracies. Using subnational georeferenced data from 15 countries from 1996 to 2017, we compare individuals from ethnicities linked to parties at the margin of electing a representative in the national parliament. Having a local ethnic party politician in parliament increases the likelihood of being employed by 2–3 percentage points. The effect is concentrated in the agricultural sector and mostly driven by self-employment, suggesting increased access to land as the main channel. We also show that religion and age are salient markers in African politics that trigger similar employment effects.
Abstract
					We use newly collected data for 16,000 women who applied for Mothers' Pensions, America's first welfare program, to investigate the effect of means-tested cash transfers on lifetime family structure and maternal well-being. In the short term, cash transfers delayed marriage and lowered geographic mobility. In the long run, transfers had no impact on the probability of remarriage, spouse quality, or fertility. Cash transfers did not affect women's well-being, measured by longevity and family income in 1940. Given the lack of significant negative behavioral impacts, the benefits of transfers appear to exceed costs if they have—even modest—positive impacts on children.
Abstract
					We study the effect of maternal dengue infections on birth outcomes using linked administrative records from Brazil estimating maternal fixed-effect specifications. In contrast to previous studies, we find robust evidence for the negative effect of dengue infections on birth weight (BW). The effect is particularly pronounced at lower parts of the BW distribution, with an increase of 15 percent, 67 percent, and 133 percent for low, very low, and extremely low BW, respectively. We also document large increases in children's hospitalizations and medical expenditures for up to three years after birth.
Abstract
					We study the role of professional networks in facilitating emigration of Jewish academics dismissed from their positions by the Nazi government. We use individual-level exogenous variation in the timing of dismissals to estimate causal effects. Academics with more ties to early emigres (emigrated 1933–1934) were more likely to emigrate. Early emigres functioned as "bridging nodes" that facilitated emigration to their own destination. We also provide evidence of decay in social ties over time and show that professional networks transmit information that is not publicly observable. Finally, we study the relative importance of three types (family, community, professional) of social networks.
Abstract
					Over the last few decades, health care services in the United States have become more geographically centralized. We study how the loss of hospital-based obstetric units in over 400 counties affects maternal and infant health via a difference-in-differences design. We find that closures lead mothers to experience a significant change in birth procedures such as inductions and C-sections. In contrast to concerns voiced in the public discourse, the effects on a range of maternal and infant health outcomes are negligible or slightly beneficial. While women travel farther to receive care, closures induce women to receive higher quality care.
Abstract
					We examine how supply-side health insurance generosity affects patient access, use, and health. Exploiting large, exogenous changes in Medicaid reimbursement rates for physicians, we find that increasing payments for new patient office visits reduces reports of providers turning away beneficiaries: closing the gap in payments between Medicaid and private insurers would reduce more than half of disparities in access among adults and would eliminate such disparities among children. We further find that higher physician reimbursement leads to more office visits, better self-reported health, and reduced school absenteeism among the program's beneficiaries.
Abstract
					How do patient and provider incentives affect the provision of long-term care? Our analysis of 551,000 nursing home stays yields three main insights. First, due to limited cost-sharing, Medicaid-covered residents prolong their nursing home stays instead of transitioning to community-based care. Second, when facility capacity binds, nursing homes shorten Medicaid stays to admit more profitable out-of-pocket private payers. Third, providers react more elastically to financial incentives than patients. Thus, targeting provider incentives through alternative payment models, such as episode-based reimbursement, is more effective than increasing patient cost sharing in facilitating transitions to community-based care and generating long-term care savings.
Abstract
					Governments often privatize the administration of regulations to third-party specialists paid for by the regulated parties. We study how the resulting conflict of interest can have unintended consequences for the distributional impacts of regulation. In Massachusetts, the party responsible for hazardous waste contamination must hire a licensed contractor to quantify the environmental severity. We find that contractors' evaluations favor their clients, exhibiting substantial score bunching just below thresholds that determine government oversight of the remediation. Client favoritism is more pronounced in socioeconomically disadvantaged neighborhoods and is associated with inferior remediation quality, highlighting a novel channel for inequities in pollution exposure.
Abstract
					We use newly digitized data to study the impacts of a historical reform that mandated exams for some employees in the largest US customs-collection districts. Although the reform improved targeted employees' professional backgrounds and reduced turnover, it did not lead to significant improvements in the cost-effectiveness of customs revenue collection. The incomplete reach of the reform was key for this partial success. First, the reform incentivized hiring in exam-exempted positions, distorting districts' hierarchical structure. Second, since we find suggestive evidence that districts' top managers mattered for performance, not changing their appointment method might have constituted a missed opportunity for improvement.
Abstract
					This paper examines whether the civil service system protected state bureaucrats from political interference following a recall petition against the governor of Wisconsin. I find that most classified workers, who were covered by the state civil service laws, were paid equally by signing status following the public disclosure of the petition list. Conversely, signers in the unclassified service, a smaller set of government positions, were paid about 3 percent less annually relative to nonsigners in the postdisclosure period. These results indicate that the civil service insulated qualified bureaucrats, while uncovered workers faced retribution.
Abstract
					Two years prior to elections, two-thirds of Delhi municipal councillors learned they had been randomly chosen for a preelection newspaper report card. Treated councillors in high-slum areas increased pro-poor spending, relative both to control counterparts and treated counterparts from low-slum areas. Treated incumbents ineligible to rerun in home wards because of randomly assigned gender quotas were substantially likelier to run elsewhere only if their report card showed a strong pro-poor spending record. Parties also benefited electorally from councillors' high pro-poor spending. In contrast, in a cross-cut experiment, councillors did not react to actionable information that was not publicly disclosed.
Abstract
					This paper studies the impact of the First Great Migration on children. We use the complete-count 1940 census to estimate selection-corrected place effects on education for children of Black migrants. On average, Black children gained 0.8 years of schooling (12 percent) by moving from the South to the North. Many counties that had the strongest positive impacts on children during the 1940s offer relatively poor opportunities for Black youth today. Opportunities for Black children were greater in places with more schooling investment, stronger labor market opportunities for Black adults, more social capital, and less crime.
Abstract
					This paper studies how US local labor markets respond to employment losses that occur during recessions. Following recessions from 1973 through 2009, we find areas that lose more jobs during the recession experience persistent relative declines in employment and population. Most importantly, these local labor markets also experience persistent decreases in the employment-population ratio, earnings per capita, and earnings per worker. Our results imply that limited population responses result in longer-lasting consequences for local labor markets than previously thought and that recessions are followed by persistent reallocation of employment across space.
Abstract
					Leveraging unique administrative data and a sharp increase in benefit generosity in a difference-in-differences research design, we estimate the impact of workers' compensation wage replacement benefits on individual behavior and program costs. We find that increased benefit generosity leads to longer income benefit durations and increased medical spending. Responses along these two margins are equally important drivers of increased program costs, collectively increasing program costs 1.4 times the mechanical increase in costs. Using these estimates and an estimate of the consumption drop among injured workers, our welfare calibrations suggest that a marginal increase in benefit generosity would not improve welfare.
Abstract
					We run a randomized controlled trial coupled with lab-in-the-field social network experiments in urban Dakar. Decision spillovers and health externalities play a large role in determining uptake of sanitation technology, with decision spillovers being largest among households that don't receive significant subsidies. There is no evidence that the spillovers are explained by social forces in general, nor by specific social mechanisms such as learning from others, social pressure, or reciprocity. We do find evidence of a fourth, nonsocial, mechanism impacting decisions: increasing health benefits. As more neighbors adopt the sanitary technology, it becomes more worthwhile for other households to adopt as well.
Abstract
					We study the human capital effects of access to elite bureaucratic jobs in Taiwan, where performance on an examination determines entry into the civil service. Historically, quotas for successful applicants were set based on the 1948 populations of individuals' native provinces in mainland China. This resulted in a higher probability of success on the exam—and, thus, greater access to elite positions—for descendants of certain migrant groups. These preferential quotas were replaced in 1962 with a uniform admissions policy. Using this variation, we find that the incentives created by preferential quotas increased human capital and improved long-run economic outcomes.
Abstract
					We study the demand and supply implications of occupational licensing using transaction-level data from a large online platform for home improvement services. We find that demand is more responsive to a professional's reviews than to the professional's platform-verified licensing status. We show some evidence that consumers view licenses and reviews as substitutes. We confirm the generality of our findings off the platform in an independent consumer survey. Combining state-level licensing regulation data with platform microdata, we find that more stringent requirements are associated with less competition, higher prices, and no increase in demand or consumer satisfaction.
Abstract
					The rising rate of chronic disease is a leading driver of the global disease burden. Yet, its determinants are not fully understood. Exploiting the Green Revolution and its expansion in historically groundwater-rich Indian districts, we examine the unanticipated contribution of agricultural productivity growth to the rise in chronic, diet-related diseases. We find that areas with greater adoption of new staple varieties saw an increase in diabetes in men born after the introduction of high-yield crops. We find suggestive evidence that diet is an important mechanism, such as heterogeneous impacts with respect to dietary habits and increases in household calorie consumption.
Abstract
					We study how market power impacts the efficiency and redistributive properties of sin taxation, with an empirical application to sugar-sweetened beverage taxation. We estimate an equilibrium model of the UK drinks market, which we embed in a tax design framework to solve for optimal sugar-sweetened beverage tax policy. Positive price-cost margins for drinks create inefficiencies that lower the optimal rate compared with a perfectly competitive setting. Since profits mainly accrue to the rich, this is partially mitigated under social preferences for equity. Overall, ignoring market power when setting tax policy leads to welfare gains 40 percent below those at the optimum.
Abstract
					Public sector audits are key to state capacity. However, they can create unintended distortions. Regression discontinuity analysis from Chile shows that audits lowered the use of auctions for public procurement, reduced supplier competition, and increased the likelihood of small, local, and incumbent firms winning contracts. Looking inside the black box of the audit process reveals that relative to comparable direct contracts, auctions underwent more than twice as many checks and led to twice as many detected infractions. These findings show that standard audit protocols can mechanically discourage the use of more regulated, complex, and transparent procedures involving more auditable steps.
Abstract
					We study the impact of a scholarship-based intervention aimed to reduce child marriage by fostering secondary education among adolescent girls in Niger. Using a large-scale randomized controlled trial, we find that after three years of implementation, the intervention led to large and positive effects. It halved both dropout and marriage rates and increased girls' and their parents' aspirations. Importantly, there is no displacement effect detrimental to the education and marriage status of nontreatment girls. Our results show that financial aid for education has the potential to transform adolescent girls' lives.
Abstract
					We provide first evidence that variations in the expected returns to crime affect the location of property crime. Our identification strategy relies on the widely held perception in the United Kingdom that South Asian households store gold jewelry at home. Price movements on the international market for gold exogenously affect the expected gains from burgling these households. Using a neighborhood-level panel on crime and difference-in-differences, we find that burglaries in South Asian neighborhoods are more sensitive to variations in the gold price than other neighborhoods in the same municipality. We conduct various tests on neighborhood and individual data to eliminate alternative explanations.
Abstract
					This paper studies the effects of a large welfare benefit reduction on the children in the affected families. The welfare cut targeted adult refugees who received residency in Denmark, and it reduced their disposable income by 30 percent on average over the first five years. We show that children exposed to the welfare cut during preschool and school-age obtained lower GPAs, experienced reduced well-being and overall education levels, and suffered lower employment and earnings as adults. Children in their teens at exposure faced large increases in conviction probabilities for violent and property crimes.
Abstract
					We study how fathers' access to workplace flexibility affects maternal postpartum health. We use variation from a Swedish reform that granted new fathers more flexibility to take intermittent parental leave during the postpartum period and show that increasing the father's temporal flexibility—and thereby his ability to be present at home together with the mother—reduces the incidence of maternal postpartum health complications. Our results suggest that mothers bear part of the burden from a lack of workplace flexibility for men because a father's inability to respond to domestic shocks exacerbates the maternal health cost of childbearing.
Abstract
					Innovative firms must trade off disclosing to investors and maintaining secrecy from competitors. We study this trade-off in a sample of IP licenses mandatorily disclosed by US public firms, whose contents can be temporarily redacted. Hand classifying the redacted information, we find that firms with valuable IP in competitive markets redact IP information more often. Markets react positively to the redaction of IP information, consistent with theoretical predictions rationalizing a separating equilibrium in which nondisclosure signals more valuable IP. Our results suggest that credible nondisclosure partially resolves information frictions for innovative public firms when facilitated by sophisticated investors.
Abstract
					The gender gap in STEM widens during high school due both to differences in student choices and institutional barriers to accessing STEM education. Using rich data from Mexico City's centralized assignment system and a structural model of high school choice, we document strong demand for elite STEM programs and relatively weak demand for non-elite STEM programs. Decomposition and counterfactual simulations demonstrate that most of the gap is due to gendered choices, with males more strongly preferring STEM. Test-based assignment restricts elite STEM access for females, who have lower placement test scores despite similar low-stakes exam scores.
Abstract
					I study discrimination arising from individual experiences of employers with worker groups. I present a model in which employers are uncertain about the productivity of one of two groups and learn through hiring. Positive experiences lead to positive biases, which correct themselves by leading to more hiring and learning. Negative experiences decrease hiring and learning, preserving negative biases, which can cause persistent discrimination. The model explains prejudice as incorrect statistical discrimination and generates novel predictions and policy implications. I then illustrate experience-based discrimination in an experimental labor market, finding support for key model predictions.
Abstract
					Noisy workplaces common in low- and middle-income countries can impair workers' cognitive functions. However, whether this lowers earnings depends on the importance of these functions for productivity and whether workers understand these effects. I study these questions with two randomized experiments in Nairobi, Kenya. I find a noise increase of 7 dB reduces productivity in a textile training course by 3 percent, impairs cognitive function, but does not affect effort. I also find willingness to pay for quiet working conditions does not depend on whether pay depends on performance, suggesting participants are not aware that quiet would increase their productivity.
Abstract
					Exploring a drastic change in media landscape in Poland, we show that mainstream media can significantly affect religious participation. After nationalist populist party PiS came to power in 2015, news on state and private independent TV diverged due to propaganda on state TV, resulting in a switch of some of its audience to independent TV. Municipalities with access to independent TV continued to follow a long-term secularization trend, while municipalities with access only to state TV experienced a reversal of this trend. An online experiment sheds light on the mechanisms underlying the effect of exposure to independent news on religiosity.
Abstract
					Expanding their customer base is crucial for firms to grow. This paper leverages sales managers' job-to-job transitions to better understand how buyer-seller relationships form. Combining unique French firm-to-firm trade data with matched employer-employee data, we perform an event study analysis that exploits the timing of sales managers' transitions from one firm to another for identification. We find recruiting a sales manager increases by 36 percent the probability to export to the buyers of her former firm. The expansion of the firm's customer base is detrimental to the buyer's former suppliers. Yet business stealing is partial; job-to-job transitions are not zero-sum.
Abstract
					We perform a large-scale analysis of the impact of family formation on crime. For mothers, criminal arrests drop precipitously in the first few months of pregnancy, decreasing 50 percent overall. Men show a sustained 20 percent decline in crime that begins around pregnancy, although arrests for domestic violence spike at birth. A separate design using parents of stillborn children to estimate counterfactual arrest rates reinforces the main findings. Marriage, in contrast, is not associated with any sudden changes and marks the completion of a gradual 50 percent decline in arrests for both men and women.
Abstract
					We study the fiscal and tax response to intergovernmental grants, exploiting quasi-experimental variation within Germany's fiscal equalization scheme triggered by census revisions of population counts. Municipal budgets do not adjust instantly. Instead, spending and investments adapt within five years to revenue gains, while the adjustment to losses is more rapid. Yet the long-run response is symmetric. The tax response is particularly slow, stretching over more than a decade. Well-known empirical anomalies such as the so-called flypaper effect may thus reflect a short-run phenomenon, while long-run fiscal behavior appears more consistent with standard theories of fiscal federalism.
Abstract
					How does remote work affect productivity and how productive are workers who choose remote jobs? We decompose these effects in a Fortune 500 firm. Before COVID-19, remote workers answered 12 percent fewer calls per hour than on-site workers. After offices closed, the productivity gap narrowed by 4 percent, and formerly on-site workers' call quality and promotion rates declined. Even with everyone remote, an 8 percent productivity gap persisted, indicating negative selection into remote jobs. A cost-benefit analysis indicates savings in reduced turnover and office rents could outweigh remote work's negative productivity impact but not the costs of attracting less productive workers.
Abstract
					We develop and implement a new method for identifying wasted subsidies and use it to provide systematic evidence of the misallocation of carbon offsets in the Clean Development Mechanism—the world's largest carbon offset program. Using newly constructed data on the locations and characteristics of over 1,000 wind farms in India, we estimate that at least 52 percent of approved carbon offsets were allocated to projects that would very likely have been built anyway. We estimate that the sale of these offsets to regulated polluters resulted in substantially higher global carbon dioxide emissions.
Abstract
					Using British data on over 7 million residential property sales, we find that simplified energy efficiency (EE) information leads to important market effects. UK legislation requires the use of an energy label that shows an EE rating score (1–100) mapped into arbitrary color-coded rating bands (A–G). Applying a regression discontinuity design, we document significant price discontinuities at rating band thresholds, indicating heuristic thinking in the market. These price discontinuities influence market behavior as sellers are more likely to make EE investments if their property is just below a threshold. We discuss policy considerations and avenues for future research.
Abstract
					Can automation complement economic incentives? We explore this question by randomly encouraging households to activate a feature on their existing smart thermostat that automates responsiveness to time-of-use electricity pricing. The feature reduces air conditioning use during the highest-priced afternoon period, raising indoor temperatures above a household's preferred temperature, primarily for customers who are typically home during the day. Customers infrequently override the feature when they experience discomfort, suggesting that they are willing to trade off monetary savings for small increases in discomfort. Automation thus enables low-cost changes in household energy use, with potentially large electricity supply-cost reductions at scale.
Abstract
					The climate economy literature has documented adverse effects of extreme temperatures on well-being through mechanisms such as mortality, productivity, and conflict. Impacts due simply to discomfort are less well understood. This paper investigates individuals' valuations of weather using a revealed preference approach. We first quantify the decline in attendance at Major League Baseball games on hot and cold days. Leveraging this finding coupled with the historically informed assumption of a horizontal supply curve, we infer a monetized estimate of the disutility of extreme temperatures. We estimate a $1.53 utility loss per hour of exposure to high temperatures, implying nontrivial aggregate welfare effects.
Abstract
					This paper provides new evidence on why municipalities are often reluctant to integrate. Exploiting a French reform that made intermunicipal cooperation mandatory, I find that municipalities forced to integrate experienced a large increase in construction, consistent with NIMBYism, explaining their resistance and that rural municipalities ended up with fewer local public services. I do not find the same effects for municipalities that had voluntarily integrated prior to the law, while both types of municipality enjoyed similar benefits in terms of public transport and fiscal revenues. These findings support the fact that municipalities resisted to avoid the local costs of integration.
Abstract
					Firms are increasingly concerned about the resilience of their sales and sourcing decisions. Using administrative data, we show that a temporary disruption in trade due to state border closures in India led to a persistent trade collapse within the country—interstate trade relative to intrastate remains five percent lower even six months after all restrictions were lifted. Reshoring explains this phenomenon as plants more dependent on interstate sales (input-sourcing) shift from inter- to intrastate sales (input-sourcing). State borders rather than distance are salient in explaining the observed substitution. We propose a novel product-level measure that determines the extent of reshoring.
Abstract
					We nest an extended two-way fixed effect (ETWFE) estimator for staggered difference-in-differences within the structural gravity model. To test the ETWFE, we estimate the effects of regional trade agreements (RTAs). The results suggest that RTA estimates in the current gravity literature may be biased downward (by more than 50 percent in our sample). Sensitivity analyses confirm the robustness of our main findings and demonstrate the applicability of our methods across settings. We expect the ETWFE methods to have significant implications for estimates of other policy variables in the trade literature and for gravity regressions on migration and foreign direct investment.
Abstract
					We use linked employer–employee data to study the causal effects of location on earnings in the United States. We estimate a model with employer and employee effects, then aggregate to the commuting zone (CZ) level. Sorting across firms biases traditional "movers" designs. Our model accurately predicts earnings changes for CZ movers after accounting for firm sorting. Worker skills explain half of observed earnings differences across CZs; observable characteristics understate this. Industry composition explains little of average place effects. Costs at least offset CZ earnings premia on average; workers who move to higher-wage CZs have equal or lower real consumption.
Abstract
					This paper investigates the effect of media coverage on immigration attitudes. It combines data on immigration coverage in French television with individual panel data from 2013 to 2017 that records respondents' preferred television channel and attitudes toward immigration. The analysis focuses on within-individual variations over time, addressing ideological self-selection into channels. We find that increased coverage of immigration polarizes attitudes, with initially moderate individuals becoming more likely to report extremely positive and negative attitudes. This polarization is mainly driven by an increase in the salience of immigration, which reactivates pre-existing prejudices, rather than persuasion effects from biased news consumption.
Abstract
					This paper evaluates the effects of the War on Poverty's legal services program (LSP), which provided subsidized legal assistance to poor communities, focusing on divorce and welfare access. We use a difference-in-difference (DiD) research design based on the program's rollout from 1965 to 1975. We find temporary increases in the rate of new divorces and persistent increases in welfare participation, consistent with LSP activities. We find increases in nonmarital birth rates that stem from falling marriage rates rather than rising birth rates. Expanded access to legal institutions thus contributed directly and indirectly to changes in family structure in the 1960s.
Abstract
					We study the effects of decentralized wealth taxation on mobility and the effectiveness of tax coordination at mitigating tax competition. We exploit the reintroduction of the Spanish wealth tax, after which all regions except Madrid levied positive tax rates. We find the mobility responses to wealth taxes are within the range of prior estimates with respect to income taxes. However, wealth tax mobility responses generate losses to personal income tax revenues that are six times larger than the direct losses to wealth taxes. Madrid could achieve higher total regional revenues by agreeing to a harmonized positive tax rate.
Abstract
					This paper uses census microdata linked with tax records to quantify the contribution of occupations to intergenerational income mobility. We document substantial segregation into occupations by parental income. Children of high-income parents are significantly more likely to pursue high-paying and more desirable occupations. Since parents may pass on their occupations to their children, we further describe patterns of intergenerational occupational following and show they vary substantially across occupations, with low-income occupations showing more persistence across generations on average. Yet, occupational persistence plays a limited role for income mobility, explaining only 10 percent of the income rank-rank relationship.
Abstract
					Home price expectations play a central role in macroeconomics and finance. However, there is little direct evidence on their effect on market choices. We provide causal evidence using a large-scale, high-stakes field experiment in the United States. We sent letters about home price trends to 57,910 homeowners who listed their homes. These letters contained randomized information creating nondeceptive, exogenous variation in home price expectations. Consistent with economic theory, higher expectations reduced selling probability. Behavior was highly elastic: a 1 percentage point increase in expectations caused a 2.63 percentage point reduction in the probability of selling the property within 12 weeks.
Abstract
					Prior research finds food expenditure decreases at retirement, which suggests households are inadequately saving. In contrast, other evidence shows that direct measures of food intake are unaffected by exiting the labor force. Using a wide array of data sources and methodologies, we find that food intake falls at retirement, including: declines in caloric and nutrient intake in cross-sectional datasets spanning 40 years, a decrease in caloric intake using longitudinal data, and a drop in a food intake index that relates diet composition to permanent income. We discuss the implications of these results in the context of life-cycle models of consumption.
Abstract
					While some studies suggest mobile phone–based information programs change behavior; others find no effect. We evaluate six text message agricultural extension programs, collectively covering 128,000 farmers. A meta-analysis finds a 1.22-fold increase in the odds of adoption of recommended practices (95 percent CI: 1.16, 1.29). We cannot reject similar impacts across experiments. Impacts are increased by message repetition, but not by providing more granular information, using behavioral framings, or complementing texts with phone calls. There is little evidence of message fatigue or crowd-out. Despite modest absolute impacts detectable only with large samples or meta-analysis, texts are inexpensive enough to be cost-effective.
Abstract
					Prices for several intermediate inputs, including cement, are higher in developing economies—particularly in Africa. Combining recent data from the International Comparison Program with a global directory of cement firms, we estimate an industry equilibrium model to distinguish between drivers of international price dispersion: demand, costs, conduct, and entry. Developing economies feature both higher marginal costs and higher markups. African markets are not characterized by less competitive conduct and, if anything, feature lower barriers to entry. Yet the small size of many national markets limits entry and competition and explains most of the higher markups and prices. Policy implications are discussed.
Abstract
					We investigate the role of cultural norms in shaping women's labor supply decisions after childbirth. Specifically, we are interested in the interplay between childhood socialization and adulthood environment. To that end, we leverage the setting of the German reunification when East Germany's gender-egalitarian culture induced by socialism and West Germany's more traditional culture were brought together. We find that East German gender norms are persistent, whereas West German ones are not. West German mothers adjust their behavior to that of their East German peers not only when immersed in East German environment but even after returning to the West.
Abstract
					We randomly offered a childcare subsidy, an equivalent cash grant, or both to mothers of three-to-five-year-old children. The childcare subsidy substantially increased the labor supply and earnings of single mothers, highlighting the importance of time constraints for them. Among couples, childcare did not affect mothers' labor market outcomes but instead increased fathers' salaried employment. At the household level, childcare led to higher income and consumption and improved child development. Cash grants positively affected mothers' labor supply and income irrespective of the household structure, suggesting the general importance of credit constraints for women's business development.
Abstract
					Increasing underrepresented groups' representation in police departments is a common proposal to reduce aggressive policing. This paper documents the effects of peer composition in the Chicago police academy on officers' future arrests by exploiting the lottery system, which provides exogenous variation in cohort composition. I find that higher shares of peers from groups that police less aggressively, such as female and older officers, reduce all officers' future low-level arrests. Peer race matters by amplifying the effects of gender and age. Overall, the results are most consistent with peers' preferences for less aggressive policing shifting officers' preferences and changing future behavior.
Abstract
					This paper studies the effects of a randomized control trial in which Canadian high school students were randomly invited to participate in a career guidance program during high school and/or made eligible for extra financial aid conditional on college enrollment. I use administrative records to examine the effects of the interventions on college enrollment, graduation, and income up to age 29. The guidance intervention increased students' four-year college enrollment and graduation rates and had positive effects on individuals' income in adulthood. The financial aid intervention had a significantly lower impact on individuals' income in adulthood despite also increasing college enrollment.
Abstract
					We quantify how pollution affects aggregate productivity and welfare in spatial equilibrium. We show that skilled workers in China emigrate away from polluted cities. These patterns are evident under various empirical specifications, such as when instrumenting for pollution using upwind power plants, or thermal inversions. Pollution changes the spatial distribution of skilled and unskilled workers, and wage returns by location. We quantify the loss in aggregate productivity due to this re-sorting by estimating a spatial equilibrium model. Counterfactual simulations show that reducing pollution increases productivity through spatial re-sorting by approximately as much as the direct health benefits of clean air.
Abstract
					The health care system uses patient family medical history in many settings, and this practice is widely believed to improve the efficiency of health care allocation. This paper provides a counterpoint by documenting that reliance on hereditary information can amplify the misallocation of low-value care. We study Attention Deficit Hyperactivity Disorder, and show that reliance on family medical history generates a "snowball effect"—the propagation of an original marginal diagnosis to a patient's relatives. This snowball effect raises the private and social costs of low-value care.
Abstract
					We evaluate the effect of smoking bans and excise taxes on the exposure
to tobacco smoke of nonsmokers, and we show their unintended
consequences on children. Smoking bans perversely increase nonsmokers'
exposure by displacing smokers to private places where
they contaminate nonsmokers. We exploit data on bio-samples of
cotinine, time use, and smoking cessation, as well as state and time
variation in anti-smoking policies across US states. We find that
higher taxes are an efficient way to decrease exposure to tobacco
smoke. (JEL D12, H25, I12, I18, J13)
Abstract
					In 1968, the Taiwanese government extended compulsory education
from 6 to 9 years and opened over 150 new junior high schools at
a differential rate among regions. Within each region, we exploit
variations across cohorts in new junior high school openings to construct
an instrument for schooling, and employ it to estimate the
causal effects of mother's or father's schooling on infant birth outcomes
in the years 1978-1999. Parents' schooling does cause favorable
infant health outcomes. The increase in schooling associated
with the reform saved almost 1 infant life in 1,000 live births. (JEL
I12, I21, J12, J13, R23)
Abstract
					This paper examines the importance of network-based intergenerational
correlations in South Africa. I use longitudinal data
on young South Africans to examine the covariance of children's
employment with the usefulness of parents in their job search. I find
that fathers serve as useful network connections to their sons (not
daughters), and that mothers do not seem to be useful network connections.
The father-son effect is robust to alternate explanations
of specific human capital and correlated networks. The size of this
effect is large. Present fathers' utility as network connections may be
responsible for a one-third increase in their sons' employment rates.
(JEL D31, J12, J13, J24, J62, O15, Z13)
Abstract
					We examine the role an exogenous increase in household income,
due to a government transfer unrelated to household characteristics,
plays in children's long-run outcomes. Children in affected households
have higher levels of education in their young adulthood and
a lower incidence of criminality for minor offenses. Effects differ by
initial household poverty status. An additional $4,000 per year for
the poorest households increases educational attainment by one year
at age 21, and reduces the chances of committing a minor crime by
22 percent for 16 and 17 year olds. Our evidence suggests improved
parental quality is a likely mechanism for the change. (JEL D14,
H23, I32, I38, J13)
Abstract
					Using nationally representative data files from 1970s and 1990s college
attendees, we find that in the 1970s matriculation at historically
black colleges and universities (HBCUs) was associated with
higher wages and an increased probability of graduation, relative to
attending a traditionally white institution. By the 1990s, there is a
wage penalty resulting in a 20 percent decline in the relative wages
of HBCU graduates between the two decades. There is modest support
for the possibility that the relative decline in wages associated
with HBCU matriculation is partially due to improvements in TWIs'
effectiveness at educating blacks. (JEL I23, J15, J24, J31)
Abstract
					This paper examines behavior in a tournament in which we vary
the tournament prize structure and the available information about
participants' skill at the task of solving mazes. The number of solved
mazes is lowest when payments are independent of performance;
higher when a single, large prize is given; and highest when multiple,
differentiated prizes are given. This result is strongest when
we inform participants about the number of mazes they and others
solved in a pre-tournament round. Some participants reported that
they solved more mazes than they actually solved, and this misreporting
also peaked with multiple differentiated prizes. (JEL D82)
Abstract
					Are the English proficiency and social outcomes of US immigrants
the result of their cultural preferences or of more fundamental constraints?
Using 2000 census microdata, we relate the English proficiency,
marriage, fertility, and residential location variables of
immigrants to their age at the time of arrival in the United States,
and, in particular, whether that age fell within the "critical period"
of language acquisition. We interpret the differences between
younger and older arrivers as effects of English language skills and
construct an instrumental variable for English language skills. Two-stage-least-squares estimates suggest English proficiency increases
the likelihood of divorce and intermarriage. It decreases fertility
and, for some, ethnic
enclave residence. (JEL J11, J13, J61, R23, Z13)
Abstract
					Some individuals borrow extensively on their credit cards. This
paper tests whether present-biased time preferences correlate with
credit card borrowing. In a field study, we elicit individual time preferences
with incentivized choice experiments, and match resulting
time preference measures to individual credit reports and annual
tax returns. The results indicate that present-biased individuals are
more likely to have credit card debt, and to have significantly higher
amounts of credit card debt, controlling for disposable income, other
socio-demographics, and credit constraints. (JEL D12, D14, D91)
Abstract
					There is a widespread perception that externalities from troubled
children are significant, though measuring them is difficult due
to data and methodological limitations. We estimate the negative
spillovers caused by children from troubled families by exploiting
a unique dataset in which children's school records are matched to
domestic violence cases. We find that children from troubled families
significantly decrease the reading and math test scores of their peers
and increase misbehavior in the classroom. The achievement spillovers
are robust to within-family differences and when controlling
for school-by-year effects, providing strong evidence that neither
selection nor common shocks are driving the results. (JEL D62, I21,
J12, J13, K42)
Abstract
					This study uses the malaria-eradication campaigns in the United
States (circa 1920) and in Brazil, Colombia, and Mexico (circa 1955)
to measure how much childhood exposure to malaria depresses
labor productivity. The campaigns began because of advances in
health technology, which mitigates concerns about reverse causality.
Malarious areas saw large drops in the disease thereafter. Relative
to non-malarious areas, cohorts born after eradication had higher
income as adults than the preceding generation. These cross-cohort
changes coincided with childhood exposure to the campaigns rather
than to pre-existing trends. Estimates suggest a substantial, though
not predominant, role for malaria in explaining cross-region differences
in income. (JEL I12, I18, J13, O15)
Abstract
					Mid-twentieth century malaria eradication campaigns largely eliminated
malaria from Paraguay and Sri Lanka. Using these interventions
as quasi-experiments, I estimate malaria's effect on lifetime
female educational attainment through the combination of pre-existing
geographic variation in malarial intensity and cohort exposure
based on the timing of the national anti-malaria campaigns. The
estimates from Sri Lanka and Paraguay are similar and indicate
that malaria eradication increased years of educational attainment
and literacy. The similarity of the estimates across the countries
reinforces our confidence in the validity of the identification strategy.
(JEL I12, I18, I21, J16, O15, O18)
Abstract
					We examine the effects of exposure to malaria in early childhood
on educational attainment and economic status in adulthood by
exploiting geographic variation in malaria prevalence in India prior
to a nationwide eradication program in the 1950s. We find that the
program led to modest increases in household per capita consumption
for prime age men, and the effects for men are larger than those
for women in most specifications. We find no evidence of increased
educational attainment for men and mixed evidence for women.
(JEL I12, I18, I21, 015, 018)
Abstract
					We use a regression discontinuity design to examine students'
responses to being placed on academic probation. Consistent with
a model of introducing performance standards, we find that being
placed on probation at the end of the first year discourages some
students from returning to school while improving the GPAs of
those who do. We find heterogeneous responses across prior academic
performance, gender, and native language, and discuss these
results within the context of the model. We also find negative effects
on graduation rates, particularly for students with the highest high
school grades. (JEL I23, J16)
Abstract
					This paper studies the contribution of sulfa drugs, a groundbreaking
medical innovation in the 1930s, to declines in US mortality. For
several infectious diseases, sulfa drugs represented the first effective
treatment. Using time-series and difference-in-differences methods,
we find that sulfa drugs led to a 24 to 36 percent decline in maternal
mortality, 17 to 32 percent decline in pneumonia mortality, and 52
to 65 percent decline in scarlet fever mortality between 1937 and
1943. Altogether, sulfa drugs reduced mortality by 2 to 3 percent and
increased life expectancy by 0.4 to 0.7 years. We also find that sulfa
drugs benefited whites more than blacks. (JEL I12, L65, N32, N72)
Abstract
					Success in slowing obesity trends would benefit from policies aimed
at reducing calorie consumption. In a field experiment at a fast-food
sandwich chain, we address the effects of providing calorie information,
mimicking recent legislation, and test an alternative approach
that makes ordering healthier slightly more convenient. We find that
calorie information reduces calorie intake. Providing a daily calorie
target does as well, but only for non-overweight individuals. Making
healthy choices convenient reduces intake when the intervention is
strong. However, a milder implementation reduces sandwich calories,
but does not reduce total calories due to compensatory effects
on side orders and drinks. (JEL I12, I18, L81)
Abstract
					We collect data on the rules and practices of financial and conflict
disclosure by members of Parliament in 175 countries. Although two-thirds
of the countries have some disclosure laws, less than one-third
make disclosures available to the public, and less than one-sixth of
potentially useful information is publicly available in practice, on
average. Countries that are richer, more democratic, and have free
press have more disclosure. Public disclosure, but not internal disclosure
to parliament, is positively related to government quality,
including lower corruption. (JEL J13, I21, I12)
Abstract
					We document and analyze the emergence of a substantial gender gap
in mathematics in the early years of schooling using a large, recent,
and nationally representative panel of US children. There are no
mean differences between boys and girls upon entry to school, but
girls lose more than two-tenths of a standard deviation relative to
boys over the first six years of school. The ground lost by girls relative
to boys is roughly half as large as the black-white test score gap
that appears over these same ages. We document the presence of this
gender math gap across every strata of society. We explore a wide
range of possible explanations in the data, including less investment
by girls in math, low parental expectations, and biased tests, but
find little support for these theories. Moving to cross-country comparisons,
we find earlier results linking the gender gap in math to
measures of gender equality are sensitive to the inclusion of Muslim
countries, where, in spite of women's low status, there is little or no
gender gap in math. (JEL I23, J26)
Abstract
					In this paper, we demonstrate that, in a context where peer groups
do not overlap fully, it is possible to identify all the relevant parameters
of the standard linear-in-means model of social interactions.
We apply this novel identification structure to study peer effects in
the choice of college major. Results show that one is more likely
to choose a major when many of her peers make the same choice.
We also show that peers can divert students from majors in which
they have a relative ability advantage, with adverse consequences
on academic performance, entry wages, and job satisfaction. (JEL
I23, J24, J31, Z13)
Abstract
					Previous literature has found that tight labor market conditions during
a job raise wages. Using the Displaced Worker Survey from 1984 to 2006, we show that wage gains associated with good labor market conditions disappear at job loss. We also find that workers with higher wages due to tight past labor market conditions face higher
risk of layoff. These findings suggest an important role of persistent
rigidities in the wage setting process that are related to layoff decisions.
This supports the notion that downward rigid employment contracts help explain the Shimer (2005) "puzzle" of low wage relative to employment fluctuations. (JEL J31, J41, J63)
Abstract
					This paper estimates the impact of a change in procurement strategy of a private buyer in the central Indian state of Madhya Pradesh. Beginning in October 2000, Internet kiosks and warehouses were established that provide wholesale price information
and an alternative marketing channel to soy farmers in the state. Using a new market-level dataset, the estimates suggest a significant increase in soy price after the introduction of kiosks, supporting the predictions of the theoretical model. Moreover, there is a robust increase in area under soy cultivation. The results point toward an
improvement in the functioning of rural agricultural markets. (JEL O13, O18, Q12, Q13)
Abstract
					Price dispersion across markets is common in developing countries. Using novel market and trader-level data, this paper provides estimates of the impact of mobile phones on price dispersion across
grain markets in Niger. The introduction of mobile phone service between 2001 and 2006 explains a 10 to 16 percent reduction in grain price dispersion. The effect is stronger for market pairs with
higher transport costs. (JEL O13, O33, Q11, Q13)
Abstract
					Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance
mechanisms through ten experimental games played in an experimental
economics laboratory in urban Peru. Risk-taking broadly conforms to theoretical predictions, with dynamic incentives strongly reducing risk-taking even without group-based mechanisms. Group lending increases risk-taking, especially for risk-averse borrowers, but this is moderated when borrowers form their own groups. Group
contracts benefit borrowers by creating implicit insurance against investment losses, but the costs are borne by other borrowers, especially the most risk averse. (JEL D82, G21, G31, O16)
Abstract
					Temporary-help jobs offer rapid entry into paid employment, but they are typically brief and it is unknown whether they foster longer term
employment. We utilize the unique structure of Detroit's welfare-to-
work program to identify the effect of temporary-help jobs on labor market advancement. Exploiting the rotational assignment of welfare clients to numerous nonprofit contractors with differing job placement rates, we find that temporary-help job placements do
not improve and may diminish subsequent earnings and employment outcomes among participants. In contrast, job placements with direct-hire employers substantially raise earnings and employment over a seven quarter follow-up period. (JEL J22, J23, J24, J31, J68)
Abstract
					Rising college enrollment over the last quarter century has not been met with a proportional increase in college completion. Comparing the high school classes of 1972 and 1992, we show declines in college completion rates have been most pronounced for men who first enroll in less selective public universities and community colleges. We decompose the decline into the components due to changes in preparedness of entering students and due to changes in collegiate characteristics, including type of institution and resources per student. While both factors play some role, the supply-side characteristics are most important in explaining changes in college completion. (JEL I23)
Abstract
					This paper provides microlevel evidence of how past institutions impact present economic outcomes. It looks at the impact of colonial land tenure institutions on local governance and education outcomes in northern India. Outcomes are worse in villages that belong to areas with a history of concentration of power with the elites. Such areas continue to retain a greater political presence of socially and
economically dominant classes. Future research should examine the success of policies that attempt to break such persistence through empowerment of nonelite groups. (JEL D02, H70, I20, N35, N45, O15, O18)
Abstract
					We analyze a randomized trial of a program that rewarded Kenyan primary school teachers based on student test scores, with penalties for students not taking the exams. Scores increased on the formula used to reward teachers, and program school students scored higher on the exams linked to teacher incentives. Yet most of the gains were focused on the teacher reward formula. The dropout rate was unchanged. Instead, exam participation increased among enrolled students. Test scores increased on exams linked to the incentives, but not on other, unrelated exams. Teacher attendance and homework
assignment were unaffected, but test preparation sessions increased. (JEL I21, I28, J13, O15)
Abstract
					The careers of MBAs from a top US business school are studied to understand how career dynamics differ by gender. Although male and female MBAs have nearly identical earnings at the outset of their careers, their earnings soon diverge, with the male earnings advantage reaching almost 60 log points a decade after MBA completion. Three proximate factors account for the large and rising gender gap in earnings: differences in training prior to MBA graduation, differences in career interruptions, and differences in weekly hours. The
greater career discontinuity and shorter work hours for female MBAs
are largely associated with motherhood. (JEL J16, J22, J31, J44)
Abstract
					Do firms always choose the cheapest suitable inputs, or can group attitudes affect their choices? To investigate this question, we examine the deterioration of relations between the United States and France from 2002-2003, when France's favorability rating in the US fell by 48 percentage points. We estimate that the worsening attitudes reduced bilateral trade by about 9 percent and that trade in inputs
probably declined similarly, by about 8 percent. We use these estimates to calculate the average decrease in firms' willingness to pay for French (or US) commodities when attitudes worsened. (JEL D24, F13, F14, L14, L21)
Abstract
					This paper uses the 1991 Indian trade liberalization to measure the impact of trade liberalization on poverty, and to examine the mechanisms underpinning this impact. Variation in sectoral composition across districts and liberalization intensity across production sectors allows a difference-in-difference approach. Rural districts, in which production sectors more exposed to liberalization were concentrated, experienced slower decline in poverty and lower consumption
growth. The impact of liberalization was most pronounced among the least geographically mobile at the bottom of the income distribution, and in Indian states where inflexible labor laws impeded factor reallocation across sectors. (JEL F13, I32, O15, O18, O19, O24)
Abstract
					Does trade policy influence schooling and child labor in low-income countries? We examine this question in the context of India's 1991 tariff reforms. While schooling increased and child labor declined in rural India in the 1990s, these trends are attenuated in districts with employment concentrated in industries losing tariff protection. As the loss of protection causes a relative rise in poverty in affected districts, families reduce schooling to save schooling costs. Girls disproportionately bear the burden of helping their families cope with poverty. (JEL F13, F16, I21, J13, J82, O15, O19)
Abstract
					We provide evidence that college graduation plays a direct role in revealing ability to the labor market. Using the NLSY79, our results suggest that ability is observed nearly perfectly for college graduates, but is revealed to the labor market more gradually for high school graduates. Consequently, from the beginning of their careers, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially unrelated to
their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and returns to ability. (JEL D82, I21, I23, J24, J31)
Abstract
					This paper establishes a causal effect of product market competition on various characteristics of organizational design. Using a unique
panel dataset on firm hierarchies of large US firms (1986-1999) and a quasi-natural experiment (trade liberalization), we find that competition leads firms to flatten their hierarchies: firms reduce the
number of positions between the CEO and division managers, and firms increase the number of positions reporting directly to the CEO. The results illustrate how firms redesign their organizational structure through a set of complementary choices in response to changes in their environment. We discuss several possible interpretations of these changes. (JEL D23, F13, G34, M12, M51)
Abstract
					This paper analyzes the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980s and the early 2000s. We find that a substantial part of the growth in inequality, and essentially all of the growth in inequality in the bottom end of the distribution, is due to the steep decline in the real value of the minimum wage. (JEL J31, J38, O15, O17, O18, R23)
Abstract
					We study competition between two publicly funded school systems in Ontario, Canada: one that is open to all students, and one that is restricted to children of Catholic backgrounds. A simple model of competition between the competing systems predicts greater effort by
school managers in areas with more Catholic families who are willing to switch systems. Consistent with this insight, we find significant effects of competitive pressure on test score gains between third and sixth grade. Our estimates imply that extending competition to all students would raise average test scores in sixth grade by 6 percent to 8 percent of a standard deviation. (JEL I21, I22, H75, Z12)
Abstract
					Despite the large literature on anomalies in risky choice, very little
research has explored the relevance of these insights in real insurance markets. This paper uses new data on consumers' choices of deductibles for home insurance to provide evidence that a surprising level of risk aversion over modest stakes is a reality in the market. Most customers purchase low deductibles despite costs significantly
above the expected value. Fitting these choices to a standard model of risk aversion yields implausibly large measures of risk parameters. Potential explanations and the implications of these results for understanding the market for insurance are discussed. (JEL D14, D81, G21, G22)
Abstract
					This paper presents empirical evidence of a positive effect of council size on government spending using a dataset of 2,056 municipalities in the German state of Bavaria over a period of 21 years. We apply a regression discontinuity design to avoid an endogeneity bias. In particular, we exploit discontinuities in the legal rule that relate population size of a municipality in order to council size to identify a causal relationship between council size and public spending, and find a robust positive impact of council size on spending. Moreover, we show that municipalities primarily adjust current expenditure in
response to a rise in council size. (JEL D72, H72, R51)
Abstract
					We designed and tested a voluntary commitment product to help smokers quit smoking. The product (CARES) offered smokers a savings account in which they deposit funds for six months, after which they take a urine test for nicotine and cotinine. If they pass, their money is returned; otherwise, their money is forfeited to charity. Of
smokers offered CARES, 11 percent took up, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group. More importantly, this effect
persisted in surprise tests at 12 months, indicating that CARES produced
lasting smoking cessation. (JEL D12, I12, O15)
Abstract
					We identify birth wantedness as a source of better child outcomes. In Vietnam, the year of birth is widely believed to determine success. As a result, cohorts born in auspicious years are 12 percent larger. Comparing siblings with one another, those of auspicious cohorts are found to have two extra months of schooling. The Vietnamese horoscope being gender-specific, this difference will be shown to be driven by birth planning. Children born in auspicious years are more likely to have been planned, thus benefiting from a more favorable growth environment. (JEL J12, J13, O15, P23, Z13)
Abstract
					We use a randomized experiment to test whether and what information changes teenagers' sexual behavior in Kenya. Providing information on the relative risk of HIV infection by partner's age led to a 28 percent decrease in teen pregnancy, an objective proxy for the
incidence of unprotected sex. Self-reported sexual behavior data
suggests substitution away from older (riskier) partners and toward same-age partners. In contrast, the official abstinence-only HIV curriculum had no impact on teen pregnancy. These results suggest that teenagers are responsive to risk information, but their sexual behavior is more elastic on the intensive than on the extensive margin.
(JEL D83, I12, J13, O12)
Abstract
					Though formal and informal sex work has long been identified as crucial for the spread of HIV/AIDS, the nature of the sex-for-money market remains poorly understood. Using a unique panel dataset constructed from 192 self-reported diaries, we find that women who engage in transactional sex substantially increase their supply of risky, better compensated sex to cope with unexpected health shocks, particularly the illness of another household member. These behavioral responses entail significant health risks for these women and their partners, and suggest that these women are unable to cope with risk through other consumption smoothing mechanisms. (JEL I12, J16, O15)
Abstract
					We exploit the introduction of electronic toll collection, (E-ZPass),
which greatly reduced both traffic congestion and vehicle emissions near highway toll plazas. We show that the introduction of E-ZPass reduced prematurity and low birth weight among mothers within 2 kilometers (km) of a toll plaza by 10.8 percent and 11.8 percent, respectively, relative to mothers 2-10 km from a toll plaza. There
were no immediate changes in the characteristics of mothers or in housing prices near toll plazas that could explain these changes. The results are robust to many changes in specification and suggest that traffic congestion contributes significantly to poor health among infants. (JEL I12, J13, Q51, Q53, R41)
Abstract
					Policy-makers have cited menstruation and lack of sanitary products as barriers to girls' schooling. We evaluate these claims using a randomized
evaluation of sanitary products provision to girls in Nepal. We report two findings. First, menstruation has a very small impact on school attendance. We estimate that girls miss a total of 0.4 days in a 180 day school year. Second, improved sanitary technology has
no effect on reducing this (small) gap. Girls who randomly received sanitary products were no less likely to miss school during their period. We can reject (at the 1 percent level) the claim that better menstruation products close the attendance gap. (JEL I21, J13, J16, O12)
Abstract
					We use data from the Swedish military enlistment to assess the importance of cognitive and noncognitive ability for labor market outcomes. The measure of noncognitive ability is based on a personal interview conducted by a psychologist. We find strong evidence
that men who fare poorly in the labor market—in the sense of unemployment or low annual earnings—lack noncognitive rather than cognitive ability. However, cognitive ability is a stronger predictor of wages for skilled workers and of earnings above the median. (JEL J24, J31, J45)
Abstract
					We study the impact of minimum wages on firm profitability, exploiting the changes induced by the introduction of a UK national minimum wage in 1999. We use pre-policy information on the distribution of wages to implement a difference-in-differences approach. Minimum wages raise wages, but also significantly reduce profitability (especially in industries with relatively high market power). This is consistent with a simple model where wage gains from minimum wages map directly into profit reductions. There is some suggestive evidence of longer run adjustment to the minimum wage through falls in net entry rates. (JEL J31, J38, L25)
Abstract
					While many researchers and policymakers infer from correlations between eating out and body weight that restaurants are a leading cause of obesity, a basic identification problem challenges these conclusions. We exploit the placement of Interstate Highways in rural areas to obtain exogenous variation in the effective price of restaurants and examine the impact on body mass. We find no causal link between restaurant consumption and obesity. Analysis of food-intake micro-data suggests that consumers offset calories from restaurant meals by eating less at other times. We conclude that regulation targeting restaurants is unlikely to reduce obesity but could decrease consumer welfare. (JEL I12, I18, L51, L66)
Abstract
					Between 1973 and 2003, abortion providers in the United States were the targets of over 300 acts of extreme violence. Using unique data on attacks and on abortions, abortion providers, and births, we examine how anti-abortion violence has affected providers' decisions to perform abortions and women's decisions about whether and where to terminate a pregnancy. We find that clinic violence
reduces abortion services in targeted areas. Once travel is taken into account, however, the overall effect of the violence is much smaller. (JEL I11, J13, K42)
Abstract
					The "Hawthorne effect" draws its name from a landmark set of studies conducted at the Hawthorne plant in the 1920s. The data from the first and most influential of these studies, the "Illumination Experiment," were never formally analyzed and were thought to have been destroyed. Our research has uncovered these data. Existing descriptions of supposedly remarkable data patterns prove to be entirely fictional. We do find more subtle manifestations of possible Hawthorne effects. We also propose a new means of testing for Hawthorne effects based on excess responsiveness to experimenter-
induced variations relative to naturally occurring variation. (JEL C90, J24, J28, M12, M54, N32)
Abstract
					We compare outcomes across two types of villages in rural India. Villages vary by which caste is dominant (owns the majority of land): either a low or high caste. The key finding is that income is substantially higher for low-caste households residing in villages dominated by a low caste. This seems to be due to a trade breakdown in irrigation water across caste groups. All else equal, lower caste water buyers
have agricultural yields which are 45 percent higher if they reside in a village where water sellers are of the same caste compared to one where they are not. (JEL O12, O13, O17, O18, Q15, R23, Z13)
Abstract
					We present in this paper evidence about the effects and mechanisms of gender peer effects in elementary, middle, and high schools. For identification, we rely on idiosyncratic variations in gender composition across adjacent cohorts within the same schools. We find that an increase in the proportion of girls improves boys and girls' cognitive outcomes. These academic gains are mediated through lower levels of classroom disruption and violence, improved inter-student and student-teacher relationships, and lessened teachers' fatigue. We find no effect on individual behavior, which suggests that the positive effects of girls on classroom environment are mostly due to compositional change. (JEL I21, J16)
Abstract
					A striking negative correlation exists between an area's residential racial segregation and its population characteristics, but it is recognized
that this relationship may not be causal. I present a novel test of causality from segregation to population characteristics by exploiting the arrangements of railroad tracks in the nineteenth century to isolate plausibly exogenous variation in areas' susceptibility to segregation. I show that this variation satisfies the requirements for a valid instrument. Instrumental variables estimates demonstrate that segregation increases metropolitan rates of black poverty and overall black-white income disparities, while decreasing rates of
white poverty and inequality within the white population. (JEL I32, J15, N31, N32, N91, N92, R23)
Abstract
					We examine to what extent immigrant school performance is affected by the characteristics of the neighborhoods that they grow up in. We address this issue using a refugee placement
policy that provides exogenous variation in the initial place of residence in Sweden. The main result is that school performance is increasing in the number of highly educated adults sharing the subject's ethnicity. A standard deviation increase in the fraction of high-educated in the assigned neighborhood raises compulsory school GPA by 0.8 percentile ranks. Particularly for disadvantaged groups, there are also long-run effects on educational attainment. (JEL I21, J15, R23)
Abstract
					Draft-lottery estimates of the causal effects of Vietnam-era military service using 2000 census data show marked schooling gains for veterans. We argue that these gains can be attributed to Vietnam veterans' use of the GI Bill rather than draft avoidance behavior. At
the same time, draft lottery estimates of the earnings consequences of Vietnam-era service are close to zero in 2000. The earnings and schooling results can be reconciled by a flattening of the age-earnings profile in middle age and a modest economic return to the schooling subsidized by the GI Bill. Other long-run consequences of Vietnam-era service include increases in migration and public sector employment. (JEL H52, I22, I23, J24, J31, J45)
Abstract
					We estimate the causal effect of mandatory participation in military
service on individuals' subsequent involvement in criminal activities. To identify this causal effect, we exploit the random assignment of young men to conscription in Argentina through a draft lottery. Using a dataset that includes draft eligibility, participation in military service,
and criminal records, we find that conscription increases the likelihood of developing a criminal record. The effects are significant not only for cohorts that provided military service during wartime, but also for those that served during peacetime. Our results do not support the introduction of conscription for anti-crime purposes.
JEL (H56, K42, O17)
Abstract
					The global poverty count uses a common global poverty line, often referred to as the dollar-a-day line, currently $1.25 at 2005 international prices, whose construction and application depends on purchasing power parity (PPP) exchange rates for consumption. The price indexes that underlie the PPPs used for this purpose are constructed for purposes of national income accounting, using weights that represent patterns of aggregate consumption, not the consumption patterns of the global poor. We use household surveys from 62 developing countries to calculate global poverty-weighted PPPs and to calculate global poverty lines and new global poverty counts. (JEL C43, E21, F31, I32, O15)
Abstract
					Using a student level randomization, we compare three education-based conditional cash transfers designs: a standard design, a design where part of the monthly transfers are postponed until children have to re-enroll in school, and a design that lowers the reward for attendance but incentivizes graduation and tertiary enrollment. The two nonstandard designs significantly increase enrollment rates at both the secondary and tertiary levels while delivering the same attendance gains as the standard design. Postponing some of the attendance transfers to the time of re-enrollment appears particularly
effective for the most at-risk children. (JEL H23, I21, I22, J13, O15)
Abstract
					In 2004, the Hugo Chávez regime in Venezuela distributed the list of
several million voters who had attempted to remove him from office
throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chávez political opponent. We find that voters who were identified as Chávez opponents experienced a 5 percent drop in earnings and a 1.3 percentage point drop in employment rates after the voter list was released. (JEL D72, O17)
Abstract
					This paper estimates the impact of a large anti-poverty cash transfer program, the Uruguayan PANES, on political support for the government
that implemented it. Using the discontinuity in program assignment based on a pretreatment eligibility score, we find that beneficiary households are 11 to 13 percentage points more likely to favor the current government relative to the previous government. Political support effects persist after the program ends. Our
results are consistent with theories of rational but poorly informed voters who use policy to infer politicians' redistributive preferences or competence, as well as with behavioral economics explanations grounded in reciprocity. (JEL D72, H23, H53, I38, O15, O17)
Abstract
					This paper illustrates the central role of persistence in estimating and interpreting value-added models of learning. Using data from Pakistani public and private schools, we apply dynamic panel methods that address three key empirical challenges: imperfect persistence, unobserved heterogeneity, and measurement error. Our estimates suggest that only one-fifth to one-half of learning persists between grades and that private schools increase average achievement by 0.25 standard deviations each year. In contrast, value-added
models that assume perfect persistence yield severely downward estimates of the private school effect. Models that ignore unobserved heterogeneity or measurement error produce biased estimates of persistence. (JEL I21, J13, O15)
Abstract
					During the housing boom, financially constrained home buyers artificially
inflated transaction prices in order to draw larger mortgages. Using transaction data from Illinois that includes sellers' offers to inflate prices, I estimate that in 2005-2008, up to 16 percent of highly leveraged transactions had inflated prices of up to 9 percent. Inflated transactions were common in low-income neighborhoods and when intermediaries had a greater stake or an informational advantage.
Borrowers who inflated prices were more likely to default, but their mortgage rates were not materially higher. Property prices in areas with a high rate of past price inflation exhibited momentum and high volatility. (JEL D14, E31, R31)
Abstract
					Low-skilled immigrants represent a significant fraction of employment in services that are close substitutes of household production. This paper studies whether the increased supply of low-skilled immigrants has led high-skilled women, who have the highest opportunity cost of time, to change their time-use decisions. Exploiting cross-city variation in immigrant concentration, we find that low-skilled immigration increases average hours of market work and the probability of working long hours of women at the top quartile of the wage distribution. Consistently, we find that women in this group decrease
the time they spend in household work and increase expenditures on housekeeping services. (JEL J16, J22, J24, J61)
Abstract
					We assemble a novel dataset to study the impact of male scarcity on marital assortative matching and other marriage market outcomes using the large shock that WWI caused to the number of French men. Using a difference-in-differences approach, we find that postwar in regions with higher mortality rates: men were less likely to marry women of lower social classes; men were more likely and women less likely to marry; out-of-wedlock births increased; divorce rates decreased; and the age gap decreased. These findings are consistent with men improving their position in the marriage market as they
become scarcer. (JEL J12, J16, N34)
Abstract
					Harlem Children's Zone (HCZ), an ambitious social experiment, combines community programs with charter schools. We provide the first empirical test of the causal impact of HCZ charters on educational outcomes. Both lottery and instrumental variable identification strategies suggest that the effects of attending an HCZ middle
school are enough to close the black-white achievement gap in mathematics. The effects in elementary school are large enough to close the racial achievement gap in both mathematics and ELA. We conclude with evidence that suggests high-quality schools are enough to significantly increase academic achievement among the poor. Community programs appear neither necessary nor sufficient. (JEL H75, I21, I28, J13, R23)
Abstract
					This paper evaluates the impact of a randomized training program for disadvantaged youth introduced in Colombia in 2005. This randomized trial offers a unique opportunity to examine the impact of training in a middle income country. We use originally collected data on individuals randomly offered and not offered training. The program raises earnings and employment for women. Women offered training earn 19.6 percent more and have a 0.068 higher probability of paid employment than those not offered training, mainly in formal-sector jobs. Cost-benefit analysis of these results suggests that
the program generates much larger net gains than those found in developed countries. (JEL I28, J13, J24, O15)
Abstract
					Health care spending varies widely across markets, and previous research finds little evidence that higher spending translates into better health outcomes. The main innovation in this paper exploits this cross-sectional variation in hospital spending in a new way by considering emergency patients who are exposed to healthcare systems
when they are far from home. Visitors to Florida who become ill in high-spending areas have significantly lower mortality rates compared to visitors in lower spending areas. The results are robust within groups of similar visitors and within groups of destinations that appear to be close demand substitutes -- areas that likely attract similar visitors. (JEL H75, I11, I18)
Abstract
					This study investigates the role of social networks in aligning the incentives of agents in settings with incomplete contracts. Specifically, the study examines the New York City taxi industry where taxis are often leased and lessee-drivers have worse driving outcomes than owner-drivers due to moral hazard. Using within-driver variation and instrumental variable strategies to remove selection, we find that drivers leasing from members of their country-of-birth community exhibit significantly reduced effects of moral hazard, representing an improvement of almost one-half of a standard deviation of the outcome measures. Screening is ruled out as an explanation, and other mechanisms are investigated. (JEL D82, D86, L92, Z13)
Abstract
					Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional
implications of this "informal taxation." Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor
payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more regressive than formal taxes. Failing to include informal taxation underestimates household tax burdens and revenue decentralization in developing countries. We discuss various
explanations for and implications of these observed stylized facts. (JEL H24, H27, O12, O17, O23)
Abstract
					This paper evaluates the effects of a public groundwater provision program on water tables in Northern India. I theorize that public provision leads to sustainable use of groundwater when the fixed costs for private well provision are high. I use village-level longitudinal data on aquifers and wells, and exploit the physical and technological limitations of surface pumps that generate a cost difference
at a specific water depth to test this model. My findings suggest that public provision can be used as an alternative in scenarios where prohibitive monitoring costs might preclude the use of other regulatory approaches to prevent over-extraction. (JEL O13, O18, Q15, Q25, Q28, Q53, Q58)
Abstract
					This paper uses the Islamic holy month of Ramadan as a natural experiment in diurnal fasting and fetal health. Among births to Arab parents in Michigan, we find prenatal exposure to Ramadan results in lower birth weight. Exposure in the first month of gestation also
reduces the number of male births. Turning to long-term "fetal origins"
effects, we find Muslims in Uganda and Iraq are 20 percent more likely to be disabled as adults if early pregnancy overlapped with Ramadan. Estimated effects are larger for mental (or learning) disabilities. Our results suggest that relatively mild prenatal exposures can have persistent effects. (JEL I12, J16, O15, O17, Z12 )
Abstract
					Japanese public pension benefits, which were distributed quarterly through February 1990, and every other month since then, induce substantial but predictable income fluctuations. The relative magnitude of the payments combined with the delay between payments
yields a stronger test of the Life-Cycle/Permanent Income Hypothesis
than in prior studies. Applying two identification strategies to monthly
household panel data, we find that consumption significantly responds
to quarterly benefit receipt. Additional analysis suggests that our findings cannot be explained by either liquidity constraints or precautionary
savings motives. (JEL D12, D91, E21, H55)
Abstract
					We construct measures of the extent to which the four main newspapers in Argentina report government corruption on their front page during the period 1998-2007 and correlate them with government advertising. The correlation is negative. The size is considerable—a one standard deviation increase in monthly government advertising is associated with a reduction in the coverage of the government's corruption scandals of 0.23 of a front page per month, or 18 percent of a standard deviation in coverage. The results are robust to the inclusion of newspaper, month, newspaper Χ president and individual-corruption scandal fixed effects, as well as newspaper Χ president specific time trends. (JEL D72, K42, L82, M37, O17)
Abstract
					Using random year-to-year variation in temperature, we document the relationship between daily temperatures and annual mortality rates and daily temperatures and annual residential energy consumption. Both relationships exhibit nonlinearities, with significant
increases at the extremes of the temperature distribution. The application of these results to "business as usual" climate predictions
indicates that by the end of the century climate change will lead to
increases of 3 percent in the age-adjusted mortality rate and 11 percent in annual residential energy consumption. These estimates likely
overstate the long-run costs, because climate change will unfold gradually allowing individuals to engage in a wider set of adaptations. (JEL I12, Q41, Q54)
Abstract
					We examine the role of delivery of subsidized seeds and fertilizers in the form of agricultural minikits by local governments in three successive farm panels in West Bengal spanning 1982-1995. These programs significantly raised farm value added per acre, accounting for almost two-thirds of the observed growth. The estimates are robust to possible endogeneity of program placement, controls for farm and year effects, other programs of agricultural development, local weather, and price shocks. The effects of the kits delivery program overshadowed the effects of other rural development programs, including the tenancy registration program Operation Barga. (JEL O13, Q12, Q16, Q18)
Abstract
					Edward Miguel, Shanker Satyanath, and Ernest Sergenti (2004), henceforth MSS, argue that lower rainfall levels and negative rainfall shocks increase conflict risk in sub-Saharan Africa. This conclusion rests on their finding of a negative correlation between conflict in t and rainfall growth between t — 1 and t — 2. I show that this finding is driven by a (counterintuitive) positive correlation between conflict in t and rainfall levels in t — 2. If lower rainfall levels or negative rainfall shocks increased conflict, MSS's finding should have been due to a negative correlation between conflict in t and rainfall levels in t — 1. In the latest data, conflict is unrelated to rainfall. (JEL D74, E32, O11, O17, O47)
Abstract
					Miguel, Satyanath, and Ernest Sergenti (2004), henceforth MSS, show that economic growth is negatively related to civil conflict in Africa, using annual rainfall variation as an IV for growth. Antonio Ciccone (2011) argues that thanks to rainfall's mean-reverting
nature, rainfall levels are preferable to annual changes. We make three points. First, MSS's findings hold using rainfall levels as instruments.
Second, Ciccone (2011) does not provide theoretical justification for preferring rainfall levels. Third, the first-stage relationship between rainfall and growth is weaker after 2000, suggesting that alternative instruments are needed when studying recent conflicts. We highlight the accumulating microeconomic evidence that adverse economic shocks lead to political violence. (JEL D74, E32, O11,
O17, O47)
Abstract
					We study grading outcomes associated with professors in an elite university in the United States who were identified—using voter registration records from the county where the university is located—as either Republicans or Democrats. The evidence suggests that student grades are linked to the political orientation of professors. Relative to their Democratic colleagues, Republican professors are associated with a less egalitarian distribution of grades and with lower grades awarded to black students relative to whites. (JEL D72, I23, J15)
Abstract
					This paper quantifies the option value arising from sequential schooling decisions made in the presence of uncertainty and learning about academic ability. College attendance has option value since enrolled students have the option, but not obligation, to continue in school after learning their aptitude and tastes. I estimate that option value accounts for 14 percent of the total value of the opportunity to attend college for the average high school graduate and is greatest for moderate-aptitude students. Students' ability to make decisions sequentially in response to new information increases welfare and also makes educational outcomes less polarized by background. (JEL D83, I23)
Abstract
					I examine changes in the city-suburban housing price gap in metropolitan areas with and without court-ordered desegregation plans over the 1970s, narrowing my comparison to housing units on opposite sides of district boundaries. Desegregation of public schools in central cities reduced the demand for urban residence, leading urban housing prices and rents to decline by 6 percent relative to neighboring suburbs. Aversion to integration was due both to changes in
peer composition and to student reassignment to nonneighborhood
schools. The associated reduction in the urban tax base imposed a fiscal externality on remaining urban residents. (JEL H75, I21, I28, J15, R23, R31)
Abstract
					I examine long-term academic performance and college going for
students affected by Hurricanes Katrina and Rita. Students who are forced to switch schools due to the hurricanes experience sharp declines in test scores in the first year following the hurricanes. However, by the third and fourth years after the disaster, evacuees displaced from Orleans Parish see a 0.18 standard deviation improvement in scores. Gains are concentrated among students initially in
the lowest quintiles of the test score distribution. Katrina evacuees do not show gains in college going relative to earlier cohorts from their same pre-hurricane high schools. (JEL I20, Q54, R23).
Abstract
					Individuals sort into and out of economic environments based on their preferences and in response to relative prices. We demonstrate the importance of such sorting for the measurement of social preferences, using two laboratory experiments. First, allowing subjects to avoid environments in which sharing is possible significantly reduces sharing. This reveals the existence of a type of individual who shares reluctantly, preferring to avoid the opportunity to share. Second, after subsidizing the sharing environment, the aggregate amount shared increases, but less is shared, on average, by those who enter. Thus, subsidies intended to induce more sharing have weak effects since they attract those who share the least. (JEL C91, D12, D64)
Abstract
					Using data from a randomized experiment, we find that poor rural
Mexican households invested part of their cash transfers from the Oportunidades program in productive assets, increasing agricultural income by almost 10 percent after 18 months of benefits. We estimate that for each peso transferred, households consume 74 cents and invest the rest, permanently increasing long-term consumption by about 1.6 cents. Results suggest that cash transfers can achieve long-term increases in consumption through investment in productive activities, thereby permitting beneficiary households to attain higher living standards that are sustained even after transitioning off the program. (JEL D14, H23, I38, O12)
Abstract
					We examine the demand for wines in Sweden using five years of weekly data on sales, advertising, and expert reviews. The effect of a favorable review peaks in the week after publication with an increase in demand of 6 percent, and the effect remains significant for more than 20 weeks. We find small demand-enhancing effects of neutral reviews and no evidence of important negative effects from unfavorable reviews. Restrictions on the state-owned monopoly retailer and
the exogenous timing of a subset of the reviews support a causal interpretation of the effects of reviews on demand. (JEL D12, L66, L81, M31, M37)
Abstract
					This paper shows that the gender of politicians affects the educational levels of individuals who grow up in the districts where these politicians are elected. A unique dataset collected on politicians in India is matched with individual data by cohort and district of residence. The political data allow the identification of close elections
between women and men, which yield quasi-experimental election outcomes used to estimate the causal effect of the gender of politicians. Increasing female political representation increases the probability that an individual will attain primary education in urban areas, but not in rural areas, and not in the sample as a whole. (JEL D72, I20, J16, 015, 017)
Abstract
					It is believed that early life circumstances are crucial to success
later in life. Yet causal evidence that the impacts of early childhood health interventions continue into late childhood and adolescence is sparse. This paper exploits a quasi-random placement of the Matlab Maternal and Child Health and Family Planning Program in Bangladesh to determine whether children eligible for child health interventions in early childhood had better cognitive functioning at
ages 8-14. I find a program effect of 0.39 standard deviations on cognitive functioning and similar effects for height and educational attainment (JEL I15, I18, J13, J18, O15).
Abstract
					We assess the implications of nonlinearity for IV and FE estimation
when the estimated model is inappropriately assumed to be linear.
Our application is the causal link between family income and child outcomes. Our nonlinear IV and FE estimates show an increasing, concave relationship between family income and children's outcomes. We find that the linear estimators miss the significant effects of family income because they assign little weight to the large marginal effects in the lower part of the income distribution. We also show that the linear IV and FE estimates differ primarily because of different weighting of marginal effects. (JEL C26, D14, J12, J13)
Abstract
					This paper studies a possible market failure in the firm-based vocational training market: training may be too complex to be specified in a contract so that it is legally enforceable, resulting in the inability of firms to commit to training provision. We present a model of firm provided training and show that training is substantially lower in the no commitment than in the commitment case. Thus, firm-based vocational training schemes are more successful in countries where commitment to training provision is more widespread. (JEL J24, L25, M12, M53)
Abstract
					Almost 50 years after domestic US family planning programs began, their effects on childbearing remain controversial. Using the county-level
roll-out of these programs from 1964 to 1973, this paper reevaluates their shorter and longer term effects on US fertility rates. I find that the introduction of family planning is associated with significant and persistent reductions in fertility driven both by falling completed childbearing and childbearing delay. Although federally funded family planning accounted for a small portion of the post-baby boom US fertility decline, my estimates imply that they reduced childbearing among poor women by 19 to 30 percent. (JEL I38, J12, J13, J18)
Abstract
					This paper evaluates the short- and longer term impact of Thailand's "Million Baht Village Fund" program, among the largest scale government microfinance iniatives in the world, using pre- and post-program panel data and quasi-experimental cross-village variation in credit per household. We find that the village funds have increased total short-term credit, consumption, agricultural investment,
and income growth (from business and labor), but decreased overall asset growth. We also find a positive impact on wages, an important general equilibrium effect. The findings are broadly consistent qualitatively with models of credit-constrained household
behavior and models of intermediation and growth. (JEL D14, G21, O12, O16, O18)
Abstract
					Using data from an experiment conducted in 70 Colombian communities, we investigate who pools risk with whom when trust is crucial for enforcing risk pooling arrangements. We explore the roles played by risk attitudes and social networks. Both empirically and theoretically, we find that close friends and relatives group assortatively on risk attitudes and are more likely to join the same risk pooling group, while unfamiliar participants group less and rarely assort. These findings indicate that where there are advantages to grouping assortatively on risk attitudes those advantages may be inaccessible when
trust is absent or low. (JEL C93, O12, O18, Z13)
Abstract
					Using matched firm-worker data from Danish manufacturing, we observe firm-to-firm worker movements and find that firms that hired workers from more productive firms experience productivity gains one year after the hiring. The productivity gains associated with hiring from more productive firms are equivalent to 0.35 percent per year for an average firm. Surviving a variety of statistical controls, these gains increase with education, tenure, and skill level of new hires, persist for several years after the hiring was done, and remain
broadly similar for different industries and measures of productivity.
Competing explanations for these gains, knowledge spillovers in particular, are discussed. (JEL D24, J24, J62, L60, O33)
Abstract
					We exploit the 2006 Italian prison pardon to evaluate peer effects in criminal behavior. The pardon randomly commutes actual sentences to expected sentences for 40 percent of the Italian prison population. Using prison and geographical origin to construct reference groups for former inmates, we find large indirect effects of this policy. In particular, we find that the reduction in the individuals' recidivism
due to an increase in their peers' residual sentence is at least as large as their response to an increase in their own residual sentence. From this result we estimate a social multiplier in crime of two. (JEL D12, K42, Z13)
Abstract
					The effect of shift structure on worker performance and productivity is of increasing interest to firms and regulatory bodies. Using approximately 743,000 emergency medical incidents attended by 2,381 paramedics in Mississippi, we evaluate the extent that paramedics' performance toward the end of shifts is impacted by shift length. We find evidence that performance deteriorates toward the end of long shifts, and argue that fatigue is the mediating factor. Our calculations imply that such deterioration may result in a 0.76 percent increase in 30-day mortality. These findings have implications for workforce organization, calling attention to regulation designed to limit extended work hours. (JEL J22, J24, J28, J45, M12)
Abstract
					Cash transfer programs have become extremely popular in the developing world. A large literature analyzes their effects on schooling, health and nutrition, but relatively little is known about possible impacts on child development. This paper analyzes the impact of a cash transfer program on early childhood cognitive development.
Children in households randomly assigned to receive benefits had significantly higher levels of development nine months after the program began. There is no fade-out of program effects two years after the program ended. Additional random variation shows that these impacts are unlikely to result from the cash component of the program alone. (JEL H23, I15, J13, O15)
Abstract
					We examine the relative fortunes of the historically disadvantaged scheduled castes and tribes (SC/ST) in India in terms of their education attainment, occupation choices, consumption and wages. We study the period 1983-2005 using household survey data from successive rounds of the National Sample Survey. We find that this period has been characterized by a significant convergence of education, occupation distribution, wages and consumption levels of SC/STs toward non-SC/ST levels. Using various decomposition
approaches we find that the improvements in education account for a major part of the wage and consumption convergence. (JEL I24, O15, O17, Z13)
Abstract
					Barcodes and barcode scanners transformed the grocery industry in the 1970s. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scanners' effect on labor productivity. I find that scanners increased a store's labor productivity, on average, by approximately 4.5 percent in the first few years. The effect was larger in stores carrying more packaged products, consistent with the presence of network externalities. Short-run gains were small relative to fixed costs, suggesting that the impediment to widespread adoption of the new technology was profitability, not coordination problems. (JEL J24, L24, L81, O33)
Abstract
					During World War II, some 50,000 Finnish children were evacuated to Sweden and placed in foster families. The evacuation scheme limited sharply the scope for selection into foster care based on background characteristics. A first-come first-served policy was applied where the children were assigned a running number and processed anonymously. Using register and survey data, I examine the extent to which the foster environment affected later life outcomes of the
Finnish child evacuees. The results show that nurture, the socioeconomic environment at early stages of life, has important effects on schooling. (JEL I21, J13, J24, N34, N44)
Abstract
					Political control of firms is prevalent across the world. Evidence suggests that firms profit from political connections, and politicians derive benefit from control over firms. This paper investigates an alternative mechanism through which politicians may benefit electorally from connected firms, examining sugar mills in India. I find evidence of embezzlement in politically controlled mills during election years, reflected in lower prices paid to farmers for cane. This result complements the literature on political cycles by demonstrating how
campaign funds are raised rather than used. Politicians may recompense farmers upon getting elected, possibly explaining how they can get away with pilferage. (JEL D72, G34, L66, O13, O17, Q12, Q13)
Abstract
					Enforcement of labor regulations in the formal sector may drive workers to informality because they increase the costs of formal labor. But better compliance with mandated benefits makes it attractive to be a formal employee. We show that, in locations with frequent
inspections, workers pay for mandated benefits by receiving lower wages. Wage rigidity prevents downward adjustment at the bottom of the wage distribution. As a result, lower paid formal sector jobs become attractive to some informal workers, inducing them to want to move to the formal sector. (JEL J31, J63, J88, K31, O15)
Abstract
					This paper examines the effect of peers on an individual's likelihood of retirement using an administrative dataset of all retirement-eligible Los Angeles teachers for the years 1998-2001. We use two large unexpected pension reforms that differentially impacted financial incentives within and across schools to construct an instrument for others' retirement decisions. Controlling for individual and school characteristics, we find that the retirement of an additional teacher in the previous year at the same school increases a teacher's own
likelihood of retirement by 1.5-2 percentage points. We then explore some possible mechanisms through which this effect operates. (JEL H75, I21, J14, J26, J45)
Abstract
					Despite dramatic improvements in medical technology, little attention
has been paid to the role of these innovations in improving economic outcomes. This study estimates the labor supply effects of Cox-2 inhibitors, a widely prescribed class of pharmaceuticals used for the treatment of chronic pain and inflammation and primarily marketed under the brand names Vioxx, Celebrex, and Bextra. This paper exploits the removal of Vioxx from the market in 2004 as an exogenous change in drug use. This removal was associated with a
0.35 percentage point decrease in overall labor force participation and $19 billion in lost wages. (JEL I12, J22, L65, O31).
Abstract
					South Africa has very high unemployment, yet few adults work informally in small firms. This paper tests whether centralized bargaining,
by which unionized large firms extend arbitration agreements to nonunionized smaller firms, contributes to this problem. While local labor market characteristics influence the location of these agreements, their coverage is spatially discontinuous, allowing identification by spatial regression discontinuity. Centralized bargaining
agreements are found to decrease employment in an industry by 8-13 percent, with losses concentrated among small firms. These effects are not explained by resettlement to uncovered areas, and are robust to a wide variety of controls for unobserved heterogeneity. (JEL J52, K31, L25, O14, O15)
Abstract
					The pharmaceutical industry is characterized as having substantial
investment in R&D and a large number of new product introductions, which poses special problems for price measurement caused by the quality of drug products changing over time. This paper applies recent demand estimation techniques to individual-level data to construct a constant-quality price index for anti-cholesterol drugs. Although the average price for anti-cholesterol drugs does not change over the sample period, I find that the constant-quality price index drops by 27 percent, a pace more in line with our expectations in such a dynamic segment of the industry. (JEL C43, L11, L65, O31)
Abstract
					This paper evaluates the impact of three major expansions in maternity
leave coverage in Germany on children's long-run outcomes. To identify the causal impact of the reforms, we use a difference-indifference design that compares outcomes of children born shortly before and shortly after a change in maternity leave legislation
in years of policy changes, and in years when no changes have taken place. We find no support for the hypothesis that the expansions in leave coverage improved children's outcomes, despite a
strong impact on mothers' return to work behavior after childbirth. (JEL J13, J16, J22, J32)
Abstract
					Decades of research on the US gender gap in wages describes its correlates, but little is known about why women changed their career paths in the 1960s and 1970s. This paper explores the role
of "the Pill" in altering women's human capital investments and its ultimate implications for life-cycle wages. Using state-by-birthcohort variation in legal access, we show that younger access to the Pill conferred an 8 percent hourly wage premium by age 50. Our estimates imply that the Pill can account for 10 percent of the convergence of the gender gap in the 1980s and 30 percent in the 1990s. (JEL J13, J16, J31, J71, J24)
Abstract
					We estimate the effect of television on fertility in Brazil, where soap operas portray small families. We exploit differences in the timing of entry into different markets of Globo, the main novela producer. Women living in areas covered by Globo have significantly lower fertility. The effect is strongest for women of lower socioeconomic status and in the central and late phases of fertility, consistent with stopping behavior. The result does not appear to be driven by selection in Globo entry. We provide evidence that novelas, and not just television, affected individual choices, based on children's naming
patterns and novela content. (JEL J13, J16, L82, O15, Z13)
Abstract
					Increasing criminal sanctions may reduce crime through two primary mechanisms: deterrence and incapacitation. Disentangling their
effects is crucial for optimal policy setting. I use sentence enhancements
due to the introduction of state add-on gun laws to isolate the deterrent effect of incarceration. Using cross-state variation in the timing of law passage dates, I find that the average add-on gun law results in a roughly 5 percent decline in gun robberies within the first 3 years. This result is robust to a number of specification tests and does not appear to be associated with large spillovers to other types of crime. (JEL K14, K42)
Abstract
					We provide new evidence on the long-term impacts of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at age 21, allowing us to use preconscription wages to control for ability differences between conscripts and nonconscripts. We find a significant 4-5 percentage point impact of service on the wages of men with only primary education, coupled with a zero effect for men with higher education. The effect for less-educated men suggests that mandatory service can be a valuable experience for those who might otherwise spend their careers in
low-level jobs. (JEL J24, J31, J45)
Abstract
					The returns to educational investments hinge on whether such investments can improve the quality and persistence of educational gains. We report the results from a randomized evaluation of an adult education program in Niger, in which some students learned how to use simple mobile phones (Project ABC). Students in ABC villages achieved test scores that were 0.19-0.26 standard deviations higher than those in standard adult education classes, and standardized math test scores remained higher seven months after the end of classes. These results suggest that simple information technology can be harnessed to improve educational outcomes among rural populations. (JEL D83, I21, O15, O33)
Abstract
					This paper reports on a randomized evaluation of a program designed to improve high school graduation and postsecondary education enrollment among low-performing high school students. Treated youths were offered mentoring, educational services, and financial rewards. The program was evaluated when the youths were 19, 21, and 24 years old. Treated youths obtained their high school diplomas
earlier and were more likely than controls to attend postsecondary
education. Five years after the end of the program, we find no significant
overall effects of this intervention on employment outcomes. The program improved outcomes to a greater extent for the female enrollees than the male ones. (JEL D83, I21, I28, J13)
Abstract
					In developing countries, unexpected income shocks are common but informal insurance is typically incomplete. An important question is therefore whether risk-sharing within the household is effective. This paper presents results from a field experiment with 142 married couples in Kenya in which individuals were given random income shocks. Even though the shocks were small relative to lifetime income, men
increase private consumption when they receive the shock but not when their wives do, a rejection of efficiency. Such behavior is not specific to the experiment—both spouses spend more on themselves when their labor income is higher. (JEL D14, D81, G22, O12, O16)
Abstract
					Using state-level variation in the timing of political reforms, we find
that an increase in female representation in local government induces a large and significant rise in documented crimes against women in India. Our evidence suggests that this increase is good news, driven primarily by greater reporting rather than greater incidence of such crimes. In contrast, we find no increase in crimes against men or in gender-neutral crimes. We also examine the effectiveness of alternative forms of political representation. Large scale membership of women in local councils affects crime against them more than their presence in higher-level leadership positions. (JEL D72, J16, K42, O15, O17)
Abstract
					Beginning in the late 1990s, electricity markets in many US states
were deregulated, and almost half of the nation's 103 nuclear power reactors were sold to independent power producers. Deregulation has been accompanied by substantial market consolidation, and today the three largest companies control one-third of US nuclear capacity. We find that deregulation and consolidation are associated with a 10 percent increase in operating performance, achieved primarily by reducing the duration of reactor outages. At average wholesale
prices, this increased operating performance is worth $2.5 billion annually and implies an annual decrease of 35 million tons of carbon dioxide emissions. (JEL L11, L51, L94, L98, Q42, Q48)
Abstract
					We examine the impact of the Kenyan Free Primary Education program on student participation, sorting, and achievement on the primary school exit examination. Exploiting variation in pre-program dropout rates between districts, we find that the program increased the number of students who completed primary school, spurred private school entry, and increased access for students from disadvantaged
backgrounds. We argue that the program was welfare enhancing as it promoted educational access without substantially
reducing the test scores of students who would have been in school in the absence of the program. (JEL H52, I21, I28, O15)
Abstract
					We consider the relationship between collegiate football success and non-athlete student performance. We find that the team's success significantly reduces male grades relative to female grades, and only in
fall quarters, which coincides with the football season. Using survey data, we find that males are more likely than females to increase alcohol consumption, decrease studying, and increase partying in response to the success of the team. Yet, females also report that their behavior is affected by athletic success, suggesting that their performance is likely impaired but that this effect is masked by the practice of grade curving. (JEL I21, L83)
Abstract
					We conducted a randomized experiment with 43,000 EITC recipients at H&R Block. Tax preparers gave simple, personalized information about the EITC schedule to half of their clients. We find no significant effects of information provision on earnings in the subsequent year in the full sample. Further exploration uncovers evidence of heterogeneous treatment effects on both self-employment income and wage earnings across the 1,461 tax preparers involved in the experiment. Providing information about tax incentives does not systematically effect earnings on average. However, tax preparers may influence their clients' earnings decisions by providing advice about how to respond to tax incentives. (JEL H23, H24, H26, J23, J31)
Abstract
					This paper explores the importance of the home and school environments in explaining the gender gap in disruptive behavior. We
document large differences in the gender gap across key features of
the home environment -- boys do especially poorly in broken families.
In contrast, we find little impact of the early school environment on
noncognitive gaps. Differences in endowments explain a small part
of boys' noncognitive deficit in single-mother families. More importantly, noncognitive returns to parental inputs differ markedly by
gender. Broken families are associated with worse parental inputs,
and boys' noncognitive development, unlike that of girls', appears
extremely responsive to such inputs. (JEL I21, J12, J13, J16, Z13)
Abstract
					While nominal wage differences between skilled and unskilled workers
have increased since 1980, college graduates have experienced
larger increases in cost of living because they have increasingly
concentrated in cities with high cost of housing. Using a city-specific
CPI, I find that real wage differences between college and
high school graduates have grown significantly less than nominal
differences. Changes in the geographical location of different skill
groups are to a significant degree driven by city-specific shifts in
relative demand. I conclude that the increase in utility differences
between skilled and unskilled workers since 1980 is smaller than
previously thought based on nominal wage differences. (JEL J22,
J23, J24, J31, R23, R31)
Abstract
					Why do many households remain exposed to large exogenous
sources of nonsystematic income risk? We use a series of randomized
field experiments in rural India to test the importance of price and
nonprice factors in the adoption of an innovative rainfall insurance
product. Demand is significantly price sensitive, but widespread
take-up would not be achieved even if the product offered a payout
ratio comparable to US insurance contracts. We present evidence
suggesting that lack of trust, liquidity constraints, and limited
salience are significant nonprice frictions that constrain demand.
We suggest possible contract design improvements to mitigate these
frictions. (JEL D14, D81, O12, O13, O16, O18, Q12)
Abstract
					We use a proprietary dataset on the floor-level operations at the
largest rail mill in India to study the response of productivity to the
threat of entry. Output per active shift increased by 28 percent over
3 years with minimal changes in physical capital and employment.
By combining data on the timing of various training programs in the
mill with shift-level variation in worker composition, we are able
to attribute over half of the higher productivity to training specifically
targeted toward improving rail output. Our work suggests high
returns to knowledge-enhancing investment in emerging economies.
(JEL D22, D24, J24, L23, L32, L61, O14)
Abstract
					Does limited access to formal savings services impede business
growth in poor countries? To shed light on this question, we randomized access to noninterest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors (who are mostly women) and men working as bicycle taxi drivers. Despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures. We see no impact for bicycle taxi drivers. These results imply significant barriers to savings and investment for market women in our study context. (JEL D14, G21, J16, J23, O12, O14, O16)
Abstract
					We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined. The first example features the optimal use of credit cards for convenience transactions after a balance transfer and the second involves a financial mistake on a home equity loan application. We find that consumers with higher overall test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake. These mistakes are generally not associated with nonmath test scores. (JEL D14, G21)
Abstract
					We use variation in oil output among Brazilian municipalities to
investigate the effects of resource windfalls on government behavior.
Oil-rich municipalities experience increases in revenues and report
corresponding increases in spending on public goods and services.
However, survey data and administrative records indicate that social
transfers, public good provision, infrastructure, and household
income increase less (if at all) than one might expect given the higher
reported spending. (JEL H41, H75, I31, O13, O15, O17, O18)
Abstract
					We study the local effects of a federal program that helped cities clear
areas for redevelopment, rehabilitate structures, complete city plans,
and enforce building codes. We use an instrumental variable strategy
to estimate the program's effects on city-level measures of income,
property values, employment and poverty rates, and population. The
estimated effects on income, property values, and population are positive and economically significant. They are not driven by changes
in demographic composition. Estimated effects on poverty reduction
and employment are positive but imprecise. The results are consistent
with a model in which local productivity is enhanced. (JEL I32, N32,
N92, R23, R38, R58)
Abstract
					We investigate the effect of household cash transfers during childhood
on young adult body mass indexes (BMI). The effects of extra
income differ depending on the household's initial socioeconomic status (SES). Children from the initially poorest households have a larger increase in BMI relative to children from initially wealthier households. Several alternative mechanisms are examined. Initial SES holds up as the most likely channel behind the heterogeneous effects of extra income on young adult BMI. (JEL D14, H23, H75, I12, J13, J15)
Abstract
					Empirical studies of the relationship between school inputs and test
scores typically do not account for household responses to changes
in school inputs. Evidence from India and Zambia shows that student
test scores are higher when schools receive unanticipated grants, but
there is no impact of grants that are anticipated. We show that the
most likely mechanism for this result is that households offset their
own spending in response to anticipated grants. Our results confirm
the importance of optimal household responses and suggest caution
when interpreting estimates of school inputs on learning outcomes
as parameters of an education production function. (JEL D12, H52,
I21, O15)
Abstract
					We show that pregnant women whose first clinic visit coincides with
the nurse's attendance are 58 percentage points more likely to test for
HIV and 46 percent more likely to deliver in a hospital. Furthermore,
women with high pretest expectations of being HIV positive, whose
visit coincides with nurse attendance, are 25 and 7.4 percentage
points more likely to deliver in a hospital and receive PMTCT medication, and 9 percentage points less likely to breast-feed than women whose visit coincides with nurse absence. The shortcomings that prevent pregnant women from testing on a subsequent visit are common in sub-Saharan Africa. (JEL I12, J16, O15)
Abstract
					In this paper, we build on the literature that examines associations between height and health outcomes of the elderly. We investigate the associations of height shrinkage at older ages with socioeconomic status, finding that height shrinkage for both men and women is negatively associated with better schooling, current urban residence, and household per capita expenditures. We then investigate the relationships between pre-shrinkage height, height shrinkage, and a rich set of health outcomes of older respondents, finding that height shrinkage is positively associated with poor health outcomes across a variety of outcomes, being especially strong for cognition outcomes. (JEL I12, J14, O15, P36)
Abstract
					A field experiment in Sri Lanka provides informal firms incentives to
formalize. Information about the registration process and reimbursement of direct costs does not increase registration. Payments equivalent to one-half to one month (alternatively, two months) of the median firm's profits leads to registration of around one-fifth (alternatively, one-half ) of firms. Land ownership issues are the most common reason for not registering. Follow-up surveys 15 to 31 months later show higher mean profits, but largely in a few firms that grew rapidly. We find little evidence for other changes in behavior, but formalized firms express more trust in the state. (JEL C93, D22, L25, L26, O14)
Abstract
					I explore how a gender's scarcity may impact educational investments
using exogenous variation in the marriage market of second generation Americans in early twentieth century. I find that worse marriage market conditions spur higher pre-marital investments: the effect for males is significant, while, for females, it is only observed in highly endogamous groups. When faced with an exogenously larger number of males per females, males' marriages appear to be less stable and more likely to involve natives and highly educated spouses, while women are less likely to work and, for those in high endogamous groups, marry more immigrants. (JEL C78, D83, J12, J16, N31)
Abstract
					Since 2007, many states passed laws prohibiting text messaging while
driving. Using vehicular fatality data from across the United States
and standard difference-in-differences techniques, bans appear moderately successful at reducing single-vehicle, single-occupant accidents if bans are universally applied and enforced as a primary offense. Bans enforced as secondary offenses, however, have at best no effect on accidents. Any reduction in accidents following texting bans is short-lived, however, with accidents returning to near former levels within a few months. This is suggestive of drivers reacting to the announcement of the legislation only to return to old habits shortly afterward. (JEL D12, K42, R41)
Abstract
					We estimate the development effects of electrification across Brazil
over the period 1960-2000. We simulate a time series of hypothetical
electricity grids for Brazil for the period 1960-2000 that show how
the grid would have evolved had infrastructure investments been made based solely on geography-based cost considerations. Using the model as an instrument, we document large positive effects of electrification on development that are underestimated when one fails to account for endogenous targeting. Broad-based improvement in labor productivity across sectors and regions rather than general equilibrium re-sorting appears to be the likely mechanism by which these development gains are realized. (JEL H54, L94, O11, O13, Q41, Q43)
Abstract
					Political and economic transition is often blamed for Russia's 40 percent surge in deaths between 1990 and 1994. Highlighting that increases in mortality occurred primarily among alcohol-related causes and among working-age men (the heaviest drinkers), this paper investigates an alternative explanation: the demise of the 1985-1988 Gorbachev Anti-Alcohol Campaign. Using archival
sources to build a new oblast-year dataset spanning 1978-2000,
we find a variety of evidence suggesting that the campaign's end
explains a large share of the mortality crisis, implying that Russia's
transition to capitalism and democracy was not as lethal as commonly
suggested. (JEL D72, I12, I18, P26, P36)
Abstract
					Fuel economy standards change the composition of the vehicle fleet,
influencing accident safety. The direction and size of the effect depend
on the combination of vehicles in the fleet. I provide empirical estimates
of vehicle safety across classes, accounting for unobserved
driving behavior and selection. I apply the model to the present
structure of US fuel economy standards, accounting for shifts in the
composition of vehicle ownership, and estimate an adverse safety
effect of 33 cents per gallon of gasoline saved. I show how two alternative
regulatory provisions fully offset this effect, producing a nearzero
change in accident fatalities.
Abstract
					We conduct a randomized evaluation of the effect of village-based
schools on children's academic performance using a sample of 31
villages and 1,490 children in rural northwestern Afghanistan. The
program significantly increases enrollment and test scores among
all children, but particularly for girls. Girls' enrollment increases by
52 percentage points and their average test scores increase by 0.65
standard deviations. The effect is large enough that it eliminates
the gender gap in enrollment and dramatically reduces differences
in test scores. Boys' enrollment increases by 35 percentage points,
and average test scores increase by 0.40 standard deviations.
Abstract
					We evaluate a 'girl-friendly' primary school program in Burkina
Faso using a regression discontinuity design. After 2.5 years, the program
increased enrollment by 19 percentage points and increased
test scores by 0.41 standard deviations. For those caused to attend
school, scores increased by 2.2 standard deviations. Girls' enrollment
increased by 5 percentage points more than boys' enrollment,
but they experienced the same increase in test scores as boys. The
unique characteristics of the schools are responsible for increasing
enrollment by 13 percentage points and test scores by 0.35 standard
deviations. They account for the entire difference in the treatment
effects by gender.
Abstract
					This paper considers the role of marriage in improving labor market
outcomes through the expansion of an individual's networks. I focus
on the impact of the relationship with the father-in-law on a young
man's career using panel data from China. The identification strategy
isolates the network effects related to a man's father-in-law by examining
the post-marriage death of a father-in-law. The estimates suggest
that the loss of the father-in-law translates into a decrease in a man's
earnings of 7 percent.
Abstract
					Efficient targeting of public programs is difficult when the cost or
benefit to potential recipients is private information. This study
illustrates the potential of self-selection to improve allocational
outcomes in the context of a program that subsidizes tree planting
in Malawi. Landholders who received a tree planting contract as a
result of bidding in an auction kept significantly more trees alive over
a three year period than did landholders who received the contract
through a lottery. The gains from targeting on private information
through the auction represent a 30 percent cost savings per surviving
tree for the implementing organization.
Abstract
					This paper studies the impact of gender quotas for corporate
board seats on corporate decisions. We examine the introduction of
Norway's 2006 quota, comparing affected firms to other Nordic companies,
public and private, that are unaffected by the rule. We find
that affected firms undertake fewer workforce reductions than comparison
firms, increasing relative labor costs and employment levels
and reducing short-term profits. The effects are strongest among
firms without female board members beforehand and are present
even for boards with older and more experienced members afterward.
The boards appear to be affecting corporate strategy in part
by selecting like-minded executives.
Abstract
					Individuals dominate money in politics, accounting for over 90 percent
of campaign contributions, yet studies of drivers of individuals' giving
are scarce. We analyze data on all contributions made between 1991
and 2008 by all 1,556 people who became S&P 500 CEOs during
that interval. We exploit variation in leadership status over these
individuals' careers to identify that being an S&P 500 CEO causes
a $4,029 or 137 percent jump per election cycle in personal giving.
While some fraction of CEOs' contributions can be attributed to
long-standing preferences, the striking changes in behavior cannot
be explained by these factors alone.
Abstract
					In cross-country data, teaching practices (such as copying from the
board versus working on projects together) are related to various
dimensions of social capital. In micro-data from three datasets, teaching
practices are also strongly correlated with student beliefs about
cooperation across schools within countries. To address omitted variable
and reverse causality concerns, we show that, within schools,
teaching practices also have an independent and sizeable effect on student
beliefs. The evidence supports the idea that progressive education
promotes the formation of social capital.
Abstract
					Computers are an important part of modern education, yet many
schoolchildren lack access to a computer at home. We test whether this
impedes educational achievement by conducting the largest-ever field
experiment that randomly provides free home computers to students.
Although computer ownership and use increased substantially,
we find no effects on any educational outcomes, including grades,
test scores, credits earned, attendance, and disciplinary actions.
Our estimates are precise enough to rule out even modestly-sized
positive or negative impacts. The estimated null effect is consistent
with survey evidence showing no change in homework time or other
"intermediate" inputs in education.
Abstract
					Lottery estimates suggest Massachusetts' urban charter schools boost
achievement well beyond that of traditional urban public schools students,
while nonurban charters reduce achievement from a higher
baseline. The fact that urban charters are most effective for poor
nonwhites and low-baseline achievers contributes to, but does not
fully explain, these differences. We therefore link school-level charter
impacts to school inputs and practices. The relative efficacy of urban
lottery sample charters is accounted for by these schools' embrace of
the No Excuses approach to urban education. In our Massachusetts
sample, Non-No-Excuses urban charters are no more effective than
nonurban charters
Abstract
					In this paper, we collect data on the inner-workings of 39 charter
schools and correlate these data with school effectiveness. We find
that traditionally collected input measures -- class size, per-pupil
expenditure, teacher certification, and teacher training -- are not
correlated with school effectiveness. In stark contrast, we show that
an index of five policies suggested by qualitative research -- frequent
teacher feedback, the use of data to guide instruction, high-dosage
tutoring, increased instructional time, and high expectations -- 
explains approximately 45 percent of the variation in school effectiveness.
The same index provides similar results in a separate
sample of charter schools.
Abstract
					Unexpected medical care spending imposes considerable financial
risk on developing country households. Based on managed care
models of health insurance in wealthy countries, Colombia's Régimen
Subsidiado is a publicly financed insurance program targeted to the
poor, aiming both to provide risk protection and to promote allocative
efficiency in the use of medical care. Using a "fuzzy" regression
discontinuity design, we find that the program has shielded the poor
from some financial risk while increasing the use of traditionally
underutilized preventive services—with measurable health gains.
Abstract
					Understanding the degree of geographical crime displacement
is crucial for the design of crime prevention policies. This paper
documents changes in automobile theft risk that were generated by
the plausibly exogenous introduction of Lojack, a highly effective
stolen vehicle recovery device, into a number of new Ford car models
in some Mexican states, but not others. Lojack-equipped vehicles in
Lojack-coverage states experienced a 48 percent reduction in theft
risk due to deterrence effects. However, 18 percent of the reduction in
thefts was displaced toward unprotected Lojack models in non-Lojack
states, providing new evidence of geographical crime displacement
in auto theft.
Abstract
					Using county-level data across several decades, and various OLS
and TSLS models, we find that higher local wages and employment
lower turnout in elections for governor, senator, US Congress and
state House of Representatives, but have no effect on presidential
turnout. We also find that the share of people voting in one election
but not in another on the same ballot increases as local labor market
conditions improve. We argue that these results are most consistent
with information-based models of voting, and use individual level
panel data to show that increased employment lowers media usage
and political knowledge.
Abstract
					Are an immigrant's decisions affected in real time by her home country's
economy? I examine this question by exploiting exchange rate
variations as exogenous price shocks to immigrants' budget constraints.
I find that in response to a 10 percent dollar appreciation,
an immigrant decreases her earnings by 0.92 percent, mainly by
reducing hours worked. The exchange rate effect is greater for recent
immigrants, married immigrants with absent spouses, Mexicans close
to the border, and immigrants from countries with higher remittance
flows. A neoclassical interpretation of these findings suggests that
the income effect exceeds the cross-substitution effect. Remittance
targets offer an alternative explanation.
Abstract
					This study explores whether potential employers have the same
information about worker ability as the incumbent firm. I develop a
model of asymmetric learning that nests the symmetric learning case
and allows the degree of asymmetry to vary. I then show how predictions
in the model can be tested with compensation data. Using the NLSY, I
test the model and find strong support for asymmetric information. My
estimates imply that in one period, outside firms reduce the average
expectation error over worker ability by only a third of the reduction
made by incumbent firms.
Abstract
					This paper provides regression discontinuity evidence on development
impacts of intergovernmental transfers. Extra transfers in Brazil
increased local government spending per capita by about 20 percent
over a 4 year period with no evidence of crowding out own revenue or
other revenue sources. Schooling per capita increased by about 7 percent
and literacy rates by about 4 percentage points. In line with the
effect on human capital, the poverty rate was reduced by about 4 percentage
points. Somewhat noisier results also suggest that the reelection
probability of local incumbent parties in the 1988 elections improved
by about 10 percentage points.
Abstract
					This paper studies the electoral effects of town hall meetings based
on programmatic, nonclientelist platforms. The experiment involves
the cooperation of leading candidates in a presidential election in
Benin. A campaign strategy based solely on these meetings was
assigned to randomly selected villages and compared to the standard
strategy of clientelist rallies. We find that treatment reduces the
prevalence of clientelism and does not affect turnout. Treatment also
lowers the vote shares for the candidate with a political stronghold in
the village and is more effective in garnering votes in regions where
a candidate does not have a political stronghold.
Abstract
					Information asymmetries are prominent in theory but difficult to estimate.
This paper exploits discontinuities in loan eligibility to test
for moral hazard and adverse selection in the payday loan market.
Regression discontinuity and regression kink approaches suggest that
payday borrowers are less likely to default on larger loans. A $50
larger payday loan leads to a 17 to 33 percent drop in the probability
of default. Conversely, there is economically and statistically significant
adverse selection into larger payday loans when loan eligibility
is held constant. Payday borrowers who choose a $50 larger loan are
16 to 47 percent more likely to default.
Abstract
					We set up a dynamic discrete choice model with subjective
expectations data to explain adult smokers'
find important differences between subjective survival probabilities
and those estimated using observed mortality data. Subjectively,
individuals attach less weight to their health conditions and smoking
choices and more weight to such factors as age, race, and parents'
longevity. Moreover, adult smokers are found to care more about
their health and to be more forward-looking than predicted by a
rational expectations framework. We further show the importance of
unobserved heterogeneity in agents' subjective survival probabilities,
and discuss policy implications of subjective expectations.
Abstract
					This paper estimates the overall impact and externality effects of
an influenza vaccination program expanding coverage outside the
typical target group. Using a triple-difference design, which exploits
the introduction of a broad based vaccination program in Ontario
and the quality of the vaccine from year to year, I link higher
vaccination to health improvements. Results indicate coverage
expansion leads to large excess gains for program-regions; benefits
exhibit decreasing returns corresponding to a standard model of
disease dynamics; and substantial external benefits accrue to older
adults.
Abstract
					We document the evolution of productivity in a steel mini mill with fixed
capital, producing an unchanged product with Leontief technology
working 24/7. Despite—almost—unchanged production conditions,
output doubled within the sample period (12 years). We decompose the
gains into downtime reductions, more rounds of production per time,
and more output per run. After attributing productivity gains to investment
and an incentive plan, we are left with a large unexplained component.
Learning by experimentation, or tweaking, seems to be behind
the continual and gradual process of productivity growth. The findings
suggest that capacity is not well defined, even in batch-oriented manufacturing.
Abstract
					This paper analyzes Thailand's 2001 healthcare reform, "30 Baht."
The program increased funding available to hospitals to care for
the poor and reduced copays to 30 Baht (~$0.75). Our estimates
suggest the supply-side funding of the program increased healthcare
utilization, especially among the poor. Moreover, we find significant
impacts on infant mortality. Prior to 30 Baht, poorer provinces had
significantly higher infant mortality rates than richer provinces.
After 30 Baht, this correlation evaporates to zero. The results suggest
that increased access to healthcare among the poor can significantly
reduce their infant mortality rates.
Abstract
					This paper presents evidence on the perverse trade-off that first price
auctions induce between low prices at the awarding stage and poor
ex post performance when bids are not binding commitments. By
exploiting the different timing with which first price auctions were
introduced in Italy to procure public works, this study finds that
at least half of the cost savings from lower winning prices are lost
because of ex post renegotiation. Screening the lowest price bid for
its responsiveness prevents performance worsening but also reduces
the initial cost savings by a third and induces delays in awarding the
contract.
Abstract
					We use the introduction of a means-tested voucher program in Florida
to examine whether increased competitive pressure on public schools
affects students' test scores. We find greater score improvements in
the wake of the program introduction for students attending schools
that faced more competitive private school markets prior to the policy
announcement, especially those that faced the greatest financial
incentives to retain students. These effects suggest modest benefits
for public school students from increased competition. The effects
are consistent across several geocoded measures of competition and
isolate competitive effects from changes in student composition or
resource levels in public schools.
Abstract
					Previous research has not always found that boys and girls are treated
differently in rural India. However estimates of the effect of gender on
parental investments could be biased if girls end up in larger families
due to son-biased stopping rules. Using a novel identification strategy
that exploits that gender at conception is random, we document that
boys receive more childcare time than girls, they are breastfed longer
and they get more vitamin supplementation. Compared to other
developing countries, boys have an advantage in height and weight
relative to girls. Neither greater needs nor anticipated family size
explain the results.
Abstract
					Agriculture on the American Plains has been constrained historically
by water scarcity. Post-WWII technologies enabled farmers over the
Ogallala aquifer to extract groundwater for large-scale irrigation.
Comparing counties over the Ogallala with nearby similar counties,
groundwater access increased agricultural land values and initially
reduced the impact of droughts. Over time, land use adjusted toward
water intensive crops and drought sensitivity increased. Viewed differently,
farmers in nearby water-scarce areas maintained lowervalue
drought-resistant practices that fully mitigate naturally higher
drought sensitivity. The evolving impact of the Ogallala illustrates
the importance of water for agricultural production, but also the
large scope for agricultural adaptation to groundwater and drought.
Abstract
					The onset of World War I spurred the "Great Migration" of African
Americans from the US South, arguably the most important internal
migration in US history. We create a new panel dataset of more than
5,000 men matched from the 1910 to 1930 census manuscripts to
address three interconnected questions: To what extent was there
selection into migration? How large were the migrants' gains?
Did migration narrow the racial gap in economic status? We find
evidence of positive selection, but the migrants' gains were large.
A substantial amount of black-white convergence in this period is
attributable to migration.
Abstract
					We use the Swedish compulsory school reform to estimate the causal
effect of parental education on sons' outcomes. To this end, we use data
from the Swedish military enlistment register on the entire population
of males and consider outcomes, such as cognitive skills, noncognitive
skills, and various dimensions of health at the age of 18. We find
positive effects of maternal education on sons' skills and health status
but no effects of paternal education. One reason behind this result may
be that the fathers affected by the reform did not face any labor market
returns to their increased schooling.
Abstract
					Micro-entrepreneurs often lack the financial literacy required to
make important financial decisions. We conducted a randomized
evaluation with a bank in the Dominican Republic to compare the
impact of two distinct programs: standard accounting training
versus a simplified, rule-of-thumb training that taught basic financial
heuristics. The rule-of-thumb training significantly improved
firms' financial practices, objective reporting quality, and revenues.
For micro-entrepreneurs with lower skills or poor initial financial
practices, the impact of the rule-of-thumb training was significantly
larger than that of the standard accounting training, suggesting that
simplifying training programs might improve their effectiveness for
less sophisticated individuals.
Abstract
					With newly available data, I investigate to what extent countries'
international trade exploits the very uneven water resources on a
global scale. I find that water is a source of comparative advantage
and that relatively water abundant countries export more water-intensive products. Additionally, water contributes significantly less to the pattern of exports than the traditional production factors labor and physical capital. This suggests relatively moderate disruptions
to overall trade on a global scale due to changing precipitation in
the wake of climate change.
Abstract
					We use an original panel dataset of migrant departures from the
Philippines to identify the responsiveness of migrant numbers
and wages to GDP shocks in destination countries. We find a
large, significant response of migrant numbers to GDP shocks at
destination, but no significant wage response. This is consistent
with binding minimum wages for migrant labor. This result implies
that labor market imperfections that make international migration
attractive also make migrant flows more sensitive to global business
cycles. Difference-in-differences analysis of a minimum wage change
for maids confirms that minimum wages bind and demand is price
sensitive without these distortions.
Abstract
					This paper studies the economic effects of endorsements. In the
publishing sector, endorsements are found to be a business stealing
form of advertising that raises title level sales without expanding
the market size. If anything, the endorsements decrease aggregate
adult fiction sales. This might be a result of the endorsed books
being more difficult than those that otherwise would have been purchased. Economically meaningful sales increases are also found
for nonendorsed titles written by endorsed authors. This spillover
demand demonstrates the broad range of benefits of advertising for
firms operating in a multiproduct brand setting.
Abstract
					Education ministries worldwide have promoted community engagement
through school committees. This paper presents results from a
large field experiment testing alternative approaches to strengthen
school committees in public schools in Indonesia. Two novel treatments
focus on institutional reforms. First, some schools were randomly
assigned to implement elections of school committee members.
Another treatment facilitated joint planning meetings between the
school committee and the village council (linkage). Two more common
treatments, grants and training, provided resources to existing
school committees. We find that institutional reforms, in particular
linkage and elections combined with linkage, are most cost-effective
at improving learning.
Abstract
					One of the most consistent findings in the literature on teacher
quality is that teachers improve with experience, especially in the
first several years. This study extends this research by separately
identifying the benefits of general teaching experience and specific
curriculum familiarity. I find that both specific and general human
capital contribute to teacher improvement and that recent specific
experience is more valuable than distant specific experience. This
paper also contributes to a broader literature on human capital
acquisition, as it is among the first to examine human capital
specificity using a direct measure of productivity.
Abstract
					This paper measures the demand for adult medical male circumcision
using an experiment that randomly offered varying-priced subsidies
and comprehensive information to 1,600 uncircumcised men in
urban Malawi. We find low demand for male circumcision: only
3 percent are circumcised over a three month period. Despite the low
overall level of take-up, both price and information are significant
determinants of circumcision. Still, the main barriers to male
circumcision-cultural norms and fear of pain-are not affected
by prices or information. Significant demand generation efforts are
needed for this HIV prevention strategy to be effective.
Abstract
					Male-female wage gaps declined significantly over the 1980s and
1990s, while returns to education increased. In this paper, we use
cross-city data to explore whether, like the return to education, the
change in the gender wage gap may reflect changes in skill prices
induced by the diffusion of information technology. We show that
male-female and education-wage differentials moved in opposite
directions in response to the adoption of PCs. Our most credible estimates simply that changes in skill prices driven by PC adoption can
explain most of the decline in the US male-female wage gap since
1980.
Abstract
					Welfare programs are often implemented in-kind to promote outcomes
that might not be realized under cash transfers. This paper
tests whether such paternalistically motivated transfers are justified
compared to cash, using a randomized controlled trial of Mexico's
food assistance program. In relation to total food consumption, the
in-kind transfer was infra-marginal and nondistorting. However, the
transfer contained ten food items, and there was large variation in
the extent to which individual foods were extra-marginal and distorting.
Small differences in the nutritional intake of women and children
under in-kind transfers did not lead to meaningful differential
improvements in health outcomes compared to cash.
Abstract
					Using panel data from a large hospital system, this paper presents
estimates of the productivity effects of human capital in a team production environment. Proxying nurses' general human capital by
education and their unit-specific human capital by experience on the
nursing unit, we find that greater amounts of both types of human
capital significantly improve patient outcomes. Disruptions to team
functioning attributable to the departure of experienced nurses, the
absorption of new hires, and the inclusion of temporary contract
nurses are associated with significant decreases in productivity
beyond those attributable to changes in nurses' skill and experience.
Abstract
					We examine the role of defaults in high-frequency, small-scale choices using unique data on over 13 million New York City taxi rides. Using a regression discontinuity design, we show that default tip suggestions have a large impact on tip amounts. These results are supported by a secondary analysis that uses the quasi-random assignment of customers to different cars to examine default effects on a wider range of fares. Finally, we highlight a potential cost of setting defaults too high, as a higher proportion of customers opt to leave no credit card tip when presented with the higher suggested amounts.
Abstract
					Conditional on enrollment, African American students are substantially less likely to graduate from four-year public universities than white students. Using administrative micro-data from Missouri, we decompose the graduation gap into racial differences in four factors: (i) how students sort to universities, (ii) how students sort to initial majors, (iii) high-school quality, and (iv) other preentry skills. Preentry skills explain 65 and 86 percent of the gap for women and men respectively. A small role is found for differential sorting into college, driven by African Americans' disproportionate representation in urban schools and schools at the very bottom of the quality distribution.
Abstract
					This paper uses data from three prominent exam high schools in New York City to estimate the impact of attending a school with high-achieving peers on college enrollment and graduation. Our identification strategy exploits sharp discontinuities in the admissions process. Applicants just eligible for an exam school have peers that score 0.17 to 0.36 standard deviations higher on eighth grade state tests and that are 6.4 to 9.5 percentage points less likely to be black or Hispanic. However, exposure to these higher-achieving and more homogeneous peers has little impact on college enrollment, college graduation, or college quality.
Abstract
					This paper evaluates the impact of access to groundwater on poverty using data from rural India. The estimation exploits the fact that the technology required to access groundwater changes exogenously due to constraints imposed by laws of physics at a depth of eight meters. I find that rural poverty in areas where depth from surface is below the cutoff is 9 to 10 percent higher. Using survey data for a subsample of villages, I also show that disputes over irrigation water increase by 25 percent around the cutoff. Historical endowments of groundwater facilitate adoption of yield enhancing technologies over the long-run.
Abstract
					How do nationalistic media affect animosity between ethnic groups? We consider one of Europe's deadliest conflicts since WWII, the Serbo-Croatian conflict. We show that, after a decade of peace, cross-border nationalistic Serbian radio triggers ethnic hatred toward Serbs in Croatia. Mostly attracted by nonpolitical content, many Croats listen to Serbian public radio (intended for Serbs in Serbia) whenever signal is available. As a result, the vote for extreme nationalist parties is higher and ethnically offensive graffiti are more common in Croatian villages with Serbian radio reception. A laboratory experiment confirms that Serbian radio exposure causes anti-Serbian sentiment among Croats.
Abstract
					This paper uses a new dataset on child-adoption matching to estimate the preferences of potential adoptive parents over US-born and unborn children relinquished for adoption. We identify significant preferences favoring girls and against African American children put up for adoption. These attitudes vary in magnitudes across different adoptive parents—heterosexual, same-sex couples, and single women. We consider the effects of excluding single women and same-sex couples from the process, and find that this would substantially reduce the overall number of adopted children.
Abstract
					This paper uses an original dataset covering the presence of local news in medium-large Italian cities in the period 1993–2010 to evaluate the effects of newspaper entry and exit on electoral participation, political selection, and government efficiency. Exploiting discrete changes in the number of newspapers, we show that newspaper entry increases turnout in municipal elections, the reelection probability of the incumbent mayor, and the efficiency of the municipal government. We do not find any effect on the selection of politicians. Competition plays a relevant role, as the effects are not limited to the first newspaper entry.
Abstract
					In the immediate aftermath of World War II, millions of German expellees were resettled into the new borders of Germany, but not into the parts of Germany that were occupied by France. Using a spatial regression discontinuity framework, I estimate the persistence of the population shock over a 20-year-period. Between 1945 and 1950, the inflow of people increased the population in municipalities where expellees could settle by 21.6 percent. The difference in population levels is highly persistent and remained 17.8 percent in 1970. The results suggest that population patterns in the region that I study were not determined by locational fundamentals.
Abstract
					I examine the learning process that economic agents use to update their expectation of an uncertain and infrequently observed event. I use a new nation-wide panel dataset of large regional floods and flood insurance policies to show that insurance take-up spikes the year after a flood and then steadily declines to baseline. Residents in nonflooded communities in the same television media market increase take-up at one-third the rate of flooded communities. I find that insurance take-up is most consistent with a Bayesian learning model that allows for forgetting or incomplete information about past floods.
Abstract
					The most desirable Kenyan secondary schools are elite government schools that admit the best students from across the country. We exploit the random variation generated by the centralized school admissions process in a regression discontinuity design to obtain causal estimates of the effects of attending one of these elite public schools on student progression and test scores in secondary school. Despite their reputations, we find little evidence of positive impacts on learning outcomes for students who attended these schools, suggesting that their sterling reputations reflect the selection of students rather than their ability to generate value-added test score gains.
Abstract
					We report an experiment in 3,000 villages that tested whether incentives improve aid efficacy. Villages received block grants for maternal and child health and education that incorporated relative performance incentives. Subdistricts were randomized into incentives, an otherwise identical program without incentives, or control. Incentives initially improved preventative health indicators, particularly in underdeveloped areas, and spending efficiency increased. While school enrollments improved overall, incentives had no differential impact on education, and incentive health effects diminished over time. Reductions in neonatal mortality in nonincentivized areas did not persist with incentives. We find no systematic scoring manipulation nor funding reallocation toward richer areas.
Abstract
					Citizenship rights are associated with better economic opportunities
for immigrants. This paper studies how in a country with a large
fraction of temporary migrants the fertility decisions of foreign
citizens respond to a change in the rules that regulate child legal
status at birth. The introduction of birthright citizenship in Germany
in 2000, represented a positive shock to the returns to investment
in child human capital. Consistent with Becker's "quality-quantity"
model of fertility, we find that birthright citizenship leads to a
reduction in immigrant fertility and an improvement in health and
socio-emotional outcomes for the children affected by the reform.
Abstract
					This paper explores the gains from trade in differentiated products
from three channels: decreases in price, improvements in quality,
and increases in variety. Using data on Indian imports of computer
printers from 1996 to 2005, a period of trade liberalization, I find
that quality was the leading source of welfare gains. Consumers
would require a 65 percent decrease in all 1996 prices to be as well
off as they were with the quality available in 2005. The contribution
of price was slightly smaller, while variety lagged farther behind.
These effects varied across buyers, as gains were largest for small
businesses.
Abstract
					I examine the impact of student incentives in Benin, using three different designs that can be implemented relatively cheaply and with administrative data. The first design is a standard incentive structure where students receive monetary rewards for reaching a performance target. In the other two designs, teams of four students receive incentives based on either their performance level as a group or in a team tournament scheme. I find a large and similar average treatment effect across designs, ranging from 0.27 to 0.34 standard deviations (Standard errors do not allow to rule out that the three designs are equally effective).
Abstract
					Exploiting within-firm, over-time variation in plan parameters for nearly 10,000 Long Term Disability (LTD) policies held by US employers, we present the first empirical analysis of the determinants of private LTD spells. We find that a shorter waiting period and a higher replacement rate increase the incidence of LTD spells. Sixty percent of the latter effect is due to the mechanical censoring of shorter spells, with the remainder due to the deterrence of spells
that would have continued beyond the waiting period. Deterrence is
driven primarily by a reduction in the incidence of shorter duration
spells and less severe disabilities.
Abstract
					This paper reports the results of a large-scaled randomized controlled
experiment comparing the public and private provision of counseling
to job seekers. The intention-to-treat estimates of both programs are
not statistically different, but more workers were enrolled in the private program, implying an effect per beneficiary that is twice as large under the public as under the private program. We find suggestive evidence that the private firms may have insufficiently mastered the counseling technology, and exercised less effort on those who had the best chance to find a job. This highlights the incentive problems in designing contracts for these services.
Abstract
					Well-functioning credit markets play a key role in boosting overall
economic growth, but their impact on distributional outcomes
is much less clear. I use a quasi-experimental setting provided by
branch banking deregulation, an important episode of US financial
development, to study the distributive impacts of finance. Following
removal of geographic restrictions on banks in the 1980s and early
1990s, mortgage access increased for lower-middle income groups,
young, and also black households. These effects were driven by commercial banks, the only financial institutions subject to the policy.
Banks' new screening technologies may have been responsible for
this expansion of credit.
Abstract
					Differences in relative female employment by soil texture are used to
explain the heterogeneous deficit of female children across districts
within India. Soil texture varies exogenously and determines the
depth of land tillage. Deep tillage, possible in loamy but not in clayey
soil textures, reduces the demand for labor in agricultural tasks traditionally performed by women. Girls have a lower economic value
where female labor opportunities are fewer. Consistently, higher relative female employment in agriculture improves the ratio of female to male children in districts that have a smaller fraction of loamy relative to clayey soils.
Abstract
					Using the dismantling of the Multi-fibre Arrangement quotas on
Chinese textile products in conjunction with China's accession to
the World Trade Organization (WTO), within firms adjustments to
intensified low-wage competition is analyzed. Employing Danish
employer-employee matched data covering from 1995 to 2007, the
analysis shows a significant change in the workforce composition of
firms in response to heightened competition. Competition is found
to negatively affect employment, value-added, and intangible assets
of the Danish firms, and firms refocus away from products, where
China's competitive advantage becomes higher. The results show an
important role of the distributional impact of low-wage competition
within firms in restructuring the industry.
Abstract
					We analyze a Massachusetts merit aid program that gives highscoring
students tuition waivers at in-state public colleges with
lower graduation rates than available alternative colleges. A regression discontinuity design comparing students just above and below the eligibility threshold finds that students are remarkably willing to forgo college quality and that scholarship use actually lowered college completion rates. These results suggest that college quality affects college completion rates. The theoretical prediction that inking subsidies of public institutions can reduce consumption of the
subsidized good is shown to be empirically important.
Abstract
					Causal evidence on microcredit impacts informs theory, practice, and debates about its effectiveness as a development tool. The six randomized evaluations in this volume use a variety of sampling, data collection, experimental design, and econometric strategies to identify causal effects of expanded access to microcredit on borrowers and/or communities. These methods are deployed across an impressive range of locations -- six countries on four continents, urban and rural areas -- borrower characteristics, loan characteristics, and lender characteristics. Summarizing and interpreting results across studies, we note a consistent pattern of modestly positive, but not transformative, effects. We also discuss directions for future research. (JEL D14, G21, I38, O15, O16, P34, P36)
Abstract
					This paper reports results from the randomized evaluation of a group-lending microcredit program in Hyderabad, India. A lender worked in 52 randomly selected neighborhoods, leading to an 8.4 percentage point increase in takeup of microcredit. Small business investment and profits of preexisting businesses increased, but consumption did not significantly increase. Durable goods expenditure increased, while "temptation goods" expenditure declined. We found no significant changes in health, education, or women's empowerment. Two years later, after control areas had gained access to microcredit but households in treatment area had borrowed for longer and in larger amounts, very few significant differences persist. (JEL G21, G31, O16, O12, L25, I38)
Abstract
					We present evidence from a randomized field experiment in rural Mongolia to assess the poverty impacts of a joint-liability microcredit program targeted at women. We find a positive impact of access to group loans on female entrepreneurship and household food consumption but not on total working hours or income in the household. A simultaneously introduced individual-liability microcredit program delivers no significant poverty impacts. Additional results on informal transfers to families and friends suggest that joint liability may deter borrowers from using loans for noninvestment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit. (JEL G21, I32, I38, J16, L26, O15, O16)
Abstract
					We report results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco in 2006. Thirteen percent of the households in treatment villages took a loan, and none in control villages did. Among households identified as more likely to borrow, microcredit access led to a significant rise in investment in assets used for self-employment activities, and an increase in profit, but also to a reduction in income from casual labor. Overall there was no gain in income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities. (JEL D14, G21, J23, O12, O16, O18)
Abstract
					We use a clustered randomized trial, and over 16,000 household surveys, to estimate impacts at the community level from a group lending expansion at 110 percent APR by the largest microlender in Mexico. We find no evidence of transformative impacts on 37 outcomes (although some estimates have large confidence intervals), measured at a mean of 27 months post-expansion, across 6 domains: microentrepreneurship, income, labor supply, expenditures, social status, and subjective well-being. We also examine distributional impacts using quantile regressions, given theory and evidence regarding negative impacts from borrowing at high interest rates, but do not find strong evidence for heterogeneity. (JEL C83, D14, G21, I31, J23, O12, O16)
Abstract
					We use an RCT to analyze the impacts of microcredit. The study population consists of loan applicants who were marginally rejected by an MFI in Bosnia. A random subset of these were offered a loan. We provide evidence of higher self-employment, increases in inventory, a reduction in the incidence of wage work and an increase in the labor supply of 16-19-year-olds in the household's business. We also present some evidence of increases in profits and a reduction in consumption and savings. There is no evidence that the program increased overall household income. (JEL C93, G21, I38, J23, L25, P34, P36)
Abstract
					Using comprehensive administrative data on France's single largest financial aid program, this paper provides new evidence on the impact of large-scale need-based grant programs on the college enrollment decisions, persistence, and graduation rates of low-income students. We exploit sharp discontinuities in the grant eligibility formula to identify the impact of aid on student outcomes at different levels of study. We find that the provision of 1,500 euros cash allowances to prospective undergraduate or graduate students increases their college enrollment rates by 5 to 7 percent. Moreover, we show that need-based grants have positive effects on student persistence and degree completion. (JEL H52, I22, I24, I28, J24)
Abstract
					We study a Conditional Cash Transfer program in which the cash transfers to the mother only depend on the fulfillment of the national preventive visit schedule by her children born before she registered in the program. We estimate that preventive visits of children born after the mother registered in the program are 50 percent lower because they are excluded from the conditionality requirement. Using the same variation, we also show that attendance to preventive care improves children health. (JEL H23, I12, I18, I38, J13, J16, O15)
Abstract
					This paper presents results from a randomized controlled trial whereby approximately 1,000 OLPC XO laptops were provided for home use to children attending primary schools in Lima, Peru. The intervention increased access and use of home computers, with some substitution away from computer use outside the home. Children randomized to receive laptops scored about 0.8 standard deviations higher in a test of XO proficiency but showed lower academic effort as reported by teachers. There were no impacts on academic achievement or cognitive skills as measured by the Raven's Progressive Matrices test. Finally, there was little evidence for spillovers within schools. (JEL I21, I28, J13, O15)
Abstract
					Using data from a randomized experiment in rural China, we study the influence of social networks on weather insurance adoption and the mechanisms through which they operate. To quantify network effects, the experiment provides intensive information sessions about the product to a random subset of farmers. For untreated farmers, the effect of having an additional treated friend on take-up is equivalent to granting a 13 percent reduction in the insurance premium. By varying the information available about peers' decisions and randomizing default options, we show that the network effect is driven by the diffusion of insurance knowledge rather than purchase decisions. (JEL G22, O12, O16, P36, Q12, Q54, Z13)
Abstract
					Community-rating regulations equalize the insurance premiums faced by the healthy and the unhealthy. Intended reductions in the unhealthy's premiums can be undone, however, if the healthy forgo coverage. The severity of this adverse selection problem hinges largely on how health care costs are distributed across market participants. Theoretically, I show that Medicaid expansions can combat adverse selection by removing high cost individuals from the relevant risk pool. Empirically, I find that private coverage rates improved significantly in community-rated markets when states expanded Medicaid's coverage of relatively unhealthy adults. The effects of these health policy instruments are fundamentally linked. (JEL G22, G28, H51, H53, I13, I18, I38)
Abstract
					This paper uses a field experiment to test whether intrahousehold heterogeneity in discount factors leads to inefficient strategic savings behavior. I gave married couples in rural Kenya the opportunity to open both joint and individual bank accounts at randomly assigned interest rates. I also directly elicited discount factors for all individuals in the experiment. Couples who are well matched on discount factors are less likely to use costly individual accounts and respond robustly to relative rates of return between accounts, while their poorly matched peers do not. Consequently, poorly matched couples forgo significantly more interest earnings on their savings. (JEL D13, D14, J12, O12)
Abstract
					We exploit exogenous variation in legal status following the January 2007 European Union enlargement to estimate its effect on immigrant crime. We difference out unobserved time-varying factors by (i) comparing recidivism rates of immigrants from the "new" and "candidate" member countries; and (ii) using arrest data on foreign detainees released upon a mass clemency that occurred in Italy in August 2006. The timing of the two events allows us to setup a difference-in-differences strategy. Legal status leads to a 50 percent reduction in recidivism, and explains one-half to two-thirds of the observed differences in crime rates between legal and illegal immigrants. (JEL F22, K42, C41)
Abstract
					We implement a randomized experiment offering Salvadoran migrants matching funds for educational remittances, which are channeled directly to a beneficiary student in El Salvador chosen by the migrant. The matches lead to increased educational expenditures, higher private school attendance, and lower labor supply of youths in El Salvador households connected to migrant study participants. We find substantial "crowd-in" of educational investments: for each $1 received by beneficiaries, educational expenditures increase by $3.72. We find no shifting of expenditures away from other students, and no effect on remittances. (JEL F24, I21, I22, J13, O15, O19)
Abstract
					We estimate the effect of a large rural workfare program in India on private employment and wages by comparing trends in districts that received the program earlier relative to those that received it later. Our results suggest that public sector hiring crowded out private sector work and increased private sector wages. We compute the implied welfare gains of the program by consumption quintile. Our calculations show that the welfare gains to the poor from the equilibrium increase in private sector wages are large in absolute terms and large relative to the gains received solely by program participants. (JEL I38, J31, J45, J68, O15)
Abstract
					This paper analyzes how evaluators' private information and subjective biases affect evaluations in academia. We use evidence from centralized selection exams in Spain, where evaluators are randomly assigned to promotion committees. Candidates are significantly more likely to be promoted when they are evaluated by an acquainted evaluator, but the source of the premium depends on the nature of this relationship. Our findings suggest that, when candidates are evaluated by their PhD adviser, a colleague or a coauthor, evaluation biases dominate the potential impact of informational gains. Weaker links, on the other hand, may improve the efficiency of the selection process. (JEL D82, I23, J44, M51)
Abstract
					We evaluate an experimental program in which the French public employment service anonymized résumés for firms that were hiring. Firms were free to participate or not; participating firms were then randomly assigned to receive either anonymous résumés or name-bearing ones. We find that participating firms become less likely to interview and hire minority candidates when receiving anonymous résumés. We show how these unexpected results can be explained by the self-selection of firms into the program and by the fact that anonymization prevents the attenuation of negative signals when the candidate belongs to a minority. (JEL J15, J68, J71)
Abstract
					Many developed countries have recently experienced sharp increases in home birth rates. This paper investigates the impact of home births on the health of low-risk newborns using data from the Netherlands, the only developed country where home births are widespread. To account for endogeneity in location of birth, we exploit the exogenous variation in distance from a mother's residence to the closest hospital. We find that giving birth in a hospital leads to substantial reductions in newborn mortality. We provide suggestive evidence that proximity to medical technologies may be an important channel contributing to these health gains. (JEL I11, I12, J13, J16)
Abstract
					Financial incentives have shown strong positive short-run effects for problematic health behaviors that likely stem from time inconsistency. However, the effects often disappear once incentive programs end. This paper analyzes the results of a large-scale workplace field experiment to examine whether self-funded commitment contracts can improve the long-run effects of an incentive program. A four week incentive program targeting use of the company gym generated only small lasting effects on behavior. Those that also offered a commitment contract at the end of the program, however, showed demand for commitment and significant long-run changes, detectable even several years after the incentive ended. (JEL D03, I10, J32)
Abstract
					The "emerging middle class" is a force of economic importance in many consumer markets around the globe. A striking phenomenon in some of these markets is the growth of "generic," low-price brands. This paper examines these phenomena in Brazil's large soft drink market. Our study draws on data sources that capture both social mobility and market outcomes. Our analysis suggests that the emergence of a price-sensitive, new middle class aided the staggering growth of a fringe of generic producers. Our estimated demand model rationalizes a drastic price cut, led by Coca-Cola, that allowed it to contain the fringe's growth. (JEL D12, L11, L66, L81, M37, O12, O14)
Abstract
					This paper studies a market where soda is sold in both refillable and nonrefillable bottles. Purchasing refillables is inconvenient but cheaper. Using a discrete choice model, I find that price-sensitive customers put less weight on the inconveniences of purchasing refillables. This implies that a retailer can target lower prices to price-sensitive customers using the refillable segment. I evaluate the overall welfare consequences of this market segmentation and find that both customer welfare and profits would decrease (by 12.61 and 4.21 percent, respectively) if the refillables were removed, as there would be an important market-shrinkage effect. (JEL D22, L13, L25, L81)
Abstract
					This paper finds that a student's share of opposite gender school friends negatively affects high school GPA. It uses the gender composition of schoolmates in an individual's neighborhood as an instrument for the gender composition of an individual's self-reported friendship network. The effect occurs across all subjects for students older than 16, but only in mathematics and science for younger students. Additional results indicate effects may operate inside the classroom through difficulties getting along with the teacher and paying attention, and outside the classroom through romantic relationships. (JEL I21, J13, J16)
Abstract
					How does income affect religiousness? Using self-collected survey data, we estimate the effects of income on religious behavior. As a source of exogenous income variation we use a change in the eligibility criteria for a government cash transfer in Ecuador and apply a regression discontinuity strategy to estimate causal effects. We find significant effects of income on religiousness. Families that earn more go to church more often. Families that earn more are also more likely to be members of an Evangelical community rather than of the mainstream Catholic Church. (JEL D14, H23, J12, J31, O15, Z12)
Abstract
					This paper estimates the constituency-level development effects of quotas for the Scheduled Castes (SCs) in India, using a unique dataset of development indicators for more than 3,100 state assembly constituencies in 15 Indian states in 1971 and 2001. Matching constituencies on pretreatment variables from 1971, I find that 30 years of quotas had no detectable constituency-level effect on overall development or redistribution to SCs. Interviews with politicians and civil servants in 2010 and 2011 suggest that these findings can be explained by the power of political parties and the electoral incentives created by the quota system. (JEL D72, J15, O15, O17, Z13)
Abstract
					Using Consumer Expenditure Survey data this paper shows that more educated workers demand more high-skill-intensive services and, to a lesser extent, more very low-skill-intensive services (such as personal services). Additional evidence at the Metropolitan Statistical Area (MSA) level shows that this "education elasticity of demand" mechanism can explain part of the correlation between the share of college-educated workers in a city and the employment share of service industries. The parametrization of a simple model suggests that this induced demand shift can explain around 6.5 percent of the relative demand shift in the United States between 1984 and 2002. Similar results are provided for the United Kingdom. (JEL D12, J24, J31, L84)
Abstract
					This paper examines if students' college outcomes are sensitive to
access to college admissions tests. I construct a dataset of every test
center location and district policy in the United States linked to the
universe of individual testing records and a large sample of college
enrollment records. I find evidence that SAT taking is responsive to
the opening or closing of a testing center at a student's own or a
neighboring high school and to policies that provide free in-school
administration and default registration. Newly induced takers of high
academic aptitude appear likely to attend and graduate from college.
(JEL H75, I23, I28)
Abstract
					We investigate whether racial discrimination in the form of biased
assessment of students is prevalent within Brazilian schools.
Evidence is drawn from unique administrative data pertaining to
eighth-grade students and educators. Holding constant performance
in blindly-scored tests of proficiency and behavioral traits we find
that blacks have lower teacher-assigned math grades than their white
classmates. Heterogeneity in differentials provides evidence both of
robustness with respect to omission biases and of compatibility with
predictions from models of statistical discrimination. (JEL I21, I24,
J15, O15)
Abstract
					We investigate the link between how male-dominated a field is, and
gender bias against women in this field. Taking the entrance exam
of a French higher education institution as a natural experiment, we
find that evaluation is actually biased in favor of females in more
male-dominated subjects (e.g., math, philosophy) and in favor of
males in more female-dominated subjects (e.g., literature, biology),
inducing a rebalancing of gender ratios between students recruited
for research careers in science and humanities majors. Evaluation
bias is identified from systematic variations across subjects in the
gap between students' nonanonymous oral and anonymous written
test scores. (JEL I23, J16, J71)
Abstract
					This paper uses data from a randomized evaluation of Head Start to answer two questions: (i) How much do short-run causal effects vary across Head Start centers? and (ii) Do observed inputs explain this variation? I find that the cross-center standard deviation of cognitive effects is 0.18 test score standard deviations, which is larger than typical estimates of variation in teacher or school effectiveness. Centers offering full-day service and home visiting are more effective, while centers that draw more children from center-based preschool have smaller effects. Other key inputs, including the High/Scope curriculum, teacher education, and class size are not correlated with Head Start effectiveness. (JEL H75, I21, I28, J13, J24)
Abstract
					We study how media environments interact with political institutions
that structure the accountability of public officials. Specifically, we
quantify media influence on the behavior of US state court judges.
We analyze around 1.5 million criminal sentencing decisions from
1986 to 2006 and new data on the newspaper coverage of 9,828 trial
court judges. Since newspaper coverage is endogenous, we use the
match between newspaper markets and judicial districts to identify
effects. We find that newspaper coverage significantly increases
sentence length by nonpartisan elected judges for violent crimes.
For partisan elected and appointed judges, there are no significant
effects. (JEL D72, H76, K41, L82)
Abstract
					We analyze data from a field experiment in which an auto repair firm provided checklists to mechanics and monitored their use. Revenue was 20 percent higher during the experiment, and the effect is equivalent to that of a 1.6 percentage point (10 percent) commission increase. Checklists appear to boost productivity by serving both as a memory aid and a monitoring technology. Despite the large benefits to the firm, mechanics did not use checklists without the firm directly monitoring their use. We show that a moral hazard can explain why mechanics do not otherwise adopt checklists. (JEL C93, D82, L25, L81)
Abstract
					Using five cycles of the National Survey of Family Growth, we estimate the effect of teen motherhood on education, labor market, and marriage outcomes for teens conceiving from 1940 through 1968. Effects vary by marital status at conception, socioeconomic background, and year. Effects on teens married at conception were limited. However, teen mothers conceiving premaritally obtained less education and had a weaker marriage market. Teen mothers of the 1940s-1950s, affected by subsequent economic and social changes, were disadvantaged in the labor market of the 1970s. In the 1960s, teens for whom motherhood would be costly increasingly avoided pregnancy. (JEL I21, J13, J16, J23, J24, N32)
Abstract
					This paper estimates the causal impact of the party allegiance (Republican or Democratic) of US governors on labor-market outcomes. I match gubernatorial elections with March Current Population Survey (CPS) data for income years 1977 to 2008. Using a regression discontinuity design, I find that Democratic governors cause an increase in the annual hours worked by blacks relative to whites, which leads to a reduction in the racial earnings gap between black and white workers. The results are consistent and robust to using a wide range of models, controls, and specifications. (JEL D72, J15, J22, J31, R23)
Abstract
					In this paper, we empirically investigate whether trade liberalization affects markup dispersion, a potential source of resource misallocation. The identification uses China's WTO accession at the end of 2001. We show that trade liberalization reduces markup dispersion within a narrowly defined industry. We also examine both price and cost responses to trade liberalization, as well as heterogeneous effects across firms and across locations. Our study contributes to the literature by identifying another potential channel through which free trade benefits a nation. (JEL F13, L11, O14, O19, P23, P31, P33)
Abstract
					Using 50,000 tests published in the AER, JPE, and QJE, we identify a residual in the distribution of tests that cannot be explained solely by journals favoring rejection of the null hypothesis. We observe a two-humped camel shape with missing p-values between 0.25 and 0.10 that can be retrieved just after the 0.05 threshold and represent 10-20 percent of marginally rejected tests. Our interpretation is that researchers inflate the value of just-rejected tests by choosing "significant" specifications. We propose a method to measure this residual and describe how it varies by article and author characteristics. (JEL A11, C13)
Abstract
					Dropouts have high crime rates, but is there a direct causal link? This study, utilizing administrative data for six cohorts of public school children in North Carolina, demonstrates that those born just after the cut date for enrolling in public kindergarten are more likely to drop out of high school before graduation and to commit a felony offense by age 19. We present suggestive evidence that dropout mediates criminal involvement. Paradoxically, these late-entry students outperform their grade peers academically while still in school, which helps account for the fact that they are less likely to become juvenile delinquents. (JEL H75, I21, J13, J24, K42)
Abstract
					We reassess the effect of minimum wages on US earnings inequality using additional decades of data and an IV strategy that addresses potential biases in prior work. We find that the minimum wage reduces inequality in the lower tail of the wage distribution, though by substantially less than previous estimates, suggesting that rising lower tail inequality after 1980 primarily reflects underlying wage structure changes rather than an unmasking of latent inequality. These wage effects extend to percentiles where the minimum is nominally nonbinding, implying spillovers. We are unable to reject that these spillovers are due to reporting artifacts, however. (JEL J22, J31, J38, K31)
Abstract
					The fall of the Iron Curtain led to an influx of new mathematical ideas into western science. We show that research teams grew disproportionately in size in subfields of mathematics in which the Soviets were strongest. This is consistent with the knowledge burden hypothesis that an outward shift in the knowledge frontier increases the returns to collaboration. We also report additional evidence consistent with this interpretation: (i) The effect is present in countries outside the United States and is not correlated with the local population of Soviet scholars, (ii) Researchers in Soviet-rich subfields disproportionately increased their level of specialization. (JEL I23, O31, O33, P36)
Abstract
					I use a field experiment to estimate the wage elasticity of employment in the day labor market in rural Malawi. Once a week for 12 consecutive weeks, I make job offers for a workfare-type program to 529 adults. The daily wage varies from the tenth to the ninetieth percentile of the wage distribution, and individuals are entitled to work a maximum of one day per week. In this context (the low agricultural season), 74 percent of individuals worked at the lowest wage, and consequently the estimated labor supply elasticity is low (0.15), regardless of observable characteristics. (JEL C93, J22, J31, O15, O18, R23)
Abstract
					This paper estimates the impact of elite school attendance on long-run outcomes including completed education, income, and fertility. Our data consist of individuals born in the 1950s and educated in a UK district that assigned students to either elite or non-elite secondary schools. Using instrumental variables methods that exploit the school assignment formula, we find that elite school attendance had large impacts on completed education. Surprisingly, there are no significant effects on most labor market outcomes except for an increase in female income. By contrast, we document a large and significant negative impact on female fertility. (JEL I21, I24, I26, J13, J16, J24, J31)
Abstract
					Casual empiricism suggests that deceptive advertising about product quality is prevalent, and several classes of theories explore its causes and consequences. We provide unusually sharp empirical evidence on its extent, mechanics, and dynamics. Ski resorts self-report substantially more natural snowfall than comparable government sources. The difference is more pronounced on weekends, despite third-party evidence that snowfall is uniform throughout the week—as one would expect given plausibly greater returns to exaggeration on weekends. Exaggeration is greater for resorts that plausibly reap greater benefits from it: those with expert terrain and those not offering money back guarantees. (JEL D83, L15, L83, M37, Z31)
Abstract
					Using population data from Norway, we examine the effects of stress induced by the death of the mother's parent during pregnancy on both the short-run and the long-run outcomes of the infant. Using a variety of empirical strategies to address the issue of nonrandom exposure to death during a pregnancy, we find small negative effects on birth outcomes. However, we find no evidence of adverse effects on adult outcomes. This suggests that, though there may be measurable effects on birth outcomes, acute psychological stressors during pregnancy have limited adverse consequences for the child's success in education and the labor market. (JEL I12, J13, J16)
Abstract
					We analyze a novel lobbying channel: firms shifting spending toward a politician's business in the hope of securing favorable regulation. We examine the evolution of advertising spending in Italy during 1993-2009, a period in which Berlusconi was in power three separate times, while maintaining control of Italy's major private television network, Mediaset. We document a significant pro-Mediaset bias in the allocation of advertising during Berlusconi's political tenure, especially for companies in more regulated sectors. We estimate that Mediaset profits increased by one billion euros during this period and that regulated firms anticipated sizeable returns, stressing the economic importance of this channel. (JEL D72, L51, L82, M31)
Abstract
					This paper demonstrates that low-skilled Mexican-born immigrants' location choices respond strongly to changes in local labor demand, which helps equalize spatial differences in employment outcomes for low-skilled native workers. We leverage the substantial geographic variation in labor demand during the Great Recession to identify migration responses to local shocks and find that low-skilled Mexican-born immigrants respond much more strongly than low-skilled natives. Further, Mexican mobility reduced the incidence of local demand shocks on natives, such that those living in metro areas with a substantial Mexican-born population experienced a roughly 50 percent weaker relationship between local shocks and local employment probabilities. (JEL E32, J15, J23, J24, J61, R23)
Abstract
					Using longitudinal data on the universe of workers in Denmark during the period 1991-2008, we track the labor market outcomes of low-skilled natives in response to an exogenous inflow of low-
skilled immigrants. We innovate on previous identification strategies by considering immigrants distributed across municipalities by a refugee dispersal policy in place between 1986 and 1998. We find that an increase in the supply of refugee-country immigrants pushed less
educated native workers (especially the young and low-tenured ones) to pursue less manual-intensive occupations. As a result immigration had positive effects on native unskilled wages, employment, and occupational mobility. (JEL J15, J24, J31, J61, J62)
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. Sixteen 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. (JEL I38, J16, J23, J24, L26, O15, Z13)
Abstract
					Daylight Saving Time (DST) impacts over 1.5 billion people, yet many of its impacts on practicing populations remain uncertain. Exploiting the discrete nature of DST transitions and a 2007 policy change, I estimate the impact of DST on fatal automobile crashes. My results imply that from 2002-2011 the transition into DST caused over 30 deaths at a social cost of $275 million annually. Employing four tests to decompose the aggregate effect into an ambient light or sleep mechanism, I find that shifting ambient light only reallocates fatalities within a day, while sleep deprivation caused by the spring transition increases risk. (JEL I12, Q48, R41)
Abstract
					We analyze how internal labor migration facilitates shock coping in rural economies. Employing high-precision satellite data, we identify objective variations in the inundations generated by a catastrophic typhoon in Vietnam and match them with household panel data before and after the shock. We find that, following a massive drop in income, households cope mainly through labor migration to urban areas. Households with settled migrants ex ante receive more remittances. Nonmigrant households react by sending new members away who then remit similar amounts than established migrants. This mechanism is most effective with long-distance migration, while local networks fail to provide insurance. (JEL J61, O15, P25, P36, Q54, R23)
Abstract
					The effect of climatic variation on conflict and crime is well established, but less is known about the mechanism through which this
effect operates. This study contributes to the literature by exploiting a new source of exogenous variation in climate to study the effect of fishermen's income opportunities on sea piracy. Using satellite data to construct a monthly measure of local fishing conditions it is found that better income opportunities reduce piracy. A wide range of approaches are employed to ensure that these effects are driven by income opportunities rather than other mechanisms through which climate could affect piracy. (JEL D74, J31, K42, O13, O17, Q22, Q54)
Abstract
					"Big data" and statistical techniques to score potential transactions
have transformed insurance and credit markets. In this paper, we observe that these widely-used statistical scores summarize a much richer heterogeneity, and may be endogenous to the context in which they get applied. We demonstrate this point empirically using data from Medicare Part D, showing that risk scores confound underlying health and endogenous spending response to insurance. We then illustrate theoretically that when individuals have heterogeneous behavioral responses to contracts, strategic incentives for cream-skimming can still exist, even in the presence of "perfect" risk scoring under a given contract. (JEL C55, G22, G28, H51, I13)
Abstract
					We exploit admission lotteries to estimate the returns to medical school in the Netherlands. Using data from up to 22 years after the lottery, we find that in every single year after graduation doctors earn at least 20 percent more than people who end up in their next-best
occupation. Twenty-two years after the lottery the earnings difference is almost 50 percent. Only a small fraction of this difference can be attributed to differences in working hours and human capital investments. The returns do not vary with gender or ability, and shift the entire earnings distribution. (JEL D44, I11, I26, J24, J31, J44)
Abstract
					Fiscal rules are laws aimed at reducing the incentive to accumulate debt, and many countries adopt them to discipline local governments. Yet, their effectiveness is disputed because of commitment and enforcement problems. We study their impact applying a quasi-experimental design in Italy. In 1999, the central government imposed fiscal rules on municipal governments, and in 2001 relaxed them below 5,000 inhabitants. We exploit the before/after and discontinuous policy variation, and show that relaxing fiscal rules increases deficits and lowers taxes. The effect is larger if the mayor can be reelected, the number of parties is higher, and voters are older.
Abstract
					Combining administrative data from the US Army, Department of Veterans Affairs, and Social Security Administration, we analyze the effect of the VA's Disability Compensation (DC) program on veterans' labor force participation and earnings. We study the 2001 Agent Orange decision, a unique policy change that expanded DC eligibility for Vietnam veterans who served in theater but did not expand eligibility to other veterans of this era, to assess the causal effects of DC enrollment. We estimate that benefits receipt reduced veterans' labor force participation by 18 percentage points, though measured income net of transfer income rose on average.
Abstract
					This article investigates the long-term consequences of the printing press in the nineteenth century sub-Saharan Africa on social capital nowadays. Protestant missionaries were the first to import the printing press and to allow the indigenous population to use it. We build a new geocoded dataset locating Protestant missions in 1903. This dataset includes, for each mission station, the geographic location and its characteristics, as well as the printing-, educational-, and health-related investments undertaken by the mission. We show that, within regions close to missions, proximity to a printing press is associated with higher newspaper readership, trust, education, and political participation.
Abstract
					We examine the impact of women's health clinic closures on women's preventive care use in Texas and Wisconsin using a unique policy context, data on clinic street addresses, and confidential respondent ZIP codes from the Behavioral Risk Factor Surveillance System. From a within-ZIP-code analysis, we conclude that an increase of 100 miles to the nearest clinic results in a decrease in the annual utilization rate of a clinical breast exam by 11 percent, a mammogram by 18 percent, and a Pap test by 14 percent. These estimates are generally larger for women of lower educational attainment.
Abstract
					We analyze a large merger in the Swedish market for analgesics (painkillers). The merging firms raised prices by 40 percent, and some outsiders raised prices by more than 10 percent. We confront these changes with predictions from a merger simulation model. With basic supply side assumptions, the models correctly or moderately underpredict the merging firms' price increase. However, they predict a larger price increase for the smaller firm, which was not the case in practice, and they underpredict the outsiders' responses. We consider several supply side explanations: a plausible cost increase after the merger and the possibility of partial collusion.
Abstract
					I take advantage of regulatory and pricing dynamics in Medicare Part D to explore interactions among adverse selection, inertia, and regulation. I first document novel evidence of adverse selection and switching frictions within Part D using detailed administrative data. I then estimate a contract choice and pricing model that quantifies the importance of inertia for risk sorting. I find that in Part D switching costs help sustain an adversely-selected equilibrium. I also estimate that active ?decision making in the existing policy environment could lead to a substantial gain in annual consumer surplus of on average $400-$600 per capita--20 percent to 30 percent of average annual spending.
Abstract
					This paper studies how firms set contributions to employer provided 401(k)-type pension plans. Using a reform that decreased the subsidy to 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.
Abstract
					Zoning policies can have marked impacts on the spatial distribution of people and land use, yet there is little systematic evidence on their origin. Investigating the causes of these regulations is complicated by the fact that land use and zoning have been co-evolving for nearly a century. We employ a novel approach to overcome this challenge, studying the factors underpinning the introduction of comprehensive zoning in Chicago. We find evidence consistent with a precursor to exclusionary zoning as well as support for the hypothesis that industrial use zoning was disproportionately allocated to neighborhoods populated by ethnic and racial minorities.
Abstract
					How do parental layoffs and their large attendant income losses affect children's long-term outcomes? This question has proven difficult to answer due to the endogeneity of parental layoffs. I overcome this problem by exploiting the timing of 7 million fathers' layoffs when children are age 12-29 in administrative data for the United States. Layoffs dramatically reduce family income but only slightly reduce college enrollment, college quality, and early career earnings. These effects are consistent with a weak estimated propensity to spend on college out of marginal parental income. I find that larger effects based on firm closures stem from selection.
Abstract
					Using a randomized experiment in Ecuador, this study provides evidence on whether cash, vouchers, and food transfers targeted to women and intended to reduce poverty and food insecurity also affected intimate partner violence. Results indicate that transfers reduce controlling behaviors and physical and/or sexual violence by 6 to 7 percentage points. Impacts do not vary by transfer modality, which provides evidence that transfers not only have the potential to decrease violence in the short-term, but also that cash is just as effective as in-kind transfers.
Abstract
					We provide new evidence of one channel through which circular labor migration has long-run effects on origin communities: by raising completed human capital of the next generation. We estimate the net effects of migration from Malawi to South African mines using newly digitized census and administrative data on access to mine jobs, a difference-in-differences strategy, and two opposite-signed and plausibly exogenous shocks to the option to migrate. Twenty years after these shocks, human capital is 4.8-6.9 percent higher among cohorts who were eligible for schooling in communities with the easiest access to migrant jobs.
Abstract
					Cognitive performance during high-stakes exams can be affected by random disturbances that, even if transitory, may have permanent consequences. We evaluate this hypothesis among Israeli students who took a series of matriculation exams between 2000 and 2002. Exploiting variation across the same student taking multiple exams, we find that transitory PM2.5 exposure is associated with a significant decline in student performance. We then examine these students in 2010 and find that PM2.5 exposure during exams is negatively associated with postsecondary educational attainment and earnings. The results highlight how reliance on noisy signals of student quality can lead to allocative inefficiency.
Abstract
					This paper studies the impact of debt relief, using a natural experiment arising from India's "Agricultural Debt Waiver and Debt Relief Scheme," one of the largest household-level debt relief initiatives in history. I find that debt relief has a substantial impact on household balance sheets, but does not affect savings, consumption and investment, as predicted by theories of debt overhang or balance sheet distress. Instead, debt relief leads to greater reliance on informal credit, reduced investment, and lower agricultural productivity. Consistent with moral hazard generated by the bailout, beneficiaries are significantly less concerned about the reputational consequences of future default.
Abstract
					This paper considers the effect of textbook funding on school-level test performance by using a quasi-experimental setting in the United States. I consider a lawsuit in California that provided a one-time payment of $96.90 per student for textbooks if schools fell below a threshold of academic performance. Exploiting this variation with a regression discontinuity (RD) design, I find that textbook funding has significant positive effects on school-level achievement in elementary schools and has a high benefit-per-dollar. In contrast to elementary schools, I find no effect in middle and high schools though these estimates are very imprecise.
Abstract
					Evidence suggests that excise taxes on tobacco improve fetal health. However, it remains unknown if smoke exposure in early life causes lasting harm to children. I find that in utero exposure to a dollar increase in the state cigarette tax causes a 10 percent decrease in sick days from school and a 4.7 percent decrease in having two or more doctor visits. I present additional evidence for decreases in hospitalizations and asthma. This supports the hypothesis that exposure to cigarette smoke in utero and infancy carries significant medium-term costs, and that excise taxes can lead to lasting intergenerational improvements in well-being.
Abstract
					We estimate habit formation in voting--the effect of past on current turnout--by exploiting transitory voting cost shocks. Using county-level data on US presidential elections from 1952-2012, we find that rainfall on current and past election days reduces voter turnout. Our estimates imply that a 1-point decrease in past turnout lowers current turnout by 0.6-1.0 points. Further analyses suggest that habit formation operates by reinforcing the direct consumption value of voting and that our estimates may be amplified by social spillovers.
Abstract
					This paper examines how an incumbent's patent protection acts as an implicit subsidy toward non-infringing substitutes. I analyze whether classes of pharmaceuticals whose first entrant has a longer period of market exclusivity (time between approval and generic entry) see more subsequent entry. Instrumenting for exclusivity using plausibly exogenous delays in the development process, I find that a one-year increase in the first entrant's market exclusivity increases subsequent entry by 0.2 drugs. The effect is stronger for subsequent entrants that are lesser clinical advances, suggesting it is driven primarily by imitation.
Abstract
					Do nutritional deficiencies contribute to the intergenerational persistence of poverty by reducing the earnings potential of future generations? To address this question, we made available supplemental iron pills at a health center in rural Peru and encouraged adolescents to take them via media messages. School administrative data provide novel evidence that reducing iron deficiency results in a large and significant improvement in school performance and aspirations for anemic students. Our findings demonstrate that combining low-cost outreach efforts and local supplementation programs can be an affordable and effective method of reducing rates of adolescent iron deficiency anemia.
Abstract
					We study the impact of a comprehensive high school financial education program spanning 6 states, 892 schools, and approximately 25,000 students in Brazil through a randomized control trial. The program increased student financial proficiency by a quarter of a standard deviation and raised grade-level passing rates. Short-term financial behaviors, however, show mixed results with significant improvements in students' savings and budgeting as well as positive spillovers to parents, but also an increase in students' use of expensive credit to make consumer purchases.
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, winners report improved housing but no change in tenure security, family income, or human capital. Winners also report increased isolation from family and caste networks and reduced informal insurance. We observe significant program exit: 34 percent of winners never took up subsidized housing and 32 percent eventually exited. Our results suggest negligible long-run economic value of this expensive public program and point to the importance of considering social networks in housing programs for the poor.
Abstract
					We evaluate the longer run impact of a local accountability intervention in primary health care provision in Uganda. Short-run improvements in health care delivery and health outcomes remained in the longer run despite minimal follow-up. We find no impact on the quality of care or health outcomes of a lower cost intervention that focused on encouraging participation but did not provide information on staff performance. We provide suggestive evidence that informed beneficiaries are more likely to identify and challenge (mis)behavior by providers and, as a result, turn their focus to issues that they can manage locally.
Abstract
					We study learning by doing by New York City taxi drivers, who have substantial discretion over their driving strategies and receive compensation closely tied to their success in finding customers. In addition to documenting learning overall by these entrepreneurial agents, we exploit our data's breadth to investigate the factors that contribute to driver improvement across a variety of situations. New drivers lag further behind experienced drivers when in difficult situations. Drivers benefit from accumulating neighborhood-specific experience, which affects how they search for their next customers.
Abstract
					We show that the provision of social information influences a high-stakes decision and this influence persists over time. In a field experiment involving thousands of admits to Teach For America, those told about the previous year's matriculation rate are more likely to accept a teaching job, complete training, start, and return a second year. To show robustness, we develop a simple theory that identifies subgroups where we expect larger treatment effects and find our effect is larger in those subgroups. That social information can have a powerful, persistent effect on high-stakes behavior broadens its relevance for policy and theory.
Abstract
					The desire for smaller families is conjectured as one reason the male-to-female sex ratio has increased with economic development in several countries. Families that strongly want at least one son are less likely to obtain him by chance at low fertility, which could increase their use of sex-selective abortion. This paper quantifies the relationship between desired fertility and the sex ratio in India by eliciting sex composition preferences at specified fertility levels. I find that the desired sex ratio increases sharply as fertility falls and that fertility decline explains one third to one half of India's recent sex ratio increase.
Abstract
					Boarding schools substitute school to home, but little is known on the effects this substitution produces on students. We present results of an experiment in which seats in a boarding school for disadvantaged students were randomly allocated. Boarders enjoy better studying conditions than control students. However, they start outperforming control students in mathematics only two years after admission, and this effect mostly comes from strong students. Boarders initially experience lower levels of well-being but then adjust. This suggests that substituting school to home is disruptive: only strong students benefit from the school, once they have adapted to their new environment.
Abstract
					Every US state has a database of criminal offenders' DNA profiles. These databases receive widespread attention in the media and popular culture, but there has been no rigorous analysis of their impact on crime. This paper intends to fill that gap. I exploit the details and timing of state DNA database expansions in two ways, first to address the effects of DNA profiling on individuals' subsequent criminal behavior and then to address the aggregate effects on crime rates. I show that DNA databases deter crime by profiled offenders, reduce crime rates, and are more cost-effective than traditional law enforcement tools.
Abstract
					This paper exploits an unusual transportation setting to generate some of the first revealed preference value of a statistical life (VSL) estimates from a low-income setting. We estimate the trade-offs individuals are willing to make between mortality risk and cost as they travel to and from the international airport in Sierra Leone. The setting and original dataset allow us to address some typical omitted variable concerns, and also to compare VSL estimates for travelers from different countries, all facing the same choice situation. The average VSL estimate for African travelers in the sample is US$ 577,000 compared to US$ 924,000 for non-Africans.
Abstract
					Political favoritism affects the allocation of government resources, but is it consequential for growth? Using a close election regression discontinuity design and data from India, we measure the local economic impact of being represented by a politician in the ruling party. Favoritism leads to higher private sector employment, higher share prices of firms, and increased output as measured by night lights; the three effects are similar and economically substantive. Finally, we present evidence that politicians influence firms primarily through control over the implementation of regulation.
Abstract
					Existing evidence suggests that extra grant revenues lead to little improvements in public services in developing countries--but would governments spend tax revenues differently? This paper considers a program that invests in the tax capacity of Brazilian municipalities. Using variations in the timing of program uptake, I find that it raises local tax revenues and that the increase in taxes is used to improve both the quantity and quality of municipal education infrastructure. In contrast, increases in grants over which municipalities have the same discretion as taxes have no impact on any measure of local public infrastructure. These results suggest that the way governments are financed matters: governments spend increases in tax revenues more toward expenditures that benefit citizens than increases in grant revenues.
Abstract
					In an experiment on Airbnb, we find that applications from guests with distinctively African American names are 16 percent less likely to be accepted relative to identical guests with distinctively white names. Discrimination occurs among landlords of all sizes, including small landlords sharing the property and larger landlords with multiple properties. It is most pronounced among hosts who have never had an African American guest, suggesting only a subset of hosts discriminate. While rental markets have achieved significant reductions in discrimination in recent decades, our results suggest that Airbnb's current design choices facilitate discrimination and raise the possibility of erasing some of these civil rights gains.
Abstract
					I explore whether the absence of school sanitation infrastructure impedes educational attainment, particularly among pubescent-age girls, using a national Indian school latrine construction initiative and administrative school-level data. School latrine construction substantially increases enrollment of pubescent-age girls, though predominately when providing sex-specific latrines. Privacy and safety appear to matter sufficiently for pubescent-age girls that only sex-specific latrines reduce gender disparities. Any latrine substantially benefits younger girls and boys, who may be particularly vulnerable to sickness from uncontained waste. Academic test scores did not increase following latrine construction, however. Estimated increases in enrollment are similar across the substantial variation in Indian district characteristics.
Abstract
					Evaluators with expertise in a particular field may have an informational advantage in separating good projects from bad. At the same time, they may also have personal preferences that impact their objectivity. This paper examines these issues in the context of peer review at the US National Institutes of Health. I show that evaluators are both better informed and more biased about the quality of projects in their own area. On net, the benefits of expertise weakly dominate the costs of bias. As such, policies designed to limit bias by seeking impartial evaluators may reduce the quality of funding decisions.
Abstract
					With nearly half of US births occurring out of wedlock, understanding how parents navigate their relationship options is important. This paper examines the consequences of a large exogenous change to parental relationship contract options on parental behavior and child well-being. Identification comes from the staggered timing of state reforms that substantially lowered the cost of legal paternity establishment. I show that the resulting increases in paternity establishment are partially driven by reductions in parental marriage. Although unmarried fathers become more involved with their children along some dimensions, the net effects on father involvement and child well-being are negative or zero.
Abstract
					We evaluate the long-term impacts of a randomized Colombian training and job placement program. Following the large short-term effects, we now find that the program effects persist, increasing formal participation and earnings contributions to social security and working in larger firms. By using a large administrative source we are also able to establish that the program improved both male and female labor market outcomes by a similar amount--a result that was not apparent with the smaller evaluation sample. The results point to a cost-effective approach to reducing informality and improving labor market outcomes in the long run.
Abstract
					Reducing tax evasion is a priority for many governments. A growing literature argues that verifying taxpayer reports against third-party information is critical for tax collection. However, effectiveness can be limited when tax authorities face constraints to credible enforcement and taxpayers make offsetting adjustments on other margins. We exploit a policy intervention in which Ecuadorian firms were notified about detected revenue discrepancies. Most firms simply failed to respond. Firms that responded increased reported revenue, matching the discrepancy amount when provided. However, they also increased reported costs by 96 cents per dollar of revenue adjustment, resulting in minor increases in tax collection.
Abstract
					We study a 2004 program designed to motivate Chinese bureaucrats to reduce accidental deaths. Each province received a set of "death ceilings" that, if exceeded, would impede government officials' promotions. For each category of accidental deaths, we observe a sharp discontinuity in reported deaths at the ceiling, suggestive of manipulation. Provinces with safety incentives for municipal officials experienced larger declines in accidental deaths, suggesting complementarities between incentives at different levels of government. While realized accidental deaths predict the following year's ceiling, we observe no evidence that provinces manipulate deaths upward to avoid ratchet effects in the setting of death ceilings.
Abstract
					How do income shocks affect international migration flows from poor countries? Income growth not only increases the opportunity cost of migration but also eases liquidity constraints. I develop a method to separate these countervailing individual effects and identify the overall income elasticity of migration. Using new administrative and census data from Indonesia, I find that positive agricultural income shocks increase labor emigration flows, particularly in villages with relatively more small landholders. However, in the most developed rural areas, persistent income shocks reduce emigration. Overall, the findings highlight the important role of wealth heterogeneity in shaping migration flows as incomes rise.
Abstract
					A by-product of the extension of mass education is the increase in the level of education of those eligible for political offices. This can have a profound impact on the effectiveness of local governments. In this paper, I examine the effects of a large school construction program in Indonesia on local governance and public good provision. The results show that the program led to important increases in the provision of public goods. Furthermore, I provide evidence consistent with the hypothesis that the increase in the education of the village heads was one of the main mechanisms behind these results.
Abstract
					The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which experienced disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show more than half of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program's fuel efficiency restrictions shifted purchases toward vehicles that cost on average $7,600 less. Thus, we estimate on net the $3 billion program reduced total new vehicle spending by $5 billion.
Abstract
					Migration contributes to the circulation of goods, knowledge, and ideas. Using community and individual-level data from Moldova, we show that the emigration wave that started in the aftermath of the Russian crisis of 1998 strongly affected electoral outcomes and political preferences in Moldova during the following decade, eventually contributing to the fall of the last Communist government in Europe. Our results are suggestive of information transmission and cultural diffusion channels. Identification relies on the quasi-experimental context and on the differential effects arising from the fact that emigration was directed both to more democratic Western Europe and to less democratic Russia.
Abstract
					Coworkers are increasingly diverse in their nationality and skill sets. This paper studies the effect of diversity on how workers are organized using data from a field experiment conducted in an environment where diversity is pervasive. Findings show that team organization improves outcomes when workers are from the same country. The opposite is true when workers are nationally diverse. These results are more pronounced for teams of workers with specialized skills. Further investigation of the data suggests that nationally diverse teams have difficulty communicating.
Abstract
					Do electoral quotas for ethnic groups continue to improve their chances of winning elections after quotas are withdrawn? This is an important question since ethnic group quotas are common, and are often intended to be temporary. Using natural experiments, I find that electoral quotas for India's "scheduled castes" (SCs) fail to boost SCs' chances of winning office after they are discontinued. These results contrast with the significant positive effects of past women's quotas found in similar contexts.
Abstract
					We present evidence from a series of field experiments in college coaching/mentoring. We find large impacts on college attendance and persistence, but only in the treatments
 where we use an intensive boots-on-the-ground approach to helping students. Our treatments that provide financial incentives or information alone do not appear to be 
effective. For women, assignment to our mentoring treatment yields a 15 percentage point increase in the college-going rate while treatment on the treated estimates are 30 
percentage points (against a control complier mean rate of 43 percent). We find much smaller treatment effects for men, and the difference in treatment effects across genders 
is partially explained by the differential in self-reported labor market opportunities. We do not find evidence that the treatment effect derives from simple behavioral mistakes, 
student disorganization, or a lack of easily obtained information. Instead our mentoring program appears to substitute for the potentially expensive and often missing ingredient 
of skilled parental or teacher time and encouragement.
Abstract
					I estimate the dynamic effects of federal affirmative action regulation, exploiting variation in the timing of regulation and deregulation across work establishments. Affirmative action increases the black share of employees over time: in 5 years after an establishment is first regulated, the black share of employees increases by an average of 0.8 percentage points. Strikingly, the black share continues to grow at a similar pace even after an establishment is deregulated. I argue that this persistence is driven in part by affirmative action inducing employers to improve their methods for screening potential hires.
Abstract
					This paper documents uniformity in real estate commission rates offered to buyers' agents using 653,475 residential listings in eastern Massachusetts from 1998–2011. Properties listed with lower commission rates experience less favorable transaction outcomes: they are 5 percent less likely to sell and take 12 percent 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. Offices 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 over steering.
Abstract
					We explore how college reputation affects the "big sort," the process by which students choose colleges and find their first jobs. We incorporate a simple definition of college reputation—graduates' mean admission scores—into a competitive labor market model. This generates a clear prediction: if employers use reputation to set wages, then the introduction of a new measure of individual skill will decrease the return to reputation. Administrative data and a natural experiment from the country of Colombia confirm this. Finally, we show that college reputation is positively correlated with graduates' earnings growth, suggesting that reputation matters beyond signaling individual skill.
Abstract
					We study the short-run causal effect of Information and Communication Technology (ICT) adoption on employment and wage distribution. We exploit a natural experiment generated by a tax allowance on ICT investments and find that the primary effect of ICT is to complement nonroutine, cognitive-intensive work. We also find that the ICT investments led to organizational changes that were associated with increased inequality within the firm and we discuss our findings in the context of theories of ICT adoption and wage inequality. We find that tasks-based models of technological change best fit the patterns that we observe.
Abstract
					This paper presents results from a large-scale randomized evaluation of the One Laptop per Child program, using data collected after 15 months of implementation in 318 primary schools in rural Peru. The program increased the ratio of computers per student from 0.12 to 1.18 in treatment schools. This expansion in access translated into substantial increases in use of computers both at school and at home. No evidence is found of effects on test scores in math and language. There is some evidence, though inconclusive, about positive effects on general cognitive skills.
Abstract
					We study the impact of an innovative program in the Indian state of Bihar that aimed to reduce the gender gap in secondary school enrollment by providing girls who continued 
to secondary school with a bicycle that would improve access to school. Using data from a large representative household survey, we employ a triple difference approach (using 
boys and the neighboring state of Jharkhand as comparison groups) and find that being in a cohort that was exposed to the Cycle program increased girls' age-appropriate 
enrollment in secondary school by 32 percent and reduced the corresponding gender gap by 40 percent. We also find an 18 percent increase in the number of girls who appear 
for the high-stakes secondary school certificate exam, and a 12 percent increase in the number of girls who pass it. Parametric and non-parametric decompositions of the triple-
difference estimate as a function of distance to the nearest secondary school show that the increases in enrollment mostly took place in villages that were further away from a 
secondary school, suggesting that the mechanism of impact was the reduction in the time and safety cost of school attendance made possible by the bicycle. We also find that 
the Cycle program was much more cost effective at increasing girls' secondary school enrollment than comparable conditional cash transfer programs in South Asia.
Abstract
					We study patronage politics in authoritarian Vietnam, using an exhaustive panel of ranking officials from 2000 to 2010 to estimate their promotions' impact on infrastructure in their hometowns of patrilineal ancestry. Native officials' promotions lead to a broad range of hometown infrastructure improvement. Hometown favoritism is pervasive across all ranks, even among officials without budget authority, except among elected legislators. Favors are narrowly targeted toward small communes that have no political power, and are strengthened with bad local governance and strong local family values. The evidence suggests a likely motive of social preferences for hometown.
Abstract
					We provide evidence on the effect of market illegality on violence. Brazil was historically the main exporter of mahogany. Starting in the 1990s, trade was restricted and eventually prohibited. We build on previous evidence that mahogany trade persisted after prohibition and document relative increases in violence in areas with natural occurrence of mahogany. We show that as illegal activity receded in the late 2000s so did the relative increase in violence. We describe an experience of increase in violence following the transition of a market from legal to illegal and contribute to the evaluation of prohibition policies under limited enforcement.
Abstract
					The elimination of private property rights can lead to inefficient use of productive assets. In China's collectivization movement from 1955 to 1957, instead of transferring draft animals to the ownership of the collectives, peasants slaughtered them to keep the meat and hide. By comparing 1,600 counties that launched the movement in different years, the difference-in-differences estimates suggest that the animal loss during the movement was 12 to 15 percent, or 7.4-9.5 million head. Grain output dropped by 7 percent due to lower animal inputs and lower productivity.
Abstract
					This paper examines the long-run health effects of a universal infant health intervention, the 1937 Danish home visiting program, which targeted all infants. Using administrative population data and exploiting variation in the timing of implementation across municipalities, we find that treated individuals enjoy higher age-specific survival rates during middle age (45-64), experience fewer hospital nights, and are less likely to be diagnosed with cardiovascular disease. These results suggest that an improved nutrition and disease environment in infancy "programmed" individuals for lower predisposition to serious adult diseases.
Abstract
					This paper documents the persistence of human capital over time and its association with long-term development. We exploit variation induced by a state-sponsored settlement policy that attracted immigrants with higher levels of schooling to particular regions of Brazil in the late nineteenth and early twentieth century. We show that one century after the policy, municipalities that received settlements had higher levels of schooling and higher income per capita. We provide evidence that long-run effects worked through higher supply of educational inputs and shifts in the structure of occupations toward skill-intensive sectors.
Abstract
					How persistent are the effects of conflict on bias toward co-ethnics? What are the channels of persistence? We employ a measure of ethnic bias derived from decisions made by Israeli Arab and Jewish judges to study the levels and determinants of bias during the 2000-2004 conflict and its aftermath (2007-2010). Despite the fall in violence, we find no evidence of a general attenuation in bias. Furthermore, bias remains positively associated with past intensity of violence in different localities. This persistence does not appear to be due to judges' personal exposure to violence but rather to different dynamics in afflicted areas.
Abstract
					We study the role of traditional norms in land allocation and human capital investment. We exploit a policy experiment in Ghana that increased the land that children from matrilineal groups could inherit from their fathers. Boys exposed to the reform received 0.9 less years of education—an effect driven by landed households, for whom the reform was binding. We find no effect for girls, whose inheritance was de facto unaffected. These patterns suggest that before the reform matrilineal groups invested more in education than they would if unconstrained, to substitute for land inheritance, underscoring the importance of cultural norms.
Abstract
					This study estimates the effect of improved bureaucrat quality on poverty alleviation by exploring a unique human capital reallocation policy in China—the College Graduate Village Officials (CGVOs) program. We find that introducing CGVOs into the village governance system improves the targeting and implementation of the central government's social assistance programs. CGVOs help eligible poor households understand and apply for relevant subsidies, thus increasing the number of pro-poor program beneficiaries. Further analysis suggests that CGVOs change bureaucrat quality, rather than quantity, of village governance, and their presence reduces elite capture of pro-poor programs.
Abstract
					Instrumental variables (IV) estimates show strong class-size effects in Southern Italy. But Italy's Mezzogiorno is distinguished by manipulation of standardized test scores as well as by economic disadvantage. IV estimates suggest small classes increase manipulation. We argue that score manipulation is a consequence of teacher shirking. IV estimates of a causal model for achievement as a function of class size and score manipulation show that class-size effects on measured achievement are driven entirely by the relationship between class size and manipulation. These results illustrate how consequential score manipulation can arise even in assessment systems with few accountability concerns.
Abstract
					We study the persuasive impacts of non-informative communication on the short-run beliefs and long-run behavior of individuals. We do so in the context of the Papal visit to Brazil in
 October 1991, in which persuasive messages related to fertility were salient in Papal speeches during the visit. We use individual's exposure to such messages to measure how
 persuasion shifts short-run beliefs such as intentions to contracept and long-term fertility outcomes such as the timing and total number of births. To measure the short-run causal
 impact of persuasion, we exploit the fact the Brazil 1991 DHS was fielded in the weeks before, during, and after the Papal visit. We use this fortuitous timing to identify that persuasion
 significantly reduced individual intentions to contracept by more than 40 percent relative to pre-visit levels, and increased the frequency of unprotected sex by 30 percent. We measure
 the long-run causal impacts of persuasion on fertility outcomes using later DHS surveys to conduct an event study analysis on births in a five-year window on either side of the 1991
 Papal visit. Estimating a hazard model of fertility, we find a significant change in births 9 months post-visit, corresponding to a 1.6 percent increase in the aggregate birth cohort. Our
 final set of results examine the very long-run impact of persuasion and document the impacts to be on the timing of births rather than on total fertility.
Abstract
					Using a randomized field experiment in India, we evaluate the effectiveness of adult literacy and parental involvement interventions in improving children's learning. Households were assigned to receive either adult literacy (language and math) classes for mothers, training for mothers on how to enhance their children's learning at home, or a combination of the two programs. All three interventions had significant but modest impacts on childrens math scores. The interventions also increased mothers' test scores in both language and math, as well as a range of other outcomes reflecting greater involvement of mothers in their children's education.
Abstract
					The Great Moderation in the US economy has been accompanied by
large changes in the comovements among output, hours, and labor
productivity. Those changes are reflected in both conditional and
unconditional second moments as well as in the impulse responses
to identified shocks. Among other changes, our findings point to an
increase in the volatility of hours relative to output, a shrinking contribution
of nontechnology shocks to output volatility, and a change
in the cyclical response of labor productivity to those shocks. That
evidence suggests a more complex picture than that associated with
"good luck" explanations of the Great Moderation. (JEL: E23, E24,
J22, J24)
Abstract
					The recent financial crisis saw a dramatic and persistent jump in
interest rate spreads between overnight federal funds and longer -
term interbank loans. The Fed took several actions to reduce these
spreads including the creation of the Term Auction Facility (TAF). The
effectiveness of these policies depends on the cause of the increased
spreads such as counterparty risk, liquidity, or other factors. Using
a no-arbitrage pricing framework and various measures of risk, we
find robust evidence that increased counterparty risk contributed to
the rise in spreads but do not find robust evidence that the TAF had
a significant effect on spreads. (JEL E43, E44, E52, G21)
Abstract
					A dominant trend in recent modeling of labor market fluctuations is to
treat unemployment inflows as acyclical. This trend has been encouraged
by recent influential papers that stress the role of longer unemployment
spells, rather than more unemployment spells, in accounting
for recessionary unemployment. After reviewing an empirical literature
going back several decades, we apply a convenient log change
decomposition to Current Population Survey data to characterize
rising unemployment in each postwar recession. We conclude that a
complete understanding of cyclical unemployment requires an explanation
of countercyclical inflow rates, especially for job losers (layoffs),
as well as procyclical outflow rates. (JEL E24, E32)
Abstract
					We argue civic virtue plays a key role in explaining the design of public
insurance against unemployment risks by solving moral hazard
issues which hinder the efficiency of unemployment insurance. We
show, in a simple model, that economies with stronger civic virtues
are more prone to provide insurance through unemployment benefits
rather than through job protection. We provide cross-country
empirical evidence of a strong correlation between civic attitudes
and the design of unemployment benefits and employment protection
in OECD countries over the period 1980 to 2003. We then use
an epidemiological approach to estimate the existence of a potential
causal relationship from inherited civic virtue to labor market insurance
institutions. (JEL: J41, J65, J68, Z13)
Abstract
					When citizens in a poor constrained society are unequally endowed,
they are likely to find it hard to agree on reforms, even though the
status quo hurts them collectively. Each citizen group or constituency
prefers reforms that expand its opportunities, but in an unequal society,
this will typically hurt another constituency's rents. Competitive
rent preservation ensures no comprehensive reform path may command
broad support. The roots of underdevelopment may therefore
lie in the natural tendency toward rent preservation in a divided
society. (JEL D72, O10, O17)
Abstract
					This paper reexamines the evidence on the border effect. We argue
that if there is cross-country heterogeneity in the distribution of
within-country price differentials, there is no clear benchmark from
which to gauge the effect of a border. In the absence of a structural
model or a (natural) experiment, it is impossible to separate
the "border" effect from the effect of trading with a country with a
different distribution of prices. We show that the border effect identified
by Engel and Rogers (1996) is entirely driven by the difference
in the distribution of prices within the United States and Canada.
(JEL F11, F14)
Abstract
					Macroeconomists have largely converged on method, model design,
reduced-form shocks, and principles of policy advice. Our main disagreements
today are about implementing the methodology. Some
think New Keynesian models are ready to be used for quarter-to-quarter
quantitative policy advice. We do not. Focusing on the state-of-
the-art version of these models, we argue that some of its shocks
and other features are not structural or consistent with microeconomic
evidence. Since an accurate structural model is essential
to reliably evaluate the effects of policies, we conclude that New
Keynesian models are not yet useful for policy analysis. (JEL E12,
E60)
Abstract
					I review research on the behavior of the labor wedge, the ratio
between the marginal rate of substitution of consumption for leisure
and the marginal product of labor. According to competitive,
market-clearing macroeconomic models, the ratio is easy to measure
and should be equal to the sum of consumption and labor taxes.
The observation that the wedge is higher in continental Europe than
in the United States has proved useful for understanding the extent
to which taxes can explain differences in labor market outcomes.
The observation that the ratio rises during recessions suggests some
failure of competitive, market-clearing macroeconomic models at
business cycle frequencies. The latter observation has guided recent
research, including work on sticky wage models and job search models.
(JEL E24, E32, J64)
Abstract
					This paper uses a dynamic stochastic general equilibrium (DSGE)
model with sticky information as a laboratory to study monetary
policy. It characterizes the model's predictions for macro dynamics
and optimal policy at prior parameters, and then uses data on
five US macroeconomic series to update the parameters and provide
an estimated model that can be used for policy analysis. The
model answers a few policy questions. How does sticky information
affect optimal monetary policy? What is the optimal interest rate
rule? What is the optimal elastic price-level targeting rule? How
does parameter uncertainty affect optimal policy? Are the conclusions
for the Euro area different? (JEL E13, E31, E43, E52)
Abstract
					Accounting for observed fluctuations in aggregate employment, consumption,
and real wage using the optimality conditions of a representative
household requires preferences that are incompatible with
economic priors. In order to reconcile theory with data, we construct
a model with heterogeneous agents whose decisions are difficult to
aggregate because of incomplete capital markets and the indivisible
nature of labor supply. If we were to explain the model-generated
aggregate time series using decisions of a stand-in household, such
a household must have a nonconcave or unstable utility as is often
found with the aggregate US data. (JEL E13, E24)
Abstract
					Assassinations are a persistent feature of the political landscape.
Using a new dataset of assassination attempts on all world leaders
from 1875 to 2004, we exploit inherent randomness in the success
or failure of assassination attempts to identify the effects of assassination.
We find that, on average, successful assassinations of
autocrats produce sustained moves toward democracy. We also find
that assassinations affect the intensity of small-scale conflicts. The
results document a contemporary source of institutional change,
inform theories of conflict, and show that small sources of randomness
can have a pronounced effect on history. (JEL D72, N40, O17)
Abstract
					We study the dynamics of economic and political change, theoretically
and empirically. Democratic capital measured by a nation's
historical experience with democracy, and the incidence of democracy
in its neighborhood, appears to reduce exit rates from democracy
and raise exit rates from autocracy. Higher democratic
capital stimulates growth by increasing the stability of democracies.
Heterogeneous effects of democracy induce sorting of countries into
political regimes, which helps explain systematic differences between
democracies and autocracies. Our results suggest the possibility of
a virtuous circle, where accumulation of physical and democratic
capital reinforce each other, promoting economic development and
consolidation of democracy. (JEL D72, I31, N10, N40, O47)
Abstract
					High interest rate currencies tend to appreciate relative to low
interest rate currencies. We argue that adverse selection problems
between participants in foreign exchange markets can account for
this "forward premium puzzle." The key feature of our model is that
the adverse selection problem facing market makers is worse when
an agent wants to trade against a public information signal. So, when
based on public information, the currency is expected to appreciate,
there is more adverse selection associated with a sell order than with
a buy order. (JEL E43, F31, G15)
Abstract
					We develop comprehensive measures of time spent in market work,
home production, schooling, and leisure in the United States for the
last 106 years. We find that hours of work for prime age individuals
are essentially unchanged, with the rise in women's hours fully compensating
for the decline in men's hours. Hours worked by those 14
to 24 years old have declined noticeably, but most of this decline was
offset by a rise in hours spent in school. Overall, per capita leisure
and average annual lifetime leisure increased by only four or five
hours per week during the last 100 years. (JEL D13, J16, J22)
Abstract
					We use oil price fluctuations to test the impact of transfers from
wealthy OPEC nations to their poorer Muslim allies. The instrument
identifies plausibly exogenous variation in foreign aid. We investigate
how aid is spent by tracking its short-run effect on aggregate
demand, national accounts, and balance of payments. Aid affects
most components of GDP though it has no statistically identifiable
impact on prices or economic growth. Much aid is consumed, primarily
in the form of imported noncapital goods. Aid substitutes for
domestic savings, has no effect on the financial account, and leads
to unaccounted capital flight. (JEL F35, O19)
Abstract
					We document that job polarization—contrary to the consensus—has started as early as the 1950s in the United States: middle-wage workers have been losing both in terms of employment and average wage growth compared to low- and high-wage workers. Given that polarization is a long-run phenomenon and closely linked to the shift from manufacturing to services, we propose a structural change driven explanation, where we explicitly model the sectoral choice of workers. Our simple model does remarkably well not only in matching the evolution of sectoral employment, but also of relative wages over the past 50 years.
Abstract
					A carbon tax can induce innovation in green technologies. I evaluate the quantitative impact of this channel in a dynamic, general equilibrium model with endogenous innovation in fossil, green, and nonenergy inputs. I discipline the parameters using evidence from historical oil shocks, after which both energy prices and energy innovation increased substantially. I find that a carbon tax induces large changes in innovation. This innovation response increases the effectiveness of the policy at reducing emissions, resulting in a 19.2 percent decrease in the size of the carbon tax required to reduce emissions by 30 percent in 20 years.
Abstract
					A principal components decomposition of sectoral IP data reveals that the contribution of aggregate shocks to the variance of aggregate output declined from about 70 percent in the period 1967–1983 to about 30 percent after 1983. We develop an "islands" model with two sectors and costly labor reallocation to investigate how this change in the relative importance of shocks alters business cycle moments. A version of the model with relatively more important sectoral shocks results in a sizeable decline in the cyclicality of labor productivity and is consistent with changes in several other business cycle moments observed in the data.
Abstract
					We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed-effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity-pay premium. Our results shed light on potential drivers of earnings inequality dynamics.
Abstract
					There are many federal, state, and local laws that distort housing decisions and prices. However, it is often difficult to tease out the quantitative impact of such policies. In this paper, we examine the implications of one of the most significant tax changes initiated by voters in the United States on house prices, housing turnover, and household welfare. In 1978 California passed Proposition 13, which lowered property tax rates and restricted future property tax increases. We find that the introduction of Proposition 13 leads to a 15 percent increase in house prices and a 3.3 percent decrease in the moving rates. The elimination of Proposition 13, however, leads to modest changes in house prices and mobility but sizable welfare gains.
Abstract
					We study whether workers progress up firm wage and size job ladders, and the cyclicality of this movement. Search theory predicts that workers should flow toward larger, higher paying firms. However, we see little evidence of a firm size ladder, partly because small, young firms poach workers from all other businesses. In contrast, we find strong evidence of a firm wage ladder that is highly procyclical. During the Great Recession, this firm wage ladder collapsed, with net worker reallocation to higher wage firms falling to zero. The earnings consequences from this lack of upward progression are sizable.
Abstract
					We present a model of investment hangover motivated by the Great Recession. Overbuilding of durable capital such as housing requires a reallocation of productive resources to other sectors, which is facilitated by a reduction in the interest rate. When monetary policy is constrained, overbuilding induces a demand-driven recession with limited reallocation and low output. Investment in other capital initially declines due to low demand, but it later booms and induces an asymmetric recovery in which the overbuilt sector is left behind. Welfare can be improved by ex post policies that stimulate investment (including in overbuilt capital) and ex ante policies that restrict investment.
Abstract
					Employer learning provides a link between wage and employment dynamics. Workers who are selectively terminated when their low productivity is revealed subsequently earn lower wages. If learning is asymmetric across employers, randomly separated high-productivity workers are treated similarly when hired from unemployment, but recover as their next employer learns their type. I provide empirical evidence supporting this link, then study whether employer learning is an empirically important factor in wage and employment dynamics. In a calibrated structural model, learning accounts for 78 percent of wage losses after unemployment, 24 percent of life-cycle wage growth, and 13 percent of cross-sectional dispersion observed in data.
Abstract
					This paper studies the consequences of predation when firms deploy guard labor as a means of protecting themselves. We build a simple model and combine it with data for 144 countries from the World Bank enterprise surveys, which ask about firm-level experiences with predation and spending on protection. We use the model to estimate the output loss caused by the misallocation of labor across firms and from production to protection. The loss due to protection effort is substantial and patterns of state protection at the micro level can have a profound impact on aggregate output losses. Various extensions are discussed.
Abstract
					The standard life-cycle models of household portfolio choice have difficulty generating a realistic age profile of risky share. These models not only imply a high risky share on average but also a steeply decreasing age profile, whereas the risky share is mildly increasing in the data. We introduce age-dependent, labor market uncertainty into an otherwise standard model. A great uncertainty in the labor market—high unemployment risk, frequent job turnovers, and an unknown career path—prevents young workers from taking too much risk in the financial market. As labor market uncertainty is resolved over time, workers start taking more risk in their financial portfolios.
Abstract
					Development is associated with systematic changes in the firm size distribution. I document that the mean and dispersion of firm size are larger in rich countries, and increased over time for US firms. To analyze the firm size-development link, I construct a frictionless general equilibrium model of occupational choice with skill-biased change in entrepreneurial technology (i.e., technical progress favors better entrepreneurs). The model accounts for key aspects of the US experience with only changes in aggregate technology. It attributes half the variation in mean and dispersion of firm size across countries to technical change. Distortions also affect the size distribution.
Abstract
					Could we significantly reduce US unemployment by helping job seekers move closer to jobs? Using data from the leading employment board CareerBuilder.com, we show that, indeed, workers dislike applying to distant jobs: job seekers are 35 percent less likely to apply to a job 10 miles (mi.) away from their zip code of residence. However, because job seekers are close enough to vacancies on average, this distaste for distance is fairly inconsequential: our search and matching model predicts that relocating job seekers to minimize unemployment would decrease unemployment by only 5.3 percent. Geographic mismatch is thus a minor driver of aggregate unemployment.
Abstract
					Because the data show that market tightness is not orthogonal to unemployment, this paper identifies the many empirical difficulties caused by adopting the free entry of vacancies assumption in the Diamond-Mortensen-Pissarides (DMP) framework. Relaxing the free entry assumption and using Simulated Method of Moments (SMM) finds the vacancy creation process is less than infinitely elastic. Because a recession-leading job separation shock then causes vacancies to fall as unemployment increases, the ad hoc restriction to zero job separation shocks (to generate Beveridge curve dynamics) becomes redundant. In contrast to standard arguments, the calibrated model finds the job separation process drives unemployment volatility over the cycle.
Abstract
					We study the cross-country evolution of technology diffusion over the last two centuries. We document that adoption lags between poor and rich countries have converged, while the intensity of use of adopted technologies of poor countries relative to rich countries has diverged. The evolution of aggregate productivity implied by these trends in technology diffusion resembles the actual evolution of the world income distribution in the last two centuries. Cross-country differences in adoption lags account for a significant part of the cross-country income divergence in the nineteenth century. The divergence in intensity of use accounts for the divergence during the twentieth century.
Abstract
					This paper investigates whether capital and human capital are over-accumulated in an incomplete market economy. As in Davila et al. (2012), whether capital is over-accumulated depends on how the pecuniary externalities affect insurance and redistribution. In a human capital economy, however, not only capital but also human capital generates externalities and an additional channel arises that has implications for the overaccumulation (under-accumulation) of capital (human capital). The income sources of the poor and the correlation between wealth and human capital are crucial for the implication of pecuniary externalities. Realistically calibrated models exhibit under-accumulation (overaccumulation) of capital (human capital).
Abstract
					Many US municipalities have committed to pay retirement benefits to public sector employees but have not saved enough to fulfill these obligations. This paper studies the determinants of municipal pension funding and its implications for intergenerational redistribution using an overlapping generations model. Under perfect capital markets, pension funding choices are fully capitalized into land prices. This neutrality result fails if agents face a binding downpayment constraint in the land market: old agents prefer a pay-as-you-go system, while young agents find a fully funded system optimal. Empirical evidence based on cross-city comparisons of pension liabilities is consistent with these predictions.
Abstract
					Using a rich dataset on government spending forecasts in Japan, we provide new evidence on the effects of unexpected changes in government spending when the nominal interest rate is near the zero lower bound (ZLB). The on-impact output multiplier is 1.5 in the ZLB period and 0.6 outside of it. We estimate that government spending shocks increase both private consumption and investment during the ZLB period, but crowd them out in the normal period. There is evidence that expected inflation increases more in the ZLB period than in the normal period.
Abstract
					We exploit a novel and unique opportunity to document the transmission of income risk to consumption in a growing economy. Our laboratory is China, an economy that has witnessed enormous and sustained growth. We build a long panel of household-level consumption and income data. We find that consumption insurance deteriorates along the growth process with a transmission of permanent income shocks to consumption that at least triples from 1989 to 2009. Although preliminary, our welfare analysis suggests that the loss of consumption insurance can have first-order implications for the welfare assessment of economic growth.
Abstract
					This paper documents new facts about the behavior of capital- and labor-intensive goods over the business cycle and also identifies a mechanism that generates international investment comovement through shifting compositional changes of production and trade across sectors. Our model's quantitative predictions not only match aggregate and sectoral statistics but also generate empirically plausible sectoral composition effects. Finally, we show that essential segments of the transmission process receive empirical support.
Abstract
					Firms differ substantially in their participation in foreign input markets. We develop a methodology to measure the aggregate effects of input trade that takes such heterogeneity into account. We provide a theoretical result that holds in a variety of settings: the firm-level data on value added and domestic expenditure shares in material spending is sufficient to compute the change in consumer prices due to a shock to the import environment. We characterize the bias of approaches that rely on aggregate statistics. In an application to French data, input trade reduces the prices of manufacturing products by 27 percent.
Abstract
					We analyze the role of oil price volatility in reducing U.S. macroeconomic instability. Using a Markov Switching Rational Expectation New-Keynesian model we revisit the timing of the Great Moderation and the sources of changes in the volatility of macroeconomic variables. We find that smaller or fewer oil price shocks did not play a major role in explaining the Great Moderation. Instead oil price shocks are recurrent sources of economic fluctuations. The most important factor reducing overall variability is a decline in the volatility of structural macroeconomic shocks. A change to a more responsive (hawkish) monetary policy regime also played a role.
Abstract
					I develop a macroeconomic model in which banks can affect loan quality by exerting costly screening effort. Informational frictions limit the amount of external funds that banks can raise. In this framework I consider two types of financial intermediation, traditional banking and shadow banking. By pooling different loans, shadow banks achieve a higher endogenous leverage compared to traditional banks, increasing credit availability. However, shadow banks also make the financial sector more fragile, because of the lower quality of the loans they finance and because of their exposure to bank runs. In this setting unconventional monetary policy can reduce macroeconomic instability.
Abstract
					We seek to identify the causal effect of sentiment innovations on consumption. Using unique Australian consumer sentiment survey data we show that, immediately after elections with a change of government, supporters of the winning party report substantially more optimistic beliefs about economic conditions than supporters of the losing party. We argue that this variation in beliefs is orthogonal to changes in fundamentals and find robust evidence that the shifts in sentiment affect spending intentions. Furthermore, using geographic variation in sentiment, vote-shares and automobile purchases we find evidence that stated spending intentions are indicative of actual spending.
Abstract
					A dynamic stochastic occupational choice model with heterogeneous agents is developed to evaluate the impact of a corporate income tax reduction on employment. In this framework, the key margin is the endogenous entrepreneurial choice of legal form of organization. A reduction in the corporate income tax burden encourages adoption of the C corporation legal form, which reduces capital constraints on firms. Improved capital reallocation increases overall productive efficiency in the economy and therefore expands the labor market. Relative to the benchmark economy, a corporate income tax cut can reduce the non-employment rate by up to 7 percent.
Abstract
					This paper formalizes and quantifies the secular stagnation hypothesis, defined as a persistently low or negative natural rate of interest leading to a chronically binding zero lower bound (ZLB). Output-inflation dynamics and policy prescriptions are fundamentally different from those in the standard New Keynesian framework. Using a 56-period quantitative life cycle model, a standard calibration to US data delivers a natural rate ranging from −1.5% to −2%, implying an elevated risk of ZLB episodes for the foreseeable future. We decompose the contribution of demographic and technological factors to the decline in interest rates since 1970 and quantify changes required to restore higher rates.
Abstract
					We develop a theory of career paths and earnings where agents organize in production hierarchies. Agents climb these hierarchies as they learn stochastically from others. Earnings grow as agents acquire knowledge and occupy positions with more subordinates. We contrast these and other implications with US census data for the period 1990 to 2010, matching the Lorenz curve of earnings and the observed mean experience-earnings profiles. We show the increase in wage inequality over this period can be rationalized with a shift in the level of the complexity and profitability of technologies relative to the distribution of knowledge in the population.
Abstract
					This paper examines foreign exchange intervention based on novel daily data covering 33 countries from 1995 to 2011. We find that intervention is widely used and an effective policy tool, with a success rate in excess of 80 percent under some criteria. The policy works well in terms of smoothing the path of exchange rates, and in stabilizing the exchange rate in countries with narrow band regimes. Moving the level of the exchange rate in flexible regimes requires that some conditions are met, including the use of large volumes and that intervention is made public and supported via communication.
Abstract
					In this paper we develop a Bayesian framework to estimate a proxy structural vector autoregression to identify monetary policy shocks. We find that during the Great Moderation period, monetary policy shocks induce a persistent decline in real activity and tightening in financial conditions. Central to this result is a systematic component of monetary policy characterized by a direct and economically significant reaction to changes in corporate credit spreads. The failure to account for this endogenous reaction induces an attenuation in the response of all variables to monetary shocks, a result that also applies to the narrative identification of Romer and Romer (2004).
Abstract
					Previous research has documented that export shipments are "lumpy"—exporters make infrequent and relatively large shipments to any given export
 destination. This fact has been interpreted as implying that fixed, per shipment cost and inventory management decisions play a key role in international 
trade. We document here that exports from poor countries are considerably more lumpy—have higher fixed per shipment cost—than those from rich 
countries. Using a model of trade with inventory management, we estimate that the country at the ninetieth percentile of the distribution of per shipment 
costs has almost three times higher costs than the one at the tenth percentile. We show that these per shipment cost differences have a reduced-form 
representation given by an ad valorem trade cost that varies with export country income (as in Waugh 2010). A calibrated version of the model that 
incorporates these estimates and allows for endogenous product quality reveals that cross-country differences in per shipment costs explain almost 40 
percent of the observed cross-country differences in income. It also shows that policies that lower per shipment costs can lead to significant welfare 
gains, mainly due to induced quality upgrading.
Abstract
					We document that fluctuations in part-time employment play a major role in movements in hours per worker during cyclical swings in the labor market. Building on this result, we develop a stock-flow framework to describe the dynamics of part-time employment. The evolution of part-time employment is predominantly explained by cyclical changes in transitions between full-time and part-time employment. Those transitions occur overwhelmingly at the same employer, entail sizable changes in individual working hours and are associated with an increase in involuntary part-time work. Our findings provide a novel understanding of the cyclical dynamics of labor adjustment on the intensive margin.
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 36 percent from 1964 to 2009.
Abstract
					A substantial fraction of workers are underemployed, i.e., employed in jobs for which they are overqualified, and that fraction—the underemployment rate—is higher in 
recessions. To explain these facts, we build a search model with an endogenous "ranking" mechanism, in which high-skill applicants are systematically hired over less-skilled 
competing applicants. Some high-skill workers become underemployed in order to escape the competition for high-skill jobs and find a job more rapidly at the expense of 
less-skilled workers. Quantitatively, the model can capture the key characteristics of underemployment, notably the fact that both the underemployment rate and the wage 
loss associated with becoming underemployed increase in recessions.
Abstract
					Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we provide a new methodology to estimate output shares of natural resources based solely on current rent flows data. With this methodology, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries. In sharp contrast with Caselli and Feyrer (2007), we find a significant and persistent degree of misallocation of physical capital. We also find a remarkable movement toward efficiency during the last 35 years, associated with the elimination of interventionist policies and driven by domestic accumulation.
Abstract
					I consider a small open economy model where international financial markets are imperfect and the exchange rate is determined by capital flows. I use this framework to study the effects of portfolio flow shocks, derive the optimal foreign exchange intervention policy, and characterize its interaction with monetary policy. I derive the optimal intervention rule in closed form as a function of three implicit targets. Finally, using Swiss data, I estimate the model to quantify the inefficiencies generated by capital flow shocks and the optimal size of the intervention.
Abstract
					We study the importance of wage rigidities for the monetary policy transmission mechanism. Using uniquely rich micro data on Swedish wage negotiations, we isolate periods when the labor market is covered by fixed-wage contracts. Importantly, negotiations are coordinated in time but their seasonal patterns are far from deterministic. Using a two-regime VAR model, we document that monetary policy shocks have a larger impact on production during fixed-wage episodes as compared to the average response. The results do not seem to be driven by the periodic structure, nor the seasonality, of the renegotiation episodes.
Abstract
					Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper examines this assumption by matching survey data on worker-supplied reasons for 
separations with administrative data. Workers exhibit substantially different earnings dynamics in mass layoffs depending on the reason for separation. Using a new methodology to account for the increased separation rates across all survey responses during a mass layoff, the paper finds earnings loss estimates that are surprisingly close to those using only administrative data.
Abstract
					I provide new empirical evidence on the negative relationship between financial frictions and productivity growth over a firm's life cycle. I show that a model of firm dynamics with incremental innovation cannot explain this evidence. However, further including radical innovation, which is very risky but potentially very productive, allows for the joint replication of several stylized facts about the dynamics of young and old firms and the differences in productivity growth in industries with different degrees of financing frictions. These frictions matter because they act as a barrier to entry that reduces competition and the risk-taking of young firms.
Abstract
					This paper evaluates the effects of product turnover on a welfare-based cost-of-living index by incorporating the quality effect and the fashion effect. Employing scanner data for Japan for the years 1988–2013, we find that (i) the price and quantity of a new product tend to be higher than those of its predecessor at its exit; (ii) a considerable fashion effect exists for the entire sample period, while the quality effect is declining over time; and (iii) the discrepancy between the cost-of-living index estimated based on our methodology and the price index constructed only from a matched sample is not large.
Abstract
					We provide a unifying framework to quantify the impact of several determinants of changes in US between-group inequality. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are driven by changes in workforce composition, occupation demand, 
computerization, and labor productivity. We parameterize the model using direct measures of computer usage within labor group-occupation pairs and quantify the 
impact of each shock for various dimensions of between-group inequality between 1984 and 2003. We find, for example, that computerization and shifts in occupation 
demand jointly account for roughly 80 percent of the rise in the skill premium, with computerization alone accounting for roughly 60 percent. In an open-economy 
extension of the model, we show how computerization and changes in occupation demand can be caused by changes in the extent of international trade and perform 
counterfactual exercises to quantify these effects.
Abstract
					Central banks' announcements that rates are expected to remain low could signal either a weak macroeconomic outlook, which would slow expenditures, or a more accommodative stance, which may stimulate economic activity. We use the Survey of Professional Forecasters to show that, when the Fed gave guidance between 2011:III and 2012:IV, these two interpretations coexisted despite a consensus on low expected rates. We rationalize these facts in a New-Keynesian model where heterogeneous beliefs introduce a trade-off in forward guidance policy: leveraging on the optimism of those who believe in monetary easing comes at the cost of inducing excess pessimism in non-believers.
Abstract
					In the aftermath of the US financial crisis, both a sharp drop in employment and a surge in corporate cash have been observed. In this paper, based on US data, we argue that the negative relationship between the corporate cash ratio and employment is systematic, both over time and across firms. We develop a dynamic general equilibrium model where heterogenous firms need cash and external liquid funds in their production process. We analyze the dynamic impact of aggregate shocks and the cross-firm impact of idiosyncratic shocks. We show that external liquidity shocks generate a negative comovement between the cash ratio and employment, as documented in the data.
Abstract
					We examine the hypothesis that the slowdown in productivity following the Great Recession was in significant part an endogenous response to the contraction in demand that induced the downturn. We motivate, develop, and estimate a model with an endogenous TFP mechanism that allows for costly development and adoption of technologies. Our main finding is that a significant fraction of the post-Great Recession fall in productivity was an endogenous phenomenon, suggesting that demand factors played an important role in the postcrisis slowdown of capacity growth. More generally, we provide insight into why recoveries from financial crises may be so slow.
Abstract
					We document that the aggregate price level responds flexibly and asymmetrically to large positive and negative value-added tax changes. We present a price-setting model with menu costs, trend inflation, and fat-tailed product-level shocks that is consistent with these observations. The model predicts a flexible price-level response to standard monetary policy shocks because it anticipates a large number of firms on the verge of price adjustment and far from their optimal prices when the shock hits.
Abstract
					We build a medium-scale DSGE model and calibrate it to fit the main macroeconomic variables during the US Great Recession. Using it to evaluate the welfare effects of increasing government consumption at the zero lower bound beyond what was actually observed in the data, we reach three main results. First, the increase in government consumption after 2008, albeit small in present value terms, was close to optimal. Second, frontloading the same stimulus would have been welfare-improving. Third, larger welfare effects occur in our model for parameter values implying either large welfare costs of modest recessions (e.g., high consumption curvature), or outright large recessions.
Abstract
					We study the currency composition of sovereign debt in emerging economies through the lens of a model in which the government lacks commitment regarding debt and monetary policy. High levels of debt in local currency give rise to incentives to dilute debt repayment through currency depreciation. Governments tilt the currency composition of debt toward foreign currency to avoid inflationary costs and real exchange rate distortions, at the expense of forgoing the hedging properties of local currency debt. Our quantitative model is used to shed light on the recent dynamics of the currency composition of debt and on its cyclical behavior.
Abstract
					We analyze the relationships between bubbles, capital flows, and economic activities in a rational bubble model with two large open economies. We establish a reinforcing relationship between global imbalances and bubbles. Capital flows from South to North facilitate the emergence and the size of bubbles in the North. Bubbles in the north in turn facilitate South-to-North capital flows. The model can simultaneously explain several stylized features of recent bubble episodes.
Abstract
					I develop a spatial-equilibrium model to quantify the distributional impacts of international trade in an economy with intranational trade and migration costs. Focusing on China, I find that international trade increases both between-region inequality among workers with similar skills and within-region inequality between skilled and unskilled workers, with the former accounting for 75 percent of the overall inequality increase. Ignoring spatial frictions will underestimate trade's impact on the overall inequality and overestimate its impact on the aggregate skill premium. I further study how internal trade and Hukou reforms affect the domestic economy and the impacts of international trade.
Abstract
					We study how international trade affects manufacturing employment and the relative wage of unskilled workers when goods and services are traded with different intensities. Manufacturing trade reduces manufacturing prices worldwide, which reduces manufacturing employment if manufactures and services are complements. International trade also raises real income, which reduces manufacturing employment if services are more income elastic than manufactures. Manufacturing production is unskilled-labor-intensive, so that these changes increase the skill premium. We incorporate these mechanisms in a quantitative trade model and show that reductions in trade costs had a negative impact on manufacturing employment and the relative wage of unskilled workers.
Abstract
					We use online job application data to study the relationship between search intensity and search duration. The data allow us to control for job seeker composition and the evolution of available job openings over the duration of search. We find that, within an individual search spell, search intensity declines continuously. We also find that longer-duration job seekers search more intensely throughout their search. They tend to be older, male, nonemployed, and live in areas with weaker labor markets. Our findings contradict standard assumptions of labor search models. We discuss how to reconcile the theory with our evidence.
Abstract
					Systemic risk arises when shocks lead to states where a disruption in financial intermediation adversely affects the economy and feeds back into further disrupting financial intermediation. We present a macroeconomic model with a financial intermediary sector subject to an equity capital constraint. The novel aspect of our analysis is that the model produces a stochastic steady state distribution for the economy, in which only some of the states correspond to systemic risk states. The model allows us to examine the transition from "normal" states to systemic risk states. We calibrate our model and use it to match the systemic risk apparent during the 2007/2008 financial crisis. We also use the model to compute the conditional probabilities of arriving at a systemic risk state, such as 2007/2008. Finally, we show how the model can be used to conduct a macroeconomic "stress test" linking a stress scenario to the probability of systemic risk states.
Abstract
					Post-financial crisis recoveries tend to be slow and accompanied by slowdowns in total factor productivity (TFP) and permanent losses in GDP. To prevent them, how should monetary policy be conducted? We address this issue by developing a model with endogenous TFP growth in which an adverse financial shock can induce a slow recovery. In the model, a welfare-maximizing monetary policy rule features a strong response to output, and the welfare gain from output stabilization is much larger than when TFP expands exogenously. Moreover, inflation stabilization results in a sizable welfare loss, while nominal GDP stabilization works well, albeit causing high interest rate volatility.
Abstract
					We study long-run correlations between safe real interest rates in the United States and over 30 variables that have been hypothesized to influence real rates. The list of variables is motivated by 
an intertermporal IS equation, by models of aggregate savings and investment, and by reduced-form studies. We use annual data, mostly from 1890 to 2016. We find that safe real interest rates 
are correlated as expected with demographic measures. For example, the long-run correlation with labor force hours growth is positive, which is consistent with overlapping generations models. 
For another example, the long-run correlation with the proportion of 40 to 64 year-olds in the population is negative. This is consistent with standard theory where middle-aged workers are high 
savers who drive down real interest rates. In contrast to standard theory, we do not find productivity to be positively correlated with real rates. Most other variables have a mixed relationship 
with the real rate, with long-run correlations that are statistically or economically large in some samples and by some measures but not in others.
Abstract
					The labor market by itself can create cyclical outcomes, even in the absence of exogenous shocks. We propose a theory in which the search behavior of the employed has profound aggregate implications for the unemployed. There is a strategic complementarity between active on-the-job search and vacancy posting by firms, which leads to multiple equilibria: in the presence of sorting, active on-the-job search improves the quality of the pool of searchers. This encourages vacancy posting, which in turn makes costly on-the-job search more attractive—a self-fulfilling equilibrium. The model provides a rationale for the Jobless Recovery, the outward shift of the Beveridge curve during the boom and for pro-cyclical frictional wage dispersion. Central to the model's mechanism is the fact that the employed crowd out the unemployed when on-the-job search picks up during recovery. We also illustrate this mechanism in a stylized calibration exercise.
Abstract
					We study how factors that hinder the reallocation of inputs across firms influence aggregate productivity growth. We extend Hopenhayn and Rogerson's (1993) firm-dynamics model to allow for endogenous innovation. We evaluate the effects of firing taxes on reallocation, innovation, and productivity growth. We find firing taxes can have opposite effects on entrants' innovation and incumbents' innovation, and the overall outcome depends on the relative strengths of these forces. In the entrant-driven growth calibration, firing taxes reduce aggregate productivity growth, whereas aggregate productivity growth increases in the incumbent-driven growth calibration.
Abstract
					We study optimal tax policies in a life-cycle economy with permanent ability differences and risky human capital investments that have both an unobservable component, learning effort, and an observable component, schooling. The optimal policies balance redistribution across agents, insurance against human capital shocks, and incentives to learn and work. In the optimum, (i) high-ability agents face risky consumption while low-ability agents are insured; (ii) the optimal schooling subsidy is substantial but less than 100 percent; (iii) if utility is separable in labor and learning effort, the inverse labor wedge follows a random walk; and (iv) if the utility is not separable then the "no distortion at the top" result does not apply. The welfare gains from switching to the optimal tax system are about 1 percent in annual consumption equivalents.
Abstract
					Using proprietary data on banks' monthly securities holdings, we show that during the European sovereign debt crisis, domestic banks in fiscally stressed countries were considerably more likely than foreign banks to increase their holdings of domestic sovereign bonds during months when the government needed to roll over a relatively large amount of maturing debt. This result cannot be explained by risk shifting, carry trading, or regulatory compliance. Domestic banks that received government support, are small, or with weaker balance sheets were particularly susceptible to "moral suasion," while governance of banks played less of a role.
Abstract
					We estimate how the marginal propensity to consume (MPC) out of liquidity varies over the business cycle. Ten years after a Chapter 7 bankruptcy, the bankruptcy flag is removed from the filer's credit report, generating an increase in credit score. In the year following flag removal, credit card limits increase by $778 and credit card balances increase by $290, implying an MPC of 0.37. Using cohorts of flag removals, we find that the MPC was 20 to 30 percent higher during the Great Recession, increased during the 2001 recession, and is positively correlated with the local unemployment rate.
Abstract
					We assess the effects of a major land policy change on farm size and agricultural productivity using a quantitative model and micro-level data. We study the 1988 land 
reform in the Philippines that imposed a ceiling on land holdings, redistributed above-ceiling lands to landless and smallholder households, and severely restricted the 
transferability of the redistributed farmlands. We study this reform in the context of an industry model of agriculture with a nondegenerate distribution of farm sizes 
featuring an occupation decision and a technology choice of farm operators. In this model, the land reform can reduce agricultural productivity not only by misallocating 
resources across farmers but also by distorting farmers' occupation and technology decisions. The model, calibrated to prereform farm-level data in the Philippines, 
implies that on impact, the land reform reduces average farm size by 34 percent and agricultural productivity by 17 percent. The government assignment of land and the 
ban on its transfer are key for the magnitude of the results since a market allocation of the above-ceiling land produces about one-third of the size and productivity 
effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.
Abstract
					I argue that the seemingly disparate findings of the recent empirical literature on monetary policy transmission are all consistent with the same standard macro models. Weak sign restrictions, which suggest that contractionary monetary policy, if anything, boosts output, present as policy shocks what actually are expansionary demand and supply shocks. Classical zero restrictions are robust to such misidentification, but miss short-horizon effects. Two recent approaches—restrictions on Taylor rules and external instruments—instead work well. My findings suggest that empirical evidence is consistent with models in which the real effects of monetary policy are larger than commonly estimated.
Abstract
					We develop a tractable bubbles model with financial friction and downward wage rigidity. Competitive speculation in risky bubbles can result in excessive investment booms that precede inefficient busts, where post- bubble aggregate economic activities collapse below the pre-bubble trend. Risky bubbles can reduce ex ante social welfare, and leaning-against-the-bubble policies that balance the boom-bust trade-off can be warranted. We further show that the collapse of a bubble can push the economy into a "secular stagnation" equilibrium, where the zero lower bound and the nominal wage rigidity constraint bind, leading to a persistent recession, such as the Japanese "lost decades."
Abstract
					We use satellite-recorded nighttime lights as an independent benchmark of economic activity in order to generate three findings in the study of PPP-adjusted estimates of GDP. First, PPP-adjusted estimates better describe poor economies than do market exchange rate-based estimates today, although this was not the case in the late 1990s. Second, estimates of PPPs have been steadily improving from one price survey round to the next. Third, it has tended to be optimal to only use the latest price data and to revise existing PPP-adjusted estimates whenever a new price survey is released.
Abstract
					We investigate the effect of structural transformation on the process of economic growth. Using a two-sector growth model we show that, in addition to Baumol's cost disease, structural transformation from goods to services generates other predictions that are in line with cross-country growth facts: an increase in the real investment rate, a decline in the real interest rate and the marginal product of capital, and an acceleration of investment-specific technological change as the share of services increases. The model calibrated to US data can account for the elasticity of real investment rates to the share of services measured in cross-country data.
Abstract
					What is the role of migration in regional evolutions? I document that within-US migration causes a reduction in the unemployment rate of the receiving city over several years. To establish this causal effect, I construct an instrument using out-migration of other places and predict its destination from historical patterns. The decline in unemployment is due to housing. Housing is durable, so increased demand causes a surge of new houses and construction jobs. Additionally, migrants' housing demand raises prices, increasing borrowing and nontradable employment. This finding implies the endogenous response of migration amplifies local labor demand shocks by about a third.
Abstract
					The steady application of quantitative easing (QE) has been followed by big and nonmonotonic effects on international asset prices and capital flows. We rationalize these observations in a model in which a central bank buys domestic assets that serve as the best collateral for investors worldwide. The crucial insight is that domestic private agents adjust their portfolios of domestic and foreign assets in different ways to offset QE, conditional on whether they are (i) fully leveraged, (ii) partially leveraged, or (iii) unleveraged. These portfolio shifts can diminish or even reverse the impact of ever-larger QE interventions on asset prices.
Abstract
					Motivated by the long-standing debate on competitive devaluation, we propose a new perspective on how monetary and exchange rate policies can contribute to a country's international competitiveness. We refocus the analysis on the implications of monetary stabilization for a country's comparative advantage. We develop a two-country New Keynesian model with two tradable sectors in each country: one perfectly competitive, the other producing differentiated goods under monopolistic competition subject to sunk entry costs and nominal rigidities and hence more sensitive to macroeconomic uncertainty. Monetary policy can disproportionately foster competitiveness of differentiated goods firms, ultimately affecting the composition of domestic output and exports.
Abstract
					I study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. Recurrence causes forward-looking variables to also react to policy intervention during phases in which the intervention is inactive. Macroprudential policies that contain systemic risk in financial markets during booms, therefore, relax market-based funding constraints during busts, which helps mitigate the severity and shorten the duration of economic meltdowns. Contractionary monetary interventions during booms also have (latent) beneficial effects during busts. Coordination between the two policy instruments improves social welfare over standard, noncoordinated policy interventions, but improvement is moderate.
Abstract
					This paper studies the labor market effects of both documented and undocumented immigration in a search model featuring nonrandom hiring. As immigrants accept lower wages, they are preferably chosen by firms and therefore have higher job finding rates than natives, consistent with evidence found in US data. Immigration leads to the creation of additional jobs but also raises competition for natives. The dominant effect depends on the fall in wage costs, which is larger for undocumented immigration than it is for legal immigration. The model predicts a dominating job creation effect for the former, reducing natives' unemployment rate, but not for the latter.
Abstract
					We show that a calibrated life cycle two-earner household model with endogenous labor supply can rationalize the extent of consumption insurance against shocks to male and female wages, as 
estimated empirically by Blundell, Pistaferri, and Saporta-Eksten (2016) in US data. In the model, 35 percent of male and 18 percent of female permanent wage shocks pass through to consumption, 
compared to the empirical estimates of 32 percent and 19 percent. Most of the consumption insurance against permanent male wage shocks is provided through the presence and labor supply 
response of the female earner. Abstracting from this private intrahousehold income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the 
desired extent of public insurance through progressive income taxation. Relative to the standard one-earner life cycle model, the optimal degree of tax progressivity is significantly lower and the 
welfare gains from implementing the optimal system are cut roughly in half.
Abstract
					We generalize recent results of Bassetto and Benhabib (2006 ) and Straub and Werning (2019 ) in a neoclassical model with endogenous labor-leisure choice where all agents are allowed to save and accumulate capital. We provide a sufficient condition under which optimal redistributive capital taxes remain at their allowed upper bound forever, even if the resulting equilibrium trajectory converges to a unique steady state with positive and finite consumption, capital, and labor. We then provide an interpretation of our sufficient condition. Using recent evidence on wealth distribution in the United States, we argue that our sufficient condition is empirically plausible.
Abstract
					We argue that misallocation across firms amplifies industrial water pollution by distorting the firm size distribution in China. Firm-level data indicate that larger firms are more likely to use clean technology but face higher distortions. In a heterogeneous firms model with an endogenous choice of pollution treatment technologies, we show that distortions that increase with firm-level TFP lower the adoption of clean technology, amplify aggregate pollution intensity, and lower aggregate output. Quantitatively, eliminating these correlated distortions would increase output by 30 percent and decrease pollution by 20 percent. Meanwhile, environmental regulations have sizable impact on pollution but limited effects on aggregate output.
Abstract
					We construct a time series of college attendance patterns for the United States and document a reversal: family background was a better predictor of college attendance before World War II, but academic ability was afterward. We construct a model of college choice that explains this reversal. The model's central mechanism is that an exogenous surge of college attendance leads better colleges to be oversubscribed, institute selective admissions, and raise their quality relative to their peers, as in Hoxby (2009). Rising quality at better colleges attracts high-ability students, while falling quality at the remaining colleges dissuades low-ability students, generating the reversal.
Abstract
					We develop a multisector sticky-price DSGE model that can endogenously deliver differential responses of prices to aggregate and sectoral shocks. Input-output production linkages and a (standard) monetary policy rule contribute to a slow response of prices to aggregate shocks. In turn, labor market segmentation at the sectoral level induces within-sector strategic substitutability in price-setting decisions, which helps the model deliver a fast response of prices to sector-specific shocks. We estimate the model using aggregate and sectoral price and quantity data for the United States and find that it accounts well for a range of sectoral price facts.
Abstract
					What are the prospects for long-run economic growth? One prominent line of economic thinking is the trend toward stagnation. Stagnationism has a long history in economics, beginning prominently with Malthus and occasionally surfacing in different guises. Prominent themes here are the following: Will economic growth slow and perhaps even reverse under the weight of resource depletion? Will overpopulation and diminishing returns lower living standards? Will unchecked CO2 emissions lead to catastrophic changes in climate and human systems? Have we depleted the store of potential great inventions? Will the aging society lead to diminished innovativeness?
Abstract
					General purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible and poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth in a new GPTs early years and, later, when the benefits of intangible investments are harvested, productivity growth overestimation. We call this phenomenon the Productivity J-curve. We apply our method to US data and find that adjusting for intangibles related to computer hardware and software yields a TFP level that is 15.9 percent higher than official measures by the end of 2017.
Abstract
					This paper assesses the importance of heterogeneity in household portfolios for the transmission of monetary policy in a New Keynesian business cycle model with uninsurable income risk and assets with different liquidity. In this environment, monetary transmission works through investment, but redistribution lowers the elasticity of investment via two channels: (i) heterogeneity in marginal propensities to invest, and (ii) time variation in the liquidity premium. Monetary contractions redistribute to wealthy households who have high propensities to invest and a low marginal value of liquidity, thereby stabilizing investment. I provide empirical evidence for countercyclical liquidity premia and heterogeneity in household portfolio responses.
Abstract
					Sovereign debt crises involve debt restructurings characterized by a mix of face value haircuts and maturity extensions. The prevalence of maturity extensions has been hard to reconcile with economic theory. We develop a model of endogenous debt restructuring that captures key facts of sovereign debt and restructuring episodes. While debt dilution pushes for negative maturity extensions, three factors are important in overcoming the effects of dilution and generating maturity extensions upon restructurings: income recovery after default, credit exclusion after restructuring, and regulatory costs of book value haircuts. We employ dynamic discrete choice methods that allow for smoother decision rules, rendering the problem tractable.
Abstract
					Standard international transmission mechanism of productivity shocks predicts a weak endogenous linkage between trade and business cycle synchronization: a problem known as the trade-comovement puzzle. We provide the foundational analysis of the puzzle, pointing to three natural candidate resolutions: (i) financial market frictions, (ii) Greenwood-Hercowitz-Huffman preferences, and (iii) dynamic trade elasticity that is low in the short run but high in the long run. We show the effects of each of these candidate resolutions analytically and evaluate them quantitatively. We find that while (i) and (ii) fall short of the data, (iii) goes a long way toward resolving the puzzle.
Abstract
					Despite increases in the college earnings premium to persistently high levels, investment in college education remains low. We can understand this apparent puzzle by considering the risk of attending college and, in particular, the possibility of failing to graduate. Students with a reasonable probability of completing college already enroll, and for those who do not enroll, the low chance of completion blunts the impact of the rising college premium. In the absence of improved college readiness, our quantitative results suggest that continuing long-standing trends in skill-biased technological change can be expected primarily to increase earnings inequality rather than college attainment.
Abstract
					From late 2008 to 2014, oil and equity returns were more positively correlated than in other periods. In addition, we show that both oil and equity returns became more responsive to macroeconomic news. We provide empirical evidence that these changes resulted from the zero lower bound (ZLB) on nominal interest rates, consistent with the theoretical predictions of a model that includes the ZLB. Although the ZLB alters the economic environment in theory, supportive empirical evidence has been lacking. Our paper provides clear evidence of the ZLB altering the economic environment.
Abstract
					We use quasi-random access to the Home Affordable Refinance Program (HARP) to identify the causal effect of refinancing into a lower-rate mortgage on borrower balance sheet outcomes. Refinancing substantially reduces borrower default rates on mortgages and other debt. Refinancing also causes borrowers to expand their use of debt instruments, such as auto loans, home equity lines, and other consumer debts that are proxies for spending. Borrowers that appear more constrained ex ante grow these debts more strongly after refinancing but also pay down credit card balances by more. These borrowers also have lower take-up of the refinancing opportunity.
Abstract
					We provide a new channel through which monetary policy has distributional consequences at business cycle frequencies. We show that an unexpected monetary easing increases labor income inequality between high-skilled and less-skilled workers. To rationalize these findings, we build a New Keynesian DSGE model with asymmetric search-and-matching (SAM) frictions and capital-skill complementarity (CSC) in production. We show that CSC on its own introduces a dynamic demand amplification mechanism: the increase in high-skilled employment after a monetary expansion makes complementary capital more productive, encouraging a further rise in investment demand and creating a multiplier effect. SAM asymmetries magnify this channel.
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 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 United States save more than nonparticipants and have increasingly dispersed portfolio returns, consistent with the choice channel.
Abstract
					We study the consequences of interest rate liberalization in a two-sector general equilibrium model of China. The model captures a key feature of China's distorted financial system: state-owned enterprises (SOEs) have greater incentive to expand production and easier access to credit than private firms. In this second-best environment, interest rate liberalization can improve capital allocations within each sector but can also exacerbate misallocations across sectors. Under calibrated parameters, the liberalization policy can reduce aggregate productivity and welfare unless other policy reforms are also implemented to alleviate SOEs' distorted incentives or improve private firms' credit access.
Abstract
					Using data on the universe of housing transactions in England and Wales over a 20-year period, we document that sale prices and selling propensities are affected by house prices prevailing in the period in which properties were previously bought. Using administrative data on mortgages, we show that cognitive frictions explain most of the history dependence in sale prices, whereas credit frictions are more relevant for selling propensities. We corroborate our analysis with data on online house listings, and we estimate the impact of history dependence on the collapse and slow recovery of housing market activity in the postcrisis period.
Abstract
					Sea level rise will cause spatial shifts in economic activity over the next 200 years. Using a spatially disaggregated, dynamic model of the world economy, this paper estimates the consequences of probabilistic projections of local sea level changes. Under an intermediate scenario of greenhouse gas emissions, permanent flooding is projected to reduce global real GDP by 0.19 percent in present value terms. By the year 2200, a projected 1.46 percent of the population will be displaced. Losses in coastal localities are much larger. When ignoring the dynamic response of investment and migration, the loss in real GDP in 2200 increases from 0.11 percent to 4.5 percent.
Abstract
					This paper computes optimal top marginal tax rates in Bewley-Huggett-Aiyagari–type economies that include entrepreneurs. Consistent with the data, entrepreneurs are overrepresented at the top of the income distribution and are thus disproportionately affected by an increase in the top marginal income tax rate. The top marginal tax rate that maximizes welfare is 60 percent. While average welfare gains are positive and similar across occupations along the transition, they are larger for entrepreneurs than for workers in the long run, and this occupational gap in welfare gains after the tax increase widens with increasing income.
Abstract
					Violations of Tinbergen's rule and strategic interaction undermine stabilization policies in a New Keynesian model with the Bernanke-Gertler accelerator. Welfare costs of risk shocks are large because of efficiency losses and income effects of costly monitoring, but they are much larger under a simple Taylor rule (STR) or a Taylor rule augmented with credit spreads (ATR) than with a Taylor rule and a separate financial rule targeting spreads. ATR and STR are tight money-tight credit regimes responding too much (little) to inflation (spreads). The Nash equilibrium of monetary and financial policies is also tight money-tight credit but it dominates ATR and STR.
Abstract
					Commonly used instruments for the identification of monetary policy disturbances are likely to combine the true policy shock with information about the state of the economy due to the information disclosed through the policy action. We show that this signaling effect of monetary policy can give rise to the empirical puzzles reported in the literature, and propose a new high-frequency instrument for monetary policy shocks that accounts for informational rigidities. We find that a monetary tightening is unequivocally contractionary, with deterioration of domestic demand, labor and credit market conditions as well as of asset prices and agents' expectations.
Abstract
					I study the optimal inflation target in a quantitative menu cost model with a zero lower bound on interest rates. I find that the optimal inflation target is 3.5 percent, which is higher than in models commonly used for monetary policy analysis. Key to this result is that inflation has a small effect on resource misallocation when the model features firm-level shocks, which are necessary to match the empirical distribution of price changes. A higher inflation target decreases price flexibility at the zero lower bound, and through this mechanism, it reduces the severity of recessions when the monetary authority is constrained.
Abstract
					Firm-level, revenue-based productivity measures are ubiquitous in studies of firm dynamics and aggregate outcomes. One common measure is increasingly interpreted as reflecting "distortions" since in distortions' absence, equalization of marginal revenue products should yield no dispersion in this measure. Another common but distinct measure is the residual of the firm-level revenue function, which reflects "fundamentals." Using micro-level US manufacturing data, we find these alternative measures are highly correlated, exhibit similar dispersion, and have similar relationships with growth and survival. However, the distinction between these alternative measures is critically important for quantitative assessment of the level and decline of allocative efficiency.
Abstract
					This paper studies the role of differences in the patterns of production and international trade on the business cycle volatility of emerging and developed economies. We study a multisector small open economy in which firms produce and trade commodities and manufactures. We estimate the model to match key cross-sectional and time-series differences across countries. Emerging economies run trade surpluses in commodities and trade deficits in manufactures, while sectoral trade flows are balanced in developed economies. We find that these differences amplify the response of emerging economies to commodity price fluctuations. We show evidence consistent with this mechanism using cross-country data.
Abstract
					Using comprehensive high-frequency state and local sales tax data, we show that shopping behavior responds strongly to changes in sales tax rates. Even though sales taxes are not 
observed in posted prices and have a wide range of rates and exemptions, consumers adjust in many dimensions. They stock up on storable goods before taxes rise and increase online 
and cross-border shopping in both the short and long run. The difference between short- and long-run spending responses has important implications for the efficacy of using sales 
taxes for countercyclical policy and for the design of an optimal tax framework. Interestingly, households adjust spending similarly for both taxable and tax-exempt goods. We embed an 
inventory problem into a continuous-time consumption-savings model and demonstrate that this behavior is optimal in the presence of shopping trip fixed costs. The model successfully 
matches estimated short-run and long-run tax elasticities. We provide additional evidence in favor of this new shopping complementarity mechanism.
Abstract
					This paper analyzes the implications of advertising for firm dynamics and economic growth through its interaction with R&D. We develop a model of endogenous growth with firm heterogeneity that incorporates advertising decisions and calibrate it to match several empirical regularities across firm size. Our model provides micro-foundations for the empirically observed negative relationship between both firm R&D intensity and growth and firm size. In the calibrated model, about half of the deviation from proportional firm growth is attributed to our novel advertising channel. In addition, R&D and advertising are substitutes, a prediction for which we find evidence in the data.
Abstract
					This paper develops a dynamic model of innovation and international trade in which agents can direct their research efforts to specific goods in the economy. Trade affects the direction of innovation through its impact on the expected market size for an invention, leading to a two-way relationship between trade and technology absent in standard quantitative Ricardian models. Following a theory-consistent strategy to estimate the extent of endogenous adjustments in technology, I find that they can account for about half of the observed variance in comparative advantage in production in a sample of 29 countries and 18 manufacturing industries. In addition, the model suggests that standard Ricardian models overestimate the reductions in real income from increases in trade costs and underestimate the rise in real income due to trade liberalizations.
Abstract
					We use sizable lottery prizes in Norwegian administrative panel data to explore how transitory income shocks are spent and saved over time and how households' marginal propensities to 
consume (MPCs) vary with household characteristics and shock size. We find that spending peaks in the year of winning and gradually reverts to normal within five years. Controlling for all items on 
households' balance sheets and characteristics such as education and income, it is the amount won, age, and liquid assets that vary systematically with MPCs. Low-liquidity winners of the smallest 
prizes (around US$1,500) are estimated to spend all within the year of winning. The corresponding estimate for high-liquidity winners of large prizes (US$8,300–150,000) is slightly below one-half. 
While conventional models will struggle to account for such high MPC levels, we show that a two-asset life cycle model with a realistic earnings profile and a luxury bequest motive can account for 
both the time profile of consumption responses and their systematic covariation with observables.
Abstract
					We develop a model where selection into marriage and household search generate a marital wage premium. Beyond selection, married individuals earn higher wages for two reasons. First, income pooling within a joint household raises risk-averse individuals' reservation wages. Second, married individuals climb the job ladder faster, as they internalize that higher wages increase their partner's selectivity over offers. Specialization according to comparative advantage in search generates a premium that increases in spousal education, as in the data. Quantitatively, household search explains 10–33 percent and 20–58 percent of the premium for males and females, respectively, and accounts for its increase with spousal education.
Abstract
					We document that government spending multipliers depend on the population age structure. Using the variation in military spending and birth rates across US states, we show that the local fiscal multiplier is 1.5 and increases with the population share of young people, implying multipliers of 1.1–1.9 in the interquartile range. A parsimonious life cycle open economy New Keynesian model with credit market imperfections and age-specific differences in labor supply and demand explains 87 percent of the relationship between local multipliers and demographics. The model implies that the US population aging between 1980 and 2015 caused a 38 percent drop in national government spending multipliers.
Abstract
					Financial crises are particularly severe and lengthy when banks fail to recapitalize after bearing large losses. We present a model that explains the slow recovery of bank capital and economic activity. Banks provide intermediation in markets with information asymmetries. Large equity losses force banks to tighten intermediation, which exacerbates adverse selection. Adverse selection lowers bank profit margins, which slows both the internal growth of equity and equity injections. This mechanism generates financial crises characterized by persistent low growth. The lack of equity injections during crises is a coordination failure that is solved when the decision to recapitalize banks is centralized.
Abstract
					To quantify trade frictions, we examine multiproduct exporters. We build a flexible general-equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market access cost shocks. Our estimates show that additional products farther from a firm's core competency come at higher production costs, but there are substantive economies of scope in market access costs. Market access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer nontariff barriers. We evaluate a counterfactual scenario that harmonizes market access costs across destinations and find global welfare gains similar to eliminating all current tariffs.
Abstract
					We develop a random-matching model to study the price dynamics of monies produced privately according to a time-consuming mining technology. For our leading example, there exists a unique equilibrium where the value of money increases over time and reaches a steady state. There is also a continuum of perfect-foresight equilibria where the price of money inflates and bursts gradually over time. Initially, money is held for a speculative motive, but it acquires a transactional role as it becomes sufficiently abundant. We study fiat, commodity, and crypto monies, endogenous acceptability, and adopt implementation and equilibrium approaches.
Abstract
					We propose a model of banks' exposure to movements in interest rates and their role in the transmission of monetary shocks. Since bank deposits provide liquidity, higher interest rates allow banks to earn larger spreads on deposits. Therefore, if risk aversion is higher than one, banks' optimal dynamic hedging strategy is to take losses when interest rates rise. This risk exposure can be achieved by a traditional maturity-mismatched balance sheet and amplifies the effects of monetary shocks on the cost of liquidity. The model can match the level, time pattern, and cross-sectional pattern of banks' maturity mismatch.
Abstract
					How large are the aggregate productivity losses from the misallocation of resources across firms? With endogenous selection, microfrictions can induce extensive margin misallocation among firms: too many unproductive firms are active (Zombies), and too many productive firms are inactive (Shadows). Therefore, the same set of measured distortions potentially induces much larger aggregate productivity losses, as the composition of firms is shifted toward unproductive active firms. I develop and calibrate a model with plant-level microdata for Indonesia to quantify aggregate welfare in the presence of extensive margin misallocation. My estimates show that selection can magnify aggregate TFP losses from microdistortions by over 40 percent compared to existing estimates. Realistic values of measurement error even increase the relative importance of extensive margin misallocation.
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.
Abstract
					Trading frictions in financial markets affect more long-term than short-term bonds, generating an upward-sloping yield curve. Long-term financing is more expensive in economies with higher trading frictions so firms choose to borrow and invest in shorter horizons and lower productivity projects. The theory guides a new identification of the slope of liquidity spread in the data. We measure and calibrate the model for the United States, and counterfactual exercises suggest that variations in trading frictions can have significant effects on maturity choices and investment. A policy intervention improves liquidity, reduces long-term financial costs, and promotes investment in longer-term projects.
Abstract
					We document a decline in the frequency of shopping trips in the United States since 1980 and consider its implications for the measurement of consumption inequality. A decline in shopping frequency as households stock up on storable goods (i.e., inventory behavior) will lead to a rise in expenditure inequality when the latter is measured at high frequency, even when underlying consumption inequality is unchanged. We find that most of the recently documented rise in expenditure inequality in the United States since the 1980s can be accounted for by this phenomenon. Using detailed micro data on spending, which we link to data on club/warehouse store openings, we directly attribute much of the reduced frequency of shopping trips to the rise in club/warehouse stores.
Abstract
					Industrial agglomeration policies may limit competition. We develop, validate, and apply a novel approach for measuring competition based on the comovement of markups and market shares among firms in the same location and industry. Then we develop a model of how this reduction in competition affects aggregate income. We apply our approach to the well-known special economic zones (SEZs) of China. We estimate that firms in SEZs exhibit cooperative pricing almost three times as intensively as firms outside SEZs. Nevertheless, we model the aggregate consequences of SEZs and find positive effects because markups become higher but also more equal.
Abstract
					We consider a matching model of employment with flexible wages for new hires but sticky wages within matches. Unlike most models of sticky wages, we allow effort to respond if wages are too high or too low. In the Mortensen-Pissarides model, employment is not affected by wage stickiness in existing matches. But it is in our model. If wages of matched workers are stuck too high, firms require more effort, lowering the value of additional labor and reducing hiring. We find that effort's response can greatly increase wage inertia.
Abstract
					Analyzing International Monetary Fund (IMF) data, we find that overly optimistic growth expectations for a country induce economic contractions a few years later. To isolate the causal effect, we take an instrumental variable approach—exploiting randomness in the country allocation of IMF mission chiefs. We first document that IMF mission chiefs differ in their individual degrees of forecast optimism, yielding quasi-experimental variation in the degree of forecast optimism at the country level. The mechanism appears to run through excessive accumulation of debt (public and private). Our findings illustrate the potency of unjustified optimism and underline the importance of basing economic forecasts upon realistic medium-term prospects.
Abstract
					We estimate a macroeconomic model on US data where banks lend to households and businesses and simultaneously adjust lending requirements on the two types of loans. We find that the collateral shock, a change in the ability of the financial sector to redeploy collateral, is the most important force driving the business cycle. Hit by this unique disturbance, our model quantitatively replicates the joint dynamics of output, consumption, investment, employment, and both household and business credit quantities and spreads. The estimated collateral shock generates accurate movements in lending standards and tracks measures of market sentiment.
Abstract
					This paper provides a unified framework for quantifying the cross-country and cross-sector interactions among trade, innovation, and knowledge diffusion. This framework is used to study the effect of trade liberalization in an endogenous growth model in which comparative advantage and the stock of knowledge are determined by innovation and diffusion. The model is calibrated to match observed cross-country and cross-sector heterogeneity in production, innovation efficiency, and knowledge spillovers. The counterfactual analysis shows that a reduction in trade costs induces a reallocation of R&D and comparative advantage across sectors. Heterogeneous knowledge diffusion amplifies the specialization effects of trade-induced R&D reallocation, becoming an important source of welfare.
Abstract
					India's relative price of investment rose 44 percent from 1981 to 1991 and fell 26 percent from 1991 to 2006. We build a simple DGE model, calibrated to Indian data, in order to explore the impact of capital import substitution policies and their reform post-1991 in accounting for this rise and fall. Our model delivers a 23 percent rise before reform and a 31 percent fall thereafter. GDP per effective labor was 3 percent lower in 1991 compared to 1981 due to import restrictions on capital goods. Their removal, and a 71 percentage point reduction in tariff rates, raised GDP per effective labor permanently by 20 percent.
Abstract
					We build an endogenous growth model with automation (the replacement of low-skill workers with machines) and horizontal innovation (the creation of new products). Over time, the share of automation innovations endogenously increases through an increase in low-skill wages, leading to an increase in the skill premium and a decline in the labor share. We calibrate the model to the US economy and show that it quantitatively replicates the paths of the skill premium, the labor share, and labor productivity. Our model offers a new perspective on recent trends in the income distribution by showing that they can be explained endogenously.
Abstract
					Business credit lags GDP growth by about one year. This contributes to high leverage during recessions and slow deleveraging. We show that a model in which firms use risky long-term debt replicates this slow adjustment of firm debt. In the model, slow-moving debt has important effects for real activity. High levels of firm debt issued during expansions are only gradually reduced during recessions. This generates an adverse feedback loop between high default rates and low investment and thereby amplifies the downturn. Sluggish deleveraging slows down the recovery.
Abstract
					Using the Quarterly Workforce Indicators database, we document that a significant amount of the decline in labor market turnover during the last two decades is accounted for by the decline in employment spells that last just one or two quarters. This phenomenon is pervasive: short-term employment spells have declined across industries, firm size categories, demographic groups, and geographic regions. Using a search-and-matching model in the Diamond-Mortensen-Pissarides tradition that incorporates noisy signals about the quality of a worker-firm match, we argue that improved screening by workers and firms can account for much of the decline in short-lived employment spells.
Abstract
					I propose a new mechanism for sluggish wages based on workers' noisy information about the state of the economy. Wages do not respond immediately to a positive aggregate shock because workers do not (yet) have enough information to demand higher wages. The model is robust to two major criticisms of existing theories of sluggish wages and volatile unemployment, namely, that wages are flexible for new hires and the flow opportunity cost of employment (FOCE) is pro-cyclicality. The model generates volatility in the labor market as well as wage and FOCE elasticities with respect to productivity, consistent with the data.
Abstract
					We show that in microdata, as well as in a search and matching model with flexible wages for new hires, wage rigidities of incumbent workers have substantial effects on separations and unemployment volatility. Allowing for an empirically relevant degree of wage rigidities for incumbent workers drives unemployment volatility as well as the volatility of vacancies and tightness to that in the data. Thus, the degree of wage rigidity for newly hired workers is not a sufficient statistic for determining the effect of wage rigidities on macroeconomic outcomes. This finding affects the interpretation of a large empirical literature on wage rigidities.
Abstract
					We show that the observed polarization of employment toward the high- and low-skill occupations disappears when only native workers are considered. Instead, low-skilled immigration explains employment growth at the low tail of the skill distribution. Moreover, while employment rose, wages remained subdued in low-skill occupations. A data-disciplined structural model accounts for this evidence: Offshoring and automation negatively affect middle-skill occupations but enhance employment and wages for the high-skilled. Low-skill employment is sheltered from offshoring and automation, as it consists of manual, non-tradable services. However, low-skilled immigration depresses low-skill wages and encourages native workers to move into skilled occupations through training.
Abstract
					This paper examines the role of agricultural diversity in the process of development. Using data from US counties and exploiting climate-induced variation in agricultural production patterns, I show that mid-nineteenth-century agricultural diversity had positive long-run effects on population density and income per capita. During the Second Industrial Revolution, agricultural diversity fostered industrialization, diversification within manufacturing, patent activity, formation of new labor skills, and the expansion of knowledge- and skill-intensive industries. These results are consistent with the hypothesis that diversity spurs the acquisition of new ideas and new skills because of the presence of cross-sector spillovers and complementarities.
Abstract
					I study efficiency and optimal monetary policy in a two-country monetary union with frictional labor markets. With heterogeneity in labor market frictions, the constrained efficient allocation generically cannot be achieved even if productivity shocks affecting each country are the same. The second-best optimal policy targets smaller inflation and output gaps in the more sclerotic labor market. A quantitative calibration to the eurozone implies welfare gains from redefining the union's inflation target to put more weight on its sclerotic members.
Abstract
					Studies based on natural experiments find that consumption responds strongly and significantly to a transitory variation in income, while semistructural estimations find no pass-through of transitory shocks to consumption. I develop a more robust semistructural estimator that relaxes the assumption that log consumption is a random walk. The robust pass-through estimate is significant and large, implying a yearly marginal propensity to consume of 0.32, close to the natural experiment findings. The robust estimator performs well in numerical simulations of a life cycle model, while nonrobust estimators do not. The difference between the two in the simulations is similar to their difference in the survey data.
Abstract
					Since sectors differ in their sensitivity to interest rates, monetary policy produces inefficient sectoral fluctuations. In a model with sectoral heterogeneity, I show that policymakers should weight sectors proportionally to their interest elasticities, account for dynamic demand effects from durable goods, and systematically utilize forward guidance to reduce sectoral volatility. A calibrated model confirms these recommendations and finds that neglecting sectoral volatility produces substantial welfare losses. The best-performing policy rule stabilizes a sectorally weighted measure of inflation, plus lags of past durable inflation.
Abstract
					We study structural change in the historical consumption expenditure of the United States, the United Kingdom, Canada, and Australia over more than a century. We characterize the most general class of preferences in a time-additive setting that admits aggregation of the saving decision and allows us to identify preference parameters from aggregate data. We parameterize and estimate such intertemporally aggregable (IA) preferences and discuss their properties in a dynamic general equilibrium framework with sustained growth. Our preference class is considerably more flexible than the Gorman form or PIGL, giving rise to a good fit of the non-monotonic pattern of structural change.
Abstract
					We provide new evidence on business cycle fluctuations in skewed labor income risk in the United States, Germany, Sweden, and France. We document four results. First, in all countries, the skewness of individual income growth is strongly procyclical, whereas its variance is flat and acyclical. Second, this result also holds for continuously employed, full-time workers, indicating that the hours margin is not the main driver; additional analyses of hours and wages confirm that both margins are important. Third, within-household smoothing does not seem effective at mitigating skewness fluctuations. Fourth, tax-and-transfer policies blunt some of the largest declines in incomes, reducing procyclical fluctuations in skewness.
Abstract
					Current and expected unemployment rates contain information that is highly useful to estimate the effect of news about TFP and to allow a general equilibrium rational expectations model to generate Pigouvian cycles: a large fraction of the comovement of output, consumption, investment, employment, and real wages is explained by noise about TFP. These results emerge because of the low-frequency negative relationship between unemployment and TFP growth. The model predicts that the start (end) of most US recessions is associated with agents realizing that previous enthusiastic (lukewarm) expectations about future TFP would not be met.
Abstract
					This paper argues that high marginal labor income tax rates on top earners are an effective tool for social insurance even when households have high labor supply elasticity, households make dynamic savings decisions, and policies have general equilibrium effects. We construct a large-scale overlapping generations model with uninsurable labor productivity risk, show that it has a realistic wealth distribution, and numerically characterize the optimal top marginal rate. We find that marginal tax rates for top 1 percent earners of 79 percent are optimal as long as the model earnings and wealth distributions display a degree of concentration as observed in US data.
Abstract
					We study the importance of input-output (IO) linkages and sectoral productivity (TFP) in determining cross-country income differences. We find that while highly connected sectors are more productive than the typical sector in poor countries, the opposite is true in rich ones. To assess the quantitative role of linkages and sectoral TFP differences in cross-country income differences, we decompose cross-country income variation using a multisector general equilibrium model. We find that IO linkages substantially amplify fundamental sectoral TFP variation, but this amplification is significantly weaker than the one suggested by a simple IO model with an aggregate intermediate good.
Abstract
					This paper studies the interaction between barriers to firm entry and distortions to allocative efficiency in a standard model of firm dynamics. We derive a strategy to infer entry barriers based on cross-country differences in the firm size distribution and idiosyncratic distortions. The inferred barriers resemble regulation-based indicators in advanced economies but are substantially higher in middle- and low-income countries. Regulation-based indicators cannot account for cross-country differences in average firm size and underestimate the aggregate productivity gains associated with their removal by up to 8 percent on average.
Abstract
					Credit spreads display occasional spikes and are more strongly countercyclical in times of elevated financial stress. Financial crises are extreme cases of this nonlinear behavior, featuring skyrocketing credit spreads, sharp losses in bank equity, and deep recessions. We develop and estimate a macroeconomic model with a banking sector in which banks' leverage constraints are occasionally binding and equity issuance is endogenous. The model captures the nonlinearities in the data and produces quantitatively realistic crises. Banks' precautionary equity issuance makes crises infrequent but does not prevent them altogether. A macroprudential policy inducing banks to issue more equity has considerable welfare benefits.
Abstract
					How are the optimal tax and debt policies affected if the government can default on its debt? We address this question from a normative perspective in an economy with noncontingent government debt, domestic default, and labor taxes. On one hand, default prevents the government from incurring future tax distortions associated with servicing the debt. On the other hand, default risk gives rise to endogenous credit limits that hinder the government's ability to smooth taxes. We characterize the fiscal policy and show how the option to default alters the near–unit root component of taxes in the economy with risk-free borrowing.
Abstract
					We develop a model with a finite number of multiproduct firms together with a continuum of single-product firms and study the dynamics that arise from product innovation. Consistent with the available evidence, the model predicts rising markups and concentration and a declining labor share. Our dynamics predict the possibility of an inverted-U relationship between labor productivity and product span, for which we provide suggestive evidence. In the optimal allocation, product span and labor productivity are strictly positively related. We also characterize optimal policies for these types of sectors.
Abstract
					In this paper, I document that workers in larger cities have significantly more occupational options than workers in smaller ones. They are able to form better occupational matches and earn higher wages. I also note differences in occupation reallocation patterns across cities. I develop a dynamic model of occupation choice that microfounds agglomeration economies and captures the empirical patterns. The calibration of the model suggests that better occupational match quality accounts for approximately 35 percent of the observed wage premium and one-third of the greater inequality in larger cities.
Abstract
					This paper assesses the presence and importance of the neo-Fisher effect in postwar data. It formulates and estimates an empirical and a New Keynesian model driven by stationary and nonstationary monetary and real shocks. In accordance with conventional wisdom, temporary increases in the nominal interest rate are estimated to cause decreases in inflation and output. The main finding of the paper is that permanent monetary shocks that increase the nominal interest rate and inflation in the long run cause increases in interest rates, inflation, and output in the short run and explain about 45 percent of inflation changes.
Abstract
					We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated production processes. Identification is achieved with restrictions derived from a stylized model of structural change. Our results point to automation as the main driver of the labor share, although rising markups have played an important role in the last 20 years. We also find evidence of capital-labor complementarity, suggesting that capital deepening may have raised the labor share.
Abstract
					We investigate the determinants of radical ("creative") innovations that break new ground in knowledge creation. We develop a model focusing on the choice between incremental and radical innovation and on how managers of different ages and human capital are sorted across firms. Firm- and patent-level evidence reveals that firms that are more "open to disruption" are significantly more likely to engage in radical innovation and hire younger managers and inventors with a comparative advantage in radical innovation. However, once the effect of the sorting is factored in, the (causal) impact of manager age on creative innovations, though positive, is small.
Abstract
					Public school funding depends heavily on local property tax revenue. Consequently, low-income households have limited access to quality education in neighborhoods with high house prices. In a dynamic life-cycle model with neighborhood choice and endogenous local school quality, we show that this property tax funding mechanism reduces intergenerational mobility and accounts for the spatial correlation between house prices and mobility. A housing voucher experiment improves access to schools, with benefits that can last for multiple generations. Additionally, a policy that redistributes property tax revenues equally across schools improves mobility and welfare. However, the benefits can take generations to be realized.
Abstract
					We show that the conditional distribution of forecasted GDP growth depends on financial conditions in a panel of 11 advanced economies. Financial conditions have a larger effect on the lower fifth percentile of conditional growth—which we call growth-at-risk (GaR)—than the median. In addition, the term structure of GaR reflects that when initial financial conditions are loose, downside risks are lower in the near term but increase in later quarters. This intertemporal trade-off for loose financial conditions is amplified when credit-to-GDP growth is rapid. Using granular instrumental variables, we also provide evidence that the relationship from loose financial conditions to future downside risks is causal. Our results suggest that models of macrofinancial linkages should incorporate the endogeneity of higher-order moments to systematically account for downside risks to growth in the medium run.
Abstract
					A common view states that central bank releases decrease central banks' own information about the economy and are harmful if about inefficient disturbances, such as cost-push shocks. This paper shows how neither is true in a microfounded macroeconomic model in which households and firms learn from central bank releases and the central bank learns from the observation of firm prices. Central bank releases make private sector and central bank expectations closer to common knowledge. This helps transmit dispersed information between the private sector and the central bank. As a result, the release of additional central bank information decreases the central bank's own uncertainty and can be beneficial, irrespective of the efficacy of macroeconomic fluctuations. A calibrated example suggests that the benefits of disclosure are substantial.
Abstract
					We explore the short- and long-run implications of tax competition between jurisdictions, where governments can only tax capital at source. We do this in the context of a neoclassical growth model under commitment and capital mobility. We provide a new theoretical perspective on the dynamic capital tax externalities that emerge in this model. Numerically, we show that the net capital tax externality is positive in the short run but converges to zero in the long run. We also find that noncooperative source-based capital taxes are initially positive and slowly decline toward zero.
Abstract
					We propose a joint theory for interest rate dynamics and bailout decisions. Interest rate spreads are driven by time-varying fundamentals and expectations of future bailouts. Private agents are uncertain about the government's willingness to bail out and learn by observing its actions. The model provides an explanation for why we observe governments initially refusing to bail out borrowers at the beginning of a crisis even if they eventually end up providing a bailout after the crisis aggravates. The typical equilibrium outcome displays hump-shaped spreads and contagion as was the case in the US financial and European debt crises.
Abstract
					We show that during the Great Recession, more-flexible sectors paid lower sectoral bond spreads. We rationalize this fact with a model with input-output linkages, heterogeneous elasticities, and binding working capital constraints in the use of intermediates. We show that the difference in flexibility between upstream and downstream sectors is key for determining the role of input-output linkages in amplifying or mitigating distortions. Calibrating the model to the US economy, we find that our sectoral elasticity estimates amplify distortions by a factor of 1.7 compared to the Cobb-Douglas case, and generate an input-output multiplier 1.2 times the homogeneous elasticity case.
Abstract
					Housing demand stimulus produces a multiplier effect by freeing up owners attempting to sell their current home, allowing them to reenter the market as buyers. Exploiting a shock to first-time home buyer demand caused by a cut in mortgage insurance premiums, we find that homeowners buy their next home sooner when the probability of their current home selling increases. We build and calibrate a search model that explains these findings as a result of homeowners avoiding the cost of owning two homes simultaneously. Simulations demonstrate that stimulus to home buying generates a substantial multiplier effect, particularly in cold markets.
Abstract
					Goldin (2014) offers a narrative in which gender differences in home production responsibilities create gender gaps in labor market outcomes. We carry out a model-based quantitative assessment of this narrative and find that it can account for a significant share of gender gaps in occupational choice, wages, and hours. Our analysis emphasizes the quantitative significance of two key elements not highlighted by Goldin: heterogeneity in comparative advantage and multimember households. Gender differences in nonmarket responsibilities have important aggregate effects on welfare and productivity, similar to those emphasized by Hsieh et al. (2019).
Abstract
					In a field experiment, we study how job seekers respond to posted wages by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. Higher wages attract significantly more interest. Still, a nontrivial number of applicants only reveal an interest in the low-wage vacancy. With a complementary survey, we show that external raters perceive higher-wage jobs as more competitive. These findings qualitatively support core predictions of theories of directed/competitive search, though in the simplest calibrated model, applications react too strongly to the wage. We discuss extensions such as on-the-job search that rectify this.
Abstract
					We study optimal time-consistent monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence give rise to persistent liquidity trap episodes. Insights from widely studied fundamental-driven liquidity traps are not a useful guide for enhancing welfare in this model. Raising the inflation target, appointing an inflation-conservative central banker, or allowing for the use of government spending as an additional stabilization tool can exacerbate deflationary pressures and demand deficiencies during the liquidity trap episodes. However, appointing a policy-maker who is sufficiently less concerned with government spending stabilization than society eliminates expectations-driven liquidity traps.
Abstract
					We study what happens to identified shocks and to dynamic responses when the data generating process features q disturbances but q1< q variables are used in an empirical model. Identified shocks are linear combinations of current and past values of all structural disturbances and do not necessarily combine disturbances of the same type. Theory-based restrictions may be insufficient to obtain structural dynamics. We revisit the evidence regarding the transmission of house price and of uncertainty shocks. We provide suggestions on how to compare the dynamics of larger scale DSGEs models with smaller scale VARs.
Abstract
					We exploit cross-sectional variation in the response of US states to an identified monetary policy shock to study how the impact of monetary policy varies with the age structure of the population. We find that the economy's response is weaker the greater the share of population under 35 years of age and stronger the greater the share between 40 and 65. We find that all age groups become more responsive to monetary policy shocks when the proportion of the middle-aged increases. We provide evidence consistent with middle-aged entrepreneurs starting and expanding businesses in response to an expansionary monetary shock.
Abstract
					We estimate a behavioral New Keynesian (NK) model in which households and firms plan over a finite horizon. The finite-horizon planning (FHP) model outperforms rational expectations versions of the NK model as well as other behavioral NK models. In the FHP model, households and firms are forward-looking in thinking about events over their planning horizon but are backward-looking regarding events beyond that point. This gives rise to substantial aggregate persistence without resorting to additional features such as habit persistence and price contracts indexed to lagged inflation.
Abstract
					We examine the dynamic effects of TFP news shocks in the context of frictions in financial markets. We document two new facts. First, a shock to future TFP generates a significant decline in credit spread indicators along with a robust improvement in credit supply indicators. Second, we establish a tight link between TFP news shocks and shocks that explain the majority of unforecastable movements in credit spread indicators. A DSGE model enriched with a financial sector of the Gertler-Kiyotaki-Karadi type generates very similar quantitative dynamics.
Abstract
					We model the world economy as one system of endogenous input-output relationships subject to frictions and study how the world's input-output structure and world's GDP change due to changes in frictions. We derive a sufficient statistic to identify frictions from the observed world input-output matrix, which we fully match for the year 2011. We show how changes in internal frictions impact the whole structure of the world's economy and that they have a much larger effect on world's GDP than external frictions. We also use our approach to study the role of internal frictions during the Great Recession of 2007–2009.
Abstract
					We quantify the relationship between the response of output to monetary policy shocks and the share of liquidity-constrained households. We do so in the context of the euro area, using a Local Projections Instrumental Variables estimation. We construct an instrument for changes in interest rates from changes in overnight indexed swap rates in a narrow time window around ECB announcements. Monetary policy shocks have heterogeneous effects on output across countries. Using micro data, we show that the elasticity of output to monetary policy shocks is larger in countries that have a larger fraction of households that are liquidity constrained.
Abstract
					We show that business cycles reduce welfare through a decrease in the average level of employment in a labor market search model with learning on the job and skill loss during unemployment. Empirically, unemployment and the job-finding rate are negatively correlated. Since new jobs are the product of these two from the employment transition equation, business cycles imply fewer new jobs. Learning on the job implies that the resulting decrease in employment reduces aggregate human capital. This reduces incentives to post vacancies, further decreasing employment and human capital. We quantify this mechanism and find large output and welfare costs of business cycles.
Abstract
					This paper determines optimal public debt in a life cycle model with incomplete markets that matches the empirically observed variation in consumption, labor, and savings. We find that public savings—not public debt—equal to 168 percent of output is optimal, primarily due to the influence of the life cycle on household decision-making. By inducing a lower interest rate, public savings slow consumption and leisure growth over an average household's lifetime, and the resulting flatter allocation of lifetime consumption and leisure improves welfare. These life cycle welfare benefits are large—on net, they outweigh the transitional costs from a tax-financed public debt elimination.
Abstract
					From 1995 to 2015 the aggregate US college completion rate increased almost 50 percent, but completion trends differed markedly by family background. We consider whether changing college preparedness contributed to growth in aggregate completion and differences by family background. We first document parallel empirical trends in precollege investments, college preparedness, and completion. We use these moments to discipline a quantitative model of intergenerational human capital investment with heterogeneous families. Within the model, investment trends generate half of the empirical increase in college completion. The model implies that subsidizing precollege investments increases college completion and lifetime earnings more than college tuition subsidies.
Abstract
					We quantify the role of population aging in the structural transformation process. Household-level data from the United States show that the fraction of expenditures devoted to services increases with household age. We use a shift-share decomposition and a quantitative model to show that US population aging accounted for about a fifth of the observed increase in the service share in consumption between 1982 and 2016. The contribution of population aging to the rise in the service share is about the same size as the contribution of real income growth and about half as large as that of changes in relative prices.
Abstract
					The responsiveness of house prices to monetary policy shocks depends on the nature of the shock—expansionary versus contractionary—and on local housing supply elasticities. These findings are established using a panel of 263 US metropolitan areas. Expansionary monetary policy shocks have a larger impact on house prices in supply-inelastic areas. Contractionary shocks are orthogonal to housing supply elasticities. In supply-elastic areas, contractionary shocks have a greater impact on house prices than expansionary shocks do. The opposite holds true in supply-inelastic areas. We attribute this to asymmetric housing supply adjustments.
Abstract
					We develop a theory of low-frequency movements in inflation expectations, and use it to interpret joint dynamics of inflation and inflation expectations for the United States and other countries over the postwar period. In our theory, long-run inflation expectations are endogenous. They are driven by short-run inflation surprises, in a way that depends on recent forecasting performance and monetary policy. This distinguishes our theory from common explanations of low-frequency properties of inflation. The model, estimated using only inflation and short-term forecasts from professional surveys, accurately predicts observed measures of long-term inflation expectations and identifies episodes of unanchored expectations.
Abstract
					Applying the Foster, Haltiwanger, and Krizan (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. To analyze this relationship, we develop a model of firm entry and exit based on Hopenhayn (1992). When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea.
Abstract
					The European debt crisis presents a challenge to our understanding of the relationship between government bond yields and economic fundamentals. I argue that information frictions are an important missing element and support that claim with evidence on the evolution of GDP forecast errors after 2008. I build a quantitative model of sovereign default where output features rare disasters and agents learn about their realizations. Debt crises coincide with economic depressions and develop gradually while markets update their expectations about future income. Calibrated to the Portuguese economy, the model replicates the comovement of bond spreads and output before and after 2008.
Abstract
					We study the effects of the zero lower bound (ZLB) on the severity of financial crises using an incomplete markets New Keynesian model with two occasionally binding constraints: a ZLB on the nominal interest rate and a borrowing constraint tied to an asset price. The model's financial wedge corresponds to an endogenous multiplier on the borrowing constraint. Binding ZLB exacerbates financial crises through its interaction with the asset fire sale vicious cycle, driving up the financial wedge. Our results offer a novel reinterpretation of the negligible effect of the ZLB in representative agent New Keynesian models with exogenous wedges.
Abstract
					We provide predictions for DSGE models with incomplete information that are robust across information structures. Our approach maps an incomplete-information model into a full-information economy with time-varying expectation wedges and provides conditions that ensure the wedges are rationalizable by some information structure. Using our approach, we quantify the potential importance of information as a source of business cycle fluctuations in an otherwise frictionless model. Our approach uncovers a central role for firm-specific demand shocks in supporting aggregate confidence fluctuations. Only if firms face unobserved local demand shocks can confidence fluctuations account for a significant portion of the US business cycle.
Abstract
					We study the effects of aggregate government spending shocks in a production network economy where sectors differ in their price rigidity, factor intensities, use of intermediate inputs, and contribution to final demand. The model implies an aggregate value-added multiplier that is 75 percent (and $0.32) larger than that obtained in the average one-sector economy. This amplification is mainly driven by input-output linkages and—to a lesser extent—sectoral heterogeneity in price rigidity. Aggregate government spending shocks also lead to heterogeneous responses of sectoral value added, which are larger among upstream industries. We present novel empirical evidence supporting this prediction.
Abstract
					This paper revisits the question of how allowing for imperfect substitution among workers with different skill levels affects the results of development accounting. We consider a range of models that nest the approaches in the literature and calibrate them to a common set of moments, including particularly evidence on the wage gains of migrants. We obtain two main results. First, human capital accounts for between one-half and three-fourths of cross-country income gaps. Second, human capital accounts for only modest variation in the relative productivity of skilled versus unskilled labor.
Abstract
					Business cycle recoveries have slowed in recent decades. This slow-down comes entirely from female employment, as women's employment rates converged toward men's during the past half-century. But does the slowdown in the growth of female employment rates translate into a slowdown for overall employment rates? We estimate the extent to which women "crowd out" men in the labor market across US states, and find that it is small. Through the lens of a general equilibrium model with home production, we show this statistic implies that 60–75 percent of the slowdown in recent business cycle recoveries can be explained by female convergence.
Abstract
					We document heterogeneity in the marginal propensity to consume (MPC) across household characteristics relevant to understanding heterogeneous agent models and monetary policy transmission. We find a strong negative relationship between household liquid wealth and MPC. We show that household liquid wealth predicts MPC closely for every other household characteristic we look at. We use a new empirical method that overcomes sources of bias found in the existing literature, along with administrative data from Denmark that allow us to identify heterogeneous behavior. We use our results to analyze monetary policy transmission mechanisms in both Denmark and the United States.
Abstract
					E-commerce represents a rapidly growing share of consumer spending in the United States. We use transactions-level data on credit and debit cards from Visa, Inc. between 2007 and 2017 to quantify the resulting consumer surplus. We estimate e-commerce reached 8 percent of consumption by 2017, yielding the equivalent of a 1 percent boost to their consumption, or over $1,000 per household per year. While some of the gains arose from avoiding travel costs to local merchants, most of the gains stemmed from substituting to merchants available online but not locally. Higher income consumers gained more, as did consumers in more densely populated counties.
Abstract
					The hoped-for silver lining of euro-area austerity programs was to raise external competitiveness and improve current accounts. Using product- and industry-level data for 12 countries over the period 1999–2018, we show that reductions in government spending reduce prices and wages but only for products with low import content and industries with low export shares. This leads to asymmetric expenditure switching, with net exports improving through lower imports rather than higher exports. The standard small-open-economy model fails to rationalize these findings, but home bias in government spending and frictions preventing factor prices from equalizing across sectors considerably improve the fit of the model.
Abstract
					We introduce a novel Bartik-like instrument for house prices consisting of the local composition of housing characteristics interacted with aggregate changes in the marginal prices of these characteristics. Using household-level panel data, we estimate elasticities of nondurable consumption expenditures with respect to house prices of around 0.1. These consumption effects are concentrated among the young and those most likely to be facing tight borrowing constraints. A decomposition shows that identifying variation in the instrument is associated with times and locations where house prices have varied the most: during the housing bust of the mid-2000s and in the western United States.
Abstract
					We employ a large panel of US income tax returns for the period 1987–2018 to extensively characterize and quantify business income risk. Our findings show business income to be much riskier than labor income. Business income is less persistent and is characterized by higher tail risk. Furthermore, when compared to labor income, heterogeneity across households is less important in explaining the cross-sectional variation in business income, and within-household income variation is more important. Our results underscore the income risks business owners face and provide stylized facts and parameter estimates useful for quantitative macroeconomic models and policy analysis.
Abstract
					I examine the role of family structure and childcare subsidies in child skill accumulation. I establish empirically that skill accumulation is more responsive to childcare price for one-parent families than for two-parent families. I analyze the effects of childcare subsidies in a model featuring endogenous family formation, parental altruism, and a baseline subsidy resembling that of the United States. I find that eliminating this subsidy generates welfare losses of 1.63 percent of lifetime consumption, that equilibrium adjustments act to mitigate these losses, and that increasing uptake among one-parent families yields the highest welfare gains per additional recipient.
Abstract
					This paper studies wage setting in a directed search model of multiworker firms facing within-firm equity constraints on wages. The constraints reduce wages, as firms exploit their monopsony power over their existing workers, rendering wages less responsive to productivity in doing so. They also give rise to a time inconsistency in the dynamic firm problem, as firms face a less elastic labor supply in the short run than in the long run, making commitment to future wages valuable. Constrained firms find it profitable to fix wages, and doing so is good for worker welfare and resource allocation in equilibrium.
Abstract
					Microeconomic evidence reveals a direct link between firms' current earnings and their access to debt. This paper studies macroeconomic implications of earnings-based borrowing constraints. In a macro model, firms with earnings-based constraints borrow more in response to positive investment shocks, whereas firms with collateral constraints borrow less. Empirically, aggregate and firm-level credit responds to identified investment shocks according to the predictions with earnings-based constraints. Moreover, with sticky prices, earnings-based constraints imply that supply shocks are quantitatively more important. This is validated in an estimated version of the model, highlighting the importance of carefully modeling credit constraints to understand policy trade-offs.
Abstract
					This paper presents a novel and unique measure of cross-sectional uncertainty constructed from stock options on individual firms. Cross-sectional uncertainty varied little between 1980 and 1995 and subsequently had three distinct peaks—during the tech boom, the financial crisis, and the coronavirus epidemic. Cross-sectional uncertainty has had a mixed relationship with overall economic activity, and aggregate uncertainty is much more powerful for forecasting aggregate growth. The data and moments can be used to calibrate and test structural models of the effects of uncertainty shocks. In international data, we find similar dynamics and a strong common factor in cross-sectional uncertainty.
Abstract
					Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting high-frequency data and TTB procedural details, we identify trade policy shocks exogenous to economic fundamentals. We then use input-output tables to construct measures of protectionism affecting downstream producers. Finally, we estimate panel local projections using the identified trade policy shocks. Protectionism has small and insignificant beneficial effects in protected industries. The effects in downstream industries are negative, sizable, and significant. The employment decline follows an increase in intermediate input and final goods prices and a decline in stock market returns.
Abstract
					This paper estimates how overall consumer spending responds to changes in gasoline prices. It uses the differential impact across consumers of the sharp drop in gasoline prices in 2014 for identification. This estimation strategy is implemented using comprehensive, high-frequency, transaction-level data for a large panel of individuals. The average estimated marginal propensity to consume (MPC) out of unanticipated, permanent shocks to income is approximately one. This estimate accounts for the elasticity of demand for gasoline and potential slow adjustment to changes in prices. The high MPC implies that changes in gasoline prices have large aggregate effects.
Abstract
					This paper studies price-setting decisions under rational inattention. Prices are set by tracking an unobserved target whose distribution is also unknown. Information acquisition is dynamic and fully flexible since, given information acquired previously, price setters choose the amount of information they collect as well as how they want to learn about both the outcome and its distribution. We show that by allowing for imperfect information to be the unique source of rigidity, the model can reconcile stylized facts in the microeconomic evidence on price setting while simultaneously being consistent with empirical results on state-dependent attention.
Abstract
					What are the short-term effects of an import-competition shock on capital reallocation and aggregate productivity? To address this question, we develop a quantitative model with heterogeneous firms and capital-reallocation frictions. We discipline the model with micro data on investment dynamics of Peruvian manufacturing firms and trade flows between China and Peru. Because of large frictions in firm downsizing and exit, an import-competition shock induces a temporary aggregate-productivity loss and larger dispersion in marginal products, due to investment inaction and exit of some productive firms. Empirical evidence on the effects of trade shocks on capital reallocation supports the model mechanism.
Abstract
					The responsiveness of job creation to shocks is procyclical, while the responsiveness of job destruction is countercyclical. This new finding can be explained by a heterogeneous-firm model in which hiring costs lead to lumpy employment adjustment. The model predicts that policies that aim to stimulate employment by encouraging job creation, such as hiring subsidies, are significantly less effective in recessions: these are times when few firms are near their hiring thresholds and many firms are near their firing thresholds. Policies that target the job destruction margin, such as employment protection subsidies, are particularly effective at such times.
Abstract
					When surveys rely on repeat participants, this raises the possibility that survey participation may affect future responses, perhaps by prompting information acquisition between survey waves. We show that these "learning-through-survey" effects are large for household inflation expectations. Repeat survey participants generally have lower inflation expectations and uncertainty, particularly if their initial uncertainty was high. Consequently, repeat participants may be more informed about or attentive to inflation. This has important implications: for example, inflation expectations of new participants are more influenced by oil prices, and estimates of the elasticity of intertemporal substitution are lower for new participants.
Abstract
					This study measures the effects of monetary policy in the euro area using a small number of sign and magnitude restrictions on the residuals of a structural vector autoregression. We derive the dates and directions of these shocks from high-frequency financial market data around official European Central Bank policy announcements. Based on an in-depth narrative analysis and a comparison of the results with those of a standard high-frequency approach, we argue that our approach is purged from central bank information effects. Despite our rather agnostic identification strategy, we find clear and conclusive effects of monetary policy shocks on a wide range of macroeconomic variables.
Abstract
					Population aging is expected to slow US economic growth. We use variation in the predetermined component of population aging across states to estimate the impact of aging on growth in GDP per capita for 1980–2010. We find that each 10 percent increase in the fraction of the population age 60+ decreased per capita GDP by 5.5 percent. One-third of the reduction arose from slower employment growth; two-thirds due to slower labor productivity growth. Labor compensation and wages also declined in response. Our estimate implies population aging reduced the growth rate in GDP per capita by 0.3 percentage points per year during 1980–2010.
Abstract
					We analyze the ups and downs in economic growth in recent decades by constructing a model with recurrent bubbles, crashes, and endogenous growth. Once realized, bubbles crowd in investment and stimulate economic growth, but expectation about future bubbles crowds out investment and reduces economic growth. We identify bubbly episodes by estimating the model using the US data. Counterfactual simulations suggest that the IT and housing bubbles not only caused economic booms but also lifted US GDP by almost 2 percentage points permanently, but the economy could have grown even faster if people had believed that asset bubbles would never arise.
Abstract
					We propose a model to study the role of industry-level external economies of scale in open economies. If the elasticity governing the strength of external economies is below the inverse of the trade elasticity in each industry, then specialization under frictionless trade is consistent with comparative advantage, the model is tractable even with trade frictions, and all countries gain from trade. External economies lower gains from trade except if the country specializes in industries with high scale economies, and they amplify the gains from further trade liberalization except if it leads to specialization in industries with low scale economies.
Abstract
					This paper investigates the interrelationship between urbanization, structural transformation, and the post-2000 Chinese housing boom through the lens of a dynamic spatial equilibrium model that features migration and a rich housing market structure with mortgages. Urbanization and structural transformation emerge as key drivers of China's house price boom, while at the same time rising house prices impede these forces of economic transition. Policies to boost urbanization can be undone by the endogenous price response. Land supply expansion ameliorates this negative feedback. Overall, housing markets powerfully shape the path of economic development.
Abstract
					Using detailed household-level data from Malawi on physical quantities of agricultural outputs and inputs, we measure farm total factor productivity (TFP), controlling for land quality, rain, and transitory shocks. We find that operated land size and capital are essentially unrelated to farm TFP, implying substantial factor misallocation. The agricultural output gain from a reallocation of factors to their efficient use among existing farmers is a factor between 1.7- and 2.8-fold. We provide suggestive evidence connecting misallocation with the extent of land markets and illustrate how an efficient allocation via rental markets can substantially reduce agricultural income inequality and poverty.
Abstract
					We propose a model that reconciles microeconomic evidence of frequent and large price changes with sizable monetary non-neutrality. Firms incur separate lump-sum costs to change prices and to gather and process some information about marginal costs. Additional relevant information is continuously available and can be factored into pricing decisions at no cost. We estimate the model by Simulated Method of Moments, using price-setting statistics for the US economy. The model with free idiosyncratic and costly aggregate information fits well both targeted and untargeted microeconomic moments and generates almost three times as much monetary non-neutrality as the Calvo model.
Abstract
					We derive closed-form expressions for the optimal inflation target under Calvo and menu-cost frictions in a model featuring a product life cycle and multiple sources of heterogeneity across goods. We show that both frictions deliver the same optimal target and how it can be estimated from observed trends in relative prices. Using micro price data underlying the CPI in the United Kingdom, we document that relative prices fall over the product lifetime in most expenditure items. This causes the optimal inflation target to be positive, with our baseline estimate for the United Kingdom being equal to 2.6 percent in 2016. The optimal target has steadily increased over the prior two decades due to an acceleration in the rates of relative price decline over time.
Abstract
					We use a dataset with prices and spending on consumer packaged goods matched at the bar code level across the United States and Mexico to measure the price index in Mexico relative to the United States. Mexican prices relative to the United States are 23 percent lower compared to the International Comparisons Project's (ICP) price index. We decompose the 23 percent gap into the biases from imputation, sampling, quality, and variety. Quality bias increases Mexican prices by 48 percent. Imputation, sampling, and variety bias lowers Mexican prices by 11 percent, 13 percent, and 33 percent, respectively.
Abstract
					We compile a new database of grocery prices in Argentina. We find uniform pricing both within and across regions—i.e., prices almost do not vary within the stores of a chain. In line with uniform pricing, prices in stores of chains operating in one region react to changes in regional employment while prices in multiregion chains do not. Using a quantitative regional model with multiregion firms and uniform pricing, we find a one-half smaller elasticity of prices to a regional than an aggregate shock. This result highlights that some caution may be necessary when using regional shocks to estimate aggregate elasticities.
Abstract
					We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exogenously generated variation in inflation expectations is used to assess how expectations affect consumption decisions. The causal effects of reduced inflation expectations on nondurable spending are imprecisely estimated, but there is a sharp positive effect on durable spending. This is likely driven by the fact that Dutch households seem to become more optimistic about their real income and aggregate spending when they decrease their inflation expectations. We find little role for cognitive or financial constraints in explaining spending responses.
Abstract
					We study optimal tax policies with human capital investment and retirement savings for present-biased agents. Agents are heterogeneous in their innate ability and make risky education investments, which determines their labor productivity. We demonstrate that the optimal distortions vary with education status. In particular, the optimal policy encourages human capital investment with savings incentives. Our implementation uses income-contingent student loans and existing retirement policies, augmented by a new tax instrument that subsidizes retirement savings for college graduates. The instrument mimics the latest policy proposals by allowing employers to offer 401(k) matching contributions proportional to student loans repayment.
Abstract
					We (i) study wage-experience profiles and obtain measures of returns to potential work experience using data from about 24 million individuals in 1,084 surveys and census samples across 145 countries; (ii) show that workers in developed countries accumulate twice as much human capital at work as those in developing countries; (iii) use a simple accounting framework to find that the contribution of work experience and education to human capital accumulation and economic development might be equally important; and (iv) employ panel regressions to investigate how changes in the returns over time correlate with several factors such as economic recessions, transitions, and human capital stocks.
Abstract
					Over the last 15 years, individual households have concentrated their spending on a few preferred products. However, this is not driven by "superstar" products capturing larger market shares. Instead, households increasingly purchase different products from each other. As a result, aggregate spending concentration has decreased. We develop a model of heterogeneous household demand and use it to conclude that increasing product variety drives these divergent trends. When more products are available, households select products better matched to their tastes. This delivers welfare gains from selection equal to about half a percent per year in the categories covered by our data.
Abstract
					We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on carbon taxation in various European countries. We find no evidence for a negative impact on employment or GDP growth but rather find a zero to modest positive impact. We also find a cumulative emissions reduction on the order of 4 to 6 percent for a $40/ton CO2 tax covering 30 percent of emissions. Reductions would likely be greater for a broad-based US carbon tax since European carbon taxes typically do not cover those sectors with the lowest marginal abatement costs.
Abstract
					We assess the causal impact of pandemic-induced lockdowns on health and macroeconomic outcomes and measure the trade-off between containing the spread of a pandemic and economic activity. To do so, we estimate an epidemiological model with time-varying parameters and use its output as information for estimating SVARs and LPs that quantify the causal effects of nonpharmaceutical policy interventions. We apply our approach to Belgian data for the COVID-19 pandemic during 2020. We find that additional government-mandated mobility curtailments would have reduced deaths at a very small cost in terms of GDP.
Abstract
					In benchmark trade models that feature a constant trade elasticity, bilateral exports vary entirely on the intensive margin (exports per firm) or entirely on the extensive margin (number of firms). Our empirical analysis documents that roughly one-half of this variation occurs along each margin, implying that the trade elasticity is not constant. We estimate a generalized Melitz model with a joint log-normal distribution for firm productivity, fixed costs, and demand shifters. Using exact-hat algebra, we quantify how trade costs affect trade flows and welfare. Welfare effects are similar to those in the Melitz-Pareto model, but implied trade flows differ significantly.
Abstract
					Does the Federal Reserve have an "information advantage" in forecasting macroeconomic variables beyond what is known to private sector forecasters? And are market participants reacting only to monetary policy shocks or also to information on the future state of the economy that the Federal Reserve communicates in its announcements via an "information channel"? This paper investigates the evolution of both the information advantage and the information channel over time. Although they appear to be important historically, we find substantially weaker empirical evidence of their presence in recent years once instabilities are accounted for.
Abstract
					We document considerable scope of heterogeneity within the unemployed, especially when they are divided along eligibility for and receipt of unemployment insurance (UI). We study the implications of this heterogeneity on UI's insurance-incentive trade-off using a heterogeneous-agent job search model capable of matching the wealth and income differences that distinguish UI recipients from nonrecipients. Insurance benefits are larger for UI recipients who are predominantly wealth poor. Meanwhile, incentive costs are nonmonotonic in wealth because the poorest individuals, who value employment, exhibit weak responses. Differential elasticities imply that accounting for the composition of recipients is material to the evaluation of UI's insurance-incentive trade-off.
Abstract
					Based on novel survey data, we document a persistent rise in work from home (WFH) over the course of the COVID-19 pandemic. Using theory and direct survey evidence, we argue that three-quarters of this increase reflects the adoption of new work arrangements that will likely be permanent for many workers. A quantitative model matched to survey data predicts that twice as many workers will WFH full-time postpandemic compared to prepandemic, and that one in every five instead of seven workdays will be WFH. These model predictions are consistent with survey evidence on workers' own expectations about WFH in the future.
Abstract
					Many policymakers view power outages as a major constraint on firm productivity in developing countries. Yet empirical studies find modest short-run effects of outages on firm performance. This paper builds a dynamic macroeconomic model to study the long-run general-equilibrium effects of power outages on productivity. Outages lower productivity in the model by creating idle resources, depressing the scale of incumbent firms and reducing entry of new firms. Consistent with the empirical literature, the model predicts small short-run effects of eliminating outages. However, the long-run general-equilibrium effects are much larger, supporting the view that eliminating outages is an important development objective.
Abstract
					Fiscal devaluations—an increase in import tariffs and export subsidies (IX) or an increase in value-added taxes and payroll subsidies (VP)—have been shown to provide as much stimulus under fixed exchange rates as a currency devaluation. We find that if agents expect policies to be reversed and the tax pass-through is large, VP is contractionary and IX provides a modest boost. In our medium-scale DSGE model, both features are crucial in accounting for Germany's underperformance in response to VP in 2007. These findings cast doubt on fiscal devaluations as a cyclical stabilization tool when monetary policy is constrained.
Abstract
					This paper proposes a parsimonious theory explaining the cyclicality of monetary policy in emerging countries in a model where access to foreign financing depends on the real exchange rate and the government lacks commitment. The discretionary monetary policy is procyclical to mitigate balance sheet effects originating from exchange rate depreciations during sudden stops. Committing to an inflation targeting regime is found to increase social welfare and reduce the frequency of financial crises despite increasing their severity. Finally, the ability to use capital controls induces a less procyclical discretionary monetary policy and delivers higher welfare gains than an inflation targeting regime.
Abstract
					I quantitatively characterize optimal consumption and labor income taxes in a structural life-cycle model of household consumption, saving, and employment choices that allows for irreversibility of durable goods and preference heterogeneity. I find that durables should be subsidized and nondurables should be taxed at a uniform rate. The durable subsidy is driven by the life-cycle features of the model together with durables' irreversibility and borrowing constraints. Uniform taxation on nondurables holds under exogenous and endogenous—fully or weakly separable—labor supply and it relies on homogeneity of intertemporal preferences. Allowing for government's equity concerns, I show that the model rationalizes the tax practice.
Abstract
					We study the dynamic interaction between COVID-19, economic mobility, and containment policy. We use Bayesian panel structural vector autoregressions with daily data for 44 countries, identified through traditional and narrative sign restrictions. We find that incidence shocks and containment shocks have large and persistent effects on mobility, morbidity, and mortality that last for one to two months. These shocks are the main drivers of the pandemic, explaining between 20 and 60 percent of the average and historical variability in mobility, cases, and deaths worldwide. The policy trade-off associated to nonpharmaceutical interventions is 1 pp less economic mobility per day for 8 percent fewer deaths after 3 months.
Abstract
					We study a new consumption stimulus program implemented by a large Chinese city that leverages mobile payment platforms to dispense massive amounts of small-value digital coupons. Exploiting a "rush" design of the dispensing process in which over 1 million program participants compete for coupons on a first-come, first-served basis through a digital portal, we estimate that winning coupons increases weekly out-of-pocket spending by US$3 for every US$1 in government subsidy. Coupon-winning consumers practice intertemporal substitution by moving up purchases that would have been made four months in the future. Customer flow analysis suggests that coupons distort consumption toward pricier options.
Abstract
					Demography and structural transformation are interrelated, and depend critically on education. At the turn of the twentieth century, US parents began having fewer children while increasing educational investment per child. This quantity-quality tradeoff facilitated job reallocation from the low-skilled agricultural sector to the high-skilled nonagricultural sector. This transformation is examined in a heterogeneous agent model with a nondegenerate human capital distribution, focusing on how fertility and education decisions affect structural transformation. The result shows that the quantity-quality decisions account for up to approximately one-third of the decline in the agricultural employment share.
Abstract
					Using microlevel data, we document systematic forecast errors in household income expectations that are related to the level of income. We show that these errors can be formalized by a modest deviation from rational expectations, where agents overestimate the persistence of their income process. We then investigate the implications of these distortions on consumption and savings behavior and find two effects. First, these distortions allow an otherwise fully optimization-based quantitative model to match the joint distribution of liquid assets and income. Second, the bias alters the distribution of marginal propensities to consume which makes government stimulus policies less effective.
Abstract
					There is a new and now large literature analyzing government policies for financial stability based on models with endogenous borrowing constraints. These normative analyses build upon the concept of constrained efficient allocation where the social planner is constrained by the same borrowing limit that agents face. In this paper, we show that there exists at least one set of tools implementing the constrained efficient allocation that can also be used by a Ramsey planner to replicate an unconstrained allocation, achieving higher welfare. Constrained efficiency may lead to inaccurate characterizations of welfare maximizing policies relative to Ramsey optimal policy.
Abstract
					This paper highlights how the presence of a monetary policy cost channel can offer new insights into the relation between monetary policy and inflation when the Phillips curve is quite flat. For instance, we highlight a key condition whereby lax monetary policy can push the economy to a low-inflation trap, and we discuss how, under the same condition, standard policy rules targeting inflation may need to be modified. In the empirical part of the paper, we explore the relevance of the condition that gives rise to these observations. The results support the key condition we emphasize.
Abstract
					Generalizing models of directed technical change, I show that complementarities between innovations and factors of production (here, energy resources) can drive transitions away from a dominant sector. In a calibrated numerical implementation, the economy gradually transitions energy supply from coal to gas and then to renewable energy, even in the absence of policy. The welfare-maximizing tax on carbon emissions is J-shaped, immediately redirects most research to renewables, and rapidly transitions energy supply directly to renewables. The emission tax is twice as valuable as either the welfare-maximizing research subsidy or the welfare-maximizing mandate to use renewable resources.
Abstract
					We study the impact of a reform that extended employment protection to temporary agency workers. Using a difference-in-difference research design, we show that plants more exposed to the regulation experienced a decrease in revenues and total employment, and that the latter effect was attenuated in industries with high elasticity of substitution between agency and nonagency workers. We also find that labor misallocation increased as a consequence of the regulation. A model of labor demand in the presence of agency work rationalizes these results.
Abstract
					Despite the growing literature on the impact of immigration, little is known about the role existing migrant settlements can play for knowledge transmission and the location of industry. We present a case that can illustrate this important mechanism and hypothesize that nineteenth-century Danish American communities helped spread knowledge on modern dairying to rural America. From around 1880 Denmark developed rapidly, and by 1890 it was a world-leading dairy producer. Using a difference-in-differences strategy and data taken from the US census and Danish emigration archives, we find that counties with more Danes in 1880 subsequently both specialized in dairying and used more modern practices.
Abstract
					This paper examines the relationship between downward nominal wage rigidity and employment outcomes using linked employer-employee data. Wage rigidity prevents 27.1 percent of counterfactual wage cuts, with a standard deviation of 19.2 percent across establishments. An establishment with the sample-average level of wage rigidity is predicted to have a 3.3 percentage point higher layoff rate, a 7.4 percentage point lower quit rate, and a 2.0 percentage point lower hire rate. Estimating a structural model by indirect inference implies that the cost of a nominal wage cut is 33 percent of an average worker's annual compensation.
Abstract
					Earnings are riskier and more unequal for households born in the 1960s and 1980s than for those born in the 1940s. Despite improvements in financial conditions, younger generations are less likely to be living in their own homes than older generations at the same age. By using a life cycle model with housing and portfolio choice that includes flexible earnings risk and aggregate asset price risk, I show that changes in earnings dynamics account for a large part of the reduction in homeownership across generations. Lower-income households find it harder to buy housing and, as a result, accumulate less wealth.
Abstract
					We propose a theory of unemployment fluctuations in which new hires and incumbent workers are imperfect substitutes. Hence, attempts to hire away the unemployed during recessions diminish the marginal product of new hires, discouraging job creation. This single feature achieves a tenfold increase in the volatility of hiring in an otherwise standard search model, produces a realistic Beveridge curve despite countercyclical separations, and explains 30–40 percent of US unemployment fluctuations. Additionally, it explains the excess procyclicality of new hires' wages, the cyclical labor wedge, countercyclical earnings losses from job displacement, and the limited steady-state effects of unemployment insurance.
Abstract
					We investigate the impact of fiscal expansions on firm investment by exploiting firms with multiple banking relationships. Further, we conduct a localized approach and compare the lending behavior of banks that barely met and missed the criteria of being a primary dealer, as well as barely winners and losers at government auctions. Our results indicate that a 1 percentage point increase in primary dealer banks' bonds-to-assets ratio decreases loans by 0.2 percent, which leads to declines in firm investment, profits, and wages. Our findings are grounded in a quantitative model with which we compute the cost of borrowing on the economy.
Abstract
					We show that prior lifetime experiences can "scar" consumers. Consumers who have lived through times of unemployment exhibit persistent pessimism about their future financial situation and spend significantly less years later, controlling for income, employment, and other life-cycle consumption factors. Due to their experience-induced frugality, scarred consumers build up more wealth. We use a stochastic life-cycle model to show that financial constraints and traditional models of income and unemployment scarring fail to generate the negative relationship between past experiences and consumption. Instead, the relationship is consistent with experience-based learning.
Abstract
					Can the macroeconomic effects of credit supply shocks be large even when a small share of firms is credit constrained? I use UK firm-level accounting data to discipline a heterogeneous-firm model where the interaction between real and financial frictions induces precautionary cash holdings. In the data, firms increased their cash ratios during the Great Recession, and cash-intensive firms displayed higher employment growth. A tightening of firms' credit conditions generates the same dynamics in the model. Unconstrained firms preemptively respond to credit supply shocks; this precautionary channel, when appropriately quantified, crucially matters for the aggregate dynamics and firm-level patterns.
Abstract
					We study the stabilizing role of benefit extensions. We develop a tractable quantitative model with heterogeneous agents, search frictions, and nominal rigidities. The model allows for a stabilizing aggregate demand channel and a destabilizing labor market channel. We characterize each channel analytically and find that aggregate demand effects quantitatively prevail in the United States. When feeding in estimated shocks, the model tracks unemployment in the two most recent downturns. We find that extensions lowered unemployment by a maximum of 0.36 pp in the Great Recession, while the joint stabilizing effect of extensions and benefit compensation peaked at 1.12 pp in the pandemic.
Abstract
					Privately produced safe debt is designed so that there is no adverse selection in trade. But in some macro states—here, the onset of the pandemic—it becomes profitable for some agents to produce private information, and then agents face adverse selection when they trade the debt (i.e., it becomes information sensitive). We empirically study these adverse selection dynamics in a very important asset class, collateralized loan obligations (CLOs), which finance loans to below-investment-grade firms. We decompose the bid-ask spreads on the AAA bonds of CLOs into a component reflecting dealer bank balance sheet costs and the adverse selection component.
Abstract
					We study the response of firms' output prices to a cut in credit supply. We combine data on loans between Danish firms and banks with survey-based producer prices and transaction-based export unit values. Exploiting banks' heterogeneous exposure to the global financial crisis, we show that loans to firms with relationships to exposed banks drop and lending rates increase. In response, firms raise prices by 3–5 percent. This effect is decreasing in the elasticity of firms' demand but positive for most industrial production. Our results show that firms increase prices to raise cash when external sources of liquidity dry up.
Abstract
					We estimate the effects of house price changes on young-firm employment shares and industry-level employment growth in local economies. A novel test shows that house price effects on local economies work through wealth, liquidity, and collateral effects on the propensity to start new firms and expand young ones. Aggregating local effects to the national level, our estimates imply that housing market ups and downs play a major role—as transmission channel and driving force—in medium-run fluctuations in young-firm employment shares in recent decades. We also find a distinct and smaller role for locally exogenous loan-supply shifts.
Abstract
					I study how input-output linkages amplify the aggregate impact of sectoral financial distortions in a dynamic general equilibrium model with endogenous capital wedges. The aggregate impact of a shock can be decomposed into weighted productivity changes and changes in allocative efficiency. A systematic uncertainty shock induces heterogenous responses in sectoral capital wedges, reducing allocative efficiency and aggregate total factor productivity (TFP). However, idiosyncratic sectoral uncertainty shocks may improve allocative efficiency and raise TFP. I then calibrate the model to US data. The network amplification magnitude on aggregate TFP ranges from 1.58 to 1.7.
Abstract
					UK households that wish for lower inflation and lower nominal interest rates have higher expected inflation. We interpret the evidence through the lens of a New Keynesian model where ambiguity-averse households differ in wealth, skill, labor market participation, and the receipt of government transfers and are subject to Knightian uncertainty. Households act based on beliefs that are negatively affected by their wishes, the more so the greater the amount of uncertainty. Using indirect inference, we find substantial output costs due to uncertainty. Monetary policy uncertainty contributes little to the costs because households generally dislike monetary expansions.
Abstract
					We empirically analyze the heterogeneous welfare effects of unemployment insurance and social assistance. We estimate a structural life cycle model of singles' and married couples' labor supply and savings decisions. The model includes heterogeneity by age, education, wealth, sex, and household composition. In aggregate, social assistance dominates unemployment insurance; however, the opposite holds true for married men, whose leisure time declines more than that of their spouses when unemployment insurance is reduced. A revenue-neutral rebalancing of social support away from unemployment insurance and toward social assistance increases aggregate welfare. Income pooling in married households decreases the welfare value of social assistance.
Abstract
					This paper uses a rich quantitative model with endogenous skill acquisition to show that capital-skill complementarity provides a quantitatively significant rationale to tax capital for redistributive governments. The optimal capital income tax rate is 67 percent, while it is 61 percent in an identically calibrated model without capital-skill complementarity. The skill premium falls from 1.9 to 1.84 along the transition following the optimal reform in the capital-skill complementarity model, implying substantial indirect redistribution from skilled to unskilled workers. These results show that a redistributive government should take into account capital-skill complementarity when taxing capital.
Abstract
					Income inequality and worker migration significantly affect sovereign default risk. Governments often impose progressive taxes to reduce inequality, which redistribute income but discourage labor supply and induce emigration. Reduced labor supply and a smaller high-income workforce erode the current and future tax base, reducing government's ability to repay debt. I develop a sovereign default model with endogenous nonlinear taxation and heterogeneous labor to quantify this effect. In the model, the government chooses the optimal combination of taxation and debt, considering its impact on workers' labor and migration decisions. Income inequality accounts for one-fifth of the average US state government spread.
Abstract
					Unconventional monetary policy (UMP) may make the effective lower bound (ELB) on the short-term interest rate irrelevant. We develop a theoretical model that underpins our empirical test of this "irrelevance hypothesis," based on the simple idea that under the hypothesis, the short rate can be excluded in any empirical model that accounts for alternative measures of monetary policy. We test the hypothesis for Japan and the United States using a structural vector autoregressive model with the ELB. We firmly reject the hypothesis but find that UMP has had strong delayed effects.
Abstract
					Someone who lives in an economically depressed place was probably born there. And having workers with local ties who prefer to live in their birthplaces leads to smaller migration responses in depressed places. Smaller migration responses lead to lower real incomes and make incomes more volatile, a form of hysteresis. Local ties can also persist for generations. Subsidies to economically depressed places cause smaller distortions, because few people want to move to depressed places. Finally, subsidies to productive places increase aggregate productivity, as they induce more migration.
Abstract
					We study the role of heterogeneity in nominal price rigidity for aggregate fluctuations in a model with sectoral productivity shocks. Theoretically, sectoral heterogeneity in the pricing friction has an ambiguous effect on GDP and aggregate price volatility. Quantitatively, (i) GDP volatility is amplified when the friction is heterogeneous rather than homogeneous; (ii) sectoral shocks can jointly rationalize the volatility of sectoral prices, aggregate prices, and GDP, unlike aggregate shocks; and (iii) shocks to the largest or most central sectors may not matter in the aggregate as heterogeneous pricing frictions may alter the identity of the most important sectors for aggregate fluctuations.
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 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.
Abstract
					We leverage the small open economy Switzerland as a testing ground for basic premises of macroeconomic models of endogenous information acquisition, using tailored surveys of firms and households. Firms and households perceiving a greater exposure to exchange rate fluctuations acquire more information about the exchange rate. Moreover, higher perceived costs of acquiring or processing information are associated with lower levels of information acquisition. Finally, an exogenous increase in the perceived uncertainty of the exchange rate increases firms' demand for a report about exchange rate developments, but not households'. Our findings inform the modeling of information frictions in macroeconomics.
Abstract
					We revisit measurement of employer-to-employer (EE) transitions in the monthly Current Population Survey. The incidence of missing answers to the question on change of employer sharply increases starting with the introduction of a new software instrument to conduct interviews in January 2007 and of the Respondent Identification Policy in 2008–2009. We document nonrandom nonresponse selection by observable and unobservable worker characteristics that correlate with EE mobility. We propose a selection model and a procedure to impute missing answers. Our imputed EE aggregate series no longer trends down after 2000 and restores a close congruence with the business cycle after 2007.
Abstract
					This paper develops a search and matching framework in which workers are characterized by asymmetric reference-dependent reciprocity and firms set wages by considering the effect that these can have on workers' effort and, therefore, on output. The cyclical response of effort to wage changes can considerably amplify shocks, independently of the cyclicality of the hiring wage, which becomes irrelevant for unemployment volatility, and firms' expectations of downward wage rigidity in existing jobs increases the volatility of job creation. The model is consistent with evidence on hiring and incumbents' wage cyclicality, and provides novel predictions on the dynamics of effort.
Abstract
					This paper quantitatively investigates the medium- and long-term macroeconomic and distributional consequences of school closures through intergenerational channels. The model economy is a dynastic overlapping-generations general equilibrium model in which schools, in the form of public education investments, complement parental investments in producing children's human capital. We find that unexpected school closure shocks have long-lasting adverse effects on macroeconomic aggregates and reduce intergenerational mobility, especially among older children. Higher substitutability between public and private investments induces smaller damages in the aggregate economy and the affected children's lifetime income while exacerbating negative impacts on intergenerational mobility and inequality.
Abstract
					I study the transmission of financial shocks using an estimated heterogeneous firm model. Following a contractionary financial shock, financially constrained firms cut investment, but unconstrained firms increase investment due to the lower capital price and interest rate. After matching the empirical dynamics of prices and the price elasticity of investment, I find a limited role of the unconstrained firms' response in dampening the aggregate investment decline. Nonfinancial capital adjustment friction is the key to generating this result. Without the capital adjustment friction, unconstrained firms' investment becomes unrealistically sensitive to prices, and the model would understate the financial shocks' aggregate relevance.
Abstract
					We use a new growth accounting method to quantify the drivers of world total factor productivity (TFP) growth during 1996–2014 and uncover four main results. World productivity growth is volatile from year to year. This mainly reflects reallocation of labor across country-industries. The contribution of country-industry level productivity growth to world productivity is relatively constant over time. This constancy masks that the increased importance of emerging economies offsets a productivity slowdown in advanced economies. After 2008, this offsetting effect dissipated and world TFP growth declined. These conclusions are robust to the inclusion of markups in the analysis.
Abstract
					How do demand shocks affect the economy? We exploit detailed data on US defense spending to examine a large set of outcome variables in response to well-identified local demand shocks, jointly examining new outcomes (e.g., firm entry and housing rents) and other key macroeconomic outcomes and elasticities that previously have been estimated separately or in settings with weaker identification. We find that government spending crowds in employment, firm entry, private consumption, and labor productivity while also increasing local housing rents. To reconcile the evidence with theory, we study a model of economic slack.
Abstract
					Why has the college wage premium risen rapidly in the United States since the 1980s but not in European economies such as Germany? We argue that differences in employment protection can account for much of the gap. We develop a model in which firms and workers make relationship-specific investments in skill accumulation. The incentive to invest is stronger when employment protection creates an expectation of long-lasting matches. We argue that changes in the economic environment have reduced relationship-specific investment for less educated workers in the United States, but not for better-protected workers in Germany.
Abstract
					We provide evidence that the delayed overshooting puzzle reflects a slow adjustment of exchange rate expectations to monetary policy shocks rather than a failure of uncovered interest parity. Consistent with this evidence, we put forward a New Keynesian model in which uncovered interest parity holds, but there are information rigidities: investors do not observe monetary policy shocks but learn rationally from unanticipated shifts in monetary policy about the state of the economy. We estimate the model and find it can account for the joint responses of the spot exchange rate, forward exchange rates, and excess currency returns to monetary policy shocks.
Abstract
					This paper studies how household financial choices affect the impact of monetary policy on consumption. Based on micro data from four major euro area countries, we estimate key structural parameters using a simulated method of moments approach to match moments related to asset market participation rates, portfolio shares, and wealth-to-income ratios by education and country. The country-specific distributions of marginal propensities to consume (MPCs) out of income and financial wealth are not degenerate. Due to this MPC heterogeneity, monetary policy, operating through income and asset returns, has a differential impact on individuals within and across countries.
Abstract
					We develop a theoretical framework that rationalizes two hypotheses of long-lasting low-interest rate episodes: deflationary-expectations-traps and secular stagnation in a unified setting. These hypotheses differ in the sign of the theoretical correlation between inflation and output growth that they imply. Using the data from Japan over 1998:I–2019:IV, we find that the data favor the expectations-trap hypothesis. The superior model fit of the expectations trap relies on its ability to generate the observed negative correlation between inflation and output growth.
Abstract
					Firms with high leverage experience a more pronounced increase in credit spreads than firms with low leverage in response to a monetary policy tightening. A large fraction of this increase is due to a component of credit spreads that is in excess of firms' expected default risk. A stylized heterogeneous firm model with default risk, financially constrained intermediaries, and segmented financial markets is able to account for these facts. Our findings imply that financial intermediaries play an important role in shaping the transmission of monetary policy to firm-level outcomes.
Abstract
					Given worldwide trends in education, wage premium for schooling, and real GDP, we derive a lower bound for the long-run elasticity of labor substitution across schooling groups of around 4, which is far higher than values commonly used in the literature. We exploit our bound to reexamine the importance of human capital in cross-country income differences, including the roles of school quality versus the skill bias of technology in the greater efficiency gains from schooling in richer countries.
Abstract
					We provide a new Keynesian model where entrepreneurs face uninsurable idiosyncratic investment risk and credit constraints. Government bonds provide liquidity services. Multiple steady states with positive values of public debt can be supported for a given permanent deficit-to-output ratio. The steady-state interest rates are lower than the economic growth rate, and public debt contains a bubble component. We analyze the determinacy regions of policy parameter space and find that a large set of monetary and fiscal policy parameters can achieve debt and inflation stability given persistent fiscal deficits both away from and at the zero interest rate lower bound.
Abstract
					We study the effects of restrictions on the length of the workweek under the President's Reemployment Agreement (PRA) of July 1933 and the National Industrial Recovery Act. We construct a model in which the equilibrium without such a workweek restriction has an inefficiently low level of employment. We find that employment rose by about 24 percent in the month following the imposition of the workweek restriction. Industries with longer workweeks pre-PRA experienced 9.4 percent faster growth in hourly earnings post-PRA, but this increase was not sufficient to prevent a relative fall in weekly earnings in these industries.
Abstract
					Evaluating the stability of the Phillips curve using aggregate data is challenging due to the bias that endogenous monetary policy imparts on estimated Phillips curve coefficients. We argue that regional data can be used to identify the structural relationship between unemployment and inflation. Our analysis, using city- and state-level data from 1977 to 2017, is consistent with the notion that both the reduced-form and the structural parameters of the Phillips curve are, to a substantial degree, quite stable.
Abstract
					This paper documents that labor search and matching frictions generate countercyclical uncertainty because the inherent nonlinearity in the flow of new matches makes employment uncertainty increasing in the number of people searching for work. Quantitatively, this mechanism is strong enough to explain uncertainty and real activity dynamics, including their correlation. Through this lens, uncertainty fluctuations are endogenous responses to changes in real activity that neither affect the severity of business cycles nor warrant policy intervention, in contrast with leading theories of the interaction between uncertainty and real activity dynamics.
Abstract
					We show that the estimated effect of digital euro news on bank stock valuations and lending depends on the bank's deposit reliance and the central bank digital currency (CBDC) design features. Using a quantitative DSGE model calibrated to the euro area economy that replicates such evidence, we find that CBDC issuance yields nontrivial welfare trade-offs between, on one side, the positive expansion of liquidity services and the improved stabilization of deposit funding and lending and, on the other side, a negative bank disintermediation effect. The optimal amount of CBDC lies between 15 and 45 percent of quarterly GDP.
Abstract
					How does sustainable consumption depend on productivity growth, the size and growth rate of the population, and uncertainty over these growth rates? I address these questions using a model in which productivity and population growth are stochastic and human lives can have (positive or negative) intrinsic social value. I show how sustainable consumption depends on expected rates of productivity and population growth, the volatility of those rates, and the dependence of welfare on population. For plausible parameter values, sustainable consumption is well below the optimal welfare-maximizing level. This raises a question: given its cost, should sustainability be a social objective?
Abstract
					We study the global trade network and quantify its trade and welfare impact. We document that the trade network is a hub-and-spoke system where 80 percent of trade is shipped indirectly and largely via entrepôts—major hubs that facilitate trade between many origins and destinations. We estimate indirect-shipping-consistent trade costs using a model where shipments can be sent indirectly through an endogenous transport network and develop a geography-based instrument to estimate scale economies in shipping. Network and scale effects propagate local trade cost changes globally. Counterfactual infrastructure improvements at entrepôts generate ten times the global welfare impact relative to nonentrepôts.
Abstract
					We study how the presence of idiosyncratic income risk affects aggregate fluctuations in the absence of binding borrowing constraints and/or cyclical income risk. Its impact is shown to be captured by the response of a consumption-weighted average of individual consumption risk to aggregate shocks. We analyze two example economies—an endowment economy and a New Keynesian economy—and show that, under plausible calibrations, the impact of idiosyncratic income risk on aggregate fluctuations is quantitatively small since most of the changes in consumption risk are concentrated among poorer (low-consumption) households.
Abstract
					We argue that the threat of automation weakens workers' bargaining power in wage negotiations, dampening wage adjustments and amplifying unemployment fluctuations. We make this argument based on a business cycle model with labor market search frictions, generalized to incorporate automation decisions. In the model, procyclical automation threats create endogenous real wage rigidity that amplifies labor market fluctuations. The automation mechanism is consistent with empirical evidence. It is also quantitatively important for explaining the large volatilities of unemployment and vacancies relative to that of real wages, a puzzling observation through the lens of standard business cycle models.
Abstract
					We examine whether, as countries become more economically dependent on a trade partner, they realign politically toward that trade partner. We use network measures of economic exposure to foreign productivity growth derived from the class of trade models with a constant trade elasticity. We establish causality using two different sources of quasi-experimental variation: China's emergence into the global economy and the reduction in the cost of air travel over time. In both cases, we find that increased economic friendship causes increased political friendship and that our theory-based network measures dominate simpler measures of trading relationships between countries.
Abstract
					Using CPI micro data for 11 euro area countries over 2010–2019, we document new findings on consumer price rigidity in the euro area: (i) the average frequency of price changes is 12 percent; (ii) the distribution of price changes is highly dispersed, with frequent large and small changes; (iii) price changes are more frequent in January; and (iv) the overall size of price changes rises with inflation, but their frequency does not; these changes in the size are driven by movements in the fraction of price changes that are increases, not by the absolute size of price increases or decreases.
Abstract
					Is deficit finance free when real borrowing rates are routinely lower than growth rates? Specifically, can the government make all generations better off by perpetually taking from the young and giving to the old? We study this in stochastic closed- and open-economy OLG models. Unfortunately, Pareto gains are predicted only for implausible calibrations. Even then, the gains reflect improved intergenerational risk sharing, improved international risk sharing, and beggaring thy neighbor—not intergenerational redistribution, per se. As we show, theoretically and quantitatively, low government borrowing rates suggest state-contingent bilateral transfers between generations—not unconditional, unilateral redistribution from future to current generations.
Abstract
					It is often assumed that the elasticity of GDP with respect to capital is one-third, but this assumes zero markups and an aggregate production function. I estimate the elasticity allowing markups to vary by industry and with a rich input-output structure. Assumptions about capital costs provide bounds on elasticity. In the United States from 1948–1995, the capital elasticity ranged from 0.19–0.32 and shifted to 0.24–0.37 by 1996–2018. Excluding housing or decapitalizing intellectual property lowers bounds to as low as 0.11–0.26. Based on these elasticities, common estimates of total factor productivity growth represent a lower bound.
Abstract
					Women's increased involvement in the economy has been an important change in labor markets during the past century. I show that a macroeconomic model taking into account gender and household composition in an otherwise parsimonious off-the-shelf setting captures key historical labor supply facts regarding trend and volatility across subgroups. Evaluating the economy's response to aggregate shocks at different points in time shows that the underlying trend growth in married women's employment contributed to the perceived quick employment recoveries after recessions before 1990, and the absence of growth thereafter consequently helps explain the more recent slower recoveries.
Abstract
					In this paper we identify demand shocks that can have a permanent effect on output through hysteresis effects. We call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular in samples starting in the 1980s. Recessions driven by permanent demand shocks lead to a permanent decline in employment and investment, while output per worker is largely unaffected. We find strong evidence that hysteresis transmits through a rise in long-term unemployment and a decline in labor force participation and disproportionately affects the least productive workers.
Abstract
					Increasing national concentration has contributed to market power concerns. Yet local trends are more informative about market power in retail, where consumers have traditionally shopped at nearby stores. Using novel product-level census data for all US retailers, we find that local and national concentration increased in parallel and affect most markets, products, and industries. The expansion of multimarket firms into new markets explains most of the increase in national concentration, with consolidation via increases in local market shares increasing in importance between 1997 and 2007. Increases in local concentration can explain one-quarter to one-third of the observed rise in retail gross margins.
Abstract
					We test the key implication of the buffer-stock model, namely that any revision in permanent income leads to a proportionate revision in target wealth. We use panel data on the amount of wealth that people think they must hold for precautionary purposes. Using the covariance restrictions that the model imposes on the joint behavior of income and target wealth, we find that households indeed revise, approximately one for one, their target wealth in response to permanent income shocks. The speed of adjustment of actual wealth to target wealth is similar to that obtained in simulations of a buffer-stock model.
Abstract
					I investigate how the introduction of industrial robots is shaping the demographic composition of the US labor force between 1993 and 2014. I find that robots decreased employment of men and women by 3.7 and 1.6 percentage points, contributing to the secular decline in the gender employment gap, and that they decreased employment among Whites and non-Whites by 1.8 and 4.5 percentage points, widening the race/ethnicity employment gap. These effects follow from the persistent occupational segregation in the labor market. Although robots are primarily used in manufacturing, their adverse effects spill over to local service industries, in particular for Blacks and Hispanics.
Abstract
					Many US households have significant wealth late in life, contrary to the predictions of a simple life-cycle model. By comparison, retirees in Sweden decumulate wealth more quickly while facing smaller out-of-pocket medical expense risks late in life. In this paper, we investigate how well the latter can account for the former using a full life-cycle consumption-saving model. We find that medical expense level and risk account for 32–59 percent of the US-Sweden difference in retirees' speed of wealth decumulation depending on age. We also show that financing and coverage of health insurance affect wealth decumulation patterns in retirement.
Abstract
					A central prediction of open economy models with a pecuniary externality due to a collateral constraint is that the unregulated economy overborrows relative to what occurs under optimal policy. A maintained assumption in this literature is that households borrow directly from foreign lenders. This paper shows that if foreign lending is intermediated by domestic banks and the government can pay interest on bank reserves and impose capital controls, the unregulated economy underborrows. The optimal bank reserve policy is countercyclical. By increasing bank reserves during contractions, the government acts as a lender of last resort to collateral-constrained households.
Abstract
					We identify Treasury supply shocks using auction data, interpreting changes in futures prices around announcements as shocks to expected supply. We isolate the component of futures price variations pertaining to US Treasury announcements between 1998 and 2020. We study how supply affects financial markets through local projections, using shocks as instruments. We show that increases in Treasury supply cause an upward shift of the yield curve fueled partly by a higher term premium. Stock prices decline, volatility climbs, and corporate bond yields increase. The risk premium rises, the equity premium falls, inflation expectations soar, and the liquidity premium decreases.
Abstract
					We solve a real business cycle model with rational inattention (an RI-RBC model). In the RI-RBC model, the growth rates of employment, investment, and output are about as persistent as in the data, with an amount of inattention consistent with survey data on expectations. Moreover, consumption, employment, and output move in the same direction in response to news about future productivity. By contrast, the baseline RBC model produces neither persistent growth rates nor business cycle comovement after news shocks.
Abstract
					The Soviet regime forcedly sent millions of enemies of the people, i.e. the educated elite considered a threat to the regime, to Gulag camps across the USSR. We use this large-scale episode of terror as a natural experiment to provide evidence on the long-run persistence of human capital across generations and its effect on economic growth. We combine archive data from the Gulag with the 2018 Russian firm census to show that areas around camps with a larger share of enemies among camp prisoners are more prosperous today, as captured by firms' wages and profits, and night lights per capita.
Abstract
					I study the effects of Ethiopia's 1997–2014 road expansion program on agricultural productivity and structural change by combining a quantitative spatial sectoral framework with novel district-level panel data on agricultural production and geocoded transport costs. In the model, the spatial heterogeneity of transport costs affects the distribution of production and mobile inputs across locations and sectors, and the allocation of land across crops within locations. Varying transport costs to their new actual levels, the model delivers substantial structural change, a rise in agricultural productivity one-tenth of the data, and a pattern of productivity gains across districts consistent with the data.
Abstract
					In a New Keynesian model with downward nominal wage rigidity (DNWR), we show that government spending is more effective in stimulating output in a low-inflation recession relative to a high-inflation recession. The government spending multiplier is large when DNWR binds, but the nature of recession matters due to the opposing response of inflation and, consequently, for real wages. Using US historical time series data, we provide evidence of larger spending multipliers in low-inflation recessions and the importance of the depth of recessions. We also employ cross-sectional data from US states to document supporting evidence on multipliers and our proposed mechanism.
Abstract
					I construct an incomplete market model featuring a closed-form expression for optimal consumption. In the model, individual consumption is an isoelastic function of wealth, inclusive of income, yielding partial consumption smoothing based on borrowing and lending in response to income shocks. I show that the model replicates several empirical characteristics of inequality in consumption, income, and wealth and their dynamics at the individual level. Using the model, I show that the rising wealth inequality since the 1980s, induced by an increase in idiosyncratic income risk, has substantially contributed to trend-level changes in real interest rates, capital-to-income ratios, and consumption-to-wealth ratios.
Abstract
					When government debt pays a lower return than private assets, the reasoning in Friedman's (1969) essay on the optimal quantity of money suggests that it would be optimal to expand the debt until its return matched that on private assets. When the only other source of revenue is a distorting tax, however, this is not generally true. In a perfect foresight model, a benevolent government that can make credible commitments chooses a large gap in returns initially and high distorting taxation in the distant future. The optimal path of taxation is time inconsistent, with ever-increasing temptation to abandon the path.
Abstract
					Terms of trade are an inaccurate empirical proxy for how fluctuations in international prices affect the economy. To capture the relevance of terms-of-trade fluctuations for the domestic business cycle, the role of export and import prices needs to be analyzed separately. Using a sample of developing economies, we find that the economy's response to a positive export price shock does not mirror the response to a negative import price shock.
Abstract
					In this paper, I show that the decline in consumption during unemployment depends on both liquid and illiquid wealth; that unemployment predicts illiquid asset withdrawal, primarily when households have few liquid assets; and that increased idiosyncratic unemployment risk leads to a rise in saving overall, but also to a decline in investment in illiquid assets. Motivated by these new findings, I embed endogenous unemployment risk in a two-asset, heterogeneous-agent New Keynesian model. The model is consistent with the new evidence and suggests that aggregate shocks are amplified by a flight-to-liquidity when unemployment risk rises, particularly when monetary policy is constrained.
Abstract
					We propose a model of boundedly rational and heterogeneous expectations that unifies adaptive learning, k-level reasoning, and replicator dynamics. Level-0 forecasts evolve over time via adaptive learning. Agents revise over time their depth of reasoning in response to forecast errors, observed and counterfactual. The unified model makes sharp predictions for when and how quickly markets converge in Learning-to-Forecast Experiments, including novel predictions for individual and market behavior in response to announced events. We present experimental results that support these predictions. We apply our unified approach in the New Keynesian model to study forward guidance policy.
Abstract
					Local skill remoteness captures the dissimilarity between the skill profiles of a worker's last job and other jobs in a local labor market. Higher skill remoteness at layoff is associated with persistently lower earnings after layoff, a higher probability of changing occupation, a lower probability of being reemployed at jobs with similar skill profiles, and a higher propensity to migrate. Jobs destroyed in recessions are also more skill remote than those lost in booms. The local skill remoteness of jobs is an empirically relevant factor to explain the severity and cyclicality of displaced workers' earnings losses and reallocation patterns.
Abstract
					A large literature finds that workers displaced in mass layoffs experience persistent earnings losses. We find that the earnings penalty from job displacement is mediated by the length of the jobless spell after displacement. Workers who experience little or no joblessness suffer no losses on average; those who experience a prolonged period of joblessness experience large, persistent earnings losses. Job movers who experience joblessness tend to move to lower-paying firms, a phenomenon that informs our understanding of the mechanisms that generate earnings losses. We also find that jobless duration predicts earnings outcomes for separators generally, not only displaced workers.
Abstract
					We estimate across-county spending flows between firms and consumers for every county in the United States, providing a new consumption link that has not been studied previously. We highlight the importance of this link by estimating the effect of changes in local housing wealth on consumption and employment from 2001 to 2019. We generally find that the effect from changes in housing wealth crosses borders to affect consumption and employment in a pattern consistent with our spending flows. However, we find potential consumers who reside outside the local commuting zone disproportionately affect local spending and employment during the Great Recession.
Abstract
					This paper studies the equilibrium effect of public liquidity on financial crises. Banks borrow from households via insured deposits and partially runnable debt and suffer endogenous funding withdrawals from households in crises. Holding public liquidity alleviates banks' liquidity problems. In equilibrium, a larger public liquidity supply reduces crisis severity and expands bank lending but crowds bank deposits and increases bank vulnerability to real shocks. The model quantitatively explains 40 percent of Treasury liquidity premium variations. Counterfactual analyses reveal that QE1 significantly improves output, 20 times larger than QE3. However, QE policies raise bank fragility against nonfinancial shocks such as COVID-19.
Abstract
					Economic agents react to signals about future tax policy changes. Consequently, estimating their macroeconomic effects requires identification of such signals. We propose a novel text analytic approach for transforming textual information into an economically meaningful time series. Using this method, we create a tax news measure from all publicly available postwar communications of US presidents. Our measure predicts the direction and size of future tax changes and contains signals not present in previously considered (narrative) measures of tax changes. We investigate the effects of tax news and find that, for long anticipation horizons, pre-implementation effects lead initially to contractions in output.
Abstract
					We investigate the impact of severe weather shocks on the US macroeconomy over the past 60 years. Using a nonlinear vector autoregressive model, we find robust evidence of time-varying effects. While negligible at the beginning of the sample, the impact becomes significant at the end, where an increase in the severe weather index reduces aggregate industrial production and consumption growth rates, and raises aggregate unemployment and inflation rates. The effects are persistent for up to 20 months. Our findings suggest limited adaptation to the increased severity of weather in the United States, at least at the macroeconomic level.
Abstract
					We estimate vector autoregressions with drifting coefficients and stochastic volatility to investigate whether US inflation persistence has changed. We focus on the inflation gap, defined as the difference between inflation and trend inflation, and we measure persistence in terms of short- to medium-term predictability. We present evidence that inflation-gap persistence increased during the Great Inflation and that it fell after the Volcker disinflation. We interpret these changes using a dynamic new Keynesian model that highlights the importance of changes in the central bank's inflation target. (JEL E12, E31, E52, E58)
Abstract
					For over ten years, the Treasury has issued index-linked debt. This paper describes the methodology for fitting a smoothed yield curve to these securities that is used at the Federal Reserve Board every day, and makes the estimates public. Comparison with the corresponding
nominal yield curve allows measures of inflation compensation
to be computed. We discuss the interpretation of inflation compensation, and provide evidence that it is not a pure measure of inflation expectations being distorted by inflation risk premium and liquidity premium components. We attempt to estimate the TIPS liquidity premium and to extract underlying inflation expectations. (JEL E31, E43, H63)
Abstract
					To study the long-run effect of dividend taxation on aggregate capital
accumulation, we build a dynamic general equilibrium model in which there is a continuum of firms subject to idiosyncratic productivity
shocks. We find that a dividend tax cut raises aggregate productivity by reducing the frictions in the reallocation of capital across firms. Our baseline model simulations show that when both dividend and capital gains tax rates are cut from 25 and 20 percent, respectively, to the same 15 percent level permanently, the aggregate long-run capital stock increases by about 4 percent. (JEL D21, E22, E62, G32, G35, H25, H32)
Abstract
					We document substantial within-country (cross-municipality) differences
in incomes for a large number of countries in the Americas. A significant fraction of the within-country differences cannot be explained by observed human capital. We conjecture that the sources of within-country and between-country differences are related. As a first step toward a unified framework, we propose a simple model incorporating differences in technological know-how across countries
and differences in productive efficiency within countries. (JEL E23, I31, J31, O15, O18, O47, R23)
Abstract
					Researchers have made much progress in the past 25 years in accounting for the proximate determinants of income levels: physical
capital, human capital, and Total Factor Productivity (TFP). But we still know little about why these factors vary. We argue that TFP exerts a powerful influence on output not only directly, but also indirectly, through its effect on physical and human capital accumulation.
We discuss why TFP varies across countries, highlighting misallocation of inputs across firms and industries as a key determinant.
(JEL E22, E23, F21, F35, O10, O40)
Abstract
					In 1961, Nicholas Kaldor highlighted six "stylized" facts to summarize
the patterns that economists had discovered in national income accounts and to shape the growth models being developed to explain them. Redoing this exercise today shows just how much progress we have made. In contrast to Kaldor's facts, which revolved around a single state variable, physical capital, our updated facts force consideration
of four far more interesting variables: ideas, institutions, population, and human capital. Dynamic models have uncovered subtle interactions among these variables, generating important insights about such big questions as: Why has growth accelerated? Why are there gains from trade? (JEL D01, E01, E22, E23, E24, J11)
Abstract
					We construct a utility-based model of fluctuations with nominal
rigidities and unemployment. We first show that under a standard
utility specification, productivity shocks have no effect on unemployment
in the constrained efficient allocation. That property is also
shown to hold, despite labor market frictions, in the decentralized
equilibrium under flexible prices and wages. Inefficient unemployment
fluctuations arise when we introduce real-wage rigidities. As a
result, in the presence of staggered price setting by firms, the central
bank faces a trade-off between inflation and unemployment stabilization,
which depends on labor market characteristics. We draw the
implications for optimal monetary policy. (JEL E12, E24, E52)
Abstract
					We measure the extent to which skilled immigrants increase innovation
in the United States. The 2003 National Survey of College
Graduates shows that immigrants patent at double the native rate,
due to their disproportionately holding science and engineering
degrees. Using a 1940-2000 state panel, we show that a 1 percentage
point increase in immigrant college graduates' population share
increases patents per capita by 9-18 percent. Our instrument for the
change in the skilled immigrant share is based on the 1940 distribution
across states of immigrants from various source regions and
the subsequent national increase in skilled immigration from these
regions. (JEL J24, J61, O31, O33)
Abstract
					The rapid growth of international reserves, a development concentrated
in the emerging markets, remains a puzzle. In this paper, we
suggest that a model based on financial stability and financial openness
goes far toward explaining reserve holdings in the modern era
of globalized capital markets. The size of domestic financial liabilities
that could potentially be converted into foreign currency (M2),
financial openness, the ability to access foreign currency through
debt markets, and exchange rate policy are all significant predictors
of reserve stocks. Our empirical financial-stability model seems to
outperform both traditional models and recent explanations based
on external short-term debt. (JEL E23, E43, E44, F31, F32, F34)
Abstract
					Countries that trade more with each other exhibit higher business
cycle correlation. This paper examines the mechanisms underlying
this relationship using a large cross-country, industry-level panel
dataset of manufacturing production and trade. We show that sector
pairs that experience more bilateral trade exhibit stronger comovement.
Vertical linkages in production are an important explanation
behind this effect: bilateral international trade increases comovement
significantly more in cross-border industry pairs that use each other
as intermediate inputs. Our estimates imply that these vertical production
linkages account for some 30 percent of the total impact of
bilateral trade on the business cycle correlation. (JEL E32, F14, F43)
Abstract
					We study sources and consequences of fluctuations in the US housing
market. Slow technological progress in the housing sector explains the
upward trend in real housing prices of the last 40 years. Over the business
cycle, housing demand and housing technology shocks explain
one-quarter each of the volatility of housing investment and housing
prices. Monetary factors explain less than 20 percent, but have played
a bigger role in the housing cycle at the turn of the century. We show
that the housing market spillovers are nonnegligible, concentrated on
consumption rather than business investment, and have become more
important over time. (JEL E23, E32, E44, O33, R31)
Abstract
					Personal bankruptcies in the United States have increased dramatically,
rising from 1.4 per thousand working age adults in 1970 to
8.5 in 2002. We use a heterogeneous agent life-cycle model with
competitive lenders to evaluate several commonly offered explanations.
We find that increased uncertainty (income shocks, expense
uncertainty) cannot account quantitatively for the rise in bankruptcies.
Instead, the rise in filings appears mainly to reflect changes in
the credit market environment: a decrease in the transaction cost
of lending and in the cost of bankruptcy. We also argue that the
abolition of usury laws and other legal changes were unimportant.
(JEL D14, E44, G21, G28)
Abstract
					Globalization brings opportunities and pressures for domestic
firms in emerging markets to innovate and improve their competitive
position. Using data from 27 emerging market economies, we
estimate the effects of foreign competition and linkages with foreign
firms on innovation by domestic firms. We provide robust evidence
of a positive relationship between foreign competition and innovation,
broadly defined. The supply chain of multinational enterprises
and trade are also important channels. There is no evidence for an
inverted U relationship between innovation and foreign competition.
Moreover, the relationship between globalization and innovation
does not differ across the manufacturing and service sectors. (JEL
F02, F23, M16, O33)
Abstract
					This paper proposes a Ricardian model to understand the short-run
and long-run aggregate effects of increased fragmentation and offshoring
on rich and poor countries. The short-run analysis shows
that, when offshoring is sufficiently high, further increases in offshoring
benefit the poor country and hurt the rich country. But these
effects may be reversed in the long run as countries adjust their
research efforts in response to increased offshoring. In particular, in
the long run, the rich country always gains from increased offshoring,
whereas poor countries see their static gains partially eroded by
a decline in their research efforts. (JEL F12, F23, L24, M16)
Abstract
					We present new data on effective corporate income tax rates in 85
countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. Corporate tax rates are correlated with investment in manufacturing but not services, as well as with the size of the informal economy. The results are robust to the inclusion of many controls. (JEL E22,
F23, G31, H25, H32, L26)
Abstract
					We assemble a dataset on technology adoption in 1000 bc, 0 ad, and 1500 AD for the predecessors to today's nation states. Technological differences are surprisingly persistent over long periods of time. Our most interesting, strong, and robust results are for the association of 1500 AD technology with per capita income and technology adoption today. We also find robust and significant technological persistence
from 1000 BC to 0 AD, and from 0 AD to 1500 AD. The evidence is consistent with a model where the cost of adopting new technologies declines sufficiently with the current level of adoption.
(JEL N10, O33, O47)
Abstract
					This paper analyses a model in which firms cannot pay discriminate based on year of entry. It is assumed that workers can costlessly quit at any time, while firms are committed to contracts. We solve for the dynamics of wages and unemployment, and show that real wages display a degree of downward rigidity and do not necessarily clear the labor market. Using sectoral productivity data from the post-war US economy, we assess the ability of the model to match the actual unemployment series. We also show that equal treatment follows from the assumption of at-will employment contracting in
our model. (JEL E24, E32, J31, J41)
Abstract
					This paper uses a dynamic factor model for the quarterly changes in consumption goods' prices in the United States since 1959 to separate them into three independent components: idiosyncratic relative-price changes, a low-dimensional index of aggregate relative-price changes, and an index of equiproportional changes in all inflation rates that we label "pure" inflation. We use the estimates to answer two questions. First, what share of the variability of inflation is
associated with each component, and how are they related to conventional measures of monetary policy and relative-price shocks? Second, what drives the Phillips correlation between inflation and measures of real activity? (JEL E21, E23, E31, E52)
Abstract
					I study the allocation of human capital in an economy with production externalities, financial constraints, and career choices. Agents choose to become entrepreneurs, workers, or financiers. Entrepreneurship has positive externalities but requires the services of financiers. In the second
best solution, the financial sector should be taxed in exactly the same way as the nonfinancial sector. When direct subsidies to investment and scientific education are not feasible, subsidizing the financial sector increases growth if externalities are driven by physical capital as in Paul M. Romer (1986), and decreases growth if externalities are
driven by human capital as in Robert E. Lucas, Jr. (1988). (JEL E44, H21, H25, L26, O41)
Abstract
					We examine the role of expectations in the Great Moderation episode. We derive theoretical restrictions in a New-Keynesian model and test them using measures of expectations obtained from survey data, the Greenbook and bond markets. Expectations explain the dynamics of inflation and interest rates but their importance is roughly unchanged over time. Systems with and without expectations display similar reduced form characteristics. Results are robust to changes in the structure of the empirical model. (JEL E23, E24, E31, E32)
Abstract
					We examine two behavioral traits essential to Confucianism, and put forward hypotheses as to whether these behavioral traits impede or are conducive to "leading" or "follower" mode growth. A dynamic leader-follower general equilibrium model with appropriately specified "Confucian" parameters is shown to generate results that correspond to some of the main features of East Asian economies: their
miracle growths, subsequent slowdowns, trade surpluses, and persistent accumulations of foreign exchange reserves. We calibrate the model to assess the quantitative importance of these cultural effects and examine their implications for future evolution of these economies. (JEL E23, O17, O41, O47, P24, Z12, Z13)
Abstract
					We provide an overview of the theory and practice of constructing PPPs. We focus on four practical areas: how to handle international differences in quality; the treatment of urban and rural areas of large countries; how to estimate prices for government services, health, and education; and the effects of the regional structure of the latest International Comparison Program for 2005. We discuss revisions
of the Penn World Table, and their effects on econometric analysis, and include health warnings. Some international comparisons are close to impossible, even in theory, and in others, the practical difficulties make comparison exceedingly hazardous. (JEL C43, E01, E31, O57).
Abstract
					We assess the degree of consumption smoothing implicit in a calibrated
life-cycle version of the standard incomplete-markets model, and we compare it to the empirical estimates of Richard Blundell, Luigi Pistaferri, and Ian Preston (2008) (BPP hereafter) on US data. Households in the data have access to more consumption insurance
against permanent earnings shocks than in the model. BPP estimate that 36 percent of permanent shocks are insurable, whereas the model's counterpart of the BPP estimator varies between 7 percent and 22 percent, depending on the tightness of debt limits. We also show that the BPP estimator has a downward bias that grows as borrowing limits become tighter. (JEL D31, D91, E21).
Abstract
					Does faster economic growth increase pressure for democratic change, or reduce it? Using data for 154 countries for the period 1963-2007, we examine the short-run relationship between economic growth and moves toward and away from greater democracy. To address the potential endogeneity of economic growth, we use variation in precipitation, temperatures, and commodity prices as instruments for a country's rate of economic growth. Our results indicate that more rapid economic growth reduces the short-run
likelihood of institutional change toward democracy. Output contractions
due to adverse weather shocks appear to have a particularly important impact on the timing of democratic change. (JEL
D72, E23, E32, O11, O17, O47)
Abstract
					We show that the "skill bias" of a country's tariff structure is positively
correlated with long-term per capita GDP growth. Testing for causal mechanisms, we find evidence consistent with the existence of real benefits from tariffs focused in skill-intensive industries. However, this only accounts for a quarter of the total correlation
between skill-biased tariffs and growth. Turning to alternative explanations, we extend the standard Grossman-Helpman "protection-for-
sale" model and show how the skill bias of tariffs can reflect the extent of domestic rent-seeking activities in the economy. We provide evidence that the remaining variation is explained by this endogeneity. (JEL D72, F13, F43, O17, O19, O24, O47)
Abstract
					We present an equilibrium model of tax avoidance and test its implications using a survey of firms in Brazil. In the model, the credit method used to collect value-added tax (VAT) creates informality chains-clients or suppliers of informal firms are more likely to be
informal. An increase in enforcement in a production stage increases formality downstream and upstream. Various empirical measures of formality of suppliers and buyers, and of enforcement downstream and upstream, are positively correlated with formality. When the VAT is applied in a single stage of production at a rate estimated by the authorities, these chain effects disappear. (JEL H25, H26, L14, L21, O14, O17)
Abstract
					Many factors inhibiting and facilitating economic growth have been
suggested. Can agnostics rely on international income data to tell them which matter? We find that agnostic priors lead to conclusions that are sensitive to differences across available income estimates. For example, the PWT 6.2 revision of the 1960-1996 income estimates in the PWT 6.1 leads to substantial changes regarding the role of government, international trade, demography, and geography. We conclude that margins of error in international income estimates
appear too large for agnostic growth empirics. (JEL O41, O47)
Abstract
					We develop and estimate an open economy New Keynesian Phillips Curve (NKPC) in which variable demand elasticities give rise to movements in desired markups in response to changes in competitive pressure from abroad. A parametric restriction yields the standard NKPC under constant elasticity and no role for foreign competition to influence domestic inflation. Foreign competition plays an important role in accounting for the behavior of traded goods price
inflation. Foreign competition accounted for more than half of a 4 percentage point decline in domestic goods price inflation in the 1990s. Our results also provide evidence against demand curves with a constant elasticity. (JEL E12, E22, E31, F14, F41)
Abstract
					This paper investigates the effects of government purchases at the industry level in order to shed light on the transmission mechanism for government spending on the aggregate economy. We create a new panel dataset that matches output and labor variables to industry-specific shifts in government demand. An increase in government demand raises output and hours, lowers real product wages and labor productivity, and has no effect on the markup. The estimates
also imply approximately constant returns to scale. The findings are more consistent with the effects of government spending in the neoclassical
model than the textbook New Keynesian model. (JEL E12, E23, E62, H50)
Abstract
					We develop a two-sector monetary model with a centralized and decentralized market. Activities in the centralized market resemble those in a standard New Keynesian economy with price rigidities. In the decentralized market agents engage in bilateral exchanges for
which money is essential. This paper is the first to formally estimate such a model, evaluate its fit based on postwar US data, and assess its money demand properties. Steady-state welfare calculations reveal that the distortions created by the monetary friction may be of similar magnitude as the distortions created by the New Keynesian friction. (JEL C54, E12, E31, E41, E52)
Abstract
					We show that deviations from the law of one price in tradable goods are an important source of violations of absolute purchasing power parity. Using highly disaggregated export data, we document systematic international price discrimination: at the US dock, low-income countries pay lower prices. This pricing-to-market is about twice as important as local nontraded inputs for differences in tradable prices. We propose a model of consumer search and pricing-to-market in which consumers in low-income countries have a comparative advantage in nontraded, nonmarket search activities. Evidence from cross-country time-use studies and US export prices supports the model. (JEL E31, F14)
Abstract
					We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off—it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment. (JEL
D31, E24, E32, J41, J63)
Abstract
					This paper investigates whether banking integration plays an important role in transmitting financial shocks across geographical boundaries by using a dataset on the branch network of nationwide city banks and prefecture-level dataset on the formation and collapse of the real estate bubble in Japan. The results show that the credit and economic cycle of financially integrated prefectures exhibits higher sensitivity to fluctuation in land prices in cities relative to financially isolated ones. These results suggest nationwide banks can be a source of economic volatility when they pass on the impacts of financial shocks to host economies. (JEL E44, G21, R30)
Abstract
					This paper examines how the professional forecasters comprising the
Blue Chip Economic Consensus view shocks to GDP. I use an unobserved components model of the forecast revisions to identify forecasters'
perceptions of permanent and transitory shocks to GDP. The model indicates forecasters: attribute about two-thirds of the variance in current-period revisions to permanent shocks; view the relative importance of permanent shocks similar to the estimates of some simple univariate econometric models; see high-frequency indicators of economic activity as being informative about both permanent and transitory shocks; and react to incoming data differently during periods of economic weakness. (JEL C51, C53, E23, E27, E32, E37)
Abstract
					What explains the enormous differences in incomes across countries? This paper returns to two old ideas: linkages and complementarity. First, linkages between firms through intermediate goods
deliver a multiplier similar to the one associated with capital in a neoclassical growth model. Because the intermediate goods share of output is about one-half, this multiplier is substantial. Second, just as a chain is only as strong as its weakest link, problems along a production chain can sharply reduce output under complementarity. These forces considerably amplify distortions to the allocation of resources, bringing us closer to understanding large income differences across countries.(JEL: D57, E23, O1O, O47)
Abstract
					We show that in a two-sector economy with heterogeneous capital subsidies and monopoly power, primal and dual measures of TFP growth can diverge from each other as well as from true technology. These distortions give rise to dynamic reallocation effects that imply technology growth needs to be measured from the bottom up rather
than from the top down. Using Singapore as an example, we show how incomplete data can be used to estimate aggregate and sectoral technology growth as well as reallocation effects. Our framework
can reconcile divergent TFP estimates in Singapore and can resolve other empirical puzzles regarding Asian development. (JEL E22, E23, E25, O33, O41, O47)
Abstract
					We study the nature of sovereign credit risk using an extensive set of sovereign CDS data. We find that the majority of sovereign credit risk can be linked to global factors. A single principal component accounts for 64 percent of the variation in sovereign credit spreads. Furthermore, sovereign credit spreads are more related to the US stock and high-yield markets than they are to local economic measures.
We decompose credit spreads into their risk premium and default risk components. On average, the risk premium represents about a third of the credit spread. (JEL F34, G15, O16, O19, P34)
Abstract
					This paper compares the evolution of long-run inflation expectations in the euro area and the United States, using evidence from financial markets and surveys of professional forecasters. Survey data indicate that long-run inflation expectations are reasonably well anchored in both economies but reveal substantially greater dispersion across forecasters' long-horizon projections of US inflation. Analysis of
daily data on inflation swaps and nominal-indexed bond spreads, which gauge compensation for expected inflation and inflation risk, also suggests that long-run inflation expectations are more firmly anchored in the euro area than in the United States. (JEL D84, E31, E37, E52, E58)
Abstract
					We derive a linear-quadratic model that is consistent with sticky prices and search and matching frictions in the labor market. We show that the second-order approximation to the welfare of the representative agent depends on inflation and "gaps" that involve current and lagged unemployment. Our approximation makes explicit how welfare costs are generated by the presence of search frictions. These costs are distinct from the costs associated with relative price dispersion and fluctuations in consumption that appear in standard new
Keynesian models. We show the labor market structure has important implications for optimal monetary policy. (JEL E24, E31, E52)
Abstract
					We examine the hypothesis that advances in household technology caused the US baby boom, and we find no support for this claim. Advances in household technology occurred before the baby boom, while fertility declined. From 1940 to 1960, levels/changes in county-level appliance ownership and electrification negatively predict
levels/changes in fertility rates. Exposure to electricity in early adulthood and children-ever-born are negatively correlated for the relevant cohorts. The Amish, who used modern technologies much less than other US households, experienced a coincident baby boom. This evidence can be reconciled with economic theory if other home-produced goods are substitutes with children. (JEL D12, J13, N32, N92, O33)
Abstract
					This paper examines the relationship between family ownership and the quality of labor relations. We find that family ownership is more prevalent in countries in which labor relations are hostile, consistent with the notion that family firms are particularly effective at coping with difficult labor relations. Our results are robust to controlling for minority shareholder protection and other potential determinants of family ownership. To address endogeneity issues, we show that, controlling for industry- and country-fixed effects, industries that
are more labor dependent have relatively more family ownership in
countries with worse labor relations. (JEL G32, G34, J52, J53)
Abstract
					The Business Cycle Dating Committee of the National Bureau of Economic Research provides a historical chronology of business cycle turning points. We investigate three central aspects of this chronology. How skillful is the Dating Committee when classifying economic activity into expansions and recessions? Which indices of economic conditions best capture the current but unobservable state of the business cycle? And which indicators best predict future turning
points, and at what horizons? We answer each of these questions in detail using methods specifically designed to assess classification ability. In the process, we clarify several important features of the business cycle. (JEL C82, E32)
Abstract
					We introduce a novel method for estimating a monetary policy rule using macroeconomic news. We estimate directly the policy rule agents use to form their expectations by linking news' effects on forecasts of both economic conditions and monetary policy. Evidence between 1994 and 2007 indicates that the market-perceived Federal Reserve policy rule changed: the output response vanished, and the inflation response path became more gradual but larger in long-run magnitude. These response coefficient estimates are robust to measurement and theoretical issues with both potential output and the inflation target. (JEL C51, E31, E43, E52, E58)
Abstract
					This paper studies the optimal long-run inflation rate (OIR) in a small New Keynesian model, where the only policy instrument is a short-term nominal interest rate that may occasionally run against a zero lower bound (ZLB). The model allows for worst-case scenarios of
misspecification. The analysis shows first, if the government optimally commits, the OIR is below 1 percent annually. Second, if the government re-optimizes each period, the OIR rises markedly to 17 percent. Third, if the government commits only to an inertial Taylor rule, the inflation bias is eliminated at very low cost in terms of welfare for the representative household. (JEL E12, E31, E43, E52, E58)
Abstract
					Research increasingly stresses the role of human capital in modern economic development. Existing historical evidence -- mostly from British textile industries -- however, rejects that formal education was important for the Industrial Revolution. Our new evidence from technological follower Prussia uses a unique school enrollment and factory employment database linking 334 counties from pre-industrial 1816 to two industrial phases in 1849 and 1882. Using pre-industrial education as instrument for later education and controlling extensively for pre-industrial development, we find that basic education is significantly associated with nontextile industrialization in both phases of the Industrial Revolution. Panel data models with county fixed effects confirm the results. (JEL I20, J24, N13, N33, N63)
Abstract
					A declining agricultural employment share is a key feature of economic development. Its main drivers are: improvements in agricultural technology combined with Engel's law release resources from agriculture ("labor push"), and improvements in industrial technology attract labor out of agriculture ("labor pull"). We present a
model with both channels and evaluate the importance using data on 12 industrialized countries since the nineteenth century. Results suggest
that the "pull" channel dominated until 1920 and the "push" channel dominated after 1960. The "pull" channel mattered more in countries in early stages of the structural transformation. This contrasts with modeling choices in recent literature. (JEL E23, N10, N53, O10, O47).
Abstract
					This paper demonstrates that an asset pricing model with least-squares
learning can lead to bubbles and crashes as endogenous responses to the fundamentals driving asset prices. When agents are risk-averse they need to make forecasts of the conditional variance of a stock's return. Recursive updating of both the conditional variance and the expected return implies several mechanisms through which
learning impacts stock prices. Extended periods of excess volatility, bubbles, and crashes arise with a frequency that depends on the extent to which past data is discounted. A central role is played by changes over time in agents' estimates of risk. (JEL D81, D83, E32,
G01, G12)
Abstract
					This paper uses a sequence of government budget constraints to motivate estimates of returns on the US Federal government debt. Our estimates differ conceptually and quantitatively from the interest
payments reported by the US government. We use our estimates to account for contributions to the evolution of the debt-GDP ratio made by inflation, growth, and nominal returns paid on debts of different maturities. (JEL E23, E31, E43, G12, H63)
Abstract
					We examine the allocation of hours of work across industrial sectors in OECD countries. We find large disparities across three sector groups, one that produces goods without home substitutes, and two others that have home substitutes but are treated differently by welfare policy. We attribute the disparities to the countries' tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Subsidies increase hours in the subsidized sectors that have home
substitutes. We compute these policy effects for 19 OECD countries. (JEL H24, H31, J22)
Abstract
					The goal of this paper is to examine the role of taxes and productivity growth as forces influencing market hours. To achieve this goal, the paper considers a calibrated growth model extended to include home production and subsistence consumption, both of which are found to be key features influencing market hours. The model is simulated for 15 OECD countries. The primary force driving changes in market
hours is found to be changing labor income tax rates. Productivity catch-up relative to the United States is found to be an important secondary force. (JEL E24, H24, H31, J22, J24)
Abstract
					We analyze how the pass-through from exchange rate to domestic wages depends on the degree of integration between domestic and foreign labor markets. Using data from 66 countries over the period 1981-2005, we find that the elasticity of domestic wages to real
exchange rate is 0.15 after a year for countries with high barriers to external labor mobility, but about 0.40 in countries with low barriers to mobility. The result is robust to the inclusion of various controls, different measures of exchange rates, and definitions of labor market integration. These findings call for including labor mobility in macro models of external adjustment. (JEL F16, F31, J31)
Abstract
					We consider the excess return from 20 internationally tradable emerging market (EM) currencies against the US dollar. It has two contributions. First, we document stylized facts about EM currencies. EM currencies have provided significant equity-like excess
returns against major currencies, but with low volatility. Picking EM currencies with a relatively high forward premium raises the portfolio return substantially. Second, our calculation incorporates institutional features of the foreign exchange market, such as lags in settling spot contracts, FX swaps, and bid/offer spreads. Transaction costs arising from bid/offer spreads are less than one-fifth of what is typically presumed in the literature. (JEL C58, F31, G15)
Abstract
					How should monetary policy respond to changes in financial conditions? We consider a simple model where firms are subject to shocks which may force them to default on their debt. Firms' assets and liabilities are nominal and predetermined. Monetary policy can
therefore affect the real value of funds used to finance production. In
this model, allowing for inflation volatility in response to aggregate
shocks can be optimal; the optimal response to adverse financial shocks is to lower interest rates and to engineer some inflation; and the Taylor rule may implement allocations that have opposite cyclical properties to the optimal ones. (JEL G32, E31, E43, E44, E52)
Abstract
					Over the past decades, the real and financial volatility of listed firms has increased, while the volatility of private firms has decreased. We first provide panel data evidence that, at the firm level, sales and employment volatility are impacted by changes in the degree of ownership concentration. We then construct a model with private and listed firms where risk-taking is a choice variable at the firm-level. Due to general equilibrium feedback, we find that both an increase in stock market participation and integration in international capital markets generate opposite trends in volatility for private and listed firms. (JEL G15, G32, L25)
Abstract
					This paper develops an analytically tractable general equilibrium model of inventory dynamics based on a precautionary stockout-avoidance
motive. The model's predictions are broadly consistent with the US business cycle and key features of inventory behavior. It is also shown that technological improvement of inventory management can increase, rather than decrease, the volatility of aggregate
output. Key to this seemingly counterintuitive result is that a stockout-avoidance motive leads to a procyclical shadow value of inventories,
which acts as an automatic stabilizer that discourages sales in booms and encourages demand in recessions, thereby reducing the variability of GDP. (JEL D92, E22, E23, E32, G31)
Abstract
					The paper subjects seven structural DSGE models, all used heavily by policymaking institutions, to discretionary fiscal stimulus shocks
using seven different fiscal instruments, and compares the results to
those of two prominent academic DSGE models. There is considerable agreement across models on both the absolute and relative sizes of different types of fiscal multipliers. The size of many multipliers is large, particularly for spending and targeted transfers. Fiscal policy is most effective if it has moderate persistence and if monetary policy is accommodative. Permanently higher spending or deficits imply significantly lower initial multipliers. (JEL E12, E13, E52, E62)
Abstract
					We develop a method for identifying and quantifying the fiscal channels that help finance government spending shocks. We define fiscal shocks as surprises in defense spending and show that they are more precisely identified when defense stock data are used in addition to aggregate macroeconomic data. Our results show that in the postwar period, about 9 percent of the US government's unanticipated spending needs were financed by a reduction in the market value of debt and more than 70 percent by an increase in primary surpluses. Additionally, we find that long-term debt is more effective at absorbing fiscal risk than short-term debt. (JEL E62, H56, and H63)
Abstract
					The term premium in standard macroeconomic DSGE models is far too small and stable relative to the data—an example of the "bond premium puzzle." However, in endowment economy models, researchers have generated reasonable term premiums by assuming investors have recursive Epstein-Zin preferences and face long-run economic risks. We show that introducing Epstein-Zin preferences into a canonical DSGE model can also produce a large and variable term premium without compromising the model's ability to fit key macroeconomic variables. Long-run nominal risks further improve the model's empirical fit, but do not substantially reduce the need for high risk aversion. (JEL E13, E31, E43, E44)
Abstract
					This paper revisits an old argument, hedging real exchange rate risk, as an explanation of the international home bias in equity. In a dynamic model, the relevant risk to be hedged is the long-run risk as opposed to the short-run risk. Domestic equity is indeed a good hedge with respect to long-run real-exchange-rate risk. Two
new frameworks are able to explain a large share of the observed US home bias: a model with Hansen-Sargent preferences in which agents fear model misspecification and a model with Epstein-Zin preferences. These two models are also immune to the risk-free rate puzzle. (JEL C58, F31, G11, G15)
Abstract
					We show how the timing of financial innovation might have contributed to the mortgage bubble and then to the crash of 2007-2009. We show why tranching and leverage first raised asset prices and why CDS lowered them afterward. This may seem puzzling, since it implies that creating a derivative tranche in the securitization whose payoffs are identical to the CDS will raise the underlying asset price, while the CDS outside the securitization lowers it. The resolution of the puzzle is that the CDS lowers the value of the underlying asset since it is equivalent to tranching cash. (JEL E32, E44, G01, G12, G13, G21).
Abstract
					A key precursor of twentieth-century financial crises in emerging and advanced economies alike was the rapid buildup of leverage. Those emerging economies that avoided leverage booms during the 2000s also were most likely to avoid the worst effects of the twenty-first century's first global crisis. A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real
currency appreciation have been the most robust and significant predictors
of financial crises, regardless of whether a country is emerging or advanced. For emerging economies, however, higher foreign exchange reserves predict a sharply reduced probability of a subsequent crisis. (JEL E44, F34, F44, G01, G21, O19)
Abstract
					This paper studies the small estimated effects of monetary policy shocks from standard VARs versus the large effects from the Romer and Romer (2004) approach. The differences are driven by three factors: the different contractionary impetus, the period of reserves targeting, and lag length selection. Accounting for these factors, the real effects of policy shocks are consistent across approaches and most likely medium. Alternative monetary policy shock measures from estimated Taylor rules also yield medium-sized real effects and indicate that the historical contribution of monetary policy shocks to real fluctuations has been significant, particularly during the 1970s and early 1980s. (JEL E32, E43, E52)
Abstract
					Drawing on an analysis of Federal Open Market Committee (FOMC) documents, this paper argues that political pressures on the Federal Reserve were an important contributor to the rise in inflation in the United States in the 1970s. Members of the FOMC understood
that a serious attempt to tackle inflation would generate opposition from Congress and the executive branch. Political considerations contributed to delays in monetary tightening, insufficiently aggressive anti-inflation policies, and the premature abandonment of attempts at disinflation. Empirical analysis verifies that references to the political environment at FOMC meetings are correlated with the stance of monetary policy during this period. (JEL D72, E32, E52,
E58, N12)
Abstract
					This paper evaluates the empirical performance of a medium-scale DSGE model with agents forming expectations using small forecasting models updated by the Kalman filter. The adaptive learning model fits the data better than the rational expectations (RE) model. Beliefs about the inflation persistence explain the observed decline in the mean and the volatility of inflation as well as Phillips curve
flattening. Learning about inflation results in lower estimates for the persistence of the exogenous shocks that drive price and wage dynamics in the RE version of the model. Expectations based on small forecasting models are closely related to the survey evidence on inflation expectations. (JEL C53, D83, D84, E13, E17, E31)
Abstract
					For three years after the typical emerging economy opens its stock market to inflows of foreign capital, the average annual growth rate of the real wage in the manufacturing sector increases by a factor of three. No such increase occurs in a control group of countries that do not liberalize. The temporary increase in wage growth drives up the level of the average worker's annual compensation by US $487—an increase equal to nearly one-fifth of their annual pre-liberalization salary. Overall, the results suggest that trade in capital may have a larger impact on wages than trade in goods. (JEL E25, E44, F16,
F43, G18, O16)
Abstract
					Using a longitudinal matched employer-employee dataset for Portugal over the 1986-2007 period, this study analyzes the wage responses to aggregate labor market conditions for newly hired
workers and existing workers within the same firm. Accounting for worker, firm, and job title heterogeneity, the data support the hypothesis that entry wages are more procyclical than wages of stayers. A one point increase in the unemployment rate decreases wages of newly hired workers within a given firm-job title by around 2.7 percent and by 2.2 percent for stayers within the same firm-job title. Finally, the results reveal a one-for-one wage response to changes in labor productivity. (JEL: E24, E32, J64)
Abstract
					Cash-in-advance models usually require agents to reallocate money and bonds in fixed periods. Every month or quarter, for example. I show that fixed periods underestimate the welfare cost of inflation. I use a model in which agents choose how often they exchange bonds for money. In the benchmark specification, the welfare cost of 10 
percent instead of 0 inflation increases from 0.1 percent of income
with fixed periods to 1 percent with optimal periods. The results are robust to different preferences, to different compositions of income in bonds or money, and to the introduction of capital and labor. (JEL: E30, E40, E50)
Abstract
					I construct measures of technology capital and country openness for the US economy and the rest of the world for 1982-2007. The key identifying assumption is that firms equalize returns on tangible and technology capital. For the US economy, technology capital is about one-third of tangible capital, and the degree of openness is
between 0.61 and 0.70. I provide both a two-country estimation and a multicountry estimation, and find that the US estimates are almost identical in both cases. The welfare loss from totally closing the US economy is small, but the welfare gain from totally opening the US economy is large. (JEL E22, F41, O30)
Abstract
					Using an original micro-dataset from France, we investigate nominal wage stickiness. Nominal wage changes are found to occur at a quarterly frequency of around 38 percent over our sample period, and to be to a large extent staggered across establishments, and very synchronized within establishments. We carry out an econometric analysis of wage changes based on a two-threshold sample selection model. Our results are that the timing of wage adjustments is
time-dependent as opposed to state-dependent, there is evidence of predetermination in wage changes, and both backward and forward-looking behavior is relevant in wage setting. (JEL E24, E52, J31)
Abstract
					High interest rate currencies tend to appreciate in the future relative to low interest rate currencies instead of depreciating as uncovered interest parity (UIP) predicts. I construct a model of exchange rate determination in which ambiguity-averse agents face a dynamic filtering problem featuring signals of uncertain precision. Solving a max-min problem, agents act upon a worst-case signal precision and systematically underestimate the hidden state that controls payoffs. Thus, on average, agents next periods perceive positive innovations, which generates an upward re-evaluation of the strategy's profitability and implies ex post departures from UIP. The model also produces predictable expectational errors, negative skewness, and time-series momentum for currency speculation payoffs. (JEL D81, F31, G15)
Abstract
					This paper uses historical fluctuations in temperature within countries to identify its effects on aggregate economic outcomes. We find three primary results. First, higher temperatures substantially reduce
economic growth in poor countries. Second, higher temperatures may reduce growth rates, not just the level of output. Third, higher temperatures have wide-ranging effects, reducing agricultural output, industrial output, and political stability. These findings inform debates over climate's role in economic development and suggest the
possibility of substantial negative impacts of higher temperatures on poor countries. (JEL E23, O13, Q54, Q56)
Abstract
					This paper develops a general equilibrium life-cycle model with
endogenous labor supply in both intensive and extensive margins, consumption, saving, and benefit claiming to measure the long-run effects of a proposed Social Security reform. Agents in the model face medical expenditure, wage, health, and survival shocks. Raising the normal retirement age by two years increases labor supply by 2.8 percent and the capital stock by 12.6 percent, showing that both margins of adjustment are critical. General equilibrium effects are important to account for the effects of reform on savings, although the effects on labor supply are less important. (JEL D91, E21, H55, I13, J22)
Abstract
					This paper presents new empirical evidence regarding the cyclicality of skill acquisition activities. The paper studies both training and schooling episodes at the individual level using quarterly data from the NLSY79 for a period of 19 years. We find that aggregate schooling is strongly countercyclical, while aggregate training is acyclical. Several training categories, however, behave procyclically. The results also indicate that firm-financed training is procyclical, while training financed through other means is countercyclical; and that the cyclicality of skill acquisition investments depends significantly on the educational level and the employment status of the individual. (JEL E24, E32, I20, J24)
Abstract
					Important changes have occurred in unsecured credit markets over the past three decades. Most prominently, there have been large increases in aggregate consumer debt, the personal bankruptcy rate, the size of bankruptcies, the dispersion of interest rates paid by borrowers, and the relative discount received by those with good credit
ratings. We find that improvements in information available to lenders on household-level costs of bankruptcy can account for a significant fraction of what has been observed. The ex ante welfare gains from better information are positive but small. (JEL D14, D82, G21)
Abstract
					Are asset prices unduly volatile and often detached from their fundamentals?
Does the bursting of financial bubbles depress the real economy? This paper addresses these issues by constructing a DSGE model with speculative bubbles. We characterize conditions under which storable goods, regardless of their intrinsic values, can carry bubbles, and agents are willing to invest in such bubbles despite their positive probability of bursting. The results show that systemic risk, commonly perceived changes in the bubble's probability of bursting, can generate boom-bust cycles with hump-shaped output dynamics and produce asset price movements many times more volatile than
the economy's fundamentals. (JEL E13, E23, E32, E44, G01, G12).
Abstract
					In addition to standard trade gains, regional trade agreements (RTAs) can promote peaceful relations by increasing the opportunity cost of conflicts. Country pairs with large trade gains from RTAs and a high probability of conflict should be more likely to sign an RTA. Using data from 1950 to 2000, we show that this complementarity between economic and politics determines the geography of RTAs. We disentangle trade gains from political factors by a theory-driven empirical estimation and find that country pairs with higher frequency of past wars are more likely to sign RTAs, the more so the larger the trade gains. (JEL D72, D74, F15, N70)
Abstract
					Rigidity in real hiring wages plays a crucial role in some recent macroeconomic models. But are hiring wages really so noncyclical? We propose using employer/employee longitudinal data to track the cyclical variation in the wages paid to workers newly hired into specific entry jobs. Illustrating the methodology with 1982-2008 data
from the Portuguese census of employers, we find real entry wages
were about 1.8 percent higher when the unemployment rate was 1 percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment. (JEL E24, E32, J31, J64)
Abstract
					Some workers bargain with prospective employers before accepting a job. Others face a posted wage as a take-it-or-leave-it opportunity. Both modes of wage determination have generated large bodies of research. We surveyed a representative sample of US workers to
inquire about the wage determination process at the time they were hired into their current or most recent jobs. A third of the respondents reported bargaining over pay before accepting their current jobs. Almost a third of workers had precise information about pay when they first met with their employers, a sign of wage posting. About 40 percent of workers were on-the-job searchers—they could
have remained at their earlier jobs at the time they accepted their current jobs, indicating a more favorable bargaining position than is held by unemployed job-seekers. About half of all workers reported that their employers had learned their pay in their earlier jobs before making the offer that led to the current job. (JEL C83, J31, J52, J64)
Abstract
					This paper assesses how various approaches to modeling the separation
margin affect the quantitative ability of the Mortensen-Pissarides labor matching model. The model with a constant separation rate fails to produce realistic volatility and productivity responsiveness of the separation rate and worker flows. The specification with endogenous separation succeeds along these dimensions. Allowing for on-the-job search enables the model to replicate the Beveridge curve. All specifications, however, fail to generate sufficient volatility of the job finding rate. While adopting the Hagedorn-Manovskii calibration remedies this problem, the volume of job-to-job transitions in the on-the-job search specification becomes essentially zero.
(JEL E24, J41, J64)
Abstract
					We estimate how spending in Texas responded to a 1997 constitutional amendment that relaxed severe restrictions on home equity lending.
We use this event as a natural experiment to estimate the importance
of credit constraints. If households are credit-constrained, such an increase in credit availability will increase their spending. We find that Texas retail sales at the county and state levels increased significantly
after the amendment, lending support to the credit-constraint hypothesis. We confirm these findings and refine our interpretation of the estimated aggregate-level responses using household-level data on home equity loans. (JEL D14, E21, G21, G28)
Abstract
					While the degree of policy inertia in central banks' reaction functions
is a central ingredient in theoretical and empirical monetary economics, the source of the observed policy inertia in the United States is controversial, with tests of competing hypotheses, such as interest-smoothing and persistent-shocks, being inconclusive. This paper employs real time data; nested specifications with flexible time series structures; narratives; interest rate forecasts of the Fed,
financial markets, and professional forecasters; and instrumental variables to discriminate between competing explanations of policy inertia. The evidence strongly favors the interest-smoothing explanation and thus can help resolve a key puzzle in monetary economics. (JEL C53, E43, E47, E52, E58)
Abstract
					This paper studies the joint dynamics of investor protection and economic
development in a political economy model with capital accumulation and occupational choice. Less investor protection implies higher costs of external financing for entrepreneurs. This excludes poorer agents from entrepreneurship, increasing the profits of the remaining entrepreneurs. The main determinants of investor protection policy preferences are the agent's net worth and the expected
return from entrepreneurship. When the policy is chosen by the simple majority rule, the model generates several implications consistent with the observed variation of investor protection over time and across countries. (JEL D72, E22, E32, G18, G38, J24, L26)
Abstract
					This paper introduces a notion of firm size into a search and matching
model with endogenous job destruction. The outcome is a rich,
yet analytically tractable framework that can be used to analyze a
broad set of features of both the cross-section and aggregate dynamics of the labor market. The model provides a coherent account of the distributions of employer size and employment growth across establishments, the amplitude and propagation of cyclical fluctuations in worker flows, the negative comovement of unemployment and vacancies, and the dynamics of the distribution of employer size over the business cycle. (JEL E24, E32, J63, J64)
Abstract
					This paper re-examines the effect of oil wealth on political violence.
Using a unique historical panel dataset of oil discoveries, we show
that simply controlling for country fixed effects removes the statistical
association between the value of oil reserves and civil war onset.
Other macro-political violence measures, such as coup attempts, are
also uncorrelated with oil wealth. To further address endogeneity
concerns, we exploit changes in oil reserves due to randomness in
the success of oil explorations. We find little robust evidence that oil
discoveries increase the likelihood of political violence. Rather, oil
discoveries increase military spending in nondemocratic countries.
(JEL D74, H56, O17, Q34, Q41)
Abstract
					I examine the causal effect of bank failures during the Great
Depression using the quasi-experimental setup of Richardson and
Troost (2009). The experiment is based on Mississippi being divided
into two Federal Reserve districts, which followed different policies
for liquidity provision. This translated into variation in bank failures
across the state. Employing a plant-level sample from the Census
of Manufactures, I find that banking failures had a negative effect
on revenue stemming from a fall in physical output. I find no effect on
employment at the plant-level and a large decline at the county-level.
(JEL E32, E44, G21, G33, N12, N22, N92)
Abstract
					We explain why international nominal bonds and equity portfolios
are biased domestically. In our model, holding domestic government
nominal debt provides a hedge against shocks to bond returns and
the impact on taxes they induce. For this result, only two features are
essential: nominal risk and taxes only on domestic agents. A third
feature explains domestically biased equity holdings: government
spending falls on domestic goods. Then, an increase in government
spending raises the returns on domestic equity, providing a hedge
against the subsequent increase in taxes. A calibrated version of the
model predicts asset holdings that quantitatively match the data.
(JEL F30, G11, G15, H61, H63)
Abstract
					Exploiting the Japanese banking crisis of the 1990s as a laboratory,
we investigate the effects of bank bailouts on the supply of credit and
the performance of banks' clients. Our findings indicate that the size
of capital injections relative to the initial financial condition of banks
is crucial for the success of bank bailouts. Capital injections that are
large enough to reestablish bank capital requirements increase the
supply of credit and spur investment. In contrast, not only do capital
injections that are too small fail to increase the supply of credit,
but they also encourage the evergreening of nonperforming loans.
(JEL E44, G21, G28, G32, G34)
Abstract
					Time use data on work and leisure is presented for a broad group
of OECD countries. The home production model explicitly accounts
for taxes and public expenditures on day care and elder care, substitutes for work households perform at home. Taxes are important
for matching time use patterns in Canada, the UK, and continental
Europe, but cannot explain the high levels of market work and low
levels of home work observed in Scandinavia. Subsidies of services
like day care that substitute for home work are shown to be quantitatively important for bringing both market and home work predictions in line with the data. (JEL D13, E62, J13, J14)
Abstract
					We provide a dynamic extension of an economy with search on credit
and labor markets (Wasmer and Weil 2004). Financial frictions create
volatility. They add an additional, almost acyclical, entry cost to
procyclical job creation costs, thus increasing the elasticity of labor
market tightness to productivity shocks by a factor of five to eight,
compared to a matching economy with perfect financial markets.
We characterize a dynamic financial multiplier that is increasing in
total financial costs and minimized under a credit market Hosios-
Pissarides rule. Financial frictions are an element of the solution to
the volatility puzzle. (JEL C78, E24, E32, E44, G21, J63)
Abstract
					We find that the answer is no in an estimated DSGE model of the US
economy in which exogenous movements in workers' market power
are not a major driver of observed economic fluctuations. If they are,
the tension between the conflicting stabilization objectives of monetary
policy increases, but with negligible effects on the equilibrium
behavior of the economy under optimal policy. (JEL E12, E23, E24,
E31, E32, E52)
Abstract
					The production of capital equipment is concentrated among a small
group of countries, and many countries import a large share of their
equipment. If capital-skill complementarity is an important feature
of technology, international trade may have important effects on the
skill premium through its impact on equipment accumulation. In this
paper we propose a tractable framework for evaluating this effect,
provide simple analytic expressions linking observable changes
in import shares by sector to changes in real wages of skilled and
unskilled workers (and, therefore, the skill premium), and quantify
the importance of this effect for a large set of countries. (JEL E22,
F11, F16, J24, L64)
Abstract
					Technological change has reduced the relative price of capital
goods. Reductions in trade costs make it cheaper to import capital
goods. With capital-skill complementarity, both can increase the skill
premium. I construct a general-equilibrium trade model with capital-skill complementarity to study the impact of changing worldwide trade costs and technologies on the skill premium. The impacts of trade costs and technical change are comparable, especially in developing countries, and much larger than Stolper-Samuelson effects. I find that both skilled and unskilled labor gain from trade, and that larger gains from trade are associated with larger increases in the skill premium. (JEL E22, F11, F16, J24, O33)
Abstract
					I propose a general equilibrium framework where firms decide
whether to outsource or integrate input manufacturing, domestically
or abroad. By outsourcing, firms may benefit from suppliers' technologies, but pay mark-up prices. By sourcing intrafirm, they save
on mark-ups and pay possibly lower foreign wages. Multinational
corporations arise when firms integrate production abroad. The
model predicts that intrafirm imports are positively correlated with
the mean and variance of the firms' productivity distribution and with
the degree of input differentiation. I use the model to quantify the US
welfare gains from intrafirm trade, which amount to about 0.23 percent of consumption per-capita. (JEL D21, F12, F23, F41, L11, L24)
Abstract
					Concern has intensified in recent years that many instrumental variables used in widely-cited growth regressions may be invalid, weak, or both. Attempts to remedy this general problem remain inadequate. We show how a range of published studies can offer more evidence that their results are not spurious. Key steps include: grounding growth regressions in more generalized theoretical models, deployment of new methods for estimating sensitivity to violations of exclusion restrictions, opening the "black box" of GMM with supportive
evidence of instrument strength, and utilization of weak-instrument
robust tests and estimators. (JEL C52, E23, F35, O41, O47)
Abstract
					This paper uses survey expectations data to construct empirical proxies for time-varying business-level uncertainty. Access to the micro data from the German IFO Business Climate Survey permits construction of uncertainty measures based on both ex ante disagreement and ex post forecast errors. Ex ante disagreement is strongly correlated with dispersion in ex post forecast errors. Surprise movements in either measure lead to significant reductions in production that abate fairly quickly. We extend our analysis to US data, measuring uncertainty with forecast disagreement from the Business Outlook Survey. Surprise increases in forecast dispersion lead to more persistent reductions in production than in the German data. (JEL C53, C83, D81, E23, E27, E32, E37)
Abstract
					Credit spreads are large, volatile, and countercyclical, and recent
empirical work suggests that risk premia, not expected credit losses,
are responsible for these features. Building on the idea that corporate
debt, while fairly safe in ordinary recessions, is exposed to economic
depressions, this paper embeds a trade-off theory of capital structure
into a real business cycle model with a small, exogenously timevarying
risk of economic disaster. The model replicates the level,
volatility and cyclicality of credit spreads, and variation in the
corporate bond risk premium amplifies macroeconomic fluctuations
in investment, employment, and GDP.
Abstract
					We estimate an empirical model of consumption disasters using new
data on consumption for 24 countries over more than 100 years, and
study its implications for asset prices. The model allows for partial
recoveries after disasters that unfold over multiple years. We
find that roughly half of the drop in consumption due to disasters
is subsequently
reversed. Our model generates a sizable equity premium
from disaster risk, but one that is substantially smaller than
in simpler models. It implies that a large value of the intertemporal
elasticity of substitution is necessary to explain stock-market crashes
at the onset of disasters.
Abstract
					A main puzzle in the sovereign debt literature is that defaults have only
minor effects on subsequent borrowing costs and access to credit. This
paper comes to a different conclusion. We construct the first complete
database of investor losses ("haircuts") in all restructurings with
foreign banks and bondholders from 1970 until 2010, covering 180
cases in 68 countries. We then show that restructurings involving
higher haircuts are associated with significantly higher subsequent
bond yield spreads and longer periods of capital market exclusion.
The results cast doubt on the widespread belief that credit markets
"forgive and forget."
Abstract
					This paper introduces a new empirical model of international trade
flows based on an import intensity-adjusted measure of aggregate
demand. We compute the import intensity of demand components by
using the OECD Input-Output tables. We argue that the composition
of demand plays a key role in trade dynamics because of the relatively
larger movements in the most import-intensive categories of expenditure
(especially investment, but also exports). We provide evidence
in favor of these mechanisms for a panel of 18 OECD countries,
paying particular attention to the 2008-2009 Great Trade Collapse.
Abstract
					The 2008–2009 financial crises, while originating in the United
States, witnessed a drop in asset prices and output that was at least
as large in the rest of the world. We investigate, in the context of a
simple two-country model, whether this could have been the result
of transmission through leveraged financial institutions. The paper
highlights what the various transmission mechanisms associated
with balance sheet losses are. For realistic parameters we find that
the model cannot account for the global nature of the crisis, both
in terms of the size of the impact and the extent of transmission.
Abstract
					This paper analyzes optimal policy responses to a global liquidity
trap. The key feature of this environment is that relative prices respond perversely. A fall in demand in one country causes an appreciation of its terms of trade, exacerbating the initial shock. At the zero bound, this country cannot counter this shock. Then it may be optimal for the partner country to raise interest rates. The partner may set a positive policy interest rate, even though its "natural interest rate" is below zero. An optimal policy response requires a mutual interaction between monetary and fiscal policy.
Abstract
					Motivated by the Chinese experience, we analyze an economy where
the central bank has access to international capital markets, but the
private sector does not. The central bank is modeled as a Ramsey
planner who can choose the domestic interest rate and the level
of international reserves. Consumers are credit-constrained as in
Woodford (1990). We find that a rapidly growing economy has a
higher welfare without capital mobility. In the Chinese context, we
argue that the domestic interest rate should be temporarily above
the international rate and that there should be more foreign asset
accumulation than in an open economy.
Abstract
					Using time-varying BVARs, we find a substantial decline in the shortrun
price elasticity of oil demand since the mid-1980s. This finding
helps explain why an oil production shortfall of the same magnitude
is associated with a stronger response of oil prices and more severe
macroeconomic consequences over time, while a similar oil price
increase is associated with smaller output effects. Oil supply shocks
also account for a smaller fraction of real oil price variability in
more recent periods, in contrast to oil demand shocks. The overall
effects of oil supply disruptions on the US economy have, however,
been modest.
Abstract
					The sensitivity of US aggregate investment to shocks is procyclical.
The response upon impact increases by approximately 50 percent
from the trough to the peak of the business cycle. This feature of
the data follows naturally from a DSGE model with lumpy microeconomic
capital adjustment. Beyond explaining this specific time
variation, our model and evidence provide a counterexample to the
claim that microeconomic investment lumpiness is inconsequential
for macroeconomic analysis.
Abstract
					Fear of risk provides a rationale for protracted economic downturns.
We develop a real business cycle model where investors with decreasing
relative risk aversion choose between a risky and a safe technology
that exhibit decreasing returns. Because of a feedback effect
from the interest rate to risk aversion, two equilibria can emerge: a
standard equilibrium and a "safe" one in which investors invest in
safer assets. We refer to the dynamics of this second equilibrium as
a safety trap because it is self-reinforcing as investors accumulate
more wealth and show it to be consistent with Japan's lost decade.
Abstract
					This paper shows how two standard models of consumption
risk-sharing—self-insurance through borrowing and saving and
limited commitment to insurance contracts—replicate similarly well
the standard, second-moment measures of insurance observed in US
micro data. A nonparametric analysis, however, reveals strongly
contrasting and counterfactual joint distributions of consumption,
income and wealth. Method of moments estimation shows how
measurement error in consumption eliminates excessive skewness
and smoothness of consumption growth. Moreover, counterfactual
nonlinearities disappear at high-estimated risk aversion under selfinsurance,
but are a robust feature of limited commitment. Its "shape
of insurance" thus argues in favor of the self-insurance model.
Abstract
					This paper examines issues related to the estimation of the government
spending multiplier (GSM) in a DSGE context. We stress a
source of bias in the GSM arising from the combination of endogenous
government expenditures and Edgeworth complementarity
between private consumption and government expenditures. Due to
cross-equation restrictions, omitting the endogenous component of
government policy at the estimation stage would lead an econometrician
to underestimate the degree of Edgeworth complementarity and,
consequently, the long-run GSM. An estimated version of our model
with US postwar data shows that this bias matters quantitatively. The
results are robust to a number of perturbations.
Abstract
					Empirical evidence on the relationship between democracy and
economic reforms is limited to few reforms, countries, and years.
This paper studies the effect of democracy on the adoption of economic
reforms using a new dataset on reforms in the financial, capital
and banking sectors, product markets, agriculture, and trade for
150 countries over the period 1960-2004. Democracy has a positive
and significant impact on the adoption of economic reforms, but
there is scarce evidence that economic reforms foster democracy.
Our results are robust to the inclusion of a large variety of controls
and estimation strategies.
Abstract
					Investments in fiscal capacity—economic institutions for tax compliance—are an important feature of economic development. This paper
develops a dynamic model to study the evolution of fiscal capacity
over time. We contrast a social planner's investment path with politically
feasible paths. Three types of states emerge in the long run: a
common-interest state where public resources are devoted to public
goods, a redistributive state where additional fiscal capacity is used
for transfers, and a weak state with no transfers and a low level of
public goods provision. We also present some preliminary evidence
consistent with the theory.
Abstract
					We conduct likelihood evaluation of a DSGE model in which firms
have imperfect common knowledge. Imperfect common knowledge
is found to be more successful than price stickiness á la Calvo to
account for the highly persistent effects of nominal shocks on output
and inflation. Our likelihood analysis suggests that firms pay
little attention to aggregate nominal conditions. This paper shows
that such allocation of attention is plausible because it is optimal for
firms with a reasonably small size of information frictions and a size
of idiosyncratic uncertainty that is in line with the micro evidence on
price changes.
Abstract
					We argue that credit constraints not only amplify fundamental shocks,
they can also lead to self-fulfilling business cycles. We study a model
with heterogeneous firms, in which imperfect contract enforcement
implies that productive firms face binding credit constraints, with
the borrowing capacity limited by expected equity value. A drop in
equity value tightens credit constraints and reallocates resources
from productive to unproductive firms. Such reallocation reduces
aggregate productivity, further depresses equity value, generating
a financial multiplier. Aggregate dynamics are isomorphic to those
in a representative-agent economy with increasing returns. For
sufficiently tight credit constraints, the model generates self-fulfilling
business cycles.
Abstract
					We present evidence on the frequency of nominal wage adjustment
using SIPP data adjusted for measurement error. The SIPP is a
representative sample of the US population. Our main results are:
(i) The average quarterly probability of a nominal wage change
is between 21.1 and 26.6 percent, depending on the assumptions
used. (ii) Wage changes are much more likely when workers change
jobs. (iii) The frequency of wage adjustment does not display
significant seasonal patterns. (iv) The hazard of a nominal wage
change first increases and then decreases, with a peak at 12 months.
Abstract
					This paper examines the consequences of rapid disinflation for
downward wage rigidities in two emerging countries, Brazil and
Uruguay. Although wage rigidities are altered by disinflation, in
neither of the two countries does price stability eliminate frictions
in wage-setting mechanisms. In a context of individual wage
negotiations and weak unions, disinflation in Uruguay puts an end
to its history of indexation, but strong resistance to nominal wage
cuts emerges. In strongly unionized Brazil, wage indexation is highly persistent, but the introduction of inflation targeting by the Central Bank in 1999 moves the focal point of wage negotiations to expected inflation.
Abstract
					We empirically establish that one-third of job transitions leads to wage
losses. Using a quantitative on-the-job search model, we find that
60 percent of them are movements down the job ladder. Accounting
for them, our baseline calibration matches the large residual wage
inequality in US data while attributing only 13.7 percent of overall
wage inequality to the presence of search frictions in the labor
market. We can trace the difference between ours and previous much
higher estimates to our explicit modeling of nonvalue improving
job-to-job transitions.
Abstract
					We build a life-cycle model with earnings risk, liquidity constraints, and
portfolio choice over tax-deferred and taxable assets to evaluate how
household consumption changes in response to shocks to transitory
anticipated income, such as the 2001 income tax rebate. Households
optimally invest in tax-deferred assets, which are encumbered by
withdrawal penalties, and exchange taxable precautionary savings
for higher after-tax returns. The model predicts a higher marginal
propensity to consume out of a rebate than is predicted by a standard
frictionless life-cycle model. Liquidity-constrained households—with
few financial assets or portfolios expensive to reallocate—consume a
higher fraction of the rebates.
Abstract
					I develop a New Keynesian model in which a type of government
multiplier doubles when unemployment rises from 5 percent to
8 percent. This multiplier indicates the additional number of workers
employed when one worker is hired in the public sector. Graphically,
in equilibrium, an upward-sloping quasi-labor supply intersects a
downward-sloping labor demand in a (employment, labor market
tightness) plane. Increasing public employment stimulates labor
demand, which increases tightness and therefore crowds out private
employment. Critically, the quasi-labor supply is convex. Hence,
when labor demand is depressed and unemployment is high, the
increase in tightness and resulting crowding-out are small.
Abstract
					Countries become more politically polarized and fractionalized following
financial crises, reducing the likelihood of major financial reforms precisely when they might have especially large benefits. The evidence from a large sample of countries provides strong support for the hypotheses that following a financial crisis, voters become more ideologically extreme and ruling coalitions become weaker, independently of whether they were initially in power. The evidence that
increased polarization and weaker governments reduce the chances of financial reform and that financial crises lead to legislative gridlock and anemic reform is less clear-cut. The US debt overhang resolution is discussed as an illustration.
Abstract
					We study the relationship between participation in free trade
agreements (FTAs) and the sustainability of democracy. Our model
shows that FTAs can critically reduce the incentive of authoritarian
groups to seek power by destroying protectionist rents, thus making
democracies last longer. This gives governments in unstable
democracies an extra motive to form FTAs. Hence, greater
democratic instability induces governments to boost their FTA
commitments. In a dataset with 116 countries over 1960-2007, we
find robust support for these predictions. They help to rationalize
the rapid simultaneous growth of regionalism and of worldwide
democratization since the late 1980s.
Abstract
					We present a monetary model with segmented asset markets that
implies a persistent fall in interest rates after a once and for all increase
in liquidity. The gradual propagation mechanism produced
by our model is novel in the literature. We provide an analytical
characterization of this mechanism, showing that the magnitude
of the liquidity effect on impact, and its persistence, depend
on the ratio of two parameters: the long-run interest rate elasticity
of money demand and the intertemporal substitution elasticity.
The model simultaneously explains the short-run "instability"
of money demand estimates as-well-as the stability of long-run
interest-elastic money demand.
Abstract
					During World War I the birth rate in France fell by 50%. Why?
I build a model of fertility choices where the war implies a positive
probability that a wife remains alone, a partially-compensated loss
of a husband's income, and a temporary decline in productivity
followed by faster growth. I calibrate the model's key parameters
using pre-war data. I find that it accounts for 91% of the decline
of the birth rate. The main determinant of this result is the loss
of expected income associated with the risk that a wife remains
alone.
Abstract
					Recent empirical work suggests that small price changes are relatively
common. This evidence has been used to criticize classic
menu-cost models. In this paper, we use scanner data from a national
supermarket chain and micro data from the Consumer Price
Index to reassess the importance of small price changes. We argue
that the vast majority of these changes are due to measurement error.
We conclude that the evidence on the prevalence of small price
changes is much too weak to be used as a litmus test of nominal
rigidity models.
Abstract
					A large body of empirical work has found that exchange rate
movements have only modest effects on U.S. inflation. However,
exchange rate pass-through may be underestimated because some
price changes are missed when constructing price indexes. We investigate downward biases that arise when items exit or enter the
U.S. import price index. Using Bureau of Labor Statistics microdata
we find that, although potentially large in theory, the empirical
biases are modest over typical forecast horizons. As such, the
empirical evidence continues to support the conclusion that pass-through to U.S. import prices is low.
Abstract
					We propose a structural dynamic factor model of a small
commodity-exporting economy, using Canada as a representative
case study. Combining large panel data sets of the global and do-
mestic economies, sign restrictions are used to identify relevant
demand and supply shocks that explain volatility in real commod-
ity prices. We quantify their dynamic effects on a wide variety
of Canadian macro variables. We are able to reproduce all the
main stylized features at business-cycle frequencies documented in
the literature on this type of economies. These include a Dutch
disease effect which has proven hard to find in empirical studies.
Abstract
					Using data on place of origin of today's country populations and the indicators of level of development in 1500 used by Acemoglu, Johnson, and Robinson (2002), we confirm a reversal of fortune for colonized countries as territories, but find persistence of fortune for people and their descendants. Persistence results are at least as strong for three alternative measures of early development, for which reversal for territories, however, fails to hold. Additional exercises lend support to Glaeser et al.'s (2004) view that human capital is a more fundamental channel of influence of precolonial conditions on modern development than is quality of institutions.
Abstract
					We consider a life-cycle model with idiosyncratic risk in earnings, out-of-pocket medical and nursing home expenses, and survival. Partial insurance is available through welfare, Medicaid, and social security. Calibrating the model to the United States we show that savings for old-age, out-of-pocket expenses account for 13.5 per- cent of aggregate wealth, half of which is due to nursing home expenses; cross-sectional out-of-pocket nursing home risk accounts for 3 percent of aggregate wealth and substantially slows down wealth decumulation at older ages; and all newborns would benefit if social insurance for nursing home stays was made more generous.
Abstract
					We show that the behavior of entrepreneurs facing incomplete financial markets and risky investment can explain why accelerations of productivity growth in developing countries tend to be associated with current account improvements. Under uninsurable investment risk, entrepreneurs have to largely rely on self-financing so that, when productivity growth rises, entrepreneurs increase saving to finance new investment. The key insight is that saving has to increase more than investment to also allow for the accumulation of precautionary assets that entrepreneurs hold for self-insurance against investment risk. Numerical simulations show that this net saving increase can generate a current account improvement in line with the empirical evidence.
Abstract
					I incorporate an insight of Friedrich Hayek—that competition allows a thousand flowers to bloom, and discovers the best among them—into a model of Schumpeterian innovation. Firms face uncertainty about the optimal direction of innovation, so more innovations implies a higher expected value of the "best" innovation. The model accounts for two seemingly contradictory relationships reported in recent empirical studies—a positive relationship between competition and industry-level productivity growth, and an inverted-U relationship between competition and firm-level innovation. Notwithstanding the positive relationship between competition and growth, I find antitrust policy reduces industry-level growth.
Abstract
					This paper evaluates the global welfare impact of China's trade integration and technological change in a multi-country quantitative Ricardian-Heckscher-Ohlin model. We simulate two alternative growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson 2004), the large majority of countries experience significantly larger welfare gains when China's productivity growth is biased toward its comparative disadvantage sectors. This finding is driven by the inherently multilateral nature of world trade.
Abstract
					We provide among the first empirical evidence, consistent with recent macro global game crisis models, that shows that the precision of public signals can coordinate crises. In these models, self-fulfilling crises independent of fundamentals can occur only when publicly disclosed signals of fundamentals have high precision; poor fundamentals are the sole driver of crises only in low precision settings. We exploit a key publicly disclosed signal of fundamentals, namely accounting data, for 68 currency and systemic banking crises in 17 countries. We find that precrisis accounting signals of fundamentals are significantly lower only in low-precision countries.
Abstract
					The evolution of debt-income ratios over time depends on income growth, inflation, and interest rates, independent of any changes in borrowing. We examine the effect of these "Fisher dynamics" on household debt-income ratios in the United States over the period 1929–2011. Adapting a standard decomposition of public debt to household sector debt, we show that these factors explain, in accounting terms, a large fraction of the changes in household debt-income ratios observed historically. More recently, debt defaults have also been important. Changes in household debt-income ratios over time cannot be straightforwardly interpreted as reflecting shifts in the supply and demand of household credit.
Abstract
					Higher national incomes are correlated with political stability. Is this
relationship causal? We test three theories linking income to conflict
with new data on export price shocks. Price shocks have no effect on
new conflict, even large shocks in high-risk nations. Rising prices,
however, weakly lead to shorter, less deadly wars. This evidence
contradicts the theory that rising state revenues incentivize state
capture, but supports the idea that rising revenues improve counterinsurgency capacity and reduce individual incentives to fight in
existing conflicts. Conflict onset and continuation follow different
processes. Ignoring this time dependence generates mistaken
conclusions about income and instability.
Abstract
					Does input trade synchronize business cycles across countries? I
incorporate input trade into a dynamic multisector model with many
countries, calibrate the model to match bilateral input-output data,
and estimate trade-comovement regressions in simulated data. With
correlated productivity shocks, the model yields high trade-comovement correlations for goods, but near-zero correlations for services and thus low aggregate correlations. With uncorrelated shocks, input trade generates more comovement in gross output than real value added. Goods comovement is higher when (i) the aggregate trade elasticity is low, (ii) inputs are more substitutable than final goods, and (iii) inputs are substitutable for primary factors.
Abstract
					Almost half of American families did not adjust their consumption
following receipt of the 2001 or 2008 tax rebates. Another 20 percent,
with low income and more likely to rent, spent a small but significant
amount. Households with large spending propensity held
high levels of mortgage debt. The heterogeneity is concentrated in
a few nondurable categories and a handful of "new vehicle" purchases.
The cumulated predictions of the heterogeneous response
model tend to be smaller and more accurate than their homogeneous
response model counterparts, offering new insights on the evaluation
of the two fiscal stimulus programs.
Abstract
					We use responses to survey questions in the 2010 Italian Survey of
Household Income and Wealth that ask consumers how much of an
unexpected transitory income change they would consume. The marginal propensity to consume (MPC) is 48 percent on average. We
also find substantial heterogeneity in the distribution, as households
with low cash-on-hand exhibit a much higher MPC than affluent
households, which is in agreement with models with precautionary
savings, where income risk plays an important role. The results have
important implications for predicting household responses to tax
reforms and redistributive policies.
Abstract
					Central banking in France from 1948 to 1973 was a paradigmatic
example of a policy that relied on quantities rather than interest
rates. Standard SVAR analyses support the common view that
monetary policy was ineffective during this period. However, this
approach fails to identify the stance of monetary policy since it does
not account for the specificity of quantitative controls on money and
credit. An alternative identification strategy based on a narrative
approach suggests that monetary policy shocks had strong and
lasting effects in the conventional direction and accounted for nearly
half of the variance in output and price levels.
Abstract
					I use a novel loan-level dataset covering lending by official creditors
to developing country governments to construct an instrument for
government spending. Loans from official creditors typically finance
multiyear public spending projects, with disbursements linked to the
stages of project implementation. The identification strategy exploits
the long lags between approval and eventual disbursement of these
loans to isolate a predetermined component of public spending associated with past loan approval decisions taken before the realization of contemporaneous shocks. In a large sample of 102 developing countries over the period 1970-2010, the one-year spending multiplier is reasonably-precisely estimated to be around 0.4.
Abstract
					We study the transmission of business cycle fluctuations for developed
(N ) to developing economies (S ) with a two-country, asymmetric,
DSGE model with endogenous development of new technologies
in N, and sunk costs of exporting and transferring the production
of the intermediate goods to S. Consistent with the data, the flow of
technologies from N to S co-moves positively with output in N and S;
shocks to N have a large effect on S; business cycles in N lead over
medium term fluctuations in S; the cross-correlation of outputs is
larger than consumption; and interest rates in S are countercyclical.
Abstract
					We show that welfare can be lower under complete financial markets
than under autarky in a monetary union with home bias, sticky prices,
and asymmetric shocks. Such a monetary union is a second-
best environment in which the structure of financial markets affects
risk-sharing but also shapes the dynamics of inflation rates and the
welfare costs from nominal rigidities. Welfare reversals arise for a
variety of empirically plausible degrees of price stickiness when the Marshall-Lerner condition is met. These results carry over a model
with active fiscal policies, and hold within a medium-scale model,
although to a weaker extent.
Abstract
					We review the events that led to the May 2010 and July 2011
bailout agreements. We interpret the bailouts as outcomes of
political-economy equilibria. We argue that these equilibria were
likely not on the Pareto frontier, and sketch political-economy arguments for why collective policymaking in the Euro area may lead to suboptimal outcomes.
Abstract
					We consider the effects of central bank purchases of a risky asset as an additional dimension of policy alongside "conventional" interest rate policy in a general-equilibrium model of asset pricing with endogenous collateral constraints. The effects of asset purchases depend on the way that they affect collateral constraints. We show that under some circumstances, central bank purchases relax financial constraints, increase aggregate demand, and may even achieve a Pareto improvement; but in other cases, they tighten financial constraints, reduce aggregate demand, and lower welfare. The latter case is almost certainly the one that arises if central bank purchases are sufficiently large. (JEL D51, E43, E44, E52, E58)
Abstract
					We provide evidence on the transmission of monetary policy shocks in a setting with both economic and financial variables. We first show that shocks identified using high frequency surprises around policy announcements as external instruments produce responses in output and inflation that are typical in monetary VAR analysis. We also find, however, that the resulting "modest" movements in short rates lead to "large" movements in credit costs, which are due mainly to the reaction of both term premia and credit spreads. Finally, we show that forward guidance is important to the overall strength of policy transmission. (JEL E31, E32, E43, E44, E52, G01)
Abstract
					This paper compares the effects of conventional monetary policy on real borrowing costs with those of the unconventional measures employed after the target federal funds rate hit the zero lower bound (ZLB). For the ZLB period, we identify two policy surprises: changes in the two-year Treasury yield around policy announcements and changes in the ten-year Treasury yield that are orthogonal to those in the two-year yield. The efficacy of unconventional policy in lowering real borrowing costs is comparable to that of conventional policy, in that it implies a complete pass-through of policy-induced movements in Treasury yields to comparable-maturity private yields. (JEL E31, E43, E44, E52)
Abstract
					We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions. We reach this conclusion by looking through the lens of an estimated New Keynesian model in which firms face moderate degrees of price rigidities, no nominal rigidities in wages, and a binding zero lower bound constraint on the nominal interest rate. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small drop in inflation that occurred during the Great Recession. (JEL E12, E23, E24, E31, E32, E52)
Abstract
					Several prominent economists have argued that existing DSGE models cannot properly account for the evolution of key macroeconomic variables during and following the recent Great Recession. We challenge this argument by showing that a standard DSGE model with financial frictions available prior to the recent crisis successfully predicts a sharp contraction in economic activity along with a protracted but relatively modest decline in inflation, following the rise in financial stress in 2008:IV. The model does so even though inflation remains very dependent on the evolution of economic activity and of monetary policy. (JEL E12, E31, E32, E37, E44, E52, G01)
Abstract
					We evaluate explanations for the absence of disinflation during the Great Recession and find popular explanations to be insufficient. We propose a new explanation for this puzzle within the context of a standard Phillips curve. If firms' inflation expectations track those of households, then the missing disinflation can be explained by the rise in their inflation expectations between 2009 and 2011. We present new econometric and survey evidence consistent with firms having similar expectations as households. The rise in household inflation expectations from 2009 to 2011 can be explained by the increase in oil prices over this time period. (JEL D84, E24, E32, E52, E58, Q35)
Abstract
					We estimate the response of stock prices to monetary policy shocks using a time-varying coefficients VAR. Our evidence points to protracted episodes in which stock prices end up increasing persistently in response to an exogenous tightening of monetary policy. That response is at odds with the "conventional" view on the effects of monetary policy on bubbles, as well as with the predictions of bubbleless models. We also argue that it is unlikely that such evidence can be accounted for by an endogenous response of the equity premium to the monetary policy shock. (JEL E43, E44, E52, G12, G14)
Abstract
					If inflation expectations become firmly anchored at the inflation target even when average inflation deviates from the target, the long-run Phillips curve becomes nonvertical. During 1997-2011, average inflation expectations in Sweden have been close to the inflation target of 2 percent, whereas average inflation has fallen short of the target by 0.6 percentage points. The estimates reported suggest that the slope of the long-run Phillips curve is about 0.75. Then the average unemployment rate has been about 0.8 percentage points higher than if average inflation had been on target. This is a large unemployment cost of undershooting the inflation target. (JEL D84, E24, E31, E52, E58)
Abstract
					The welfare cost of random consumption fluctuations is known from De Santis (2007) to be increasing in the level of uninsured idiosyncratic consumption risk. It is known from Barillas, Hansen, and Sargent (2009) to increase if agents care about robustness to model misspecification. We calculate the cost of business cycles in an economy where agents face idiosyncratic consumption risk and fear model misspecification, finding that idiosyncratic risk has a greater impact on the cost of business cycles if agents already fear model misspecification. Correspondingly, endowing agents with fears about misspecification is more costly when there is already idiosyncratic risk. (JEL D81, E13, E21, E32)
Abstract
					This paper studies how demographic variation affects the aggregate household saving rate. We focus on China because it is experiencing an historic demographic transition and has had a massive increase in household saving. We conduct a quantitative investigation using a structural overlapping generations model that incorporates parental care through support for dependent children and financial transfers to retirees. The saving decisions in the parameterized model mimic many of the features observed in the Chinese household saving rate time series from 1955 to 2009. Demographic change alone accounts for over half of the saving rate increase. (JEL D12, D91, E21, J11, O12, O16, P36)
Abstract
					In response to income fluctuations, households smooth consumption by substituting between market expenditure and time inputs. This paper provides evidence of this substitution in the context of food consumption over transitory and permanent income fluctuations in Mexico. Household time investments drive a wedge between consumption and expenditure, amplifying measured expenditure volatility. Volatility decompositions for Mexico and the United States suggest that the extent of bias in expenditure-based measures induced by changes in marketization is relatively larger in the Mexican setting. These findings imply that volatility comparisons between commodities or across countries are misleading when consumption measures ignore home production. (JEL D12, D91, E21, E32, O11, O12)
Abstract
					Within a search and matching model with risk-averse workers, endogenous hiring and separation, and unobservable search effort, we show how to decentralize the constrained-efficient allocation by a combination of a production tax and three labor-market policy instruments: vacancy subsidies, layoff taxes, and unemployment benefits. We derive analytical expressions for the optimal mix of these over the business cycle. Calibrating the model to the US economy under the assumption that wages are rigid, we find that hiring subsidies and layoff taxes should rise considerably and persistently in recessions. The optimal variation in unemployment benefits, in contrast, is quantitatively small and short-lived. (JEL E24, E32, J24, J63, J64, J65)
Abstract
					This paper presents a new model of Bertrand competition between heterogeneous firms in the open economy where the macroeconomic distribution of markups responds to the degree of trade openness and the underlying level of technology in each trading partner. The model's simple closed-form distributions for markups and pricing yield predictions that coincide with a number of stylized facts from the empirical literature on markups, pass-through, and trade openness which previously could be illustrated only through numerical simulations. (JEL D43, F12, F41, L13)
Abstract
					We examine the implications of workhorse trade models for how aggregate productivity, real GDP and real consumption, as measured by statistical agencies, respond to changes in trade costs. In a range of models, changes in measured productivity are equal to the inverse of an export-share weighted average of changes in variable trade costs incurred domestically. Under certain conditions, despite the multiple biases in the CPI, measured real consumption captures the first-order effects of changes in variable trade costs on welfare. Through the lens of these results, we interpret some of the empirical work on measured gains from trade. (JEL E21, E23, F11, F43)
Abstract
					I characterize optimal taxes in a life-cycle economy where ability and human capital are unobservable. I show that unobservable human capital effectively makes preferences over labor nonseparable across age. I generalize the static optimal tax formulas to account for such nonseparabilities and show how they depend both on own-Frisch labor elasticities and cross-Frisch labor elasticities. I calibrate the economy to US data. I find that the optimal marginal income taxes decrease with age, in contrast to both the US tax code and to a model with observable human capital. I demonstrate that the behavior of cross Frisch elasticities is essential in explaining the decline. (JEL D91, H21, H24, J24)
Abstract
					An important incentive problem for the design of unemployment insurance is the fraudulent collection of unemployment benefits by workers who are gainfully employed. We show how to efficiently use a combination of tax/subsidy and monitoring to prevent such fraud. The optimal policy monitors the unemployed at fixed intervals. Employment tax is nonmonotonic: it increases between verifications but decreases after a verification. Unemployment benefits are relatively flat between verifications but decrease sharply after a verification. Our quantitative analysis suggests that the optimal monitoring cost is 60 percent of the cost in the current US system. (JEL D82, H24, J64, J65)
Abstract
					On average, estimates of trade elasticities are smaller in aggregate data than at sector level. This is an artifact of aggregation. Estimations performed on aggregate data constrain sector elasticities to homogeneity, which creates a heterogeneity bias. The paper shows such a bias exists in two prominent approaches used to estimate elasticities, which has meaningful consequences for the calibration of the trade elasticity in one-sector, aggregative models. With elasticities calibrated to aggregate data, macroeconomic models can have predictions at odds with the implications of their multi-sector counterparts. They do not when elasticities are calibrated using a weighted average of sector elasticities. (JEL C51, F13, F14, F41, O19)
Abstract
					We study the implications of offshoring on innovation, technology, and wage inequality in a Ricardian model with directed technical change. Profit maximization determines both the extent of offshoring and the direction of technological progress. A fall in the offshoring cost induces technical change with an ambiguous factor bias. When the initial cost of offshoring is high, an increase in offshoring opportunities causes a fall in the real wages of unskilled workers in industrial countries, skill-biased technical change and rising skill premia. When the offshoring cost is sufficiently low, instead, offshoring induces technical change biased in favor of the unskilled workers. (JEL J24, J31, L24, O33)
Abstract
					Countercyclical country interest rates have been shown to be an important characteristic of business cycles in emerging markets. In this paper we provide a microfounded rationale for this pattern by linking interest rate spreads to the dynamics of corporate leverage. For this purpose we embed a financial accelerator into a business cycle model of a small open economy and estimate it on a novel panel dataset for emerging economies that merges macroeconomic and financial data. The model accounts well for the empirically observed countercyclicality of interest rates and leverage, as well as for other stylized facts. (JEL E13, E32, E43, E44, F41, O11)
Abstract
					This paper develops a quantifiable unified growth theory to investigate cross-country comparative development. The calibrated model can replicate the historical development dynamics in forerunner countries like Sweden and the patterns in cross-country panel data. The findings suggest a crucial role of the timing of the onset of the economic and demographic transition for explaining differences in development. Country-specific differences in extrinsic mortality are a candidate explanation for differences in the timing of the take-off across countries and the resulting worldwide comparative development patterns, including the bimodal distribution of the endogenous variables across countries. (JEL I12, J11, J13, N33, N34, O41, O47)
Abstract
					Agriculture in poor countries has low productivity, high employment, and negligible trade flows relative to other sectors. These facts motivate a multisector, open-economy view of international productivity differences. With a quantitative multicountry model featuring nonhomothetic preferences, multiple interrelated sectors, distorted labor markets, and costly trade, I find: trade amplifies the negative effect of labor market distortions; trade costs—large for poor countries, especially in agriculture—significantly contribute to international productivity differences; and explicitly modeling agriculture reveals additional channels through which poor countries may gain from trade. (JEL F41, J24, J43, O13, O19, Q11, Q17)
Abstract
					I construct a two-sector general equilibrium model of structural change to study the impact of sectoral composition of gross domestic product (GDP) on cross-country differences in GDP growth and volatility. For an empirically relevant parametrization of sectoral production functions, an increase in the share of services in GDP reduces both aggregate total factor productivity (TFP) growth and volatility, thus reducing GDP growth and volatility. When the model is calibrated to the US manufacturing and service sector, the rise of the service sector occurring as income grows can account for a large fraction of the differences in per capita GDP growth and volatility between high-income economies and upper middle income economies. (JEL E23, E25, E32, L60, L80)
Abstract
					There are two major problems in identifying the output effects of banking panics of the pre-Great Depression era. First, it is not clear when panics occurred because prior panic series differ in their identification of panic episodes. Second, establishing the direction of causality is tricky. This paper addresses these two problems (i) by deriving a new panic series for the 1825-1929 period and (ii) by studying the output effects of major banking panics via vector autoregression (VAR) and narrative-based methods. The new series has important implications for the history of financial panics in the United States. (JEL E32, E44, G21, N11, N12, N21, N22)
Abstract
					Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2007, we show that industrial policies allocated to competitive sectors or that foster competition in a sector increase productivity growth. We measure competition using the Lerner Index and include as industrial policies subsidies tax holidays, loans, and tariffs. Measures to foster competition include policies that are more dispersed across firms in a sector or measures that encourage younger and more productive enterprises. (JEL L11, L25, L52, O14, O25, O47, P31)
Abstract
					A central result in international macroeconomics is that a government cannot simultaneously opt for open financial markets, fixed exchange rates, and monetary autonomy; rather, it is constrained to choosing no more than two of these three. This paper considers whether partial capital controls and limited exchange rate flexibility allow for full monetary policy autonomy. We find partial capital controls do not generally allow for greater monetary control than with open capital accounts, unless they are quite extensive, but a moderate amount of exchange rate flexibility does allow for some degree of monetary autonomy, especially in emerging and developing economies. (JEL E52, F32, F33)
Abstract
					This paper develops a production-based asset pricing model with two types of agents and concentrated ownership of physical capital. A temporary but persistent "distribution shock" causes the income share of capital owners to fluctuate in a procyclical manner, consistent with US data. The concentrated ownership model significantly magnifies the equity risk premium relative to a representative-agent model because the capital owners' consumption is more-strongly linked to volatile dividends from equity. With a steady-state risk aversion coefficient around 4, the model delivers an unleveled equity premium of 3.9 percent relative to short-term bonds and a premium of 1.2 percent relative to long-term bonds. (JEL D31, E13, E25, E32, E44, G12)
Abstract
					We assess how the properties of technology affect structural transformation, i.e., the reallocation of production factors across the broad sectors of agriculture, manufacturing, and services. To this end, we estimate sectoral constant elasticity of substitution (CES) and Cobb-Douglas production functions on postwar US data. We find that differences in technical progress across the three sectors are the dominant force behind structural transformation whereas other differences across sectoral technology are of second order importance. Our findings imply that Cobb-Douglas sectoral production functions that differ only in technical progress capture the main technological forces behind the postwar US structural transformation. (JEL E16, E25, O33, O47)
Abstract
					This paper argues that the correlation of business cycles across countries is largely due to linkages between multinational firms and their foreign affiliates. There are very few foreign affiliates in France, but they contribute considerably to aggregate economic activities. We exploit the heterogeneity in the presence and origin of foreign affiliates across French regions to identify their impact on comovement. We find a positive impact of foreign affiliates' presence on the comovement of business cycles between their regions of location and their countries of origin. This effect is not primarily driven by foreign affiliates' trade with their countries of origin. (JEL E32, F14, F23, F44)
Abstract
					We reassess the empirical effects of income and employment on
self-reported well-being. Our analysis makes use of a two-step estimation procedure that allows us to apply instrumental variable regressions with ordinal observable data. As suggested by the theory of incomplete markets, we differentiate between the effects of persistent and transitory income shocks. In line with this theory, we find that persistent shocks have a significant impact on happiness while transitory shocks do not. This also has consequences for inference about the happiness effect of employment. We find that employment per se is associated with a nonsignificant decline in happiness. (JEL D12, D52, I31, J22)
Abstract
					This paper assesses the importance of trade policy reforms in South Korea, as well as the General Agreement on Tariffs and Trade (GATT) tariff reductions, in explaining Korea's growth miracle. We develop a model of neoclassical growth and trade in which lower tariffs lead to increased gross domestic product (GDP) per worker via comparative advantage and specialization, and capital accumulation. We calibrate the model and simulate the tariff reductions that occurred between early 1962 and 1989. The model can explain 17 percent of South Korea's catch-up to the G7 countries in value-added per worker in the manufacturing sector. These gains, as well as most of the welfare gains, are driven by two key transmission channels: multistage production and imported investment goods. (JEL F13, F43, L60, O47)
Abstract
					We estimate an aggregate matching function and find that the regression residual, which captures movements in matching efficiency, displays procyclical fluctuations and a dramatic decline after 2007. Using a matching function framework that explicitly takes into account worker heterogeneity as well as market segmentation, we show that matching efficiency movements can be the result of variations in the degree of heterogeneity in the labor market. Matching efficiency declines substantially when, as in the Great Recession, the average characteristics of the unemployed deteriorate substantially, or when dispersion in labor market conditions—the extent to which
some labor markets fare worse than others—increases markedly. (JEL E24, E32, J41, J42)
Abstract
					Marriage has declined since 1960, with the drop being more significant for noncollege-educated individuals versus college-educated ones. Divorce has increased, more so for the noncollege-educated. Additionally, positive assortative mating has risen. Income inequality among households has also widened. A unified model of marriage, divorce, educational attainment, and married female labor-force participation is developed and estimated to fit the postwar US data. Two underlying driving forces are considered: technological progress in the household sector and shifts in the wage structure. The analysis emphasizes the joint role that educational attainment, married female labor-force participation, and marital structure play in determining income inequality. (JEL D13, D31, D83, I20, J12, J16, O33)
Abstract
					This paper studies a dynamic production economy with financial intermediation. It is assumed that claims held on intermediaries cannot be fully enforced such that intermediation is subject to intermediary equity requirements. It is shown that competitive equilibria are not constrained efficient whenever the aggregate amount of intermediary equity in the economy is low enough to limit production. Specifically, a constrained social planner can achieve a Pareto improvement by creating long-term rents for intermediaries, which immediately reduces intermediary equity requirements. The constrained-efficient allocation can be implemented by a positive tax on future intermediary activity. (JEL D21, D82, D86, G21, G28)
Abstract
					This paper derives the optimal lending contract in the financial accelerator model of Bernanke, Gertler, and Gilchrist (1999), henceforth, BGG. The optimal contract includes indexation to the aggregate return on capital, household consumption, and the return to internal funds. This triple indexation results in a dampening of fluctuations in leverage and the risk premium. Hence, compared with the contract originally imposed by BGG, the privately optimal contract implies essentially no financial accelerator. (JEL D11, D81, D86, D92, E13, G31, L26)
Abstract
					We propose a theory of endogenous firm-level risk over the business cycle based on endogenous market exposure. Firms that reach a larger number of markets diversify market-specific demand shocks at a cost. The model is driven only by total factor productivity shocks and captures the observed countercyclity of firm-level risk. Using a panel of US firms we show that, consistent with our theoretical model, measures of market reach are procyclical, and the countercyclicality of firm-level risk is driven by those firms that adjust their market exposure, which are larger than those that do not. (JEL D21, D22, E23, E32, L25)
Abstract
					I explore mismatch between firms and their managers as a source of variation in aggregate output and total factor productivity (TFP). The model is calibrated to match observations on the size distribution of US manufacturing firms, managerial compensation, and aggregate moments in the national accounts. Quantitatively, small deviations from assortative matching can have sizeable effects on output and TFP. "Cronyism," where managerial positions are allocated by status rather than talent, imposes a substantial burden on economic welfare. Moreover, the model can reconcile the seemingly contradictory evidence from numerous case studies with results from recent contributions to the assignment literature. (JEL D24, E23, L11, L60, M52, O40)
Abstract
					Financial innovations that change how promises are collateralized affect prices and investment, even in the absence of any change in fundamentals. In C-models, the ability to leverage an asset always generates overinvestment compared to Arrow-Debreu. Credit Default Swaps always leads to underinvestment with respect to Arrow-Debreu, and in some cases even robustly destroy competitive equilibrium. The need for collateral would seem to cause underinvestment. Our analysis illustrates a countervailing force: goods that serve as collateral yield additional services and can therefore be over-valued and over-produced. In models without cash flow problems there is never marginal underinvestment on collateral. (JEL D52, D86, D92, E44, G01, G12, R31)
Abstract
					Flow earnings in a laboratory experiment decline the further a Brownian state variable, z, evolves from its optimal level, z*. Optimal state dependent models predict subjects will pay a fixed cost to return z to z* only when z strays outside a critical inaction region around the optimum. On average, subjects adjust at states remarkably close to optimal threshold levels but, as in the field, do not establish true "state dependent" inaction regions, suggesting significant "time dependent" components in adjustment rules. Structural estimates of subjective observation cost qualitatively account for variation in time dependence observed across treatments. (JEL C91, D21, D80)
Abstract
					Financial liberalization increases growth, but leads to more crises
and costly bailouts. We present a two-sector model in which liberalization, by allowing debt-denomination mismatch, relaxes borrowing limits in the financially constrained sector, but endogenously
generates crisis risk. When regulation restricts external financing to standard debt, liberalization preserves financial discipline and may increase allocative efficiency, growth, and consumption possibilities. By contrast, under unfettered liberalization that also allows uncollateralized option-like liabilities, discipline breaks down, and efficiency falls. The model yields a testable gains-from-liberalization condition, which holds in emerging markets. It also helps rationalize the contrasting experience of emerging markets and the recent US housing crisis. (JEL E23, E44, G01, G21, G28, O41, R31)
Abstract
					Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. In a theoretical model, we first show that a shift in the composition of public purchases toward high-tech products translates into higher economy-wide returns to innovation, leading to an increase in the aggregate level of private R&D. Using unique data on federal procurement in US states and performing panel fixed-effects estimations, we find support for the model's prediction of a positive R&D effect of the technological content of government procurement. Instrumental-variable estimations suggest a causal interpretation of our findings. (JEL H57, H76, O31, O32, O38)
Abstract
					The price of crude oil never exceeded $40 per barrel until mid-2004. By July 2008 it peaked at $145 and by late 2008 it fell to $30 before increasing to $110 in 2011. Are speculators partly to blame for these price changes? Using a simple model of supply and demand in the cash and storage markets, we determine whether speculation is consistent with data on production, inventory changes, and convenience yields. We focus on crude oil, but our approach can be applied to other commodities. We show speculation had little, if any, effect on oil prices. (JEL G13, G18, G23, G31, Q35, Q38)
Abstract
					We examine the impact of unconventional monetary policy (UMP) on stock market tail risk and risks of extreme interest rate movements. We find that UMP announcements substantially reduced option-implied
equity market tail risks and interest rate risks. Most of the impact derives from forward guidance rather than asset purchase announcements. Communication about the future path of policy rates reduced volatility expectations of long-term rates and the associated risk premia. The reaction of equity market tail risk, in turn, points to the risk-taking channel of monetary policy, as the commitment to low funding rates may have relaxed financial intermediaries' riskbearing constraints. (JEL E52, E58, G12, G13, G14)
Abstract
					We present a new data fact: in response to a monetary tightening, the domestic currency tends to appreciate in developed countries but depreciate in developing countries. A model is developed to rationalize this contrasting pattern. It has three key channels of monetary transmission: a liquidity demand channel, a fiscal channel, and an output channel. The paper shows that a calibrated version of the model can explain the contrast between developed and developing countries. Using counterfactual experiments and empirical evidence, we identify differences in the liquidity demand effect as critical in explaining the contrasting responses generated by the model. (JEL E23, E43, E52, F31, F33, O19)
Abstract
					This paper characterizes optimal labor income taxes that depend on age, household assets, and filing status (one or two earners) within a life-cycle model with heterogeneous, two-member households. The key innovation is a labor supply elasticity that varies endogenously among households. I find that tax distortions should be hump shaped in age, decrease in household assets, and be lower for joint relative to single filers. Age and assets act as complements within the optimal tax policy. Overall, a tax system using all three tags can increase consumption up to 6.4 percent and welfare up to 1.5 percent. (JEL D14, D91, H21, H24, J22, J31)
Abstract
					This paper highlights a pecuniary externality that results in excessive financing costs. Firms borrow to finance purchases of an inelastically supplied input, bidding up its price. Since higher input prices necessitate more debt obligations, this leads to an increase in intermediation costs. A quantitative interpretation of the model suggests that it is optimal to tax financial intermediation by increasing the borrowing rate by 3 percentage points. (JEL E13, E44, G21, G32, H21, H25)
Abstract
					Firm entry and exit amplify and propagate the effects of aggregate shocks, leading to greater persistence and unconditional variation of aggregate quantities. Following a positive aggregate shock, entry rises. As in the data, entrants are small and their initial impact on aggregate dynamics is negligible. However, as the common productivity component reverts to its unconditional mean, the youngsters that survive grow larger, generating a wider and longer expansion than in a scenario without entry or exit. The model also identifies a causal link between the drop in establishments at the outset of the Great Recession and the subsequent slow recovery.
Abstract
					The paper proposes a new measure of the degree of credibility of the Federal Reserve. We estimate a medium-scale macroeconomic model, where the central bank has access to a commitment technology, but where a regime-switching process governs occasional re-optimizations of announced plans. The framework nests the commonly used discretion and commitment cases, while allowing for a continuum of intermediate cases. Our estimates reject both full-commitment and discretion. We instead identify occasional re-optimization episodes both before and during the Great Moderation period. Finally, through counterfactual analyses we assess the role of credibility over the past four decades.
Abstract
					We study the evolution of educational attainment of the 1932-1972 cohorts using a human capital investment model with heterogeneous learning ability. Inter-cohort variation in schooling is driven by changes in skill prices, tuition, and education quality over time, and average learning ability across cohorts. Under static expectations the model accounts for the main empirical patterns. Rising skill prices for college explain the rapid increase in college graduation until the 1948 cohort. The decline in average learning ability, calibrated to match the evolution of test scores, explains half of the stagnation in college graduation between the 1948 and 1972 cohorts.
Abstract
					China has experienced remarkably stable growth and inflation in recent years according to official statistics. We use systematic discrepancies between cross-sectional and time-series Engel curves to construct alternative estimates of Chinese growth and inflation. Our estimates suggest that official statistics present a smoothed version of reality. Official inflation rose in the 2000s, but our estimates indicate that true inflation was still higher and consumption growth was overstated. In contrast, inflation was overstated and growth understated during the low-inflation 1990s. These patterns hold for the food Engel curve, and for numerous other categories, such as grain as a fraction of food.
Abstract
					A growing literature stresses the importance of early childhood human capital. I ask whether variation in early childhood investments can help explain cross-country income differences. I provide new empirical evidence: the adult outcomes of refugees are independent of age at arrival to the United States up to age six, despite dramatic improvements in income and environment upon arrival. A standard model is consistent with this finding if parents but not country are important for early childhood development. This finding limits the mechanisms for generating cross-country early childhood human capital differences. I also provide suggestive evidence on parental inputs.
Abstract
					This is the first paper documenting the frequency and size of price adjustments using micro data from both the high-inflation period in the 1970s and 1980s, and the period of low inflation since the early 1990s. When inflation is high and volatile, prices change more frequently and in smaller magnitudes. When inflation is low and stable, prices change less frequently but in larger magnitudes. The frequency of price changes is more important for the variation in inflation when inflation is high and volatile. When inflation is low and stable, the magnitude of the price changes is more important than the frequency.
Abstract
					The English structural transformation from farming to manufacturing was accompanied by rapid technological change, expansion of trade, and massive population growth. While the roles of technology and trade in this process have been investigated, the literature has largely ignored the role of population growth. We examine population size effects on various aspects of structural development, characterizing their explicit dependence on preference-side and production-side characteristics of the economy, and trade. Our quantitative analysis of the English transformation assigns a major role to population growth, with especially notable contributions to post-1750 rise in the manufacturing employment share and the relative price dynamics.
Abstract
					This paper studies how international investors' concerns about model misspecification affect sovereign bond spreads. We develop a general equilibrium model of sovereign debt with endogenous default wherein investors fear that the probability model of the underlying state of the borrowing economy is misspecified. Consequently, investors demand higher returns on their bond holdings to compensate for the default risk in the context of uncertainty. In contrast with the existing literature on sovereign default, we match the bond spreads dynamics observed in the data together with other business cycle features for Argentina, while preserving the default frequency at historical low levels.
Abstract
					This paper uses Social Security benefit increases from 1952 to 1991 to investigate the macroeconomic effects of changes in transfers. It finds a large, immediate, and significant positive response of consumption to permanent benefit increases. The response declines after about five months, and does not appear to spread to industrial production or employment. The effects of transfers are faster, but much less persistent and much smaller overall, than those of tax changes. Finally, monetary policy responds strongly to benefit increases but not to tax changes. This may account for the failure of the effects of transfers to persist or spread.
Abstract
					We investigate how the response of the US economy to monetary policy shocks depends on the state of the business cycle. The effects of monetary policy are less powerful in recessions, especially for durables expenditure and business investment. The asymmetry relates to how fast the economy is growing, rather than to the level of resource utilization. There is some evidence that fiscal policy has counteracted monetary policy in recessions but reinforced it in booms. We also find evidence that contractionary policy shocks are more powerful than expansionary shocks, but contractionary shocks have not been more common in booms. So this asymmetry cannot explain our main finding.
Abstract
					This paper estimates the effects of monetary policy based on a new, extensive real-time dataset for the United Kingdom. Employing the Romer-Romer identification approach we construct a new measure of monetary policy innovations and find that a 1 percentage point increase in the policy rate reduces output by 0.6 percent and inflation by up to 1 percentage point after 2 to 3 years. Our use of forecast data is shown to be crucial and that their omission generates the well-known price puzzle. Our estimates are more comparable to the wider VAR literature but we also reconcile our findings with the Romer-Romer estimates for the United States.
Abstract
					This paper investigates the economic relevance of the large differences in homestead exemptions across US states. We build a structural model for an equilibrium analysis of debt-portfolio choices over the life cycle. Our analysis captures key patterns from the observed cross-sectional distributions of secured debt, unsecured debt, and of home equity. The model predicts that harmonizing the amount of home equity exempt in bankruptcy procedures has quantitatively negligible effects on the interest rate of unsecured debt and on welfare, unless the exemption is eliminated. The small welfare effect may rationalize why the differences in homestead exemptions are so persistent.
Abstract
					What are the effects of a higher central bank inflation target on the burden of real public debt? Several recent proposals have suggested that even a moderate increase in the inflation target can have a pronounced effect on real public debt. We consider this question in a New Keynesian model with a maturity structure of public debt and an imperfectly observed inflation target. We find that moderate changes in the inflation target only have significant effects on real public debt if they are essentially permanent. Moreover, the additional benefits of not communicating a change in the inflation target are minor.
Abstract
					This paper investigates how financial sector leverage affects macroeconomic instability and welfare. In the model, banks borrow (use leverage) to allocate resources to productive projects and provide liquidity. When banks do not actively issue new equity, aggregate outcomes depend on the level of equity in the financial sector. Equilibrium is inefficient because agents do not internalize how their decisions affect volatility, aggregate leverage, and the returns on assets. Leverage creates systemic risk, which increases the frequency and duration of crises. Limiting leverage decreases asset price volatility and increases expected returns, which decrease the likelihood that the financial sector is undercapitalized.
Abstract
					We provide new estimates of the importance of growth-rate shocks and uncertainty shocks for developed countries. The shocks we estimate are large and correspond to well-known macroeconomic episodes such as the Great Moderation and the productivity slowdown. We compare our results to earlier estimates of "long-run risks" and assess the implications for asset pricing. Our estimates yield greater return predictability and a more volatile price-dividend ratio. In addition, we can explain a substantial fraction of cross-country variation in the equity premium. An advantage of our approach, based on macroeconomic data alone, is that the parameter estimates cannot be viewed as backward engineered to fit asset pricing data. We provide intuition for our results using the recently developed framework of shock-exposure and shock-price elasticities.
Abstract
					The recent financial crisis has highlighted the interconnectedness between macroeconomic and financial stability, raising questions about how to combine monetary and prudential policies. This paper characterizes the jointly optimal monetary and prudential policies, setting the interest rate and bank-capital requirements. The source of financial fragility is the socially excessive risk taking by banks due to limited liability and deposit insurance. We provide conditions under which locally (Ramsey) optimal policy dedicates the prudential instrument to preventing inefficient risk taking by banks, and the monetary instrument to dealing with the business cycle, with the two instruments covarying either negatively, or positively and countercyclically.
Abstract
					This paper incorporates worker selection into a random matching model with multi-worker firms. Unlike the standard Diamond-Mortensen-Pissarides (DMP) model, the extended model is compatible with cross-sectional behavior of vacancy yields, which rise with employment growth and worker turnover, but fall with establishment size. Using calibrated versions of the standard and worker selection models, I show that accounting for these patterns has quantitatively important policy implications. I also compare the worker selection and the directed search models. While both models account for these patterns equally well, they differ with regard to labor market policy.
Abstract
					When is it optimal for a fully committed government to default on its legal repayment obligations? Considering a small open economy with domestic production risk and noncontingent government debt, we show that it is ex ante optimal to occasionally deviate from the legal repayment obligation and to repay debt only partially. This holds true even if default generates significant deadweight costs ex post. A quantitative analysis reveals that default is optimal only in response to persistent disaster-like shocks to domestic output. Applying the framework to the situation in Greece, we find that optimal default policies suggest a considerably larger and more timely default than the one actually implemented in the year 2012.
Abstract
					This paper proposes a model that explains the joint occurrence of liquidity traps and jobless growth recoveries. Its key elements are downward nominal wage rigidity, a Taylor-type interest rate feedback rule, the zero lower bound on nominal interest rates, and a confidence shock. Absent a change in policy, the model predicts that low inflation and high unemployment become chronic. With capital accumulation, the model predicts, in addition, an investment slump. The paper identifies a New Fisherian effect, whereby raising the nominal interest rate to its intended target for an extended period of time can boost inflationary expectations and thereby foster employment.
Abstract
					This paper develops a model of segmented financial markets in which the net worth of financial institutions limits the degree of arbitrage across the term structure. The model is embedded into the canonical Dynamic New Keynesian (DNK) framework. We estimate the model using data on the term premium. Our principal results include the following. First, the estimated segmentation coefficient implies a nontrivial effect of central bank asset purchases on yields and real activity. Second, there are welfare gains to having the central bank respond to the term premium, e.g., including the term premium in the Taylor Rule. Third, a policy that directly targets the term premium sterilizes the real economy from shocks originating in the financial sector. A term-premium peg can have significant welfare effects.
Abstract
					Purchasing power parity exchange rates, or PPPs, are price indexes that summarize prices in each country relative to a numeraire country, typically the United States. These numbers are used to compare living standards across countries, by academics in studies of economic growth, particularly through the Penn World Table, by the World Bank to construct measures of global poverty, by the European Union to redistribute resources, and by the international development community to draw attention to discrepancies between rich and poor countries. The International Comparison Program (ICP) collects the detailed prices on which these indexes are based on an irregular basis. In 2014, the ICP published PPPs from the 2011 round that are sharply different from those that were expected from extrapolation of the previous round, ICP 2005. These discrepancies will eventually have important implications for the Penn World Table, and for international comparisons of living standards given that the PPPs are used to convert countries' national accounts--GDP and consumption, for example--from local currency to common currency units (international dollars.) The world according to ICP 2011 looks markedly more equal than the world according to ICP 2005. This paper investigates why this happened. We identify a likely source of the problem in the way that the regions of the ICP were linked in 2005. We use two different methods for measuring the size of the effect. Both suggest that the 2005 PPPs for consumption for countries in Asia (excluding Japan), Western Asia, and Africa were overstated relative to the United States by between 18 to 26 percent. Per capita consumption in international dollars of these countries was therefore too low in 2005 and more likely to be accurately estimated in 2011.
Abstract
					The latest global survey on relative prices and income levels, for the year 2011, showed changes to relative income levels that were larger in lower income countries, thereby narrowing the world income distribution compared to estimates based on the previous, 2005, survey. This paper examines whether changes in measurement methodology between the 2005 and 2011 survey can explain these large differences. We construct a counterfactual set of relative prices for 2005 that harmonizes measurement, and we no longer find systematic differences across income levels, implying that international income inequality based on the 2005 survey was overstated.
Abstract
					Workers who suffer job displacement experience surprisingly large and persistent earnings losses. This paper proposes an explanation for this robust empirical puzzle in a model of search with a significant job ladder and increased separation rates for the recently hired. In addition to capturing the depth and persistence of displaced worker earnings losses, the model matches: employment-to-nonemployment and employer-to-employer probabilities by tenure; the empirical decomposition of earnings losses into reduced wages and employment; observed wage dispersion; and the distribution of wage changes around a nonemployment event.
Abstract
					We propose a general equilibrium framework with financial intermediaries subject to endogenous leverage constraints, and assess its ability to explain the observed fluctuations in intermediary leverage and real economic activity. In the model, intermediaries ("banks") borrow in the form of short-term risky debt. The presence of risk-shifting moral hazard gives rise to a leverage constraint, and creates a link between the volatility in bank asset returns and leverage. Unlike TFP or capital quality shocks, volatility shocks produce empirically plausible fluctuations in bank leverage. The model replicates well the fall in leverage, assets, and GDP during the 2007-2009 financial crisis.
Abstract
					China's housing prices have been growing nearly twice as fast as national income over the past decade, despite a high vacancy rate and a high rate of return to capital. This paper interprets China's housing boom as a rational bubble emerging naturally from its economic transition. The bubble arises because high capital returns driven by resource reallocation are not sustainable in the long run. Rational expectations of a strong future demand for alternative stores of value can thus induce currently productive agents to speculate in the housing market. Our model can quantitatively account for China's paradoxical housing boom.
Abstract
					We find that oil supply shocks decrease average real wages, particularly skilled wages, and increase wage dispersion across regions, particularly unskilled wage dispersion. In a model with spatial energy intensity differences and nontradables, labor demand shifts, while explaining the response of average wages to oil supply shocks, have counterfactual implications for the response of wage dispersion. Only an additional response in labor supply can explain this latter fact, highlighting the importance of general equilibrium effects in a spatial context. We provide additional empirical evidence of regionally directed worker reallocation and housing prices consistent with our spatial model. Finally, we show that a calibrated version of our model can quantitatively match the estimated effects of oil supply shocks.
Abstract
					We use individual-level credit reports merged with loan-level mortgage data to estimate how home equity interacted with mobility in relatively weak and strong labor markets in the United States during the Great Recession. We construct a dynamic model of housing, consumption, employment, and relocation, which provides a structural interpretation of our empirical results and allows us to explore the role that foreclosure played in labor mobility. We find that negative home equity is not a significant barrier to job-related mobility because the benefits of accepting an out-of-area job outweigh the costs of moving. This pattern holds even if homeowners are not able to default on their mortgages.
Abstract
					Credit relationships are sticky. Stickiness makes relationships beneficial to borrowers in times of their own distress but makes them potentially problematic when lenders themselves face hardship. To examine the role of credit relationships during a financial crisis, we exploit a natural experiment in Mississippi during the Great Depression that generated plausibly exogenous differences in financial distress for banks. Using new data drawn from the publications of the credit rating agency Dun & Bradstreet and from original bankruptcy filings, we show that financial distress increased business exit but did not increase the bankruptcy rate. Financial distress caused both banks and trade creditors to recalibrate their collections strategies, which is revealed by changes in the geographical distribution of the creditors of bankrupt businesses.
Abstract
					Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in low inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is available, individuals still place a significant weight on inaccurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policymaking.
Abstract
					We construct a tractable neoclassical growth model that generates Pareto's law of income distribution and Zipf's law of the firm size distribution from idiosyncratic, firm-level productivity shocks. Executives and entrepreneurs invest in risk-free assets, as well as their own firms' risky stocks, through which their wealth and income depend on firm-level shocks. By using the model, we evaluate how changes in tax rates can account for the evolution of top incomes in the United States. The model matches the decline in the Pareto exponent of the income distribution and the trend of the top 1 percent income share in recent decades.
Abstract
					During the 1970s, the United States switched from mutual consent to a unilateral divorce regime. Who benefited/lost from this change? We develop a dynamic life cycle model in which agents make consumption, saving, work, and marital-status decisions under a given divorce regime. Calibrating the model to match key moments for the 1940 cohort and conditioning solely on gender, our ex ante welfare analysis finds that women fare better under mutual consent whereas men prefer a unilateral system. Conditioning as well on initial productivity (expected income), we find that the top three quintiles of men and the top two quintiles of women prefer unilateral divorce.
Abstract
					Using new home production data for the United States, we estimate a model of structural transformation with a home production sector, allowing for both non-homotheticity of preferences and differential productivity growth in each sector. We report two main findings. First, the estimation results show that home services have a lower income elasticity than market services. Second, the slowdown in home labor productivity, which started in the late 70s, is a key determinant of the rise of market services. Our counterfactual experiment shows that, without the slowdown, the share of market services would have been lower by 7.5 percent in 2010.
Abstract
					Why doesn't capital flow into fast-growing countries? Using a model with heterogeneous producers and underdeveloped domestic financial markets, we explain the joint dynamics of total factor productivity (TFP) and capital flows. When a large-scale economic reform removes preexisting idiosyncratic distortions in a small open economy, its TFP rises, driven by efficient reallocation of economic resources. At the same time, because of the domestic financial frictions, saving rates surge but investment rates respond only with a lag, resulting in capital outflows. The dynamics of TFP, capital flows, and idiosyncratic distortions in the model are consistent with what is observed during growth acceleration episodes, which often follow large-scale economic reforms.
Abstract
					When the policy rate is at the zero lower bound (ZLB), an increase in uncertainty regarding the future path of exogenous shocks alters the conditional expectations of relevant prices facing households and firms. Accordingly, an increase in uncertainty alters consumption, inflation, and output to a greater extent when the policy rate is constrained than otherwise. Using an empirically rich sticky-price model calibrated to match key features of the US economy, I find that uncertainty can exacerbate the decline of output by about 10 percent in a deep recession that pushes the policy rate to the ZLB.
Abstract
					The seminal contribution by Kiyotaki and Moore (1997) has spurred a vast literature on the importance of collateral constraints in propagating and amplifying shocks to the economy. However, most papers in the literature using collateral constraints assume non-state-contingent debt, i.e., markets are incomplete. To assess the relative importance of collateral constraints versus market incompleteness, we study a calibrated incomplete markets model and solve it with and without collateral constraints. We find that market incompleteness by itself plays a quantitatively significant role in the amplified and asymmetric responses of the economy, including land price and output, to exogenous shocks.
Abstract
					We consider a model of heterogeneous production units with endogenous entry and productivity investment to assess the quantitative impact of policy distortions: when the productivity elasticity of distortions increases from 0.09 in the United States to 0.5 in India, aggregate output and average establishment size fall by 53 and 86 percent (37 and 0 percent in the standard factor misallocation model). Entry productivity and factor misallocation contribute equally to the reduction in output, whereas lower life-cycle productivity growth is fully offset by increased entry and reduced productivity dispersion. Establishment size differences are consistent with evidence from a new comprehensive cross-country dataset.
Abstract
					This paper investigates the role of the rise in services in the narrowing of gender gaps in hours and wages in recent decades. We highlight the between-industry component of differential gender trends for the United States and propose a model economy with goods, services, and home production, in which women have a comparative advantage in producing services. The rise of services, driven by structural transformation and marketization of home production, raises women's relative wages and market hours. Quantitatively, the model accounts for an important share of the observed trends in women's hours and relative wages.
Abstract
					We examine how cross-border input linkages shape the response of demand for value added to international relative price changes. We define a novel value-added real effective exchange rate (REER), which aggregates bilateral value-added price changes. Spillovers via input linkages lower the sensitivity of the value-added REER to price changes by supply chain partners because they counterbalance demand-side expenditure switching. Input linkages also raise the price elasticity of demand relative to the conventional REER framework, making demand more sensitive to REER changes. Using global input-output data, we demonstrate that these conceptual insights are quantitatively important in a case study of European competitiveness.
Abstract
					The prevalence of untitled land in poor countries helps explain the international agricultural productivity differences. Since untitled land cannot be traded across farmers, it creates land misallocation and distorts individuals' occupational choice between farming and working outside agriculture. I build a two-sector general equilibrium model to quantify the impact of untitled land. I find that economies with higher percentages of untitled land would have lower agricultural productivity; land titling can increase agricultural productivity by up to 82.5 percent. About 42 percent of this gain is due to eliminating land misallocation, and the remaining is due to eliminating distortions in individuals' occupational choice.
Abstract
					We investigate the role of "noise" shocks as a source of business cycle fluctuations. To do so we set up a simple model of imperfect information and derive restrictions for identifying the noise shock in a VAR model. The novelty of our approach is that identification is reached by means of dynamic rotations of the reduced-form residuals. We find that noise shocks generate hump-shaped responses of GDP, consumption and investment, and account for a sizable fraction of their prediction error variance at business cycle horizons.
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.
Abstract
					Improvement in human capital is often presumed to be 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.
Abstract
					The value of the elasticity of substitution between labor and capital (σ) is a crucial assumption in understanding the secular decline in the labor share of income. This paper develops and implements a new strategy for estimating this crucial parameter by combining a low-pass filter with panel data to identify the low-frequency/long-run relations appropriate to production function estimation. Standard estimation methods, which do not filter out transitory variation, generate downwardly biased estimates of 40 percent to 70 percent relative to the benchmark value. Despite correcting for this bias, our preferred estimate of 0.40 is substantially below the Cobb-Douglas assumption of σ = 1.
Abstract
					I quantify the contribution of sectoral shocks to business cycle fluctuations in aggregate output. I develop and estimate a multi-industry general equilibrium model in which each industry employs the material and capital goods produced by other sectors. Using data on US industries' input prices and input choices, I find that the goods produced by different industries are complements to one another as inputs in downstream industries' production functions. These complementarities indicate that industry-specific shocks are substantially more important than previously thought, accounting for at least half of aggregate volatility.
Abstract
					We analyze geographic patterns of trade between individuals using
transactions data from eBay and MercadoLibre, two large online
auction sites. We find that distance continues to be an important
deterrent to trade between geographically separated buyers and sellers,
though to a lesser extent than has been observed in studies of
non-Internet commerce between business counterparties. We also
find a strong "home bias" for trading with counterparties located in
the same city. Further analyses suggest that location-specific goods
such as opera tickets, cultural factors, and the possibility of direct
contract enforcement in case of breach may be the main reasons
behind the same-city bias. (JEL D44, F11, R12)
Abstract
					We analyze a game of two-sided private information where players
have privately known "strengths" and can decide to fight or compromise.
If either chooses to fight, the stronger player receives a high
payoff and the weaker player receives a low payoff. If both choose
to compromise, each player receives an intermediate payoff. The
only equilibrium is for players to always fight. In our experiment, we
observe frequent compromise, more fighting the lower the compromise
payoff and less fighting by first than second movers. We explore
several theories of cognitive limitations in an attempt to understand
these anomalous findings. (JEL C91, D82)
Abstract
					The Winner's Curse (WC) is a robust and persistent deviation
from theoretical predictions established in experimental economics
and claimed to exist in field environments. Recent attempts to
reconcile such deviation include "cursed equilibrium" and level-k
reasoning. We design and implement a simplified version of the
Acquiring-a-Company game that transformed the game to an individual-choice problem that still retains the adverse-selection problem.
We further simplified the problem so that simple ordinal reasoning
could replace both Bayesian updating and contingent thinking. Our
results suggest that the WC reflects bounded rationality in that people
have difficulties performing contingent reasoning on future events.
(JEL D81, D82)
Abstract
					How can consumers be assured that firms will endeavor to provide
good quality when quality is unobservable prior to purchase? We
test the hypothesis that reputational incentives are effective at causing
restaurants to maintain good hygiene quality. We find that chain
affiliation provides reputational incentives and franchised units tend
to free-ride on chain reputation. We also show that regional variation
in the degree of repeat customers affects the strength of reputational
incentives for good hygiene at both chain and nonchain restaurants.
Despite these incentives, a policy intervention in the form of posted
hygiene grade cards causes significant improvements in restaurant
hygiene. (JEL I18, I19, L14, L83).
Abstract
					This paper reports an experimental study of trading networks.
Networks are incomplete in the sense that each trader can only
exchange assets with a limited number of other traders. The greater
the incompleteness of the network, the more intermediation is
required to transfer the assets between initial and final owners. The
uncertainty of trade in networks constitutes a potentially important
market friction. Nevertheless, we find the pricing behavior observed
in the laboratory converges to competitive equilibrium behavior in
a variety of treatments. However, the rate of convergence varies
depending on the network, pricing rule, and payoff function. (JEL
C91, C92, G10, G19)
Abstract
					Many markets encounter difficulty maintaining a thick marketplace
because they experience transactions made at dispersed times. To
address such problems, many markets try to establish norms concerning
when offers can be made, accepted, and rejected. Examining
such markets suggests it is difficult to establish a thick market at an
efficient time if firms can make exploding offers, and workers cannot
renege on early commitments. Laboratory experiments allow us to
isolate the effects of exploding offers and binding acceptances. In a
simple experiment, we find inefficient early contracting when firms
can make exploding offers and applicants' acceptances are binding.
(JEL C91, D40, D81)
Abstract
					This paper provides a theory-based empirical framework for understanding the risk and return on productive capital assets and their allocation across activities in an economy characterized by idiosyncratic and aggregate risk and thin formal markets for real and financial assets. We apply our framework to households running business enterprises in Thai villages with extensive networks, taking advantage of panel data: income, assets, consumption, gifts, and loans. We decompose risk and estimate the risk premia faced by households, distinguishing aggregate risk from idiosyncratic, potentially diversifiable risk. This distinction matters for estimating measures of underlying productivity and has important policy implications.
Abstract
					In 2011, Maricopa County adopted voluntary restaurant hygiene grade cards (A, B, C, D). Using inspection results between 2007 and 2013, we show that only 58 percent of the subsequent inspections led to online grade posting. Although the disclosure rate in general declines with inspection outcome, higher-quality A restaurants are less likely to disclose than lower-quality As. After examining potential explanations, we believe the observed pattern is best explained by a mixture of signaling and countersignaling: the better A restaurants use nondisclosure as a countersignal, while worse As and better Bs use disclosure to stand out from the other restaurants.
Abstract
					This paper uncovers a novel pattern of offshoring dynamics in a high-tech industry, and proposes a structural model to explain it. Specifically, the hard disk drive industry (1976-1998) witnessed massive waves of entry, exit, and the relocation of manufacturing plants to low-cost countries, in which shakeouts occurred predominantly among home firms and almost all survivors were offshore firms. I build and estimate a dynamic offshoring game with entry/exit to measure the benefits and costs of offshoring, investigate the relationship between offshoring and market structure, and assess the impacts of hypothetical government interventions.
Abstract
					We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufficient conditions for consistency of observed choices with the existence of consideration set restrictions. The same conditions can also be derived from a model in which the consideration set formation is endogenous and based on subjective prices. By imposing restrictions on these subjective prices, we obtain additional refined revealed preference tests. We illustrate and compare the performance of our tests by means of a dataset on household consumption choices.
Abstract
					We investigate the potential of transparency to influence committee decision-making. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate, and vote. We study three levels of transparency under which career concerns are predicted to affect behavior differently and test the model's key predictions in a laboratory experiment. The model's predictions are largely borne out—transparency negatively affects information aggregation at the deliberation and voting stages, leading to sharply different committee error rates than under secrecy. This occurs despite subjects revealing more information under transparency than theory predicts.
Abstract
					We investigate the effects of better access to foreign markets on innovation strategies of multiproduct firms in industries with different scope for product differentiation. Industry-specific demand and cost linkages induce a distinction between the returns to innovation. In differentiated industries, cannibalization is lower and firms invest more in product innovation. In homogeneous industries, firms internalize intra-firm spillovers and invest more in process innovation. Using firm-level data and large exchange rate devaluations, we show that better access to foreign markets increases the incentive to innovate. However, we exploit differential effects across industries and show that the innovation strategies depend on the scope of differentiation.
Abstract
					We develop a general equilibrium model of trade that features "indirectly additive" preferences and heterogeneous firms. Monopolistic competition generates markups that are increasing in firm productivity and in destination country per capita income, but independent from destination population, as documented empirically. The gains from trade liberalization are lower than in models based on CES preferences, and the difference is governed by the average pass-through. When we calibrate the model so as to match observed pricing-to-market in micro-data, it generates welfare gains that are substantially lower than those predicted by commonly employed frameworks.
Abstract
					When consumers care not only for the quantity but also the value of a product, it could be rational to purchase products as they become more expensive. This study provides nonparametric—revealed preference—conditions to measure consumers' marginal willingness to pay for value (i.e., diamondness) associated with particular goods. This is the first nonparametric test of price-dependent preferences. The proposed diamondness measure is applied to observational data from the Russia Longitudinal Monitoring Survey. The results show that this diamondness measure is related to a product's visibility to society, which indicates a certain degree of conspicuous consumption.
Abstract
					We revisit the relationship between competition and price discrimination. Theoretically, we show that if consumers differ in terms of both their underlying willingness-to-pay and their brand loyalty, competition may increase price differences between some consumers while decreasing them between others. Empirically, we find that competition has little impact at the top or the bottom of the price distribution but a significant impact in the middle, thus increasing some price differentials but decreasing others. Our findings highlight the importance of understanding the relevant sources of consumer heterogeneity and can reconcile earlier conflicting findings.
Abstract
					This article studies costly signaling. The signaling effort is chosen in multiple periods and observed with noise. The signaler benefits from the belief of the market, not directly from the effort or the signal. Optimal signaling behavior in time-varying environments trades off effort-smoothing and influencing belief exactly when it yields a return. If the return to signaling first increases over time and then decreases, then the optimal effort rises slowly, reaches its maximum before the return does, and declines quickly. Advertising data displays this pattern.
Abstract
					We study bidding behavior by firms in beauty-contest auctions, i.e., auctions in which the winning bid is the one which gets closest to some function (average) of all submitted bids. Using a dataset on public procurement beauty-contest auctions, we show that firms' observed bidding behavior departs from equilibrium and can be predicted by a "sophistication" index, which captures the firms' capacity of bidding close to optimality in the past. We show that our empirical evidence is consistent with a Cognitive Hierarchy model of bidders' behavior. We also investigate whether and how firms learn to bid strategically through experience.
Abstract
					We invoke the insights from the auction literature to study trade in services using data from an online market for programming support. We find that the observed clustering of trade between countries can be rationalized through a model featuring endogenous sorting of sellers who are heterogeneous in both quality and costs across projects offered by buyers who differ in outside option and willingness to pay for quality. To accommodate the possibility of such an outcome we extend a single-auction entry model to a setting where sellers choose among multiple projects. This feature plays an important role in explaining the data and understanding the effects of various trade policies.
Abstract
					The fear of moral hazard—especially in the age of Internet commerce—can depress or prevent profitable trades. Experiments show, however, that many people prefer honesty to deceit and would not succumb to moral hazard. This paper asks a whether we can find a simple, voluntary institution that can empower moral traders, drive out amoral ones, reduce moral hazard, and restore profitable trade to markets. I find that selling goods with a "satisfaction guarantee," accompanied by potentially minor legal or reputational enforcement, allows moral preferences to defeat moral hazard.
Abstract
					How many cartels are there, and how long do they live? The answers to these questions are important in assessing the need for competition policy. We present a Hidden Markov Model that takes into account that often it is not known whether a cartel exists or not. We take the model to data from a period of legal cartels—Finnish manufacturing industries 1951–1990. Our estimates suggest that once born, cartels are persistent; by the end of the period, almost all industries were cartelized.
Abstract
					A model of majority choice of voucher characteristics with quantitative counterpart explains observed income eligibility requirements for educational vouchers. Households differ by income and preference for religious schooling. They elect a policy maker who chooses public school expenditure, a voucher, a maximum income for voucher eligibility, and a tax to finance public expenditure. Equilibrium has a voucher below per student public expenditure, an eligibility threshold near 300 percent of the poverty level, and a majority in public school though with substantial voucher usage, all properties typical of U.S. voucher programs. Disallowing a voucher leads to higher per student public expenditure.
Abstract
					This paper uses a laboratory experiment to study the effect of the monitoring structure on the play of the infinitely repeated prisoner's dilemma. Keeping the strategic form of the stage game fixed, we examine the behavior of subjects when information about past actions is perfect (perfect monitoring), noisy but public (public monitoring), and noisy and private (private monitoring). We find that the subjects sustain cooperation in every treatment, but that their strategies differ across the three treatments. Specifically, the strategies under imperfect 
monitoring are both more complex and more lenient than those under perfect monitoring. The results show how the changes in strategies across monitoring structures mitigate the effect of noise in monitoring on efficiency.
Abstract
					We quantify the welfare effects of zone pricing, or setting common prices across distinct markets, in retail oligopoly. Although monopolists can only increase profits by price discriminating, 
this need not be true when firms face competition. With novel data covering the retail home-improvement industry, we find that Home Depot would benefit from finer pricing but that 
Lowe's would prefer coarser pricing. Zone pricing softens competition in markets where firms compete, but it shields consumers from higher prices in rural markets, where firms might 
otherwise exercise market power. Overall, zone pricing produces higher consumer surplus than finer price discrimination does.
Abstract
					We investigate the role of competition on the outcome of Austrian Treasury auctions. Austria's EU accession led to an increase in the number of banks participating in treasury auctions. We 
use structural estimates of bidders' private values to examine the effect of increased competition on auction performance. We find robust evidence that bidders' surplus dropped sharply 
after EU accession, but less than reduced form estimates would suggest. The difference can be explained by reduced form estimates not taking into account the increase in valuations upon 
EU accession.
Abstract
					We test expectations-based reference dependence in market experiments with probabilistic forced exchange. Koszegi and Rabin (2006) predict that when the probability of forced exchange 
increases, individuals cannot expect to stick with the status quo, and should grow more willing to exchange. This mechanism may eliminate and even reverse the "endowment effect" 
(Knetsch and Sinden 1984; Kahneman, Knetsch, and Thaler 1990). In a series of experiments with overall 930 subjects, we show some tentative support for the notion that attitudes toward 
exchange are influenced by the probability of forced exchange. However, the results are sensitive to small changes in experimental design.
Abstract
					We study the evolution of cooperation in the indefinitely repeated prisoner's dilemma when it is costly for players to adjust their strategy. Our experimental interface allows subjects to 
design a comprehensive strategy that then selects actions for them in every period. We conduct lab experiments in which subjects can adjust their strategies during a repeated game but 
may incur a cost for doing so. We find three main results. First, subjects learn to cooperate more when adjustments are costless than when they are costly. Second, subjects make more 
adjustments to their strategies when adjustments are costless, but they still make adjustments even when they are costly. Finally, we find that cooperative strategies emerge over time when 
adjustments are costless but not when adjustments are costly. These results highlight that within-game experimentation is critical to the rise of cooperative behavior. We provide simulations 
based on an evolutionary algorithm to support these results.
Abstract
					How do different switching costs affect choices and competition in a private pension system? I answer this question in a setting in which variation in employment status allows me to identify two switching costs that jointly affect enrollees' decisions: the cost of evaluating financial information and the cost of the bureaucratic process that enrollees must navigate when switching. I use this variation to estimate the different switching costs and study their impact on competition among pension funds. I find that though eliminating all switching costs decreases equilibrium fees the most, eliminating either switching cost decreases fees significantly.
Abstract
					In dynamic matching problems, priorities often depend on previous allocations and create opportunities for manipulations that are absent in static problems. In the dynamic school choice problem, students can manipulate the period-by-period deferred acceptance (DA) mechanism. With a commonly used restriction on the schools' priorities, manipulation vanishes as the number of agents increases, but without it the mechanism can be manipulated, even in large economies. We also check manipulation in large finite economies through a novel computer algorithm, which can check every possible manipulation by examining all the different matchings that a single player can induce.
Abstract
					We show that monetary exchange facilitates the transition from small to large-scale economic interactions. In an experiment, subjects chose to play an "intertemporal cooperation game" either in partnerships or in groups of strangers where payoffs could be higher. Theoretically, a norm of mutual support is sufficient to maximize efficiency through large-scale cooperation. Empirically, absent a monetary system, participants were reluctant to interact on a large scale; and when they did, efficiency plummeted compared to partnerships because cooperation collapsed. This failure was reversed only when a stable monetary system endogenously emerged: the institution of money mitigated strategic uncertainty problems.
Abstract
					How does online price disclosure affect competition when both consumers and firms can use the disclosed information? This paper addresses this question exploiting the sequential implementation of an online price-disclosure policy in the Chilean retail gasoline industry. The results show that disclosure increased margins by 9 percent on average, though the effects varied across the country depending on the intensity of local search behavior. Because margins increased the least, and even decreased, in high-search areas, where income is also higher, the results also show that price disclosure policies may have important distributional effects.
Abstract
					Relative price dispersion refers to persistent differences in the price that different retailers set for one particular good relative to the price they set for other goods. Relative price dispersion accounts for 30 percent of the overall variance of prices at which the same good is sold during the same week and in the same market. Relative price dispersion can be rationalized as the consequence of a pricing strategy used by sellers to discriminate between high-valuation buyers who need to make all of their purchases in one store, and low-valuation buyers who are able to purchase different items in different stores.
Abstract
					In a two-sided matching context we show how we can predict stable matchings by considering only one side's preferences and the mutually acceptable pairs of agents. Our methodology consists of identifying impossible matches, i.e., pairs of agents that can never be matched together in a stable matching of any problem consistent with the partial data. We analyze data from the French academic job market for mathematicians and show that the match of about 45 percent of positions (and about 60 percent of candidates) does not depend on the preferences of the hired candidates, unobserved and submitted at the final stage of the market.
Abstract
					Taking works off copyright promotes their availability, but it also allows generic entry to dissipate producer surplus. This paper examines the effect of a copyright on the availability and price of books when incentives to create new works are not affected. Evaluating the welfare impact of the 1998 Copyright Term Extension Act, I find that a copyright significantly limits the availability of works, leading to a decrease in consumer surplus, which is significantly larger than any increases in profits to copyright holders. Without changing incentives to create new content, the copyright extension was economically inefficient.
Abstract
					We model the consequences on newspapers' content and prices of a reduction in advertising revenues. Newspapers choose the size of their newsroom, and readers are heterogeneous in their ideal amount of journalistic-intensive content. We show that a reduction in advertising revenues lowers newspapers' incentives to produce journalistic-intensive content. We also build a unique dataset on French newspapers between 1960 and 1974 and perform a difference-in-differences analysis exploiting the introduction of advertising on television, which affected national newspapers more severely than local ones. We find robust evidence of a decrease in the amount of journalistic-intensive content produced and the subscription price.
Abstract
					In a market rush, the fear of future adverse price movements causes traders to trade before they become well informed, reducing the informational efficiency of the market. I derive theoretical conditions under which market rushes are equilibrium behavior and study how well these conditions organize trading behavior in a laboratory implementation of the model. Market rushes, including both panics and frenzies, occur more frequently when predicted by theory. However, subjects use commonly discussed, momentum-like strategies that lead to informational losses not predicted by theory, suggesting that these strategies may exacerbate both the occurrence and consequences of panics and frenzies.
Abstract
					We present a revealed preference methodology for nonparametric demand analysis under the assumption of normal goods. Our methodology is flexible in that it allows for imposing normality on any subset of goods. We show the usefulness of our methodology for empirical welfare analysis through cost-of-living indices. An illustration to US consumption data drawn from the Panel Study of Income Dynamics (PSID) demonstrates that mild normality assumptions can substantially strengthen the empirical analysis. It obtains considerably tighter bounds on cost-of-living indices and a significantly more informative classification of better-off and worse-off individuals after the 2008 financial crisis.
Abstract
					Measures of productivity reveal large differences across producers even within narrowly defined industries. Traditional measures of productivity, however, will associate differences in demand volatility to differences in productivity when adjusting factors of production is costly. I document this effect by comparing the influence of demand volatility on capacity utilization in a high (hotels) and low (airlines) adjustment cost industry. Differences in annual demand volatility explain a large share of the variation in occupancy rates of hotels at the metro area-segment-year level. In contrast, differences in annual demand volatility have no effect on load factors of airlines at the destination-airline-year level.
Abstract
					We examine the role of collateral in a dynamic model of optimal credit contracts in which a borrower values both housing and nonhousing consumption. The borrower's private information about his income is the only friction. An optimal contract is collateralized when in some state, some portion of the borrower's net worth is forfeited to the lender. We show that optimal contracts are always collateralized. The total value of forfeited assets is decreasing in income, highlighting the role of collateral as a deterrent to manipulation. Some assets—those that generate consumable services—will necessarily be collateralized, while others may not be. Endogenous default arises when the borrower's initial wealth is low, as with subprime borrowers, and/or his future earnings are highly variable.
Abstract
					We experimentally examine how information transmission functions in an ongoing relationship. Where the one-shot cheap-talk literature documents substantial overcommunication and preferences for honesty, the outcomes in our repeated setting are more consistent with uninformative babbling outcomes. This is particularly surprising, as honest revelation is supportable as an equilibrium outcome in our repeated setting. We show that inefficient outcomes are driven by a coordination failure on how to distribute the gains from information sharing. However, when agents can coordinate on the payment of an "information rent," honest revelation emerges.
Abstract
					We present revealed-preference characterizations of the most common models of intertemporal choice: the model of exponentially discounted concave utility, and some of its generalizations. Our characterizations take consumption data as primitives, and provide nonparametric revealed-preference tests. We apply our tests to data from two recent experiments and find that our axiomatization delivers new insights and perspectives on datasets that had been analyzed by traditional parametric methods.
Abstract
					A principal seeks to persuade an agent to accept an offer of uncertain value before a deadline expires. The principal can generate information, but exerts no control over exogenous outside information. The combined effect of the deadline and outside information creates incentives for the principal to keep uncertainty high in the first periods so as to persuade the agent close to the deadline. We characterize the equilibrium, compare it to the single-player decision problem in which exogenous outside information is the agent's only source of information, and examine the welfare implications of our analysis.
Abstract
					This paper considers time exchanges via a common platform (e.g., markets for exchanging time units, positions at education institutions, and tuition waivers). There are several problems associated with such markets, e.g., imbalanced outcomes, coordination problems, and inefficiencies. We model time exchanges as matching markets and construct a non-manipulable mechanism that selects an individually rational and balanced allocation that maximizes exchanges among the participating agents (and those allocations are efficient). This mechanism works on a preference domain whereby agents classify the goods provided by other participating agents as either unacceptable or acceptable, and for goods classified as acceptable, agents have specific upper quotas representing their maximum needs.
Abstract
					We study the optimal intervention policy to stop projects in a relational contract between a principal and a policymaker. The policymaker is privately informed about his ability and privately chooses how much effort to exert. Before a project is completed, the principal receives a signal about its outcome and can intervene to stop it. Intervention may prevent a bad outcome, but no intervention leads to better learning about the policymaker's ability. In the benchmarks with observable effort or observable ability, optimal intervention follows a threshold rule. With unobservable effort and ability, the optimal policy switches between intervention and no intervention.
Abstract
					In two-sided markets, two groups of agents interact through platforms. Because agents' decision to join a platform is affected by the presence of agents on the other side, their interactions create indirect network externalities and make platforms' strategies different from those of firms in one-sided markets. In this paper, I use a structural model to show that platforms may take a loss on one side of the market to make a profit on the other side and that platform mergers may benefit some agents by lowering prices or attracting more agents on the other side of the market.
Abstract
					Hirschman's Exit, Voice, and Loyalty highlights the role of "voice" when individuals confront an unexpected deterioration in quality. Yet, voice has received little attention. To motivate our empirical analysis, we develop a simple model of voice as the equilibrium of a relational contract between customers and firms. We use data on 4 million tweets to or about US airlines to study the relationship between quality, voice, and market structure. Voice increases when quality deteriorates. This relationship is greater for airlines that operate a large share of flights in a market. Supplemental analyses support a relational contracting role for voice.
Abstract
					In markets with asymmetric information, where equilibria are often inefficient, bargaining can help promote welfare. We design an experiment to examine the impact of competition and price transparency in such settings. Consistent with the theoretical predictions, we find that competition promotes efficiency if bargainers cannot observe each other's price offers. Contrary to the predictions, however, the efficiency-enhancing effect of competition persists even when offers are observable. We explore different behavioral explanations for the absence of a detrimental effect of price transparency. Remarkably, implementing the strategy method improves subjects' conditional reasoning, delivering the predicted loss in efficiency when offers are observable.
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 sender-receiver game, we find that senders disclose favorable information, but withhold unfavorable 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 their actions and beliefs suggest that many are insufficiently skeptical about nondisclosed information in the absence of repeated feedback.
Abstract
					Our experiments investigate the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. In simultaneous markets with bids that are conditional on the price, traders neglect the information conveyed by the hypothetical value of the price. In sequential markets where the price is known prior to the bid submission, traders react to price to an extent that is roughly consistent with the benchmark theory. The difference's robustness to a number of variations provides insights about the drivers of this effect.
Abstract
					The integration of markets may improve efficiency by lowering costs or reducing local market power. India, seeking to reduce electricity shortages, set up a new power market, in which transmission constraints sharply limit trade between regions. During congested hours, measures of market competitiveness fall and firms raise bid prices. I use confidential bidding data to estimate the costs of power supply and simulate market outcomes with more transmission capacity. Counterfactual simulations show that transmission expansion increases market surplus by 22 percent, enough to justify the investment. One-third of this gain is due to sellers' response to a more integrated grid.
Abstract
					Using detailed information from the Canadian interbank payments system and liquidity-providing facilities, we find that despite sustained increases in market-rate spreads, the increase in banks' willingness to pay for liquidity during the 2008–2009 financial crisis was short-lived. Our study suggests that high-frequency distress indicators based on demand for liquidity offered by central banks can be complementary, and perhaps even superior, to market-based indicators, especially during times and in markets where uncertainty in the economic environment may lead to lack of meaningful information in prices due to absence of trading.
Abstract
					In a model where agents differ in wages and preferences over labor time–consumption bundles, we study labor income tax schemes that alleviate poverty. To avoid conflict with individual well-being, we require redistribution to take place between agents on both sides of the poverty line provided they have the same labor time. This requirement is combined with efficiency and robustness properties. Maximizing the resulting social preferences under incentive compatibility constraints yields the following evaluation criterion: tax schemes should minimize the labor time required to reach the poverty line. We apply this criterion to European countries and the United States.
Abstract
					We experimentally examine private information and communication in a public goods environment with uncertain returns. We consider a common-value public goods game in which the return to contribution is either high or low. Before contributing, three players observe private signals correlated with the return and send cheap talk messages to one another. There are social gains from truthfulness, but a private incentive to exaggerate. We compare treatments with and without cheap talk, finding that communication is largely truthful and increases efficiency. In further treatments, we increase the incentive to exaggerate and find reduced truthfulness and smaller gains from communication.
Abstract
					In 2012, Brazilian public universities were mandated to use affirmative action policies for candidates from racial and income minorities. We show that the policy makes the students' affirmative action status a strategic choice and may reject high-achieving minority students while admitting low-achieving majority students. Empirical data shows evidence consistent with this type of unfairness in more than 49 percent of the programs. We propose a selection criterion and an incentive-compatible mechanism that, for a wider range of similar problems and the one in Brazil in particular, is fair and removes any gain from strategizing over the privileges claimed.
Abstract
					We study the design of voting rules for committees representing heterogeneous groups (countries, states, districts) when cooperation among groups is voluntary. While efficiency recommends weighting groups proportionally to their stakes, we show that accounting for participation constraints entails overweighting some groups, those for which the incentive to cooperate is the lowest. When collective decisions are not enforceable, cooperation induces more stringent constraints that may require granting veto power to certain groups. In the benchmark case where groups differ only in their population size (i.e., the apportionment problem), the model provides a rationale for setting a minimum representation for smaller groups.
Abstract
					We study social learning in a continuous action space experiment. Subjects, acting in sequence, state their beliefs about the value of a good after observing their predecessors' statements and a private signal. We compare the behavior in the laboratory with the Perfect Bayesian Equilibrium prediction and the predictions of bounded rationality models of decision-making: the redundancy of information neglect model and the overconfidence model. The results of our experiment are in line with the predictions of the overconfidence model and at odds with the others'.
Abstract
					We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the optimal government contract involves a high interest rate but nearly zero cofinancing by the entrepreneur. This contrasts sharply with observed loan schemes. With adverse selection and moral hazard, allowing for two levels of effort by the entrepreneur, the optimal policy consists of a menu of at most two contracts, one with high interest and zero self-financing and a second with a lower interest plus cofinancing. Calibrated simulations assess welfare gains from the optimal policy, observed loan programs, and a direct subsidy to private venture capital firms. The gains vary with the size of the externalities, the cost of public funds, and the effectiveness of the private venture capital industry.
Abstract
					We empirically assess the implications of the common ownership hypothesis from a historical perspective using the set of S&P 500 firms from 1980 to 2017. We show that the dramatic rise in common ownership in the time series is driven primarily by the rise of indexing and diversification and, in the cross section, by investor concentration, which the theory presumes to drive a wedge between cash flow rights and control. We also show that the theory predicts incentives for expropriation of undiversified shareholders via tunneling, even in the Berle and Means (1932) world of the widely held firm.
Abstract
					American industries have grown more concentrated over the last 40 years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. With US census data from 1972 to 2012, I use price data to disentangle revenue from output. Industry-level estimates show that concentration increases are positively correlated to productivity and real output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor's revenue share. I rationalize these results in a simple model of competition. Productive industries (with growing oligopolists) expand real output and hold down prices, raising consumer welfare, while maintaining or reducing their workforces, lowering labor's share of output.
Abstract
					Product recall data and information on stock price reactions to recalls are used to estimate the value of reputation in a model in which product quality is not contractible. A recall is the result of a product defect that signals low effort. The recall triggers a reduction in the firm's product price and value, which then both rise steadily until its next defect occurs. We estimate that reputation accounts for 8.3 percent of firm value and that welfare is 26 percent of its first best level. A policy intervention that attains first best is a recall tax accompanied by a flow subsidy.
Abstract
					We examine a common value dynamic matching environment where adverse selection accrues slowly over time. Theoretical best responses are therefore time varying, and the prior experimental literature suggests that sequential environments might lead to greater understanding of adverse selection in this dynamic setting. However, while a sophisticated minority in our experiment do condition on time and are close to a best response, the majority use a stationary response, even after extended experience. In an environment with persistent uncertainty, our results indicate that sequentiality is insufficient for the large majority of participants to recognize the effects of adverse selection.
Abstract
					This paper develops a dynamic structural model of trade in which firms slowly accumulate consumers in foreign markets. Estimating the model using export data from individual firms and a particle Markov chain Monte Carlo estimator, the model predicts lower survival rates for new exporters and estimates low entry costs of exporting—less than half of those estimated in the absence of consumer accumulation. Using simulations and out-of-sample predictions, I show that the introduction of such frictions and the reduction in estimated entry costs allow the model to match important facts regarding the aggregate response of international trade to shocks.
Abstract
					We study efficient exclusion policies in a canonical credit model that features both exogenous and strategic default along the equilibrium path. Policies that maximize welfare in a stationary equilibrium implement exclusion for a finite and deterministic number of periods following default. Front-loading exclusion makes the mass of socially valuable transactions as high as it can be in steady state. Less intuitively, doing so also maximizes the average welfare of excluded agents in equilibrium conditional on the level of incentives provided by the threat of exclusion. We argue that these results are robust to a host of natural variations on our benchmark model.
Abstract
					The prospect of capital obsolescence inhibits investment. Investors thus become more optimistic when the obsolescence of their capital slows down. We propose a model with no fixed costs of investment, and random technological progress that induces obsolescence of capital in place. Spikes occur precisely when technological progress slows down. Moreover, the more variable the progress, the larger are the spikes. Cross-industry data show that where price of capital declines are more variable, investment spikes are larger.
Abstract
					We propose a simple method, requiring only minimal data, for bounding demand elasticities in growing, homogeneous-product markets. Since growing demand curves cannot cross, shifts in market equilibrium over time can be used to "funnel" the demand curve into a narrow region, bounding its slope. Our featured application assesses the antitrust remedy in the 1952 DuPont decision, ordering incumbents to license patents for commercial plastics. We bound the demand elasticity significantly below 1 in many post-remedy years, inconsistent with monopoly, supporting the remedy's effectiveness. A second application investigates whether the 1911 dissolution of American Tobacco fostered competition in the cigarette market.
Abstract
					Copyrights, which establish intellectual property in music, science, and other creative goods, are intended to encourage creativity. Yet, copyrights also raise the cost of accessing existing work—potentially discouraging future innovation. This paper uses an exogenous shift toward weak copyrights (and low access costs) during World War II to examine the potentially adverse effects of copyrights on science. Using two alternative identification strategies, we show that weaker copyrights encouraged the creation of follow-on science, measured by citations. This change is driven by a reduction in access costs, allowing scientists at less affluent institutions to use existing knowledge in new follow-on research.
Abstract
					Most institutions are limited in scope. We study experimentally how enforcement institutions affect behavior, preferences, and beliefs beyond their direct influence over the behaviors they control. Groups play two identical public good games, with cooperation institutionally enforced in one game. Institutions generally have economically significant positive spillover effects to the unregulated game. We also observe that institutions enhance conditional cooperation preferences and beliefs about others' cooperativeness, suggesting that both factors are drivers of observed spillover effects. In additional treatments, we provide evidence for several factors, including characteristics of institutions, that enhance or limit the effectiveness and scope of spillover effects.
Abstract
					A principal owns a firm, hires an agent of uncertain productivity, and designs a dynamic policy for evaluating his performance. The agent observes ongoing evaluations and decides when to quit. When not quitting, the agent is paid a wage that is linear in his expected productivity; the principal claims the residual performance. After quitting, the players secure fixed outside options. I show that equilibrium is Pareto efficient. For a broad class of performance technologies, the equilibrium wage deterministically grows with tenure. My analysis suggests that endogenous performance evaluation plays an important role in shaping careers in organizations.
Abstract
					This paper investigates the how government outsourcing affects efficiency and expenditures by considering how outsourcing decisions are determined along two dimensions: (i) cost differences between private firms and government suppliers of public goods and (ii) dynamics arising from cost complementarities and capacity constraints. I formulate and estimate a dynamic model of government outsourcing using project-level data from the dredging industry. Model estimates indicate substantial cost savings due to outsourcing but also that government presence in the market yields cost reduction. A counterfactual policy featuring direct competition between government and private sector firms finds a total expenditure reduction of 15.7 percent.
Abstract
					We study how voter turnout affects the aggregation of preferences in elections. Under voluntary voting, election outcomes disproportionately aggregate the preferences of voters with low voting cost and high preference intensity. We show identification of the correlation structure among preferences, costs, and perceptions of voting efficacy, and explore how the correlation affects preference aggregation. Using 2004 US presidential election data, we find that young, low-income, less-educated, and minority voters are underrepresented. All of these groups tend to prefer Democrats, except for the less educated. Democrats would have won the majority of the electoral votes if all eligible voters had turned out.
Abstract
					In a stock market experiment, we examine how regret avoidance influences the decision to sell an asset while its price changes over time. Participants know beforehand whether they will observe the future prices after they sell the asset or not. Without future prices, participants are affected only by regret about previously observed high prices (past regret), but when future prices are available, they also avoid regret about expected after-sale high prices (future regret). Moreover, as the relative sizes of past and future regret change, participants dynamically switch between them. This demonstrates how multiple reference points dynamically influence sales.
Abstract
					We introduce noisy belief equilibrium (NBE) for normal-form games in which players best respond to noisy belief realizations. Axioms restrict belief distributions to be unbiased with respect to and responsive to changes in the opponents' behavior. The axioms impose testable restrictions both within and across games, and we compare these restrictions to those of regular quantal response equilibrium (QRE) in which axioms are placed on the quantal response function as the primitive. NBE can generate similar predictions as QRE in several classes of games. Unlike QRE, NBE is a refinement of rationalizability and invariant to affine transformations of payoffs.
Abstract
					The Allais Paradox, or the common consequence effect, is a well-known behavioral regularity in individual decision-making under risk. Data from 81 experiments reported in 29 studies reveal that the Allais Paradox is a fragile empirical finding. The Allais Paradox is likely to be observed in experiments with high hypothetical payoffs, the medium outcome being close to the highest outcome and when lotteries are presented as a probability distribution (not in a compound form). The Allais Paradox is likely to be reversed in experiments when the probability mass is equally split between the lowest and highest outcomes in risky lotteries.
Abstract
					This paper analyzes the Taiwan mechanism used nationwide for high school assignment starting in 2014. In the Taiwan mechanism, points are deducted from an applicant's score, with larger penalties for lower-ranked choices. Deduction makes the mechanism a hybrid of the Boston and deferred acceptance mechanisms. Our analysis sheds light on why Taiwan's new mechanism has led to massive nationwide demonstrations and why it nonetheless remains in use.
Abstract
					Firms use relational contracts to support repeated trade. Do these informal agreements evolve in response to market conditions? In a market for ice, firms reestablish relationships on new terms when a prior agreement breaks down. Using transaction data, we show that ice retailers prioritize deliveries to loyal buyers⁠—fishing firms⁠—when supply from the monopolistic manufacturer is scarce. After an upstream shock to competition increases supply, repeated trade lapses, threatening retailers' positions. Incumbent retailers establish a new agreement expanding trade credit to loyal buyers, which impedes new retailer entry. Upstream competition also increases downstream firms' productivity and lowers consumer fish prices.
Abstract
					We address the growing concern that minority shareholding (MS) in rival firms may lessen competition, using the introduction of national leniency programs (LPs) as a shock that destabilizes collusive agreements. Based on data from 63 countries, we find a large and significant immediate increase in domestic horizontal MS acquisitions once an LP is introduced but only in countries where the LP is deemed to be effective. There is no effect on non-horizontal or cross-border MS acquisitions. Our findings suggest that firms may use MS acquisitions to either stabilize collusive agreements or soften competition in the event that collusion breaks down.
Abstract
					A large literature examines demand-side barriers to product adoption. In this paper, we examine supply-side barriers in a setting with limited contract enforcement. We model the 
relationship between a distributor and its credit-constrained vendors. We show that the optimal self-enforcing arrangement can be implemented by providing vendors with a line of 
credit and the option to buy additional units at a fixed price. Moreover, the structure of this arrangement is optimal both for profit-maximizing firms and for nonprofit organizations 
with limited resources. We test the arrangement using a field experiment in rural Uganda. We find that the model-implied optimal arrangement increased distribution significantly 
compared to a standard contract. However, growth was lower than predicted by the model because vendors were unwilling to extend credit to customers and did not have access to a 
reliable savings technology. We discuss several recent technological innovations that help to overcome both of these challenges.
Abstract
					We estimate a perfect information static entry game to study the effect of cultural entry barriers on entry and competition in the retail banking industry. Canada provides a favorable setting for analysis due to its high linguistic diversity, concentrated market, and regulatory entry barriers. We find that cultural affinity between customers and financial institutions that share a common cultural origin plays an important role in explaining the comparative advantages of these institutions in certain markets. Using several counterfactual experiments and additional empirical evidence, we show that the effectiveness of regulations intended to foster competition is significantly limited by cultural barriers, which is a key determinant that shapes the competitive landscape of the industry.
Abstract
					We study the life cycle of a firm that produces a good of unknown quality. The firm manages its quality by investing while consumers learn via public breakthroughs; if the firm fails to generate such breakthroughs, its revenue falls and it eventually exits. Optimal investment depends on the firm's reputation (the market's belief about its quality) and self-esteem (the firm's own belief about its quality), and is single-peaked in the time since a breakthrough. We derive predictions about the distribution of revenue and propose a method to decompose the impact of policy changes into investment and selection effects.
Abstract
					Workhorse economic models used for studying the market impacts of search frictions assume constant search costs: individuals pay the same cost to obtain price information each time they search. This paper provides evidence on a new form of search costs: start-up costs. Exploiting a natural experiment in retail gasoline, we document how a temporary, large exogenous shock to consumers' search incentives leads to a substantial, permanent increase in price search. A standard search model fails to explain such history dependence in search, while it follows directly from a model with a one-time up-front cost to start searching.
Abstract
					We analyze the design of a mechanism to extract a ranking of individuals according to a unidimensional characteristic, such as ability or need. Individuals, connected on a social network, only have local information about the ranking. We show that a planner can construct an ex post incentive compatible and efficient mechanism if and only if every pair of friends has a friend in common. We characterize the windmill network as the sparsest social network for which the planner can always construct a complete ranking.
Abstract
					We develop an index of competitiveness and cooperativeness that is based on the primitives of a normal-form game, i.e., players, strategies and payoffs. The index relies on the unique decomposition of a given game into a zero-sum game and a common interest game. The index decreases in the distance to its zero-sum part and increases in the distance to its common interest part. The comparative statics of our index coincide with economic intuition. The index also supports experimental findings in well-known classes of games in the sense that more cooperative and less competitive behavior correlates with lower values of the index.
Abstract
					We explore the implications of steering by an informed profit-maximizing intermediary. The intermediary steers consumers by recommending firms, taking into account both the commissions firms offer and the prices they set. Such steering results in higher commissions and consumer prices, so that consumers only benefit from intermediation when their search cost is sufficiently high. Steering reverses the normal relationship between competition and price, with prices increasing in the number of competing firms. We use the framework to study various policies including commission caps (absolute or relative), commission disclosure, promoting information provision, and penalties for inappropriate advice.
Abstract
					Industry-wide shocks can have heterogeneous impacts on firms' costs due to different firm characteristics. The heterogeneity of these impacts is crucial for understanding the pass-through of the shock because of its implications for strategic competition. In the context of the gas price shock in the electricity market, I develop a method to identify the heterogeneous impacts of the shock and show, with a structural analysis, that the heterogeneous feature of the shock induces markup adjustments in firms. Pass-through that is estimated without incorporating the existing heterogeneous impacts fails to reflect the change in competition arising from the shock and is, on average, underestimated.
Abstract
					This paper examines the effect of cross-border shopping on grocery demand in Norway using monthly store × category sales data from Norway's largest grocery chain 2012–2016. The sensitivity of demand to the foreign price is hump-shaped and greatest 30–60 minutes' driving distance from the closest foreign store. Combining continuous demand, fixed costs of cross-border shopping, and linear transport costs a la Hotelling, we show how this hump shape can arise through a combination of intensive and extensive margins of cross-border shopping. Our conclusions are further supported by novel survey evidence and cross-border traffic data.
Abstract
					It is taken as given by many policy makers that Direct-to-Consumer Advertising of prescription drugs drives inappropriate patients to treatment. Alternatively, advertising may provide useful information that causes appropriate patients to seek treatment. I study this dynamic in the context of antidepressants. Leveraging variation driven by the borders of television markets, I find that a 10 percent increase in anti-depressant advertising leads to a 0.3 percent ($32 million) increase in new prescriptions followed by reductions in workplace absenteeism worth about $770 million. I find no effect of advertising on prices, generic penetration, drug switches, adverse effects, non-adherence rates, or therapist visits.
Abstract
					I study a dynamic model of electoral competition between candidates with heterogeneous valence. When the candidates' and voters' policy preferences differ, the winner extracts rents, limited only by the voters' threat of electing the weaker candidate. This threat becomes more costly to the voters when the relevant time horizon is longer. Thus, term limits can increase the voters' bargaining power and their welfare. Term limits are even more important for curbing rent extraction if entry is strategic, as in that case strong incumbents face weaker competition. The paper also compares the welfare properties of seniority caps and stochastic term limits.
Abstract
					To prevent biased advice, regulators increasingly ban commission payments to financial advisers. Such bans are associated with "advice gaps," meaning that advice becomes less accessible. To understand the trade-off between the quality and accessibility of advice, this paper develops a model of price competition in advice markets with endogenous entry of advisers. While commission bans increase consumer surplus in the short run, they hurt the profitability of advisers. In the long run, advisers exit the market, advice becomes inaccessible, and consumer surplus decreases. These results imply that accounting for the endogeneity of market structure is important when regulating advice.
Abstract
					The optimal duration of a supply contract balances the costs of re-selecting a supplier against the costs of being matched to an inefficient supplier when the contract lasts too long. I develop a structural model of contract duration that captures this trade-off and provide an empirical strategy for quantifying (unobserved) transaction costs. I estimate the model using federal supply contracts for a standardized product, where suppliers are selected by procurement auctions. The estimated transaction costs are substantially greater than consumer switching costs and a significant portion of total buyer costs. Counterfactuals illustrate the importance of accounting for the duration margin.
Abstract
					Using a large-scale hybrid laboratory and online trust experiment with and without preplay communication, we investigate how the passage of time affects trust. Communication (predominantly through promises) raises cooperation, trust, and trustworthiness by about 50 percent. This result holds even when three weeks pass between the time of the trustee's message/the trustor's decision to trust and the time of the trustee's contribution choice and even when this contribution choice is made outside of the lab. Delay between the beginning of the interaction and the time to reciprocate neither substantially alters trust or trustworthiness nor affects how subjects communicate.
Abstract
					We study the impact of deliberation on intertemporal choices. Using multiple experiments, including a field study in the Democratic Republic of the Congo, we show that the introduction of waiting periods—a policy that temporally separates information about choices from choices themselves—causes substantially less myopic decisions. These results cannot be captured by models of exponential discounting nor present bias. Comparing the effects of waiting periods to making planned choices over future time periods, the former has a larger impact on reducing myopia. Our results highlight the role of deliberation in decision-making and have implications for policy and intervention design.
Abstract
					I study the effects of financial players who trade alongside physical buyers and sellers in electricity markets. Using detailed firm-level data, I examine physical and financial firms' responses to regulation that exogenously increased financial trading. I show that the effect of speculators on generators' market power depends on the kind of equilibrium they are in. I develop a test of the null of static Nash equilibrium and reject it. To implement the test, I present a new method to define markets using machine-learning tools. I find that increased financial trading reduced generators' market power and increased consumer surplus.
Abstract
					I introduce a model of international production that allows the production chain to be of any length or number of sourcing countries and in which the production process does not have to be perfectly sequential. The presence of trade costs in this model makes firms cluster their production geographically, while trade liberalization allows firms to fragment their production more. Clustering patterns depend on the characteristics of the production structure, with stronger clustering associated with longer and less connected structures. Clustering intensity in upstream stages of production is generally higher and less affected by exogenous changes in production structure.
Abstract
					I study how trade affects urbanization and real income. To this end, I exploit large-scale exogenous changes in trade stemming from the redrawing of Hungary's borders after the First World War. I show that urbanization in counties near the new border decreased significantly relative to counties farther away. I rationalize this reduced-form finding in a spatial model in which benefits from trading drive agglomeration around locations where trading activity takes place. Structurally estimating the model, I find a 15.55 percent decrease in Hungarian residents' average real income after the redrawing of borders, with the largest losses concentrated in border regions.
Abstract
					We experimentally investigate how impartial observers allocate money to agents whose complementarity and substitutability determine the surplus that each group can achieve. Analyzing the data through the lens of axioms and solutions from cooperative game theory, a one-parameter model (mixing equal split and Shapley value) arises as a parsimonious description of the data.
Abstract
					Elicitation mechanisms typically presume only money enters utility functions. However, nonmonetary objectives are confounders. In particular, psychologists argue people favor bets where ability is involved over equivalent random bets—a preference for control. Our new elicitation method mitigates control objectives and determines that under the widely used matching probabilities method, subjects report beliefs 18 percent higher than their true beliefs to increase control. Nonmonetary objectives account for 68 percent of what would normally be measured as overconfidence. We also find that control is only a desire to bet on doing well; betting on doing badly is perceived as a negative.
Abstract
					How robust are experimental results to changes in design? And can researchers anticipate which changes matter most? We consider a real-effort task with multiple behavioral treatments and examine the stability along six dimensions: (i) pure replication, (ii) demographics, (iii) geography and culture, (iv) the task, (v) the output measure, and (vi) the presence of a consent form. We find near-perfect replication of the experimental results and full stability of the results across demographics, significantly higher than a group of experts expected. The results differ instead across task and output change, mostly because the task change adds noise to the findings.
Abstract
					Sequentiality of moves in an infinitely repeated prisoner's dilemma does not change the conditions under which mutual cooperation can be supported in equilibrium relative to simultaneous decision-making. The nature of the interaction is different, however, given that sequential play reduces strategic uncertainty. We show in an experiment that this has large consequences for behavior. We find that with intermediate incentives to cooperate, sequentiality increases the cooperation rate by around 40 percentage points, whereas with very low or very high incentives to cooperate, cooperation rates are respectively very low or very high in both settings.
Abstract
					This paper provides evidence of rational inattention by experienced professionals in strategic interactions. We add rational inattention to a game of matching pennies with state-dependent payoffs. Unlike the full-information, mixed-strategy Nash equilibrium, payoffs of different actions need not be equated state by state. Moreover, players respond partially to payoff differences, this responsiveness is stronger when attention costs are lower, strategies converge to full-information Nash as stakes increase, and average payoffs across all states are approximately equal across actions. We test these predictions using data on millions of pitches from Major League Baseball, where we observe strategies, payoffs, and proxies for attention costs.
Abstract
					This paper exploits a large-scale auction experiment conducted by two Chinese government treasury security issuers—the Chinese Development Bank and the Export-Import Bank—to investigate whether treasury securities should be sold through uniform price or discriminatory price auction mechanisms. Based on the outcomes of more than 300 treasury securities issued through an alternating auction-rule market experiment, we find that yield rates of the two auction formats are not statistically different. Further, these estimates indicate there is no significant economic difference in terms of revenue between the two auction mechanisms. This result is robust across different bond yield-rate measurements and participation behavior.
Abstract
					US spectrum licenses cover geographically distinct areas and often complement each other. A bidder seeking to acquire multiple licenses is exposed to the risk of winning only isolated patches. Using Auction 73 data, we model the bidding process as an entry game with interdependent markets and evolving bidder beliefs. Bidders' decisions on bidding provide bounds on licenses' stand-alone values and complementarity between licenses. We show that the effects of package bidding on bidders' exposure risks depend on package format and size. More importantly, package bidding increases auction revenue substantially at the cost of reducing bidder surplus and increasing license allocation concentration.
Abstract
					Deferred acceptance (DA), a widely implemented algorithm, is meant to improve allocations: under classical preferences, it induces preference-concordant rankings. However, recent evidence shows that—in both real, large-stakes applications and experiments—participants frequently play seemingly dominated, significantly costly strategies that avoid small chances of good outcomes. We show theoretically why, with expectations-based loss aversion, this behavior may be partly intentional. Reanalyzing existing experimental data on random serial dictatorship (a restriction of DA), we show that such reference-dependent preferences, with a degree and distribution of loss aversion that explain common levels of risk aversion elsewhere, fit the data better than no-loss-aversion preferences.
Abstract
					We study how parliaments and committees select one out of several alternatives when options cannot be ordered along a "left-right" axis. Which voting agendas are used in practice, and how should they be designed? We assume that preferences are single peaked on a tree and study convex agendas where, at each stage in the voting process, the tree of remaining alternatives is divided into two subtrees that are subjected to a Yes-No vote. We show that strategic voting coincides with sincere, unsophisticated voting. Based on inference results and revealed preference arguments, we illustrate the empirical implications for two case studies.
Abstract
					We explore the relationship between the volatility of a firm's local environment and its organizational structure. Using micro-level data on managers working for a large retailer, we empirically test and provide support for our theory that a more volatile local environment results in more decentralization only when the need for coordination among subunits is low. In contrast, more local volatility is associated with more centralization when coordination needs are high. Our evidence supports the argument that centralized organizations are better at adapting to local shocks when coordination is important.
Abstract
					We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow us to disentangle different sources of inertia by using a rich combination of macromoments and micromoments. We find that consumers perceive contracts as differentiated and both limited awareness and switching costs hinder efficient choices. Our counterfactuals reveal substantial welfare gains from alleviating both frictions, in particular switching costs, and that a well-regulated monopoly can generate similar consumer surplus as the current deregulated market.
Abstract
					Economists have long been puzzled by event-ticket underpricing: underpricing reduces revenue for the performer and encourages socially wasteful rent-seeking by ticket brokers. What about using an auction? This paper studies the introduction of auctions into this market by Ticketmaster in the mid-2000s. By combining primary-market auction data from Ticketmaster with secondary-market resale value data from eBay, we show that Ticketmaster's auctions 'worked': they substantially improved price discovery, roughly doubled performer revenues, and, on average, nearly eliminated the potential arbitrage profits associated with underpriced tickets. We conclude by discussing why, nevertheless, the auctions failed to take off.
Abstract
					Spending time with a spouse is a major gain from marriage. We extend the classical collective model of the household to allow for togetherness between spouses. Togetherness takes the form of joint leisure and joint care for children. Using revealed preference conditions and Dutch data over the years 2009–2012, we find that households are willing to pay €1.20 per hour—10 percent of the average wage—to convert private leisure to joint leisure and €2.10 per hour to convert private childcare to joint childcare. Our results suggest togetherness is an important component of household time use despite being over- looked in the economics literature.
Abstract
					We provide experimental evidence on coordination within large groups that could proxy the atomistic nature of real-world markets. We use a bank run game where the two pure-strategy equilibria can be ranked by payoff and risk dominance and a sequence of public announcements introduces stochastic sunspot equilibria. We find systematic group size effects that theory fails to predict. When the payoff-dominant strategy is risky enough, the behavior of small groups is uninformative of the behavior in large groups: unlike smaller groups of size ten, larger groups exclusively coordinate on the Pareto-inferior strategy and never coordinate on sunspots.
Abstract
					This paper studies the effects of time preferences on cooperation in an infinitely repeated prisoner's dilemma game experiment. Subjects play repeated games in the lab, all decisions at once, but stage game payoffs are paid over an extended period of time. Changing the time window of stage game payoffs (weekly or monthly) varies discount factors, and a delay for the first-stage game payoffs eliminates/weakens present bias. First, subjects with weekly payments cooperate more than subjects with monthly payments—higher discount factors promote greater cooperation. Second, the rate of cooperation is higher when there is a delay—present bias reduces cooperation.
Abstract
					We develop and test a theory of blind disclosure. A sender chooses whether to disclose information based on a preliminary, private signal. In the unique equilibrium, contrary to the literature's canonical unraveling result, senders disclose only if their preliminary signal exceeds a cutoff. This cutoff rule leads to partial unraveling in environments with either risk aversion or moral hazard, and disclosure decreases with uncertainty. Using unique administrative data on disclosed and undisclosed grades in a large university, we find that the model is consistent with student choices during spring 2020 to conceal letter grades by switching to optional pass-fail grades.
Abstract
					We document new facts about pricing technology using high-frequency data, and we examine the implications for competition. Some online retailers employ technology that allows for more frequent price changes and automated responses to price changes by rivals. Motivated by these facts, we consider a model in which firms can differ in pricing frequency and choose pricing algorithms that are a function of rivals' prices. In competitive (Markov perfect) equilibrium, the introduction of simple pricing algorithms can increase price levels, generate price dispersion, and exacerbate the price effects of mergers.
Abstract
					We propose an intuitive representation of product design in which firms locate inside a circle and consumers in its outer circumference. Designs trade off horizontal and vertical transport costs. Our setting encompasses all linear demand rotations. Firms with lower quality or higher marginal costs choose niche designs that cater to specific consumers at the expense of alienating the rest. Firms choose intermediate designs or more polarized ones, instead, depending on the convexity of the vertical transport cost. We examine such design choices in monopoly, duopoly, and monopolistic competition settings.
Abstract
					We document a form of attribution bias wherein people wrongly ascribe sensations of positive or negative surprise to the underlying disutility of a real-effort task. Participants in our experiments learned from experience about two unfamiliar tasks, one more onerous than the other. We manipulated expectations about which task they would face: some participants were assigned their task by chance, while others knew their assignment in advance. Hours later, we elicited willingness to work again on that same task. Participants assigned the less (more) onerous task by chance were more (less) willing to work than those who knew their assignment in advance.
Abstract
					We investigate how strategic behavior is affected by the set of notions (frames) used when thinking about the game. In our games the action set consists of visual objects: each player must privately choose one, trying to match the counterpart's choice. We propose a model where different player-types are aware of different attributes of the action set (hence, different frames). One of the novelties is an epistemic structure that allows players to think about new frames, after initial unawareness of some attributes. To test the model, our experimental design brings about multiple frames by varying subjects' awareness of several attributes.
Abstract
					External reference pricing (ERP), the practice of benchmarking domestic drug prices to foreign prices, generates an incentive for firms to withhold products from low-income countries. Using a novel moment inequality approach, we estimate a structural model to measure how ERP policies affect access to innovative drugs across Europe. We find that ERP increases entry delays in eight low-income European countries by up to one year per drug. The European Union could remove these delays without replacing ERP by compensating firms through lump-sum transfers at the cost of around €18 million per drug.
Abstract
					We test the core ideas of the "automata" approach to bounded rationality, using simple experimental bandit tasks. Optimality requires subjects to use a moderately complex decision procedure, but most subjects in our baseline condition instead use simpler (often sub-optimal) procedures that economize on "states" in the algorithmic structure of the rule. When we artificially remove the mental costs of tracking states by having the computer track and organize past events, subjects abandon these simpler rules and use maximally complex optimal rules instead. The results thus suggest that the main type of complexity described in the automata literature fundamentally influences behavior.
Abstract
					Certification of sellers by trusted third parties helps alleviate information asymmetries in markets, yet little is known about the impact of a certification's threshold on market outcomes. Exploiting a policy change on eBay, we study how a more selective certification threshold affects the distribution of quality and incumbent behavior. We develop a stylized model that shows how changes in selectivity change the distribution of quality and prices in markets. Using rich data from hundreds of online categories on eBay.com, we find support for the model's hypotheses. Our results help inform the design of certification selectivity in electronic and other markets.
Abstract
					We study a dynamic model of property appropriation in autocracies. To maintain the appearance of the rule of law, an autocrat reassigns property only when the reassignment is acceptable to all affected citizens. Nevertheless, the autocrat can appropriate public and private property by exploiting enforcement gaps. After an adjustment period, wealth shares of public property and the private property of out-groups decline. The model rationalizes the connection between wealth inequality and privatization in many autocracies. Calibrating to Russian and Chinese data, simulations to mid-twenty-first century display widening wealth gaps between elites and the populace. Anocracies mitigate this outcome.
Abstract
					We study the problem of learning about the effect of one market-level variable (e.g., price) on another (e.g., quantity) in the presence of shocks to unobservables (e.g., preferences). We show that economic intuitions about the plausible size of the shocks can be informative about the parameter of interest. We illustrate with a main application to the grain market.
Abstract
					We study the disclosure policy of a regulator overseeing a monitor with reputation concerns. The monitor faces a manager, who chooses how much to manipulate based on the monitor's reputation. Reputational incentives are strongest for intermediate reputations. Instead of providing transparency, the regulator's disclosure policy aims to keep the monitor's reputation intermediate, even at the cost of diminished incentives. Beneficial schemes feature random delay or noisy information. Schemes that feature verifiable disclosure destroy reputational incentives. The regulator discloses more aggressively when she has better enforcement tools.
Abstract
					We compare behavior of two person teams with individuals in indefinitely repeated prisoner dilemma games with perfect monitoring. Team discussions are used to understand the rationale underlying these choices and how these choices come about. There are three main findings: (i) Teams learned to cooperate faster than individuals, and cooperation was more stable for teams. (ii) Strategies identified from team dialogues differ from those identified by the Strategy Frequency Estimation Method. This reflects the improvisational nature of teams' decision making. (iii) Increasing cooperation was primarily driven by teams unilaterally cooperating in the hope of inducing their opponent to cooperate.
Abstract
					The canonical direct-elicitation approach for measuring individuals' valuations for goods is the Becker-DeGroot-Marschak procedure, which generates willingness-to-pay (WTP) values that are imprecise and systematically biased. We show that enhancing elicited WTP values with supervised machine learning (SML) can improve estimates of peoples' out-of-sample purchase behavior. Furthermore, swapping WTP data with choice data generated from a simple task leads to comparable performance. We quantify the benefit of using various SML methods in conjunction with using different types of data. Our results suggest that prices set by SML would increase revenue by 29 percent over using the stated WTP, with the same data.
Abstract
					Entry of new firms onto a platform has an ambivalent effect on the incumbent firms operating on the platform: the main tension lies between the negative effects of increased competitive pressure and positive indirect network effects. This paper empirically studies the net effect of these countervailing forces and its dependence on firm quality, using a quasi-exogenous shock on a large online platform. On average, market expansion favors incumbents, though the average effect masks substantial heterogeneity: high-quality incumbents experience significant increases in sales and revenue, whereas low-quality firms perform unambiguously worse. Lastly, the paper explores the main mechanisms and firms' responses.
Abstract
					We develop a framework to evaluate the impact of market integration, accounting for spillovers between multiple distribution channels. We adapt the standard random coefficients logit demand model to allow for substitution between channels and consumer arbitrage across countries. We apply our framework to the European portable PC market, where geoblocking practices that restrict online cross-border trade have recently been banned. Consumers in high income countries gain most from price convergence, while consumers in other countries may be worse off. The total consumer and welfare gains from online market integration are more modest and mainly due to increased product choice rather than reduced price discrimination.
Abstract
					We present a learning-based selection argument for Linear Bayesian Nash equilibrium in a Walrasian auction. Endowments vary stochastically; traders model residual supply as linear, estimate its slope from past trade data, and periodically update these estimates. In the standard setting with quadratic preferences, we show that this learning process converges to the unique LBN. Anonymity and statistical learning therefore support this commonly used equilibrium selection rule.
Abstract
					Manufacturers of durable goods can encourage consumers facing transaction costs to upgrade by accepting used units as trade-ins. These "buyback schemes" increase demand for new units, but increase the supply of used units if trade-ins are resold. I investigate the equilibrium effects of buyback schemes in the market for business jets. I find that buyback increases manufacturer revenue by 7.2 percent at fixed prices. However, in equilibrium this revenue gain is diminished by 43 percent due to substitution away from new jets among first time buyers. I show how the size of this cannibalization effect depends on preference heterogeneity.
Abstract
					We use simulations of a simple learning model to predict cooperation rates in the experimental play of the indefinitely repeated prisoner's dilemma. We suppose that learning and the game parameters only influence play in the initial round of each supergame, and that after these rounds, play depends only on the outcome of the previous round. We find that our model predicts out-of-sample cooperation at least as well as models with more parameters and harder-to-interpret machine learning algorithms. Our results let us predict the effect of session length and help explain past findings on the role of strategic uncertainty.
Abstract
					We study the exit of duopolists from a stochastically declining market. Firms privately learn about the market conditions from observing the stochastic arrival of customers, while exit decisions are publicly observed. A larger firm is more likely to have customers and hence has better information about the market conditions. We provide sufficient conditions for either the smaller or the larger firm to be the first to exit in the unique equilibrium. Because of observational learning, exiting may be a firm's dominant action since continuing operation would bring too optimistic news to the rival, leading it to further postpone its exit.
Abstract
					Most prosocial decisions involve intertemporal trade-offs. Yet, the timing of prosocial utility flows is ambiguous and bypassed by most models of other-regarding preferences. We study the behavioral implications of the time structure of prosocial utility, leveraging a conceptual distinction between consequence-dated and choice-dated utility flows. We conduct a high-stakes donation experiment that comprehensively characterizes discounting behavior in self–other trade-offs and allows us to identify different prosocial motives from their distinct time profiles. Our data can only be explained by a combination of choice- and consequence-dated prosocial utility. Both motives are pervasive and negatively correlated at the individual level.
Abstract
					Motivated reasoning posits that people distort how they process information in the direction of beliefs they find attractive. This paper creates a novel experimental design to identify motivated reasoning from Bayesian updating when people have preconceived beliefs. It analyzes how subjects assess the veracity of information sources that tell them the median of their belief distribution is too high or too low. Bayesians infer nothing about the source veracity, but motivated beliefs are evoked. Evidence supports politically motivated reasoning about immigration, income mobility, crime, racial discrimination, gender, climate change, and gun laws. Motivated reasoning helps explain belief biases, polarization, and overconfidence.
Abstract
					We study experimentally the effect of multigame contact on cooperation, with each subject playing a pair of indefinitely repeated prisoner's dilemmas. Multigame contact is present if a subject plays both games with a single partner, and it is absent if each of the two games is played with a different partner. In contrast to the theoretical prediction, multigame contact does not increase overall cooperation rates. Nonetheless, multigame contact systematically affects behavior and outcomes, acting like a double-edged sword, in the sense that subjects link decisions across games and, consequently, mutual cooperation and mutual defection in both games become more likely.
Abstract
					Technological innovations like broadcast television and the internet challenge local newspapers' business model of bundling their local content with third-party content, such as wire national news. We examine how the entry of television affected newspapers and news diets in the United States. We construct a dataset of newspapers' economic performance and content choices from 1944 to 1964 and exploit quasi-random variation in the rollout of television to show its negative impact in the readership and advertising markets. Newspapers responded by reducing content, particularly local news. We tie this change to increased party vote share congruence between congressional and presidential elections.
Abstract
					Distributional decisions regularly involve multiple payoff components. In a series of experiments, we show that individuals sometimes exhibit narrow equity concerns: applying fairness preferences narrowly on a specific component of payoffs rather than on broader payoff consequences. This behavior results in different distributional decisions depending on which payoff component we frame individuals to consider. We document narrow equity concerns in an exceedingly simple setting—in which payoff components are tokens worth $0.01 and $0.02—and in context-rich applications including tax policy and worker compensation.
Abstract
					In many online markets, consumers have to spend time and effort browsing through products. The addition of new products could make other products less visible, creating congestion externalities. Using Android app store data, I take advantage of a natural experiment—a redesign of part of the store—to show evidence of congestion externalities online: more apps in the market directly reduce per app usage/downloads. The natural experiment also increases long-run entry, but a structural demand model that accounts for congestion externalities suggests that 40 percent of consumer variety welfare gains are lost from higher congestion.
Abstract
					This paper investigates the welfare effects of vertical integration in China's movie industry. We leverage data covering all theaters and 423 popular movies in China during 2014–2018. We find no evidence of integrated movies being foreclosed to rival theaters. Integrated theaters show movies for longer, allocate more screenings, and charge lower prices. We estimate a model of consumers' demand and theaters' screening decisions. Integrated theaters internalize a substantial fraction of their upstream companies' profits. Vertical integration mitigates distortions from revenue-sharing contracts and steers demand favoring integrated movies. Overall, vertical integration increases consumer surplus with considerable heterogeneity across markets.
Abstract
					Contributions toward public goods often reveal information that is useful to others considering their own contributions. This experiment compares static and dynamic contribution decisions to determine how contingent reasoning differs in dynamic decisions where equilibrium requires understanding how future information can inform about prior events. This identifies partially cursed individuals who can only extract partial information from contingent events, others who are better at extracting information from past rather than future or concurrent events, and Nash players who effectively perform contingent thinking. Contrary to equilibrium, the dynamic provision mechanism does not lead to lower contributions than the static mechanism.
Abstract
					Our novel approach to modeling monopolistic competition with heterogeneous firms and consumers involves spatial product differentiation, in either a geographical space or a space of characteristics. In addition to price, each firm chooses location in space. We formulate conditions for positive sorting—more-productive firms serve larger market segments and face tougher competition—and for existence and uniqueness of equilibrium. To quantify the role of sorting, we calibrate the model using haircut market data and perform counterfactual analysis. Inequality in gains among consumers caused by positive market shocks can be substantial: gains for consumers at more-populated locations are three to four times higher.
Abstract
					We present results from three experiments containing incentivized school choice scenarios. In these scenarios, we vary whether schools' assessments of students are based on a common priority (inducing correlation in admissions decisions) or are based on independent assessments (eliminating correlation in admissions decisions). The quality of students' application strategies declines in the presence of correlated admissions: application strategies become substantially more aggressive and fail to include attractive "safety" options. We provide a battery of tests suggesting that this phenomenon is at least partially driven by correlation neglect, and we discuss implications for the design and deployment of student-to-school matching mechanisms.
Abstract
					Consumer recycling generates new intermediate inputs. If some of the inputs are used to manufacture a substitute for the original product, the primary seller faces an incentive to reduce current output and raise rivals' future costs. I find that firms in the US paper industry facing exposure to future competition from the recycled sector, based on differences between product specific recycling technologies, reduced output more than firms not exposed to the recycled sector as consumer recycling increased. I then use the model to illustrate how the strategic response to recycling affects environmental policy.
Abstract
					Antitrust often uses the Herfindahl-Hirschman Index (HHI) for merger screening and review. We argue that HHI-based antitrust policy using predefined markets in the banking industry misses anticompetitive effects that are predicted by the proximity of merging branch networks. Difference-in-differences estimates from thousands of mergers reveal that close-proximity bank acquisitions have harmful effects, including branch closures, even if they fall below the HHI threshold for enforcement. Neither lowering the threshold nor using narrower predefined markets addresses this underenforcement without introducing significant overenforcement and underenforcement of other transactions. However, using a proximity threshold to complement the HHI policy could improve bank antitrust.
Abstract
					This study explores selection neglect in an experimental investment game where individuals can learn from others' outcomes. Experiment 1 examines aggregate-level equilibrium behavior. We find strong evidence of selection neglect and corroborate several comparative static predictions of Jehiel's (2018) model, showing that the severity of the bias is aggravated by the sophistication of other individuals and moderated when information is more correlated across individuals. Experiment 2 focuses on individual decision-making, isolating the influence of beliefs from possible confounding factors. This allows us to classify individuals according to their degree of naivety and explore the limits of, and potential remedies for, selection neglect.
Abstract
					How does information about players' intelligence affect strategic behavior? Game theory, based on the assumption of common knowledge of rationality, does not provide useful predictions. We experimentally show that, in the Prisoner's Dilemma, disclosure hampers cooperation: higher-intelligence players trust their partners less when playing against someone of lower ability. Similarly, in the Battle of Sexes with low payoff inequality, disclosure disrupts coordination, as higher-intelligence players try to force their most preferred outcome. Instead, with higher payoff inequality, behavior changes and higher-intelligence players concede. We analyze the reasons for these patterns of behavior.
Abstract
					Case studies of cartels and recent theory suggest that communication is a key factor for cooperation under imperfect monitoring, where actions can only be observed with noise. We conduct a laboratory experiment to study how communication affects cooperation under different monitoring structures. Pre-play communication reduces strategic uncertainty and facilitates very high cooperation rates at the beginning of an interaction. Under perfect monitoring, this is sufficient to reach a high and stable cooperation rate. However, repeated communication is important to maintain a high level of cooperation under imperfect monitoring, where players face additional uncertainty about the history of play.
Abstract
					We aim to understand the role and evolution of beliefs in the indefinitely repeated prisoner's dilemma (IRPD). To do so, we elicit beliefs about the supergame strategies chosen by others. We find heterogeneity in beliefs and changes in beliefs with experience are central to understanding behavior and learning in the IRPD. Beliefs strongly predict cooperation, beliefs respond to the return to cooperation, most subjects choose strategies that perform well given their beliefs, and beliefs change with experience while becoming more accurate over time. Finally, we uncover a novel mechanism whereby trusting subjects learn to cooperate through their interaction with experience.
Abstract
					An increasing number of monopolization cases have been constructed around the notion of "must-have" items: products that distributors must carry to "compete effectively." Motivated by these cases, we consider a multiproduct setting where upstream suppliers sell their products through competing distributors offering one-stop-shopping convenience to consumers. We show the emergence of products that distributors cannot afford not to carry if their rivals do. A supplier of such products can exploit this must-have property, along with tying and exclusivity provisions, to monopolize adjacent, otherwise-competitive markets. Policy interventions that ban tying or exclusivity provisions may prove ineffective or even backfire.
Abstract
					In vertically differentiated matching markets with private information, agents face an acceptance curse: being accepted as a partner conveys bad news. We experimentally investigate whether individuals anticipate the acceptance curse in such an environment. We test the effect of an exogenous change in reservation values, making some types more selective and inducing significant changes in the posterior distribution of match qualities. Consistent with limited strategic sophistication, subjects don't respond to this manipulation. Through additional investigation and structural estimations, we suggest a mechanism explaining the lack of subjects' response: out-of-equilibrium beliefs are quantitatively more important than limited conditional thinking.
Abstract
					We model repeated pricing by differentiated product firms when each firm has private information about its serially correlated marginal cost. In a fully separating equilibrium of the dynamic game, signaling incentives can lead equilibrium prices to be significantly above those in a static, complete information game, even when the possible variation in the privately observed state variables is very limited. We calibrate our model using data from the beer industry and show that, without any change in conduct, our model can explain increases in price levels and changes in price dynamics and cost pass-through after the 2008 MillerCoors joint venture.
Abstract
					This paper develops and estimates a dynamic structural model of emissions abatement, investment, and permit trading with banking under cap-and-trade regulation. The model accounts for forward-looking behavior and transaction costs in the permit market, which determine the temporal and geographical distribution of emissions in equilibrium and, thus, the welfare implications of the regulation. The model is applied to the US Acid Rain Program to evaluate the role of regulatory designs. Permit banking mitigates inefficiencies arising from transaction costs and modifies the timing of emissions. An emissions tax policy could achieve an outcome close to dynamic cap and trade without transaction costs.
Abstract
					Individuals face nonlinear incentives in myriad situations. We test a fundamental assumption in such settings: that individuals display stable preferences when facing linear and nonlinear incentives. We use a laboratory experiment to characterize how revealed preferences are affected by changes in the budget set environment. Choices under kinked budgets exhibit the same very high levels of internally consistent behavior as they do under linear budgets. However, for about half the subjects, choices across settings are inconsistent with the maximization of a stable preference. Subjects displaying arbitrary consistency exhibit large and significant changes in utility parameters, risk premiums, and price elasticities across settings.
Abstract
					How do electoral incentives influence the choice to experiment with a policy reform that generates uncertain future benefits? To answer this question, we examine a two-period model of redistributive politics with uncertain policy outcomes involving a mixture of private and public benefits. In equilibrium, we find that the intertemporal trade-off between current policy costs and future benefits creates an incentive for politicians to use public debt to smooth spending across periods. The higher the share of policy benefits that are in the form of a public good, the higher the level of available debt-related spending on targeted policies that is necessary.
Abstract
					We show that rational but inattentive agents can become polarized ex ante. We present how optimal information acquisition and subsequent belief formation depend crucially on the agent-specific status quo valuation. Beliefs can systematically—in expectations over all possible signal realizations conditional on the state of the world—update away from the realized truth, and even agents with the same initial beliefs might become polarized. We design a laboratory experiment to test the model's predictions. The results confirm our predictions about the mechanism (rational information acquisition) and its effect on beliefs (systematic polarization), and they provide general insights into demand for information.
Abstract
					Level-k models often assume that individuals employ a fixed depth of reasoning across different games. We study this assumption by having subjects make choices in five classes of games chosen to identify inconsistent depth of reasoning. We demonstrate that depth of reasoning is pervasively inconsistent, changing both within and between classes of games. We show that this cannot easily be explained by factors such as subject confusion, changing beliefs about others' depth of reasoning, stochastic choice, model misspecification, changing incentives, or low cognitive ability. We develop a simple model incorporating ambiguity aversion that predicts inconsistent depth of reasoning.
Abstract
					Antitrust authorities search public documents to discover anti-competitive mergers. Thus, investor disclosures may alert them to deals that would otherwise go undetected, creating disincentives for managers to divulge certain transactions. We study this behavior in publicly traded US companies. First, we employ a regression discontinuity approach to estimate the effect of mandatory disclosures. We find that releasing information to investors poses antitrust risk. Second, we introduce a method for measuring undisclosed mergers that relies on financial accounting reporting requirements. We find that undisclosed mergers total $1.85 trillion between 2002 and 2016.
Abstract
					Employee spin-offs harm incumbent firms by increasing competition (benefiting consumers) and preventing firm owners from making beneficial investments in workers who may later spin off (harming consumers). We model noncompete agreements (NCAs) as solutions for the firm and analyze the resulting trade-off for consumers. We show that market structure and the nature of investment play large roles. Counterintuitively, increased investment benefits have the potential to harm consumers such that industries where firms value NCAs the most are those where harm is greater. Finally, we draw two analogies between NCAs and antitrust and show how those areas inform NCA policy.
Abstract
					We revisit the interpretation of the anchoring effect as evidence for nonexisting or arbitrary preferences. A theory of endogenous information acquisition (i.e., deliberation) is developed to rationalize the causal dependence of economic valuations on arbitrary anchor numbers. We identify theory-driven moderators to reconcile seemingly discrepant findings among original and follow-up anchoring experiments. We demonstrate in a meta-analysis that the anchoring effect may be systematically moderated by unintended experimental/individual differences. Moreover, apparent replication failure of the anchoring effect may be a false negative for self-countervailing treatment effects, because an anchoring treatment may cast opposite effects on different subjects within an experiment.
Abstract
					In bargaining environments with stochastic future surplus, failing to delay agreement can be inefficient when the expected future surplus is sufficiently high. Theoretically, such inefficiencies never arise under unanimity rule but can arise under majority rule. Using a laboratory experiment, we find support for these predictions, both when the unanimity rule is predicted to be more efficient and when there should be no difference between the two rules. We also find large point prediction deviations under the majority rule. We show these deviations can be explained by higher-than-predicted egalitarian sharing and a lower risk of being excluded from future agreements.
Abstract
					Attitudes toward fairness and redistribution differ along socioeconomic lines. To understand their formation, we conduct a large-scale experiment on attention to merit and luck and the effect of attention on fairness decisions. Randomly advantaged subjects pay less attention to information about true merit and retain more economic surplus, and this effect persists in subsequent impartial decisions. Attention also has a causal role: encouraging subjects to look at merit reduces the effect of an advantaged position on allocations. This suggests that attention-based policy interventions may be effective in reducing polarized views on inequality.
Abstract
					We develop a revealed preference test for the Choquet expected utility model with ambiguity aversion, which does not rely on specific functional form assumptions on the utility index. It is computationally efficient if the number of states is not too large, even for a large number of observations. This is a nice feature compared to other existing revealed preference tests for decision models with ambiguity. We illustrate the usefulness of our results by implementing our test on two experimental datasets from the literature, and we compare the empirical fit of this model to the subjective expected utility model.
Abstract
					We introduce the inverse product differentiation logit (IPDL) model, a micro-founded inverse market share model for differentiated products that captures market segmentation according to one or more characteristics. The IPDL model generalizes the nested logit model to allow richer substitution patterns, including complementarity in demand, and can be estimated by linear instrumental variable regression with market-level data. Furthermore, we provide Monte Carlo experiments comparing the IPDL model to the workhorse empirical models of the literature. Lastly, we demonstrate the empirical performance of the IPDL model using a well-known dataset on the ready-to-eat cereal market.
Abstract
					We study secure survey designs in organizational settings where fear of retaliation makes it hard to elicit truth. Theory predicts that (i) randomized-response techniques offer no improvement because they are strategically equivalent to direct elicitation, (ii) exogenously distorting survey responses (hard garbling) can improve information transmission, and (iii) the impact of survey design on reporting can be estimated in equilibrium. Laboratory experiments confirm that hard garbling outperforms direct elicitation but randomized response works better than expected. False accusations slightly but persistently bias treatment effect estimates. Additional experiments reveal that play converges to equilibrium if learning from others' experience is possible.
Abstract
					We experimentally examine the Becker-Shapley-Shubik two-sided matching model. In the experiment, the aggregate outcomes of matching and surplus are affected by whether equal split is in the core and whether efficient matching is assortative; the canonical cooperative theory predicts no effect. In markets with an equal number of participants on both sides, individual payoffs cannot be explained by existing refinements of the core, but are consistent with our noncooperative model's predictions. In markets with unequal numbers of participants, noncompetitive outcomes, are not captured by the canonical cooperative model, but are included in the set of predictions in our noncooperative model.
Abstract
					Allegations of voter fraud accompany many real-world elections. How does electoral malpractice affect the acceptance of elected institutions? Using an online experiment in which participants distribute income according to majority-elected rules, we show that those who experience vote buying or voter disenfranchisement during the election are subsequently less likely to voluntarily comply with a rule. On average, the detrimental impact of electoral malpractice on compliance is of the same magnitude as removing the election altogether and imposing a rule exogenously. Our experiment shows how corrupting democratic processes impacts economic behavior and sheds light on factors that may underlie "rule legitimacy."
Abstract
					Half of all transactions in the $6 trillion market for manufactured goods in the United States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of "superstar" firms—the largest 1 percent. Estimates based on detailed administrative data show that the rise of the largest firms was driven by an intuitive linkage between their sourcing of goods from abroad and an expansion of their domestic distribution network to reach more buyers. Both elements require scale economies and lead to increased wholesaler market shares and markups.
Abstract
					We study the inner workings of a hub-and-spoke cartel in the Brazilian automotive fuel industry. Based on court documents and detailed price and sales data, we discuss how gas station owners (spokes) operating inside the federal capital received help from fuel distributors (hub) to reduce dispersion of and increase gasoline's retail price. We provide evidence that distributor cartel members benefited by raising wholesale prices while keeping competitors from supplying retail cartel members. We also provide theoretical foundations and empirical evidence for a new mechanism through which hubs help spokes: smoothing cost fluctuations.
Abstract
					We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on eliciting preferences for receiving high stakes lottery tickets at different points in time. In a standard intertemporal choice model high rewards decouple lottery choices from variation in background consumption. We investigate robustness to other assumptions theoretically, and validate our elicitation method experimentally. We illustrate an application of our method with unemployed job seekers, which naturally have income/consumption variation.
Abstract
					We consider the identification of empirical models of supply and demand with imperfect competition. We show that a restriction on the covariance between unobserved demand and cost shocks can resolve endogeneity and identify the price parameter. We demonstrate how to employ this approach in estimation, and we compare it to the method of instrumental variables. Our formal results also indicate that weaker covariance restrictions can bound the price parameter. We illustrate the covariance restriction approach with applications to ready-to-eat cereal, cement, and airlines.
Abstract
					We propose a method to augment conventional demand estimation approaches with crowd-sourced data on the product space. Our method obtains triplets data ("product A is closer to B than it is to C") from an online survey to compute an embedding—i.e., a low-dimensional representation of the latent product space. The embedding can either replace data on observed characteristics in mixed logit models, or provide pairwise product distances to discipline cross-elasticities in log-linear models. We illustrate both approaches by estimating demand for ready-to-eat cereals; the information contained in the embedding leads to more plausible substitution patterns and better fit.
Abstract
					This paper provides evidence on the scope and incentive mechanisms of long-term relationships in the US truckload freight industry. In this setting, shippers and carriers engage in repeated interactions under fixed-rate contracts that allow for inefficient opportunism. The main dynamic mechanism involves shippers using the threat of relationship termination to deter carriers from short-term opportunism. This threat and the potential of future rents induce more carrier cooperation. We test this mechanism against likely alternatives and analyze relationship scope for different carrier types. We find that incentive schemes do not exploit the full temporal and spatial scope of relationships.
Abstract
					Preferences for mixing can reveal ambiguity perception and attitude on a single event. The validity of the approach is discussed for multiple preference classes, including maxmin, maxmax, variational, and smooth second-order preferences. An experimental implementation suggests that participants perceive almost as much ambiguity for the stock index and actions of other participants as they do for the Ellsberg urn, indicating the importance of ambiguity in real-world decision-making.
Abstract
					We study pivots as signaling devices in a dynamic experimentation model. An entrepreneur receives funding from an investor and has private information about a project, which requires costly experimentation to succeed. The entrepreneur has a real option to pivot, i.e., to abandon the project and to start a new one. Investors learn about the project from the arrival of exogenous information and from the entrepreneur's pivoting decisions. We characterize signaling equilibria in which high-skill entrepreneurs pivot early. Such early pivots are associated with higher likelihood of success and with more favorable funding terms following the pivot.
Abstract
					Clustered bids and a missing mass of nearly tied bids have both been proposed as markers of collusion. We present causal empirical evidence from an actual procurement cartel that bidding involves both clustering and a gap around the winning bid. We support these results with information from the testimony of cartel participants that explains how both patterns arise naturally as part of an arrangement featuring complementary bidding. Based on these findings, we develop an easy-to-implement screen for collusive arrangements featuring complementary bidding.
Abstract
					We model competitive insurance markets with continuous cost-types. A regulator sets minimum and maximum coverage levels and a fee for nonbuyers. Equilibrium is unique if the type distribution is log-concave. Increasing the nonpurchase fee increases welfare if the density of types is decreasing. The optimal level of the minimum coverage is positive, below full insurance, and induces some pooling at the minimum coverage contract. The optimal level of the maximum coverage is full insurance, even in an extension that allows for ex post moral hazard.
Abstract
					Empirical search cost estimates are often large and increasing in the size of the transaction. We conduct an online search experiment in which we manipulate the price scale while keeping the physical search effort per price quote constant. Additionally, we obtain a direct measure of subjects' opportunity costs of time. Using a standard search model, we confirm that search cost estimates are large and increasing in the price scale. We then modify the model to incorporate context effects with respect to prices. This results in search cost estimates that are scale independent and correspond well to subjects' opportunity costs of time.
Abstract
					We study the role of endogenous trust in amplifying ideological bias. Agents in our model learn a sequence of states from sources whose accuracy is ex ante uncertain. Agents learn these accuracies by comparing their own reasoning about the states based on introspection or direct experience to the sources' reports. Small biases in this reasoning can cause large ideological differences in the agents' trust in information sources and their beliefs about the states, and may lead agents to become overconfident in their own reasoning. Disagreements can be similar in magnitude whether agents see only ideologically aligned sources or diverse sources.
Abstract
					We conduct a large-scale experiment to measure elementary aspects of strategic thinking skills and their linkage to labor market outcomes. Two incentivized measures of higher-order rationality and backward induction are developed. Males' (females') strategic thinking skills are positively (negatively) associated with individual labor income. However, among married individuals, strategic thinking skills are significantly and positively associated with their household labor income regardless of gender, highlighting the importance of strategic thinking skills for collective economic success. We argue that the intrahousehold channels encompassing collective labor supply with home-to-workplace spillover and marriage assortative matching offer the most plausible explanation for our findings.
Abstract
					We examine the effects of overlapping ownership among existing firms deciding whether to enter a product market. We show that in most cases—and especially when overlapping ownership is already widespread—an increase in the extent of overlapping ownership will harm welfare by softening product market competition, reducing entry, and thereby (in contrast to standard results) inducing insufficient entry and magnifying the negative impact of an increase of entry costs on entry. Overlapping ownership can mostly be beneficial only under substantial increasing returns to scale, in which case industry consolidation (induced by overlapping ownership) leads to sizable cost efficiencies.
Abstract
					This paper reports laboratory experiments that evaluate the performance
of a flexible package bidding format developed by the FCC,
in comparison with other combinatorial formats. In general, the
interest of policy makers in combinatorial auctions is justified by the
laboratory data. When value complementarities are present, package
bidding yields improved performance. We find clear differences
among the combinatorial auction formats both in terms of efficiency
and seller revenue, however. Notably, the combinatorial clock provides
the highest revenue. The FCC's flexible package bidding format
performed worse than the alternatives, which is one of the main
reasons why it was not implemented. (JEL D44, H82)
Abstract
					We combine survey data on friendship networks and individual
characteristics with experimental observations from dictator games.
Dictator offers are primarily explained by social distance, giving
follows a simple inverse distance law. While student demographics
play a minor role in explaining offer amounts, individual heterogeneity
is important for network formation. In particular, we detect
significant homophilous behavior; students connect to others similar
to themselves. Moreover, the network data reveal a strong preference
for cliques, students connect to those already close. The study is one
of the first to identify network architecture with individual behavior
in a strategic context. (JEL D44, H82)
Abstract
					The US airline industry went through tremendous turmoil in the early 2000s, with four major bankruptcies, two major mergers, and various changes in network structure. This paper presents a structural model of the industry, and estimates the impact of demand and supply changes on profitability. Compared with 1999, we find that, in 2006, air-travel demand was 8 percent more price sensitive, passengers displayed a stronger preference for nonstop flights, and changes in marginal cost significantly favored nonstop flights. Together with the expansion of low-cost carriers, they explain more than 80 percent of legacy carriers' variable profit reduction. (JEL L13, L25, L93)
Abstract
					We assess the impact of a variety of policies that may influence the career decisions of members of the US Congress. These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, non-pecuniary rewards and career prospects (both in and out of Congress). We find that the effect of
most policies varies considerably across different types of politicians.
For example, a reduction in the congressional wage would disproportionately induce exit from Congress by "skilled" politicians,
Democrats, and politicians who were relatively young when first elected, but not by politicians who most value legislative accomplishments ("achievers"). (JEL D72)
Abstract
					We develop a new model of household sorting in a system of residential
neighborhoods. We show that this model is partially identified without imposing parametric restrictions on the distribution of unobserved tastes for neighborhood quality and the shape of the indirect utility function. The proof of identification is constructive and can be used to derive a new semiparameteric estimator. Our empirical
application focuses on residential choices in the Pittsburgh metropolitan
area. We find that sorting of households with children exhibit
more stratification by income than sorting of households without children. (JEL C51, D12, H41, J12, R21, R23)
Abstract
					In social-learning environments, we investigate implications of the assumption that people naïvely believe that each previous person's action reflects solely that person's private information. Naïve herders inadvertently over-weight early movers' private signals by neglecting that interim herders' actions also embed these signals. Such "social confirmation bias" leads them to herd with positive probability on incorrect actions even in extremely rich-information settings where rational players never do. Moreover, because they become fully confident even when wrong, naïve herders can be harmed, on average, by observing others. (JEL D82, D83)
Abstract
					This paper develops a new approach to testing for strategic entry deterrence and applies it to the behavior of pharmaceutical incumbents before patent expiration. It examines a cross section of markets, determining whether behavior is nonmonotonic in market size.
Under some conditions, investment levels will be monotone in market size if firms do not invest to deter entry. Strategic investments to deter entry, however, may result in nonmonotonic investment because they are unnecessary in small markets, and impossible in large ones. Consistent with an entry-deterrence motivation is the finding that incumbents in medium-sized markets advertise less prior to patent expiration. (JEL D92, G31, L11, L21, L65)
Abstract
					This paper examines whether debt financing can undermine a supermarket
firm's incentive to provide product quality. In the supermarket industry, product availability is an important measure of a retailer's quality. Using US consumer price index microdata to track inventory shortfalls, I find that taking on high financial leverage
increases shortfalls. Highly leveraged firms appear to be degrading their products' quality in order to preserve current cash flow for debt service. Although reducing quality can erode both current sales and customer loyalty, firms appear to be willing to risk these outcomes in order to achieve benefits associated with debt finance. (JEL D92, G31, G32, L15, L81)
Abstract
					I analyze country-level product ranges offered by multinational laundry detergent manufacturers in Western Europe. Observed product range variation across countries exceeds the optimal firm-level response to differences in consumer preferences and retail environments. Counterfactual analysis reveals that increased product range standardization would reduce firm costs and increase profits. These findings are consistent with theory models of local agency, where decentralized decision making can be the constrained optimal organizational
form despite the resulting lack of coordination across divisions. My analysis suggests that organizational structure affects product market outcomes and firm performance. (JEL D23, F23, L21, L25, L65)
Abstract
					Bilateral, product-level data exhibit a number of strong patterns that can be used to evaluate international trade theories, notably the spatial incidence of "export zeros" (correlated with distance and importer size), and of export unit values (positively related to distance). We show that leading theoretical trade models fail to explain
at least some of these facts, and propose a variant of the Melitz model that can account for all the facts. In our model, high quality firms are the most competitive, with heterogeneous quality increasing with firms' heterogeneous cost. (JEL F11, F14, F40)
Abstract
					We study processing and acquisition of objective information regarding qualities that people care about, intelligence and beauty. Subjects receiving negative feedback did not respect the strength of these signals, were far less predictable in their updating behavior and exhibited an aversion to new information. In response to good news, inference conformed more closely to Bayes' Rule, both in accuracy and precision. Signal direction did not affect updating or acquisition in our neutral control. Unlike past work, our design varied direction and agreement with priors independently. The results indicate that
confirmation bias is driven by direction; confirmation alone had no
effect. (JEL D82, D83)
Abstract
					We examine how structural changes in the mobile telecommunications industry between 1996, when local markets were duopolies, and 1998, when varying degrees of regulated entry had occurred,
affected firms' product offerings and nonlinear pricing strategies. We relate firms' digital technology adoption and the characteristics of their calling plan menus to the amount of entry in local markets. We find that entry induces firms to offer larger menus with more evenly spread plans, both directly and by accelerating the introduction of digital menus with such features. Prices decline with entry, in particular for high-valuation consumers who benefit from steeper quantity discounts. (JEL L11, L13, L96, L98, O33)
Abstract
					Game theory is usually difficult to test in the field because predictions
typically depend sensitively on features that are not controlled or observed. We conduct one such test using both laboratory and field data from the Swedish lowest unique positive integer (LUPI) game. In this game, players pick positive integers and whoever chooses the lowest unique number wins. Equilibrium predictions are
derived assuming Poisson distributed population uncertainty. The field and lab data show similar patterns. Despite various deviations from equilibrium, there is a surprising degree of convergence toward equilibrium. Some deviations can be rationalized by a cognitive hierarchy model. (JEL C70, C93, D44, H27)
Abstract
					In markets where product quality is imperfectly observed or delivery is uncertain, seller reputations and product guarantees or warranties can impact equilibrium prices and quantities. Using data from a decentralized online market, this paper empirically investigates the substitutability of product guarantees for seller reputation. I find that a "guaranteed or your money back" promise from the market maker does not substitute for reputation, either in determining price or the probability of sale. The most likely causes of the policy's ineffectiveness are delays in buyer response to the guarantee and skepticism about reimbursement in the event of fraud. (JEL D82, L14, L15, L81,
M31)
Abstract
					We study the impact of status and social recognition on worker performance
in a field experiment. In collaboration with an international non-governmental organization, we hired students to work on a database project. Students in the award treatment were offered a
congratulatory card honoring the best performance. The award was purely symbolic to ensure that any behavioral effect is driven by non-material
benefits. Our results show that the award increases performance by about 12 percent on average. The results provide strong evidence for the motivating power of status and social recognition in labor relations. (JEL C93, J33, M12, M52)
Abstract
					Studies of organizational learning and forgetting identify potential channels through which the firm's production experience is lost. These channels have differing implications for efficient resource allocation within the firm, but their relative importance has been ignored to date. We develop a framework for distinguishing the contributions of labor turnover and human capital depreciation to organizational forgetting. We apply our framework to a novel dataset of ambulance companies and their workforce. We find evidence of organizational forgetting, which results from skill decay and turnover effects. The latter has twice the magnitude of the former. (JEL D23, D83, J24, J63)
Abstract
					We propose an axiomatic approach for equilibrium selection in the discounted, infinitely repeated symmetric Prisoner's Dilemma. Our
axioms characterize a unique selection criterion that is also useful as a tool for applied comparative statics exercises as it results in a critical discount factor δ* strictly larger than δ, the standard criterion that has often been used in applications. In an experimental test we find a strong predictive power of our proposed criterion. For parameter changes where the standard and our criterion predict differently, changes in observed cooperation follow predictions based on δ* . (JEL C72, C73, C92, D81)
Abstract
					This paper tests several predictions from the literature on firm reputation,
and confirms a main result: poor performance leads a firm to conceal its reputation. A residential plumbing firm with a record of complaints one standard deviation above the mean is 133.2 percent more likely to change its name. In addition, firms with longer track records are less likely to change their names or exit, while firms with
more firm-specific investments, such as advertising, are more likely to change their names than exit. In addition, firms in small markets value their reputations comparatively more than firms in large markets. (JEL L14, L25, L84)
Abstract
					We offer a theory of the sunk cost fallacy as an optimal response to limited memory. As new information arrives, a decision-maker may not remember all the reasons he began a project. The sunk cost gives additional information about future profits and informs subsequent decisions. The Concorde effect makes the investor more eager to complete projects when sunk costs are high and the pro-rata effect
makes the investor less eager. In a controlled experiment we had subjects play a simple version of the model. In a baseline treatment subjects exhibit the pro-rata bias. When we induce memory
constraints the effect reverses and the subjects exhibit the Concorde bias. (JEL D24, D83, G31)
Abstract
					Eye tracking is used to investigate the procedures that participants employ in choosing between two lotteries. Eye movement patterns in problems where the deliberation process is clearly identified are used to substantiate an interpretation of the results. The data provide little support for the hypothesis that decision makers rely exclusively upon an expected utility type of calculation. Instead eye patterns indicate that decision makers often compare prizes and probabilities separately. This is particularly true when the multiplication of sums and probabilities is laborious to compute. (JEL D81, D87)
Abstract
					This paper shows moral decision making is not well predicted by the overall fairness of an act but rather by the fairness of the consequences that follow directly. In laboratory experiments, third-party punishment for keeping money from a poorer player decreases when an intermediary actor is included in the transaction. This is true for completely passive intermediaries, even though intermediation decreases the payout of the poorest player and hurts equity, and because intermediation distances the transgressor from the outcome. A separate study shows rewards of charitable giving decrease when the saliency of an intermediary is increased. (JEL A13, D63, D64)
Abstract
					We develop a model of herds in which consumers observe only the aggregate purchase history, not the complete ordered history of search actions. We show that the purchasing information changes the conditions under which herds can occur for both low- and high-quality products. Inferior products are certain to be ignored; high
quality products may be ignored, but complete learning may also occur. We obtain closed form solutions for the probabilities of these events and conduct comparative statics. We test the model's predictions using data from an online music market created by Salganik, Dodds, and Watts (2006). (JEL D11, D12, L82)
Abstract
					Economists are increasingly interested in how group membership affects individual behavior. The standard method assigns individuals to "minimal" groups, i.e. arbitrary labels, in a lab. But real group often involve social interactions leading to social ties between group members. Our experiments compare randomly assigned minimal groups to randomly assigned groups involving real social interactions. While adding social ties leads to qualitatively similar, although
stronger, in-group favoritism in cooperation, altruistic norm enforcement
patterns are qualitatively different between treatments. Our findings contribute to the micro-foundation of theories of group preferences, and caution against generalizations from "minimal" groups to groups with social context. (JEL C92, D64, D71, Z13)
Abstract
					We model how student choices to rush a fraternity, and fraternity admission choices, interact with signals firms receive about student productivities to determine labor-market outcomes. The fraternity and students value wages and fraternity socializing values. We provide sufficient conditions under which, in equilibrium, most members have intermediate abilities: weak students apply, but are rejected unless they have high socializing values, while most able students do not apply to avoid taint from association with weaker members. (JEL C72, J24, J31, Z13)
Abstract
					People often see the same evidence but draw opposite conclusions, becoming polarized over time. More surprisingly, disagreements persist even when they are commonly known. We derive a model and present an experiment showing that opinions can diverge when one-dimensional opinions are formed from two-dimensional information. When subjects are given sufficient information to reach agreement, however, disagreement persists. Subjects discount information when it is filtered through the actions of others, but not when it is presented directly, indicating that common knowledge of disagreement may be the result of excessive skepticism about the decision-making skills of others. (JEL C92, D82, D83)
Abstract
					Film studios occasionally withhold movies from critics before their
release. These cold openings provide a natural setting to apply
laboratory-developed models of limited strategic thinking to the field. In a set of 1,303 widely released movies, cold opening is correlated with a 10-30 percent increase in domestic box-office revenue, and a pattern of fan disappointment, consistent with the hypothesis that some moviegoers do not infer low quality from cold opening. While selection and endogeneity may play a role in these regressions, the
full pattern of results is consistent with level-k and cognitive hierarchy
behavioral-game-theoretic models. (JEL D12, D82, L82, M37)
Abstract
					We consider a game where one player, the Announcer, has to communicate the value of a payoff relevant state of the world to a set of players who play a coordination game with multiple equilibria. While the Announcer and the players agree that coordination is desirable, since the payoffs of the players at the equilibria are unequal, they disagree as to which equilibrium is best. We demonstrate experimentally
that in such coordination games, in order to mask the asymmetry of equilibrium payoffs, it may be advantageous for a utilitarian benevolent Announcer to communicate in an ambiguous or vague manner. (JEL C71, D81, D83)
Abstract
					We reexamine the effects of the anchoring manipulation of Ariely, Loewenstein, and Prelec (2003) on the evaluation of common market goods and find very weak anchoring effects. We perform the same manipulation on the evaluation of binary lotteries, and find no anchoring effects at all. This suggests limits on the robustness of
anchoring effects. (JEL C91, D12, D44)
Abstract
					We investigate how the convexity of a firm's incentives interacts with worker overconfidence to affect sorting decisions and performance. We demonstrate, experimentally, that overconfident employees are more likely to sort into a nonlinear incentive scheme over a linear one, even though this reduces pay for many subjects and despite the presence of clear feedback. Additionally, the linear scheme attracts
demotivated, underconfident workers who perform below their ability. Our findings suggest that firms may design incentive schemes that adapt to the behavioral biases of employees to "sort in" ("sort away") attractive (unattractive) employees; such schemes may also reduce a firm's wage bill. (JEL D03, D83, J24, J31, M12)
Abstract
					This paper compares consumers' brand exploration when shopping online versus in a brick-and-mortar store. I use a new scanner dataset to compare the behavior of households shopping online and in-store at the same chain, for identical items and prices. I find that brand exploration is more prevalent in-store. My model quantifies the role of features of e-commerce, like the existence of "favorites lists" and the
difficulty in verifying item quality. Limited exploration online implies
higher barriers to entry on the Internet channel. Counterfactual exercises suggest that online advertising could make the Internet channel more competitive. (JEL D12, L11, L81, M31, M37)
Abstract
					We examine how the decisions of churches are impacted by the decisions of rival churches. Using a novel dataset, we estimate a model of strategic interaction, which accounts for the location and denomination of churches. We focus on a church's decision of whether to
provide a weekday child care program. Empirical evidence indicates that churches compete more strongly with same-denomination churches than with different-denomination churches. These effects diminish with distance. (JEL J13, L31, Z12)
Abstract
					In recent "learning to forecast" experiments (Hommes et al. 2005), three different patterns in aggregate price behavior have been observed: slow monotonic convergence, permanent oscillations, and dampened fluctuations. We show that a simple model of individual learning can explain these different aggregate outcomes within the same experimental setting. The key idea is evolutionary selection among heterogeneous expectation rules, driven by their relative performance. The out-of-sample predictive power of our switching
model is higher compared to the rational or other homogeneous expectations benchmarks. Our results show that heterogeneity in expectations is crucial to describe individual forecasting and aggregate price behavior. (JEL C53, C91, D83, D84, G12)
Abstract
					This paper explores methodological issues surrounding the use of discrete
choice experiments to elicit values for public goods. We develop an explicit game theoretic model of individual decisions, providing conditions under which surveys with a single binary choice question, or sequence of binary choice questions, are incentive-compatible. We complement the theory with a framed field experiment, with treatments that span the spectrum from incentive-compatible, financially
binding decisions to decisions with no direct financial consequences. The results suggest truthful preference revelation is possible, provided that participants view their decisions as having more than a weak chance of influencing policy. (JEL C83, C93, H41, Q23)
Abstract
					Set-asides and subsidies are used extensively in government procurement
and resource sales. We analyze these policies in an empirical
model of US Forest Service timber auctions. The model fits the data
well both within the sample of unrestricted sales used for estimation,
and when we predict (out-of-sample) outcomes for small business
set-asides. Our estimates suggest that restricting entry substantially
reduces efficiency and revenue, although it increases small business
participation. An alternative policy of subsidizing small bidders
would increase revenue and small bidder profit, with little efficiency
cost. We explain these findings by connecting to the theory of optimal
auction design. (JEL D44, H57, L73, Q23)
Abstract
					This paper studies a new strategic auditing game in which atomistic
auditors maximize the success rate of audits, and provides a method
to calibrate its parameters based on audit data. Calibrating the
model to Italian auditing data, we provide an estimate of tax evasion
based on (non-random) audit data alone. Counterfactual simulation
of the model quantifies the costs and benefits of alternative auditing
policies. We compare decentralized enforcement with a counterfactual
"commitment policy," and compute the loss from the former.
(JEL H25, H26, M42)
Abstract
					We propose a method to structurally estimate the deterministic component of bidder valuations in FCC spectrum auctions, and apply it to the 1995-1996 C block auction. We base estimation on a pairwise stability condition: two bidders cannot exchange two licenses in a way that increases the sum of their valuations. Pairwise stability holds in some theoretical models of simultaneous ascending auctions under intimidatory collusion and demand reduction. Pairwise stability results in a matching game approach to estimation. We find that a system of four large regional licenses would raise the allocative efficiency of the C block outcome by 48 percent. (JEL D44, D45, H82, L82)
Abstract
					Firms engage in foggy pricing when the menu of tariff options aims
at profiting from consumer mistakes. The analysis of this paper
concludes that the transition from monopoly to competition in the
early US cellular telephone industry does not generally foster the
use of such deceptive strategies. I offer three alternative measures
to account for the fogginess of the menu of options offered by cellular
carriers. All results are robust to the existence of uncertainty
regarding future consumption at the time of choosing a particular
tariff option, as well as to consumers' heterogeneity with respect to
cellular telephone usage. (JEL D03, L11, L12, L13, L96)
Abstract
					This paper analyzes how preferences for a noneconomic characteristic
(e.g., caste) can affect equilibrium patterns of matching,
and empirically evaluates this in the context of middle-class Indian
arranged marriages. We show theoretically how the equilibrium consequences of caste depend on whether preferences are towards one's own group or for "marrying up." We then estimate actual preferences for caste and other attributes using a unique dataset of individuals who placed matrimonial advertisements and find only a strong preference for in-caste marriage. This translates, in equilibrium, in caste doing little to alter the matching patterns on non-caste attributes. (JEL C78, J12, O15, O17, Z13)
Abstract
					We develop a method for identifying departures from relative factor
price equality that is robust to unobserved variation in factor productivity. We implement this method using data on the relative wage bills of nonproduction and production workers across 170 local
labor markets comprising the continental United States for 1972,
1992, and 2007. We find evidence of statistically significant differences
in relative wages in all three years. These differences increase
in magnitude over time and are related to industry structure in a
manner that is consistent with neoclassical models of production.
(JEL J31, J61, R23)
Abstract
					Learning by exporting refers to the mechanism whereby a firm's
performance improves after entering export markets. This mechanism is often mentioned in policy documents, but many econometric studies have not found corroborating evidence. I show that
the econometric methods rely on an assumption that productivity
evolves exogenously. I show how to accommodate endogenous productivity processes such as learning by exporting. I discuss the bias
introduced by ignoring such a process, and show that adjusting for
it can lead to different conclusions. Using micro data from Slovenia I find evidence of substantial productivity gains from entering
export markets.
Abstract
					We point out a fundamental difficulty of successfully colluding
in retail markets with heterogeneous firms, and characterize the
mechanism recent gasoline cartels in Canada used to sustain collusion. Heterogeneity in cost and network size necessitates arrangements whereby participants split the market unequally to favor stronger players. We characterize empirically the strategy and transfer mechanism using court documents containing summaries and extracts of conversations between participants. The mechanism implements transfers based on adjustment delays during price changes. We estimate that these delays can translate into substantial transfers and provide examples in which they can substantially reduce deviation frequency.
Abstract
					This paper experimentally tests the predictions of a principal-agent
model in which the agent has biased beliefs about his ability. Overconfident workers are found to earn lower wages than underconfident ones because they overestimate their expected payoff, and
principals adjust their offers accordingly. Moreover, the profit-maximizing contract distorts effort by varying incentives according to self-confidence, although only the most successful principals
use this strategy. These findings have implications for the labor
market; in particular, self-confidence is often correlated with gender, implying that principals would prefer to hire men over women
simply because they are more overconfident.
Abstract
					In the population of over 1.7 million Texan sales-tax collecting 
business establishments, we show that greater distance to owner
headquarters is associated with shorter establishment longevity.
For the lodging industry, where we have revenue data, increases in
distance to headquarters due to HQ-moving owners or acquisitions
are associated with reductions in revenues per room. We argue that
this detrimental distance effect is robust and causal, arising even
when we control for the potential endogeneity of HQ distance using
instrumental variable and matched pair analyses. We interpret this
as evidence of monitoring and local information asymmetry
problems for distant owners.
Abstract
					Incomplete product availability is an important feature of many
markets, and ignoring changes in availability may bias demand
estimates. We study a new dataset from a wireless inventory system
on vending machines to track product availability every four
hours. The data allow us to account for product availability when
estimating demand, and provide valuable variation for identifying
substitution patterns when products stock out. We develop a
procedure that allows for changes in product availability when
availability is only observed periodically. We find significant
differences in demand estimates: the corrected model predicts
significantly larger impacts of stock-out events on profitability.
Abstract
					The proposed 2008 TARP auction was intended to remove "toxic"
assets from portfolios of financially stressed banks. The Treasury
selected a design whereby bids to sell different securities would
be normalized by "reference prices" that reflect relative value
estimates. We conduct a series of experiments indicating that a simple
Reference Price Auction can be an effective mechanism for avoiding
serious effects of adverse selection and strategic bid manipulation,
even with inaccurate reference prices. Beyond the TARP auction,
our results are relevant to various multi-object auctions with value
heterogeneity.
Abstract
					This paper presents a game theoretic analysis of the generalized
second-price auction that the company Overture operated in 2004
to sell sponsored search listings on search engines. We construct a
model that embodies few prior assumptions about parameters, and
we present results that indicate that this model has under quite general
assumptions a multiplicity of Nash equilibria. We then analyze
bid data assuming that advertisers choose Nash equilibrium bids. We
offer preliminary conclusions about advertisers' true willingness to
bid for sponsored search listings. We find that advertisers' true willingness
to bid is multi-dimensional and decreasing in listing position.
Abstract
					Previous research has suggested that codeshare agreements
eliminate double marginalization that exists when unaffiliated
airlines independently determine the price for different segments
of an interline trip. Using a structural econometric model, this
paper investigates whether codeshare contracts do eliminate
double marginalization. The results suggest that both upstream
and downstream margins persist when the operating carrier of a
codeshare product also offers competing single-carrier product(s) in
the concerned market. Furthermore, counterfactual simulations from
the model suggest that efficient pricing of these codeshare products
would lower their price, and yield nontrivial increases in consumer
welfare.
Abstract
					We provide a novel experimental auction design, in which (i) an exogenous decrease in the probability of winning, conditional on the
bid, reduces the optimal bid of a loss averse agent whose reference point is expectations based; (ii) observed bid distributions uniquely
identify the participants' latent value distribution and loss-aversion parameter. Experimental evidence affirms the presence of such
reference points. We show that at the estimated magnitudes of loss aversion, (a) conventional Becker, DeGroot, and Marschak (1964)
experiments may lead to large biases in estimated willingness to pay (which our design can correct for); and (b) first-price auctions
may fetch moderately higher revenue, compared with second-price auctions.
Abstract
					We experimentally investigate the Jackson and Moselle (2002) model where legislators bargain over policy proposals and the allocation of
private goods. Key comparative static predictions of the model hold with the introduction of private goods, including "strange bedfellow"
coalitions. Private goods help to secure legislative compromise and increase the likelihood of proposals passing, an outcome not
predicted by the theory but a staple of the applied political economy literature. Coalition formation is better characterized by an "efficient
equal split" between coalition partners than the subgame perfect equilibrium prediction, which has implications for stable political party formation.
Abstract
					What institutions can sustain cooperation in groups of strangers?  Here we study the role of monetary systems. In an experiment, subjects sometimes needed help and sometimes could incur a cost to help an anonymous counterpart. In the absence of money, the intertemporal exchange of help, which could be supported by a norm of community punishment of defectors, did not emerge. Introducing
intrinsically worthless tokens substantially altered patterns of behavior. Monetary trade emerged, which increased predictability of play and promoted cooperation when strangers could trade help for a token.
Abstract
					Vendettas occur in many real-world settings where rivals compete
for a prize, e.g., winning a competitive promotion or retaining a job,
by engaging in aggressive, retaliatory behavior. We present a benchmark experiment where two players have an initial probability of
winning a prize. Retaliatory vendettas occur and lead subjects to
the worst possible outcomes in 2/3 of cases, counter to self-interest
predictions, with large inefficiencies even in the absence of any
immediate gain from aggression. Negative emotions are important
and interact with the economic setting to produce large social inefficiencies. Allowing cooling off periods reduces aggression.
Abstract
					We study the effect of communication in an experimental game where
cooperation is consistent with equilibrium play if players share
an understanding that cheating will be punished. Consistent with
communication acting as a coordinating device, credible preplay
threats to punish cheating are the most effective message to facilitate
collusion. Promises to collude also improve cooperation. Credible
threats do not occur in a treatment with a limited message space
that permits threats of punishment. Contrary to some theoretical
predictions, renegotiation possibilities facilitate collusion.
Abstract
					This paper studies the dynamics by which populations with heterogeneous preferences for public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions best facilitate efficient self-organization when residents can move freely between locations. I find that institutions requiring all residents of a community to pay equal taxes enable subjects to sort into stable, homogeneous communities. Though sorted, residents often fail to attain the provision level best suited for them. When residents can vote for local tax policies with ballots, along with their feet, each community converges to the most efficient outcome for its population.
Abstract
					We provide the second mover in a trust game and a moonlighting game with an excuse for not reciprocating. While this type of manipulation has been shown to strongly reduce giving in the dictator game, we find that the availability of the excuse has no effect on the incidence of reciprocal behavior in these games. Our results cast doubt on the generalizability of previous dictator game findings and suggest that image concerns are not a key driver of reciprocal behavior.
Abstract
					This study examines mergers in two-sided markets using a structural supply-and-demand model that employs data from the 1996-2006 merger wave in the U.S. radio industry. In particular, it identities the conflicting incentives for merged firms to exercise market power on both listener and advertiser sides of the market, and disaggregates the effects of mergers into changes in product variety and advertising quantity. Specifically, it finds 0.2% listener
welfare increase (+0.3% from increased product variety, and -0.1% from decreased ad quantity) and 21% advertiser welfare decrease (-17% from changes in product variety, and -5%
from decreased ad quantity).
Abstract
					Airline capacity utilization increased dramatically between 1993 and
2007, after staying fairly level following deregulation. We argue that
consumers' use of the Internet to investigate and purchase airline
tickets reduces market frictions and allows airlines to meet demand
with less capacity and higher load factors. We find that differences
in the rate of change of metropolitan area Internet penetration are
positively correlated with differences in the rate of change of airlines' airport-pair load factors. Consistent with our explanation, this correlation is greater on flights in more competitive markets and on flights with fewer total passengers.
Abstract
					We document individuals' willingness to pay to control their own
payoff. Experiment participants choose whether to bet on themselves or on a partner answering a quiz question correctly. Given participants' beliefs, which we elicit separately, expected-money maximizers would bet on themselves in 56.4 percent of the decisions. However, participants actually bet on themselves in 64.9 percent of their opportunities, reflecting an aggregate control premium. The average participant is willing to sacrifice 8 percent to 15 percent of expected asset-earnings to retain control. Thus, agents may incur costs to avoid delegating and studies inferring beliefs from choices may overestimate their results on overconfidence.
Abstract
					In several common-value environments (e.g., auctions or elections), players should make informational inferences from opponents' strategies under certain hypothetical events (e.g., winning the auction or being pivotal). We design a voting experiment that identifies whether subjects make these inferences and distinguishes between hypothetical thinking and information extraction. Depending on feedback, between 50 and 80 percent of subjects behave non-optimally. More importantly, these mistakes are driven by difficulty in extracting information from hypothetical, but not from actual, events. Mistakes are robust to experience and hints, and also arise in more general settings where players have no private information.
Abstract
					We study optimal contracting in team settings where agents have
many opportunities to shirk, task-level monitoring is needed to provide useful incentives, and it is difficult to write individual performance into formal contracts. Incentives are provided informally, using wasteful sanctions like guilt and shame, or slowed promotion. These features give rise to optimal contracts with under performance, forgiving sanctioning schemes, and endogenous supervision structures. Agents optimally take on more assigned tasks than they intend to complete, leading to the concentration of supervisory responsibility in the hands of one or two agents.
Abstract
					Horizontal mergers have a large impact by inducing a long-lasting
change in market structure. Only in an industry with substantial
entry barriers is a merger not immediately counteracted by post-merger entry. To evaluate the duration of the effects of a merger, I use the model of Abbring and Campbell (2010) to estimate demand thresholds for entry and for exit. These thresholds, along with the process for demand, are estimated using data from the ready-mix concrete industry. Simulations predict that a merger from duopoly to monopoly generates between 9 and 10 years of monopoly in the market.
Abstract
					Sharp nonparametric bounds are derived for counterfactual demands and Hicksian compensating and equivalent variations. These "i-bounds" refine and extend earlier results of Blundell, Browning, and Crawford (2008). We show that their bounds are sharp under the Weak Axiom of Revealed Preference (WARP) since they do not require transitivity. The new bounds are sharp under the Strong Axiom of Revealed Preference (SARP). By requiring transitivity they can be used to bound welfare measures. The new bounds on welfare measures are shown to be operationalized through algorithms that are easy to implement. (JEL D04, D11)
Abstract
					Disclosure programs exist in many industries in which consumers are poorly informed about product quality. We study a disclosure program for airline on-time performance, which ranks airlines based on the fraction of their flights that arrive less than 15 minutes late. The program creates incentives for airlines to focus their efforts on flights close to this threshold. We find that firms in this industry are heterogeneous in how they respond to these incentives. Moreover, this heterogeneity correlates with internal firm characteristics. Our findings highlight the importance of interactions between incentives created by a disclosure program and firms' internal organizational practices. (JEL D22, L15, L25, L93)
Abstract
					This paper reports on two experiments that test the descriptive validity of ambiguity models using a natural source of uncertainty (the evolution of stock indices) and both gains and losses. We observed violations of probabilistic sophistication, violations that imply a fourfold pattern of ambiguity attitudes: ambiguity aversion for likely gains and unlikely losses and ambiguity seeking for unlikely gains and likely losses. Our data are most consistent with prospect theory and, to a lesser extent, α-maxmin expected utility and Choquet expected utility. Models with uniform ambiguity attitudes are inconsistent with most of the observed behavioral patterns. (JEL D81, D83, G11, G12, G14)
Abstract
					We analyze a consumer-choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between two sandwiches. Participants differ in their reported taste for the two sandwiches and in their degree of loss aversion, which we measure separately. We find that more-loss-averse participants are more likely to opt for the cheaper sandwich, in line with theoretical predictions. The estimates in the model with rational expectations are slightly more significant than those with naïve expectations. (JEL D11, D12, D84, M31)
Abstract
					We study the effects of mergers in timber sale auctions in Oregon. We propose an entry and bidding model within the affiliated private value (APV) framework and with heterogeneous bidders, and establish existence of the entry equilibrium and existence and uniqueness of the bidding equilibrium when the joint distribution of private values belongs to the class of Archimedean copulas. We estimate the resulting structural model, and study merger effects through counterfactual analyses using the structural estimates. We evaluate how merger effects depend on affiliation, entry, and the auction mechanism and find that the seller may benefit from some mergers. (JEL C57, D44, G34, L11, L73)
Abstract
					We use data from eBay to identify hundreds of thousands of instances in which retailers posted otherwise identical product listings with targeted variation in pricing and auction design. We use these matched listings to measure the dispersion in auction prices for identical goods sold by the same seller, to estimate nonparametric auction demand curves, to analyze the effect of buy it now options, and to assess consumer sensitivity to shipping fees. The scale of the data allows us to show that the estimates are robust to narrower criteria for matching listings, thereby addressing plausible concerns about endogeneity and selection biases. (JEL D44, L11, L81)
Abstract
					We study users' responses to sponsored-search advertising using consumer-level data from Microsoft Live. We document that users click ads in a nonsequential order and that the click through rates depend on the identity of competing ads. We estimate a dynamic model of utility-maximizing users that rationalizes these two facts and find that 51 percent more clicks would occur if ads faced no competition. We demonstrate that optimal matching of advertisements to positions raises welfare by 27 percent, and that individual-level targeting raises welfare by 69 percent. Revealing the quality of the advertiser prior to clicking on a sponsored link raises welfare by 1.6 percent. (JEL D12, L86, M37)
Abstract
					We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the "price grid," or the possible amounts that bidders can bid above the current standing price. Using two diverse auction sites, one in New York and one in Texas, we find that buyer and seller behavior differs strikingly across the two sites. Specifically, in Texas we find peculiar patterns of bidding among a small but prominent group of buyers suggesting that they are "cyber-shills" working on behalf of sellers. These patterns do not appear in the New York auctions. (JEL C93, D12, D44, L62, L81)
Abstract
					Empirical evidence on peer intermediation lags behind both theory and practice in which lenders use peers to mitigate adverse selection and moral hazard. Using a referral incentive under individual liability, we develop a two-stage field experiment that permits separate identification of peer screening and enforcement. Our key contribution is to allow for borrower heterogeneity in both ex ante repayment type and ex post susceptibility to social pressure. Our method allows identification of selection on repayment likelihood, selection on susceptibility to social pressure, and loan enforcement. Implementing our method in South Africa we find no evidence of screening but large enforcement effects. (JEL D14, D82, G21, O12, O16)
Abstract
					We explore conditions under which trade agreements can provide gains by reducing trade policy uncertainty. Given the degree of income risk aversion, this is more likely when economies are more open, export supply elasticities are lower, and economies more specialized. Governments have stronger incentives to sign trade agreements when the trading environment is more uncertain. As exogenous trade costs decline, the gains from reducing tariff uncertainty become more important relative to reducing average tariff levels. We also develop a simple "sufficient statistic" approach to quantify the gains from managing trade policy uncertainty, and examine the impact of ex ante investments on such gains. (JEL D81, F13)
Abstract
					Quality certification programs help consumers identify high-quality products or sellers in markets with information asymmetries. Using data from eBay UK's online marketplace, we study how certification's impact on demand varies with market- and seller- level attributes, exploiting variation in sellers' certification status within groups of near-identical listings. The positive effects of eBay's "top rated seller" certification are stronger for categories with few other certified sellers, in more competitive markets, and for sellers with shorter records of past performance. These findings indicate certification provides more value when certification is rare, the product space is crowded, and for sellers lacking established reputations. (JEL D12, D82, L15, L86)
Abstract
					We introduce an internal geography to the canonical model of international trade driven by comparative advantages to study the regional effects of external economic integration. The model features a dual-economy structure, in which locations near international gates specialize in export-oriented sectors while more distant locations do not trade with the rest of the world. The theory rationalizes patterns of specialization, employment, and relative incomes observed in developing countries that opened up to trade. We find regional specialization patterns consistent with the model in industry-level data from Chinese prefectures. (JEL F11, O18, P23, P25, P33, R12, R32)
Abstract
					This paper uses a Bayesian information processing task to compare belief elicitation mechanisms including a quadratic scoring rule, a Becker-DeGroot-Marschak pricing procedure, and a two-stage menu of lottery choices that is structured to identify a precise point of probability indifference. The choice menu yields a higher incidence of correct Bayesian responses and lower belief error averages. Unlike the quadratic scoring rule, the binary payoffs for the lottery choice mechanism are synchronized to provide theoretical incentive-compatibility regardless of risk attitudes. In addition, the choice menu structure is more transparent and intuitive than the Becker-DeGroot-Marschak procedure. (JEL C91, D44, D81, D83)
Abstract
					Crises, such as revolutions and currency attacks, rarely occur; but when they do they typically arrive in waves. The rarity of crises is an important contagion mechanism in a multiple-country dynamic global game model. When players are uncertain about the true model of the world, observing a rare success elsewhere can substantially change their expectations concerning the payoffs from attacking or defending the regime. Such dramatic revisions in beliefs, amplified by strategic complementarity in actions, may lead to a series of attacks in other countries. The crisis period can be long-lasting, but will eventually come to an end. (JEL D74, D83, F33, G01)
Abstract
					Local television stations are platforms in a two-sided market connecting advertisers and viewers. This paper explicitly examines the effect that important intermediaries (such as cable, telephone, and satellite distributors) may have on a platform's pricing behavior in a two-sided market. I find that stations raise their fees to cable distributors because stations prefer that viewers access their content through satellite distributors with whom they do not compete in the local advertising market, and that station mergers lower stations' fees to distributors by partially internalizing a pricing externality that results from the mandatory bundling of local content. (JEL C78, D12, G34, L11, L82, M37)
Abstract
					We study entry and bidding in procurement auctions where
contracts are awarded to the bid closest to a trimmed average bid.
These auctions, common in public procurement, create incentives
to coordinate bids to manipulate the bid distribution. We present
statistical tests to detect coordinated entry and bidding choices. The
tests perform well in a validation dataset where a court case makes
coordination observable. We use the tests to detect coordination in a
larger dataset where it is suspected, but not known. The results are
used to interpret a major market shakeout following a switch to first
price auctions. (JEL D44, D47, H57, R42)
Abstract
					Through a series of decision tasks involving colored cards, we provide
separate measures of Bayesian updating and non-probabilistic
reasoning skills. We apply these measures to (and are the first to
study) a common-value Dutch auction. This format is more salient
than the strategically equivalent first-price auction and silent Dutch
formats in hinting that one should condition one's estimate of the
value on having the highest bid. Both Bayesian updating skills and
non-probabilistic reasoning skills are shown to help subjects correct
for the winner's curse, as does the saliency of the active-clock Dutch
format. (JEL D12, D44, D83)
Abstract
					I derive a novel solution for the general equilibrium effects of tariffs
that is robust to heterogeneity across industries and countries, and
is a function of only aggregate trade data and country-by-industry
Pareto shape parameters. Using the model to evaluate tariff shocks,
I show that while most countries lose by removing observed tariffs
unilaterally, India, Japan, Korea, and the United States gain by
doing so, which suggests inefficient tariff discrimination. In evaluating
multilateral shocks, observed tariff cuts over 1994–2000 benefit
69 percent of countries, with these benefits skewed toward developing
nations. In contrast, removing all post-2000 tariffs benefit the
developed. (JEL F12, F13, F14)
Abstract
					This paper identifies a new reason for giving preferences to the disadvantaged
using a model of contests. There are two forces at work:
the effort effect working against giving preferences and the selection
effect working in favor of them. When education is costly and easy to
obtain (as in the United States), the selection effect dominates. When
education is heavily subsidized and limited in supply (as in India),
preferences are welfare reducing. The model also shows that unequal
treatment of identical agents can be welfare improving, providing
insights into when the counterintuitive policy of rationing educational
access to some subgroups is welfare improving. (JEL H52,
H75, I23, I28, J15, O15)
Abstract
					In finitely repeated prisoner dilemma games, two-person teams start
with significantly less cooperation than individuals, consistent with
results from the psychology literature. This quickly gives way to teams
cooperating more than individuals. Team dialogues show increased
payoffs from cooperation, along with anticipating opponents’
recognition of the same, provides the basis for cooperation, even
while fully anticipating defection near the end game. A strong
status quo bias in defecting across super-games limits unraveling.
Defecting typically occurs one round earlier across super-games,
consistent with low marginal, or even negative, benefits of more than
one-step-ahead defection. (JEL C72, C73, C90, D12)
Abstract
					We estimate the value of competition in United States Forest Service (USFS) timber auctions, in the context of the Reagan administration's bailout of firms that faced substantial losses on existing contracts. We use a model with endogenous entry by asymmetric firms, allowing survivors to respond to the exit of bailed-out firms by entering more auctions and for these marginal entrants to have lower values than firms that would choose to enter in any event, a selective entry effect. Observed asymmetries and selective entry contribute to us finding that the bailout may have increased USFS revenues in subsequent auctions quite substantially.
Abstract
					We exploit Japan's mid-nineteenth century transition from autarky to open trade to test Alan Deardorff's (1982) seminal and parsimonious autarky price formulation of the Heckscher-Ohlin theorem. Factor price data from Japan's late autarky period impose a refutable restriction on Japan's factor content of trade. Our data are constructed from many historical sources, including a major Japanese survey of agricultural techniques and a rich set of nineteenth century comparative cost studies. Evaluating Japan's factor content of trade during 1865-1876 under alternative theoretical assumptions about technology, we provide robust evidence in favor of the Heckscher-Ohlin hypothesis.
Abstract
					I study a multilateral bargaining game in which committee members invest in a common project prior to redistributing the total value of production. The game corresponds to a Baron and Ferejohn (1989) legislative bargaining model preceded by a production stage that is similar to a voluntary contribution mechanism. In this game, contributions reach almost full efficiency in a random rematching experimental design. Bargaining outcomes tend to follow an equity standard of proportionality: higher contributors obtain higher shares. Unlike other bargaining experiments with an exogenous fund, allocations involving payments to all members are modal instead of minimum winning coalitions, and proposer power is quite low.
Abstract
					We report the results of an experiment that investigates free riding in the accumulation of durable public goods. We consider economies with reversibility, where contributions can be positive or negative; and economies with irreversibility, where contributions are nonnegative. Aggregate outcomes support the qualitative predictions of the Markov Perfect Equilibria (MPE) characterized in Battaglini, Nunnari, and Palfrey (2014): steady state levels of public good are lower with reversibility than irreversibility; accumulation is inefficiently slow; and the public good is under-provided in both regimes. On the other hand, public good levels are higher than MPE, and some evidence of history dependence is detected.
Abstract
					Case-based decision theory (CBDT) provided a new way of revealing preferences, with decisions under uncertainty determined by similarities with cases in memory. This paper introduces a method to measure CBDT that requires no commitment to parametric families and that relates directly to decisions. Thus, CBDT becomes directly observable and can be used in prescriptive applications. Two experiments on real estate investments demonstrate the feasibility of our method. Our implementation of real incentives not only avoids the income effect, but also avoids interactions between different memories. We confirm CBDT's predictions except for one violation of separability of cases in memory.
Abstract
					We study one-sided matching when groups with n > 2 members are being formed. Type-complementarity rules out all but the rank-ordered grouping. Type-substitutability (for example, matching to share risk) rules out much less. It requires that every two groups must be "intertwined," in that each dominates the other at some rank. Intertwined matching is necessary and, in one context, sufficient for any grouping to be a potential equilibrium. But there are many intertwined matching patterns when n > 2. Thus, substitutability can be observationally similar to complementarity; we demonstrate this by showing that dyadic regressions can register intertwined (negative assortative) matching as homogeneous matching.
Abstract
					To mitigate adverse selection in insurance markets, individuals are often mandated to buy at least a baseline plan, but may choose to opt into a premium plan. In some markets, such as US health exchanges, each plan is responsible for the full expenses of those who buy it ("total pricing"). In other markets, such as the privately supplied "Medigap" top-ups to traditional government-provided Medicare, premium providers are only responsible for the incremental expenses they top up ("incremental pricing"). For parameter values calibrated to health exchanges, the shift from total to incremental pricing reduces the welfare loss from adverse selection by an order of magnitude.
Abstract
					To handle various applications, we study matching under constraints. The only requirement on the constraints is heredity; given a feasible matching, any matching with fewer students at each school is also feasible. Heredity subsumes existing constraints such as regional maximum quotas and diversity constraints. With constraints, there may not exist a matching that satisfies fairness and nonwastefulness (i.e., stability). We demonstrate our new mechanism, the Adaptive Deferred Acceptance mechanism (ADA), satisfies strategy-proofness for students, nonwastefulness, and a weaker fairness property. We also offer a technique to apply ADA even if heredity is violated (e.g., minimum quotas).
Abstract
					This paper considers a matching market with two-sided search and transferable utility where match payoffs depend on age at marriage (time until match) and search is finite. We define and prove existence of equilibrium, and provide sufficient conditions for positive assortative matching that build on restricting the slope and curvature of the marriage payoff function to generate single-peaked preferences in age and therefore convex matching sets. Payoff functions that are incompatible with positive sorting by age include all strictly increasing functions and constant flow payoffs enjoyed for some finite period.
Abstract
					We study multiple-unit, laboratory experimental call markets in which orders are cleared by a single price at a scheduled "call." The markets are independent trading "days" with two calls each day preceded by a continuous and public order flow. Markets approach the competitive equilibrium over time. The price formation dynamics operate through the flow of bids and asks configured as the "jaws" of the order book with contract execution featuring elements of an underlying mathematical principle, the Newton-Raphson method for solving systems of equations. Both excess demand and its slope play a systematic role in call market price discovery.
Abstract
					Spatial election literature attributes voters' political differences to irreconcilable conflicts of interest. Alternatively, voters may merely hold differing beliefs regarding which policies best promote the public interest, as in the classic common-value model of Condorcet (1785). This paper shows how a spatial version of the common-value model explains empirical patterns of public opinion, ideology, electoral margins, and participation that are puzzling from the standard perspective, suggesting that voters may implicitly view politics as a contest between truth and error. If so, this has important consequences for political analysis.
Abstract
					We propose a model of flexible trade agreements in which verifying the prevailing contingencies is possible but costly. Two types of flexibility emerge: contingent protection, which requires governments to verify the state of the world, and discretionary protection, which allows governments to set tariffs unilaterally. The structure of the GATT/WTO agreement provides these two types of flexibility through a mechanism that we call Cap and Escape. Governments may choose tariffs unilaterally below the negotiated cap, but escaping from the cap requires state verification. We show that this framework explains key features of the GATT/WTO agreements, including the substantial variation across sectors and countries in the level of negotiated tariffs, and the rate at which different flexibility measures are used.
Abstract
					We present results from a randomized study of a well-defined use of
computers in schools, a popular instructional computer program for
pre-algebra and algebra. We primarily assess the program using a
test designed to target pre-algebra and algebra skills. Students randomly
assigned to computer-aided instruction score significantly
higher on a pre-algebra and algebra test than students randomly
assigned to traditional instruction. We hypothesize that this effectiveness
arises from increased individualized instruction as the effects
appear larger for students in larger classes and in classes with high
student absentee rates. (JEL H75, I21)
Abstract
					We investigate the impact of a large-scale Mexican program to
replace dirt floors with cement floors on child health and adult happiness.
We find that replacing dirt floors with cement significantly
improves the health of young children measured by decreases in the
incidence of parasitic infestations, diarrhea, and the prevalence of
anemia, and an improvement in children's cognitive development.
Additionally, we find significant improvements in adult welfare measured
by increased satisfaction with their housing and quality of life,
as well as by lower scores on depression and perceived stress scales.
(JEL I12, I31, J13, O15)
Abstract
					A low carbon fuel standard (LCFS) seeks to reduce greenhouse gas
emissions by limiting the carbon intensity of fuels. We show this
decreases high carbon fuel production but increases low carbon fuel
production, possibly increasing net carbon emissions. The LCFS
cannot be efficient, and the best LCFS may be nonbinding. We simulate
a national LCFS on gasoline and ethanol. For a broad parameter
range, emissions decrease, energy prices increase, abatement
costs are large ($80 - $760 billion annually), and average abatement
costs are large ($307 - $2,272 per CO2 metric ton). A cost effective
policy has much lower average abatement costs ($60 - $868). (JEL
Q54, Q58)
Abstract
					In this paper, I develop an empirical framework for the analysis
of large-scale policies, and apply it to study the effects of school
finance reform on the Detroit metropolitan area. Exploiting school
finance reform in Michigan in 1994, I estimate a general equilibrium
model of multiple jurisdictions with 1990 data from Detroit, predict
the 2000 equilibrium, and compare this prediction with 2000 data to
validate the model. I conduct counterfactual simulations using the
estimates. According to my analysis, feasible revenue-based reforms
that ensure spending equity or adequacy have little impact on school
quality or household demographics in Detroit. (JEL H75, I22)
Abstract
					Do firms investing abroad simultaneously reduce their domestic
activity? This paper analyzes the relationship between the domestic
and foreign operations of US manufacturing firms between 1982 and
2004 by instrumenting for changes in foreign operations with GDP
growth rates of the foreign countries in which they invest. Estimates
produced using this instrument indicate that 10 percent greater
foreign investment is associated with 2.6 percent greater domestic
investment, and 10 percent greater foreign employee compensation
is associated with 3.7 percent greater domestic employee compensation.
These results do not support the popular notion that expansions
abroad reduce a firm's domestic activity, instead suggesting
the opposite. (JEL F23, H25, L25)
Abstract
					We examine the effects of presentation and information on the take-up
of financial subsidies for retirement saving in a large randomized
experiment carried out with H&R Block. The subsidies raise take-up
and contributions with larger effects when the subsidy is characterized
as a matching contribution rather than an equivalent-value tax
credit (or cash back), and when filers are informed before the tax
season about the subsidy. The results imply that both pure incentives
and the presentation of those incentives affect consumer choices.
(JEL D14, H24, H31, J26)
Abstract
					If voters have negligible cognition costs, ballot layout should not
affect election outcomes. We explore deviations from rational voting
using quasi-random variation in candidate name placement on
ballots from the 2003 California recall election. We find that minor
candidates' vote shares almost double when their names are adjacent
to the names of major candidates. All else equal, vote share gains
are larger in precincts with higher percentages of poorly educated,
poor, or third-party voters. A major candidate that disproportionally
attracts voters from such precincts faces an electoral disadvantage.
We also explore which voting technology platforms and brands mitigate
misvoting. (JEL D72)
Abstract
					We study alumni contributions to an anonymous research university.
If alumni believe donations will increase the likelihood of their
child's admission, and if this belief helps motivate their giving, then
the pattern of giving should vary systematically with the ages of their
children, whether the children ultimately apply to the university, and
the admissions outcome. We call this pattern the child cycle of alumni
giving. The evidence is consistent with the child-cycle pattern. Thus,
while altruism drives some giving, the hope for a reciprocal benefit
also plays a role. We compute rough estimates of the proportion of
giving due to selfish motives. (JEL D91, D64, I21)
Abstract
					This study assesses the impact of an increase in funding for public
community colleges on the market for two-year college education,
considering both the effect on community college enrollments and
on the number of proprietary schools in a market. I draw on a new
administrative dataset of for-profit colleges in California and votes
on local community college bond referenda to implement a unique
regression discontinuity design. The results suggest that bond passage
diverts students from the private to the public sector and causes
a corresponding decline in the number of proprietary schools in the
market. (JEL H75, I22, I23)
Abstract
					Data on memory modules sales are used to explore aspects of e-retail
demand. Aggregate sales are examined in state-level regressions.
Discrete choice techniques are used to examine (incomplete) hourly
sales data from a price comparison site. We find a strong relationship
between e-retail sales to a given state and sales tax rates that apply
to purchases from offline retailers, suggesting substantial online-offline
substitution and the importance of tax avoidance motives.
Geography matters in two ways: consumers prefer purchasing from
firms in nearby states and appear to have a separate preference for
buying from in-state firms. (JEL D12, H25, H71, L81)
Abstract
					Environmental regulation of industrial pollution is often incomplete;
regulations apply to only a subset of facilities contributing to a
pollution problem. Policymakers are increasingly concerned about
the emissions leakage that may occur if unregulated production can
be easily substituted for regulated production. This paper analyzes
emissions leakage in an incompletely regulated and imperfectly
competitive industry. The analytical model is used to simulate outcomes
under incomplete, market-based regulation of carbon dioxide
emissions in California's electricity sector. Regulation that exempts
out-of-state producers achieves approximately one-third of the total
emissions reductions achieved under complete regulation at more
than twice the cost per ton. (JEL L94, Q53, Q58)
Abstract
					Exploiting a rich dataset of passenger vehicle registrations in 20 US
MSAs from 1997 to 2005, we examine the effects of gasoline prices
on the automotive fleet's composition. We find that high gasoline
prices affect fleet fuel economy through two channels: shifting new
auto purchases towards more fuel-efficient vehicles, and speeding
the scrappage of older, less fuel-efficient used vehicles. Policy simulations
suggest that a 10 percent increase in gasoline prices from
2005 levels will generate a 0.22 percent increase in fleet fuel economy
in the short run and a 2.04 percent increase in the long run.
(JEL H25, L11, L69, L71)
Abstract
					Simeon Djankov et al. (2003) introduce a measure of the quality
of contract enforcement -- the formalism of civil procedure -- for 109
countries as of 2000. For 40 of these countries, we compute procedural
formalism every year since 1950. We find that large differences
in procedural formalism between common and civil law countries
existed in 1950 and widened by 2000. For this area of law, the findings
are inconsistent with the hypothesis that national legal systems
are converging, and support the view that legal origins exert long
lasting influence on legal rules. (JEL K41, O17)
Abstract
					Using data from the Continuing Survey of Food Intake by Individuals,
this paper describes the shape of consumption profiles over the
month for Social Security benefit recipients that have saved different
amounts for retirement. Individuals with income mostly made up of
Social Security and savings smooth consumption over the pay period,
while individuals without savings consume 25 percent fewer calories
the week before they receive checks relative to the week afterwards.
The findings for individuals without savings, who comprise about a
fourth of our sample, are inconsistent with the standard Life Cycle-
Permanent Income Hypothesis but are consistent with hyperbolic
discounting. (JEL D14, E21, J26)
Abstract
					The lives of women in the United States have improved over the past
35 years by many objective measures, yet we show that measures of
subjective well-being indicate that women's happiness has declined
both absolutely and relative to men. This decline in relative wellbeing
is found across various datasets, measures of subjective wellbeing,
demographic groups, and industrialized countries. Relative
declines in female happiness have eroded a gender gap in happiness
in which women in the 1970s reported higher subjective well-being
than did men. These declines have continued and a new gender gap
is emerging -- one with higher subjective well-being for men. (JEL
I31, J16, J28)
Abstract
					This paper analyzes the effects of size-dependent tax enforcement on firms' tax compliance. We exploit quasi-experimental variation generated by a Large Taxpayers Unit (LTU) in Spain, which monitors firms with more than €6 million in reported revenue. Firms strategically bunch below the eligibility threshold in order to avoid stricter tax enforcement. The response is stronger in sectors where transactions leave more paper trail, suggesting that monitoring effort and the traceability of information reported by firms are complements. We estimate that there would be substantial welfare gains from extending stricter tax monitoring to smaller businesses.
Abstract
					The misuse of prescription opioids has become a serious epidemic in the United States. In response, states have implemented Prescription Drug Monitoring Programs (PDMPs), which record a patient's opioid prescribing history. While few providers participated in early systems, states have recently begun to require providers to access the PDMP under certain circumstances. We find that "must access" PDMPs significantly reduce measures of misuse in Medicare Part D. In contrast, we find that PDMPs without such provisions have no effect. We find stronger effects when providers are required to access the PDMP under broad circumstances, not only when they are suspicious.
Abstract
					We use individual level data on purchases of cholesterol-lowering drugs to study the responses of physicians and patients to variation in the cost of drugs. In a sample of first-time statin prescriptions to employees from 12 Fortune 500 firms, we find that co-pay variation across plans has a small effect on the choice of drug, and this effect does not vary with patient income. After the highly publicized patent expiration of Zocor, however, prescriptions for this drug increased substantially, especially for lower income patients. Our analysis suggests that physicians can perceive the price sensitivity of their patients and adjust their initial prescriptions accordingly, but only in response to a large and universal price change.
Abstract
					There is considerable controversy over the use of private insurers to deliver public health insurance benefits. We investigate the consequences of patients enrolling in Medicare Advantage (MA), privately 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.
Abstract
					An important but under-explored issue in student assignment procedures is heterogeneity in the level of strategic sophistication among students. Our work provides the first direct measure of which students rank schools following their true preference order (sincere students) and which rank schools by manipulating their true preferences (sophisticated students). We present evidence that our proxy for sophistication captures systematic differences among students. Our results demonstrate that sophisticated students are 9.6 percentage points more likely to be assigned to one of their preferred schools. Further, we show that this large difference in assignment probability occurs because sophisticated students systematically avoid over-demanded schools.
Abstract
					We demonstrate that the nationalities of EU Commissioners influence budget allocation decisions in favor of their country of origin. Our focus is on the Commissioners for Agriculture, who are exclusively responsible for a specific fund that accounts for the largest share of the overall EU budget. On average, providing the Commissioner causes a 1 percentage point increase in a country's share of the overall EU budget, which corresponds to 850 million euros per year. There are no different pretreatment trends and the magnitude of the bias from selection-on-unobservables would have to be implausibly high to account for the estimated coefficient.
Abstract
					Firms and governments often use moral suasion and economic incentives to influence intrinsic and extrinsic motivations for economic activities. To investigate persistence of such interventions, we randomly assign households to moral suasion and dynamic pricing that stimulate energy conservation during peak-demand hours. We find significant habituation and dishabituation for moral suasion—the treatment effect diminishes after repeated interventions but can be restored to the original level by a sufficient time interval between interventions. Economic incentives induce larger treatment effects, little habituation, and significant habit formation. Our results suggest moral suasion and economic incentives produce substantially different short-run and long-run policy impacts.
Abstract
					Texas is the only US state that limits home equity borrowing to 80 percent of home value. This paper exploits this policy discontinuity around Texas' interstate borders and uses a multidimensional regression discontinuity design framework to find that limits on home equity borrowing in Texas lowered the likelihood of mortgage default by about 1.5 percentage points for all mortgages and 4–5 percentage points for non-prime mortgages. Estimated non-prime mortgage default hazards within 25 to 100 miles on either side of the Texas border are about 20 percent smaller when crossing into Texas.
Abstract
					We use a database generated by a policy intervention that incentivized learning as measured by standardized exams to investigate empirically the relationship between cheating by students and cash incentives to students and teachers. We adapt methods from the education measurement literature to calculate the extent of cheating and show that cheating is more prevalent under treatments that provide monetary incentives to students (versus no incentives or incentives only to teachers). We provide evidence suggesting that students may have learned to cheat, with the number of cheating students per classroom increasing over time under treatments that provide monetary incentives to students.
Abstract
					Physician treatment choices for observably similar patients vary dramatically across regions. This paper exploits cardiologist migration to disentangle the role of physician-specific factors such as preferences and learned behavior versus environment-level factors such as hospital capacity and productivity spillovers on physician behavior. Physicians starting in the same region and subsequently moving to dissimilar regions practice similarly before the move. After the move, physician behavior in the first year changes by 0.6–0.8 percentage points for each percentage point change in practice environment, with no further changes over time. This suggests environment factors explain between 60–80 percent of regional disparities in physician behavior.
Abstract
					Most countries promote exports. This paper answers two questions: Does export promotion improve firm performance, and do any benefits outweigh costs? We solve self-selection problems by accounting for an extensive set of firm characteristics. In addition, we distinguish firms that self-selected into promotion services from firms the Danish Trade Council approached based on observed information. We find that export promotion increases sales, value added, employment, and value added per worker. For small firms, summing expenditures on export promotion, subsidies, and tax distortions, the gain in value added is roughly three times higher than the direct costs of export promotion.
Abstract
					Assessing productivity gains from multinational production has been a vital topic of economic research and policy debate. Positive productivity gains are often attributed to productivity spillovers; however, an
 alternative, much less emphasized channel is selection and market reallocation, whereby competition leads to factor and revenue reallocation within and between domestic firms and exits of the least productive
 firms. We investigate the roles of these different mechanisms in determining aggregate-productivity gains using a unifying framework that explores the mechanisms' distinct predictions on the distributions of
 domestic firms: within-firm productivity improvement shifts rightward or reshapes the productivity distribution, while selection and market reallocation move the revenue and employment distributions leftward
 and raise left truncations. Using a rich cross-country firm-level panel dataset, we find significant evidence of both mechanisms and effects of competition in product, technology, and labor space. However,
 selection and market reallocation account for the majority of aggregate-productivity gains, suggesting ignoring this channel could lead to substantial bias in understanding the nature of productivity gains from
 multinational production.
Abstract
					The Great Depression produced a profound and lasting influence on the structure of US government. This paper studies theoretically and empirically the increased centralization of revenues and expenditures by the states relative to local governments during this period. A model of property and sales taxation and tax delinquency is introduced. In the model, the income decline of the Depression causes a rise in property tax delinquency and leads to a shift toward sales taxation and fiscal centralization by the states. Empirical evidence based on cross-state variation in the severity of the Depression is consistent with the model's key predictions.
Abstract
					US housing voucher holders pay their landlord a fraction of household income and the government pays the rest, up to a rent ceiling. We study how two types of changes to the rent ceiling affect landlords and tenants. A policy that makes vouchers more generous across a metro area benefits landlords through increased rents, with minimal impact on neighborhood and unit quality. A second policy that indexes rent ceilings to neighborhood rents leads voucher holders to move into higher quality neighborhoods with lower crime, poverty, and unemployment.
Abstract
					Since 2007, US coal-fired electricity generation has declined by a stunning 25 percent. Detailed daily unit-level data is used to examine the joint impact of natural gas prices and wind generation on coal-fired generation and emissions, with a focus on the interaction between gas prices and wind. This interaction is found to be significant. Marginal responses of coal-fired generation to natural gas prices (wind) in 2013 were larger, sometimes much larger, than the counterfactual with 2008 wind generation (gas prices). Additionally, these factors jointly account for the vast majority of the observed decline in generation and emissions.
Abstract
					We take advantage of provisions of the Immigration Reform and Control Act of 1986 (IRCA), which granted legal resident status to long-time unauthorized residents but created new obstacles to employment for more recent immigrants, to explore how employment opportunities affect criminal behavior. Exploiting administrative data on the criminal justice involvement of individuals in San Antonio, Texas and using a triple-differences strategy, we find evidence of an increase in felony charges filed against residents most likely to be negatively affected by IRCA's employment regulations. Our results suggest a strong relationship between access to legal jobs and criminal behavior.
Abstract
					In the United States, unemployment insurance (UI) is more generous when unemployment is high. This paper examines whether this policy is desirable. The optimal UI replacement rate is the Baily-Chetty replacement rate plus a correction term measuring the effect of UI on welfare through labor market tightness. Empirical evidence suggests that tightness is inefficiently low in slumps and inefficiently high in booms, and that an increase in UI raises tightness. Hence, the correction term is positive in slumps but negative in booms, and optimal UI is indeed countercyclical. Since there remains some uncertainty about the empirical evidence, the paper provides a thorough sensitivity analysis.
Abstract
					A significant number of people have very low levels of literacy in many OECD countries. This paper studies a national change in policy and practice in England that refocused the teaching of reading around "synthetic phonics." This was a low-cost intervention that targeted the pedagogy of existing teachers. We evaluate the pilot and first phase of the national rollout. While strong initial effects tend to fade out on average, they persist for those with children with a higher initial propensity to struggle with reading. As a result, this program helped narrow the gap between disadvantaged pupils and other groups.
Abstract
					This study estimates the investment, financing, and payout responses to variation in a firm's effective corporate income tax rate in the United States. I exploit quasi-experimental variation created by the Domestic Production Activities Deduction, a corporate tax expenditure created in 2005. A 1 percentage point reduction in tax rates increases investment by 4.7 percent of installed capital, increases payouts by 0.3 percent of sales, and decreases debt by 5.3 percent of total assets. These estimates suggest that lower corporate tax rates and faster accelerated depreciation each stimulate a similar increase in investment, per dollar in lost revenue.
Abstract
					This paper exploits a natural experiment in information provision on US Disability Insurance (DI) applications: the Social Security statement. Although the effect of the statement on DI application was negligible in the general health and retirement study population, among those previously reporting a work limitation, biennial DI application rates approximately doubled. This effect was driven by previously uninformed individuals. Additional analyses show these were new applicants and were no less likely to be accepted onto DI, accounting for a substantial fraction of the rise in DI rolls from 1994 to 2004 and indicating the importance of informational frictions in disability policymaking.
Abstract
					For individuals who experience job loss, enrollment in postsecondary programs may provide an opportunity to improve future employment outcomes. However, decisions to enroll may be hampered by insufficient information about the benefits and costs and the necessary steps and assistance available to facilitate such investments. Using variation in the dissemination and timing of letters sent to Unemployment Insurance (UI) recipients containing this information, we find that individuals sent the information are 40 percent more likely to enroll. These findings suggest that well coordinated information interventions delivered with institutional support may be more effective than raising the generosity of existing government programs in increasing participation.
Abstract
					We model the effects of cash-flow taxes, differing according to the location of the tax, on the behavior of a multinational producing and selling in two countries with three sources of economic rent: a fixed basic-production factor (located with initial production), mobile managerial skill, and a fixed final production factor (located with consumption). In general, governments face trade-offs in choosing between alternative taxes. A source-based cash-flow tax creates welfare-impairing production and consumption distortions, but falls partially on firm owners who may be nonresident. By contrast, a destination-based cash-flow tax does not distort behavior, but falls only on domestic residents.
Abstract
					Women remain underrepresented in politics and it remains unclear how this might change. In this paper, we investigate whether female council candidates receive more preferential votes when a female mayor has been recently elected into office. We hand collect data for 109,017 candidates in four open-list local council elections (2001-2016) in all 426 municipalities of a German state. Based on RDD estimations for close mixed-gender races, we show that female council candidates advance more from their initial list rank when the mayor is female. This effect spreads to neighboring municipalities and leads to a rising share of female council members.
Abstract
					We explore how private drug plans set cost sharing in the context of Medicare Part D. While publicly provided drug coverage typically involves uniform cost sharing across drugs, we document substantial heterogeneity in the cost sharing for different drugs within privately provided plans. We also document that private plans systematically set higher consumer cost sharing for drugs or classes associated with more elastic demand; to do so, we estimate price elasticities of demand across more than 150 drugs and across more than 100 therapeutic classes. We conclude by discussing the various channels that likely affect private plans' cost-sharing decisions.
Abstract
					The design of Medicare Part D causes most beneficiaries to receive fragmented health insurance, with drug and medical coverage separated. Fragmentation is potentially inefficient since separate insurers optimize over only one component of healthcare spending, despite complementarities and substitutabilities between healthcare types. Fragmentation of only some plans can also lead to market distortions due to differential adverse selection, as integrated plans may use drug formularies to induce enrollment by patients that are profitable in the medical insurance market. We study the design of insurance plans in Medicare Part D and find that formularies reflect these two differences in incentives.
Abstract
					To what extent do car buyers undervalue future fuel costs, and what does this imply for tax policy? To address both questions, we show it is crucial to account for consumer mileage heterogeneity. We use product-level data for a panel of European countries and exploit fuel cost variation by engine. Despite a modest undervaluation of fuel costs, fuel taxes are more effective in reducing fuel usage than product taxes. They also perform better in terms of welfare, even when usage demand is held fixed. The reason is that fuel taxes better target high mileage consumers to purchase fuel efficient cars.
Abstract
					Many websites now warehouse instructional materials designed to be taught by teachers in a traditional classroom. What are the potential benefits of the new resources? We analyze an experiment in which we randomly give middle school math teachers access to existing high-quality, off-the-shelf lessons, and in some cases, support to promote their use. Teachers receiving access alone increased students' math achievement by a marginally significant 0.06 of a standard deviation. Teachers who received access and support increased students' math achievement by
 0.09 of a standard deviation. Weaker teachers experience larger gains, suggesting that these lessons substitute for teacher skill or efforts. The online materials are more scalable and cost effective than most policies aimed at improving teacher quality, suggesting that, if search costs can be overcome, there is a real benefit to making high-quality instructional materials available to teachers on the Internet.
Abstract
					Medicaid programs increasingly finance competing, capitated managed care plans rather than administering fee-for-service (FFS) programs. We study how the transition from FFS to managed care affects high- and low-cost infants (blacks and Hispanics, respectively). We find that black-Hispanic disparities widen—e.g., black mortality and preterm birth rates increase by 15 percent and 7 percent, respectively, while Hispanic mortality and preterm birth rates decrease by 22 percent and 7 percent, respectively. Our results are consistent with a risk-selection model whereby capitation incentivizes competing plans to offer better (worse) care to low- (high-) cost clients to retain (avoid) them in the future.
Abstract
					This paper examines the degree of substitution between public pension wealth and private saving by studying Poland's 1999 pension reform. The analysis identifies the effect of pension wealth on private saving using cohort-by-time variation in pension wealth induced by the reform. The estimates, which are based on the 1997-2003 Polish Household Budget Surveys, show that 1 Polish zloty (PLN) less of pension wealth increases household saving by 0.3 PLN. Among highly educated households, pension wealth and private saving appear to be close substitutes.
Abstract
					We study the impact of financial education on intertemporal choice in adolescence. The educational program was randomly assigned among high school students, and choices were measured using an incentivized experiment. Students who participated in the program make more time-consistent choices; are more likely to allocate payments to a single payment date, as opposed to spreading payment across two dates; and display increased consistency of choice with the law of demand. These findings suggest that financial education increases the quality of intertemporal decision-making and decreases narrow bracketing.
Abstract
					Climate change remains one of the major international environmental challenges facing nations. Up to now, nations have adopted minimal policies to slow climate change. Moreover, there has been no major improvement in emissions trends as of the latest data. The current study uses the updated DICE model to develop new projections of trends and impacts of alternative climate 
policies. It also presents a new set of estimates of the uncertainties about future climate change and compares the results with those of other integrated assessment models. The study confirms past estimates of likely rapid climate change over the next century if major climate-change policies are not taken. It suggests that it is unlikely that nations can achieve the 2°C target of 
international agreements, even if ambitious policies are introduced in the near term. The required carbon price needed to achieve current targets has risen over time as policies have been delayed.
Abstract
					Hospitals in the United States increasingly belong to multihospital systems that operate in numerous geographic markets. A large literature in management and economics suggests that competition between firms may be softened as a result of multimarket contact—ie., firms competing with one another in multiple markets simultaneously. Exploiting plausibly exogenous variation in multimarket contact generated by out-of-market consolidation, I find that increases in multimarket contact over the 2000–2010 period led to higher hospital prices. These results suggest that continued hospital consolidation may produce higher prices even if that consolidation only minimally affects within-market concentration.
Abstract
					How does ethnic politics affect the state's ability to provide policing services? Using a panel of administrative personnel data on the full careers of 6,784 police officers, we show how the rise of ethnic politics around Kenya's independence influenced policemen's behavior. We find a significant deterioration in discipline after Kenya's first multiparty election for those police officers of ethnic groups associated with the ruling party. These effects are driven by a behavioral change among these policemen. We find no evidence of favoritism within the police. Instead, our results are consistent with co-ethnic officers experiencing an emboldenment effect. Our findings highlight that the state's security apparatus, at its most granular level, is not insulated from ethnic politics.
Abstract
					Overdose deaths from prescription opioid pain relievers nearly quadrupled between 1999 and 2010. We study the consequences of one of the largest supply disruptions to date to abusable opioids—the introduction of an abuse-deterrent version of OxyContin in 2010. Supply-side interventions which limit access to opioids may have the unintended consequence of increasing use of substitute drugs, including heroin. Exploiting cross-state variation in OxyContin exposure, we find that states with the highest initial rates of OxyContin misuse experienced the largest increases in heroin deaths. Our results imply that the recent heroin epidemic is largely due to the reformulation of OxyContin.
Abstract
					This paper studies the effect of punishment severity on jury decision-making using archival data from London's Old Bailey Criminal Court from 1772 to 1871. We exploit two natural experiments in English history, resulting in sharp decreases in punishment severity: the offense-specific abolition of capital punishment and the temporary halt of penal transportation during the American Revolution. Using difference-in-differences to study the former and a pre-post design for the latter, we find a large, significant and permanent impact on jury behavior: juries are more likely to convict overall and across crime categories. Moreover, the effect size differs with defendants' gender.
Abstract
					In this paper we focus on a new channel of adaptation to trade liberalization, namely the shift toward increased provision of services in lieu of goods production. We exploit variation in European Union trade policy to show that lower manufacturing tariffs lead firms to shift into services provision and out of goods production. We also find that a successful transition is associated with higher firm-level R&D stocks.
Abstract
					The economic values of investing in long-term public projects are highly sensitive to the social discount rate (SDR). We surveyed over 200 experts to disentangle disagreement on the risk-free SDR into its component parts, including pure time preference, the wealth effect and return to capital. We show that the majority of experts do not follow the simple Ramsey Rule, a widely-used theoretical discounting framework, when recommending SDRs. Despite disagreement on discounting procedures and point values, we obtain a surprising degree of consensus among experts, with more than three-quarters finding the median risk-free SDR of 2 percent acceptable.
Abstract
					It is found that electorally-induced policy uncertainty decreases manufacturing investment in US states. In a state with average partisan polarization, the elasticity of election-year investment to a specific measure of policy uncertainty is -0.027. When the incumbent governor is term-limited, there is greater uncertainty over the outcome, providing an instrument to demonstrate this effect is causal, not simply coincidental. Moreover, manufacturing investment does not rebound following the election. Rather, own-state uncertainty is associated with a large and significant coincident rise in neighboring states' investment. These findings suggest that policy uncertainty at the sub-national level drives investment to alternate sites.
Abstract
					One-in-seven Americans received benefits from the Supplemental Nutrition Assistance Program in 2011, an all-time high. We analyze changes in program enrollment over the past two decades, quantifying the contributions of unemployment and state policy changes. Using instrumental variables to address measurement error, we estimate that a one percentage point increase in unemployment raises enrollment by 15 percent. Unemployment explains most of the decrease in enrollment in the late 1990s, state policy changes explain more of the increase in enrollment in the early 2000s, and unemployment explains most of the increase in enrollment in the aftermath of the Great Recession.
Abstract
					This paper examines a simple element of financial incentive design—whether the incentive takes the form of a fee for bad behavior or a reward for good behavior—to determine if the framing of the incentive influences the policy's effectiveness. I investigate the effect of two similar policies aimed at reducing disposable bag use and a five-cent tax on disposable bag use and a five-cent bonus for reusable bag use. While the tax decreased disposable bag use by over forty percentage points, the bonus generated virtually no effect on behavior. These results are consistent with a model of loss aversion.
Abstract
					When consumers or firms don't face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, but it may be infeasible to tax the externality directly. The alternative, taxing a related product, will be second-best. In this paper, we show that in the presence of heterogeneous externalities and elasticities, this type of indirect tax performs poorly. In our empirical application, gasoline taxes to address pollution externalities, less than a third of the deadweight loss of the externality is addressed by second-best optimal taxes.
Abstract
					This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs. The model is estimated using a unique dataset describing individual landowners in the San Francisco Bay Area. Results indicate that geographic and time-series variation in costs are key to understanding where and when construction occurs. Pro-cyclical costs provide an incentive for some landowners to build before price peaks. Results also indicate that landowners actively "time" the market, which reduces the elasticity of supply.
Abstract
					The recent boom in U.S. oil production has prompted debates on levying new taxes on oil. This paper uses new well-level production data and price variation from federal oil taxes and price controls to assess how taxes affected production. After-tax price elasticity estimates range between 0.295 (0.038) and 0.371 (0.025). Response along the shut-in margin is minimal. There is no evidence of spatial shifting of production to minimize tax liabilities. Taken together the results suggest that taxes reduced domestic production in the 1980s, and the response largely came from wells that continued to pump oil, but at a reduced rate.