Do Well Managed Firms Make Better Forecasts? - Bloom, Nicholas; Kawakubo, Takafumi; Meng, Charlotte; Mizen, Paul; Riley, Rebecca; Senga, Tatsuro; Van Reenen, John (National Bureau of Economic Research Working Paper Series, 2021)
We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, profitability and size. Uniquely, the survey collects firms’ micro forecasts of their own sales and also macro forecasts of GDP. We find that better managed firms make more accurate micro and macro forecasts, even after controlling for their size, age, industry and many other factors. We also show better managed firms appear aware that their forecasts are more accurate, with lower subjective uncertainty around central values. These stylized facts suggest that one reason for the superior performance of better managed firms is that they knowingly make more accurate forecasts, enabling them to make superior operational and strategic choices.
Author contact info: Nicholas Bloom Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/725-3266 Fax: 650/725-5702 E-Mail: nbloom@stanford.edu Takafumi Kawakubo Houghton Street London WC2A 2AE UK E-Mail: t.kawakubo.24@gmail.com Charlotte Chunm. Meng National Institute of Economic and Social Research E-Mail: c.meng@niesr.ac.uk Paul Mizen School of Economics University of Nottingham University Park Nottingham NG7 2RD United Kingdom E-Mail: Paul.Mizen@nottingham.ac.uk Rebecca Riley King's College London Strand London WC2R 2LS United Kingdom E-Mail: rebecca.riley@kcl.ac.uk Tatsuro Senga Queen Mary University of London Mile End Road London E-Mail: t.senga@qmul.ac.uk John Van Reenen Department of Economics London School of Economics Houghton Street London, WC2A 2AE United Kingdom E-Mail: j.vanreenen@lse.ac.uk

Forced Displacement and Human Capital: Evidence from Separated Siblings - Chiovelli, Giorgio; Michalopoulos, Stelios; Papaioannou, Elias; Sequeira, Sandra (National Bureau of Economic Research Working Paper Series, 2021)
We examine the impact of conflict-driven displacement on human capital. We focus on the Mozambican civil war (1977–1992), during which more than four million civilians fled to the countryside, cities, and refugee camps and settlements in neighboring countries. We leverage the full post-war census to compare siblings separated during the war, using those who stayed behind as a counterfactual to one’s displacement path. Uprooted children register higher investments in education. Second, we quantify the relative importance of place-based and displacement effects. The latter increases education and decreases attachment to agriculture by the same rate as being exposed to an environment approximately one standard deviation more developed than one’s birthplace. Third, we conduct a survey in Nampula, whose population doubled during the civil war. Those who fled to the city have significantly higher education than their siblings who remained in the countryside and they converged to the levels of schooling of non-mover urban-born individuals. However, those displaced exhibit significantly lower social/civic capital and have worse mental health, even three decades after the war. These findings reveal that displacement shocks can trigger human capital investments, breaking links with subsistence agriculture, but at the cost of long-lasting, social, and psychological traumas.
Author contact info: Giorgio Chiovelli Universidad de Montevideo Prudencio de pena 2544 Montevideo 11600 Uruguay E-Mail: gchiovelli@um.edu.uy Stelios Michalopoulos Brown University Department of Economics 64 Waterman Street Providence, RI 02912 Tel: 401/863-2506 Fax: 401/863-1970 E-Mail: smichalo@brown.edu Elias Papaioannou London Business School Regent's Park Sussex Place Regent's Park London NW1 4SA United Kingdom Tel: +44 (0) 207000 8432 Fax: +44 (0) 207000 8401 E-Mail: papaioannou.elias@gmail.com Sandra Sequeira London School of Economics E-Mail: s.sequeira@lse.ac.uk

Information, Intermediaries, and International Migration - Bazzi, Samuel; Cameron, Lisa; Schaner, Simone G; Witoelar, Firman (National Bureau of Economic Research Working Paper Series, 2021)
Job seekers face substantial information frictions, especially in international labor markets where intermediaries match prospective migrants with overseas employers. We conducted a randomized trial in Indonesia to explore how information about intermediary quality shapes migration outcomes. Holding access to information about the return to choosing a high-quality intermediary constant, intermediary-specific quality disclosure reduces the migration rate, cutting use of low-quality providers. Workers who do migrate receive better pre-departure preparation and have improved experiences abroad, despite no change in occupation or destination. These results are not driven by changes in beliefs about average provider quality or the return to migration. Nor does selection explain improved outcomes for those who migrate with quality disclosure. Together, our findings are consistent with an increase in the option value of search: with better ability to differentiate offer quality, workers search longer, select higher-quality intermediaries, and ultimately have better migration experiences.
Author contact info: Samuel Bazzi University of California, San Diego School of Global Policy and Strategy 9500 Gilman Drive, 0519 La Jolla, CA 92093 E-Mail: sbazzi@ucsd.edu Lisa Cameron Melbourne Institute: Applied Economic and Social Research Level 5, FBE Building 111 Barry St University of Melbourne VIC 3010, Australia E-Mail: lisa.cameron@unimelb.edu.au Simone G. Schaner Department of Economics and Center for Economic and Social Research University of Southern California 635 Downey Way Los Angeles, CA 90089 Tel: 213-821-6023 Fax: 213.821.2716 E-Mail: schaner@usc.edu Firman Witoelar Arndt-Corden Department Of Economics Crawford School For Public Policy JG Crawford Building, 132 Lennox Crossing Canberra, ACT 2600 Australia Tel: 0456877179 E-Mail: FirmanWitoelar.Kartaadipoetra@anu.edu.au

Taking the Pulse of Nations: a Biometric Measure of Well-being - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2021)
A growing literature identifies associations between subjective and biometric indicators of wellbeing. These associations, together with the ability of subjective wellbeing (SWB) metrics to predict health and behavioral outcomes, have spawned increasing interest in SWB as an important concept in its own right. However, some social scientists continue to question the usefulness of SWB metrics. We contribute to this literature in three ways. First, we introduce a biometric measure of wellbeing – pulse – which has been largely overlooked. Using nationally representative data on 165,000 individuals from the Health Survey for England (HSE) and Scottish Health Surveys (SHeS) we show that its correlates are similar in a number of ways to those for SWB, and that it is highly correlated with SWB metrics, as well as self-assessed health. Second, we examine the determinants of pulse rates in mid-life (age 42) among the 9,000 members of the National Child Development Study (NCDS), a birth cohort born in a single week in 1958 in Britain. Third, we track the impact of pulse measured in mid-life (age 42) on health and labor market outcomes at age 50 in 2008 and age 55 in 2013. The probability of working at age 55 is negatively impacted by pulse rate a decade earlier. The pulse rate has an impact over and above chronic pain measured at age 42. General health at 55 is lower the higher the pulse rate at age 42, while those with higher pulse rates at 42 also express lower life satisfaction and more pessimism about the future at age 50. Taken together, these results suggest social scientists can learn a great deal by adding pulse rates to the metrics they use when evaluating people’s wellbeing.
Author contact info: David G. Blanchflower Bruce V. Rauner Professor of Economics 6106 Rockefeller Hall Dartmouth College Hanover, NH 03755-3514 Tel: 603/646-2536 Fax: 603/646-2122 E-Mail: blanchflower@dartmouth.edu Alex Bryson Professor of Quantitative Social Science UCL Social Research Institute University College London 20 Bedford Way London WC1H 0AL London United Kingdom Tel: +44 7969179755 E-Mail: a.bryson@ucl.ac.uk

Inattention and Inequity in School Matching - Bucher, Stefan F; Caplin, Andrew (National Bureau of Economic Research Working Paper Series, 2021)
The attractive properties of the Deferred Acceptance (DA) algorithm rest on the assumption of perfect information. Yet field studies of school matching show that information is imperfect, particularly for disadvantaged students. We model costly strategic learning when schools are ex ante symmetric, agree on their ranking of students, and learning is rationally inattentive. Our analytic solution quantifies how each student’s rank, learning costs and prior beliefs interact to determine their gross and net welfare as well as the extent and form of mistakes they make. In line with the evidence, we find that lower-ranked students are affected disproportionately more by information costs, generally suffering a larger welfare loss than higher-ranked students. Interactions between mechanism design, inattention and inequity are thus of first order importance.
Author contact info: Stefan F. Bucher NYU Department of Economics 19 W4th St, 6th Fl New York, NY 10012 United States E-Mail: sfb311@nyu.edu Andrew Caplin Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8950 Fax: 212/995-3932 E-Mail: andrew.caplin@nyu.edu

The Rise, Fall and Stabilization of U.S. Inflation: Shifting Regimes and Evolving Reputation - King, Robert G; Lu, Yang K (National Bureau of Economic Research Working Paper Series, 2021)
The rise, fall, and stabilization of US inflation between 1969 and 2005 is consistent with a model of shifting policy regimes that features a forward-looking New Keynesian Phillips curve, policymakers that can or cannot commit, and private sector learning about policymaker type. Using model-implied inflation forecasting rules to extract state variables from the inflation forecasts in the Survey of Professional Forecasters, we provide evidence that policy regimes without commitment prevailed before 1980 and regimes with commitment prevailed afterward. With theory and quantification, we find that evolution of reputational capital is central to understanding the behavior of inflation.
Author contact info: Robert G. King Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-5941 E-Mail: rking@bu.edu Yang K. Lu Department of Economics Hong Kong University of Science and Technology Clearwater Bay, Kowloon Boston, MA 02215 United States Tel: 16173535941 E-Mail: yanglu@ust.hk

Private but Misunderstood? Evidence on Measuring Intimate Partner Violence via Self-Interviewing in Rural Liberia and Malawi - Park, David Sungho; Aggarwal, Shilpa; Jeong, Dahyeon; Kumar, Naresh; Robinson, Jonathan; Spearot, Alan (National Bureau of Economic Research Working Paper Series, 2021)
Women may under-report intimate partner violence (IPV) in surveys due to a variety of social and psychological factors. To understand if anonymized interviewing can allay this concern, we conduct a measurement experiment in rural Liberia and Malawi in which women were asked IPV questions via either self-interviewing (SI) or face-to-face interviewing (FTFI) with an enumerator. We find that about a third of women incorrectly answer basic screening questions over SI, and that it generates placebo effects on innocuous questions even for those who "pass" screening. Because the probability of responding "yes" to any specific IPV question is less than 50%, and that IPV is typically reported as an index (reporting yes to at least one question in a category of violence), such misunderstanding will tend to increase IPV reporting. In Malawi, we find that SI dramatically increases reported IPV, with the incidence of any type of IPV increasing by 13 percentage points on a base of 20%; in Liberia, we find an insignificant and modest increase of 4 percentage points on a base of 39%. Our results suggest SI may spuriously increase reported IPV rates.
Author contact info: David Sungho Park 263 Namsejong-ro Sejong 30149 South Korea E-Mail: park@kdis.ac.kr Shilpa Aggarwal Indian School of Business Gachibowli, Hyderabad 500032 India E-Mail: shilpa_aggarwal@isb.edu Dahyeon Jeong World Bank E-Mail: dahyeonjeong@worldbank.org Naresh Kumar E-Mail: nkumar18@worldbank.org Jonathan Robinson Department of Economics University of California, Santa Cruz 457 Engineering 2 Santa Cruz, CA 95064 Tel: 831/459-5618 Fax: 831/459-5077 E-Mail: jmrtwo@ucsc.edu Alan Spearot University of California, Santa Cruz Santa Cruz, CA 95064 E-Mail: acspearot@gmail.com

Lobbying Physicians: Payments from Industry and Hospital Procurement of Medical Devices - Bergman, Alon; Grennan, Matthew; Swanson, Ashley (National Bureau of Economic Research Working Paper Series, 2021)
We draw upon newly merged administrative data sets to study the relationship between payments from medical technology firms to physicians and medical device procurement by hospitals. These payments (and the interactions that accompany them) may facilitate the transfer of valuable information to and from physicians. However, they may also influence physicians’ preferences, and in turn hospital device procurement, in favor of paying firms. Payments are pervasive: 87 percent of device sales in our sample occurred at a hospital where a relevant physician received a payment from a device firm. Payments are also highly correlated with spending within a firm-hospital pair: event studies suggest that a large positive increase in payments to a given hospital from a given firm ($438 per physician on average, or 112 percent of the mean) is associated with 27 percent higher expenditures on the paying firm’s devices post-event. Finally, we explore how payments mediate the relationship between expertise and device procurement patterns. Hospitals affiliated with the top Academic Medical Centers (AMCs), which plausibly represent an expert benchmark, purchase a different mix of devices than other hospitals, and payments to hospitals outside the top AMCs are correlated with larger deviations from the procurement patterns of top AMC hospitals.
Author contact info: Alon Bergman University of Pennsylvania Department of Medical Ethics and Health Policy Philadelphia, PA 19104 E-Mail: alonberg@wharton.upenn.edu Matthew Grennan University of California, Berkeley Haas School of Business Berkeley, CA 94720 E-Mail: mgrennan@berkeley.edu Ashley T. Swanson University of Wisconsin–Madison Department of Economics 1180 Observatory Dr Madison, WI 53706 E-Mail: ashley.swanson@wisc.edu

Sufficient Statistics for Nonlinear Tax Systems with General Across-Income Heterogeneity - Ferey, Antoine; Lockwood, Benjamin; Taubinsky, Dmitry (National Bureau of Economic Research Working Paper Series, 2021)
This paper provides general and empirically implementable sufficient statistics formulas for optimal nonlinear tax systems in the presence of across-income heterogeneity in preferences, inheritances, income-shifting capabilities, and other sources. We study unrestricted tax systems on income and savings (or other commodities) that implement the optimal direct-revelation mechanism, as well as simpler tax systems that impose common restrictions like separability between earnings and savings taxes. We characterize the optimum using familiar elasticity concepts and a sufficient statistic for general across-income heterogeneity: the difference between the cross-sectional variation of savings with income, and the causal effect of income on savings. The Atkinson-Stiglitz Theorem is a knife-edge case corresponding to zero difference, and a number of other key results in optimal tax theory are subsumed as special cases. We provide tractable extensions of these results that include multidimensional heterogeneity, additional efficiency rationales for taxing heterogeneous returns, and corrective motives to encourage more saving. Applying these formulas in a calibrated model of the U.S. economy, we find that the optimal savings tax is positive and progressive.
Author contact info: Antoine Ferey 28 rue des Saints PÃ¨res Paris 75007 France E-Mail: antoine.ferey@sciencespo.fr Benjamin Lockwood The Wharton School University of Pennsylvania 1400 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 E-Mail: ben.lockwood@wharton.upenn.edu Dmitry Taubinsky University of California, Berkeley Department of Economics 530 Evans Hall #3880 Berkeley, CA 94720-3880 E-Mail: dmitry.taubinsky@berkeley.edu

Absenteeism, Productivity, and Relational Contracts Inside the Firm - Adhvaryu, Achyuta; Gauthier, Jean-François; Nyshadham, Anant; Tamayo, Jorge A (National Bureau of Economic Research Working Paper Series, 2021)
We study relational contracts among managers using unique data that tracks transfers of workers across teams in Indian ready-made garment factories. We focus on how relational contracts help managers cope with worker absenteeism shocks, which are frequent, often large, weakly correlated across teams, and which substantially reduce team productivity. Together these facts imply gains from sharing workers. We show that managers respond to shocks by lending and borrowing workers in a manner consistent with relational contracting, but many potentially beneficial transfers are unrealized. This is because managers’ primary relationships are with a very small subset of potential partners. A borrowing event study around main trading partners’ separations from the firm reinforces the importance of relationships. We show robustness to excluding worker moves least likely to reflect relational borrowing responses to idiosyncratic absenteeism shocks. Counterfactual simulations reveal large gains to reducing costs associated with forming and maintaining additional relationships among managers.
Author contact info: Achyuta Adhvaryu School of Global Policy and Strategy University of California, San Diego La Jolla, CA 92093 Tel: 734/615-2327 E-Mail: aadhvaryu@ucsd.edu Jean-François Gauthier Boston College 140 Commonwealth Avenue Chestnut Hill, MA 02467 United States E-Mail: gauthija@bc.edu Anant Nyshadham Stephen M. Ross School of Business University of Michigan 701 Tappan Street Ann Arbor, MI 48109-1234 E-Mail: nyshadha@umich.edu Jorge A. Tamayo Harvard Business School Soldiers Field, Morgan Hall 292 Boston, MA 02163 E-Mail: jtamayo@hbs.edu

Organizational and Economic Obstacles to Automation: A Cautionary Tale from AT&T in the Twentieth Century - Feigenbaum, James J; Gross, Daniel P (National Bureau of Economic Research Working Paper Series, 2021)
AT&T was the largest U.S. firm for most of the 20th century. Telephone operators once comprised over 50% of its workforce, but in the late 1910s it initiated a decades-long process of automating telephone operation with mechanical call switching—a technology invented in the 1880s. We study what drove AT&T to do so, and why it took nearly a century. Interdependencies between call switching and nearly every other activity in AT&T's business presented obstacles to change: telephone operators were the fulcrum of a complex production system which had developed around them, and automation only began after the firm and new technology were adapted to work together. Even then, automatic switching was only profitable in larger markets—hence diffusion expanded when the technology improved or service areas grew. The example suggests even narrowly-defined tasks can be difficult to automate if they interact with many others.
Author contact info: James J. Feigenbaum Department of Economics Boston University 270 Bay State Road Boston, MA 02215 E-Mail: jamesf@bu.edu Daniel P. Gross Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 E-Mail: daniel.gross@duke.edu

Information Frictions and Skill Signaling in the Youth Labor Market - Heller, Sara B; Kessler, Judd B (National Bureau of Economic Research Working Paper Series, 2021)
This paper demonstrates that information frictions limit the labor market trajectories of young people in the U.S. We provide credible skill signals—recommendation letters based on supervisor feedback—to a random subset of 43,409 participants in New York City’s summer jobs program. Letters increase employment the following year by 3 percentage points (4.5 percent). Earnings effects grow over 4 years to a cumulative $1,349 (4.9 percent). We find no evidence of increased job search or confidence; instead, the signals help employers better identify successful matches with high-productivity workers. But the additional work hampers on-time high school graduation, especially among low-achieving students.
Author contact info: Sara B. Heller University of Michigan Department of Economics 611 Tappan Street, Lorch Hall Room 238 Ann Arbor, MI 48109 E-Mail: sbheller@umich.edu Judd B. Kessler The Wharton School University of Pennsylvania 320 Vance Hall Philadelphia, PA 19104 Tel: 215/898-7696 Fax: 215/898-7635 E-Mail: judd.kessler@wharton.upenn.edu

Does Digital Trade Change the Purpose of a Trade Agreement? - Staiger, Robert W (National Bureau of Economic Research Working Paper Series, 2021)
The design of a trade agreement should reflect its purpose. Does digital trade change the purpose of a trade agreement? To explore this question, I first describe the definitional and classification issues associated with digital trade, and for modeling purposes I adopt a simple taxonomy of the ways in which digital trade can arise and the policies that can be used to restrict such trade. I then review what the theoretical literature on the economics of trade agreements has to say about the purpose of a trade agreement in a pre-digital model world economy, and how this purpose can be seen to be reflected in the broad design features of both GATT and GATS, the WTO agreements that govern international trade in goods and services respectively. Finally, I introduce digital trade into the model world economy and revisit the purpose of a trade agreement. From this perspective I consider whether the rise of digital trade warrants changes in the design of the WTO.
Author contact info: Robert W. Staiger Department of Economics Dartmouth College 319 Silsby Hanover, NH 03755 Tel: (603)-646-9345 E-Mail: rstaiger@dartmouth.edu

Cognitive Uncertainty in Intertemporal Choice - Enke, Benjamin; Graeber, Thomas (National Bureau of Economic Research Working Paper Series, 2021)
This paper studies the relevance of cognitive uncertainty – subjective uncertainty over one's utility-maximizing action – for understanding and predicting intertemporal choice. The main idea is that when people are cognitively noisy, such as when a decision is complex, they implicitly treat different time delays to some degree alike. By experimentally measuring and manipulating cognitive uncertainty, we document three economic implications of this idea. First, cognitive uncertainty explains various core empirical regularities, such as why people often appear very impatient, why per-period impatience is smaller over long than over short horizons, why discounting is often hyperbolic even when the present is not involved, and why choices frequently violate transitivity. Second, impatience is context-dependent: discounting is substantially more hyperbolic when the decision environment is more complex. Third, cognitive uncertainty matters for choice architecture: people who are nervous about making mistakes are twice as likely to follow expert advice to be more patient.
Author contact info: Benjamin Enke Department of Economics Harvard University Littauer M008 Cambridge, MA 02138 Tel: 617/496-5895 E-Mail: enke@fas.harvard.edu Thomas Graeber Harvard Business School Harvard University E-Mail: tgraeber@hbs.edu

Effect of Health Insurance in India: A Randomized Controlled Trial - Malani, Anup; Holtzman, Phoebe; Imai, Kosuke; Kinnan, Cynthia; Miller, Morgen; Swaminathan, Shailender; Voena, Alessandra; Woda, Bartosz; Conti, Gabriella (National Bureau of Economic Research Working Paper Series, 2021)
We report on a large randomized controlled trial of hospital insurance for above-poverty-line Indian households. Households were assigned to free insurance, sale of insurance, sale plus cash transfer, or control. To estimate spillovers, the fraction of households offered insurance varied across villages. The opportunity to purchase insurance led to 59.91% uptake and access to free insurance to 78.71% uptake. Access increased insurance utilization. Positive spillover effects on utilization suggest learning from peers. Many beneficiaries were unable to use insurance, demonstrating hurdles to expanding access via insurance. Across a range of health measures, we estimate no significant impacts on health.
Author contact info: Anup Malani University of Chicago Law School 1111 E. 60th Street Chicago, IL 60637 Tel: 773/702-9602 E-Mail: amalani@uchicago.edu Phoebe Holtzman 330 Madison Ave 4th floor New York, NY 10017 USA E-Mail: phoebe.holtzman@am.JLL.com Kosuke Imai Harvard University 1737 Cambridge Street Cambridge, MA 02138 E-Mail: imai@harvard.edu Cynthia Kinnan Department of Economics Tufts University 177 College Ave #620 Medford, MA 02155 E-Mail: cynthia.kinnan@tufts.edu Morgen Miller University of Chicago Law School 1111 E. 60th St. Chicago, IL 60637 E-Mail: mmmiller@uchicago.edu Shailender Swaminathan Sai University SSPDL Building, Beta Block 4th Floor Navalur Old Mahabalipuram Rd Chennai India E-Mail: shailender.s@saiuniversity.edu.in Alessandra Voena Stanford University Landau Economics Building 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/498-1096 E-Mail: avoena@stanford.edu Bartosz Woda University of Chicago Law School 1111 E. 60th St. Chicago, IL 60637 USA E-Mail: bartekwoda@gmail.com Gabriella Conti Department of Economics University College London Drayton House 30 Gordon Street London WC1H 0AX United Kingdom Tel: Tel. +44(0)20 76794 1731 E-Mail: gabriella.conti@ucl.ac.uk

Did Pandemic Unemployment Benefits Reduce Employment? Evidence from Early State-Level Expirations in June 2021 - Holzer, Harry J; Hubbard, R. Glenn; Strain, Michael R (National Bureau of Economic Research Working Paper Series, 2021)
The generosity of Unemployment Insurance (UI) benefits was expanded during the pandemic (FPUC), along with the groups of workers eligible for benefits (PUA). These two programs were set to expire in September 2021, but 18 states opted out of both in June 2021. Using Current Population Survey data, we present difference-in-difference and event study estimates that the flow of unemployed workers into employment increased by around two-thirds following early termination. We construct a counterfactual scenario that implies the national unemployment rate in each of July and August would have been around 0.3 percentage point lower than they were, and the employment-population ratio would have been around 0.1-0.2 percentage point higher than it was, had all states ended FPUC and PUA in June. Expanded eligibility and generosity of UI may have both slowed transitions from unemployment to employment. We also present some suggestive evidence that households with relatively high confidence in their ability to meet expenses may have been less sensitive to the termination of expanded benefits. Finally, we present evidence that early termination reduced the share of households that had no difficulty meeting expenses by five percent. The welfare implications of the early termination of FPUC and PUA are therefore ambiguous.
Author contact info: Harry J. Holzer McCourt School of Public Policy Old North 401 Georgetown University 37 and O St. NW Washington DC 20057 E-Mail: hjh4@georgetown.edu R. Glenn Hubbard Graduate School of Business Columbia University, Kravis Hall 572 665 West 130th Street New York, NY 10027 Tel: 212/854-3493 Fax: 212/864-6184 E-Mail: rgh1@columbia.edu Michael R. Strain American Enterprise Institute 1789 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: michael.strain@aei.org

Peltzman Revisited: Quantifying 21st Century Opportunity Costs of FDA Regulation - Mulligan, Casey B (National Bureau of Economic Research Working Paper Series, 2021)
This paper revisits Peltzman (1973) in light of two recent opportunities to quantitatively assess tradeoffs in drug regulation. First, reduced regulatory barriers to drug manufacturing associated with the 2017 reauthorization of Generic Drug User Fee Amendments were followed by significantly more entry and lower consumer prices for prescription drugs. Using a simple and versatile industry model and historical data on entry, I find that easing generic restrictions discourages innovation, but this welfare cost is more than offset by consumer benefits from enhanced competition, especially after 2016. Second, accelerated vaccine approval in 2020 had unprecedented net benefits as it not only improved health but substantially changed the trajectory of the wider economy. The evidence suggests that cost-benefit analysis of FDA regulation is incomplete without accounting for substitution toward potentially unsafe and ineffective treatments that are both outside FDA jurisdiction and heavily utilized prior to FDA approval. Moreover, the policy processes initiating these 21st century regulatory changes show a clear influence of Peltzman’s 1973 findings.
Author contact info: Casey B. Mulligan University of Chicago Department of Economics 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-9017 Fax: 773/702-8490 E-Mail: c-mulligan@uchicago.edu

Is Digital Credit Filling a Hole or Digging a Hole? Evidence from Malawi - Brailovskaya, Valentina; Dupas, Pascaline; Robinson, Jonathan (National Bureau of Economic Research Working Paper Series, 2021)
Digital credit has expanded rapidly in Africa, mostly in the form of short-term, high-interest loans offered via mobile money. Loan terms are often opaque and consumer financial literacy is low, providing opportunities for predatory lending. A regression discontinuity analysis shows no negative effect of access to digital loans on financial well-being, but the majority of borrowers fail to repay on time and incur high late fees. We randomize exposure to a short phone-based financial literacy intervention. The intervention improved knowledge and marginally improved loan repayment but increased loan demand, increasing overall default risk.
Author contact info: Valentina Brailovskaya IDInsight E-Mail: valentina.brailovskaya@idinsight.org Pascaline Dupas Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: pdupas@princeton.edu Jonathan Robinson Department of Economics University of California, Santa Cruz 457 Engineering 2 Santa Cruz, CA 95064 Tel: 831/459-5618 Fax: 831/459-5077 E-Mail: jmrtwo@ucsc.edu

Identifying Monetary Policy Shocks Using the Central Bank's Information Set - Bachmann, Ruediger; Gödl-Hanisch, Isabel; Sims, Eric R (National Bureau of Economic Research Working Paper Series, 2021)
We identify monetary policy shocks by exploiting variation in the central bank’s information set. To be specific, we use differences between nowcasts of the output gap and inflation with final, revised estimates of these series to isolate movements in the policy rate unrelated to economic conditions. We then compute the effects of a monetary policy shock on the aggregate economy using local projection methods. We find that a contractionary monetary policy shock has a limited negative effect on output but a persistent negative impact on prices. In contrast to alternative identification approaches, we do not observe a price puzzle when analyzing the period from 1987 to 2008. Further, we validate the identification approach in a simple New Keynesian model, augmented by the assumption that the central bank observes the ingredients of the Taylor rule with error.
Author contact info: Ruediger Bachmann 3026 Jenkins Nanovic Hall Department of Economics University of Notre Dame Notre Dame, IN 46556 E-Mail: rbachman@nd.edu Isabel Gödl-Hanisch Ludwigstrasse 28 Munich 80539 E-Mail: isabel.goedl-hanisch@econ.lmu.de Eric R. Sims Department of Economics University of Notre Dame 3060 Jenkins Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-6309 Fax: 574/631-4783 E-Mail: esims1@nd.edu

Time Use and Gender in Africa in Times of Structural Transformation - Dinkelman, Taryn; Ngai, L. Rachel (National Bureau of Economic Research Working Paper Series, 2021)
Many African countries are still in the early stages of structural transformation. Typically, as economies move through the structural transformation, activities once conducted within the household are outsourced to the market. This has particular implications for women’s time use. In this paper, we document that current patterns of female time use in home production in several African countries closely resemble historical time use patterns in the US. We highlight two stylized facts about women’s time use in Africa. First, in North Africa, women spend very few hours in market work and female labor force participation overall is extremely low. Second, although extensive margin participation of women is high in sub-Saharan Africa, women tend to work in the market for only a few hours each week, with the rest of their work hours spent in home production. These two facts suggest two types of constraints that could slow down the reallocation of female time from home to market as economies grow: Social norms related to women’s market work, and a lack of infrastructure (e.g. household infrastructure and childcare facilities) to facilitate marketizing home production. We discuss recent empirical evidence related to each set of constraints and highlight new avenues for research.
Author contact info: Taryn Dinkelman Department of Economics 3058 Jenkins Nanovic Halls University of Notre Dame South Bend, IN 46617 Tel: 574-631-2785 E-Mail: tdinkelm@nd.edu L. Rachel Ngai London School of Economics E-Mail: l.ngai@lse.ac.uk

Labor Productivity Growth and Industrialization in Africa - McMillan, Margaret S; Zeufack, Albert (National Bureau of Economic Research Working Paper Series, 2021)
Manufacturing has made an important contribution to raising living standards in many parts of the world. Concerns about premature deindustrialization have made some observers skeptical about the potential for manufacturing to play this role in Africa. But employment in African manufacturing has grown rapidly over the past 20 years. These employment gains have been accompanied by: (i) large increases in the number of small manufacturing firms; (ii) limited employment gains in large firms; and (iii) robust labor productivity growth in Africa’s large firms. Limited employment growth in Africa’s large manufacturing firms is partly a result of the capital intensity of the manufacturing sub-sectors in which African countries are most engaged – the processing of resources, and partly a result of rising capital intensity in manufacturing. The potential for manufacturing to raise living standards in Africa depends on indirect job creation by large firms through backward and forward linkages and increasing labor productivity in small firms.
Author contact info: Margaret S. McMillan Tufts University Department of Economics 177 College Ave #669 Medford, MA 02155 E-Mail: margaret.mcmillan@tufts.edu Albert Zeufack 1818 H St. NW Washington, DC 20433 United States E-Mail: azeufack@worldbank.org

Using Neural Networks to Predict Micro-Spatial Economic Growth - Khachiyan, Arman; Thomas, Anthony; Zhou, Huye; Hanson, Gordon H; Cloninger, Alex; Rosing, Tajana; Khandelwal, Amit (National Bureau of Economic Research Working Paper Series, 2021)
We apply deep learning to daytime satellite imagery to predict changes in income and population at high spatial resolution in US data. For grid cells with lateral dimensions of 1.2km and 2.4km (where the average US county has dimension of 55.6km), our model predictions achieve R2 values of 0.85 to 0.91 in levels, which far exceed the accuracy of existing models, and 0.32 to 0.46 in decadal changes, which have no counterpart in the literature and are 3-4 times larger than for commonly used nighttime lights. Our network has wide application for analyzing localized shocks.
Author contact info: Arman Khachiyan E-Mail: arman.khachiyan@gmail.com Anthony Thomas Department of Computer Science and Engineering UC San Diego San Diego, CA 92093 E-Mail: ahthomas@eng.ucsd.edu Huye Zhou Department of Mathematics UC San Diego San Diego, CA 92093 E-Mail: h1zhou@ucsd.edu Gordon H. Hanson Harvard Kennedy School Harvard University 79 John F. Kennedy St. Cambridge, MA 02138 E-Mail: gordon_hanson@hks.harvard.edu Alex Cloninger Department of Mathematics San Diego, CA 92093 E-Mail: acloninger@ucsd.edu Tajana Rosing Department of Computer Science and Engineering UC San Diego San Diego, CA 92093 E-Mail: tajana@eng.ucsd.edu Amit Khandelwal Yale University Economics Department, Jackson School 55 Hillhouse Avenue New Haven, CT 06511 E-Mail: amit.khandelwal@yale.edu

STEM Employment Resiliency During Recessions: Evidence from the COVID-19 Pandemic - Davis, James C; Diethorn, Holden A; Marschke, Gerald R; Wang, Andrew J (National Bureau of Economic Research Working Paper Series, 2021)
Employment in STEM occupations suffered smaller peak-to-trough percentage declines than non-STEM occupations during the Great Recession and COVID-19 recession, suggesting a relative resiliency of STEM employment. We exploit the sudden peak-to-trough declines in STEM and non-STEM employment during the COVID-19 recession to measure STEM recession-resiliency, decomposing our difference-in-differences estimate into parts explained by various sources. We find that STEM knowledge importance on the job explains the greatest share of STEM employment resiliency, and that workers in non-STEM occupations who nonetheless use STEM knowledge experienced better employment outcomes. STEM employment resiliency may explain the mild effects of COVID-19 on innovative activity.
Author contact info: James C. Davis Economic Research Service U.S. Department of Agriculture PO Box 419205, MS 9999 Kansas City, MO 64141-6205 E-Mail: James.Davis2@usda.gov Holden A. Diethorn 202 College Park Street Ascension Hall Gambier, OH 43022 E-Mail: holden.diethorn@gmail.com Gerald R. Marschke State University of New York at Albany Economics Department 1400 Washington Avenue Albany, NY 12222 E-Mail: gerald.marschke@gmail.com Andrew J. Wang National Bureau of Economic Research 1050 Massachusetts Avenue Cambridge, MA 02138 E-Mail: awang@nber.org

Changing Income Risk across the US Skill Distribution: Evidence from a Generalized Kalman Filter - Braxton, J. Carter; Herkenhoff, Kyle F; Rothbaum, Jonathan L; Schmidt, Lawrence (National Bureau of Economic Research Working Paper Series, 2021)
For whom has earnings risk changed, and why? We answer these questions by combining the Kalman filter and EM-algorithm to estimate persistent and temporary earnings for every individual at every point in time. We apply our method to administrative earnings linked with survey data. We show that since the 1980s, persistent earnings risk rose by 20% for both employed and unemployed workers and the scarring effects of unemployment doubled. At the same time, temporary earnings risk declined. Using education and occupation codes, we show that rising persistent earnings risk is concentrated among high-skill workers and related to technology adoption.
Author contact info: J. Carter Braxton University of Wisconsin E-Mail: j.carter.braxton@gmail.com Kyle F. Herkenhoff University of Minnesota Department of Economics 4-101 Hanson Hall 1925 Fourth Street South Minneapolis, MN 55455 Tel: 925/360-7623 E-Mail: kfh@umn.edu Jonathan L. Rothbaum Social, Economic, and Housing Statistics US Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: jonathan.l.rothbaum@census.gov Lawrence D.W. Schmidt Sloan School of Management Massachusetts Institute of Technology 100 Main Street Cambridge, MA E-Mail: ldws@mit.edu

Randomization for Causality, Ethnography for Mechanisms: Illiquid Savings for Liquor in an Autarkic Society - Godoy, Ricardo; Karlan, Dean; Zinman, Jonathan (National Bureau of Economic Research Working Paper Series, 2021)
What should researchers do when confronted with surprising results? Financial access innovations usually leave “temptation” spending unaffected or reduced. However, we found that promotion of savings lockboxes in a largely autarkic society increased alcohol consumption and blood pressure, despite no one reporting intentions to save for alcohol. To probe mechanisms that could explain this pattern, we then used ethnographic methods, including direct observations of drinking (“scans”) and debriefing interviews to discuss the earlier trial results. We learn that sponsoring drinks confers prestige, but the stigma attached to drinking by outsiders likely discouraged reporting intentions to save for it.
Author contact info: Ricardo Godoy Heller-Brown Building E-Mail: rgodoy@brandeis.edu Dean Karlan Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8706 E-Mail: dean.karlan@gmail.com Jonathan Zinman Department of Economics Dartmouth College 314 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-0075 Fax: 603/646-2122 E-Mail: jzinman@dartmouth.edu

Job Training Through Turmoil - Barrera-Osorio, Felipe; Kugler, Adriana D; Silliman, Mikko I (National Bureau of Economic Research Working Paper Series, 2021)
We follow the labor market outcomes of applicants who were randomized into job training a year and a half before the pandemic through the subsequent economic turmoil that resulted from COVID-19. Despite persistently improved labor market outcomes of training participants prior to March 2020, we show that job losses resulting from the pandemic washed away all the benefits of the program. A year and a half after the initial scars of the pandemic, there are no visible signs of recovery of trainees’ labor market outcomes.
Author contact info: Felipe Barrera-Osorio Department of Leadership, Policy and Organizations Vanderbilt University 106 C Payne hall 230 Appleton Place Nashville, MA 37203 E-Mail: felipe.barrera.-.osorio@vanderbilt.edu Adriana D. Kugler Georgetown University McCourt School of Public Policy 37th and O Streets NW, Suite 311 Washington, DC 20057 Tel: 202/687-5716 Fax: 202/687-5544 E-Mail: ak659@georgetown.edu Mikko I. Silliman Skanselien 27 Bergen, MA 5031 Norway Tel: +358413659906 E-Mail: mikko.silliman@gmail.com

When (and Why) Providers Do Not Respond to Changes in Reimbursement Rates - Dillender, Marcus; Jinks, Lu G; Lo Sasso, Anthony T (National Bureau of Economic Research Working Paper Series, 2021)
Policies to reduce health care payments can lead to health care access issues if providers reduce their supply in response to reimbursement rate reductions. We examine the impact of a policy that reduced reimbursement rates by 30% in a workers’ compensation insurance system that provided generous reimbursement rates relative to other payers even after the rate reduction. The results suggest that providers’ supply is inelastic at the part of the reimbursement distribution that we study. Our estimates indicate that the policy reduced annual workers’ compensation medical costs by over $400 million without affecting injured workers’ health care utilization or health.
Author contact info: Marcus Dillender Department of Medicine, Health, and Society Vanderbilt University 422 Buttrick Hall Nashville, TN 37235 E-Mail: marcus.o.dillender@vanderbilt.edu Lu G. Jinks Analysis Group 111 Huntington Ave. 14th FL. Boston, MA 02199 E-Mail: lu.jinks@analysisgroup.com Anthony T. Lo Sasso Economics Department DePaul University 1 East Jackson Chicago, IL 60604 USA Tel: 312-362-1242 E-Mail: alosasso@depaul.edu

COVID-19 Vaccination Mandates and Vaccine Uptake - Karaivanov, Alexander; Kim, Dongwoo; Lu, Shih En; Shigeoka, Hitoshi (National Bureau of Economic Research Working Paper Series, 2021)
We evaluate the impact of government mandated proof of vaccination requirements for access to public venues and non-essential businesses on COVID-19 vaccine uptake. We find that the announcement of a mandate is associated with a rapid and significant surge in new vaccinations (more than 60% increase in weekly first doses) using the variation in the timing of these measures across Canadian provinces in a difference-in-differences approach. Time-series analysis for each province and for France, Italy and Germany corroborates this finding, and we estimate cumulative gains of up to 5 percentage points in provincial vaccination rates and 790,000 or more first doses for Canada as a whole as of October 31, 2021 (5 to 13 weeks after the provincial mandate announcements). We also find large vaccination gains in France (3 to 5 mln first doses), Italy (around 6 mln) and Germany (around 3.5 mln) 11 to 16 weeks after the proof of vaccination mandate announcements.
Author contact info: Alexander Karaivanov Department of Economics Simon Fraser University 8888 University Drive Burnaby, BC V5A 1S6 Canada E-Mail: akaraiva@sfu.ca Dongwoo Kim Department of Economics Simon Fraser University 8888 University Drive Burnaby, BC V5A 1S6 Canada E-Mail: dongwook@sfu.ca Shih En Lu Department of Economics Simon Fraser University 8888 University Drive Burnaby, BC V5A 1S6 Canada E-Mail: shihenl@sfu.ca Hitoshi Shigeoka Department of Economics Simon Fraser University 8888 University Drive, WMC 4653 Burnaby, BC V5A 1S6 Tel: 778/782-5348 E-Mail: hitoshi_shigeoka@sfu.ca

The US-China Trade War and Global Reallocations - Fajgelbaum, Pablo; Goldberg, Pinelopi K; Kennedy, Patrick J; Khandelwal, Amit; Taglioni, Daria (National Bureau of Economic Research Working Paper Series, 2021)
The US-China trade war created net export opportunities rather than simply shifting trade across destinations. Many “bystander” countries grew their exports of taxed products into the rest of the world (excluding US and China). Country-specific components of tariff elasticities, rather than specialization patterns, drove large cross-country variation in export growth of tariff-exposed products. The elasticities of exports to US-China tariffs identify whether a country’s exports complement or substitute US or China and its supply curve’s slope. Countries that operate along downward-sloping supplies whose exports substitute (complement) US and China are among the larger (smaller) beneficiaries of the trade war.
Author contact info: Pablo D. Fajgelbaum Department of Economics University of California, Los Angeles 8283 Bunche Hall Mail Stop: 147703 Los Angeles, CA 90095 E-Mail: pfajgelbaum@gmail.com Pinelopi K. Goldberg Yale University Department of Economics 87 Trumbull Street P.O. Box 208264 New Haven, CT E-Mail: penny.goldberg@yale.edu Patrick J. Kennedy E-Mail: Patrick.Kennedy@berkeley.edu Amit Khandelwal Yale University Economics Department, Jackson School 55 Hillhouse Avenue New Haven, CT 06511 E-Mail: amit.khandelwal@yale.edu Daria Taglioni World Bank 1818 H Street, NW Washington DC 20433 E-Mail: dtaglioni@worldbank.org

Customers and Retail Growth - Einav, Liran; Klenow, Peter J; Levin, Jonathan D; Murciano-Goroff, Raviv (National Bureau of Economic Research Working Paper Series, 2021)
Using Visa debit and credit card transactions in the U.S. from 2016 to 2019, we document the importance of customers in accounting for sales variation across merchants, across stores within retail chains, and over time for individual merchants and stores. Customers, as opposed to transactions per customer or dollar sales per transaction, consistently account for about 80% of sales variation. The top 1% of growing and shrinking merchants account for about 70% of customer and sales reallocation in a given year. In order to illustrate some of the potential implications, we write down an endogenous growth model with and without the customer margin. In the context of this model, we find that the customer margin dramatically increases the size and growth contribution of the largest firms, but lowers the aggregate growth rate by diverting resources from research to customer acquisition activities.
Author contact info: Liran Einav Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/723-3704 Fax: 650/725-5702 E-Mail: leinav@stanford.edu Peter J. Klenow Department of Economics 579 Jane Stanford Way Stanford University Stanford, CA 94305-6072 Tel: 650/725-8169 Fax: NA E-Mail: Klenow@Stanford.edu Jonathan D. Levin Graduate School of Business Stanford University Stanford, CA 94305-7298 Tel: 650/723-5962 E-Mail: jdlevin@stanford.edu Raviv Murciano-Goroff Boston University Questrom School of Business 595 Commonwealth Ave Boston, MA 02215 USA Tel: 617-353-4510 E-Mail: ravivmg@bu.edu

Let the Worst One Fail: A Credible Solution to the Too-Big-To-Fail Conundrum - Philippon, Thomas; Wang, Olivier (National Bureau of Economic Research Working Paper Series, 2021)
We study time-consistent bank resolution mechanisms. When interventions are ex post efficient, a government cannot commit not to inject capital into the banking system. Contrary to common wisdom, we show that the government may still avoid moral hazard and implement the first best allocation by using the distribution of bailouts across banks to provide ex ante incentives. In particular, we analyze properties of credible tournament mechanisms that provide support to the best performing banks and resolve the worst performing ones, including through mergers. Our mechanism continues to perform well if banks are partially substitutable, and if they are heterogeneous in their size, interconnections, and thus systemic risk, as long as bailout funds can be targeted to particular banks.
Author contact info: Thomas Philippon New York University Stern School of Business 44 West 4th Street, Suite 9-190 New York, NY 10012-1126 Tel: 212/998-0490 Fax: 212/995-4233 E-Mail: tphilipp@stern.nyu.edu Olivier Wang New York University Kaufman Management Center 44 West Fourth Street New York, NY 10012 E-Mail: olivier.wang@nyu.edu

Simple Allocation Rules and Optimal Portfolio Choice Over the Lifecycle - Duarte, Victor; Fonseca, Julia; Goodman, Aaron S; Parker, Jonathan A (National Bureau of Economic Research Working Paper Series, 2021)
We develop a machine-learning solution algorithm to solve for optimal portfolio choice in a lifecycle model that includes many features of reality modelled only separately in previous work. We use the quantitative model to evaluate the consumption-equivalent welfare losses from using simple rules for portfolio allocation across stocks, bonds, and liquid accounts instead of the optimal portfolio choices, both for optimizing households and for households that undersave. We find that the consumption-equivalent losses from using an age-dependent rule as embedded in current target-date/lifecycle funds (TDFs) are substantial, around 2 to 3 percent of consumption, despite the fact that TDF rules mimic average optimal behavior by age closely until shortly before retirement. Optimal equity shares have substantial heterogeneity, particularly by wealth level, state of the business cycle, and dividend-price ratio, implying substantial gains to further customization of advice or TDFs in these dimensions.
Author contact info: Victor Duarte Gies College of Business University of Illinois at Urbana-Champaign 1206 South 6th Street Champaign, IL 61820 E-Mail: vduarte@illinois.edu Julia Fonseca University of Illinois at Urbana-Champaign Gies College of Business 1206 S. Sixth Street Champaign, IL 61820 E-Mail: juliaf@illinois.edu Aaron S. Goodman Vanguard Investment Strategy Group 100 Vanguard Blvd Malvern, PA 19355 E-Mail: aaron_goodman2@vanguard.com Jonathan A. Parker MIT Sloan School of Management 100 Main Street, E62-642 Cambridge, MA 02142-1347 Tel: 617-253-7218 E-Mail: JAParker@MIT.edu

The Missing Intercept: A Demand Equivalence Approach - Wolf, Christian K (National Bureau of Economic Research Working Paper Series, 2021)
I give conditions under which changes in private spending are accommodated in general equilibrium exactly like changes in aggregate fiscal expenditure. Under such demand equivalence, researchers can use time series evidence on fiscal multipliers to recover the general equilibrium "missing intercept" of shocks to private spending identified in the cross section. I apply this method to deficit-financed stimulus checks, and find a) a large direct consumption spending response, and b) a fiscal multiplier of one and so a missing intercept close to zero. I also discuss the robustness of this aggregation approach to empirically plausible violations of demand equivalence.
Author contact info: Christian K. Wolf MIT Department of Economics The Morris and Sophie Chang Building 50 Memorial Drive Cambridge, MA 02139 E-Mail: ckwolf@mit.edu

Individual and Collective Information Acquisition: An Experimental Study - Reshidi, Pëllumb; Lizzeri, Alessandro; Yariv, Leeat; Chan, Jimmy H; Suen, Wing (National Bureau of Economic Research Working Paper Series, 2021)
Many committees—juries, political task forces, etc.—spend time gathering costly information before reaching a decision. We report results from lab experiments focused on such information-collection processes. We consider decisions governed by individuals and groups and compare how voting rules affect outcomes. We also contrast static information collection, as in classical hypothesis testing, with dynamic collection, as in sequential hypothesis testing. Several insights emerge. Static information collection is excessive, and sequential information collection is non-stationary, producing declining decision accuracies over time. Furthermore, groups using majority rule yield especially hasty and inaccurate decisions. Nonetheless, sequential information collection is welfare enhancing relative to static collection, particularly when unanimous rules are used.
Author contact info: Pëllumb Reshidi Department of Economics Princeton University Julis Romo Rabinowitz Princeton, NJ 08544 E-Mail: preshidi@princeton.edu Alessandro Lizzeri Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: lizzeri@princeton.edu Leeat Yariv Department of Economics Princeton University Julis Romo Rabinowitz Princeton, NJ 08544 Tel: 609/258-4021 E-Mail: lyariv@princeton.edu Jimmy H. Chan Department of Economics Chinese University of Hong Kong Hong Kong Hong Kong E-Mail: jimmyhingchan@cuhk.edu.hk Wing Suen Room 908, K.K. Leung Building The University of Hong Kong Pokfulam Road Hong Kong E-Mail: wsuen@econ.hku.hk

Dominant Currency Paradigm: A Review - Gopinath, Gita; Itskhoki, Oleg (National Bureau of Economic Research Working Paper Series, 2021)
A handful of currencies, especially the US dollar, play a dominant role in international trade. We survey the active theoretical and empirical literature that documents patterns of currency use in global trade, the implications of dominant currencies for international transmission of shocks, exchange rate pass-through, expenditure switching, and optimal monetary policy. We describe advances in the endogenous currency choice literature including conditions for the emergence and persistence of dominant currency equilibria.
Author contact info: Gita Gopinath International Monetary Fund 700 19th St. NW Washington, DC 20431 Tel: 617/495-8161 Fax: 617/495-7730 E-Mail: ggopinath@imf.org Oleg Itskhoki Department of Economics University of California, Los Angeles Bunche Hall, 315 Portola Plaza Los Angeles, CA 90095-1477 Tel: 609/216-4489 E-Mail: itskhoki@econ.ucla.edu

Making Teaching Last: Long-Run Value-Added - Gilraine, Michael; Pope, Nolan G (National Bureau of Economic Research Working Paper Series, 2021)
Teacher value-added (VA) measures how teachers improve their students' contemporaneous test scores. Many teachers, however, argue that contemporaneous test scores are a poor proxy for their permanent influence on students. This paper considers a new VA measure -- 'long-run VA' -- that captures teachers' contributions that persist by replacing contemporaneous test scores with subsequent test scores in VA estimation. We find that students assigned to high long-run VA teachers fare substantially better in terms of long-term outcomes. Policy simulations indicate that the use of long-run VA improves policy effectiveness by a factor of two compared to traditional VA measures.
Author contact info: Michael Gilraine Economics Department Simon Fraser University West Mall Centre 3602 8888 University Drive Burnaby, BC V5A 1S6 Canada Tel: 7787231579 E-Mail: mike.gilraine@nyu.edu Nolan G. Pope University of Maryland 3114 Tydings Hall 7343 Preinkert Dr College Park, MD 20742 E-Mail: npope@umd.edu

Empirical Option Pricing Models - Bates, David S (National Bureau of Economic Research Working Paper Series, 2021)
This paper is an overview of empirical options research, with primary emphasis on research into systematic stochastic volatility and jump risks relevant for pricing stock index options. The paper reviews evidence from time series analysis, option prices and option price evolution regarding those risks, and discusses required compensation.
Author contact info: David S. Bates Henry B. Tippie College of Business Department of Finance University of Iowa Iowa City, IA 52242-1000 Tel: 319/353-2288 Fax: 319/335-3690 E-Mail: david-bates@uiowa.edu

Health Shocks of the Father and Longevity of the Children's Children - Costa, Dora (National Bureau of Economic Research Working Paper Series, 2021)
I document the transmission of a grandfather’s net nutritional deprivation in young adulthood across multiple generations using the grandfather’s ex-POW status in the US Civil War (1861-5). I uncover an association between a grandfather’s ex-POW status and the longevity after age 45 of his sons and male-line grandsons but not of his daughters, granddaughters, female-line grandsons, children-in-law, or grandchildren-in-law. Male-line grandsons lost roughly a year of life at age 45, or 4% of remaining life expectancy, if descended from ex-POWs who suffered severe captivity conditions than if descended from non-POWs. I find that the grandfather’s age at exposure, own education and own and father’s poor late gestatational conditions, as proxied by season of birth, mediate this relationship. I rule out socioeconomic status, marriage and mortality selection, and cultural or psychological transmission from grandfather to grandson as explanations. I cannot rule out an epigenetic explanation.
Author contact info: Dora Costa Bunche Hall 9272 Department of Economics UCLA Box 951477 Los Angeles, CA 90095-1477 Tel: (310) 825-4249 Fax: (310) 825-9528 E-Mail: costa@econ.ucla.edu

Technology, Vintage-Specific Human Capital, and Labor Displacement: Evidence from Linking Patents with Occupations - Kogan, Leonid; Papanikolaou, Dimitris; Schmidt, Lawrence D. W; Seegmiller, Bryan (National Bureau of Economic Research Working Paper Series, 2021)
We develop a measure of workers’ technology exposure that relies only on textual descriptions of patent documents and the tasks performed by workers in an occupation. Our measure appears to identify a combination of labor-saving innovations but also technologies that may require skills that incumbent workers lack. Using a panel of administrative data, we examine how subsequent worker earnings relate to workers’ technology exposure. We find that workers at both the bottom but also the top of the earnings distribution are displaced. Our interpretation is that low-paid workers are displaced as their tasks are automated while the highest-paid workers face lower earnings growth as some of their skills become obsolete. Our calibrated model fits these facts and emphasizes the importance of movements in skill quantities, not just skill prices, for the link between technology and inequality.
Author contact info: Leonid Kogan MIT Sloan School of Management 100 Main Street, E62-636 Cambridge, MA 02142 Tel: 617/504-9728 Fax: 617/258-6855 E-Mail: lkogan@mit.edu Dimitris Papanikolaou Kellogg School of Management Northwestern University 2211 Campus Drive, Office 4319 Evanston, IL 60208 Tel: 847/491-7704 E-Mail: d-papanikolaou@kellogg.northwestern.edu Lawrence D.W. Schmidt Sloan School of Management Massachusetts Institute of Technology 100 Main Street Cambridge, MA E-Mail: ldws@mit.edu Bryan Seegmiller Northwestern University Kellogg School of Management E-Mail: bryan.seegmiller@kellogg.northwestern.edu

Has Global Agricultural Trade Been Resilient Under Covid-19? Findings from an Econometric Assessment of 2020 - Arita, Shawn; Grant, Jason; Sydow, Sharon S; Beckman, Jayson (National Bureau of Economic Research Working Paper Series, 2021)
Global agricultural trade, which increased at the end of 2020, has been described as “resilient” to the impacts of the COVID-19 coronavirus pandemic; however, the size and channels of its quantitative impacts are not clear. Using a reduced-form, gravity-based econometric model for monthly trade, we estimate the effects of COVID-19 incidence rates, policy restrictions imposed by governments to curb the outbreak, and the de facto reduction in human mobility/lockdown effect on global agricultural trade through the end of 2020. We find that while agricultural trade remained quite stable through the pandemic, the sector as a whole did not go unscathed. First, we estimate that COVID-19 reduced agricultural trade by the approximate range of 5 to 10 percent at the aggregate sector level; a quantified impact two to three times smaller in magnitude than our estimated impact on trade occurring in the non-agricultural sector. Second, we find sharp differences across individual commodities. In particular, we find that non-food items (hides and skins, ethanol, cotton, and other commodities), meat products including seafood, and higher value agri-food products were most severely impacted by the pandemic; however, the COVID- 19 trade effect for the majority of food and bulk agricultural commodity sectors were found to be insignificant, or in a few cases, positive. Finally, we also examine the effects across low vs high income countries, the changing dynamics of the pandemic’s effect on trade flows, and the effects along the extensive product margins of trade.
Author contact info: Shawn Arita Office of the Economist Washington, DC United States E-Mail: shawn.arita@usda.gov Jason Grant Virginia Tech Blacksburg, VA E-Mail: jhgrant@vt.edu Sharon S. Sydow Office of the Economist Washington, DC United States E-Mail: sharon.sydow@usda.gov Jayson Beckman Economic Research Service Washington, DC United States E-Mail: Jayson.Beckman@usda.gov

Researchers' Degrees-of-Flexibility and the Credibility of Difference-in-Differences Estimates: Evidence From the Pandemic Policy Evaluations - Weill, Joakim A; Stigler, Matthieu; Deschenes, Olivier; Springborn, Michael R (National Bureau of Economic Research Working Paper Series, 2021)
The COVID-19 pandemic brought unprecedented policy responses and a large literature evaluating their impacts. This paper re-examines this literature and investigates the role of researchers' degrees-of-flexibility on the estimated effects of mobility-reducing policies on social-distancing behavior. We find that two-way fixed effects estimates are not robust to minor changes in usually-unexplored dimensions of the degree-of-flexibility space. While standard robustness tests based on the sequential addition of covariates are very stable, small changes in the outcome variable and its transformation lead to large and sometimes contradictory changes in the estimates, where the same policy can be found to significantly increase or decrease mobility. Yet, due to the large number of degrees-of-flexibility, one can focus on a set of results that appears stable, while ignoring problematic ones. We show that recently developed heterogeneity-robust difference-in-differences estimators only partially mitigate these issues, and discuss how a strategy of identifying the point at which a sequence of ever more-stringent robustness tests eventually fail could increase the credibility of policy evaluations.
Author contact info: Joakim A. Weill Department of Agricultural and Resource Economics University of California, Davis Davis, CA 95616 E-Mail: Joakim.A.Weill@frb.gov Matthieu Stigler Center on Food Security and the Environment Stanford University Stanford, CA 94305 E-Mail: mstigler@stanford.edu Olivier Deschenes Department of Economics 2127 North Hall University of California, Santa Barbara Santa Barbara, CA 93106 Tel: 805/893-5617 Fax: 805/893-8830 E-Mail: olivier@econ.ucsb.edu Michael R. Springborn Department of Environmental Science & Policy University of California, Davis E-Mail: mspringborn@ucdavis.edu

Selection in Surveys: Using Randomized Incentives to Detect and Account for Nonresponse Bias - Dutz, Deniz; Huitfeldt, Ingrid; Lacouture, Santiago; Mogstad, Magne; Torgovitsky, Alexander; van Dijk, Winnie (National Bureau of Economic Research Working Paper Series, 2021)
We show how to use randomized participation incentives to test and account for nonresponse bias in surveys. We first use data from a survey about labor market conditions, linked to full-population administrative data, to provide evidence of large differences in labor market outcomes between participants and nonparticipants, differences which would not be observable to an analyst who only has access to the survey data. These differences persist even after correcting for observable characteristics, raising concerns about nonresponse bias in survey responses. We then use the randomized incentives in our survey to directly test for nonresponse bias, and find strong evidence that the bias is substantial. Next, we apply a range of existing methods that account for nonresponse bias and find they produce bounds (or point estimates) that are either wide or far from the ground truth. We investigate the failure of these methods by taking a closer look at the determinants of participation, finding that the composition of participants changes in opposite directions in response to incentives and reminder emails. We develop a model of participation that allows for two dimensions of unobserved heterogeneity in the participation decision. Applying the model to our data produces bounds (or point estimates) that are narrower and closer to the ground truth than the other methods. Our results highlight the benefits of including randomized participation incentives in surveys. Both the testing procedure and the methods for bias adjustment may be attractive tools for researchers who are able to embed randomized incentives into their survey.
Author contact info: Deniz Dutz University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: deniz.dutz@gmail.com Ingrid Huitfeldt Statistics Norway Akersveien 26, 0177 Oslo Norway E-Mail: ingrid.huitfeldt@gmail.com Santiago Lacouture 924 E 57th St Chicago, IL 60637 E-Mail: slacouture@uchicago.edu Magne Mogstad Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-3877 E-Mail: magne.mogstad@gmail.com Alexander Torgovitsky University of Chicago 1126 E. 59th Street Chicago, IL 60637 E-Mail: atorgovitsky@gmail.com Winnie van Dijk Department of Economics Yale University 87 Trumbull Street, B228 New Haven, CT 06520 E-Mail: winnie.vandijk@yale.edu

Productivity and Pay in the US and Canada - Greenspon, Jacob; Stansbury, Anna M; Summers, Lawrence H (National Bureau of Economic Research Working Paper Series, 2021)
We study the productivity-pay relationship in the United States and Canada along two dimensions. The first is divergence: the degree to which the levels of productivity and pay have diverged. The second is delinkage: the degree to which incremental increases in the rate of productivity growth translate into incremental increases in the rate of growth of pay, holding all else equal. We show that in both countries the pay of typical workers has diverged substantially from average labor productivity over recent decades, driven by both rising labor income inequality and a declining labor share of income. Even as the levels of productivity and pay have grown further apart, we find evidence for some linkage between productivity and pay in both countries: a one percentage point increase in the rate of productivity growth is associated with a positive increase in the rate of pay growth, holding all else equal. This linkage appears stronger in the US than in Canada. Overall, our findings lead us to tentatively conclude that policies or trends which lead to incremental increases in productivity growth, particularly in large relatively closed economies like the USA, will tend to raise middle class incomes. At the same time, other factors orthogonal to productivity growth have been driving productivity and typical pay further apart, emphasizing that much of the evolution in middle class living standards will depend on measures bearing on relative incomes.
Author contact info: Jacob Greenspon University of Oxford 10 Manor Rd Oxford OX1 3UQ United Kingdom E-Mail: jacob.greenspon@economics.ox.ac.uk Anna M. Stansbury MIT Sloan School of Management 100 Main Street Cambridge, MA 02142 E-Mail: amms@mit.edu Lawrence H. Summers Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 Tel: 617/495-9322 Fax: 617/495-0436 E-Mail: lhs@harvard.edu

The Incidence of the Corporate Income Tax is Irrelevant for its (Benefit-Based) Justification - Naitram, Simon M; Weinzierl, Matthew C (National Bureau of Economic Research Working Paper Series, 2021)
Robust support for corporate income taxation is a puzzle for standard tax theory because the tax’s incidence is uncertain and unreliable. We propose a resolution: if the corporate tax is seen as a benefit-based tax, its normative appeal depends on the correspondence between its incidence and that of the benefit which corporations derive from the state’s activities. We show that a simple mechanism makes this correspondence exact—and the net incidence of the tax zero—when the tax base matches what we call the benefit base. As a result, the appeal of the corporate income tax is independent of incidence as conventionally understood.
Author contact info: Simon Naitram The University of the West Indies Cave Hill Campus, PO Box 64 Bridgetown BB11000 Barbados E-Mail: simon.naitram@gmail.com Matthew C. Weinzierl Harvard Business School 277 Morgan Soldiers Field Boston, MA 02163 Tel: 617/495-6697 Fax: 617/496-5994 E-Mail: mweinzierl@hbs.edu

Gifted & Talented Programs and Racial Segregation - Thompson, Owen (National Bureau of Economic Research Working Paper Series, 2021)
Racial segregation can occur across educational programs or classrooms within a given school, and there has been particular concern that gifted & talented programs may reduce integration within schools. This paper evaluates the contribution of gifted & talented education to racial segregation using data on the presence and racial composition of gifted & talented programs at virtually all US elementary schools over a span of nine school years. I first show that, consistent with widespread perceptions, gifted & talented programs do disproportionately enroll white and Asian students while Black, Hispanic and Native American students are underrepresented. However, I also show that accounting for the within-school racial sorting caused by these programs has little or no effect on standard measures of overall racial segregation. This is primarily because gifted & talented programs are a small share of total enrollments and do enroll non-negligible numbers of under-represented minority students. I also estimate changes in race-specific enrollments after schools initiate or discontinue gifted & talented programs, and find no significant enrollment changes after programs are eliminated or initiated. I conclude that gifted & talented education is a quantitatively small contributor to racial segregation in US elementary schools.
Author contact info: Owen Thompson Department of Economics Williams College 24 Hopkins Hall Drive Williamstown, MA 01267 Tel: 413/597-2669 E-Mail: ot3@williams.edu

Did the Hospital Readmissions Reduction Program Reduce Readmissions? An Assessme - Ziedan, Engy; Kaestner, Robert