Do Cities Mitigate or Exacerbate Environmental Damages to Health? - Molitor, David; White, Corey D (National Bureau of Economic Research Working Paper Series, 2023)
Do environmental conditions pose greater health risks to individuals living in urban or rural areas? The answer is theoretically ambiguous: while urban areas have traditionally been associated with heightened exposure to environmental pollutants, the economies of scale and density inherent to urban environments offer unique opportunities for mitigating or adapting to these harmful exposures. To make progress on this question, we focus on the United States and consider how exposures—to air pollution, drinking water pollution, and extreme temperatures—and the response to those exposures differ across urban and rural settings. While prior studies have addressed some aspects of these issues, substantial gaps in knowledge remain, in large part due to historical deficiencies in monitoring and reporting, especially in rural areas. As a step toward closing these gaps, we present new evidence on urban-rural differences in air quality and population sensitivity to air pollution, leveraging recent advances in remote sensing measurement and machine learning. We find that the urban-rural gap in fine particulate matter (PM₂.₅) has converged over the last two decades and the remaining gap is small relative to the overall declines. Furthermore, we find that residents of urban counties are, on average, less vulnerable to the mortality effects of PM₂.₅ exposure. We also discuss promising areas for future research.
Author contact info: David Molitor University of Illinois at Urbana-Champaign 340 Wohlers Hall 1206 S. Sixth Street Champaign, IL 61820 Tel: 217/244-0504 E-Mail: dmolitor@illinois.edu Corey D. White Department of Economics Monash University Melbourne, VIC Australia E-Mail: corey.white@monash.edu

The Role of Intermediaries in Selection Markets: Evidence form Mortgage Lending - Allen, Jason; Clark, Robert; Houde, Jean-François; Li, Shaoteng; Trubnikova, Anna V (National Bureau of Economic Research Working Paper Series, 2023)
We study the role of brokers in selection markets. We find broker-clients in the Canadian mortgage market are observationally different from branch-clients. They finance larger loans with more leverage and longer amortization. We build and estimate a model of mortgage demand to disentangle three possible explanations for these riskier product choices: (i) selection on observables, (ii) unobserved borrower preferences for riskier loans, and (iii) a causal effect of brokers. Although we find that brokers influence product choices, the main reason borrowers choose high-leverage products is unobserved preferences. Borrowers prefer larger loans and brokers facilitate qualification for them.
Author contact info: Jason Allen Bank of Canada 234 Wellington Street Ottawa, ON K1A 0G9 E-Mail: jallen@bankofcanada.ca Robert Clark Department of Economics Queen's University 94 University Ave. Kingston, K7L3N6 Canada Tel: (613) 533-6546 E-Mail: clarkr@econ.queensu.ca Jean-François Houde Department of Economics University of Wisconsin-Madison 1180 Observatory Dr Madison, WI 53706 E-Mail: houde@wisc.edu Shaoteng Li E-Mail: shaotengli@bankofcanada.ca Anna V. Trubnikova Cornerstone Research 599 Lexington Ave 40th Fl, Manhattan, NY 10022 E-Mail: anna.trubnikova@cornerstone.com

Labor Market Tightness and Union Activity - Pezold, Chantal; Jäger, Simon; Nüss, Patrick (National Bureau of Economic Research Working Paper Series, 2023)
We study how labor market conditions affect unionization decisions. Tight labor markets might spur unionization, e.g., by reducing the threat of unemployment after management opposition or employer retaliation in response to a unionization attempt. Tightness might also weaken unionization by providing attractive outside alternatives to engaging in costly unionization. Drawing on a large-scale, representative survey experiment among U.S. workers, we show that an increase in worker beliefs about labor market tightness moderately raises support for union activity. Effect sizes are small as they imply that moving from trough to peak of the business cycle increases workers’ probability of voting for a union by one percentage point. To study equilibrium effects, we draw on three quasi-experimental research designs using data from across U.S. states and counties over several decades. We find no systematic effect of changes in aggregate labor market tightness on union membership, union elections, and strikes. Overall, our results challenge the notion that labor market tightness significantly drives U.S. unionization.
Author contact info: Chantal Pezold Department of Economics, E52 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: chantalp@mit.edu Simon Jäger Department of Economics, E52-454 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: sjaeger@mit.edu Patrick Nuess Wilhelm-Seelig-Platz 1 24118 Kiel, Germany Germany Tel: +491729716254 E-Mail: nuess@economics.uni-kiel.de

Market Design for the Environment - Cantillon, Estelle; Slechten, Aurélie (National Bureau of Economic Research Working Paper Series, 2023)
The main argument in favor of markets in environmental contexts is the same as in other contexts: their ability to promote efficient allocations and production. But environmental problems bring their own challenges: their underlying bio-physical processes - and the technologies to monitor them - constrain what is feasible or even desirable. This chapter illustrates the main design dimensions in environmental markets, the trade-offs involved and their impact on performance, through the lens of a regulated market for pollution rights (the EU emissions trading scheme) and a voluntary market for the provision of environmental services (the global market for carbon credits). While both markets eventually contribute to climate change mitigation, their organisation as a “pollution market”, for the former, and as a “provision market”, for second, means that different design considerations take precedence. Both markets also face challenges: volatile prices in the EU emissions scheme and low trust for voluntary carbon markets. We discuss how alternative design options could address those.
Author contact info: Estelle Cantillon Universite Libre de Bruxelles Solvay Brussels School of Economics and Management 50, Av. F.D. Roosevelt, CP 114 1050 BRUSSELS Belgium Tel: +32-2-650-3840 E-Mail: estelle.cantillon@ulb.ac.be Aurélie Slechten Lancaster University Management School Department of Economics United Kingdom E-Mail: a.slechten@lancaster.ac.uk

Fund Flows and Income Risk of Fund Managers - Cen, Xiao; Dou, Winston Wei; Kogan, Leonid; Wu, Wei (National Bureau of Economic Research Working Paper Series, 2023)
We develop a unique dataset, the first-ever of its kind, by leveraging the US Census Bureau’s LEHD program and various big textual data sources, to examine the factors influencing the compensation and career trajectories of US active equity mutual fund managers. We find that managers’ compensation is primarily determined by assets under management (AUM), with return performance directly influencing bonuses beyond its impact on AUM. Despite not aligning with client interests, fund flows significantly affect manager compensation and career outcomes. Large fund outflows increase a manager’s likelihood of job turnover (with a substantial decline in compensation) by 4 percentage points.
Author contact info: Xiao Cen Department of Finance Mays Business School 360 Wehner Building (4218) Texas A&M University College Station, TX 77843-4218 E-Mail: xcen@mays.tamu.edu Winston Wei Dou The Wharton School University of Pennsylvania 2318 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/746-0005 E-Mail: wdou@wharton.upenn.edu 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 Wei Wu Department of Finance Mays Business School 360 Wehner Building (4218) Texas A&M University College Station, TX 77843-4218 E-Mail: wwu@mays.tamu.edu

Professional Motivations in the Public Sector: Evidence from Police Officers - Chalfin, Aaron; Gonçalves, Felipe M (National Bureau of Economic Research Working Paper Series, 2023)
We study how public sector workers balance their professional motivations with private economic concerns, focusing on police arrests. Arrests made near the end of an officer's shift typically require overtime work, and officers respond by reducing arrest frequency but increasing arrest quality. Days in which an officer works a second job after their police shift have higher opportunity cost, also reducing late-shift arrests. Combining our estimates in a dynamic model identifies officer preferences over workplace activity and overtime work. Our results indicate that officers' private costs of arrests have a first-order impact on the quantity and quality of enforcement.
Author contact info: Aaron Chalfin Department of Criminology University of Pennsylvania 558 McNeil Building 3718 Locust Walk Philadelphia, PA 19104 E-Mail: achalfin@sas.upenn.edu Felipe M. Gonçalves Department of Economics University of California, Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 E-Mail: fgoncalves@econ.ucla.edu

Online Job Posts Contain Very Little Wage Information - Batra, Honey; Michaud, Amanda; Mongey, Simon (National Bureau of Economic Research Working Paper Series, 2023)
We present six facts that characterize the little wage information contained in the universe of online job posts in the U.S. First, wage information is rare: only 14% of posts contain any wage information and the minority of these (6%) have a point wage. The majority (8%) feature a range of wages that are on average wide, spanning 28% of the midpoint (e.g. $21-28/hr or $32,000-$42,000/yr). Second, information varies systematically along the occupation-wage gradient. Third, posted wages are 40% higher than wages in BLS data in low-wage occupations and 20% lower than BLS data in high-wage occupations. Fourth, among the wages that are posted, high wage firms are more opaque, with more and wider ranges. Fifth, there is zero correlation between wage information and local labor market tightness. Sixth, of the top 20 posting private firms, none have any wage information in more than 2% of their posts. Our findings caution against treating wage data from job postings as a stand-in for administrative data. We provide an example of bias in econometric inference that worsens as wage information falls.
Author contact info: Honey Batra E-Mail: batra040@umn.edu Amanda Michaud 90 hennepin ave Minneapolis, MN 55401 E-Mail: amanda.michaud@mpls.frb.org Simon Mongey Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: simonmongey@gmail.com

The Direct and Intergenerational Effects of Criminal History-Based Safety Net Bans in the U.S. - Mueller-Smith, Michael G; Reeves, James M; Schnepel, Kevin; Walker, Caroline (National Bureau of Economic Research Working Paper Series, 2023)
We study the lifetime banning, as introduced by United States Public Law 104-193, of individuals convicted of felony drug offenses after August 22, 1996 from ever receiving future SNAP benefits. Using a regression discontinuity design that leverages CJARS criminal history records with federal administrative and survey data, we estimate the causal impact of safety net assistance bans, finding significant reductions in SNAP benefit take-up, which creates unintentional spillovers to spouses and children and persist long after ban revocations occurred. While we observe limited changes to other adult outcomes, children's cognitive and educational outcomes worsen, especially those impacted at young ages.
Author contact info: Michael G. Mueller-Smith Department of Economics University of Michigan 365C Lorch Hall 611 Tappan Ave. Ann Arbor, MI 48109-1220 Tel: 410/218-3189 E-Mail: mgms@umich.edu James M. Reeves Department of Economics University of Michigan 238 Lorch Hall Ann Arbor, MI 48109 E-Mail: jmreeves@umich.edu Kevin Schnepel Department of Economics 8888 University Drive Simon Fraser University Burnaby, British Columbia, V5A 1S6 Canada Tel: 778-782-3795 E-Mail: kevin_schnepel@sfu.ca Caroline Walker U.S. Census Bureau E-Mail: caroline.walker@census.gov

Dealing with Imperfect Randomization: Inference for the HighScope Perry Preschool Program - Heckman, James J; Pinto, Rodrigo; Shaikh, Azeem (National Bureau of Economic Research Working Paper Series, 2023)
This paper considers the problem of making inferences about the effects of a program on multiple outcomes when the assignment of treatment status is imperfectly randomized. By imperfect randomization we mean that treatment status is reassigned after an initial randomization on the basis of characteristics that may be observed or unobserved by the analyst. We develop a partial identification approach to this problem that makes use of information limiting the extent to which randomization is imperfect to show that it is still possible to make nontrivial inferences about the effects of the program in such settings. We consider a family of null hypotheses in which each null hypothesis specifies that the program has no effect on one of many outcomes of interest. Under weak assumptions, we construct a procedure for testing this family of null hypotheses in a way that controls the familywise error rate--the probability of even one false rejection--in finite samples. We develop our methodology in the context of a reanalysis of the HighScope Perry Preschool program. We find statistically significant effects of the program on a number of different outcomes of interest, including outcomes related to criminal activity for males and females, even after accounting for imperfections in the randomization and the multiplicity of null hypotheses.
Author contact info: James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Rodrigo Pinto Department of Economics University of California at Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 Tel: 2245958758 E-Mail: rodrig@econ.ucla.edu Azeem Shaikh Department of Economics University of Chicago 1126 E. 59th Street Chicago IL 60637 E-Mail: amshaikh@uchicago.edu

Infrastructure Inequality: Who Pays the Cost of Road Roughness? - Currier, Lindsey; Glaeser, Edward L; Kreindler, Gabriel E (National Bureau of Economic Research Working Paper Series, 2023)
Which Americans experience the worst infrastructure? What are the costs of living with that infrastructure? We measure road roughness throughout America using vertical acceleration data from Uber rides across millions of American roads. Our measure correlates strongly and positively with other measures of road roughness where they are available, negatively with driver speed, and we find road repair events decrease roughness and increase speeds. We measure drivers’ willingness-to-pay to avoid roughness by measuring how speeds change with salient changes in road roughness, such as those associated with town borders and road repaving events in Chicago. These estimates suggest the roughness of the median local road in the US generates welfare losses to drivers of at least 31 cents per driver-mile. Roads are worse near coasts, and in poorer towns and in poorer neighborhoods, even within towns. We find that a household that drives 3,000 miles annually on predominantly local roads will suffer $318 per year more in driving pain if they live in a predominantly Black neighborhood than in a predominantly White neighborhood. Road roughness modestly predicts subsequent road resurfacing in New York City, but not in three other cities, which suggests that repaving is only weakly targeted towards damaged roads. Surveys from 120 towns and cities across the US suggest many reasons why resurfacing seems to be weakly targeted.
Author contact info: Lindsey Currier Department of Economics Littauer Center Harvard University Cambridge, MA 02138 United States E-Mail: lcurrier@g.harvard.edu Edward L. Glaeser Department of Economics 315A Littauer Center Harvard University Cambridge, MA 02138 Tel: 617/495-0575 Fax: 617/495-7730 E-Mail: eglaeser@harvard.edu Gabriel Kreindler Department of Economics Harvard University 1805 Cambridge Street Cambridge, MA 02138 E-Mail: gkreindler@fas.harvard.edu

Creating the “American Way” of Business: Evidence from WWII in the U.S. - Giorcelli, Michela (National Bureau of Economic Research Working Paper Series, 2023)
The Second World War II (WWII) was arguably one of the largest shocks to the U.S. economic and production system in history. Historians, business historians, and economists have largely discussed the stimulus that WWII had on U.S. technological advancements. However, its effect on U.S. ‘‘managerial technology’’ innovations has been largely ignored, except for very few qualitative works. In this paper, I argue that ‘‘managerial technology’’ played a key role in shaping U.S. WWII production and its capacity to defeat some of the most advanced economies in the world. The large-scale diffusion of innovative management practices to US firms involved in war production acted as a technology that put them on a higher growth path for decades. Moreover, it made U.S. managerial practices internationally distinctive and helped create the so-called “American Way” of business, which was exported to war-torn European and Japanese economies in the war aftermath.
Author contact info: Michela Giorcelli Department of Economics University of California at Los Angeles Bunche Hall 9262 315 Portola Plaza Los Angeles, CA 90095 Tel: 650/630-9648 E-Mail: mgiorcelli@econ.ucla.edu

The Effects of Reforms on Retirement Behavior: Introduction and Summary - Börsch-Supan, Axel H; Coile, Courtney (National Bureau of Economic Research Working Paper Series, 2023)
The International Social Security (ISS) project compares the experiences of a dozen developed countries to study Social Security Programs and Retirement Around the World. The project was launched in the mid 1990s and was motivated by decades of decline in the labor force participation rate of older men. The first phases of the project documented that social security program provisions can create powerful incentives for retirement that are strongly correlated with the labor force behavior of older workers. Since then, the dramatic decline in men’s labor force participation has been replaced by sharply rising participation rates. Older women’s participation has increased dramatically as well. This tenth phase of the International Social Security (ISS) Project is the third step in explaining rising participation at older ages. The first step investigated changes in health and education as potential causes and showed that they could not account for the extent of changes in labor force participation. As a second step, we documented that countries have undertaken numerous reforms of their social security programs, disability programs, and other public benefit programs available to older workers. We found that these reforms substantially reduced the implicit tax on work at older ages and that stronger financial incentives to work were positively correlated with labor force participation at older ages. In this volume, the third step of our analysis, we exploit the time-series and cross-national variation in the timing and extent of reforms of retirement incentives and employ micro-econometric methods in order to study whether the correlation between financial incentives and work at older ages is causal.
Author contact info: Axel H. Börsch-Supan Munich Research Institute for the Economics of Aging and SHARE Analyses Max Planck Institute Leopoldstraße 139 80804 Munich Germany Tel: +49 (89) 3860-2355 Fax: 49 (89) 3860-2390 E-Mail: boersch-supan@mea.mpisoc.mpg.de Courtney Coile Department of Economics Wellesley College 106 Central Street Wellesley, MA 02481 Tel: 781/283-2408 Fax: 781/283-2177 E-Mail: ccoile@wellesley.edu

Firm Accommodation After Disability: Labor Market Impacts and Implications for Social Insurance - Aizawa, Naoki; Mommaerts, Corina; Rennane, Stephanie L (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the labor market impacts of firm accommodation decisions and assesses implications for the design of social insurance for workplace disability. We leverage a unique workers’ compensation (WC) program in Oregon that provides wage subsidies to firms for accommodating injured workers. Exploiting rich administrative data and a policy change to the wage subsidy, we show that accommodation rates respond to the subsidy rate and that receipt of accommodation leads to a significant increase in employment and earnings a year later. To explore welfare implications, we develop and estimate a frictional labor market model of accommodation as a form of human capital investment. Worker turnover and imperfect experience rating in WC lead to under-accommodation and inefficient labor market outcomes after workplace disability. Counterfactual simulations show that subsidizing accommodation not only improves long-run labor market outcomes of workers experiencing work-related disability but also leads to welfare gains for most workers.
Author contact info: Naoki Aizawa Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 E-Mail: naoki.aizawa@nber.org Corina Mommaerts Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/263-3213 E-Mail: cmommaerts@wisc.edu Stephanie L. Rennane RAND Corporation 1200 S Hayes St Arlington, VA 22202 United States Tel: 7034131100 x5442 E-Mail: srennane@rand.org

The Psychology of Poverty: Where Do We Stand? - Haushofer, Johannes; Salicath, Daniel (National Bureau of Economic Research Working Paper Series, 2023)
In recent years, the psychological causes and consequences of poverty have received renewed attention from scientists and policymakers. In this review, we summarize new developments in this literature. First, we discuss advances in our understanding of the relationship between income and psychological well-being. There is a robust positive relationship between the two, both within and across countries, and in correlational and causal analyses. Second, we summarize recent work on the impact of “scarcity” and stress on economic preferences and decision-making. Our view of this literature is that the evidence is relatively weak. Third, we summarize evidence on the impact of psychological interventions on economic outcomes. Light-touch psychological interventions, such as videos that aim to raise aspirations, have shown some promise in encouraging investment and improving economic well-being. Similarly, psychotherapy and pharmacological mental health treatments have positive effects on economic outcomes. Relative to the effects of cash transfers, these impacts are small in absolute terms and large in per-dollar terms. We conclude by discussing whether a psychological poverty trap is plausible.
Author contact info: Johannes Haushofer Department of Economics National University of Singapore 1 Arts Link AS2 #06-02 Singapore 117570 Singapore E-Mail: johannes.haushofer@nus.edu.sg Daniel Salicath E-Mail: daniel.salicath@nav.no

Improving Regulation for Innovation: Evidence from China’s Pharmaceutical Industry - Jia, Ruixue; Ma, Xiao; Yang, Jianan; Zhang, Yiran (National Bureau of Economic Research Working Paper Series, 2023)
This study investigates how enhanced regulation can promote innovation, focusing on the impacts of a significant regulatory reform in China's pharmaceutical sector implemented in 2015. Inspired by regulatory practices in the U.S., the reform aimed to address application backlogs and reduce administrative waiting time for new drug development. Using data at the drug and firm levels during 2012--2021, we make three main findings: (1) drug categories experiencing improved approval times witnessed a surge in investigational new drug applications and related clinical trials; (2) despite little improvement in innovativeness (measured by novel targets unexplored by U.S. counterparts) within drug categories, the reform led to changes in firm composition, attracting innovative new firms and boosting overall drug innovativeness; and (3) the market recognized the improvement in drug innovation, as reflected in stock price adjustments post new drug registrations after the reform. Our findings demonstrate that regulatory barriers can hinder the entry of innovative firms and suggest that latecomers could boost their innovation potential by adopting specific, effective regulatory practices from frontier countries.
Author contact info: Ruixue Jia School of Global Policy and Strategy University of California at San Diego 9500 Gilman Drive #0519 La Jolla, CA 92093 Tel: 858/534-5969 E-Mail: ruixue.jia@gmail.com Xiao Ma Peking University HSBC Business School E-Mail: xiaomaecon@gmail.com Jianan Yang Institute for Global Health and Development Peking University E-Mail: jianan.yang@pku.edu.cn Yiran Zhang Fudan University, School of Economics E-Mail: yiran_zhang@fudan.edu.cn

Indexing and the Incorporation of Exogenous Information Shocks to Stock Prices - Morck, Randall; Yavuz, M. Deniz (National Bureau of Economic Research Working Paper Series, 2023)
Savings increasingly flow to low-cost index funds, which simply buy and hold the stocks in a major index, such as the S&P 500. Increased indexing impedes incorporation of idiosyncratic information into stock prices. We limit endogeneity bias by showing that exogenous idiosyncratic currency shocks induce smaller idiosyncratic moves in the stock prices of currency-sensitive firms in proximate time windows when in the index than when not in it. Increased indexing thus appears to be undermining the efficient markets hypothesis that supports its viability.
Author contact info: Randall Morck Faculty of Business University of Alberta Edmonton, AB T6G 2R6 Tel: 780/492-5683 Fax: 780/492-3325 E-Mail: randall.morck@ualberta.ca M. Deniz Yavuz Krannert Graduate School of Management Purdue University 403 W. State Street West Lafayette, IN 47907-2056 Tel: 314 935 6339 E-Mail: myavuz@purdue.edu

Whose Preferences Matter for Redistribution: Cross-country Evidence - Marechal, Michel; Cohn, Alain; Yusof, Jeffrey; Fisman, Raymond (National Bureau of Economic Research Working Paper Series, 2023)
Using cross-sectional data from 93 countries, we investigate the relationship between the desired level of redistribution among citizens from different socioeconomic backgrounds and the actual extent of government redistribution. Our focus on redistribution arises from the inherent class conflicts it engenders in policy choices, allowing us to examine whose preferences are reflected in policy formulation. Contrary to prevailing assumptions regarding political influence, we find that the preferences of the lower socioeconomic group, rather than those of the median or upper strata, are most predictive of realized redistribution. This finding contradicts the expectations of both leading experts and regular citizens.
Author contact info: Michel Marechal University of Zurich Bluemlisalpstr. 10 CH-8006 Zurich Switzerland E-Mail: michel.marechal@econ.uzh.ch Alain Cohn 105 S State St Ann Arbor, Mich 48109 United States E-Mail: adcohn@umich.edu Jeffrey Yusof Schoenberggasse 1 8001 Zurich Switzerland E-Mail: jeffrey.yusof@econ.uzh.ch Raymond Fisman Department of Economics Boston University 270 Bay State Road, 304A Boston, MA 02215 Tel: 617-353-6821 E-Mail: rfisman@bu.edu

Civil Rights Protests and Election Outcomes: Exploring the Effects of the Poor People's Campaign - Anderson, D. Mark; Charles, Kerwin; Karbownik, Krzysztof; Rees, Daniel I; Steffens, Camila (National Bureau of Economic Research Working Paper Series, 2023)
The Poor People’s Campaign (PPC) of 1968 was focused on highlighting, and ultimately reducing, poverty in the United States. As part of the campaign, protestors from across the country were transported to Washington, D.C. in 6 separate bus caravans, each of which made stops en route to rest, recruit, and hold non-violent protests. Using data from 1960-1970, we estimate the effects of these protests on congressional election outcomes. In the South, we find that PPC protests led to reductions in Democratic vote share and turnout, while in the West they may have benefited Democratic candidates at the expense of their Republican rivals.
Author contact info: D. Mark Anderson Department of Agricultural Economics & Economics Montana State University P.O. Box 172920 Bozeman, MT 59717 Tel: 406/366-0921 E-Mail: dwight.anderson@montana.edu Kerwin Charles School of Management Yale University 165 Whitney Avenue New Haven, CT. 06511 Fax: NA E-Mail: kerwin.charles@yale.edu Krzysztof Karbownik Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 E-Mail: krzysztof.karbownik@emory.edu Daniel I. Rees Department of Economics Universidad Carlos III de Madrid Calle Madrid 126 28903 Getafe Spain E-Mail: Daniel.Rees@uc3m.es Camila Steffens E-Mail: camilastfs@gmail.com

Monopsony Amplifies Distortions from Progressive Taxes - Berger, David W; Herkenhoff, Kyle F; Mongey, Simon; Mousavi, Negin (National Bureau of Economic Research Working Paper Series, 2023)
In this short paper we show that progressive income taxes distort hiring and wages when firms have labor market power. From a firm’s perspective, raising pre-tax wages increases employment by less when taxes are progressive as less of the pre-tax wage is paid to workers. Understanding this when setting wages leads to lower wages and employment at all firms. When firms differ in productivity, progressive taxes also distort the allocation of labor across firms. We characterize this novel monopsony cost of progressivity in a simple monopsony economy and derive efficiency wedges that depend on progressivity. A simple quantification of these wedges points to the possibility that the monopsony cost may be of similar magnitudes to redistribution and insurance benefits.
Author contact info: David W. Berger Department of Economics Duke University 419 Chapel Drive Social Science Building 231 Durham, NC 27708 Tel: 919/660-1853 E-Mail: david.berger@duke.edu 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 Simon Mongey Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: simonmongey@gmail.com Negin Mousavi E-Mail: mousavi8@gmail.com

Accessing the Safety Net: How Medicaid Affects Health and Recidivism - Packham, Analisa; Slusky, David (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the causal impact of access to means-tested public health insurance coverage (Medicaid) on health outcomes and recidivism for those recently released from incarceration. To do so, we leverage a policy change in South Carolina that allowed simplified Medicaid re-enrollment for previously incarcerated eligible individuals. Using linked administrative data on criminal convictions and health insurance claims, we find that reducing barriers in access to Medicaid for vulnerable populations increases enrollment and utilization of health care services. However, we do not find that this improved health care insurance access reduces 1-year or 3-year recidivism, suggesting that effectiveness of such policies is context dependent.
Author contact info: Analisa Packham Department of Economics Vanderbilt University 2301 Vanderbilt Place Nashville, TN 37235 E-Mail: analisa.packham@vanderbilt.edu David Slusky Department of Economics University of Kansas 1460 Jayhawk Boulevard Lawrence, KS 66045 Tel: 785/864-1954 E-Mail: david.slusky@ku.edu

Monetary Tightening, Commercial Real Estate Distress, and US Bank Fragility - Jiang, Erica Xuewei; Matvos, Gregor; Piskorski, Tomasz; Seru, Amit (National Bureau of Economic Research Working Paper Series, 2023)
Building on the work of Jiang et al. (2023) we develop a framework to analyze the effects of credit risk on the solvency of U.S. banks in the rising interest rate environment. We focus on commercial real estate (CRE) loans that account for about quarter of assets for an average bank and about $2.7 trillion of bank assets in the aggregate. Using loan-level data we find that after recent declines in property values following higher interest rates and adoption of hybrid working patterns about 14% of all loans and 44% of office loans appear to be in a “negative equity” where their current property values are less than the outstanding loan balances. Additionally, around one-third of all loans and the majority of office loans may encounter substantial cash flow problems and refinancing challenges. A 10% (20%) default rate on CRE loans – a range close to what one saw in the Great Recession on the lower end -- would result in about $80 ($160) billion of additional bank losses. If CRE loan distress would manifest itself early in 2022 when interest rates were low, not a single bank would fail, even under our most pessimistic scenario. However, after more than $2 trillion decline in banks’ asset values following the monetary tightening of 2022, additional 231 (482) banks with aggregate assets of $1 trillion ($1.4 trillion) would have their marked to market value of assets below the face value of all their non-equity liabilities. To assess the risk of solvency bank runs induced by higher rates and credit losses, we expand the Uninsured Depositors Run Risk (UDRR) financial stability measure developed by Jiang et al. (2023) where we incorporate the impact of credit losses into the market-to-market asset calculation, along with the effects of higher interest rates. Our analysis, reflecting market conditions up to 2023:Q3, reveals that CRE distress can induce anywhere from dozens to over 300 mainly smaller regional banks joining the ranks of banks at risk of solvency runs. These findings carry significant implications for financial regulation, risk supervision, and the transmission of monetary policy.
Author contact info: Erica Xuewei Jiang Marshall School of Business University of Southern California Los Angeles, CA 90089 E-Mail: erica.jiang@marshall.usc.edu Gregor Matvos Kellogg School of Management Northwestern University 2211 Campus Drive Global Hub 4361 Evanston IL, 60208 E-Mail: gregor.matvos@kellogg.northwestern.edu Tomasz Piskorski Columbia Business School 3022 Broadway Uris Hall 810 New York, NY 10027 Tel: 212/854-4655 E-Mail: tp2252@columbia.edu Amit Seru Stanford Graduate School of Business Stanford University 655 Knight Way Tel: 650/736-0223 E-Mail: aseru@stanford.edu

Inflation, War Bonds, and the Rise of Republicans in the 1950s - Brunet, Gillian; Hilt, Eric; Jaremski, Matthew S (National Bureau of Economic Research Working Paper Series, 2023)
We study the role of war bonds and inflation in the presidential elections of the 1950s. During World War II, the federal government conducted aggressive campaigns to convince Americans to invest their savings in wartime savings bonds. Although the bonds were nonnegotiable and protected from interest rate fluctuations, two major inflationary episodes after the war, in 1946-48 and 1950-51, eroded the real value of their returns, contributing to a political backlash against the incumbent Democrats. In a difference-in-differences framework, we find that counties with higher war bond purchases shifted their votes towards the Republican party in the postwar elections, relative to the elections of the late 1930s and early 1940s. To address concerns related to the endogeneity of war bond purchases, we instrument for WWII bond subscriptions using participation rates from the World War I liberty bonds, and find similar results. Our results indicate that the promotion of savings bonds made Americans more sensitive to the high inflation that prevailed after the war, contributing to Republicans’ victories in the 1950s.
Author contact info: Gillian Brunet Smith College Department of Economics Wright Hall #226 Northampton, MA 01063 E-Mail: gbrunet@smith.edu Eric Hilt Wellesley College Department of Economics 106 Central Street Wellesley, MA 02481 Tel: 781/283-2986 Fax: 781/283-2177 E-Mail: ehilt@wellesley.edu Matthew S. Jaremski Utah State University Department of Economics and Finance 3565 Old Main Hill Logan, UT 84322 E-Mail: matthew.jaremski@usu.edu

Time-Varying Risk Premia, Labor Market Dynamics, and Income Risk - Meeuwis, Maarten; Papanikolaou, Dimitris; Rothbaum, Jonathan L; Schmidt, Lawrence D.W. (National Bureau of Economic Research Working Paper Series, 2023)
We show that time variation in risk premia leads to time-varying idiosyncratic income risk for workers. Using US administrative data on worker earnings, we show that increases in risk premia lead to lower earnings for low-wage workers; these declines are primarily driven by job separations. By contrast, productivity shocks affect the earnings mainly of highly paid workers. We build an equilibrium model of labor market search that quantitatively replicates these facts. The model generates endogenous time-varying income risk in response to changes in risk premia and matches several stylized features of the data regarding unemployment and income risk over the business cycle.
Author contact info: Maarten Meeuwis Washington University in St. Louis Olin Business School One Brookings Drive St. Louis, MO 63130 E-Mail: m.meeuwis@wustl.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 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

Do Firms Mitigate Climate Impact on Employment? Evidence from US Heat Shocks - Acharya, Viral V; Bhardwaj, Abhishek; Tomunen, Tuomas (National Bureau of Economic Research Working Paper Series, 2023)
How do firms mitigate the impact of rising temperatures on employment? Using establishment-level data, we show that firms operating in multiple counties in the United States respond to heat shocks by reducing employment in the affected locations and increasing it in unaffected locations, whereas single-location firms simply downsize. Workforce reallocation, aimed at preventing heat-related decline in labor productivity, is stronger among larger, financially stable firms with more ESG-oriented investors. The scale of this response increases with the severity of climate disasters and is aided by credit availability and competitive labor markets. Climate risk management by firms mitigates the impact of heat shocks on aggregate employment but induces a spatial redistribution of economic activity.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Abhishek Bhardwaj A. B. Freeman School of Business Tulane University 7 McAlister Dr New Orleans, LA 70118 United States Tel: (929) 215-2434 E-Mail: abhardwaj@tulane.edu Tuomas Tomunen Boston College Carroll School of Management 140 Commonwealth Avenue Chestnut Hill, MA 02467 E-Mail: tuomas.tomunen@bc.edu

Does Political Partisanship Affect Housing Supply? Evidence from US Cities - Ferreira, Fernando V; Gyourko, Joseph (National Bureau of Economic Research Working Paper Series, 2023)
We study the relationship between housing supply and political partisanship in US cities using a new database of mayoral elections combined with local housing permits since 1980. Endogeneity of which party holds the mayoral office is addressed via a regression discontinuity design that relies on closely contested races between Republicans and Democrats. We find that partisanship has no effect on the supply of single and multifamily housing despite recent increases in extreme partisanship, corroborating that US cities follow the median voter. This indicates that solutions to housing affordability will not be dependent upon the political party in power at the local level.
Author contact info: Fernando V. Ferreira Wharton Real Estate University of Pennsylvania 430 Vance Hall 3733 Spruce Street Philadelphia, PA 19104-6301 Tel: 215/898-7181 E-Mail: fferreir@wharton.upenn.edu Joseph Gyourko University of Pennsylvania The Wharton School of Business 3733 Spruce Street Room 448 Vance Hall Philadelphia, PA 19104-6302 E-Mail: gyourko@wharton.upenn.edu

Dynamic Monopsony with Large Firms and Noncompetes - Gottfries, Axel; Jarosch, Gregor (National Bureau of Economic Research Working Paper Series, 2023)
How do noncompete agreements between workers and firms affect wages and employment in equilibrium? We build a tractable framework of wage posting with on-the-job search and large employers that provides a natural laboratory to assess anti-competitive practices in the labor market. We characterize the impact of market structure and show that noncompetes can sharply suppress wages. We validate the quantitative model with empirical evidence on the impact of mergers and noncompetes on employment and wages. Banning noncompetes in the US would raise wages by 4%. Wage gains are large when demand is inelastic, training costs are high, and when noncompetes are widespread.
Author contact info: Axel Gottfries School of Economics 30 Buccleuch Place Edinburgh, EH8 9JT UK E-Mail: axel.gottfries@gmail.com Gregor Jarosch Department of Economics Duke University 240 Social Sciences Building Durham, NC 27708 E-Mail: gregorjarosch@gmail.com

Experiments about Institutions - Callen, Michael; Weigel, Jonathan L; Yuchtman, Noam (National Bureau of Economic Research Working Paper Series, 2023)
We review an emerging experimental literature studying institutional change. Institutions are a key determinant of economic growth, but the “critical junctures” in which institutions can change are not precisely defined. For example, such junctures are often identified ex post, raising methodological problems: selection on the outcome of institutional change; an inability to study beliefs, central to coordination and thus the process of institutional change; and an in- ability to conduct experiments to identify causal effects. We argue that critical junctures are identifiable in real-time as moments when there exists deep uncertainty about future institutions. Consistent with this conception, the papers reviewed: (i) examine changes to institutions, i.e., the “fundamental rules of the game”; (ii) are real-time studies of plausible critical junctures; and, (iii) use field experiments to achieve causal identification. Substantively, this literature examines institutional changes in state capacity and legitimacy, political inclusion, and political accountability. We also advocate more systematic measurement of beliefs about future institutions to identify critical junctures as they happen and provide an empirical proof of concept. Such work is urgent given contemporary critical junctures arising from democratic backsliding, state fragility, climate change, and conflicts over the rights of the marginalized.
Author contact info: Michael Callen London School of Economics Houghton Street London, WC2A 2AE United Kingdom E-Mail: m.j.callen@lse.ac.uk Jonathan L. Weigel Haas School of Business University of California, Berkeley Berkeley, CA 94720 E-Mail: jweigel@berkeley.edu Noam Yuchtman University of Oxford Department of Economics Manor Rd Oxford OX1 3UQ United Kingdom E-Mail: noam.yuchtman@economics.ox.ac.uk

Rethinking the Informal Economy and the Hugo Effect - Pappadà, Francesco; Rogoff, Kenneth S (National Bureau of Economic Research Working Paper Series, 2023)
This paper offers a new approach to measuring the size of the informal economy based on VAT data for the European Union. Although data intensive, our EVADE measure is simpler and more transparent than existing measures. EVADE also shows more variation across countries of Europe than earlier measures, including higher informality in Greece, Italy and Spain, for example. Moreover, we find considerably higher variation within countries across time; in a cross-country time series regression, controlling for tax rates, we confirm that the informal economy grows significantly in recessions and decreases in booms, which we term the “Hugo effect”.
Author contact info: Francesco Pappadà Department of Economics Ca’ Foscari University of Venice Cannaregio 873, Fondamenta San Giobbe Venezia 30121 Italy E-Mail: francesco.pappada@unive.it Kenneth S. Rogoff Maurits C. Boas Professor of International Economics Economics Department Harvard University Littauer Center 216 Cambridge, MA 02138-3001 Tel: 617-495-4022 Fax: 617/495-7730 E-Mail: krogoff@harvard.edu

Does Wealth Inhibit Criminal Behavior? Evidence from Swedish Lottery Winners and Their Children - Cesarini, David; Lindqvist, Erik; Östling, Robert; Schroeder, Christofer (National Bureau of Economic Research Working Paper Series, 2023)
There is a well-established negative gradient between economic status and crime, but its underlying causal mechanisms are not well understood. We use data on four Swedish lotteries matched to data on criminal convictions to gauge the causal effect of financial windfalls on player’s own crime and their children’s delinquency. We estimate a positive but statistically insignificant effect of lottery wealth on players’ own conviction risk. Our estimates allow us to rule out effects one fifth as large as the cross-sectional gradient between income and crime. We also estimate a less precise null effect of parental lottery wealth on child delinquency.
Author contact info: David Cesarini Department of Economics New York University 19 West 4th Street, Room 511 New York, NY 10012 Tel: 212/998-3773 E-Mail: dac12@nyu.edu Erik Lindqvist Swedish Institute for Social Research (SOFI) Stockholm University SE-106 91 Stockholm SWEDEN E-Mail: erik.lindqvist@sofi.su.se Robert Östling Department of Economics Stockholm School of Economics P.O. Box 6501 SE-113 83 Stockholm Sweden E-Mail: robert.ostling@hhs.se Christofer Schroeder Sonnemannstrasse 20 Frankfurt am Main 60314 Germany E-Mail: christofer.schroeder@ecb.europa.eu

The Traveling Trucker Problem - Allen, Treb; Atkin, David; Cleves, Santiago Cantillo; Hernandez, Carlos Eduardo (National Bureau of Economic Research Working Paper Series, 2023)
This paper documents three new stylized facts showing that truckers in Colombia frequently choose to make complex chains of shipments in a single trip before returning home. It then provides a newmodel of optimal trucker trip-chaining with a general geography that is consistent with these facts.
Author contact info: Treb Allen Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 E-Mail: treb@dartmouth.edu David Atkin Department of Economics, E52-550 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 203/936-9367 E-Mail: atkin@mit.edu Santiago Cantillo-Cleves E-Mail: santiago@ucsd.edu Carlos Eduardo Hernandez Colombia E-Mail: cehernandez.econ@gmail.com

The Cost of Climate Policy to Capital: Evidence from Renewable Portfolio Standards - Hong, Harrison; Kubik, Jeffrey D; Shore, Edward P (National Bureau of Economic Research Working Paper Series, 2023)
Many US states have set ambitious renewable portfolio standards (RPS) that require utilities to switch from fossil fuels toward renewables. RPS increases the renewables capacity, bond issuance, maturity, and yield spreads of investor-owned utilities compared to municipal producers that are exempted from this climate policy. Contrary to stranded-asset concerns, the hit to overall firm financial health is moderate. Falling cost of renewables and passthrough of these costs to consumers mitigate the burden of RPS on firms. Using a Tobin’s q model, we show that, absent these mitigating factors, the impact of RPS on firm valuations would have been severe.
Author contact info: Harrison Hong Department of Economics Columbia University 1022 International Affairs Building Mail Code 3308 420 West 118th Street New York, NY 10027 Tel: 212/851-9435 E-Mail: hh2679@columbia.edu Jeffrey D. Kubik Maxwell School Syracuse University 426 Eggers Hall Syracuse, NY 13244 E-Mail: jdkubik@maxwell.syr.edu Edward P. Shore Department of Economics Columbia University 420 West 118th Street New York, NY 10025 USA E-Mail: eps2148@columbia.edu

Closing the Productivity Gap with the US: Causes and Consequences of the Productivity Program in Western Europe - Giorcelli, Michela (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies to what extent the transfer of US managerial technologies to Europe after World War II contributed to closing the gap with US businesses. Between 1952 and 1958, the US government sponsored the Productivity Program, which promoted management training trips for European managers at US firms. Through the analysis of reports compiled by UK, France, Germany, and Italian participating firms, I first document that these companies claimed between 5 and 10% yearly productivity increase thanks to the program. The fact that European businesses were not forced to adopt the American management model, but could adapt it to their firm needs and existing business practices was a key aspect of the program’s success. Second, using data on US and Italian participating firms’ performance I show that Italian firms grew on average 7.8 percent faster than that of US companies in the ten years after the start of the program. Moreover, the distribution of productivity of Italian and US firms became more similar over years, confirming a performance convergence between these companies.
Author contact info: Michela Giorcelli Department of Economics University of California at Los Angeles Bunche Hall 9262 315 Portola Plaza Los Angeles, CA 90095 Tel: 650/630-9648 E-Mail: mgiorcelli@econ.ucla.edu

Societal Aging and its Impact on Singapore - Chen, Cynthia; Lim, Julian; Visaria, Abhijit; Chan, Angelique (National Bureau of Economic Research Working Paper Series, 2023)
Societal aging is arguably one of our most critical demographic challenges, and Singapore is aging at a much faster rate compared to other countries. Population aging could negatively affect older adults, contribute to an increase in healthcare expenditure and increase caregivers' financial and emotional burden. This chapter provides an overview of the well-being and health and social care needs of older adults in Singapore. Formulating social and public policies that enhance the health span, extend productive life years, support caregivers, and improve community health and social care services are crucial elements to help older adults age successfully. We analyze how aging affects health, financial security, and well-being, exploring correlations between disability levels and these factors. We then discuss policies the Singapore government has implemented or will implement to help older adults age successfully. Lastly, we provide an overview of formal and informal care provided in Singapore, including assessing the overall cost of LTC in Singapore.
Author contact info: Cynthia Chen Saw Swee Hock School of Public Health National University of Singapore 12 Science Drive 2 #10-01 Singapore 117549 E-Mail: ephchc@nus.edu.sg Julian Lim Saw Swee Hock School of Public Health National University of Singapore 12 Science Drive 2 #10-01 Singapore 117549 E-Mail: jullimjh@nus.edu.sg Abhijit Visaria Centre for Ageing Research and Education Duke-NUS Medical School 8 College Road Singapore 169857 Singapore E-Mail: abhijit@duke-nus.edu.sg Angelique Chan Health Services & Systems Research Duke-NUS Medical School 8 College Road Singapore E-Mail: angelique.chan@duke-nus.edu.sg

Toxified to the Bone: Early-Life and Childhood Exposure to Lead and Men’s Old-Age Mortality - Fletcher, Jason; Noghanibehambari, Hamid (National Bureau of Economic Research Working Paper Series, 2023)
Several strands of research document the life-cycle impacts of lead exposure during the critical period of children’s development. Yet little is known about long-run effects of lead exposure during early-life on old-age mortality outcomes. This study exploits the staggered installation of water systems across 761 cities in the US over the first decades of the 20th century combined with cross-city differences in materials used in water pipelines to identify lead and non-lead cities. An event-study analysis suggests that the impacts are more concentrated on children exposed during in-utero up to age 10. The results of difference-in-difference analysis suggests an intent-to-treat effect of 2.7 months reduction in old-age longevity for fully exposed cohorts. A heterogeneity analysis reveals effects that are 3.5 and 2 times larger among the nonwhite subpopulation and low socioeconomic status families, respectively. We also find reductions in education and socioeconomic standing during early adulthood as candidate mechanism. Finally, we employ WWII enlistment data and observe reductions in height-for-age among lead-exposed cohorts.
Author contact info: Jason Fletcher University of Wisconsin-Madison La Follette School of Public Affairs 1225 Observatory Drive Madison, WI 53706 E-Mail: jfletcher@lafollette.wisc.edu Hamid Noghanibehambari Marion St Clarksville, TN 37040-5164 United States Tel: 8066201812 E-Mail: noghanih@apsu.edu

The Effects of Social Security Incentives on Retirement in Spain - García-Gómez, Pilar; Garcia-Mandicó, Silvia; Jimenez-Martin, Sergi; Vall Castelló, Judit (National Bureau of Economic Research Working Paper Series, 2023)
In this paper, we analyze the extent to what financial incentives have influenced individual and couples retirement decisions over the last two decades in Spain. We use administrative data on earnings histories to create synthetic measures of financial incentives that we link to individual survey data from the European Community Household Panel and the European Union Statistics on Income and Living Conditions. The ocurrence of several major reforms in the period largely facilitates identification. We find that retirement is highly responsive to incentive variables (both ITAX and SSW). We find that a 10% change in the implicit tax rate on working longer increases the probability of retiring by about 0.70 pp (0.90 pp for men and 0.54 for women). Furthermore, we find that couple incentives matter more in husband's retirement decisions than in wife's retirement decisions.
Author contact info: Pilar García-Gómez Erasmus School of Economics P.O. Box 1738 3000 DR Rotterdam The Netherlands E-Mail: garciagomez@ese.eur.nl Silvia Garcia-Mandicó OECD Paris France E-Mail: sgarciamandico@gmail.com Sergi Jimenez-Martin Universitat Pompeu Fabra Ramon Trias Fargas 25-27 08005 BARCELONA (SPAIN) E-Mail: sergi.jimenez@upf.edu Judit Vall Castelló Department of Economics & IEB Universitat de Barcelona 08034 Barcelona Spain E-Mail: judit.vall@ub.edu

Occupational Hazard? An Analysis of Birth Outcomes Among Physician Mothers - Jena, Anupam; Slusky, David; Springer, Lilly (National Bureau of Economic Research Working Paper Series, 2023)
Training to become a physician involves long work hours that can be physically demanding, particularly for surgeons. Are birth outcomes of physician mothers affected as a result? Using Texas birth data from 2007-2014, we compared birth outcomes between physicians and another highly educated group, lawyers, and between surgeons and non-surgeon physicians. Further, using a difference-in-differences framework, we examine whether the Accreditation Council for Graduate Medical Education 2011 duty hour reform, which lowered trainee work hours, impacted the birth outcomes of babies born to physicians compared with lawyers. We find that physicians have lower birth weights and shorter pregnancies than lawyers with the results driven by physicians in surgical specialties. However, the duty hour reform appears to not have impacted birth outcomes. Thus, we find that physicians tend to have worse birth outcomes than lawyers and, in this case, the work reform did little to address the difference.
Author contact info: Anupam Jena Department of Health Care Policy Harvard Medical School 180 Longwood Avenue, Door A Boston, MA 02115 E-Mail: jena@hcp.med.harvard.edu David Slusky Department of Economics University of Kansas 1460 Jayhawk Boulevard Lawrence, KS 66045 Tel: 785/864-1954 E-Mail: david.slusky@ku.edu Lilly Springer Department of Economics University of Kansas 1460 Jayhawk Boulevard Lawrence, KS 66045 E-Mail: lilly.springer@ku.edu

Time Use and Macroeconomic Uncertainty - Cacciatore, Matteo; Hauser, Daniela; Gnocchi, Stefano (National Bureau of Economic Research Working Paper Series, 2023)
We study the effects of uncertainty on time use and their macroeconomic implications. Employing data from the American Time Use Survey and the Bureau of Labor Statistics, we document that heightened uncertainty increases housework and reduces market work hours, mildly impacting leisure. We then propose a model that quantitatively accounts for these estimates. We show that substitution between market and housework provides self-insurance to households, weakening precautionary savings. However, it also reduces aggregate demand, ultimately amplifying uncertainty's recessionary impact. Time reallocation can lead to higher inflation, particularly when uncertainty couples with policies redirecting time use towards housework (e.g., lockdown restrictions).
Author contact info: Matteo Cacciatore HEC Montreal Institute of Applied Economics 3000 Côte-Sainte-Catherine Montreal, QC H3T 2A7 Tel: 514/340-1496 Fax: 514/340-6463 E-Mail: matteo.cacciatore@hec.ca Daniela Hauser Bank of Canada International Economic Analysis Department 234 Wellington St. W, Ottawa, ON K1A 0G9 Canada E-Mail: dhauser@bank-banque-canada.ca Stefano Gnocchi Bank of Canada Canadian Economic Analysis Department 234 Wellington St. W. Ottawa, ON K1A Canada E-Mail: sgnocchi@bank-banque-canada.ca

Fiscal Federalism and Monetary Unions - Berriel, Rafael; Gonzalez-Aguado, Eugenia; Kehoe, Patrick J; Pastorino, Elena (National Bureau of Economic Research Working Paper Series, 2023)
We apply ideas from fiscal federalism to reassess how fiscal authority should be delegated within a monetary union. In a real-economy model with no fiscal externalities, in which local fiscal authorities have an informational advantage about the preferences of their citizens for public spending relative to a fiscal union, a natural generalization of the classic decentralization result by Oates (1972) applies. Namely, a decentralized fiscal regime dominates a fiscal union, and the degree of dominance increases as the information of the fiscal union worsens in quality. In the presence of direct fiscal externalities across countries, however, a decentralized regime is optimal for small federations of countries, whereas a centralized regime is optimal for large ones. We then consider a monetary-economy model, in which governments finance their expenditures with nominal debt and inflation has a negative impact on aggregate productivity. If the monetary authority can commit to an inflation policy, then a version of Oates (1972)’s decentralization result holds. By contrast, when the monetary authority lacks commitment power, the resulting time-inconsistency problem generates an indirect endogenous fiscal externality. In this case, when a country-level fiscal authority chooses a higher level of nominal debt, it induces the monetary authority to inflate more to reduce the level of distortionary taxes needed to finance the higher debt. Because country-level fiscal authorities do not take into account the costs to other countries of the inflation that their fiscal policies induce, a negative fiscal externality arises. This externality naturally becomes more severe as the number of countries in the monetary union increases. Hence, as in the real-economy model, a decentralized fiscal regime is optimal for small monetary unions, whereas a fiscal union is optimal for sufficiently large ones. Our key result is that as the size of a monetary union increases, it becomes relatively more desirable to centralize fiscal authority. We conclude by discussing the implications of our results for the debate on the integration of fiscal policy within the EU and its enlargement.
Author contact info: Rafael Berriel Stanford University Stanford, CA 94305 E-Mail: rberriel@stanford.edu Eugenia Gonzalez-Aguado E-Mail: eugenia.gonzalez@tse-fr.eu Patrick J. Kehoe Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: patrickjameskehoe@gmail.com Elena Pastorino Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/725-9935 E-Mail: epastori@stanford.edu

On the Economics of Extinction and Mass Extinctions - Taylor, M. Scott; Weder, Rolf (National Bureau of Economic Research Working Paper Series, 2023)
Human beings' domination of the planet has not been kind to many species worldwide. This is to be expected. Humans have radically altered natural landscapes, harvested heavily from the ocean, and altered the climate in an unprecedented way. Recent concerns over the extent and rate of biodiversity loss have led to renewed interest in extinction outcomes and speculation concerning humans' potential role in any future mass extinction. In this paper, we discuss the economic causes of extinction in two high-profile cases - Sharks and the North American Buffalo - and then extend our framework to allow for multiple species and the possibility of mass extinction. Throughout, we present evidence drawn from authoritative data sources with a focus on shark populations to ground our analysis. Despite large gaps in our data, the available evidence suggests extinction risks are rising for many species and policy is slow to react.
Author contact info: M. Scott Taylor Professor of Economics Department of Economics The University of Calgary 2500 University Drive, N.W. Calgary, AB T2N 1N4 Tel: 403/220-8912 Fax: 403/282-5262 E-Mail: m.scott.taylor1@gmail.com Rolf Weder Professor of International Economics University of Basel Peter Merian-Weg 6 CH-4002 Basel Switzerland E-Mail: rolf.weder@unibas.ch

Neoclassical Growth in an Interdependent World - Kleinman, Benny; Liu, Ernest; Redding, Stephen J; Yogo, Motohiro (National Bureau of Economic Research Working Paper Series, 2023)
We generalize the open-economy neoclassical growth model to allow for trade and capital market frictions and imperfect substitutability of goods and capital across countries. The multi-country model is tractable, amenable to quantitative analysis, and matches key empirical patterns such as gravity equations in trade and capital holdings. The degree of integration in trade and capital markets and their interaction shape adjustments to shocks and the speed of convergence to steady state. The model is well-suited to study counterfactual changes in both trade and capital market frictions, such as a decoupling between the United States and China.
Author contact info: Benny Kleinman Becker Friedman Institute University of Chicago 5757 S University Ave Chicago, IL 60610 United States Tel: 609-510-6056 E-Mail: bennykleinman@uchicago.edu Ernest Liu Department of Economics Princeton University 20 Washington Road Princeton, NJ 08540 E-Mail: ernestliu@princeton.edu Stephen J. Redding Department of Economics & School of Public and International Affairs Princeton University Princeton, NJ 08544 Tel: 609/258-4016 Fax: 609/258-6419 E-Mail: reddings@princeton.edu Motohiro Yogo Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: myogo@princeton.edu

Geopolitical Shocks And Commodity Market Dynamics: New Evidence From The Russian-Ukraine Conflict - Aizenman, Joshua; Lindahl, Robert; Stenvall, David; Uddin, Gazi Salah (National Bureau of Economic Research Working Paper Series, 2023)
We investigate the event-based geopolitical shocks from the Russian invasion of Ukraine on selected agricultural and energy commodities using daily event-based structural vector autoregression (SVAR). We find that the geopolitical shock affects the markets of wheat (3%) and European natural gas (12%). However, substantial heterogeneity is observed among the food and energy markets. Geopolitical risk affects the European natural gas market more strongly than the US and Asian markets. The regional segment of natural gas markets could explain this. Finally, the dynamics of the impacts of geopolitical news are analyzed in the stock, currency, and bond markets.
Author contact info: Joshua Aizenman Economics and SIR University of Southern California University Park Los Angeles, CA 90089-0043 Tel: 213-740-4066 E-Mail: aizenman@usc.edu Robert Lindahl Department of Management and Engineering Linköping University, SE-581 83 Linköping, Swed Sweden E-Mail: robert.lindahl@liu.se David Stenvall Linköping University SE-581 83 Linköping Sweden E-Mail: david.stenvall@liu.se Gazi Salah Uddin Department of Management and Engineering Linköping University Linköping 58183 Sweden E-Mail: gazi.salah.uddin@liu.se

Natural and Neutral Real Interest Rates: Past and Future - Obstfeld, Maurice (National Bureau of Economic Research Working Paper Series, 2023)
This paper surveys the decline in real interest rates in advanced and emerging economies over the past several decades, linking that process to a range of global factors that have operated with different force in different periods. The paper argues that estimates of long-run equilibrium real rates (r̄) may not always furnish an accurate guide to the rate appropriate for short-term monetary policy (r*). It argues further that effective monetary should consider not only equilibrium in the market for domestic goods, but also the current account balance, financial conditions (including capital flows), and imperfect policy credibility. Equilibrium long-term real interest rates have risen recently according to market indicators. However, the main underlying factors that have pushed real interest rates down since the 1980s and 1990s – notably demographic shifts, lower productivity growth, corporate market power, and safe asset demand relative to supply – do not appear poised to reverse strongly enough to drive a big and durable rise in global real interest rates over the coming years. Low equilibrium interest rates may well continue periodically to bedevil monetary policy and financial stability.
Author contact info: Maurice Obstfeld Peterson Institute for International Economics 1750 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: obstfeld@econ.berkeley.edu

The World’s Rust Belts: The Heterogeneous Effects of Deindustrialization on 1,993 Cities in Six Countries - Gagliardi, Luisa; Moretti, Enrico; Serafinelli, Michel (National Bureau of Economic Research Working Paper Series, 2023)
We investigate the employment consequences of deindustrialization for 1,993 cities in France, Germany, Great Britain, Italy, Japan, and the United States. In all six countries we find a strong negative relationship between a city's share of manufacturing employment in the year of its country’s manufacturing peak and the subsequent change in total employment, reflecting the fact that cities where manufacturing was initially more important experienced larger negative labor demand shocks. But in a significant number of cases, total employment fully recovered and even exceeded initial levels, despite the loss of manufacturing jobs. Overall, 34% of former manufacturing hubs--defined as cities with an initial manufacturing employment share in the top tercile--experienced employment growth faster than their country's mean, suggesting that a surprisingly large number of cities was able to adapt to the negative shock caused by deindustrialization. The U.S. has the lowest share, indicating that the U.S. Rust Belt communities have fared relatively worse compared to their peers in the other countries. We then seek to understand why some former manufacturing hubs recovered while others didn't. We find that deindustrialization had different effects on local employment depending on the initial share of college-educated workers in the labor force. While in the two decades before the manufacturing peak, cities with a high college share experienced a rate of employment growth similar to those with a low college share, in the decades after the manufacturing peak, the employment trends diverged: cities with a high college share experienced significantly faster employment growth. The divergence grows over time at an accelerating rate. Using an instrumental variable based on the driving distance to historical colleges and universities, we estimate that a one standard deviation increase in local college share results in a rate of employment growth per decade that is 9.1 percentage points higher. This effect is in part explained by faster growth in human capital-intensive services, which more than offsets the loss of manufacturing jobs.
Author contact info: Luisa Gagliardi Department of Management and Technology Bocconi University Via Sarfatti 25 20100 Milan Italy E-Mail: luisa.gagliardi@unibocconi.it Enrico Moretti University of California, Berkeley Department of Economics 549 Evans Hall Berkeley, CA 94720-3880 Tel: 510/642 6649 Fax: 510/643 7042 E-Mail: moretti@econ.berkeley.edu Michel Serafinelli Department of Economics University of Essex Wivenhoe Park Colchester CO4 3SQ United Kingdom E-Mail: michel.serafinelli@essex.ac.uk

Market Design and Maintenance - Roth, Alvin E (National Bureau of Economic Research Working Paper Series, 2023)
Because no marketplace operates in isolation from the larger world, marketplace designs may need to adapt to changes in the larger environments. I discuss such changes in connection with the labor markets for new doctors, new Ph.D. economists, and for kidney exchange transplants. But while practical market design presents a host of challenges, it also offers many rewards. Among the rewards to market designers themselves is the opportunity to become intimately familiar with markets that shape the lives and careers of their participants.
Author contact info: Alvin E. Roth Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/725-9147 E-Mail: alroth@stanford.edu

An Empirical Analysis of the Interconnection Queue - Johnston, Sarah; Liu, Yifei; Yang, Chenyu (National Bureau of Economic Research Working Paper Series, 2023)
Generators applying to connect to the U.S. power grid go through an interconnection queue. Most wind and solar generators that begin the process do not complete it. Using new data, we find that a long queue increases the average waiting time, and high interconnection costs are a key factor in a generator’s decision to withdraw. We develop and estimate a dynamic model of the queue and quantify the effects of policy reforms. Our simulations indicate that reducing waiting times can significantly increase completions. An alternative queuing mechanism can therefore increase completed capacity by removing certain generators to reduce congestion. A flat entry fee has a similar effect. We also quantify the effects of reforming how interconnection costs are assessed. These policy reforms lead to a substantial reduction in carbon emissions.
Author contact info: Sarah Johnston Department of Agricultural and Applied Economics University of Wisconsin-Madison 427 Lorch Street Madison, WI 53706 E-Mail: sarah.johnston@wisc.edu Yifei Liu Department of Agricultural and Applied Economics University of Wisconsin-Madison 427 Lorch Street Madison, WI 53706 E-Mail: yifei.violet.liu@wisc.edu Chenyu Yang 3115E Tydings Hall, 7343 Preinkert Dr., University of Maryland College Park, MD 20742 E-Mail: chny.yang@gmail.com

Econometric Causality: The Central Role of Thought Experiments - Heckman, James J; Pinto, Rodrigo (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the econometric causal model and the interpretation of empirical evidence based on thought experiments that was developed by Ragnar Frisch and Trygve Haavelmo. We compare the econometric causal model with two currently popular causal frameworks: the Neyman-Rubin causal model and the Do-Calculus. The Neyman-Rubin causal model is based on the language of potential outcomes and was largely developed by statisticians. Instead of being based on thought experiments, it takes statistical experiments as its foundation. The Do-Calculus, developed by Judea Pearl and co-authors, relies on Directed Acyclic Graphs (DAGs) and is a popular causal framework in computer science and applied mathematics. We make the case that economists who uncritically use these frameworks often discard the substantial benefits of the econometric causal model to the detriment of more informative analyses. We illustrate the versatility and capabilities of the econometric framework using causal models developed in economics.
Author contact info: James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Rodrigo Pinto Department of Economics University of California at Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 Tel: 2245958758 E-Mail: rodrig@econ.ucla.edu

Rising Income Tax Complexity - Benzarti, Youssef; Wallossek, Luisa (National Bureau of Economic Research Working Paper Series, 2023)
This paper provides novel estimates on the cost of filing taxes over time and in different countries. First, we ran a survey of US taxpayers. We find that taxpayers perceive that tax complexity and filing costs have been increasing and that the majority would be willing to pay for simplifying the tax system and adopting pre-populated tax returns. Second, we use word counts of the tax codes in several countries dating as far back as the early 1980’s as a proxy for tax compliance costs. This measure shows that compliance costs have been steadily increasing.
Author contact info: Youssef Benzarti Department of Economics University of California Santa Barbara, CA 93106 E-Mail: youssef.benzarti@gmail.com Luisa Wallossek Ludwigstr. 28 80539 Munich Munich 80539 Germany E-Mail: luisa.wallossek@econ.lmu.de

Sovereign Default and Tax-smoothing in the Shadow of Corruption and Institutional Weakness - Azzimonti, Marina; Mitra, Nirvana (National Bureau of Economic Research Working Paper Series, 2023)
Emerging countries exhibit volatile fiscal policies and frequent sovereign debt crises, that significantly diminish the well-being of their citizens. International advisors typically suggest developed-world solutions as a remedy. We argue that the root of the problem lies in the institutional environment, which does not incentivize responsible policymaking, particularly tax-smoothing practices. Focusing on democratic representation and control of corruption, our dynamic political-economy bargaining model shows that nations with weaker institutions experience frequent default episodes and greater economic volatility. Our results are in line with stylized facts from a panel of 58 countries between 1990 and 2022. Through counterfactual experiments, we find that while emerging economy policymakers might favor moderate reforms to improve democratic representation, achieving the institutional depth seen in developed countries is politically unfeasible, despite its clear advantages for citizens.
Author contact info: Marina Azzimonti Economics Department Stony Brook University 100 Nicolls Road Stony Brook, NY 11794 E-Mail: marina.azzimonti@gmail.com Nirvana Mitra CAFRAL, Reserve Bank of India Main Building, Mezzanine Floor Shahid Bhagat Singh Marg, Mumbai 400001 India Tel: +91 8697421854 E-Mail: nirvana.mitra@gmail.com

Causal Models for Longitudinal and Panel Data: A Survey - Arkhangelsky, Dmitry; Imbens, Guido (National Bureau of Economic Research Working Paper Series, 2023)
This survey discusses the recent causal panel data literature. This recent literature has focused on credibly estimating causal effects of binary interventions in settings with longitudinal data, with an emphasis on practical advice for empirical researchers. It pays particular attention to heterogeneity in the causal effects, often in situations where few units are treated. The literature has extended earlier work on difference-in-differences or two-way-fixed-effect estimators and more generally incorporated factor models or interactive fixed effects. It has also developed novel methods using synthetic control approaches.
Author contact info: Dmitry Arkhangelsky CEMFI 5 Calle Casado del Alisal Madrid 28014 Spain E-Mail: darkhangel@cemfi.es Guido Imbens Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: Imbens@stanford.edu

Influencing Policy and Transforming Institutions: Lessons from Kidney/Liver Exchange - Sönmez, Tayfun; Ünver, M. Utku (National Bureau of Economic Research Working Paper Series, 2023)
Kidney exchange emerges as a pioneering application in the early stages of market design. In contrast to most other successful applications in the field, where design economists primarily serve as consultants to decision-makers, in the context of kidney exchange, they assumed the role of outsider critics, ultimately succeeding in shaping real-life practices and institutions. This paper delves into the strategies that facilitated this influential role. Drawing on our two-decade involvement in shaping kidney and liver exchange clearinghouses in the United States and Turkey, we provide insights into factors pivotal for the effectiveness of market design research in shaping policy. Building upon these experiences and incorporating lessons from school choice reforms in the 2000s, Sönmez (2023) introduces a novel institutional design paradigm termed "minimalist market design." Recent years have witnessed tangible outcomes resulting from integrated research and policy efforts employing this framework, notably contributing to the 2021 reform of the US Army's cadet branching system and the establishment of reserve systems during the Covid-19 pandemic for vaccine and therapy allocation across multiple states.
Author contact info: Tayfun Sönmez Boston College Department of Economics 140 Comm. Ave. Chestnut Hill, MA 02467 E-Mail: tayfun.sonmez@bc.edu M. Utku Ünver Boston College Department of Economics 140 Commonwealth Avenue Chestnut Hill, MA 02467 Tel: 617-5522217 E-Mail: unver@bc.edu

Updating about Yourself by Learning about the Market: The Dynamics of Beliefs and Expectations in Job Search - He, Qiwei; Kircher, Philipp (National Bureau of Economic Research Working Paper Series, 2023)
This study documents how job seekers update perceived job-finding prospects by unemployment duration and by learning about aggregate unemployment. We find that job seekers perceive an 18% decline in their job-finding probability for each additional month of unemployment, but perceive a higher job-finding probability when the aggregate unemployment rate is unexpectedly low. We develop a job search model with learning and updating to quantify the impact of perceived aggregate unemployment on subjective job-finding probabilities, revealing an overreaction to news about aggregate conditions. These beliefs can potentially offset a non-trivial part of the negative consequences of moral hazard in job search.
Author contact info: Qiwei He Uris Hall Department of Economics Cornell University Ithaca, NY 14853 E-Mail: qh224@cornell.edu Philipp Kircher Ives Hall School for Industrial and Labor Relations Cornell University Ithaca, NY 14853 E-Mail: pk532@cornell.edu

Heterogeneous Impacts of Sentencing Decisions - Jordan, Andrew; Karger, Ezra; Neal, Derek (National Bureau of Economic Research Working Paper Series, 2023)
We examine 70,581 felony court cases filed in Chicago, IL, from 1990–2007. We exploit case randomization to assess the impact of judge assignment and sentencing decisions on the arrival of new charges. We find that, in marginal cases, incarceration creates large and lasting reductions in recidivism among first offenders. Yet, among marginal repeat offenders, incarceration creates only short-run incapacitation effects and no lasting reductions in the incidence of new felony charges. These treatment-impact differences inform ongoing legal debates concerning the merits of sentencing rules that recommend leniency for first offenders while encouraging or mandating incarceration sentences for many repeat offenders. We show that methods that fail to estimate separate outcome equations for first versus repeat offenders or fail to model judge-specific sentencing tendencies separately for cases involving first versus repeat offenders produce misleading results for first offenders.
Author contact info: Andrew Jordan Department of Economics Washington University in St Louis One Brookings Dr. St Louis, MO 63105 E-Mail: awjordan@wustl.edu Ezra Karger Federal Reserve Bank of Chicago 230 South LaSalle Street Chicago, IL 60604 E-Mail: karger@uchicago.edu Derek Neal Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-8166 Fax: 773-702-8490 E-Mail: n9na@uchicago.edu

Impacts of the Jones Act on U.S. Petroleum Markets - Kellogg, Ryan; Sweeney, Richard L (National Bureau of Economic Research Working Paper Series, 2023)
We study how the Jones Act — a 100-year-old U.S. regulation that constrains domestic waterborne shipping — affects U.S. markets for crude oil and petroleum products. We collect data on U.S. Gulf Coast and East Coast fuel prices, movements, and consumption, and we estimate domestic non-Jones shipping costs using freight rates for Gulf Coast exports. We then model counterfactual prices and product movements absent the Jones Act, allowing shippers to arbitrage price differences between the Gulf and East Coasts when they exceed transport costs. Eliminating the Jones Act would have reduced average East Coast gasoline, jet fuel, and diesel prices by $0.63, $0.80, and $0.82 per barrel, respectively, during 2018–2019, with the largest price decreases occurring in the Lower Atlantic. The Gulf Coast gasoline price would increase by $0.30 per barrel. U.S. consumers’ surplus would increase by $769 million per year, and producers’ surplus would decrease by $367 million per year.
Author contact info: Ryan Kellogg University of Chicago Harris School of Public Policy 1307 East 60th Street Chicago, IL 60637 E-Mail: kelloggr@uchicagoedu.mail.onmicrosoft.com Richard L. Sweeney Economics Department Boston College Chestnut Hill, MA 02467 E-Mail: sweeneri@bc.edu

Dollar Shortages, CIP Deviations, and the Safe Haven Role of the Dollar - Bacchetta, Philippe; Davis, J. Scott; van Wincoop, Eric (National Bureau of Economic Research Working Paper Series, 2023)
Since 2007, an increase in risk or risk aversion has resulted in a US dollar appreciation and greater deviations from covered interest parity (CIP). In contrast, prior to 2007, risk had no impact on the dollar, and CIP held. To explain these phenomena, we develop a two-country model featuring (i) market segmentation, (ii) limited CIP arbitrage (since 2007), (iii) global dollar dominance. During periods of heightened global financial stress, dollar shortages in the offshore market emerge, leading to increased CIP deviations and a dollar appreciation. The appreciation occurs even in the absence of global dollar demand shocks. Central bank swap lines mitigate these effects.
Author contact info: Philippe Bacchetta Faculty of Business and Economics University of Lausanne Internef 523 CH-1015 Lausanne Switzerland E-Mail: philippe.bacchetta@unil.ch J. Scott Davis Federal Reserve Bank of Dallas Research Department 2200 North Pearl Street Dallas, TX 75201 E-Mail: Scott.Davis@dal.frb.org Eric van Wincoop Department of Economics University of Virginia P.O. Box 400182 Charlottesville, VA 22904-4182 Tel: 434/924-3997 Fax: 434/982-2904 E-Mail: vanwincoop@virginia.edu

Security Analysis and the Collection of Hard and Soft Information - Ben-Rephael, Azi; Carlin, Bruce I; Da, Zhi; Israelsen, Ryan D (National Bureau of Economic Research Working Paper Series, 2023)
We use minute-by-minute Bloomberg online status microdata during 2017-2021 to directly study how hard and soft information collection affects equity analyst performance. Collection of hard information, proxied by office workday length, is positively associated with the quantity and timeliness of analyst reports. Soft information collection, as proxied by propensity to travel, is positively correlated with the market’s reaction to recommendation changes and the likelihood of becoming a star analyst. Both hard and soft information collection improve forecast precision, a causal result that we confirm using the COVID lockdown as an instrument.
Author contact info: Azi Ben-Rephael Rutgers Business School 1 Washington Park Newark, NJ 07102 USA E-Mail: abenrephael@business.rutgers.edu Bruce I. Carlin Jones Graduate School of Business Rice University 1900 Rice Boulevard Houston, TX 77005 E-Mail: carlin@rice.edu Zhi Da University of Notre Dame 258 Mendoza College of Business Notre Dame, Indiana 46556-5646 Tel: 574-631-0354 E-Mail: zda@nd.edu Ryan D. Israelsen Michigan State University Broad College of Business 667 N Shaw Ln Rm 307 East Lansing, MI 48824 USA Tel: (517) 353-1705 E-Mail: israels4@msu.edu

American Disclosure Options - Back, Kerry; Carlin, Bruce I; Kazempour, Seyed Mohammad; Xie, Chloe L (National Bureau of Economic Research Working Paper Series, 2023)
We study strategic disclosure timing by correlated firms in the presence of risk-averse investors. Firms delay disclosures in the hope that positively correlated firms will announce especially good news and lift their own price. Risk premia rise before disclosures, drop when disclosures occur, and then rise again. Conditional risk premia can be much larger than unconditional risk premia. Disclosures are always good news, but disclosures that are only moderately good news induce clustering of disclosures by other positively correlated firms. We present evidence of strategic behavior in earnings announcement timing as predicted by the model.
Author contact info: Kerry Back Jones Graduate School of Business Rice University P.O. Box 2932 Houston, TX 77252 E-Mail: kerry.e.back@rice.edu Bruce I. Carlin Jones Graduate School of Business Rice University 1900 Rice Boulevard Houston, TX 77005 E-Mail: carlin@rice.edu Seyed Mohammad Kazempour E.J. Ourso College of Business Louisiana State University 501 South Quad Drive Baton Rouge, LA 70803 E-Mail: skazempour@lsu.edu Chloe Xie Sloan School of Management Massachusetts Institute of Technology 100 Main St Cambridge, MA 02142 E-Mail: chloexie@mit.edu

An Evaluation of Protected Area Policies in the European Union - Grupp, Tristan; Mishra, Prakash; Reynaert, Mathias; van Benthem, Arthur A (National Bureau of Economic Research Working Paper Series, 2023)
The European Union designates 26% of its landmass as a protected area, limiting economic development to favor biodiversity. This paper uses the staggered introduction of protected-area policies between 1985 and 2020 to study the selection of land for protection and the causal effect of protection on vegetation cover and nightlights. Our results reveal protection did not affect the outcomes in any meaningful way across four decades, all countries, protection cohorts, and a wide range of land and climate attributes. We conclude that European conservation efforts lack ambition because policymakers select land for protection not threatened by development.
Author contact info: Tristan Grupp Stuart Weitzman School of Design University of Pennsylvania E-Mail: tgrupp@design.upenn.edu Prakash Mishra E-Mail: mishrap@wharton.upenn.edu Mathias Reynaert Toulouse School of Economics 1, Esplanade de l'Université 31080, Toulouse Cedex 06, France E-Mail: mathias.reynaert@tse-fr.eu Arthur A. van Benthem The Wharton School University of Pennsylvania 327 Vance Hall 3733 Spruce Street Philadelphia, PA 19104 Tel: 215/898-3013 Fax: 215/898-7635 E-Mail: arthurv@wharton.upenn.edu

Optimal Exchange Rate Policy - Itskhoki, Oleg; Mukhin, Dmitry (National Bureau of Economic Research Working Paper Series, 2023)
We develop a general policy analysis framework for an open economy that features nominal rigidities and financial frictions giving rise to endogenous PPP and UIP deviations. The efficient allocation can be implemented with monetary policy closing the output gap and FX interventions eliminating UIP deviations. When the “natural” real exchange rate is stable, both goals can be achieved solely by monetary policy that fixes the exchange rate — an open-economy divine coincidence. More generally, optimal policy features a managed float/crawling peg complemented with FX forward guidance and macroprudential accumulation of FX reserves, in line with the “fear of floating” observed in the data. Capital controls are not necessary to achieve the frictionless allocation, but they facilitate the extraction of rents in the currency market. Constrained unilateral policies are not optimal from the global perspective, and international cooperation features a complementary use of FX interventions across countries.
Author contact info: 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 Dmitry Mukhin 32 Lincolns Inn Fields Room 1.24 Houghton Street WC2A 2AE London United Kingdom E-Mail: D.Mukhin@lse.ac.uk

Revisiting the Eswaran-Kotwal Model of Tenancy - Ghatak, Maitreesh; Mookherjee, Dilip (National Bureau of Economic Research Working Paper Series, 2023)
Persistence of sharecropping tenancy and increases in farm productivity following regulations protecting tenant rights have been observed in many developing countries. This paper examines if these can be explained by alternative models of sharecropping with two sided efforts/investments, namely, complete contract models either without wealth constraints (Eswaran-Kotwal (1985)), or with a wealth constrained tenant (Mookherjee (1997), Banerjee-Gertler-Ghatak (2002)); and incomplete contract holdup models without wealth constraints (Grossman-Hart (1986)). In the absence of wealth constraints the complete contract model always results in (incentive constrained) surplus-maximizing productivity, so there can be no scope for tenancy regulations to raise productivity. In the incomplete contract model, tenancy regulations would raise productivity only if the tenant's investments are more important than the landlord's investment. But in that case sharecropping tenancy would not persist in the absence of wealth constraints as the tenant would have purchased the land right ex ante from the landlord. The model with wealth constraints helps explain both the persistence of tenancy and productivity/surplus enhancing effects of tenancy regulations.
Author contact info: Maitreesh Ghatak London School of Economics Department of Economics R521 (STICERD) Houghton Street London WC2A 2AE, U.K. E-Mail: m.ghatak@lse.ac.uk Dilip Mookherjee Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4392 Fax: 617/353-4143 E-Mail: dilipm@bu.edu

The Power to Conserve: A Field Experiment on Electricity Use in Qatar - Al-Ubaydli, Omar; Cassidy, Alecia W; Chatterjee, Anomitro; Khalifa, Ahmed; Price, Michael K (National Bureau of Economic Research Working Paper Series, 2023)
High resource users often have the strongest response to behavioral interventions promoting conservation. Yet, litlle is known about how to motivate them. We implement a field experiment in Qatar, where residential customers have some of the highest energy use per capita in the world. Our dataset consists of 207,325 monthly electricity meter readings from a panel of 6,096 customers. We employ two normative treatments priming identity - a religious message quoting the Qur’an, and a national message reminding households that Qatar prioritizes energy conservation. The treatments reduce electricity use by 3.8% and both messages are equally effective. Using machine learning methods on supplemental survey data, we elucidate how agency, motivation, and responsibility activate conservation responses to our identity primes.
Author contact info: Omar Al-Ubaydli Department of Economics and Mercatus Center George Mason University E-Mail: omar@omar.ec Alecia W. Cassidy Department of Economics, Finance and Legal Studies University of Alabama 200 Alston Hall, Box 870224, 361 Stadium Tuscaloosa, AL 35487 E-Mail: awcassidy1@cba.ua.edu Anomitro Chatterjee E-Mail: a.chatterjee6@lse.ac.uk Ahmed A. Khalifa Department of Finance and Economics College of Business and Economics Qatar University Doha 2713 Tel: +97474015848 Fax: +97444035081 E-Mail: aliabdelkh91@gmail.com Michael K. Price Department of Economics, Finance, and Legal Studies The University of Alabama 250 Alston Hall Box 870224 Tuscaloosa, AL 35487 E-Mail: mkprice2@ua.edu

Eliciting Willingness-to-Pay to Decompose Beliefs and Preferences that Determine Selection into Competition in Lab Experiments - Chen, Yvonne Jie; Dutz, Deniz; Li,; Moon, Sarah; Vytlacil, Edward J; Zhong, Songfa (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops a partial-identification methodology for analyzing self-selection into alternative compensation schemes in a laboratory environment. We formulate a model of self-selection in which individuals select the compensation scheme with the largest expected valuation, which depends on individual- and scheme-specific beliefs and non-monetary preferences. We characterize the resulting sharp identified sets for individual-specific willingness-to-pay, subjective beliefs, and preferences, and develop conditions on the experimental design under which these identified sets are informative. We apply our methods to examine gender differences in preference for winner-take-all compensation schemes. We find that what has commonly been attributed to a gender difference in preference for performing in a competition is instead explained by men being more confident than women in their probability of winning a future (though not necessarily a past) competition.
Author contact info: Yvonne J. Chen School of Entrepreneurship and Management ShanghaiTech Univeresity 363 Huaxia Road Rm 306, Shanghai China E-Mail: chenjie1@shanghaitech.edu.cn Deniz Dutz University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: deniz.dutz@gmail.com Li Li Faculty of Economics and Management East China Normal University A-1303 Science Building 3663 North Zhongshan Rd Shangia 200062 China E-Mail: lli@fem.ecnu.edu.cn Sarah Moon E-Mail: sarahmn@mit.edu Edward J. Vytlacil Department of Economics Yale University Box 208281 New Haven, CT 06520-8281 Tel: 203-436-3994 Fax: 203-432-6167 E-Mail: edward.vytlacil@yale.edu Songfa Zhong National University of Singapore 1 Arts Link Singapore 117570 E-Mail: zhongsongfa@gmail.com

The Labor Market Effects of Legal Restrictions on Worker Mobility - Johnson, Matthew S; Lavetti, Kurt J; Lipsitz, Michael (National Bureau of Economic Research Working Paper Series, 2023)
We analyze how the legal enforceability of noncompete agreements (NCAs) affects labor markets. Using newly-constructed panel data, we find that higher NCA enforceability diminishes workers’ earnings and job mobility, with larger effects among workers most likely to sign NCAs. These effects are far-reaching: changes in enforceability impose externalities on workers across state borders, suggesting that enforceability broadly affects labor market dynamism. We provide evidence that NCA enforceability primarily affects wages through its effect on workers' outside options; moreover, workers facing high enforceability are unable to leverage tight labor markets to increase earnings. We motivate these findings by embedding NCA enforceability in a search model with bargaining. Finally, higher NCA enforceability exacerbates gender and racial earnings gaps.
Author contact info: Matthew S. Johnson Sanford School of Public Policy Duke University Box #90312 Durham, NC 27708 E-Mail: matthew.johnson@duke.edu Kurt J. Lavetti Department of Economics The Ohio State University 1945 N. High St. Arps Hall 433 Columbus, OH 43210 Tel: 301/752-0895 E-Mail: Lavetti.1@osu.edu Michael Lipsitz Federal Trade Commission E-Mail: mlipsitz@ftc.gov

One Hundred Years of Exchange Rate Economics at The University of Chicago: 1892-1992 - Edwards, Sebastian (National Bureau of Economic Research Working Paper Series, 2023)
In this paper I analyze the work on exchange rates and external imbalances by University of Chicago faculty members during the university’s first hundred years, 1892-1992. Many people associate Chicago’s views with Milton Friedman’s advocacy for flexible exchange rates. But, of course, there was much more than that, including the work of J. Laurence Laughlin on bimetallism, Jacob Viner on the balance of payments, Lloyd Metzler on transfers, Harry Johnson on trade and currencies, Lloyd Mints on exchange rate regimes, Robert Mundell on optimal currency areas, and Arnold Harberger on shadow exchange rates, among other. The analysis shows that, although different scholars emphasized different issues, there was a common thread in this research, anchored on the role of relative prices’ changes during the adjustment process.
Author contact info: Sebastian Edwards UCLA Anderson Graduate School of Management 110 Westwood Plaza, Suite C508 Box 951481 Los Angeles, CA 90095-1481 Tel: 310/206-6797 Fax: 310/206-5825 E-Mail: sebastian.edwards@anderson.ucla.edu

Information Leakage from Short Sellers - Chague, Fernando D; Giovannetti, Bruno; Herskovic, Bernard (National Bureau of Economic Research Working Paper Series, 2023)
Using granular data on the entire Brazilian securities lending market merged with all trades in the centralized stock exchange, we identify information leakage from short sellers. Our identification strategy explores trading execution mismatches between short sellers’ selling activity in the centralized exchange and borrowing activity in the over-the-counter securities lending market. We document that brokers learn about informed directional bets by intermediating securities lending agreements and leak that information to their clients. We find evidence that the information leakage is intentional and that brokers benefit from it. We also study leakage effects on stock prices.
Author contact info: Fernando Chague Getulio Vargas Foundation, Sao Paulo School of Economics Sao Paulo SP Brazil E-Mail: fernando.chague@fgv.br Bruno C. Giovannetti Getulio Vargas Foundation Sao Paulo School of Economics Brazil E-Mail: bruno.giovannetti@gmail.com Bernard Herskovic UCLA Anderson School of Management UCLA Anderson School of Management 110 Westwood Plaza, Suite C4.13 Los Angeles, CA 90095 E-Mail: bernard.herskovic@anderson.ucla.edu

The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt - Guttman-Kenney, Benedict; Adams, Paul D; Hunt, Stefan; Laibson, David; Stewart, Neil; Leary, Jesse (National Bureau of Economic Research Working Paper Series, 2023)
We run a field experiment and a survey experiment to study an active choice nudge. Our nudge is designed to reduce the anchoring of credit card payments to the minimum payment. In our field experiment, the nudge reduces enrollment in Autopaying the minimum from 36.9% to 9.6%. However, the nudge does not reduce credit card debt after seven payment cycles. Nudged cardholders tend to choose Autopay amounts that are only slightly higher than the minimum payment. The nudge lowers Autopay enrollment resulting in increasing missed payments. Finally, the nudge reduces manual payments by cardholders enrolled in Autopay.
Author contact info: Benedict Guttman-Kenney 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: benedict@chicagobooth.edu Paul D. Adams Netherlands E-Mail: paulduncanadams@gmail.com Stefan Hunt Keystone Strategy E-Mail: stefanhunt@gmail.com David Laibson Department of Economics Littauer M-12 Harvard University Cambridge, MA 02138 Tel: 617/496-3402 Fax: 617/495-8570 E-Mail: dlaibson@gmail.com Neil Stewart Warwick Business School University of Warwick England E-Mail: neil.stewart@warwick.ac.uk. Jesse b. Leary Amazon United Kingdom E-Mail: learyjesse@gmail.com

The Impact of AI and Cross-Border Data Regulation on International Trade in Digital Services: A Large Language Model - Sun, Ruiqi; Trefler, Daniel (National Bureau of Economic Research Working Paper Series, 2023)
The rise of artificial intelligence (AI) and of cross-border restrictions on data flows has created a host of new questions and related policy dilemmas. This paper addresses two questions: How is digital service trade shaped by (1) AI algorithms and (2) by the interplay between AI algorithms and cross-border restrictions on data flows? Answers lie in the palm of your hand: From London to Lagos, mobile app users trigger international transactions when they open AI-powered foreign apps. We have 2015-2020 usage data for the most popular 35,575 mobile apps and, to quantify the AI deployed in each of these apps, we use a large language model (LLM) to link each app to each of the app developer's AI patents. (This linkage of specific products to specific patents is a methodological innovation.) Armed with data on app usage by country, with AI deployed in each app, and with an instrument for AI (a Heckscher-Ohlin cost-shifter), we answer our two questions. (1) On average, AI causally raises an app's number of foreign users by 2.67 log points or by more than 10-fold. (2) The impact of AI on foreign users is halved if the foreign users are in a country with strong restrictions on cross-border data flows. These countries are usually autocracies. We also provide a new way of measuring AI knowledge spillovers across firms and find large spillovers. Finally, our work suggests numerous ways in which LLMs such as ChatGPT can be used in other applications.
Author contact info: Ruiqi Sun Rotman School of Management 105 St. George Street Toronto, ON M5S3E6 Canada Tel: 4379890196 E-Mail: sunrq.17@pbcsf.tsinghua.edu.cn Daniel Trefler Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 Tel: 416/946-7945 Fax: 416/978-5433 E-Mail: dtrefler@rotman.utoronto.ca

Can Socially-Minded Governance Control the AGI Beast? - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2023)
This paper robustly concludes that it cannot. A model is constructed under idealised conditions that presume the risks associated with artificial general intelligence (AGI) are real, that safe AGI products are possible, and that there exist socially-minded funders who are interested in funding safe AGI even if this does not maximise profits. It is demonstrated that a socially-minded entity formed by such funders would not be able to minimise harm from AGI that might be created by unrestricted products released by for-profit firms. The reason is that a socially-minded entity has neither the incentive nor ability to minimise the use of unrestricted AGI products in ex post competition with for-profit firms and cannot preempt the AGI developed by for-profit firms ex ante.
Author contact info: Joshua S. Gans Rotman School of Management University of Toronto 105 St. George Street Toronto ON M5S 3E6 Tel: 416/978-3243 E-Mail: joshua.gans@rotman.utoronto.ca

Macroeconomic Announcement Premium - Ai, Hengjie; Bansal, Ravi; Guo, Hongye (National Bureau of Economic Research Working Paper Series, 2023)
The paper reviews the evidence on the macroeconomic announcement premium and its implications on equilibrium asset pricing models. Empirically, a large fraction of the equity market risk premium is realized on a small number of trading days with significant macroeconomic announcements. We review the literature that demonstrates that the existence of the macroeconomic announcement premium implies that investors’ preferences must satisfy generalized risk sensitivity. We show how this conclusion generalizes to environments with heterogeneous investors and demonstrate how incorporating generalized risk sensitivity affects economic analysis in dynamic setups with uncertainty.
Author contact info: Hengjie Ai Department of Finance Wisconsin School of Business University of Wisconsin Madison, WI 53705 U.S.A. Tel: 919/660-2900 E-Mail: hengjie.ai@wisc.edu Ravi Bansal Fuqua School of Business Duke University 1 Towerview Drive Durham, NC 27708 Tel: 919/660-7758 Fax: 919/660-8038 E-Mail: ravi.bansal@duke.edu Hongye Guo 724 K. K. Leung Building University of Hong Kong E-Mail: silver.hongye.guo@gmail.com

Winners and Losers from the U.S.-China Trade War - Dang, Alicia H; Krishna, Kala; Zhao, Yingyan (National Bureau of Economic Research Working Paper Series, 2023)
We investigate the phenomenon of trade re-allocations across countries as a result of the U.S.- China trade war. Using quarterly data on U.S. imports, we find evidence, as do others, of trade diversion in a range of industries and products, including products not targeted by U.S. tariffs on China. We are however the first to ask what seems to drive these trade reallocation activities. First, we show that they seem to be driven by differences in comparative advantage across countries: countries with a greater revealed comparative advantage in a product benefit (in terms of exports to the U.S.) more from U.S. tariffs on China. Second, we show that there is evidence of spillovers to similar non-targeted products: products in similar industries (as defined by their HS codes) are also similarly affected. This is consistent with the colocation effects. Third, our findings also suggest that bystander countries with greater capital abundance are more heavily impacted in capital-intensive industries, suggesting that a higher proportion of more flexible or transferable assets provides flexibility to alter production to respond to new trade opportunities. Finally, we show that the countries that export more to the U.S. as a result of the tariffs on China also export more to other countries. This suggests that firms are entering these countries and once there, export not just to the U.S. but everywhere.
Author contact info: Alicia H. Dang Department of Economics Union College 807 Union Street Schenectady, NY 12308 E-Mail: dangh@union.edu Kala Krishna Department of Economics 523 Kern Graduate Building The Pennsylvania State University University Park, PA 16802 Tel: 814/865-1106 Fax: 814/863-4775 E-Mail: kmk4@psu.edu Yingyan Zhao Department of Economics George Washington University 2115 G St NW Suite 340 Washington, DC 20052 E-Mail: yingyan_zhao@gwu.edu

Regulating Artificial Intelligence - Guerreiro, Joao; Rebelo, Sergio; Teles, Pedro (National Bureau of Economic Research Working Paper Series, 2023)
We consider an environment in which there is substantial uncertainty about the potential adverse external effects of AI algorithms. We find that subjecting algorithm implementation to regulatory approval or mandating testing is insufficient to implement the social optimum. When testing costs are low, a combination of mandatory testing for external effects and making developers liable for the adverse external effects of their algorithms comes close to implementing the social optimum even when developers have limited liability.
Author contact info: Joao Guerreiro Department of Economics University of California Los Angeles Los Angeles, CA Tel: 8477307182 E-Mail: jguerreiro@econ.ucla.edu Sergio Rebelo Northwestern University Kellogg School of Management Department of Finance Leverone Hall Evanston, IL 60208-2001 Tel: 847/467-2329 Fax: 847/491-5719 E-Mail: s-rebelo@northwestern.edu Pedro Teles Banco de Portugal R. Francisco Ribeiro 2 1150 Lisboa Portugal E-Mail: pteles@ucp.pt

How Much Are the Poor Losing From Tax Competition? - Muñoz, Mathilde (National Bureau of Economic Research Working Paper Series, 2023)
This paper quantifies the unequal welfare effects of tax competition. I derive the optimal tax and transfer schedules in a free mobility union composed of countries that can either compete or set a uniform federal tax rate. In the absence of fiscal coordination, governments internalize that any decentralized tax reform can lead to the out-migration of taxpayers at the top of the income distribution while increasing the in-migration of transfer recipients. As a result, the optimal level of redistribution is always lower in the tax competition equilibrium. Numerical calibrations show that being in a competition union rather than in a federal union decreases poorer individuals’ welfare by up to -20 percent. In contrast, the rich experience higher welfare in the tax competition equilibrium due to lower tax rates.
Author contact info: Mathilde Muñoz Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: mathildemunoz@berkeley.edu

Browsers Don’t Lie? Gender Differences in the Effects of the Indian COVID-19 Lockdown on Digital Activity and Time Use - Miller, Amalia R; Ramdas, Kamalini; Sungu, Alp (National Bureau of Economic Research Working Paper Series, 2023)
We measure the impact of the initial Indian national COVID-19 lockdown on digital activity using browser histories of 1,094 individuals, spanning over 31.5 million website visits on computers and mobile devices. Reflecting the predicted increase in the value of online activity, both men and women in our sample dramatically increased their internet browsing during the lockdown. However, men’s browsing increased by significantly more, causing gender gaps overall and in key browsing categories, and in browsing on mobile devices. Our browser data showed significant relative reductions in women’s online job search, corroborated in aggregate data obtained from a major Indian online job platform, indicating potentially persistent harms to women’s employment. Consistent with increased childcare obligations driving the observed gender gaps, we find that gaps were greatest among parents. Men and women in our sample had similar browsing levels and trends pre-pandemic, which diverged during the lockdown. Our primary findings therefore shed new light on determinants of digital time use, while also highlighting the importance of considering both extensive and intensive margins of digital activity to track the digital divide. In our secondary analysis of time devoted to childcare, we find conflicting survey responses between fathers (who report an increase relative to mothers) and mothers (who report no such increase). While our data cannot directly resolve this conflict, they do show fathers having larger increases in time spent online, with no relative increase in childcare-related browsing. This secondary result demonstrates the value of complementing survey data with digital trace data.
Author contact info: Amalia R. Miller Department of Economics University of Virginia P. O. Box 400182 Charlottesville, VA 22904 Tel: 434/924-6750 Fax: 434/982-2904 E-Mail: armiller@virginia.edu Kamalini Ramdas London Business School A215 Sussex Place Regent's Park London NW11 8AA United Kingdom E-Mail: kramdas@london.edu Alp Sungu The Wharton School of the University of Pennsylvania E-Mail: alpsungu@upenn.edu

Family Trees and Falling Apples: Historical Intergenerational Mobility Estimates for Women and Men - Buckles, Kasey; Price, Joseph; Ward, Zachary; Wilbert, Haley E.B. (National Bureau of Economic Research Working Paper Series, 2023)
Efforts to document long-term trends in socioeconomic mobility in the United States have been hindered by the lack of large, representative datasets that include information linking parents to their adult children. This problem has been especially acute for women, who are more difficult to link because their surnames often change between childhood and adulthood. In this paper, we use a new dataset, the Census Tree, that overcomes these issues by building on information from an online genealogy platform. Users of the platform have private information that allows them to create links among the 1850 to 1940 decennial censuses; the Census Tree combines these links with others obtained using machine learning and traditional linking methods to produce a dataset with hundreds of millions of census-to-census links, nearly half of which are for women. With these data, we produce estimates of the intergenerational transmission of socioeconomic status from fathers to their sons and daughters. We find that for married men and women, the patterns of mobility over this period are remarkably similar. Single women, however, are less mobile than their male counterparts. We also present new estimates that show that assortative mating was much stronger than previously estimated for the US.
Author contact info: Kasey Buckles University of Notre Dame Department of Economics 3052 Jenkins-Nanovic Halls Notre Dame, IN 46556 E-Mail: kbuckles@nd.edu Joseph Price Department of Economics Brigham Young University 2129 WVB Provo, UT 84602 Tel: 801/422-5296 Fax: 801/422-0194 E-Mail: joseph_price@byu.edu Zachary Ward Department of Economics Baylor University One Bear Place Waco, TX 76798 E-Mail: zach.a.ward@gmail.com Haley E.B. Wilbert University of Notre Dame Department of Economics 3052 Jenkins-Nanovic Halls Notre Dame, IN 46556 E-Mail: hwilbert@nd.edu

Age and Suicide Impulsivity: Evidence from Handgun Purchase Delay Laws - Donohue, John J; Cai, Samuel V; Ravi, Arjun (National Bureau of Economic Research Working Paper Series, 2023)
We provide the first quasi-experimental estimates of variation in suicide impulsivity by age by examining the impact of firearm purchase delay laws by age. Prior studies of firearm purchase delay laws use traditional two-way-fixed-effects estimation, but we demonstrate that bias due to heterogenous treatment effects may have inflated previous estimates relative to our stacked-regression approach. We also develop a triple-difference stacked-regression estimator to confirm the robustness of our results. We find that purchase delay laws reduce firearm suicide for the overall adult population, but this effect is largely driven by a 6.1 percent reduction in firearm suicides for young adults ages 21-34. We demonstrate that the relationship between purchase delay laws and firearm suicide reduction weakens with age and is not driven by gun ownership rates. We argue that this is due to the impulsiveness of young adults in committing suicide, indicating that removing firearm access for young adults may provide a critical deterrent to suicide.
Author contact info: John J. Donohue Stanford Law School Crown Quadrangle 559 Nathan Abbott Way Stanford, CA 94305 Tel: 650/721-6339 E-Mail: donohue@law.stanford.edu Samuel V. Cai E-Mail: sam.cai@yale.edu Arjun Ravi E-Mail: arjun.ravi@stx.ox.ac.uk

The Outlook for Women's Employment and Labor Force Participation - Albanesi, Stefania (National Bureau of Economic Research Working Paper Series, 2023)
Employment and participation rates for US prime age women rose steadily during the second half of the 20th century. In the last 30 years, however, those rates stagnated, even as employment and participation rates for women in other industrialized countries continued to rise. I discuss the role of changes in the earnings structure and persistent institutional barriers, such as limited investment in family policies, that may be holding back employment among American women today. The COVID-19 pandemic reduced employment more for women than for men and raised the barriers to female participation due to the increase in childcare responsibilities during this period. Yet, the diffusion of remote and hybrid work arrangements in its aftermath may be beneficial for women's participation in the long run, even if both men's and women's post-pandemic employment growth so far are strongly associated with access to remote work options.
Author contact info: Stefania Albanesi Miami Herbert Business School University of Miami 5250 University Drive Coral Gables, FL 33146 E-Mail: stefania.albanesi@gmail.com

Federal Reserve Structure and the Production of Monetary Policy Ideas - Bordo, Michael D; Prescott, Edward S (National Bureau of Economic Research Working Paper Series, 2023)
We evaluate the decentralized structure of the Federal Reserve System as a mechanism for generating and processing new ideas on monetary policy over the 1960 - 2000 period. We document the introduction of monetarism, rational expectations, credibility, transparency, and other monetary policy ideas by Reserve Banks into the Federal Reserve System. We argue that the Reserve Banks were willing to support and develop new ideas due to internal reforms to the FOMC that Chairman William McChesney Martin implemented in the 1950s and the increased ties with academia that developed in this period. Furthermore, the Reserve Banks were able to succeed at this because of their private-public governance structure. We illustrate this with a time-consistency model in which a decentralized organization is better at producing new ideas than a centralized one. We argue that this role of the Reserve Banks is an important benefit of the Federal Reserve’s decentralized structure by allowing for more competition in formulating ideas and by reducing groupthink.
Author contact info: Michael D. Bordo Department of Economics Rutgers University 75 Hamilton Street New Brunswick, NJ 08901 Tel: 732/822-7152 Fax: 732/932-7416 E-Mail: bordo@econ.rutgers.edu Edward S. Prescott Federal Reserve Bank of Cleveland 1455 E. 6th St. Cleveland, OH 44114 E-Mail: Edward.Prescott@clev.frb.org

The Wealth of Working Nations - Fernández-Villaverde, Jesús; Ventura, Gustavo; Yao, Wen (National Bureau of Economic Research Working Paper Series, 2023)
GDP growth per capita and GDP growth per working-age adult have become quite different in advanced economies. Countries with lackluster GDP growth per capita, such as Japan, have performed well in working-age adult terms. Furthermore, many advanced economies are on parallel growth trajectories in working-age adult terms despite differences in levels. We calibrate a standard growth model in which the growth of the working-age adult population varies in line with the data. The calibrated model tracks output per working-age adult in most cases. We conclude that the growth of mature, aging economies is not puzzling from a theoretical perspective.
Author contact info: Jesús Fernández-Villaverde Department of Economics University of Pennsylvania The Ronald O. Perelman Center for Political Science and Economics 133 South 36th Street Suite 150 Philadelphia, PA 19104 E-Mail: jesusfv@econ.upenn.edu Gustavo Ventura Department of Economics Arizona State University 501 E Orange St., CPCOM 412A Tempe, AZ 85287-9801 Tel: 319-335 0842 E-Mail: gustavo.ventura@asu.edu Wen Yao Department of Economics School of Economics and Management Tsinghua University Beijing China E-Mail: yaow@sem.tsinghua.edu.cn

Polarizing Corporations: Does Talent Flow to "Good" Firms? - Colonnelli, Emanuele; McQuade, Timothy; Ramos, Gabriel; Rauter, Thomas; Xiong, Olivia (National Bureau of Economic Research Working Paper Series, 2023)
We conduct a field experiment in partnership with the largest job platform in Brazil to study how environmental, social, and governance (ESG) practices of firms affect talent allocation. We find both an average job-seeker's preference for ESG and a large degree of heterogeneity across socioeconomic groups, with the strongest preference displayed by highly educated, white, and politically liberal individuals. We combine our experimental estimates with administrative matched employer-employee microdata and estimate an equilibrium model of the labor market. Counterfactual analyses suggest ESG practices increase total economic output and worker welfare, while increasing the wage gap between skilled and unskilled workers.
Author contact info: Emanuele Colonnelli Booth School of Business University of Chicago 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: emanuele.colonnelli@chicagobooth.edu Timothy McQuade Haas School of Business University of California, Berkeley Berkeley, CA 94720 E-Mail: tmcquade@haas.berkeley.edu Gabriel Ramos Imperial College London Business School E-Mail: g.lobato-ramos23@imperial.ac.uk Thomas Rauter University of Chicago Booth School of Business Chicago, IL 60637 E-Mail: thomas.rauter@chicagobooth.edu Olivia Xiong E-Mail: olivia.xiong@chicagobooth.edu

Distributional Tax Analysis in Theory and Practice: Harberger Meets Diamond-Mirrlees - Saez, Emmanuel; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2023)
This paper proposes a new framework to study the distribution of taxes and the effects of tax reforms, connecting classical tax incidence analysis to optimal tax theory. To study the distribution of current taxes, labor taxes are assigned to the corresponding workers, capital taxes to the corresponding asset owners, and consumption taxes to consumers. The tax rates are the wedges between pre-tax prices (relevant for production) and after-tax prices (relevant for the work, saving, and consumption decisions of households). In contrast to the conventional approach that shifts taxes across production factors, our approach measures actual incomes, is internally consistent, and maximizes the comparability of tax progressivity and inequality over time and across countries. Applying this methodology to the United States, we find that the effective tax rate of the top 1% has declined from about 50% in the early 1950s to 32% in 2021. It is through the corporate tax that a high degree of tax progressivity was achieved in the middle of the 20th century. To analyze the distributional effects of tax reforms, mechanical changes in tax liability by income groups and aggregate revenue effects due to household behavioral responses are sufficient statistics in neoclassical optimal tax models. The effects of taxes on pre-tax prices at the heart of classical tax incidence analysis are irrelevant. This neoclassical framework can be extended to incorporate non-standard behavioral responses uncovered by the recent empirical literature. We apply this framework by providing a distributional analysis of frequently discussed tax reforms, including replacing employer-provided health insurance contributions by a payroll tax.
Author contact info: Emmanuel Saez Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 Tel: 510/642-4631 Fax: 510/642-6615 E-Mail: saez@econ.berkeley.edu Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

The Intergenerational Effects of Parental Leave: Exploiting Forty Years of U.S. Policy Variation - Flores, Andrea M; Gayle, George-Levi; Hincapié, Andrés (National Bureau of Economic Research Working Paper Series, 2023)
We study the effects of job-protected leave policies on intergenerational mobility, long-run child outcomes, and parental decisions (labor market, investments in children, and fertility). We merge rich sources of historical information on family leave policies across the United States since 1973 with over 40 years of survey data covering two generations of individuals. Exploiting variation in the timing of job-protected leave policies introduced in a large set of 18 states and the District of Columbia before the enactment of the Family and Medical Leave Act (FMLA) in 1993, we find that the pre-FMLA protected leave policies had a level effect and a mobility effect. The level effect yields from overall improvements in education and wages for the children born under these policies. The mobility effect, chiefly an increase in intergenerational mobility in education, stems from heterogeneity in the effects of the policies: children of mothers with fewer years of education benefit more. As a potential mechanism, we find that the policies increased mothers’ time investments in children and the likelihood of the households having childcare expenses. Finally, consistent with the tradeoffs of policy design, we find that the policies exacerbated the motherhood penalty in labor market outcomes and that they affected fertility choices, increasing the likelihood of having a first child and decreasing the likelihood of having subsequent children.
Author contact info: Andrea M. Flores E-Mail: andrea.flores@fgv.br George-Levi Gayle Department of Economics Washington University in St. Louis Campus Box 1208 One Brookings Drive St. Louis, MO 63130 Tel: 314/935-7472 E-Mail: ggayle@wustl.edu Andrés Hincapié Department of Economics University of North Carolina at Chapel Hill CB # 3305 Gardner Hall Chapel Hill, NC 27599 E-Mail: andres.hincapie@unc.edu

Automation: Theory, Evidence, and Outlook - Restrepo, Pascual (National Bureau of Economic Research Working Paper Series, 2023)
This article reviews the literature on automation and its impact on labor markets, wages, factor shares, and productivity. I first introduce the task model and explain why this framework offers a compelling way to think about recent labor market trends and the effects of automation technologies. The task model clarifies that automation technologies operate by substituting capital for labor in a widening range of tasks. This substitution reduces costs, creating a positive productivity effect, but also reduces employment opportunities for workers displaced from automated tasks, creating a negative displacement effect. I survey the empirical literature and conclude that there is wide qualitative support for the implications of task models and the displacement effects of automation. I conclude by discussing shortcomings of the existing literature and avenues for future research.
Author contact info: Pascual Restrepo Department of Economics Boston University 270 Bay State Road Boston, MA 02215 E-Mail: pascual@bu.edu

Contingent Credit Under Stress - Acharya, Viral V; Jager, Maximilian; Steffen, Sascha (National Bureau of Economic Research Working Paper Series, 2023)
Over the past two decades, banks have increasingly focused on offering contingent credit in the form of credit lines as a primary means of corporate borrowing. We review the existing body of research regarding the rationales for banks’ provision of liquidity insurance in the form of credit lines, their significance in managing corporate liquidity, and the reasons and circumstances under which firms opt to utilize them. We emphasize that the options for firms to both draw down and repay credit lines are put options issued by banks, which are exercised by firms in a correlated manner during periods of widespread stress, with adverse affects on bank intermediation thereafter. We discuss the bank capital and the bank funding channels that can drive these effects, contrasting their roles during the Global Financial Crisis and the Covid-19 outbreak. We conclude by discussing the increasing extension of bank credit lines to non-bank financial intermediaries, as well as the role of stress tests and monetary policy in managing the risks of contingent credit under stress.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Maximilian Jager Frankfurt School of Finance & Management Adickesallee 32-34 60322 Frankfurt am Main Germany E-Mail: m.jager@fs.de Sascha Steffen Frankfurt School of Finance & Management Adickesallee 32-34 60322 Frankfurt Germany Tel: E-Mail: s.steffen@fs.de

Cost-Sharing in Medical Care Can Increase Adult Mortality: Evidence from Colombia - Buitrago, Giancarlo; Amaya-Nieto, Javier; Miller, Grant; Vera-Hernández, Marcos (National Bureau of Economic Research Working Paper Series, 2023)
There is substantial evidence that cost-sharing in medical care constrains total health spending. However, there is relatively little (and unclear) evidence on its health effects, particularly in low- and middle-income countries. This paper re-evaluates the link between outpatient cost-sharing and health, studying Colombia’s entire formal sector workforce observed monthly between 2011 and 2018 with individual-level health care utilization records linked to payroll data and vital statistics. Because Colombia’s national health system imposes discrete breaks in outpatient cost-sharing requirements across the earnings distribution, we estimate a dynamic regression discontinuity model, finding that greater outpatient cost-sharing initially reduces use of outpatient care (including consultations and drugs), resulting in fewer diagnoses of common chronic diseases – and over time, increases the prevalence and severity of chronic diseases as well as use of inpatient care. Ultimately, greater outpatient cost-sharing measurably increases mortality, raising 8-year mortality by 4 deaths per 10,000 individuals. To the best of our knowledge, this study is the first to show a relationship between cost-sharing and adult mortality risk in a low- or middle-income country, a relationship important to incorporate into social welfare analyses of cost-sharing policies.
Author contact info: Giancarlo Buitrago Instituto de Investigaciones Clínicas Facultad de Medicina Universidad Nacional de Colombia Bogotá, Colombia Bogota, DC 111321 Colombia E-Mail: gbuitragog@unal.edu.co Javier Amaya-Nieto MD. Instituto de Investigaciones Clínicas Facultad de Medicina Universidad Nacional de Colombia Bogotá, Colombia E-Mail: jamayan@unal.edu.co Grant Miller Department of Health Policy School of Medicine Stanford University 615 Crothers Way Stanford, CA 94305-6006 Tel: 650/723-2714 E-Mail: ngmiller@stanford.edu Marcos Vera-Hernández University College London Department of Economics Gower St. London WC1E 6BT United Kingdom E-Mail: m.vera@ucl.ac.uk

Risk-On Risk-Off: A Multifaceted Approach to Measuring Global Investor Risk Aversion - Chari, Anusha; Dilts Stedman, Karlye; Lundblad, Christian (National Bureau of Economic Research Working Paper Series, 2023)
This paper defines risk-on risk-off (RORO), an elusive terminology in pervasive use, as the variation in global investor risk aversion. Our high-frequency RORO index captures time-varying investor risk appetite across multiple dimensions: advanced economy credit risk, equity market volatility, funding conditions, and currency dynamics. The index exhibits risk-off skewness and pronounced fat tails, suggesting its amplifying potential for extreme, destabilizing events. Compared with the conventional VIX measure, the RORO index reflects the multifaceted nature of risk, underscoring the diverse provenance of investor risk sentiment. Practical applications of the RORO index highlight its significance for international portfolio reallocation and return predictability.
Author contact info: Anusha Chari Department of Economics, CB #3305 University of North Carolina at Chapel Hill Chapel Hill, NC 27599 Tel: 919/966-5346 E-Mail: achari@unc.edu Karlye Dilts Stedman Federal Reserve Bank of Kansas City 1 Memorial Dr. Kansas City, MO 64108 E-Mail: karlye.stedman@kc.frb.org Christian Lundblad Department of Finance University of North Carolina at Chapel Hill Chapel Hill, NC 27599-3490 USA Tel: 919-962-8441 Fax: 707-371-7060 E-Mail: christian_lundblad@unc.edu

Schooling and Intergenerational Mobility: Consequences of Expanding Higher Education Institutions - Katzkowicz, Noemí; Lavy, Victor; Querejeta, Martina; Rosá, Tatiana (National Bureau of Economic Research Working Paper Series, 2023)
Poor post-secondary education infrastructure and opportunities partly explain the low higher education rates in developing countries. This paper estimates the effect of a program that improved post-secondary education infrastructure by building many university campuses across Uruguay. Leveraging temporal and geographic variation in program implementation, we use a two-way fixed effect design and comprehensive administrative records to assess the program’s causal impact. By lowering the distance to a university campus, the program successfully increased university enrollment, particularly of less privileged students who are the first in their families to attend a university. The program impacted students from localities up to 30 kilometers from the new campus, reducing spatial inequality. Importantly, this expansion did not lower university completion rates. Furthermore, the program increased high school attendance and completion rates and the proportion of educated workers in the affected localities.
Author contact info: Noemí Katzkowicz E-Mail: noma.katzkowicz@fcea.edu.uy Victor Lavy Department of Economics University of Warwick Coventry, CV4 7AL United Kingdom Tel: 44(0) 24 7657 4158 E-Mail: v.lavy@warwick.ac.uk Martina Querejeta E-Mail: martinaquerejeta@gmail.com Tatiana Rosá E-Mail: tatiana.rosa@uc.cl

New Views Of Structural Transformation: Insights From Recent Literature - Gollin, Douglas; Kaboski, Joseph P (National Bureau of Economic Research Working Paper Series, 2023)
This paper describes an emerging literature in economics that aims to merge macro issues of structural change and growth with micro data and analysis. This literature focuses on a set of related patterns of change that accompany the processes of growth and development. Traditionally, the focus has been on industrialization – and more broadly the reallocation of employment and economic activity from agriculture to manufacturing and services. The new literature considers a broader set of transformations: from rural to urban, from home to market (and from market to home), from informal to formal, and from self-employment to wage work. Drawing on new data sources, including micro data and administrative records, the literature tries to understand the complex interactions of a broad set of market failures, policy distortions, and impediments to the growth process. In broadening the understanding of structural transformation – to encompass processes beyond industrialization – this literature opens the door to a richer understanding of the processes of growth and a wider set of potential levers for policy.
Author contact info: Douglas Gollin Tufts University School of Arts and Sciences, Economics, Ballou Hall, Oxford OX1 3TB Medford, MA 02155 USA E-Mail: Douglas.Gollin@tufts.edu Joseph P. Kaboski Department of Economics University of Notre Dame 3039 Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-9906 E-Mail: jkaboski@nd.edu

Sequential Search for Corporate Bonds - Kargar, Mahyar; Lester, Benjamin; Plante, Sébastien; Weill, Pierre-Olivier (National Bureau of Economic Research Working Paper Series, 2023)
In over-the-counter (OTC) markets, customers search for counterparties. Little is known about this process, however, because existing data is comprised of transaction records, which are only informative about the end of a successful search. Leveraging data from the leading trading platform for corporate bonds, we offer evidence about the search process: we analyze customers’ repeated attempts to trade (successful and unsuccessful). We estimate that it takes two to three days to complete a transaction after an unsuccessful attempt, with substantial variation depending on trade and customer characteristics. Our analysis offers insights into the sources of trading delays in OTC markets.
Author contact info: Mahyar Kargar Gies College of Business Department of Finance University of Illinois at Urbana-Champaign 435 Wohlers Hall 1206 S. Sixth Street Champaign, IL 61820 Tel: (217) 300-7640 E-Mail: kargar@illinois.edu Benjamin Lester Research Department Federal Reserve Bank of Philadelphia 10 Independence Mall Philadelphia, PA 19106 E-Mail: Benjamin.Lester@phil.frb.org Sébastien Plante Wisconsin School of Business University of Wisconsin 5182 Grainger Hall Madison, WI 53706 USA E-Mail: splante@wisc.edu Pierre-Olivier Weill Department of Economics University of California, Los Angeles Bunche Hall 8283 Los Angeles, CA 90095 Tel: 310/794-6495 Fax: 310/825-9528 E-Mail: poweill@econ.ucla.edu

One-Sided Limited Commitment and Aggregate Risk - Ando, Yoshiki; Krueger, Dirk; Uhlig, Harald (National Bureau of Economic Research Working Paper Series, 2023)
In this paper we study the neoclassical growth model with idiosyncratic income risk and aggregate risk in which risk sharing is endogenously constrained by one-sided limited commitment. Households can trade a full set of contingent claims that pay off depending on both idiosyncratic and aggregate risk, but limited commitment rules out that households sell these assets short. The model results, under suitable restrictions of the parameters of the model, in partial consumption insurance in equilibrium. With log-utility and idiosyncratic income shocks taking two values one of which is zero (e.g., employment and unemployment) we show that the equilibrium can be characterized in closed form, despite the fact that it features a non-degenerate consumption- and wealth distribution. We use the tractability of the model to study, analytically, inequality over the business cycle and asset pricing, and derive conditions under which our model has identical, as well as conditions under which it has lower/higher risk premia than the corresponding representative agent version of the model.
Author contact info: Yoshiki Ando University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 E-Mail: yando@sas.upenn.edu Dirk Krueger Economics Department University of Pennsylvania The Ronald O. Perelman Center 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-6691 Fax: 215/573-2057 E-Mail: dkrueger@econ.upenn.edu Harald Uhlig Dept. of Economics University of Chicago 1126 E 59th Street Chicago, IL 60637 Tel: 773/702-3702 Fax: 773/702-8490 E-Mail: huhlig@uchicago.edu

Optimal Subsidies for Green Hydrogen Production - Fell, Harrison; Holland, Stephen P; Yates, Andrew J (National Bureau of Economic Research Working Paper Series, 2023)
Green hydrogen may decarbonize sectors which are difficult to electrify, and the recent Inflation Reduction Act (IRA) provides tax credits to encourage hydrogen production. We analyze a model in which hydrogen produced using electricity replaces natural gas. The electricity may be procured from dedicated renewables or from the grid with and without offsetting. In the absence of Pigouvian taxation, optimal hydrogen subsidies are positive if the unpriced externality from avoided natural gas is larger than the unpriced externality from electricity. With optimally differentiated subsidies, offsetting increases welfare. With undifferentiated subsidies, offsetting can decrease welfare, unless it is restricted to regions with higher unpriced electricity externalities. Short-run parameterization shows that the IRA's subsidy of $3/kg-H2 is rationalized: i) by hydrogen production from dedicated renewables if the social cost of carbon (SCC) is $500 or ii) by hydrogen production from the (relatively clean) grid in California with renewables offsetting (relatively dirty) electricity in the non-RGGI East if the SCC is $185. Allowing offsetting of production in California with renewables in any region does not reduce welfare, but the reverse does not hold.
Author contact info: Harrison Fell NC State University Raleigh, NC 27695 United States Tel: 9195154676 E-Mail: hfell@ncsu.edu Stephen P. Holland Bryan School of Business and Economics University of North Carolina, Greensboro P.O. Box 26165 Greensboro, NC 27402-6165 Tel: 336/334-4925 Fax: 336/334-4089 E-Mail: sphollan@uncg.edu Andrew J. Yates Department of Economics and Curriculum for the Environment and Ecology University of North Carolina at Chapel Hill CB 3305 Chapel Hill, NC 27599 E-Mail: ajyates@email.unc.edu

The High Frequency Effects of Dollar Swap Lines - Kekre, Rohan; Lenel, Moritz (National Bureau of Economic Research Working Paper Series, 2023)
We study the effects of dollar swap lines using high frequency responses in asset prices around policy announcements. News about expanded dollar swap lines causes a reduction in liquidity premia, compression of deviations from covered interest parity (CIP), and depreciation of the dollar. Equity prices rise and the VIX falls, while the response of long-term government bond prices is mixed. The cross-section of high frequency responses implies that swap lines affect the dollar factor or the price of risk. Our findings are qualitatively consistent with models relating the supply of dollar liquidity to the broader economy.
Author contact info: Rohan Kekre Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-3239 E-Mail: rohan.kekre@chicagobooth.edu Moritz Lenel Princeton University Department of Economics Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: lenel@princeton.edu

Evaluating Tax Harmonization - Hines, James R, Jr. (National Bureau of Economic Research Working Paper Series, 2023)
Tax harmonization entails a uniform rate that may not suit all governments. Harmonization can advance collective governmental objectives only if the standard deviation of tax rates is less than the average downward effect of tax competition on rates. Since an efficient harmonized tax rate undoes the effect of competition, an efficient rate equals or exceeds the sum of the observed average tax rate and the standard deviation of rates. In 2020, the mean world corporate tax rate was 25.9%, and the standard deviation 4.5%, so if there is an efficient harmonized world tax rate, it must be 30.4% or higher.
Author contact info: James R. Hines Department of Economics University of Michigan 343 Lorch Hall 611 Tappan Street Ann Arbor, MI 48109-1220 Tel: 734/764-2320 Fax: 734/764-2769 E-Mail: jrhines@umich.edu

The Effect of Public Science on Corporate R&D - Arora, Ashish; Belenzon, Sharon; Cioaca, Larisa C; Sheer, Lia; Zhang, Hansen (National Bureau of Economic Research Working Paper Series, 2023)
We study the relationships between corporate R&D and three components of public science: knowledge, human capital, and invention. We identify the relationships through firm-specific exposure to changes in federal agency R&D budgets that are driven by the political composition of congressional appropriations subcommittees. Our results indicate that R&D by established firms, which account for more than three-quarters of business R&D, is affected by scientific knowledge produced by universities only when the latter is embodied in inventions or PhD scientists. Human capital trained by universities fosters innovation in firms. However, inventions from universities and public research institutes substitute for corporate inventions and reduce the demand for internal research by corporations, perhaps reflecting downstream competition from startups that commercialize university inventions. Moreover, abstract knowledge advances per se elicit little or no response. Our findings question the belief that public science represents a non-rival public good that feeds into corporate R&D through knowledge spillovers.
Author contact info: Ashish Arora Fuqua School of Business Duke University Box 90120 Durham, NC 27708-0120 Tel: 919 660 7746 Fax: 919 684-2818 E-Mail: ashish.arora@duke.edu Sharon Belenzon Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 Tel: 919/660-7845 E-Mail: sharon.belenzon@duke.edu Larisa C. Cioaca Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 USA E-Mail: larisa.cioaca@duke.edu Lia Sheer Tel-Aviv University Ramat-Aviv, P.O. Box 39040 Tel Aviv 6997801 Israel E-Mail: liasheer@tauex.tau.ac.il Hansen Zhang Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 E-Mail: hansen.zhang@duke.edu

What Do Impact Investors Do Differently? - Cole, Shawn; Jeng, Leslie; Lerner, Josh; Rigol, Natalia; Roth, Benjamin N (National Bureau of Economic Research Working Paper Series, 2023)
In recent years, impact investors – private investors who seek to generate simultaneously financial and social returns – have attracted intense interest and controversy. We analyze a novel, comprehensive data set of impact and traditional investors to assess how the non-financial characteristics of impact portfolios differ from their traditional counterparts. First, we document that they are more likely to invest in disadvantaged areas and nascent industries and exhibit more risk tolerance and patience. We then examine the degree to which impact investors expand the financing frontier, versus investing in companies that could have attracted traditional private financing. Utilizing a variety of network theoretic and event study analyses, we find limited support for the assertion that impact investors expand the financing frontier, either in the deal-selection stage or the post-investment stage.
Author contact info: Shawn Cole Harvard Business School Baker Library 271 Soldiers Field Boston, MA 02163 Tel: 617/495-6525 Fax: 617/496-3564 E-Mail: scole@hbs.edu Leslie Jeng E-Mail: ljeng@hbs.edu Josh Lerner Harvard Business School Rock Center 214 Soldiers Field Boston, MA 02163 Tel: 617/495-6065 Fax: 617/496-7357 E-Mail: jlerner@hbs.edu Natalia Rigol Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617-495-5682 E-Mail: nrigol@hbs.edu Benjamin N. Roth Harvard Business School Soldiers Field Road Boston, MA 02163 E-Mail: broth@hbs.edu

Learning by Investing: Entrepreneurial Spillovers from Venture Capital - Lerner, Josh; Li, Jinlin; Liu, Tong (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies how investing in venture capital (VC) affects the entrepreneurial outcomes of individual limited partners (LPs). Using comprehensive administrative data on entrepreneurial activities and VC fundraising and investments in China, we first document that individual LPs, on average, contribute about 50% of the capital of each fund in which they participate, and over 50% of them are entrepreneurs. We then exploit an identification strategy by comparing the entrepreneurial outcomes of individual LPs in funds that eventually launched with those in funds that failed to launch. The fraction of committed capital from corporate LPs in industries that subsequently encounter poor returns is used as an instrument for funds’ launch failures. We find that after investing in a successfully launched VC fund, individual LPs create significantly more ventures than do LPs in funds which failed to launch. These new ventures tend to be high-tech firms and file more patents than do the LPs’ prior ventures. We find evidence consistent with venture investments being a channel through which individual LPs learn.
Author contact info: Josh Lerner Harvard Business School Rock Center 214 Soldiers Field Boston, MA 02163 Tel: 617/495-6065 Fax: 617/496-7357 E-Mail: jlerner@hbs.edu Jinlin Li Harvard University E-Mail: lijinlin@pku.edu.cn Tong Liu MIT Sloan School of Management, E62-623 100 Main Street Cambridge, MA 02142 E-Mail: tongl@mit.edu

Who Bears the Costs of Inflation? Euro Area Households and the 2021–2022 Shock - Pallotti, Filippo; Paz-Pardo, Gonzalo; Slacalek, Jiri; Tristani, Oreste; Violante, Giovanni L (National Bureau of Economic Research Working Paper Series, 2023)
We measure the heterogeneous welfare effects of the recent inflation surge across households in the Euro Area. A simple framework illustrating the numerous channels of the transmission mechanism of surprise inflation to household welfare guides our empirical exercise. By combining micro data and aggregate time series, we conclude that: (i) country-level average welfare costs—expressed as a share of 2021–22 income—were larger than a typical recession, and heterogeneous, e.g., 3% in France and 8% in Italy; (ii) this inflation episode resembles an age-dependent tax, with the elderly losing up to 20%, and roughly half of the 25–44 year-old winning; (iii) losses were quite uniform across consumption quantiles because rigid rents served as a hedge for the poor; (iv) nominal net positions are the key driver of heterogeneity across-households; (v) the rise in energy prices generated vast variation in individual-level inflation rates, but unconventional fiscal policies were critical in shielding the most vulnerable households
Author contact info: Filippo Pallotti Department of Economics University College London Drayton House 30 Gordon Street London WC1H 0AX United Kindom E-Mail: filippo.pallotti@ucl.ac.uk Gonzalo Paz-Pardo Directorate General Research European Central Bank D-60640 Frankfurt am Main Europe E-Mail: gonzalo.paz_pardo@ecb.europa.eu Jiri Slacalek Directorate General Research European Central Bank D-60640 Frankfurt am Main Europe E-Mail: jiri.slacalek@ecb.int Oreste Tristani Directorate General Research European Central Bank D-60640 Frankfurt am Main Europe E-Mail: oreste.tristani@ecb.europa.eu Giovanni L. Violante Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08540 E-Mail: violante@princeton.edu

The Impact of Commercial Real Estate Regulations on U.S. Output - Babalievsky, Fil; Herkenhoff, Kyle F; Ohanian, Lee E; Prescott, Edward C (National Bureau of Economic Research Working Paper Series, 2023)
Commercial real estate accounts for roughly 20% of the U.S. fixed asset stock, and commercial land use is highly regulated. However, little is known about the quantitative impact of these regulations on economic activity or consumer welfare. This paper develops a spatial general equilibrium model of the U.S. economy that includes commercial real estate regulations and congestion effects, the latter of which provide a rationale for such regulations. The model is tailored to exploit the near-universe of CoreLogic's commercial, parcel-level, property tax records to construct a quantitative index of commercial real estate regulations for nearly every commercial property. We use the model to evaluate the positive and normative impacts of commercial land use deregulations. Moderately relaxing commercial regulations across all U.S. cities yields large allocative efficiency effects, with output gains of about 3 percent to 6 percent and welfare gains of about 3 percent to 9 percent of lifetime consumption. We also find significant positive and normative gains from deregulation with 40 percent of the labor force working remotely.
Author contact info: Fil Babalievsky Census Bureau E-Mail: filipfba@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 Lee E. Ohanian 8283 Bunche Hall UCLA, Department of Economics Box 951477 Los Angeles, CA 90095 Tel: 310/825-0979 Fax: 310/825-9528 E-Mail: ohanian@econ.ucla.edu Edward C. Prescott E-Mail: N/A user is deceased

How Do Households Respond to Income Shocks? - Krueger, Dirk; Malkov, Egor; Perri, Fabrizio (National Bureau of Economic Research Working Paper Series, 2023)
We use panel data from the Italian Survey of Household Income and Wealth from 1991 to 2016 to document empirically what components of the household budget constraint change in response to shocks to household labor income, both over shorter and over longer horizons. We show that shocks to labor income are associated with negligible changes in transfers and non-labor income components, modest changes in consumption expenditures, and large changes in wealth. We then split the sample in households which do not own business or real estate wealth, and households who do. For the first group, we find that consumption responses are more substantial (and increasing with the horizon of the income shock) and wealth responses are much smaller. We show that, for this group, a version of the standard PIH framework that allows for partial insurance against even permanent income shocks can explain well the consumption and wealth responses, both at short and long horizons. For the second group the standard framework cannot explain the large changes in wealth associated with income shocks. We conclude that models which include shocks to the value of household wealth are necessary to fully evaluate the sources and the consequences of household resource risk.
Author contact info: Dirk Krueger Economics Department University of Pennsylvania The Ronald O. Perelman Center 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-6691 Fax: 215/573-2057 E-Mail: dkrueger@econ.upenn.edu Egor Malkov Bates White 2001 K Street NW, North Building, Suite 500 Washington, DC 20006 USA E-Mail: egor.s.malkov@gmail.com Fabrizio Perri Research Department Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis MN 55401 E-Mail: fperri@umn.edu

What to do when you can't use '1.96' Confidence Intervals for IV - Lee, David S; McCrary, Justin; Moreira, Marcelo J; Porter, Jack R; Yap, Luther (National Bureau of Economic Research Working Paper Series, 2023)
To address the well-established large-sample invalidity of the +/-1.96 critical values for the t-ratio in the single variable just-identified IV model, applied research typically qualifies the inference based on the first-stage-F (Staiger and Stock (1997) and Stock and Yogo (2005)). We fully extend this F-based approach to its logical conclusion by presenting new critical values for the t-ratio to additionally accommodate values of F that do not meet existing thresholds needed for validity. These new t-ratio critical values simultaneously fix the main problem of over-rejection (invalidity) and the under-appreciated possibility of under-rejection (conservativeness) that can occur when relying solely on the usual 1.96 critical value. We show that the corresponding new confidence intervals are generally expected to be substantially shorter than competing “robust to weak instrument” intervals, including those from the recommended benchmark of Anderson and Rubin (1949) (AR). In a sample of 89 specifications from 10 recent empirical studies drawn from five general interest journals, the new “VtF” intervals are shorter than AR intervals 100 percent of the time, and even more likely to produce statistically significant results than the usual +/-1.96 procedure.
Author contact info: David S. Lee Industrial Relations Section Louis A. Simpson International Bldg. Princeton University Princeton, NJ 08544 Tel: 609/258-9548 Fax: 609/258-2907 E-Mail: davidlee@princeton.edu Justin McCrary Columbia University Jerome Greene Hall Room 521 435 West 116th Street New York, NY 10027 Tel: 212-854-2801 E-Mail: jmccrary@law.columbia.edu Marcelo Moreira Department of Economics Getulio Vargas Foundation - 11th floor Praia de Botafogo 190 Rio de Janeiro - RJ 22250-040 E-Mail: moreira.marceloj@gmail.com Jack R. Porter University of Wisconsin-Madison 1180 Observatory Drive 6448 Social Sciences Building Madison, WI 53706-1320 E-Mail: jrporter@ssc.wisc.edu Luther Yap E-Mail: lyap@princeton.edu

The Voting Premium - Levit, Doron Y; Malenko, Nadya; Maug, Ernst G (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops a unified theory of blockholder governance and the voting premium, in a setting without takeovers and controlling shareholders. A voting premium emerges when a minority blockholder tries to influence the composition of the shareholder base by accumulating votes and buying shares from dissenting shareholders. Empirical measures of the voting premium do not reflect the value of voting rights or voting power. A negative voting premium results from free-riding by dispersed shareholders on the blockholder’s trades. Conflicts between dispersed shareholders and the blockholder endogenously increase the liquidity of voting shares, but do not necessarily increase the voting premium.
Author contact info: Doron Y. Levit University of Washington E-Mail: dlevit@uw.edu Nadya Malenko 140 Commonwealth Avenue Carroll School of Management Boston College Chestnut Hill, MA 02467 E-Mail: malenko@bc.edu Ernst G. Maug Universität Mannheim L9 68161 68161 Universität Mannheim, L9 Mannheim, Plea Germany Tel: +49 621 181-1952 E-Mail: maug@uni-mannheim.de

Corporate Debt Structure with Home and International Currency Bias - Maggiori, Matteo; Neiman, Brent; Schreger, Jesse (National Bureau of Economic Research Working Paper Series, 2023)
We explore the consequences of global capital market segmentation by currency for the optimal currency composition of borrowing by firms. Global bond portfolios are driven by the currency of denomination of assets as investors prefer to lend in their home currency or the international currency, the US Dollar. Larger and more productive firms select into foreign currency issuance. International segmentation results in a quantity-dimension of the exorbitant privilege whereby US firms that only issue in the domestic currency benefit from being able to more easily borrow from global investors.
Author contact info: Matteo Maggiori Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: maggiori@stanford.edu Brent Neiman University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-3199 Fax: 773/753-8266 E-Mail: brent.neiman@chicagobooth.edu Jesse Schreger Columbia Business School 665 W 130th St Kravis Hall, 551 New York, NY 10027 Tel: 212-851-0171 Fax: 212-662-8474 E-Mail: jesse.schreger@columbia.edu

Long-term Care in Denmark - Gørtz, Mette; Christensen, Bent Jesper; Gupta, Nabanita Datta (National Bureau of Economic Research Working Paper Series, 2023)
The population is aging in Denmark, as in many other countries, due to increasing life expectancy and a low total fertility rate. This potentially puts the Danish welfare state under pressure. This paper discusses the demographic and socioeconomic situation of the elderly in Denmark, focusing on the health status and financial situation of the elderly, and the provision of long-term care (LTC). We rely on a combination of survey data, mainly from the Survey of Health and Retirement in Europe (SHARE), and high-quality register data covering the entire Danish population. We find that a large fraction of the elderly is in good health, but that those in the older age group, 85+, face considerably more functional limitations in daily living. One in three of the elderly receives some form of long-term care, and more than half the 85+ group. The paper further identifies a number of current challenges regarding organization of the long-term care sector, including recruitment of personnel for health care and LTC. Finally, the paper sheds light on the extent of informal care provided by family and friends. While informal care is offered voluntarily and is generally unpaid, it represents a substantial opportunity cost to society.
Author contact info: Mette Gørtz Department of Economics University of Copenhagen Øster Farimagsgade 5 1353 Copenhagen K Denmark E-Mail: mette.gortz@econ.ku.dk Bent Jesper Christensen Department of Economics and Business Economics Fuglesangs Allé 4 DK-8000 Aarhus C Denmark E-Mail: bjchristensen@econ.au.dk Nabanita Datta Gupta Department of Economics and Aarhus University Fuglesangs Allé 4 8210 Aarhus V Denmark E-Mail: ndg@econ.au.dk

The Debauchery of Currency and Inflation: Chile, 1970-1973 - Edwards, Sebastian (National Bureau of Economic Research Working Paper Series, 2023)
In this essay, I analyze Salvador Allende’s economic policies in Chile during the early 1970s. I argue that the explosion of inflation during his administration (above 1,500% on a six-month annualized measure) was predictable, and that the government’s response to it, through massive and strict price controls, generated acute macroeconomic imbalances. I postulate that the combination of runaway inflation, shortages, and black markets generated major disaffection among the middle class and that that unhappiness reduced the support for the Unidad Popular government.
Author contact info: Sebastian Edwards UCLA Anderson Graduate School of Management 110 Westwood Plaza, Suite C508 Box 951481 Los Angeles, CA 90095-1481 Tel: 310/206-6797 Fax: 310/206-5825 E-Mail: sebastian.edwards@anderson.ucla.edu

Heterogeneous and Racialized Impacts of State Incarceration Policies on Birth Outcomes in the U.S. - Boen, Courtney; Bair, Elizabeth; Lee, Hedwig; Venkataramani, Atheendar (National Bureau of Economic Research Working Paper Series, 2023)
While state incarceration policies have received much attention in research on the causes of mass incarceration in the U.S., their roles in shaping population health and health disparities remain largely unknown. We examine the impacts of two signature state incarceration policies adopted during the “tough on crime” era of the 1990s—three strikes and truth in sentencing—on Black and White birth outcomes. Using a difference-in-differences event study research design that models the dynamic impacts of these policies over time, we find that these policies had opposing effects on birth outcomes. We find that birth weight outcomes—including mean birth weight and low birth weight—for Black infants worsened markedly in the year three strikes policies were adopted. By contrast, birth outcomes for Black and White infants gradually improved after truth in sentencing policies were adopted. The discordant findings point to distinct, countervailing mechanisms by which sentencing policies can affect population health. We provide suggestive evidence that three strikes policies adversely impacted Black birth outcomes through affective mechanisms, by inducing highly racialized, stigmatizing public discourse around the time of policy adoption, while truth in sentencing likely impacted birth outcomes via material mechanisms, namely gradually reductions in community incarceration and crime rates. Altogether, these findings point to the need to further interrogate state criminal legal system policies for their impacts on population health, considering whether, how, and for whom these policies result in health impacts.
Author contact info: Courtney Boen Department of Sociology University of Pennsylvania 232 McNeil Building 3718 Locust Walk Philadelphia, PA 19104 E-Mail: cboen@upenn.edu Elizabeth Bair Department of Medical Ethics and Health Policy University of Pennsylvania 423 Guardian Drive Philadelphia, PA 19104 E-Mail: efbair@pennmedicine.upenn.edu Hedwig Lee Duke University Department of Sociology 276 Reuben-Cooke 417 Chapel Drive Durham, NC 27708 United States E-Mail: hedwig.lee@duke.edu Atheendar Venkataramani Department of Medical Ethics and Health Policy University of Pennsylvania 423 Guardian Drive Philadelphia, PA 19104 E-Mail: atheenv@pennmedicine.upenn.edu

Pandemic-Era Inflation Drivers and Global Spillovers - di Giovanni, Julian; Kalemli-Özcan, Ṣebnem; Silva, Alvaro; Yildirim, Muhammed A (National Bureau of Economic Research Working Paper Series, 2023)
We estimate a multi-country multi-sector New Keynesian model to quantify the drivers of domestic inflation during 2020–2023 in several countries, including the United States. The model matches observed inflation together with sector-level prices and wages. We further measure the relative importance of different types of shocks on inflation across countries over time. The key mechanism, the international transmission of demand, supply and energy shocks through global linkages helps us to match the behavior of the USD/Euro exchange rate. The quantification exercise yields four key findings. First, negative supply shocks to factors of production, labor and intermediate inputs, initially sparked inflation in 2020–2021. Global supply chains and complementarities in production played an amplification role in this initial phase. Second, positive aggregate demand shocks, due to stimulative policies, widened demand-supply imbalances, amplifying inflation further during 2021–2022. Third, the reallocation of consumption between goods and service sectors, a relative sector-level demand shock, played a role in transmitting these imbalances across countries through the global trade and production network. Fourth, global energy shocks have differential impacts on the US relative to other countries’ inflation rates. Further, complementarities between energy and other inputs to production play a particularly important role in the quantitative impact of these shocks on inflation.
Author contact info: Julian di Giovanni Federal Reserve Bank of New York Research and Statistics Group 33 Liberty Street New York, NY 10045 E-Mail: juliandigiovanni@gmail.com Ṣebnem Kalemli-Özcan Department of Economics University of Maryland Tydings Hall 4118D College Park, MD 20742-7211 Tel: 301/405-3266 E-Mail: kalemli@econ.umd.edu Alvaro Silva Department of Economics University of Maryland Tydings Hall 4118A College Park, MD 20742-7211 E-Mail: asilvub@umd.edu Muhammed A. Yildirim Koc University Rumelifeneri Yolu Sariyer Istanbul 34450 TURKEY E-Mail: yildirim@gmail.com

The Extent of the Market for Early American Bank Notes - Bodenhorn, Howard (National Bureau of Economic Research Working Paper Series, 2023)
How far did antebellum bank notes travel? Up to now, we did not know. Using previously overlooked data on interbank holdings of bank notes and the records of a small-time note broker, I find that most bank notes circulated within about 50 miles of the issuing banks. Few notes were observed from as far as 200 miles away. Several studies of secondary markets for privately issued currencies assume that notes moved across vast geographic space, but these new findings suggest that we may need new models of bank note pricing and the efficiency of relatively unfettered markets in private currencies.
Author contact info: Howard Bodenhorn John E. Walker Department of Economics 309-H Wilber O. and Ann Powers Hall Clemson University Clemson, SC 29634 Tel: 864/656-4335 E-Mail: bodenhorn@gmail.com

Importing the Opioid Crisis? International Trade and Fentanyl Overdoses - Moore, Timothy J; Olney, William W; Hansen, Benjamin (National Bureau of Economic Research Working Paper Series, 2023)
The U.S. opioid crisis is now driven by fentanyl, a powerful synthetic opioid that currently accounts for 90% of all opioid deaths. Fentanyl is smuggled from abroad, with little evidence on how this happens. We show that a substantial amount of fentanyl smuggling occurs via legal trade flows, with a positive relationship between state-level imports and drug overdoses that accounts for 15,000-20,000 deaths per year. This relationship is not explained by geographic differences in "deaths of despair,'' general demand for opioids, or job losses from import competition. Our results suggest that fentanyl smuggling via imports is pervasive and a key determinant of opioid problems.
Author contact info: Timothy J. Moore Department of Economics Purdue University 403 W. State Street West Lafayette, IN 47907 Tel: 301/442-1785 E-Mail: moore839@purdue.edu William W. Olney Department of Economics Williams College 24 Hopkins Hall Dr Williamstown, ma 01267 E-Mail: wwo1@williams.edu Benjamin Hansen Department of Economics 1285 University of Oregon Eugene, OR 97403 Tel: 541/357-8395 E-Mail: bchansen@uoregon.edu

Insurance Coverage and Provision of Opioid Treatment: Evidence from Medicare - Agniel, Denis; Cantor, Jonathan H; Maclean, Johanna Catherine; Simon, Kosali I; Taylor, Erin (National Bureau of Economic Research Working Paper Series, 2023)
Opioid overdose deaths in older adults increased substantially over the past two decades. This increase occurred despite the availability of effective treatments. Methadone, one of three medications approved for opioid use disorder (OUD) treatment, was not covered by Medicare — the primary insurer of older Americans — for OUD until 2020. We study the response of opioid treatment programs (OTPs), the only healthcare providers that can dispense methadone for OUD in the U.S., to this policy change using administrative data and a difference-in-differences framework. We examine provider acceptance of Medicare payment and the number of treatment episodes, before and after the policy change, in OTPs relative to other substance use disorder treatment facilities. Our findings show a surge in Medicare acceptance by OTPs and an increase in the number of treatment episodes post-policy, signalling the importance of insurance for OUD treatment provision.
Author contact info: Denis Agniel E-Mail: dagniel@rand.org Jonathan H. Cantor RAND Corporation 1776 Main Street Santa Monica, CA 90401 E-Mail: jcantor@rand.org Johanna Catherine Maclean Schar School of Policy and Government George Mason University Mason Square Van Metre Hall 3351 Fairfax Drive Arlington, VA 22201 E-Mail: jmaclea@gmu.edu Kosali I. Simon O’Neill School of Public and Environmental Affairs Indiana University 1315 East Tenth Street Bloomington, IN 47405-1701 Tel: (812) 856-3850 E-Mail: simonkos@indiana.edu Erin Taylor RAND Corporation 1776 Main St Santa Monica, CA 90407-2138 E-Mail: Erin_Taylor@rand.org

Ten Facts about Son Preference in India - Jayachandran, Seema (National Bureau of Economic Research Working Paper Series, 2023)
This article discusses son preference in India, including both greater investment in sons and the fertility preference for sons. Regarding differential investment, I focus on child health and show that gender gaps in inputs and outcomes have narrowed in recent years. Nonetheless, girls remain disadvantaged in important ways, and making health services free is unlikely to be enough to close these remaining gaps. In addition to gender gaps, there are also stark health gaps between eldest sons, whom parents favor, and other sons. Fertility preferences likewise center on eldest sons. The desire to have at least one son — who can fill that eldest son role in the family — drives the skewed sex ratio, and this preference shows little sign of abating. In fact, the downward trend in family size is exacerbating how the desire for a son translates into sex-selection. Families’ quest for a son also imposes collateral damage on sisters’ health. The policy challenge, particularly around reducing the desire for sons, is large. Empowering women is not a panacea, and offering financial incentives to have daughters risks further concentrating girls in poorer families. While we do not know which policies will erase the disadvantages girls face, some that might advance this goal are public pensions as an alternative to old-age support from sons, increased delivery of health services through schools, and norm-change interventions that aim to increase the intrinsic value that Indian families place on girls.
Author contact info: Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu

Long-term Care Around the World - Gruber, Jonathan; McGarry, Kathleen M; Hanzel, Charles (National Bureau of Economic Research Working Paper Series, 2023)
The developed world is in the midst of an enormous demographic transition, with life expectancy increasing and fertility falling, leading to a rapid aging of the population. This trend has critical implications for long-term care around the world. This paper serves as the introduction to a volume that brings together experts from ten countries to compare long term care systems. We find a number of important similarities: only a minority of those elderly receiving assistance rely solely on formal care (i.e. care in an institution or through paid home care) while the majority of care is provided informally by family or other unpaid caregivers; without public support, the cost of long-term care would be beyond the financial means of a large fraction of the elderly in each country, particularly for the oldest and most disabled; and the public sector bears the majority of the costs of formal long-term care in every country. There are, however, important differences across countries, particularly in the extent to which formal care is delivered in institutions or at home, and in the division between the use of formal and informal care. Given the importance of informal care across all countries studied, we conclude that any estimate of the social costs of long-term care must account for the implicit costs of informal care. In undertaking such an evaluation of informal care, we find that it comprises at least one-third of all long-term care spending for all countries studied, with an average portion of nearly fifty percent.
Author contact info: Jonathan Gruber Department of Economics, E52-434 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8892 Fax: 617/253-1330 E-Mail: gruberj@mit.edu Kathleen M. McGarry Department of Economics Social and Behavioral Science Building Stony Brook University Stony Brook, NY 11790 Tel: 310-206-2833 Fax: 310-825-9528 E-Mail: kathleen.mcgarry@stonybrook.edu Charles Hanzel E-Mail: charleshanzel2029@u.northwestern.edu

Long-term Care in the United States - Gruber, Jonathan; McGarry, Kathleen M (National Bureau of Economic Research Working Paper Series, 2023)
The population of the United States, as with the rest of the world, is aging rapidly, with the most rapid growth occurring among the age 85 and older population, those who rely most on long-term care. In this chapter, we review the delivery and financing of long-term care in the U.S. We show that the resources of most elderly in the U.S. are insufficient to finance these ongoing long-term care needs and the public sector finances the majority of long-term care spending. At the same time, informal care plays a critical role, with the elderly at every age and every disability level receiving informal care more frequently than formal care. Indeed, when properly valued, informal care accounts for more than one-third of the nearly 2 percent of U.S. GDP devoted to long-term care.
Author contact info: Jonathan Gruber Department of Economics, E52-434 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8892 Fax: 617/253-1330 E-Mail: gruberj@mit.edu Kathleen M. McGarry Department of Economics Social and Behavioral Science Building Stony Brook University Stony Brook, NY 11790 Tel: 310-206-2833 Fax: 310-825-9528 E-Mail: kathleen.mcgarry@stonybrook.edu

The Power of Proximity to Coworkers: Training for Tomorrow or Productivity Today? - Emanuel, Natalia; Harrington, Emma; Pallais, Amanda (National Bureau of Economic Research Working Paper Series, 2023)
Amidst the rise of remote work, we ask: what are the effects of proximity to coworkers? We find being near coworkers has tradeoffs: proximity increases long-run human capital development at the expense of short-term output. We study software engineers at a Fortune 500 firm, whose main campus has two buildings several blocks apart. When offices were open, engineers working in the same building as all their teammates received 22 percent more online feedback than engineers with distant teammates. After offices closed for COVID-19, this advantage largely disappears. Yet sitting together reduces engineers' programming output, particularly for senior engineers. The tradeoffs from proximity are more acute for women, who both do more mentoring and receive more mentorship when near their coworkers. Proximity impacts career trajectories, dampening short-run pay raises but boosting them in the long run. These results can help to explain national trends: workers in their twenties who often need mentorship and workers over forty who often provide mentorship are more likely to return to the office. However, even if most mentors and mentees go into the office, remote work may reduce interaction: pre-COVID, having just one distant teammate reduced feedback among co-located workers.
Author contact info: Natalia Emanuel 33 Liberty Street New York, NY 10045 USA E-Mail: natalia@nataliaemanuel.com Emma Harrington E-Mail: emma.k.harrington4@gmail.com Amanda Pallais Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617/495-2151 E-Mail: apallais@fas.harvard.edu

Supply and Demand and the Term Structure of Interest Rates - Greenwood, Robin; Hanson, Samuel; Vayanos, Dimitri (National Bureau of Economic Research Working Paper Series, 2023)
We survey the growing literature emphasizing the role that supply-and-demand forces play in shaping the term structure of interest rates. Our starting point is the Vayanos and Vila (2009, 2021) model of the term structure of default-free bond yields, which we present in both discrete and continuous time. The key friction in the model is that the bond market is partially segmented from other financial markets: the prices of short-rate and bond supply risk are set by specialized bond arbitrageurs who must absorb shocks to the supply and demand for bonds from other “preferred-habitat” agents. We discuss extensions of this model in the context of default-free bonds and other asset classes.
Author contact info: Robin Greenwood Harvard Business School Baker Library 267 Soldiers Field Boston, MA 02163 Tel: 617/495-6979 Fax: 617/496-8443 E-Mail: rgreenwood@hbs.edu Samuel Hanson Harvard Business School Baker Library 361 Soldiers Field Boston, MA 02163 Tel: 617/495-6137 E-Mail: shanson@hbs.edu Dimitri Vayanos Department of Finance, OLD 3.41 London School of Economics Houghton Street London WC2A 2AE UNITED KINGDOM Tel: +44 (0)20 7955 6382 Fax: +44 (0)20 7955 7420 E-Mail: d.vayanos@lse.ac.uk

Recent Developments in Financial Risk and the Real Economy - Dew-Becker, Ian; Giglio, Stefano (National Bureau of Economic Research Working Paper Series, 2023)
This paper reviews recent developments in macro and finance on the relationship between financial risk and the real economy. We focus on three specific topics: the term structure of uncertainty, time variation - and specifically the long-term decline - in the variance risk premium, and time variation in conditional skewness. We also introduce two new data series: implied volatility from one-day options on grains for the period 1906-1936, and on cliquet options, which provide insurance against single-day crashes on the S&P 500, both of which give some context to the recent rise in trade in extremely short-dated options. Finally, we discuss new avenues for future research.
Author contact info: Ian Dew-Becker Visiting University of Chicago 5256 N. Wayne Avenue Chicago, IL 60640 E-Mail: ian.dewbecker@gmail.com Stefano Giglio Yale School of Management 165 Whitney Avenue New Haven, CT 06520 Tel: 203/432-3373 E-Mail: stefano.giglio@yale.edu

Combinatorial Discrete Choice: A Quantitative Model of Multinational Location Decisions - Arkolakis, Costas; Eckert, Fabian; Shi, Rowan (National Bureau of Economic Research Working Paper Series, 2023)
We introduce a general quantifiable framework to study the location decisions of multinational firms. In the model, firms choose in which locations to pay the fixed costs of setting up production, taking into account potential complementarities among production locations. The firm’s location choice problem is combinatorial because the marginal value of an individual production location depends on its complete set of production sites. We develop a computational method to solve such problems and aggregate optimal decisions across heterogeneous firms. We use our calibrated model to study Brexit and the recent sanctions war with Russia. In both counterfactuals, changes in the location decisions of multinationals are driving real wage responses.
Author contact info: Costas Arkolakis Department of Economics Yale University, 87 Trumbull Street P.O. Box 208268 New Haven, CT 06520-8268 Tel: 203/432-3527 Fax: 203/432-6323 E-Mail: costas.arkolakis@yale.edu Fabian Eckert Department of Economics UC San Diego 9500 Gilman Dr La Jolla, CA 92093 E-Mail: f@fpeckert.me Rowan Shi E-Mail: rowanxshi@torontomu.ca

International Trade Responses to Labor Market Regulations - Muñoz, Mathilde (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies how differences in labor market regulations shape countries' comparative advantage in the cross-border provision of labor-intensive services, using administrative data in Europe for the last two decades. I exploit exogenous variation in labor taxes and minimum wages faced by exporting firms engaged in a large European trade program. Firms from different countries compete to supply the same physical service in the same location but their employees are subject to different payroll taxes and minimum wages. These rules varied across countries, sectors, and over time. Reduced-form country case-studies as well as model-implied gravity estimates show evidence of large trade responses to lower labor taxes and minimum wages, with an elasticity that is around one. The Bolkestein directive, by exempting foreign firms from all labor regulations in the destination country, would have doubled exports of physical services from Eastern European countries, rationalizing the wave of protests in high-wage countries that led to the withdrawal of the proposal.
Author contact info: Mathilde Muñoz Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: mathildemunoz@berkeley.edu

The Economics of Long-Term Care in Canada - Milligan, Kevin S; Schirle, Tammy (National Bureau of Economic Research Working Paper Series, 2023)
This paper contributes a broad overview of the Canadian long-term care system. Taking an economist’s viewpoint, we bring together supply and demand factors to provide an economic analysis of the current and future path for long-term care. Like other OECD countries, the coming demographic wave of older baby boomers will put tremendous stress on the existing financial, organizational, and physical structures of the long-term care system. Unlike other OECD countries, Canada’s system is organized almost entirely at the subnational level, with provinces and territories having by far the largest role in financing and regulating long-term care. We provide institutional and empirical details on the evolution and future of Canada's long-term care system.
Author contact info: Kevin S. Milligan Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 E-Mail: kevin.milligan@ubc.ca Tammy Schirle Department of Economics Wilfrid Laurier University 75 University Avenue West Waterloo ON N2L 3C5 CANADA E-Mail: tschirle@wlu.ca

Late Bloomers: The Aggregate Implications of Getting Education Later in Life - Bárány, Zsófia L; Buchinsky, Moshe; Corblet, Pauline (National Bureau of Economic Research Working Paper Series, 2023)
It is generally agreed upon that most individuals who acquire a college degree do so in their early 20s. Despite this consensus, we show that in the US from the 1930 birth cohort onwards a large fraction – around 20% – of college graduates obtained their degree after age 30. We explore the implications of this phenomenon. First, we show that these so-called late bloomers have significantly contributed to the narrowing of gender and racial gaps in the college share, despite the general widening of the racial gap. Second, late bloomers are responsible for more than half of the increase in the aggregate college share from 1960 onwards. Finally, we show that the returns to having a college degree vary depending on the age at graduation. Ignoring the existence of late bloomers therefore leads to a significant underestimation of the returns to college education for those finishing college in their early 20s.
Author contact info: Zsófia L. Bárány Central European University Vienna Austria E-Mail: baranyzs@ceu.edu Moshe Buchinsky Department of Economics 9357 Bunche Hall Box 851477 UCLA Los Angeles, CA 90095-1477 Tel: 310/206-9665 Fax: 310/825-9528 E-Mail: buchinsky@econ.ucla.edu Pauline Corblet E-Mail: pzc208@nyu.edu

The Environmental Impacts of Protected Area Policy - Reynaert, Mathias; Souza-Rodrigues, Eduardo A; van Benthem, Arthur A (National Bureau of Economic Research Working Paper Series, 2023)
The world has pledged to protect 30 percent of its land and waters by 2030 to halt the rapid deterioration of critical ecosystems. We summarize the state of knowledge about the impacts of protected area policies, with a focus on deforestation and vegetation cover. We discuss critical issues around data and measurement, identify the most commonly-used empirical methods, and summarize empirical evidence across multiple regions of the world. In most cases, protection has had at most a modest impact on forest cover, with stronger effects in areas that face pressure of economic development. We then identify several open areas for research to advance our understanding of the effectiveness of protected area policies: the use of promising recent econometric advancements, shifting focus to direct measures of biodiversity, filling the knowledge gap on the effect of protected area policy in advanced economies, investigating the long-run impacts of protection, and understanding its equilibrium effects.
Author contact info: Mathias Reynaert Toulouse School of Economics 1, Esplanade de l'Université 31080, Toulouse Cedex 06, France E-Mail: mathias.reynaert@tse-fr.eu Eduardo A. Souza-Rodrigues Department of Economics University of Toronto Max Gluskin House, 150 St. George Street, room 324 Toronto, ON, Canada E-Mail: edusouzarod@gmail.com Arthur A. van Benthem The Wharton School University of Pennsylvania 327 Vance Hall 3733 Spruce Street Philadelphia, PA 19104 Tel: 215/898-3013 Fax: 215/898-7635 E-Mail: arthurv@wharton.upenn.edu

A Model of Behavioral Manipulation - Acemoglu, Daron; Makhdoumi, Ali; Malekian, Azarakhsh; Ozdaglar, Asuman (National Bureau of Economic Research Working Paper Series, 2023)
We build a model of online behavioral manipulation driven by AI advances. A platform dynamically offers one of n products to a user who slowly learns product quality. User learning depends on a product’s “glossiness,’ which captures attributes that make products appear more attractive than they are. AI tools enable platforms to learn glossiness and engage in behavioral manipulation. We establish that AI benefits consumers when glossiness is short-lived. In contrast, when glossiness is long-lived, users suffer because of behavioral manipulation. Finally, as the number of products increases, the platform can intensify behavioral manipulation by presenting more low-quality, glossy products.
Author contact info: Daron Acemoglu Department of Economics, E52-446 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-1927 Fax: 617/253-1330 E-Mail: daron@mit.edu Ali Makhdoumi Duke University 100 Fuqua Drive Durham, NC 27708 United States E-Mail: ali.makhdoumi@duke.edu Azarakhsh Malekian Rotman School of Management University of Toronto E-Mail: azarakhsh.malekian@rotman.utoronto.ca Asuman Ozdaglar Department of Electrical Engineering and Computer Science Massachusetts Institute of Technology 77 Massachusetts Ave, E40-130 Cambridge, MA 02139 E-Mail: asuman@mit.edu

Geographic Variation in Cesarean Sections in the United States: Trends, Correlates, and Other Interesting Facts - Robinson, Sarah; Royer, Heather; Silver, David (National Bureau of Economic Research Working Paper Series, 2023)
Analyzing data spanning three decades covering the near universe of births, we study county-level differences in Cesarean section (C-section) rates among first-time mothers of singleton births. Our research reveals persistent geographic variation in C- section rates for both low- and high-risk groups. Counties with elevated C-section rates consistently perform more C-sections across mothers at all levels of appropriateness for the procedure. These elevated rates of C-section in high C-section counties are associated with reduced maternal and infant morbidity. We also find that C-section decisions are less responsive to underlying risks for Black mothers relative to white mothers, suggesting potential welfare-reducing disparities.
Author contact info: Sarah Robinson Robert Day School of Economics and Finance Claremont McKenna College 500 E Ninth St Claremont, CA 91711 E-Mail: sarah.robinson@claremontmckenna.edu Heather Royer Department of Economics University of California, Santa Barbara 2127 North Hall Santa Barbara, CA 93106 Tel: 805/893-3797 Fax: 805/893-8830 E-Mail: royer@econ.ucsb.edu David Silver Department of Economics University of California, Santa Barbara 2127 North Hall Santa Barbara, CA 93106 Tel: 719-510-4601 E-Mail: silverdw@gmail.com

Long-term Care in Germany - Geyer, Johannes; Börsch-Supan, Axel H; Haan, Peter; Perdrix, Elsa (National Bureau of Economic Research Working Paper Series, 2023)
This chapter provides an overview of the German long-term care insurance. We document care needs and wellbeing of the elderly population. Moreover, we provide a detailed description of the German long-term care institutions (sources of finance and types of benefits), the professional care work force, and informal caregivers. Finally, we document expenditures on long-term care and estimate the value of informal care. The cost of long-term care for the elderly (65+), including both cost of nursing home and home health agency, reached 61 billion euro in 2019. Half of these spending are for nursing homes while only about 22.5% of beneficiaries use these institutions. Out-of-pocket spending differs greatly between modes of care. Out-of-pocket expenditures make up only about 7% of total expenditures for home care. In nursing homes, 41% of expenditures are out-of-pocket payment. Most of the expenditures are covered by the long-term care insurance. The share of other governmental schemes in expenditures for inpatient care is relatively high. This is explained by a high rate of benefit recipients who cannot afford co-payments for nursing homes: about one-third of all nursing home residents receive means- and wealth-tested social assistance. If we add the costs of informal care the share of privately financed care amounts to nearly 60% of total expenditures.
Author contact info: Johannes Geyer Deutsches Institut für Wirtschaftsforschung Mohrenstraße 58 10117 Berlin Germany E-Mail: jgeyer@diw.de Axel H. Börsch-Supan Munich Research Institute for the Economics of Aging and SHARE Analyses Max Planck Institute Leopoldstraße 139 80804 Munich Germany Tel: +49 (89) 3860-2355 Fax: 49 (89) 3860-2390 E-Mail: boersch-supan@mea.mpisoc.mpg.de Peter Haan Deutsches Institut für Wirtschaftsforschung Mohrenstraße 58 10117 Berlin Germany E-Mail: phaan@diw.de Elsa Perdrix Leda, Legos Université Paris Dauphine Place du maréchal de Lattre de Tassigny 75016 Paris France E-Mail: elsa.perdrix@dauphine.psl.eu

One Says Goodbye, Another Says Hello: Turnover and Compensation in the Early Care and Education Sector - Cunha, Flavio; Lee, Marcos (National Bureau of Economic Research Working Paper Series, 2023)
The quality of the early environment children experience influences their human capital development. We investigate retention and compensation in the Early Care and Education workforce by merging datasets from three different government agencies in Texas. We employ non-structural methods to compare turnover and pay in Early Care and Education with those in other sectors that employ similar workers. We estimate a dynamic discrete choice occupational model to quantify the labor supply and turnover elasticities in this industry. In addition, we simulate the impact of wage supplementation programs.
Author contact info: Flavio Cunha Department of Economics Rice University P.O. Box 1892 Houston, TX 77251-1892 Tel: 713-348-4875 E-Mail: flaviocunha@rice.edu Marcos Lee Department of Economics Rice University Houston, TX 77005 E-Mail: marcos.lee@rice.edu

Identification using Revealed Preferences in Linearly Separable Models - Agarwal, Nikhil; Li, Pearl Z; Somaini, Paulo J (National Bureau of Economic Research Working Paper Series, 2023)
Revealed preference arguments are commonly used when identifying models of both single-agent decisions and non-cooperative games. We develop general identification results for a large class of models that have a linearly separable payoff structure. Our model allows for both discrete and continuous choice sets. It incorporates widely studied models such as discrete and hedonic choice models, auctions, school choice mechanisms, oligopoly pricing and trading games. We characterize the identified set and show that point identification can be achieved either if the choice set is sufficiently rich or if a variable that shifts preferences is available. Our identification results also suggests an estimation approach. Finally, we implement this approach to estimate values in a combinatorial procurement auction for school lunches in Chile.
Author contact info: Nikhil Agarwal Department of Economics, E52-440 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: agarwaln@mit.edu Pearl Z. Li E-Mail: pearlzli@stanford.edu Paulo J. Somaini Stanford Graduate School of Business Knight Management Center 655 Knight Way E372D Stanford, CA 94305 E-Mail: soma@stanford.edu

The Impact of Right-to-Work Laws on Long Hours and Work Schedules - Gihleb, Rania; Giuntella, Osea; Tan, Jian Qi (National Bureau of Economic Research Working Paper Series, 2023)
Unions play a crucial role in determining wages and employment outcomes. However, union bargaining power may also have important effects on non-pecuniary working conditions. We study the effects of right-to-work laws, which removed agency shop protection and weakened union powers on long hours and non-standard work schedules that may adversely affect workers' health and safety. We exploit variation in the timing of enactment across US states and compare workers in bordering counties across adopting states and states that did not adopt the laws yet. Using the stacked approach to difference-in-differences estimates proposed by Cengiz et al. (2019), we find evidence that right-to-work laws increased the share of workers working long hours by 6%, while there is little evidence of an impact on hourly wages. The effects on long hours are larger in more unionized sectors (i.e. construction, manufacturing, and transportation). While the likelihood of working non-standard hours increases for particular sectors (education and public administration), there is no evidence of a significant increase in the overall sample.
Author contact info: Rania Gihleb Department of Economics University of Pittsburgh 230 South Bouquet Street Pittsburgh, PA 15260 E-Mail: gihleb@pitt.edu Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Jian Qi Tan E-Mail: jit38@pitt.edu

Job Transitions and Employee Earnings After Acquisitions: Linking Corporate and Worker Outcomes - Arnold, David; Milligan, Kevin S; Moon, Terry; Tavakoli, Amirhossein (National Bureau of Economic Research Working Paper Series, 2023)
This paper connects changes in employer characteristics through job transitions to employee earnings following mergers and acquisitions (M&As). Using firm balance sheet data linked to individual earnings data in Canada and a matched difference-in-differences design, we find that after M&As acquirers expand while targets shrink substantially relative to their matched control groups. Additionally, profit margins decrease for both acquirers and targets in the medium run. Furthermore, workers at target firms suffer losses in earnings, and this decline in earnings is entirely driven by workers who move to other firms after an M&A event. We find that workers leaving target firms after M&As move to larger firms with higher wage premiums, but with much worse match qualities on average. Taken together, it appears that job transitions to employers with poor match qualities primarily explain the post-M&A decline in worker earnings in our setting.
Author contact info: David Arnold Department of Economics University of California, San Diego 9500 Gilman Drive San Diego, CA 92093 E-Mail: daarnold@ucsd.edu Kevin S. Milligan Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 E-Mail: kevin.milligan@ubc.ca Terry Moon 6000 Iona Drive Vancouver School of Economics University of British Columbia Vancouver, B.C. V6S0K4 Canada Tel: 6048097625 E-Mail: tsmoon@mail.ubc.ca Amirhossein Tavakoli E-Mail: ah.tavakoli@ubc.ca

The Deposit Business at Large vs. Small Banks - d'Avernas, Adrien; Eisfeldt, Andrea L; Huang, Can; Stanton, Richard; Wallace, Nancy (National Bureau of Economic Research Working Paper Series, 2023)
The deposit business differs at large versus small banks. We provide a parsimonious model and extensive empirical evidence supporting the idea that much of the variation in deposit-pricing behavior between large and small banks reflects differences in "preferences and technologies." Large banks offer superior liquidity services but lower deposit rates, and locate where customers value their services. In addition to receiving a lower level of deposit rates on average, customers of large banks exhibit lower demand elasticities with respect to deposit rate spreads. As a result, despite the fact that the locations of large-bank branches have demographics typically associated with greater financial sophistication, large-bank customers earn lower average deposit rates. Our explanation for deposit pricing behavior challenges the idea that deposit pricing is mainly driven by pricing power derived from the large observed degree of concentration in the banking industry.
Author contact info: Adrien d'Avernas Swedish House of Finance, Drottninggatan 98 4th Floor Portkod 8792 111 60 Stockholm, ---- Sweden E-Mail: adrien.davernas@gmail.com Andrea L. Eisfeldt Anderson School of Management University of California at Los Angeles 110 Westwood Plaza Suite C4.10 Los Angeles, CA 90095 E-Mail: andrea.eisfeldt@anderson.ucla.edu Can Huang Gies College of Business 1206 S. Sixth St. 339 Wohlers Hall CHAMPAIGN, IL 61820 E-Mail: canhuang@illinois.edu Richard Stanton Haas School of Business University of California, Berkeley 545 Student Services Bldg #1900 Berkeley, CA 94720-1900 Tel: 510-642-7382 E-Mail: stanton@haas.berkeley.edu Nancy E. Wallace E-Mail: newallace@berkeley.edu

Financial Windfalls, Portfolio Allocations, and Risk Preferences - Briggs, Joseph S; Cesarini, David; Lee, Sean Chanwook; Lindqvist, Erik; Östling, Robert (National Bureau of Economic Research Working Paper Series, 2023)
We investigate the impact of financial windfalls on household portfolio choices and risk exposure. Exploiting the randomized assignment of lottery prizes in three Swedish lotteries, we find a windfall gain of $100K leads to a 5-percentage-point decrease in the risky share of household portfolios. We show theoretically that negative wealth effects are consistent with both constant and decreasing relative risk aversion and analyze how our empirical estimates help distinguish between competing models of portfolio choice. We further show our results are quantitatively aligned with the predictions of a calibrated dynamic portfolio choice model with nontradable human capital and consumption habits.
Author contact info: Joseph S. Briggs Goldman Sachs 200 West Street New York, NY 10282 USA E-Mail: jsbriggs87@gmail.com David Cesarini Department of Economics New York University 19 West 4th Street, Room 511 New York, NY 10012 Tel: 212/998-3773 E-Mail: dac12@nyu.edu Sean Chanwook Lee Harvard University Department of Economics Cambridge, MA 02138 E-Mail: seanclee@g.harvard.edu Erik Lindqvist Swedish Institute for Social Research (SOFI) Stockholm University SE-106 91 Stockholm SWEDEN E-Mail: erik.lindqvist@sofi.su.se Robert Östling Department of Economics Stockholm School of Economics P.O. Box 6501 SE-113 83 Stockholm Sweden E-Mail: robert.ostling@hhs.se

When do Treasuries Earn the Convenience Yield? — A Hedging Perspective - Acharya, Viral V; Laarits, Toomas (National Bureau of Economic Research Working Paper Series, 2023)
We document that the convenience yield of U.S. Treasuries exhibits properties that are consistent with a hedging perspective of safe assets. The convenience yield tends to be low when the covariance of Treasury returns with the aggregate stock market returns is high. A decomposition of the aggregate stock-bond covariance into terms corresponding to the convenience yield, the frictionless risk-free rate, and default risk reveals that the covariance between stock returns and the convenience yield itself drives the effect in a substantive capacity. We show the convenience yield is reduced with heightened inflation expectations that erode the hedging properties of U.S. Treasuries and other fixed-income money-like assets, inducing a switch to alternatives such as gold; it is also reduced immediately prior to debt-ceiling standoffs and with increases in Treasury supply.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Toomas Laarits Stern School of Business New York University 44 West Fourth Street Suite 9-190 New York, NY 10012 Tel: 8579281743 E-Mail: tlaarits@stern.nyu.edu

Are Swedish House Prices Too High? Why the Price-to-Income Ratio Is a Misleading Indicator - Svensson, Lars E.O. (National Bureau of Economic Research Working Paper Series, 2023)
Appropriate indicators of housing valuation are important for macroprudential policy and assessments of risks to financial stability. Overvalued housing may result in a correction and a fall in house prices. This would weaken households’ balance sheets, reduce the collateral of mortgages and covered housing bonds, and could threaten financial stability. According to ECB (2023) and European Systemic Risk Board (2022), Swedish owner-occupied housing (OOH) was overvalued by about 55% in 2021q2, the largest overvaluation in the EU and EEA; according to European Commission (2023c), by about 30% in 2022. These assessments affect warnings and recommendations issued for Swedish economic policy and the shocks in EBA stress tests of Swedish banks. But these large overvaluation assessments are due to the use of misleading indicators: the deviations of price-to-income (PTI) and price-to-rent ratios from their historical averages. They disregard mortgage rates and other housing costs and lack scientific support. According to a large housing literature, it is not the purchase price but the user cost that is the appropriate measure of the cost of living in OOH, the cost of the housing services that the OOH delivers. From this point of view, “Are house prices too high?” is the wrong question. The right question is, “Are user costs too high?” New improved estimates of the user costs are constructed, including an adjustment for a preference shift during the coronavirus crisis in favor of larger and better housing. According to the user-cost-to-income (UCTI) ratio, Swedish owner-occupied houses have since 2010 instead become increasingly undervalued (not overvalued), by about 35% in 2019q4. Due to higher mortgage rates, they are less undervalued in 2023q4, but still about 25%. For Sweden, the UCTI and PTI indicators are in fact strongly negatively correlated, with opposite signs. If the UCTI indicator is the right one, the PTI indicator is consistently wrong. The valuation assessments of the ECB, the ESRB, the Commission, the OECD, and the IMF are scrutinized and compared. The problem of misleading indicators and overvaluation assessments—and resulting distorted warnings and recommendations—is not restricted to Sweden but concerns several other countries in the European Union.
Author contact info: Lars E.O. Svensson Department of Economics Stockholm School of Economics P.O. Box 6501 SE-11383 Stockholm Sweden E-Mail: Leosven@gmail.com

Long-term Care in Italy - Brugiavini, Agar; Carrino, Ludovico; Pasini, Giacomo (National Bureau of Economic Research Working Paper Series, 2023)
The provision of long-term care (LTC) for senior citizens in Italy is at the center of the recent policy debate. Italy has witnessed a spectacular increase in the share of people aged 65 and over and in particular of people aged 80 and over, which could translate in large increases in the number of people in need of care. We show that individuals who are in need of LTC have lower economic resources than the average, so that many frail older people have little financial means to pay out-of-pocket for formal care. In fact, publicly provided care is highly fragmented, with stark differences emerging in terms of coverage and generosity across Italian regions. Hence, the supply of LTC is relying heavily on the informal support of members of the family, especially women, at the same time formal care is characterised by a significant underground economy of unskilled carers.
Author contact info: Agar Brugiavini Ca’ Foscari University of Venice Economics Department Cannaregio, 873 30121 Venezia Italy E-Mail: brugiavi@unive.it Ludovico Carrino Piazzale Europa 1 Department of Economics, Business, Mathematics and Statistics 'Bruno de Finetti' 34100 Trieste Italy E-Mail: ludovico.carrino@units.it Giacomo Pasini Ca' Foscari University of Venice Economics Department Cannaregio 873 30121 Venezia Italy Tel: +39 041 234 9171 Fax: +39 041 2349176 E-Mail: pasinigi@unive.it

Trade Uncertainty and U.S. Bank Lending - Correa, Ricardo; di Giovanni, Julian; Goldberg, Linda S; Minoiu, Camelia (National Bureau of Economic Research Working Paper Series, 2023)
This paper uses U.S. loan-level credit register data and the 2018–2019 Trade War to test for the effects of international trade uncertainty on domestic credit supply. We exploit cross-sectional heterogeneity in banks’ ex-ante exposure to trade uncertainty and find that an increase in trade uncertainty is associated with a contraction in bank lending to all firms irrespective of the uncertainty that the firms face. This baseline result holds for lending at the intensive and extensive margins. We document two channels underlying the estimated credit supply effect: a wait-and-see channel by which exposed banks assess their borrowers as riskier and reduce the maturity of their loans and a financial frictions channel by which exposed banks facing relatively higher balance sheet constraints contract lending more. The decline in credit supply has real effects: firms that borrow from more exposed banks experience lower debt growth and investment rates. These effects are stronger for firms that are more reliant on bank finance.
Author contact info: Ricardo Correa Board of Governors of the Federal Reserve System Division of International Finance Washington DC 20551 E-Mail: ricardo.correa@frb.gov Julian di Giovanni Federal Reserve Bank of New York Research and Statistics Group 33 Liberty Street New York, NY 10045 E-Mail: juliandigiovanni@gmail.com Linda S. Goldberg Federal Reserve Bank-New York 33 Liberty Street New York, NY 10045 Tel: 212/720-2836 Fax: 212/720-6831 E-Mail: linda.goldberg@ny.frb.org Camelia Minoiu Federal Reserve Bank of Atlanta Research Department 1000 Peachtree St NE Atlanta, GA 30309 United States Tel: +12026830807 E-Mail: minoiu.camelia@gmail.com

What Drives Booms and Busts in Value? - Campbell, John Y; Giglio, Stefano; Polk, Christopher (National Bureau of Economic Research Working Paper Series, 2023)
Value investing delivers volatile returns, with large drawdowns during both market booms and busts. This paper interprets these returns through an intertemporal CAPM, which predicts that aggregate cash flow, discount rate, and volatility news all move value returns. We document that indeed these shocks explain a large fraction of quarterly value returns over the last 60 years. We also distinguish between the intra-industry and inter-industry components of value, showing that the ICAPM explains the former better. Finally, we develop a novel methodology to perform this decomposition at the daily frequency, using it to interpret value returns during the Covid-19 pandemic.
Author contact info: John Y. Campbell Morton L. and Carole S. Olshan Professor of Economics Department of Economics Harvard University Littauer Center 213 Cambridge, MA 02138 Tel: 617/496-6448 Fax: 617/495-7730 E-Mail: john_campbell@harvard.edu Stefano Giglio Yale School of Management 165 Whitney Avenue New Haven, CT 06520 Tel: 203/432-3373 E-Mail: stefano.giglio@yale.edu Christopher Polk Department of Finance London School of Economics Houghton St. London WC2A 2AE UK Tel: +44 (0)20 7849 4917 Fax: +44 (0)20 7852 3580 E-Mail: c.polk@lse.ac.uk

The Long-run Effect of Air Pollution on Survival - Deryugina, Tatyana; Reif, Julian (National Bureau of Economic Research Working Paper Series, 2023)
Many environmental hazards produce health effects that take years to arise, but quasi-experimental studies typically measure outcomes and treatment over short time periods. We develop a new approach to overcome this challenge and use it to gauge the effect of exposure to air pollution on US life expectancy. Using changes in wind direction as an instrument for daily sulfur dioxide levels, we first characterize the short-run mortality effects of acute exposure during the time period 1972-1988. Exposure causes two distinct mortality patterns: a short-run mortality displacement effect, and a persistent accelerated aging effect. We then incorporate our estimates into a flexible health production model to quantify the lifelong effects of chronic air pollution exposure for a cohort born in 1972. Model calculations of the effect of chronic exposure on life expectancy are 7-8 times larger than the effect implied by simple extrapolation of our short-run empirical estimates. Ninety percent of the survival benefits accrue after the first fifty years of life, implying that most of the 1970 Clean Air Act's health benefits have yet to emerge for cohorts born after its passage.
Author contact info: Tatyana Deryugina Department of Finance University of Illinois at Urbana-Champaign 515 East Gregory Drive, MC-520 Champaign, IL 61820 Tel: 925/349-8999 E-Mail: deryugin@illinois.edu Julian Reif Department of Finance University of Illinois at Urbana-Champaign 515 E. Gregory Street Champaign, IL 61820 Tel: 217/300-0169 E-Mail: jreif@illinois.edu

Forecasting the Impact of Racial Uprisings, Market versus Stakeholders' Expectations - Ba, Bocar A; Rivera, Roman; Whitefield, Alexander (National Bureau of Economic Research Working Paper Series, 2023)
Given police abolitionism’s new visibility after the 2020 racial justice protests, we assess stakeholder beliefs on the protests’ stock impacts on police-affiliated firms. Experts generally underestimate the firms’ stock gains, except situated experts like community organizers and police experts, who link the market responses to reforms, not budget cuts. An experiment with nonexperts and finance professionals shows negatively skewed stock predictions among respondents lacking information on policing products and no effect of exposure to narratives about the protests on forecast alignment. National data show enduring support for police reform despite abolitionist advocacy and little understanding of the Defund movement’s objectives.
Author contact info: Bocar A. Ba Department of Economics Duke University 213 Social Sciences Durham, NC 27708 E-Mail: bocar.ba@duke.edu Roman Rivera E-Mail: rgrivera@berkeley.edu Alexander Whitefield E-Mail: whalex@wharton.upenn.edu

Who Invests in Crypto? Wealth, Financial Constraints, and Risk Attitudes - Aiello, Darren; Baker, Scott R; Balyuk, Tetyana; Di Maggio, Marco; Johnson, Mark J; Kotter, Jason D (National Bureau of Economic Research Working Paper Series, 2023)
We provide a first look into the drivers of household cryptocurrency investing. Analyzing consumer transaction data for millions of U.S. households, we find that, except for high income early adopters, cryptocurrency investors resemble the general population. These investors span all income levels, with most dollars coming from high-income individuals, similar to equity investors. High past crypto returns and personal income shocks lead to increased cryptocurrency investments. Higher household-level inflation expectations also correlate with greater crypto investments, aligning with hedging motives. For most U.S. households, cryptocurrencies are treated like traditional assets.
Author contact info: Darren Aiello Brigham Young University 683 TNRB Provo, UT 84663 E-Mail: darren.aiello@gmail.com Scott R. Baker Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 415/244-8274 E-Mail: s-baker@kellogg.northwestern.edu Tetyana Balyuk Goizueta Business School Emory University 1300 Clifton Rd Atlanta, GA 30322 E-Mail: tetyana.balyuk@emory.edu Marco Di Maggio Harvard Business School Baker Library 265 Soldiers Field Boston, MA 02163 Tel: 617/495-6152 E-Mail: mdimaggio@hbs.edu Mark J. Johnson Brigham Young University Department of Finance Provo, UT 84602 E-Mail: markjjohnson@byu.edu Jason D. Kotter Brigham Young University Marriott School of Business Provo, UT 84602 E-Mail: jasonkotter@byu.edu

Safety Reviews on Airbnb: An Information Tale - Culotta, Aron; Jin, Ginger Zhe; Sun, Yidan; Wagman, Liad (National Bureau of Economic Research Working Paper Series, 2023)
Consumer reviews, especially those expressing concerns of product quality, are crucial for the credibility of online platforms. However, reviews that criticize a product or service may also dissuade buyers from using the platform, creating an incentive to blur the visibility of critical reviews. Using Airbnb and official crime data in five major US cities, we find that both reviews and self experiences concerning the safety of a listing's vicinity decrease guest bookings on the platform. Counterfactual simulations suggest that a complete removal of vicinity safety reviews (VSR) would hurt guests but increase revenues from reservations on Airbnb, with positive sorting towards listings formerly with VSR. Conversely, incorporating VSR in a listing's overall ratings or highlighting VSR could generate opposite effects. Either way, the interests of consumers are not always aligned with the interests of a revenue-centric platform. Because VSR are more closely correlated with official crime statistics in low-income and minority neighborhoods, our findings suggest that suppressing or highlighting VSR would have different effects on different neighborhoods.
Author contact info: Aron Culotta School of Science and Engineering Tulane University New Orleans, LA 70118 United States E-Mail: aculotta@tulane.edu Ginger Zhe Jin University of Maryland Department of Economics College Park, MD 20742-7211 Tel: 301/405-3484 Fax: 301/405-3542 E-Mail: ginger@umd.edu Yidan Sun 565 W. Adams St. Chicago, IL 60661 E-Mail: ysun100@hawk.iit.edu Liad Wagman Illinois Institute of Technology 565 W Adams, 4th Floor Chicago, IL 60661 Tel: 7739809883 E-Mail: lwagman@stuart.iit.edu

Perspectives on the Labor Share - Karabarbounis, Loukas (National Bureau of Economic Research Working Paper Series, 2023)
As of 2022, the share of U.S. income accruing to labor is at its lowest level since the Great Depression. Updating previous studies with more recent observations, I document the continuing decline of the labor share for the United States, other countries, and various industries. I discuss how changes in technology and product, labor, and capital markets affect the trend of the labor share. I also examine its relationship with other macroeconomic trends, such as rising markups, higher concentration of economic activity, and globalization. I conclude by offering some perspectives on the economic and policy implications of the labor share decline.
Author contact info: Loukas Karabarbounis University of Minnesota Department of Economics Hanson Hall Minneapolis, MN 55455 Tel: 612-204-5498 E-Mail: loukas@umn.edu

The Long-Term Distributional Impacts of a Full-Year Interleaving Math Program in Nigeria - van der Haar, Lotte; Gray-Lobe, Guthrie; Kremer, Michael; de Laat, Joost (National Bureau of Economic Research Working Paper Series, 2023)
This study reports the findings from a year-long randomized evaluation assessing the impact of assigning 62 classrooms in Nigeria to receive either blocked or interleaved math problem sets. Blocked practice sessions focused on a single skill at a time. Interleaved problem sets alternated between different skills within a practice session. On tests of short-term retention, interleaved practice increased test scores by 0.29 standard deviations. In contrast, we find no evidence that interleaving improves average performance on a cumulative assessment measuring retention of material over the academic year. We find some evidence of large impacts on the cumulative assessment at the bottom of the distribution, but these impacts appear to be offset by negative impacts at the top.
Author contact info: Lotte van der Haar Wageningen University Development Economics Group E-Mail: lotte.vanderhaar@wur.nl Guthrie Gray-Lobe University of Chicago Development Innovation Lab Department of Economics E-Mail: graylobe@uchicago.edu Michael Kremer University of Chicago Department of Economics 1126 E. 59th St. Chicago, IL 60637 Tel: 773/702-6710 Fax: 773/702-8490 E-Mail: kremermr@uchicago.edu Joost de Laat Utrecht University Utrecht School of Economics E-Mail: j.j.delaat@uu.nl

A Framework for Geoeconomics - Clayton, Christopher; Maggiori, Matteo; Schreger, Jesse (National Bureau of Economic Research Working Paper Series, 2023)
Governments use their countries’ economic strength from existing financial and trade relationships to achieve geopolitical and economic goals. We refer to this practice as geoeconomics. We build a framework based on three core ingredients: limited contract enforceability, input-output linkages, and externalities. Geoeconomic power arises from the ability to jointly exercise threats across separate economic activities. A hegemon, like the United States, exerts its power on firms and governments in its economic network by asking these entities to take costly actions that manipulate the world equilibrium in the hegemon’s favor. We characterize the optimal actions and show that they take the form of mark-ups on goods or higher rates on lending, but also import restrictions and tariffs. Input-output amplification makes controlling some sectors more valuable for the hegemon since changes in the allocation of these strategic sectors have a larger influence on the world economy. This formalizes the idea of economic coercion as a combination of strategic pressure and costly actions. We apply the framework to two leading examples: national security externalities and the Belt and Road Initiative.
Author contact info: Christopher Clayton Yale School of Management 165 Whitney Avenue P.O. Box 208200 New Haven, CT 06520-8200 E-Mail: christopherdclayton@gmail.com Matteo Maggiori Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: maggiori@stanford.edu Jesse Schreger Columbia Business School 665 W 130th St Kravis Hall, 551 New York, NY 10027 Tel: 212-851-0171 Fax: 212-662-8474 E-Mail: jesse.schreger@columbia.edu

Implications of Asset Market Data for Equilibrium Models of Exchange Rates - Jiang, Zhengyang; Krishnamurthy, Arvind; Lustig, Hanno (National Bureau of Economic Research Working Paper Series, 2023)
We characterize the relation between exchange rates and their macroeconomic fundamentals without committing to a specific model of preferences, endowment or menu of traded assets. When investors can trade home and foreign currency risk-free bonds, the exchange rate (conditionally) appreciates in states of the world that are worse for home investors than foreign investors. This prediction is at odds with the empirical evidence. We first show that it can be overturned (unconditionally) if the deviations from U.I.P. are large and exchange rates are highly predictable, which are conditions that do not hold in the data. More broadly, it is not possible to match the empirical exchange rate cyclicality (the Backus-Smith puzzle), the deviations from U.I.P. (the Fama puzzle) and the lack of predictability (the Meese-Rogoff puzzle). We then show that introducing Euler equation wedges, consistent with a home currency bias, home bond convenience yields, or financial repression, can resolve all of these puzzles.
Author contact info: Zhengyang Jiang Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2848 E-Mail: zhengyang.jiang@kellogg.northwestern.edu Arvind Krishnamurthy Stanford Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: akris@stanford.edu Hanno Lustig Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hlustig@stanford.edu

What about Japan? - Chien, Yi-Li; Cole, Harold L; Lustig, Hanno (National Bureau of Economic Research Working Paper Series, 2023)
As a result of the BoJ’s large-scale asset purchases, the consolidated Japanese government borrows mostly at the floating rate from households and invests in longer-duration risky assets to earn an extra 3% of GDP. We quantify the impact of Japan’s low-rate policies on its government and households. Because of the duration mismatch on the government balance sheet, the government’s fiscal space expands when real rates decline, allowing the government to keep its promises to older Japanese households. A typical younger Japanese household does not have enough duration in its portfolio to continue to finance its spending plan and will be worse off. Low-rate policies tax younger, poorer and less financially sophisticated households.
Author contact info: Yi-Li Chien Research Division Federal Reserve Bank of St. Louis P.O. Box 442 St. Louis, MO 63166-0442 Tel: 314-444-4617 E-Mail: yilichien@gmail.com Harold L. Cole Economics Department University of Pennsylvania 3718 Locust Walk 160 McNeil Building Philadelphia, PA 19104 Tel: 215-898-7788 E-Mail: colehl@sas.upenn.edu Hanno Lustig Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hlustig@stanford.edu

Policymakers' Uncertainty - Cieslak, Anna; Hansen, Stephen; McMahon, Michael; Xiao, Song (National Bureau of Economic Research Working Paper Series, 2023)
Uncertainty is a ubiquitous concern emphasized by policymakers. We study how uncertainty affects decision-making by the Federal Open Market Committee (FOMC). We distinguish between the notion of Fed-managed uncertainty vis-a-vis uncertainty that emanates from within the economy and which the Fed takes as given. A simple theoretical framework illustrates how Fed-managed uncertainty introduces a wedge between the standard Taylor-type policy rule and the optimal decision. Using private Fed deliberations, we quantify the types of uncertainty the FOMC perceives and their effects on its policy stance. The FOMC's expressed inflation uncertainty strongly predicts a more hawkish policy stance that is not explained either by the Fed's macroeconomic forecasts or by public uncertainty proxies. We rationalize these results with a model of inflation tail risks and argue that the effect of uncertainty on the FOMC's decisions reflects policymakers' concern with maintaining credibility for the inflation anchor.
Author contact info: Anna Cieslak Fuqua School of Business Duke University P.O. Box 90120 Durham, NC 27708 Tel: 919/660-7879 E-Mail: Anna.cieslak@duke.edu Stephen Hansen University College London Department of Economics Drayton House London WC1H 0AX United Kingdom E-Mail: stephen.hansen@ucl.ac.uk Michael McMahon Department of Economics Manor Road Building University of Oxford Oxford OX1 3UQ UK E-Mail: michael.mcmahon@economics.ox.ac.uk Song Xiao Department of Finance London School of Economics and Political Science London WC2A 2AE United Kingdom E-Mail: S.Xiao2@lse.ac.uk

The Active Role of the Natural Rate of Unemployment - Hall, Robert E; Kudlyak, Marianna (National Bureau of Economic Research Working Paper Series, 2023)
We propose that the natural rate of unemployment may have an active role in the business cycle, in contrast to a widespread view that the rate is fairly smooth and at most only weakly cyclical. We demonstrate that the tendency to treat the natural rate as near-constant would explain the surprisingly low slope of the Phillips curve. We observe that evidence is weak about this basic point—the evidence neither comes close to rejecting the conventional view nor does it reject a very different view in which fluctuations in the natural rate are associated with a substantial fraction of cyclical volatility. We show that the natural rate may have closely tracked the actual rate during the long recovery that began in 2009 and ended in 2019. We explain how the common finding of research in the Phillips-curve framework of low—often extremely low—response of inflation to unemployment could be the result of fairly close tracking of the natural rate and the actual rate in recoveries. Our interpretation of the data contrasts to that of many Phillips-curve studies, that conclude that inflation has little relation to un- employment. But we also call attention to a recently growing body of research along New Keynesian lines that supports the credibility of the hypothesis of a strong relation between movements of the natural rate and actual rate of unemployment.
Author contact info: Robert E. Hall Hoover Institution Stanford University Stanford, CA 94305-6010 Tel: 650/723-2215 E-Mail: rehall@gmail.com Marianna Kudlyak 101 Market St Federal Reserve Bank of San Francisco San Francisco, CA 94105 E-Mail: mkudlyak@gmail.com

Spillover Effects at School: How Black Teachers affect their White Peers’ Racial Competency - Gershenson, Seth; Lindsay, Constance A; Papageorge, Nicholas W; Campbell, Romaine A; Rendon, Jessica H (National Bureau of Economic Research Working Paper Series, 2023)
Do white teachers learn racial competency from their Black peers? We answer this question using a mixed-methods approach. Longitudinal administrative data from North Carolina show that having a Black same-grade peer significantly improves the achievement and reduces the suspension rates of white teachers’ Black students. Open-ended interviews of North Carolina public school teachers reaffirm these findings. Broadly, our findings suggest that the positive impact of Black teachers’ ability to successfully teach Black students is not limited to their direct interaction with Black students but is augmented by spillover effects on early-career white teachers, likely through peer learning.
Author contact info: Seth Gershenson School of Public Affairs American University 4400 Massachusetts Avenue NW Washington, DC 20016-8070 E-Mail: gershens@american.edu Constance A. Lindsay UNC School of Education E-Mail: clindsay@unc.edu Nicholas W. Papageorge Department of Economics Johns Hopkins University 3400 N. Charles Street Baltimore, MD 21218 Tel: 410/516-4938 E-Mail: papageorge@jhu.edu Romaine A. Campbell Department of Economics Harvard University Cambridge, MA 02138 E-Mail: rcampbell@g.harvard.edu Jessica H. Rendon E-Mail: jh3608a@american.edu

Technology and Labor Displacement: Evidence from Linking Patents with Worker-Level Data - Kogan, Leonid; Papanikolaou, Dimitris; Schmidt, Lawrence D.W.; Seegmiller, Bryan (National Bureau of Economic Research Working Paper Series, 2023)
We develop measures of labor-saving and labor-augmenting technology exposure using textual analysis of patents and job tasks. Using US administrative data, we show that both measures negatively predict earnings growth of individual incumbent workers. While labor-saving technologies predict earnings declines and higher likelihood of job loss for all workers, labor-augmenting technologies primarily predict losses for older or highly-paid workers. However, we find positive effects of labor-augmenting technologies on occupation-level employment and wage bills. A model featuring labor-saving and labor-augmenting technologies with vintage-specific human capital quantitatively matches these patterns. We extend our analysis to predict the effect of AI on earnings.
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

Differences in How and Why Social Comparison and Real-Time Feedback Impact Resource Use: Evidence from a Field Experiment - Andor, Mark A; Goette, Lorenz; Price, Michael K; Schulze Tilling, Anna; Tomberg, Lukas (National Bureau of Economic Research Working Paper Series, 2023)
We compare the behavior and welfare effects of two popular interventions for resource conservation. The first intervention is social comparison reports (SC), which primarily provide consumers with information motivating behavioral change. The second intervention is real-time feedback (RTF), which primarily provides consumers with information facilitating behavioral change. In a field experiment with around 1,000 participants, we directly observe the interventions’ effects on participants’ behavior. Further, we elicit participants’ willingness to pay for receiving the interventions, both before and after having experienced them for one month. We find that SC leads to a reduction in water use per shower by 9.4%, RTF by 28.8%, and the combination (BOTH) by 35.0%. Our willingness to pay results show that all interventions are highly valued by participants and that willingness to pay for RTF and BOTH is significantly higher than for SC. Furthermore, we find that the valuation of the interventions do not change following one-month experience. Our results suggest that while both interventions improve welfare, providing consumers with information facilitating behavioral change achieves a higher impact and a slightly higher welfare increase than providing consumers with information motivating behavioral change.
Author contact info: Mark A. Andor RWI - Leibniz Institute for Economic Research Hohenzollernstraße 1-3 Essen NRW 45128 Germany E-Mail: andor@rwi-essen.de Lorenz Goette National University Singapore E-Mail: lorenz@lorenzgoette.org Michael K. Price Department of Economics, Finance, and Legal Studies The University of Alabama 250 Alston Hall Box 870224 Tuscaloosa, AL 35487 E-Mail: mkprice2@ua.edu Anna Schulze Tilling E-Mail: schulzetilling@uni-bonn.de Lukas Tomberg RWI - Leibniz Institute for Economic Research Hohenzollernstraße 1-3 Essen NRW 45128 Germany E-Mail: lukas.tomberg@rwi-essen.de

Do Two Wrongs Make a Right? Measuring the Effect of Publications on Science Careers - Ginther, Donna K; Zambrana, Carlos; Oslund, Patricia; Chang, Wan-Ying (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines whether publication data matched to the Survey of Doctorate Recipients can be used for research purposes. We use Gold Standard data created to validate the publication match quality and compare these measures to publications assigned by a machine-learning algorithm developed by Thomson Reuters (now Clarivate). Our econometric model demonstrates that publications likely suffer from non-classical measurement error. Using horse race and instrumental variable models, we confirm that the Gold Standard data are relatively free from measurement error but show that the Clarivate data suffer from non-classical measurement error. We employ a variety of methods to adjust the Clarivate data for false negatives and false positives and demonstrate that with these adjustments the data produce estimates very similar to the Gold Standard. However, these adjustments are not as useful when publications are used as a dependent variable. We recommend using subsamples of the data that have better match quality when using the Clarivate data as a dependent variable.
Author contact info: Donna K. Ginther Department of Economics University of Kansas 333 Snow Hall 1460 Jayhawk Boulevard Lawrence, KS 66045 Tel: 785/864-3251 Fax: 785/864-5270 E-Mail: dginther@ku.edu Carlos Zambrana E-Mail: zambrana@ku.edu Patricia Oslund Institute for Policy & Social Research 1541 Lilac Lane Lawrence, KS 66045 E-Mail: poslund@ku.edu Wan-Ying Chang National Science Foundation 4201 Wilson Boulevard Arlington, VA 22230 E-Mail: wchang@nsf.gov

Life and Death at the Margins of Society: The Mortality of the U.S. Homeless Population - Meyer, Bruce D; Wyse, Angela; Logani, Ilina (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the relationship between extreme socioeconomic disadvantage and poor health by providing the first detailed and accurate picture of mortality patterns among people experiencing homelessness in the U.S. Our analyses center on 140,000 people who were sheltered or unsheltered homeless during the 2010 Census, by far the largest sample ever used to study this population and the only sample designed to be nationally representative. These individuals, along with housed comparison groups, are linked to Social Security Administration data on all-cause mortality from 2010-2022 to estimate the magnitude of health disparities associated with homelessness. We find that non-elderly people experiencing homelessness have 3.5 times the mortality risk of those who are housed, accounting for differences in demographic characteristics and geography, and that a 40-year-old homeless person faces a similar mortality risk to a housed person nearly twenty years older. Our results reveal notable patterns in relative mortality risk by age, race, gender, and Hispanic ethnicity and suggest that within the homeless population, employment, higher incomes, and more extensive observed family connections are associated with lower mortality. The mortality hazard of homeless individuals rose by 33 percent during the COVID-19 pandemic, an increase that, while similar in proportional terms to the increase for the housed population, affected a much larger share of the homeless population due to their substantially elevated baseline mortality rate. These findings elucidate the persistent hardships associated with homelessness and show that the well-documented gradient between health and poverty persists into the extreme lower tail of socioeconomic disadvantage.
Author contact info: Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu Angela Wyse University of Chicago 1307 E 60th Street Chicago, IL 60637 E-Mail: awyse@uchicago.edu Ilina Logani University of Oxford E-Mail: ilina.logani@history.ox.ac.uk

Designing Difference in Difference Studies With Staggered Treatment Adoption: Key Concepts and Practical Guidelines - Freedman, Seth M; Hollingsworth, Alex; Simon, Kosali I; Wing, Coady; Yozwiak, Madeline (National Bureau of Economic Research Working Paper Series, 2023)
Difference-in-Difference (DID) estimators are a valuable method for identifying causal effects in the public health researcher’s toolkit. A growing methods literature points out potential problems with DID estimators when treatment is staggered in adoption and varies with time. Despite this, no practical guide exists for addressing these new critiques in public health research. We illustrate these new DID concepts with step-by-step examples, code, and a checklist. We draw insights by comparing the simple 2 × 2 DID design (single treatment group, single control group, two time periods) with more complex cases: additional treated groups, additional time periods of treatment, and with treatment effects possibly varying over time. We outline newly uncovered threats to causal interpretation of DID estimates and the solutions the literature has proposed, relying on a decomposition that shows how the more complex DID are an average of simpler 2X2 DID sub-experiments.
Author contact info: Seth M. Freedman School of Public and Environmental Affairs 1315 E. 10th St. Bloomington, IN 47405 US E-Mail: freedmas@indiana.edu Alex Hollingsworth Department of Agricultural, Environmental, and Development Economics, Department of Economics, and the John Glenn College of Public Affairs The Ohio State University 2120 Fyffe Road Columbus, OH 43210 Tel: 812/855-6892 E-Mail: hollingsworth.126@osu.edu Kosali I. Simon O’Neill School of Public and Environmental Affairs Indiana University 1315 East Tenth Street Bloomington, IN 47405-1701 Tel: (812) 856-3850 E-Mail: simonkos@indiana.edu Coady Wing Indiana University 1315 E 10th St Bloomington, IN 47405 E-Mail: cwing@indiana.edu Madeline Yozwiak Energy Justice Lab Indiana University E-Mail: myozwiak@iu.edu

To Go Electric or To Burn Coal? A Randomized Field Experiment of Informational Nudges - Fang, Hanming; Li, King King; Shen, Peiyao (National Bureau of Economic Research Working Paper Series, 2023)
Coal heating in residential homes is an important source of indoor air pollution, leading to detrimental health effects. We conduct a randomized field experiment in northern China using three types of SMS campaigns targeting three potential biases that may hinder the adoption of electric heating: a Cost SMS campaign, designed to address the overestimation of electricity expenses; a Health SMS campaign, aimed at addressing the underestimation of health damage associated with coal heating; and a Social Comparison SMS campaign, intended to inform households about the popularity of electric heating. We find that the Cost SMS backfires: it instead leads to a substantial reduction in electric heating, which can be attributed to salience bias induced by the Cost SMS, which drew heightened attention to the cost of electricity. The Health SMS is ineffective for households that underestimate the health damage of coal heating and even backfires for those who expressed little concern about the health consequences. Social Comparison SMS is only effective for a small proportion of households who were concerned about their neighbors' heating choices. Overall, our findings suggest that SMS campaigns targeting these biases are largely ineffective, and caution should be exercised when applying plausible nudge interventions. The findings also suggest that households may be motivated to maintain their beliefs and resist paternalistic interventions.
Author contact info: Hanming Fang Department of Economics Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street, Suite 150 Philadelphia, PA 19104 Tel: 215-898-7767 Fax: 215-573-2057 E-Mail: hanming.fang@econ.upenn.edu King King Li Shenzhen Audencia Financial Technology Institute Shenzhen University WeBank Institute of Financial Technology Shenzhen University Shenzhen China E-Mail: likingking@gmail.com Peiyao Shen Room 644, Level 6, Colin Clark Building (#39) School of Economics University of Queensland, St Lucia Brisbane, QLD 4072 Australia E-Mail: njsy2004@gmail.com

Foreign Competition and Innovation - Helpman, Elhanan (National Bureau of Economic Research Working Paper Series, 2023)
Empirical studies have found that enhanced foreign competition can encourage or discourage innovation. To address this relationship, I examine a market structure in which a small number of large multi-product oligopolists compete with a large number of small single-product firms in the same industry. The single-product firms are short-lived while the multi-product firms live forever, and the large firms invest in innovation in order to enlarge their product spans. All firms export. I show that an increase in the competitiveness of foreign firms can increase or reduce innovation efforts of a large multi-product firm. Moreover, changes in the incentives to innovate can be different for more-productive and less-productive oligopolists. As a result, aggregate sectoral innovation may rise or decline, depending on the productivity distribution of the oligopolists. I also show that changes in short-term operating profits may not be aligned with changes in the incentives to invest in innovation.
Author contact info: Elhanan Helpman Department of Economics Harvard University 1875 Cambridge Street Cambridge, MA 02138 Tel: 617-495-4690 Fax: 617-495-7730 E-Mail: ehelpman@harvard.edu

Daily Momentum and New Investors in an Emerging Stock Market - Gao, Zhenyu; Jiang, Wenxi; Xiong, Wei A; Xiong, Wei (National Bureau of Economic Research Working Paper Series, 2023)
Despite the dominance of retail investors in the Chinese stock market, there’s a conspicuous absence of price momentum in weekly and monthly returns. This study uncovers the presence of price momentum in daily returns and, through a systematic analysis of trading heterogeneity among investors, links daily momentum to the attention and trading activities of new investors—a phenomenon particularly significant in emerging stock markets. Furthermore, our findings indicate the existence of daily price momentum in various other emerging markets, contrasting with its relative scarcity in developed ones.
Author contact info: Zhenyu Gao Chinese University of Hong Kong Hong Kong E-Mail: gaozhenyu@baf.cuhk.edu.hk Wenxi Jiang Chinese University of Hong Kong Room 1250, 12/F. Cheng Yu Tung Building 12 Chak Cheung Street Shatin, N.T. Hong Kong E-Mail: jiangwenxi@gmail.com Wei A. Xiong Shenzhen Stock Exchange 2012 Shennan Blvd. Shenzhen China E-Mail: wxiong@szse.cn Wei Xiong Princeton University Department of Economics Bendheim Center for Finance Princeton, NJ 08450 Tel: 609/258-0282 Fax: 609/258-0771 E-Mail: wxiong@princeton.edu

Fiscal Influences on Inflation in OECD Countries, 2020-2022 - Barro, Robert J; Bianchi, Francesco (National Bureau of Economic Research Working Paper Series, 2023)
The fiscal theory of the price level (FTPL) has been active for 30 years, and the interest in this theory grew with the recent global surges in inflation and government spending. This study applies the FTPL to 37 OECD countries for 2020-2022. The theory’s centerpiece is the government’s intertemporal budget constraint, which relates a country’s inflation rate in 2020-2022 (relative to a baseline rate) to a composite government-spending variable. This variable equals the cumulative increase in the ratio of government expenditure to GDP from 2020 to 2022, divided by the ratio of public debt to GDP in 2019 and the duration of the debt in 2019. This specification has substantial explanatory power for recent inflation rates across 20 non-Euro-zone countries and an aggregate of 17 Euro-zone countries. The estimated coefficients of the composite spending variable are significantly positive, implying that 40-50% of effective government financing came from the inverse effect of unexpected inflation on the real value of public debt, whereas 50-60% reflected conventional public finance (increases in current or future taxes or cuts in future spending). Within the Euro area, inflation reacts mostly to the area-wide government-spending variable, not to individual values.
Author contact info: Robert J. Barro Department of Economics Littauer Center 218 Harvard University Cambridge, MA 02138 Tel: 617/495-3203 Fax: 617/496-8629 E-Mail: rbarro@harvard.edu Francesco Bianchi Johns Hopkins University Department of Economics 3400 N. Charles Street 544E Wyman Bldg. Baltimore, Maryland 21218 E-Mail: francesco.bianchi@jhu.edu

The A.I. Dilemma: Growth versus Existential Risk - Jones, Charles I (National Bureau of Economic Research Working Paper Series, 2023)
Advances in artificial intelligence (A.I.) are a double-edged sword. On the one hand, they may increase economic growth as A.I. augments our ability to innovate. On the other hand, many experts worry that these advances entail existential risk: creating a superintelligence misaligned with human values could lead to catastrophic outcomes, even possibly human extinction. This paper considers the optimal use of A.I. technology in the presence of these opportunities and risks. Under what conditions should we continue the rapid progress of A.I. and under what conditions should we stop?
Author contact info: Charles I. Jones Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305-4800 Tel: 650/725-9265 Fax: 650/725-0468 E-Mail: chad.jones@stanford.edu

The Impact of Fake Reviews on Demand and Welfare - Akesson, Jesper; Hahn, Robert W; Metcalfe, Robert D; Monti-Nussbaum, Manuel (National Bureau of Economic Research Working Paper Series, 2023)
Although fake online customer reviews have become prevalent on platforms such as Amazon, Google, and Facebook, little is known about how these reviews influence consumer behavior. This paper provides the first experimental estimates of the effects of fake reviews on individual demand and welfare. We conduct an incentive-compatible online experiment with a nationally representative sample of respondents from the United Kingdom (n = 10,000). Consumers are asked to choose a product category, browse a platform resembling Amazon, and select one of five equally priced products. One of the products is of inferior quality, one is of superior quality, and three are of average quality. We randomly allocate participants to variants of the platform: five treatment groups see positive fake reviews for an inferior product, and the control group does not see fake reviews. Moreover, some participants are randomly selected to receive an educational intervention that aims to mitigate the potential effects of fake reviews. Our analysis of the experimental data yields four findings. First, fake reviews make consumers more likely to choose lower-quality products. Second, we estimate that welfare losses from such reviews may be important—on the order of $.12 for each dollar spent in the setting we study. Third, we find that fake reviews have heterogeneous effects. For example, the effect of fake reviews is smaller for those who do not trust customer reviews. Fake reviews also have larger effects on those who shop online more frequently. Fourth, we show that the educational intervention reduces the adverse welfare impact of fake reviews by 44%.
Author contact info: Jesper Akesson The Behavioralist United Kingdom E-Mail: jesper@thebehaviouralist.com Robert W. Hahn University of Oxford E-Mail: robert.hahn@smithschool.ox.ac.uk Robert D. Metcalfe Department of Economics University of Southern California Los Angeles, CA 90007 E-Mail: robert.metcalfe@usc.edu Manuel Monti-Nussbaum London E-Mail: manuel@thebehaviouralist.com

A Tale of Two Fields? STEM Career Outcomes - Jiang, Xuan; Staudt, Joseph; Weinberg, Bruce A (National Bureau of Economic Research Working Paper Series, 2023)
Is the labor market for US researchers experiencing the best or worst of times? This paper analyzes the market for recently minted Ph.D. recipients using supply-and-demand logic and data linking graduate students to their dissertations and W2 tax records. We also construct a new dissertation-industry “relevance” measure, comparing dissertation and patent text and linking patents to assignee firms and industries. We find large disparities across research fields in placement (faculty, postdoc, and industry positions), earnings, and the use of specialized human capital. Thus, it appears to simultaneously be a good time for some fields and a bad time for others.
Author contact info: Xuan Jiang Department of Economics School of Economics Jinan University Guangzhou 510000 China E-Mail: jiangxuan@jnu.edu.cn Joseph Staudt Center for Economic Studies U.S. Census Bureau E-Mail: joseph.staudt@census.gov Bruce A. Weinberg The Ohio State University Department of Economics 410 Arps Hall 1945 North High Street Columbus, OH 43210 Fax: 614/292-3906 E-Mail: weinberg.27@osu.edu

Lagged-Price Reimbursement Contracts: The Impact of Medicare Part B on Pharmaceutical Price Growth - Acquatella, Angelique; Ericson, Keith Marzilli; Starc, Amanda (National Bureau of Economic Research Working Paper Series, 2023)
We examine cost-plus lagged-price reimbursement contracts, focusing on Medicare Part B's payment for physician-administered drugs. Our theoretical model shows that lagged-price reimbursement can raise launch prices but lower prices in later periods. While previous research showed Part B increased launch prices, we estimate its effect on later prices (net of rebates). Drugs more exposed to Medicare have lower price growth. A drug with above median Part B exposure has a 10% lower price after 3 years than a below median exposure drug that launched at the same price, with a larger effect for newly approved molecules.
Author contact info: Angelique Acquatella 1 Esplanade de l'université Toulouse 31000 France E-Mail: acquatella.angie@gmail.com Keith Marzilli Ericson Boston University Questrom School of Business 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/353-4553 E-Mail: kericson@bu.edu Amanda Starc Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 330/338-2067 E-Mail: amanda.starc@kellogg.northwestern.edu

Risk Preferences Implied by Synthetic Options - Dew-Becker, Ian; Giglio, Stefano (National Bureau of Economic Research Working Paper Series, 2023)
The historical returns on equity index options are well known to be strikingly negative. That is typically explained either by investors having convex marginal utility over stock returns (e.g. crash/variance aversion) or by intermediaries demanding a premium for hedging risk. This paper examines the consistency of those explanations with returns on dynamically replicated, or synthetic, options. Theoretically, it derives conditions under which convex marginal utility leads synthetic options to also have negative excess returns. Empirically, synthetic options have CAPM alphas near zero over the period 1926--2022, in stark contrast to exchange-traded options. Over the last 15 years, returns on traded options have converged to those on synthetic options -- with the variance risk premium shrinking towards zero -- while various drivers of the cost and risk of hedging options exposures have declined, consistent with a model in which intermediaries drive option prices.
Author contact info: Ian Dew-Becker Visiting University of Chicago 5256 N. Wayne Avenue Chicago, IL 60640 E-Mail: ian.dewbecker@gmail.com Stefano Giglio Yale School of Management 165 Whitney Avenue New Haven, CT 06520 Tel: 203/432-3373 E-Mail: stefano.giglio@yale.edu

Asset Pricing in a Low Rate Environment - Azinovic, Marlon; Cole, Harold L; Kubler, Felix (National Bureau of Economic Research Working Paper Series, 2023)
We examine asset prices in environments where the risk-free rate lies considerably below the growth rate. To do so, we introduce a tractable model of a production economy featuring heterogeneous trading technologies, as well as idiosyncratic and aggregate risk. We show that allowing for the possibility of firms exiting is crucial for matching key macroeconomic moments and, simultaneously, the risk-free rate, the market price of risk, and price-earnings ratios. In particular, our model allows us to consider calibrations that match the high observed market price of risk and average interest rates as low as 2-3.5 percent below the average growth rate. High values for risk aversion or non-standard preferences are not necessary for this. We use the model to examine the wealth distribution and asset prices in economies with very low real rates. We also examine under which conditions realistic calibrations allow for an infinite rollover of government debt. For our benchmark calibration, rollover is impossible even if the average risk-free rate lies 3.5 percent below the average growth rate.
Author contact info: Marlon Azinovic E-Mail: azinovic@sas.upenn.edu Harold L. Cole Economics Department University of Pennsylvania 3718 Locust Walk 160 McNeil Building Philadelphia, PA 19104 Tel: 215-898-7788 E-Mail: colehl@sas.upenn.edu Felix Kubler University of Zurich Plattenstrasse 32 CH-8032 Zurich Switzerland E-Mail: fkubler@gmail.com

Do Water Audits Work? - Akesson, Jesper; Hahn, Robert W; Kochhar, Rajat; Metcalfe, Robert D (National Bureau of Economic Research Working Paper Series, 2023)
Water suppliers are showing greater interest in using different mechanisms to promote conservation. One such mechanism is conducting home water audits, which involves assessing water use and providing tailored suggestions for conserving water for residential customers. Yet, very little is known about the economic impacts of these water audits. This paper helps fill this gap by implementing a natural field experiment in the United Kingdom. The experiment involves randomly allocating 45,000 water customers to a control group or to treatment groups that receive different behavioral encouragements to take-up an online water audit. Our analysis yields three main findings. First, encouraging subjects to participate in an audit with financial incentives reduces household consumption by about 17 percent over two months. Furthermore, we find that the size of the financial incentive used to encourage conservation matters for take-up, but not conservation. Second, notwithstanding these improvements in water conservation, the per capita net benefits of the intervention are close to zero under a wide range of assumptions. We also implement a marginal value of public funds approach that considers benefits and costs and we reach a similar conclusion. Third, we find that targeting of high users could double the effectiveness of the financial incentive interventions.
Author contact info: Jesper Akesson The Behavioralist United Kingdom E-Mail: jesper@thebehaviouralist.com Robert W. Hahn University of Oxford E-Mail: robert.hahn@smithschool.ox.ac.uk Rajat Kochhar Energy and Environment Lab University of Chicago E-Mail: rajatkoc@uchicago.edu Robert D. Metcalfe Department of Economics University of Southern California Los Angeles, CA 90007 E-Mail: robert.metcalfe@usc.edu

Competition, Harmonization and Redistribution: Corporate Taxes in Switzerland - Brülhart, Marius; Koethenbuerger, Marko; Krapf, Matthias; Parchet, Raphael; Schmidheiny, Kurt; Staubli, David (National Bureau of Economic Research Working Paper Series, 2023)
Switzerland could be considered as a test case for international corporate-tax policy coordination. It is a federation of 26 fiscally autonomous cantons that have been taxing corporate profits more or less independently for over a century. We document and discuss corporate taxation in Switzerland, with a focus on three aspects: (a) the evolving within-country geography of taxable profits and corporate tax rates, (b) the nature and historical emergence of formal tax-base harmonization, and (c) the functioning of fiscal equalization. Parallels are drawn and differences are discussed relative to ongoing efforts at international tax coordination.
Author contact info: Marius Brülhart University of Lausanne Faculty of Business and Economics (HEC) Department of Economics 1015 Lausanne Switzerland E-Mail: marius.brulhart@unil.ch Marko Koethenbuerger ETH Zurich D-MTEC Leonhardstr. 21 8092 Zurich Switzerland E-Mail: koethenbuerger@ethz.ch Matthias Krapf University of Basel Faculty of Business and Economics Peter-Merian-Weg 6 4002 Basel Switzerland E-Mail: matthias.krapf@unibas.ch Raphael Parchet Università della Svizzera italiana Department of Economics Via Giuseppe Buffi 13 6900 Lugano Switzerland E-Mail: raphael.parchet@usi.ch Kurt Schmidheiny University of Basel Faculty of Business and Economics Peter Merian-Weg 6 4002 Basel Switzerland E-Mail: kurt.schmidheiny@unibas.ch David Staubli Swiss Federal Tax Administration Eigerstrasse 65 3007 Bern Switzerland E-Mail: david.staubli@estv.admin.ch

Long-term Care in Japan - Fu, Rong; Iizuka, Toshiaki; Noguchi, Haruko (National Bureau of Economic Research Working Paper Series, 2023)
Japan, renowned for its significantly aged population, presents a distinctive landscape in elderly care. Notably, there exists no apparent correlation between the economic well-being of the elderly and the limitations they experience in Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs). In response to the escalating demand for elderly care, Japan introduced the public Long-Term Care Insurance (LTCI) system in 2000. This comprehensive program offers a wide spectrum of long-term care services, aiming to facilitate aging in place for seniors and alleviate the burdens on informal caregivers. Nevertheless, the LTCI system faces substantial challenges, predominantly related to financial sustainability and a shortage of human resources. Ongoing discussions center on achieving cost-effective service delivery, potential adjustments to premium rates and copayments, especially for individuals with ample financial resources or minimal care needs. Furthermore, debates surround the reduction of the age of eligibility for LTCI, with opposition stemming from intricate financial and structural considerations. Japan grapples with a deficiency of social security contributors and skilled care workers, necessitating endeavors to enhance labor force participation and foster innovation in the long-term care sector. Japan's LTCI system offers invaluable insights for countries grappling with akin demographic and care-related predicaments.
Author contact info: Rong Fu Faculty of Commerce, Waseda University 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050 Japan Tel: +81 (3)5272-4782 Fax: +81 (3)5272-4782 E-Mail: nataliefu@waseda.jp Toshiaki Iizuka Graduate School of Economics, University of Tokyo 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-8656 Tokyo Japan E-Mail: toshi.iizuka@gmail.com Haruko Noguchi Faculty of Political Science and Economics, Waseda University 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050 Tel: +81 (3)5272-4782 Fax: +81 (3)5272-4782 E-Mail: noguchi.haruko@gmail.com

Preemptive Austerity with Rollover Risk - Conesa, Juan Carlos; Kehoe, Timothy J (National Bureau of Economic Research Working Paper Series, 2023)
By preemptive austerity, we mean a policy that increases taxes to deter potential rollover crises. The policy is so successful that the usual danger signal of a rollover crisis, a high yield on new bonds sold, does not show up because the policy eliminates the danger. Mechanically, high taxes make the safe zone in the model — the set of sovereign debt levels for which the government prefers to repay its debt rather than default — larger. By announcing a high tax rate at the beginning of the period, the government ensures that tax revenue will be high enough to service sovereign debt becoming due, which deters panics by international lenders but is ex-post suboptimal. That is why, as it engages in preemptive austerity, the government continues to reduce the level of debt to a point where, asymptotically, high taxes are no longer necessary.
Author contact info: Juan Carlos Conesa Department of Economics Stony Brook University Stony Brook, NY 11794-4384 Tel: (631) 632-7549 Fax: (631) 632-7516 E-Mail: juan.conesa@stonybrook.edu Timothy J. Kehoe University of Minnesota Department of Economics 1925 Fourth Street South Minneapolis, MN 55455-0462 Tel: 612/625-1589 Fax: 612/204-5515 E-Mail: tkehoe@umn.edu

Partisan Traps - Bueno de Mesquita, Ethan; Dziuda, Wioletta (National Bureau of Economic Research Working Paper Series, 2023)
Electoral incentives may lead policymakers to eschew opportunities for common-interest reform, focusing instead on zero-sum, partisan policymaking. By forgoing opportunities for common-interest reforms, incumbents may convince their constituents that such reforms are rarely feasible, so that policymaking is primarily about zero-sum, partisan conflict. Voters with such beliefs vote based on ideological alignment, rather than factors such as quality or honesty. This is electorally beneficial for incumbents, who are typically ideologically aligned with their constituents. We capture this logic in an infinite horizon model and characterize the resulting dynamics of politics and policymaking. Equilibrium exhibits partisan traps---voters are pessimistic about common-interest opportunities, politicians behave in a purely partisan manner that shuts down voter learning, and ideologically aligned incumbents are consistently reelected. Partisan traps often occur in equilibrium even when common-interest reforms are in fact frequently feasible. The model shows how elite and mass polarization are intertwined, with politicians engaging in strategically polarized and polarizing behavior which leads to pessimistic beliefs among voters, who come to perceive there to be little political common ground.
Author contact info: Ethan Bueno de Mesquita University of Chicago Harris School of Public Policy Studies 1307 E 60th St Chicago, IL 60637 E-Mail: bdm@uchicago.edu Wioletta Dziuda E-Mail: wdziuda@uchicago.edu

Long-term Care in England - Banks, James; French, Eric; McCauley, Jeremy (National Bureau of Economic Research Working Paper Series, 2023)
This paper describes the state of Long-Term Care (LTC) in England, which is facing increasing strain due to population aging. We piece together microeconomic and aggregate data in order to give an overview of the demand and supply of LTC in England in a way that facilitates comparisons with other countries, and briefly discuss current LTC policy and recent reforms.
Author contact info: James Banks Arthur Lewis Building-3.020 School of Social Sciences The University of Manchester Manchester M13 9PL United Kingdom E-Mail: james.banks@manchester.ac.uk Eric French Faculty of Economics, University of Cambridge Austin Robinson Building Sidgwick Avenue Cambridge, CB3 9DD, UK United Kingdom Tel: +44 7582496247 E-Mail: Eric.French.econ@gmail.com Jeremy McCauley 3C4, Priory Road Complex Bristol BS8 1TU United Kingdom E-Mail: jeremymccauley@gmail.com

Universalizing the Access to Long-term Care: Evidence from Spain - Costa-Font, Joan; Jimenez-Martin, Sergi; Vilaplana-Prieto, Cristina; Viola, Analía (National Bureau of Economic Research Working Paper Series, 2023)
Spain together with Scotland are two countries that exhibit the largest expansions in long term care (LTC) in the last two decades, universalizing subsidies and supports. This paper is part of a global effort to provide a snapshot of the trends in LTC use and access, as well as the financing, and organization of the LTC system compared to other higher-income countries. The passage of Act 39/2006 on the Promotion of Personal Autonomy and Care for Dependent Persons (SAAD in Spanish) on December 14th, 2006, universalized coverage for care subsidies and supports, allowing access to care conditioned only on individuals’ assessment of care needs. As a consequence, LTC spending as a percentage of GDP has risen from 0.5% in 2003 to nearly 0.9% in 2019, despite private LTC insurance playing a minor role. Still today, LTC remains heavily reliant on informal care, which is now partially subsidized by a caregiving subsidy as part of SAAD. Long-term care spending in Spain amounts to between 1.27% (conservative estimates) and 1.70% (flexible estimation) of GDP. Finally, the system reveals significant gender imbalances in the provision of care, with women accounting for most caregivers in both formal (87%) and informal (58%) care.
Author contact info: Joan Costa-i-Font Department of Health Policy London School of Economics and Political Science (LSE) UK E-Mail: j.costa-font@lse.ac.uk Sergi Jimenez-Martin Universitat Pompeu Fabra Ramon Trias Fargas 25-27 08005 BARCELONA (SPAIN) E-Mail: sergi.jimenez@upf.edu Cristina Vilaplana-Prieto Departamento de Economia E-Mail: cvilaplana@um.es Analía Viola FEDEA C/ Jorge Juan, 46 Madrid 28001 Spain E-Mail: aviola@fedea.es

Tax Policy and the Heterogeneous Costs of Homeownership - Bishop, Kelly; Dowling, Jakob; Kuminoff, Nicolai V; Murphy, Alvin (National Bureau of Economic Research Working Paper Series, 2023)
The real economic cost of homeownership depends on an intricate system of taxes and subsides that vary over time and across the United States. We incorporate the key features of this system into a framework for measuring the annual user-cost of housing and we use it to document how housing costs and subsidies varied over time, across space, and with household demographics in 2016-2017. Then we examine how the Tax Cuts and Jobs Act of 2017 subsequently reduced subsidies and increased the relative cost of housing. We report how these changes varied by geography, homeownership, race, and voting behavior.
Author contact info: Kelly Bishop Department of Economics Arizona State University PO Box 879801 Tempe, AZ 85287-9801 E-Mail: kelly.bishop@asu.edu Jakob Dowling E-Mail: jakob.dowling@gmail.com Nicolai V. Kuminoff Department of Economics Arizona State University P.O. Box 879801 Tempe, AZ 85287 Tel: 480/727-9802 Fax: 480/965-0748 E-Mail: kuminoff@asu.edu Alvin Murphy Department of Economics Arizona State University PO Box 879801 Tempe, AZ 85287-9801 Tel: 314-935-6306 E-Mail: Alvin.Murphy@asu.edu

Long-term care in the Netherlands - Bakx, Pieter; Van Doorslaer, Eddy; Wouterse, Bram (National Bureau of Economic Research Working Paper Series, 2023)
We describe the financing and use of long-term care in the Netherlands. Public long-term care insurance is universal and comprehensive; user fees are low compared to other countries. We use linked survey and administrative data to document the distribution of the need for long-term care in the 65+ population, long-term care costs and how they are paid for. The findings reveal that no other country spends more per capita on publicly financed formal care than The Netherlands. A potential reason is that the threshold to receive formal care appears to be lower in the Netherlands than in other countries. Still, a considerable share of the adult population provides informal care. Caregiving is concentrated in specific demographic groups. The costs of informal care provision are considerable, but as a share of total spending on long term care they are smaller than in most developed countries. Adding the costs of informal care to formal care expenditures changes the view on who bears the costs of long-term care.
Author contact info: Pieter Bakx Erasmus University Rotterdam The Netherlands E-Mail: bakx@eshpm.eur.nl Eddy Van Doorslaer E-Mail: vandoorslaer@ese.eur.nl Bram Wouterse Erasmus University Rotterdam The Netherlands E-Mail: wouterse@eshpm.eur.nl

Greater Than the Sum of Its Parts: Aggregate vs. Aggregated Inflation Expectations - Dietrich, Alexander; Knotek, Edward S; Myrseth, Kristian O; Rich, Robert W; Schoenle, Raphael; Weber, Michael (National Bureau of Economic Research Working Paper Series, 2023)
This paper introduces a novel measure of consumer inflation expectations: We elicit and combine inflation forecasts across categories of personal consumption expenditure to form an aggregated measure of inflation expectations. Drawing on nearly 60,000 respondents, our data comprise the early low-inflation environment of the COVID pandemic and the 2021 inflation surge. Conventionally elicited inflation expectations consistently exceed aggregated measures constructed under plausible weighting schemes. Aggregated measures display less disagreement and volatility and are stronger predictors of consumers’ spending plans. The relative informational value of aggregated measures rises with the individual-level gap between conventional and aggregated inflation expectations. Our results chart a new course for designing measurement of inflation expectations.
Author contact info: Alexander Dietrich E-Mail: amdi@nationalbanken.dk Edward S. Knotek II Federal Reserve Bank of Cleveland E-Mail: Edward.Knotek@clev.frb.org Kristian Myrseth University of York E-Mail: kristian.myrseth@outlook.com Robert W. Rich P.O. Box 6387 Cleveland, OH 44101-1387 Tel: 216.579.2928 E-Mail: robert.rich@clev.frb.org Raphael Schoenle Brandeis University Department of Economics 415 South Street Waltham, MA 02454 E-Mail: schoenle@brandeis.edu Michael Weber Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-1241 E-Mail: michael.weber@chicagobooth.edu

Convergent Evolution Toward the Joint-Stock Company - Le Bris, David; Goetzmann, William N; Pouget, Sébastien (National Bureau of Economic Research Working Paper Series, 2023)
The origin of the modern publicly-held joint-stock company is typically traced to large-scale maritime trading companies in England and the Netherlands in the early 17th century. Highlighting medieval cases in southern Europe, we claim that the joint-stock company likely emerged in several times and places, in response to a similar set of needs and requirements for coordinating large-scale enterprises. These prior appearances support the theory of convergent evolution toward the joint-stock company. We document the different legal genealogies of the various paths, their independence and their socio-economic contexts. These observations have implications for identifying the necessary legal and political background underlying the emergence of the joint-stock company, and for the debate regarding the link between institutions and economic development.
Author contact info: David Le Bris Toulouse Business School 20, Boulevard Lascrosse 31000 Toulouse France E-Mail: d.le-bris@tbs-education.fr William N. Goetzmann School of Management Yale University Box 208200 New Haven, CT 06520-8200 Tel: 203/432-5950 Fax: 203/432-3003 E-Mail: william.goetzmann@yale.edu Sébastien Pouget Toulouse School of Economics University of Toulouse 21 Allée de Brienne 31000 Toulouse France Tel: 33 671 955 126 E-Mail: spouget@univ-tlse1.fr

Hidden Exposure: Measuring US Supply Chain Reliance - Baldwin, Richard; Freeman, Rebecca; Theodorakopoulos, Angelos (National Bureau of Economic Research Working Paper Series, 2023)
Supply chain problems, previously relegated to specialized journals, now appear in G7 Leaders’ Communiqués. Our paper looks at three core elements of the problems: measurement of the links that expose supply chains to disruptions, the nature of the shocks that cause the disruptions, and the criteria for policy to mitigate the impact of disruptions. Utilizing global input-output data, we show that US exposure to foreign suppliers, and particularly to China, is ‘hidden’ in the sense that it is much larger than what conventional trade data suggest. However, at the macro level, exposure remains relatively modest, given that over 80% of US industrial inputs are sourced domestically. We argue that many recent shocks to supply chains have been systemic rather than idiosyncratic. Moreover, systemic shocks are likely to arise from climate change, geoeconomic tensions, and digital disruptions. Our principal conclusion is that concerns regarding supply chain disruptions, and policies to address them, should focus on individual products, rather than the whole manufacturing sector.
Author contact info: Richard Baldwin International Institute for Management Development Ch. de Bellerive 23 CH-1001, Lausanne Switzerland Tel: 41-21-618-0111 E-Mail: richard.baldwin@imd.org Rebecca Freeman Bank of England Threadneedle Street London EC2R 8AH United Kingdom E-Mail: rebecca.freeman@bankofengland.co.uk Angelos Theodorakopoulos Aston Business School Aston Triangle Birmingham B4 7ET United Kingdom E-Mail: a.theodorakopoulos2@aston.ac.uk

Social Insurance and Migration: Evidence from a Nation-Wide Institutional Reform in China - Li, Fanghua; Ji, Chenyang; Buchinsky, Moshe (National Bureau of Economic Research Working Paper Series, 2023)
In this paper we examine the causal relationship between formal social insurance and individuals’ migration decisions. We exploit a quasi experimental design in rural China, under which county officials were assigned to a group of villages (i.e., treated villages) to serve as village supervisors (VSs) for the local leaders. We show that this led to reduced favoritism in welfare allocation by the local leaders, thereby increasing the efficacy in the formal social insurance in the treated villages. We use detailed geo-referenced administrative household-level data suited for a spatial regression discontinuity design (RDD) to obtain an average treatment effect (LATE) of the improved social insurance on migration. The apparent variation in the implementation of the reform across treated villages and heterogeneous impacts on different family clans make it possible to directly link changes in the efficacy of the insurance to migration choices. We find a large positive migration effect, of about 19%, for the young males and females. In turn, this led to a large boost in the average household’s income in just two years.
Author contact info: Fanghua Li Department of Economics University of New South Wales Sydney New South Wales Australia E-Mail: fanghua.li@unsw.edu.au Chenyang Ji 59 Zhongguancun St Beijing Beijing, Beij 100086 China E-Mail: jichenyang@ruc.edu.cn Moshe Buchinsky Department of Economics 9357 Bunche Hall Box 851477 UCLA Los Angeles, CA 90095-1477 Tel: 310/206-9665 Fax: 310/825-9528 E-Mail: buchinsky@econ.ucla.edu

Does Wage Theft Vary by Demographic Group? Evidence from Minimum Wage Increases - Clemens, Jeffrey; Strain, Michael R (National Bureau of Economic Research Working Paper Series, 2023)
Using Current Population Survey data, we assess whether and to what extent the burden of wage theft — wage payments below the statutory minimum wage — falls disproportionately on various demographic groups following minimum wage increases. For most racial and ethnic groups at most ages we find that underpayment rises similarly as a fraction of realized wage gains in the wake of minimum wage increases. We also present evidence that the burden of underpayment falls disproportionately on relatively young African American workers and that underpayment increases more for Hispanic workers among the full working-age population.
Author contact info: Jeffrey Clemens Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-5713 E-Mail: jeffclemens@ucsd.edu Michael R. Strain American Enterprise Institute 1789 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: michael.strain@aei.org

Semiparametric Conditional Factor Models: Estimation and Inference - Chen, Qihui; Roussanov, Nikolai; Wang, Xiaoliang (National Bureau of Economic Research Working Paper Series, 2023)
This paper introduces a simple and tractable sieve estimation of semiparametric conditional factor models with latent factors. We establish large-N-asymptotic properties of the estimators without requiring large T. We also develop a simple bootstrap procedure for conducting inference about the conditional pricing errors as well as the shapes of the factor loading functions. These results enable us to estimate conditional factor structure of a large set of individual assets by utilizing arbitrary nonlinear functions of a number of characteristics without the need to pre-specify the factors, while allowing us to disentangle the characteristics' role in capturing factor betas from alphas (i.e., undiversifiable risk from mispricing). We apply these methods to the cross-section of individual U.S. stock returns and find strong evidence of large nonzero pricing errors that combine to produce arbitrage portfolios with Sharpe ratios above 3. We also document a significant decline in apparent mispricing over time.
Author contact info: Qihui Chen The Chinese University of Hong Kong, Shenzhen 406 Zhiren Building 2001 Longxiang Avenue Longgang District Shenzhen, Guandong 518172 China E-Mail: qihuichen@cuhk.edu.cn Nikolai Roussanov University of Pennsylvania 2400 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104-6367 Tel: 215/746-0004 Fax: 215/898-6200 E-Mail: nroussan@wharton.upenn.edu Xiaoliang Wang Hong Kong University of Science and Technology School of Business and Management Department of Finance Clear Water Bay, Kowloon Hong Kong E-Mail: xlwangfin@ust.hk

How Does Medicaid Expansion Impact Income Support Program Participation and Employment for Different Types of People with Disabilities? - Ne'eman, Ari; Maestas, Nicole (National Bureau of Economic Research Working Paper Series, 2023)
Social Security Disability Insurance and Supplemental Security Income, the United States’ two primary disability income support programs, each offer a pathway to public health insurance in addition to cash benefits. This implies that expansions in public health insurance availability, such as the ACA’s Medicaid expansions, may impact disability program participation and employment of people with disabilities. However, prior research has yielded mixed results as to the impact of Medicaid expansion on these outcomes. Using a stacked difference-in-differences design and data from the Current Population Survey, we demonstrate that the ACA’s Medicaid expansions increased SSDI receipt among individuals ages 50-64 with physical, self-care and independent living disabilities, consistent with a “job unlock” mechanism. Exploiting the longitudinal nature of the CPS, we show that treatment effects are heterogeneous and concentrated among persons with ongoing disabilities (as opposed to new disabilities) as reported on the CPS’s 6-question functional impairment sequence. We also show suggestive evidence of a reduction in SSI, but find that it is sensitive to specification and data preparation choices, which we illustrate through comparison with other recent work. Effects on employment are inconclusive. Our findings provide further evidence of work capacity among SSDI beneficiaries.
Author contact info: Ari Ne'eman E-Mail: aneeman@g.harvard.edu Nicole Maestas Department of Health Care Policy Harvard Medical School 180 Longwood Avenue Boston, MA 02115 Tel: 617/432-3455 E-Mail: maestas@hcp.med.harvard.edu

Economic Growth under Transformative AI - Trammell, Philip; Korinek, Anton (National Bureau of Economic Research Working Paper Series, 2023)
Industrialized countries have long seen relatively stable growth in output per capita and a stable labor share. AI may be transformative, in the sense that it may break one or both of these stylized facts. This review outlines the ways this may happen by placing several strands of the literature on AI and growth within a common framework. We first evaluate models in which AI increases output production, for example via increases in capital's substitutability for labor or task automation, capturing the notion that AI will let capital “self-replicate”. This typically speeds up growth and lowers the labor share. We then consider models in which AI increases knowledge production, capturing the notion that AI will let capital “self-improve”, speeding growth further. Taken as a whole, the literature suggests that sufficiently advanced AI is likely to deliver both effects.
Author contact info: Philip Trammell Department of Economics University of Oxford 10 Manor Rd Oxford, Oxfordshire United Kingdom E-Mail: pawtrammell@gmail.com Anton Korinek Department of Economics University of Virginia Monroe Hall 246 248 McCormick Rd Charlottesville, VA 22904 E-Mail: anton@korinek.com

Analyzing Bounded Count Data - Mullahy, John (National Bureau of Economic Research Working Paper Series, 2023)
This paper presents and assesses analytical strategies that respect the bounded count structures of outcomes that are encountered often in health and other applications. The paper's main motivation is that the applied econometrics literature lacks a comprehensive discussion and critique of strategies for analyzing and understand such data. The paper's goal is to provide a treatment of prominent issues arising in such analyses, with particular focus on evaluations in which bounded count outcomes are of interest, and on econometric modeling of their probability and moment structures. Hopefully the paper will provide a toolkit for researchers so they may better appreciate the range of questions that might be asked of such data and the merits and limitations of the analytical methods they might contemplate to study them. It will be seen that the choice of analytical method is often consequential: questions of interest may be unanswerable when some familiar analytical methods are deployed in some circumstances.
Author contact info: John Mullahy University of Wisconsin-Madison Dept. of Population Health Sciences 787 WARF, 610 N. Walnut Street Madison, WI 53726 Tel: 608/265-5410 Fax: 608/263-2820 E-Mail: jmullahy@facstaff.wisc.edu

Dirty Air and Green Investments: The Impact of Pollution Information on Portfolio Allocations - Fisman, Raymond; Ghosh, Pulak; Sarkar, Arkodipta; Zhang, Jian (National Bureau of Economic Research Working Paper Series, 2023)
We study exposure to pollution information and investment portfolio allocations, exploiting the rollout of air quality monitoring stations in India. Using a triple-differences framework, we show that retail investors' investments in "brown" stocks are negatively related to local air pollution after a monitoring station appears nearby, with particularly pronounced effects on ``alert'' dates when air quality is listed as harmful to the general population. The effect of pollution information on investment choices is most prominent amongst tech-savvy investors who are most plausibly "treated" by real-time pollution data, and by younger investors who tend to be more sensitive to environmental concerns. Overall, our results provide micro-level support for the view that salience of environmental conditions affect investors' tastes for green investments, and preferences for environmental amenities more generally.
Author contact info: Raymond Fisman Department of Economics Boston University 270 Bay State Road, 304A Boston, MA 02215 Tel: 617-353-6821 E-Mail: rfisman@bu.edu Pulak Ghosh Bannerghatta Road Bangalore, Karn 560076 India E-Mail: pulak.ghosh@iimb.ac.in Arkodipta Sarkar Singapore E-Mail: asarkar@nus.edu.sg Jian Zhang The University of Hong Kong (HKU) Business School E-Mail: zhangj1@hku.hk

The Impact of the Global COVID-19 Vaccination Campaign on All-Cause Mortality - Agrawal, Virat; Sood, Neeraj; Whaley, Christopher M (National Bureau of Economic Research Working Paper Series, 2023)
The global COVID-19 vaccination campaign is the largest public health campaign in history, with over 2 billion people fully vaccinated within the first 8 months. Nevertheless, the impact of this campaign on all-cause mortality is not well understood. Leveraging the staggered rollout of vaccines, we find that the vaccination campaign across 141 countries averted 2.4 million excess deaths, valued at $6.5 trillion. We also find that an equitable counterfactual distribution of vaccines, with vaccination in each country proportional to its population, would have saved roughly 670,000 more lives. However, this distribution approach would have reduced the total value of averted deaths by $1.8 trillion due to redistribution of vaccines from high-income to low-income countries.
Author contact info: Virat Agrawal USC Sol Price School of Public Policy Los Angeles, CA 90089 United States E-Mail: viratagr@usc.edu Neeraj Sood Schaeffer Center for Health Policy and Economics Sol Price School of Public Policy University of Southern California University Park Campus Los Angeles CA 90089 Tel: 310/393-0411 Fax: 310/260-8156 E-Mail: nsood@healthpolicy.usc.edu Christopher M. Whaley Brown University 121 South Main Street Providence, RI 02912 United States E-Mail: christopher_whaley@brown.edu

Wars and the Labor Market Outcomes of Minorities in the U.S. - Ferrara, Andreas (National Bureau of Economic Research Working Paper Series, 2023)
This chapter reviews key literature studying the effects of wars on minority and underrepresented groups in U.S. labor markets in the 20th century. These labor markets, characterized by historically pervasive barriers to entry into certain occupations and industries, promotions, and fair pay for underrepresented workers, experienced severe challenges during times of war. These challenges served to break down some of the barriers faced by underrepresented workers. Recent years have shown that sudden labor shortages, similar to those induced by large-scale wars, are not a feature of the past. Hence, a better understanding of such shortages and their effects on different groups continues to be important. The focus here is on the labor market outcomes of Black and white women, as well as Black men, during and after the two World Wars. Their labor inputs compensated for the lack of white male workers during the war years; however, only WWII generated significant and more prolonged socioeconomic progress for both groups. This chapter summarizes theoretical considerations that can explain why some war-induced labor market shocks are persistent while others are not, and the empirical literature related to the labor market experiences of women and Black workers during and after the World Wars.
Author contact info: Andreas Ferrara Department of Economics University of Pittsburgh 4906 Wesley W. Posvar Hall Pittsburgh, PA 15260 E-Mail: a.ferrara@pitt.edu

Heterogeneous Agent Trade - Waugh, Michael E (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the implications of household heterogeneity for trade. I develop a model where household heterogeneity is induced via incomplete markets and results in heterogeneous price elasticities. Conditional on exposure to trade, heterogeneous price elasticities imply that different households value price changes differently, and thus rich and poor households experience different gains from trade. I calibrate the model to match bilateral trade flows and micro-facts about household-level expenditure patterns and elasticities. I find gains from trade that are pro-poor and that the average gains from trade are substantially larger than representative agent benchmarks.
Author contact info: Michael E. Waugh Federal Reserve Bank of Minneapolis 90 Hennepin Ave Minneapolis, MN 55401 E-Mail: michael.e.waugh@gmail.com

China’s Nationwide CO2 Emissions Trading System: A General Equilibrium Assessment - Goulder, Lawrence H; Long, Xianling; Qu, Chenfei; Zhang, Da (National Bureau of Economic Research Working Paper Series, 2023)
China’s recently launched CO2 emissions trading system, already the world’s largest, aims to contribute importantly toward global reductions in greenhouse gas emissions. The system, a tradable performance standard (TPS), differs importantly from cap and trade (C&T), the principal emissions trading approach used in other countries. This paper presents the structure and results from a multi-sector, multi-period equilibrium model tailored to evaluate China’s TPS. The model incorporates distinctive features of China’s economy, including state-owned enterprises and electricity market regulation. It distinguishes between the TPS and C&T and considers a wide range of potential future TPS designs. Key findings include the following. The TPS’s environmental benefits exceed its costs by a factor of five when only the climate-related benefits are considered and by a significantly higher factor when health benefits from improved air quality are included. The TPS’s interactions with China’s fiscal system substantially affect its costs relative to those of C&T. Employing a single benchmark (standard) for the electricity sector would lower costs by 34 percent relative to the four-benchmark system that is actually in place but increase the standard deviation of percentage income losses across provinces by more than 60 percent. Introducing an auction as a complementary source of allowance supply can lower economy-wide costs by at least 30 percent.
Author contact info: Lawrence H. Goulder Department of Economics Landau Economics Building 328 Stanford University Stanford, CA 94305 Tel: 650/723-3706 Fax: 650/725-5702 E-Mail: goulder@stanford.edu Xianling Long National School of Development Peking University Beijing, China China E-Mail: xianlinglong@pku.edu.cn Chenfei Qu E-Mail: qcf20@mails.tsinghua.edu.cn Da Zhang E-Mail: zhangda@mail.tsinghua.edu.cn

Using Macro Counterfactuals to Assess Plausibility: An Illustration using the 2001 Rebate MPCs - Orchard, Jacob; Ramey, Valerie A; Wieland, Johannes (National Bureau of Economic Research Working Paper Series, 2023)
Macroeconomics has increasingly adopted tools from the applied micro “credibility revolution” to estimate micro parameters that can inform macro questions. In this paper, we argue that researchers should take advantage of this confluence of micro and macro to take the credibility revolution one step further. We argue that researchers should assess the plausibility of the micro estimates and macro models by constructing macro counterfactuals for historical periods and comparing these counterfactuals with reasonable benchmarks. We illustrate this approach by conducting a case study of the 2001 U.S. tax rebates, as well as briefly summarizing two previous applications of the methodology. In the 2001 rebate case, we calibrate a two-good, two-agent New Keynesian model with the leading estimates of the household marginal propensity to consume (MPC) out of the rebates to construct a counterfactual path for nondurable consumption. The counterfactual path implies that without the tax rebate nondurable consumption spending would have fallen dramatically in the late summer and fall of 2001. Using forecasting regressions and other evidence, we argue that this counterfactual is implausible. When we investigate the source of the discrepancy, we find that the leading MPC estimates are not representative of the response of total consumption.
Author contact info: Jacob Orchard 2001 C St NW, 20006 Federal Reserve Board Washington, DC 20006 USA E-Mail: jake.orchard@frb.gov Valerie A. Ramey Hoover Institution Stanford University 434 Galvez Mall Stanford, CA 94305 Tel: 858/534-2388 Fax: 858/534-7040 E-Mail: vramey@stanford.edu Johannes Wieland Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 510/388-2785 E-Mail: jfwieland@ucsd.edu

When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies - Gudgeon, Matthew; Guzman, Pablo; Schmieder, Johannes F; Trenkle, Simon; Ye, Han (National Bureau of Economic Research Working Paper Series, 2023)
This paper shows empirically that the non-employment effects of unemployment insurance (UI) for older workers depend in a first-order way on the structure of retirement policies. Using German data, we first present reduced-form evidence of these interactions, documenting large bunching in UI inflows at the age that allows workers to claim their pension following UI expiration. We then estimate a dynamic life-cycle model and use it to directly quantify how the effects of UI vary with retirement policies. Accounting for interactions across UI and retirement institutions also helps explain otherwise difficult-to-explain trends in the unemployment rate of older German workers.
Author contact info: Matthew Gudgeon Department of Economics Tufts University 177 College Avenue Medford, MA 02155 United States E-Mail: matthew.gudgeon@tufts.edu Pablo Guzman E-Mail: guzmanpi@amazon.com Johannes F. Schmieder Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/299-9841 Fax: 617/353-4449 E-Mail: johannes@bu.edu Simon Trenkle Institute of Labor Economics (IZA) Schaumburg-Lippe Str. 5-9 53113 Bonn, Germany E-Mail: trenkle@iza.org Han Ye L 7, 3-5 68161 Mannheim Germany E-Mail: han.ye@uni-mannheim.de

The Topography of Nations - Allen, Treb (National Bureau of Economic Research Working Paper Series, 2023)
How does the interplay of geography and political-economic forces affect the shape of nations? This paper presents a quantitative framework for characterizing the equilibrium evolution of national boundaries in a world with a rich geography. The framework delivers simple equilibrium conditions based on the efficient transportation of resources that arise from disparate political economic micro-foundations. I characterize the existence, uniqueness, and efficiency of the equilibrium and provide a simple algorithm for its calculation. When combined with detailed spatial geography data from Europe, the equilibrium conditions well approximate observed borders, and the framework is able to successfully predict the evolution of national boundaries and resulting conflict over the past millennia. Finally, I apply the framework to ask how the changing spatial distribution of resources arising from climate change may alter European borders in the future, finding that the Crimean peninsula and surrounding area is especially susceptible.
Author contact info: Treb Allen Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 E-Mail: treb@dartmouth.edu

Laffer's Day in Court: The Revenue Effects of Criminal Justice Fees and Fines - Norris, Samuel; Rose, Evan K (National Bureau of Economic Research Working Paper Series, 2023)
Many jurisdictions levy sizable fines and fees (legal financial obligations, or LFOs) on criminal defendants. Proponents argue LFOs are a “tax on crime” that funds courts and provides deterrence; opponents argue they do neither. We examine the fiscal implications of lowering LFOs. Incentives to default generate a “Laffer” curve with revenue eventually decreasing in LFOs. Using detailed administrative data, however, we find few defendants demonstrably on the right-hand side of the curve. Those who are tend to be poor, Black, and charged with felonies. As a result, decreasing LFOs for the average defendant would come at substantial cost to governments.
Author contact info: Samuel Norris 6000 Iona Dr Vancouver, BC V6T 1L4 Canada Tel: 6173831323 E-Mail: sbnorris4@gmail.com Evan K. Rose Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: ekrose@uchicago.edu

Racial Disparities in the Income Tax Treatment of Marriage - Holtzblatt, Janet; Joshi, Swati; Cahill, Nora R; Gale, William (National Bureau of Economic Research Working Paper Series, 2023)
Although it is generally blind with respect to race, the federal individual income tax can create racial disparities when factors that affect tax liability are associated with race. We provide new evidence on racial differences in marriage penalties and bonuses in the income tax, using data from eight waves of the Survey of Consumer Finances. Our results support Brown’s (2021) hypothesis that, controlling for income, penalties are more frequent and larger for Black couples than white couples. We link these results to racial differences in relative spousal earnings, the presence of dependents, and the level of income. We show that marriage rates are much higher among white adults than Black adults, which implies that two policy reforms we examine end up benefiting a greater share of white adults than Black adults.
Author contact info: Janet Holtzblatt Urban Institute 500 L'Enfant Plaza SW Washington, DC 20024 E-Mail: jholtzblatt@urban.org Swati Joshi Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Social Science Building Madison, WI 53706-1320 USA E-Mail: joshisswati@gmail.com Nora R. Cahill Harvard Kennedy School 79 John F. Kennedy St Cambridge, MA 02138 E-Mail: nrcahill@gmail.com William Gale Brookings Institution 1775 Massachusetts Avenue, NW Washington, DC 20036 Tel: 202/797-6148 Fax: 202/797-6181 E-Mail: wgale@brookings.edu

The Effects of Mandatory Profit-Sharing on Workers and Firms: Evidence from France - Nimier-David, Elio; Sraer, David; Thesmar, David (National Bureau of Economic Research Working Paper Series, 2023)
Since 1967, all French firms with more than 100 employees are required to share a fraction of their excess-profits with their employees. Through this scheme, firms with excess-profits distribute on average 10.5% of their pre-tax income to workers. In 1990, the eligibility threshold was reduced to 50 employees. We exploit this regulatory change to identify the effects of mandated profit-sharing on firms and their employees. The cost of mandated profit-sharing for firms is evident in the significant bunching at the 100 employee threshold observed prior to the reform, which completely disappears post-reform. Using a difference-in-difference strategy, we find that, at the firm-level, mandated profit-sharing (a) increases labor share by 1.8 percentage points, (b) reduces the profit share by 1.4 percentage points, and (c) does not affect investment nor productivity. At the employee level, mandated profit-sharing increases low-skill workers' total compensation and leaves high-skill workers total compensation unchanged. Overall, mandated profit-sharing redistributes excess-profits to lower-skill workers in the firm, without generating significant distortions or productivity effects.
Author contact info: Elio Nimier-David E-Mail: elio.nimier-david@chicagobooth.edu David Sraer Haas School of Business University of California, Berkeley 545 Student Services Building Berkeley, CA 94720-1900 E-Mail: sraer@berkeley.edu David Thesmar MIT Sloan School of Management 100 Main Street, E62-632 Cambridge, MA 02142 Tel: 617/225-9767 E-Mail: thesmar@mit.edu

An Economic View of Corporate Social Impact - Allcott, Hunt; Montanari, Giovanni; Ozaltun, Bora; Tan, Brandon (National Bureau of Economic Research Working Paper Series, 2023)
The growing discussions of impact investing and stakeholder capitalism have increased interest in measuring companies' social impact. We conceptualize corporate social impact as the welfare loss that would be caused by a firm's exit. To illustrate, we quantify the social impacts of 74 firms in 12 industries using a new survey measuring consumer and worker substitution patterns combined with models of product and labor markets. We find that consumer surplus is the primary component of social impact (dwarfing profits, worker surplus, and externalities), suggesting that consumer impacts deserve more attention from impact investors. Existing ESG and social impact ratings are essentially unrelated to our economically grounded measures.
Author contact info: Hunt Allcott Stanford University Stanford, CA 94305 E-Mail: allcott@stanford.edu Giovanni Montanari E-Mail: gm2536@nyu.edu Bora Ozaltun Department of Agricultural & Resource Economics University of California, Berkeley 207 Giannini Hall Berkeley, CA 94720 USA E-Mail: ozaltun@berkeley.edu Brandon Tan E-Mail: btan2@imf.org

Double and Single Descent in Causal Inference with an Application to High-Dimensional Synthetic Control - Spiess, Jann; Imbens, Guido; Venugopal, Amar (National Bureau of Economic Research Working Paper Series, 2023)
Motivated by a recent literature on the double-descent phenomenon in machine learning, we consider highly over-parameterized models in causal inference, including synthetic control with many control units. In such models, there may be so many free parameters that the model fits the training data perfectly. We first investigate high-dimensional linear regression for imputing wage data and estimating average treatment effects, where we find that models with many more covariates than sample size can outperform simple ones. We then document the performance of high-dimensional synthetic control estimators with many control units. We find that adding control units can help improve imputation performance even beyond the point where the pre-treatment fit is perfect. We provide a unified theoretical perspective on the performance of these high-dimensional models. Specifically, we show that more complex models can be interpreted as model-averaging estimators over simpler ones, which we link to an improvement in average performance. This perspective yields concrete insights into the use of synthetic control when control units are many relative to the number of pre-treatment periods.
Author contact info: Jann Spiess Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 United States Tel: 8572849880 E-Mail: jspiess@stanford.edu Guido Imbens Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: Imbens@stanford.edu Amar Venugopal E-Mail: amarvenu@stanford.edu

Does Paid Sick Leave Facilitate Reproductive Choice? - Maclean, Johanna Catherine; Popovici, Ioana; Ruhm, Christopher J (National Bureau of Economic Research Working Paper Series, 2023)
Unlike most advanced countries, the United States does not have a federal paid sick leave (PSL) policy; however, multiple states have adopted PSL mandates. PSL can facilitate healthcare use among women of child−bearing ages, including use of family planning services. We combine administrative and survey data with difference−in−differences methods to shed light on these possibilities. Our findings indicate that state PSL mandates reduce birth rates, potentially through increased use of contraception services post−mandate. Overall, our findings imply that PSL policies may help women balance family and work responsibilities, and facilitate their reproductive choices.
Author contact info: Johanna Catherine Maclean Schar School of Policy and Government George Mason University Mason Square Van Metre Hall 3351 Fairfax Drive Arlington, VA 22201 E-Mail: jmaclea@gmu.edu Ioana Popovici Department of Sociobehavioral and Administrative Pharmacy Nova Southeastern University 3301 College Avenue Fort Lauderdale, FL 33314-7796 E-Mail: ip153@nova.edu Christopher J. Ruhm Frank Batten School of Leadership and Public Policy University of Virginia 235 McCormick Rd. P.O. Box 400893 Charlottesville, VA 22904-4893 E-Mail: ruhm@virginia.edu

Pension Reform, Incentives to Retire and Retirement Behavior: Empirical Evidence from Swedish Micro-data - Laun, Lisa; Palme, Mårten (National Bureau of Economic Research Working Paper Series, 2023)
This paper investigates to what extent the 1998 reform of Sweden’s public old-age pension system contributed to the increase in extensive margin labor supply among older workers seen in the country in recent decades. We use a large data set containing all males and females born in Sweden between 1927 and 1950 and observe their retirement behavior during 1991–2012. The data show that the reform changed the incentives to remain in the labor force ambiguously: although it induced an income effect towards later retirement through lower replacement levels, it also implied a lower price on leaving the labor market under some assumptions. We use an econometric model in which the economic incentives to stay in the labor market are measured by Social Security Wealth, defined at each hypothetical retirement age, and a variable measuring the implicit tax, imposed by the income security system, on staying in the labor force. The point estimates from our econometric model, which should be interpreted with caution, suggest that at most a small part of the increase in labor force participation of the elderly can be attributed to the pension reform.
Author contact info: Lisa Laun Institute for Evaluation of Labour Market and Education Policy (IFAU) Box 513 SE-751 20 Uppsala Sweden Tel: +46 (0)18 471 60 56 Fax: +46 (0)18 471 70 71 E-Mail: Lisa.Laun@ifau.uu.se Mårten Palme Department of Economics Stockholm University SE-106 91 Stockholm SWEDEN E-Mail: Marten.Palme@ne.su.se

Causal Interpretation of Structural IV Estimands - Andrews, Isaiah; Barahona, Nano; Gentzkow, Matthew; Rambachan, Ashesh; Shapiro, Jesse M (National Bureau of Economic Research Working Paper Series, 2023)
We study the causal interpretation of instrumental variables (IV) estimands of nonlinear, multivariate structural models with respect to rich forms of model misspecification. We focus on guaranteeing that the researcher's estimator is sharp zero consistent, meaning that the researcher concludes that the endogenous variable has no causal effect on the outcome whenever this is actually the case. Sharp zero consistency generally requires the researcher's estimator to satisfy a condition that we call strong exclusion. When a researcher has access to excluded, exogenous variables, strong exclusion can often be achieved by appropriate choice of estimator and instruments. Failure of strong exclusion can lead to large bias in estimates of causal effects in realistic situations. Our results cover many settings of interest including models of differentiated goods demand with endogenous prices and models of production with endogenous inputs.
Author contact info: Isaiah Andrews Department of Economics MIT 50 Memorial Drive, E52-530 Cambridge, MA 02142 E-Mail: iandrews@mit.edu Nano Barahona Department of Economics University of California, Berkeley 519 Evans Hall Berkeley, CA 94720 E-Mail: nanobk@berkeley.edu Matthew Gentzkow Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-3721 Fax: 650/725-5702 E-Mail: gentzkow@stanford.edu Ashesh Rambachan Department of Economics MIT Cambridge, MA E-Mail: asheshr@mit.edu Jesse M. Shapiro Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617-444-9571 E-Mail: jesse_shapiro@fas.harvard.edu

Why is Trade Not Free? A Revealed Preference Approach - Adão, Rodrigo; Costinot, Arnaud; Donaldson, Dave; Sturm, John A (National Bureau of Economic Research Working Paper Series, 2023)
A prominent explanation for why trade is not free is politicians’ desire to protect some of their constituents at the expense of others. In this paper we develop a methodology that can be used to reveal the welfare weights that a nation’s import tariffs implicitly place on different groups of society. Applied in the context of the United States in 2017, this method implies that redistributive trade protection accounts for a significant fraction of US tariff variation and causes large monetary transfers between US individuals, mostly driven by differences in welfare weights across sectors of employment. Perhaps surprisingly, differences in welfare weights across US states play a much smaller role.
Author contact info: Rodrigo Adão Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: rodrigo.adao@chicagobooth.edu Arnaud Costinot Department of Economics, E52-534 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/324-1712 Fax: 617/253-1330 E-Mail: costinot@mit.edu Dave Donaldson Department of Economics, E52-554 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4790 Fax: 617/253-1330 E-Mail: ddonald@mit.edu John S. Becko 33 Lincoln Rd, Apt 4L Brooklyn, New 11225 United States Tel: 16096470720 E-Mail: johnsbecko@gmail.com

Deadwood Labor? The Effects of Eliminating Employment Protection for Older Workers - Saez, Emmanuel; Schoefer, Benjamin; Seim, David G (National Bureau of Economic Research Working Paper Series, 2023)
We study the role of employment protection legislation (EPL) in boosting employment among older workers. We do so by conducting a comprehensive analysis of the sharp and complete elimination of EPL that occurs at age 67 in Sweden, as well as reform-driven shifts in this age cutoff. First, focusing on direct separation effects, we find that 8% of jobs separate in response to the elimination of EPL. Effects stem from jobs with stronger initial EPL (long-tenure, firms subject to “last in, first out” rules), and those in the public sector. Separations appear involuntary to workers, with firms targeting plausibly unproductive workers (sick leave users). Second, we focus on effects on continuing jobs. While wages appear rigid to EPL elimination, we uncover novel, sizable intensive-margin hours reductions among continuing jobs, and an 8% drop in earnings conditional on staying on the job. Third, we estimate total equilibrium effects at the cohort level, where separations fully pass through into employment to population rate effects, with no offsetting effect from hiring. On a per-capita basis, total earnings of older-workers causally drop by 21.5% due to EPL elimination. We validate these local effects by leveraging a reform-driven shift in the age cutoff from 67 to 68. EPL is therefore a potential tool to prop up labor income among older workers, by prolonging the duration of their final job.
Author contact info: Emmanuel Saez Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 Tel: 510/642-4631 Fax: 510/642-6615 E-Mail: saez@econ.berkeley.edu Benjamin Schoefer Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/642-0822 E-Mail: schoefer@berkeley.edu David G. Seim Universitetsvägen 10 A, 106 91 Stockholm Stockholm University E-Mail: david.g.seim@gmail.com

Strategic Inattention, Inflation Dynamics, and the Non-Neutrality of Money - Afrouzi, Hassan (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies how competition affects firms’ expectations in a new dynamic general equilibrium model with rational inattention and oligopolistic competition where firms acquire information about their competitors’ beliefs. In the model, firms with fewer competitors are less attentive to aggregate variables—a novel prediction supported by survey evidence. A calibrated version of the model matches the relationship between firms’ numbers of competitors and their uncertainty about aggregate inflation as a non-targeted moment. A quantitative exercise reveals that firms’ strategic inattention to aggregates significantly amplifies monetary non-neutrality and shifts output response disproportionately towards less competitive oligopolies by distorting relative prices.
Author contact info: Hassan Afrouzi Department of Economics Columbia University 420 W 118th Street New York, NY 10027 E-Mail: ha2475@columbia.edu

“Compensate the Losers?” Economic Policy and Partisan Realignment in the US - Kuziemko, Ilyana; Longuet-Marx, Nicolas; Naidu, Suresh (National Bureau of Economic Research Working Paper Series, 2023)
We argue that the Democratic Party’s evolution on economic policy helps explain partisan realignment by education. We show that less-educated Americans differentially demand “predistribution” policies (e.g., a federal jobs guarantee, higher minimum wages, protectionism, and stronger unions), while more-educated Americans differentially favor redistribution (taxes and transfers). This educational gradient in policy preferences has been largely unchanged since the 1940s. We then show the Democrats’ supply of predistribution has declined since the 1970s. We tie this decline to the rise of a self-described “New Democrat” party faction who court more educated voters and are explicitly skeptical of predistribution. Consistent with this faction’s growing influence, we document the significant growth of donations from highly educated donors, especially from out-of-district donors, who play an increasingly important role in Democratic (especially “New Democrat”) primary campaigns relative to Republican primaries. In response to these within-party changes in power, less-educated Americans began to leave the Democratic Party in the 1970s, after decades of serving as the party’s base. Roughly half of the total shift can be explained by their changing views of the parties’ economic policies. We also show that in the crucial transition period of the 1970s and 1980s, New Democrat-aligned candidates draw disproportionately from more-educated voters in both survey questions and actual Congressional elections.
Author contact info: Ilyana Kuziemko Department of Economics Princeton University 239 J.R. Rabinowitz Building Princeton, NJ 08544 E-Mail: kuziemko@princeton.edu Nicolas Longuet-Marx Columbia University School of International and Public Affairs 420 West 118th Street New York, NY 10027 E-Mail: nkd2120@columbia.edu Suresh Naidu Columbia University 420 West 118th Street New York, NY 10027 Tel: 212/854-3213 E-Mail: sn2430@columbia.edu

Informal Fiscal Systems in Developing Countries - Aman-Rana, Shan; Minaudier, Clement; Sukhtankar, Sandip (National Bureau of Economic Research Working Paper Series, 2023)
Governments in developing countries have low fiscal capacity yet face pressures to provide public goods and services, leading them to rely on various unusual fiscal arrangements. We document one such - hitherto unexplored - arrangement: informal fiscal systems that rely on local bureaucrats to fund the delivery of public goods and services. Using survey data and government accounts from Pakistan, we show that public officials are expected to cover funding gaps in public services and they do so, at least partially, through extracted bribes. We propose a model of bureaucratic agency to explore when governments benefit from sustaining such systems and investigate welfare implications. Informal fiscal systems are more likely to arise when monitoring corruption is difficult relative to monitoring the provision of public services, and politically-important groups of citizens do not bear the full cost of corruption. The existence of such systems can distort the effective incidence of the tax burden, reduce the incentives of government to fight corruption, and legitimize bribe-taking.
Author contact info: Shan Aman-Rana Department of Economics University of Virginia 248 McCormick Rd Charlottesville, VA 22904-4182 Tel: 4349243177 E-Mail: sa8ey@virginia.edu Clement Minaudier E-Mail: clement.minaudier@city.ac.uk Sandip Sukhtankar Department of Economics University of Virginia Charlottesville, VA 22904 E-Mail: srs8yk@virginia.edu

Household Carbon Dioxide Emissions Engel Curve Dynamics - Huang, Robert; Kahn, Matthew E (National Bureau of Economic Research Working Paper Series, 2023)
Household carbon dioxide emissions have been an increasing function of income and distance from the city. Richer suburbanites drive more and consume more electricity and natural gas at home. In recent years, richer people in California have been more likely to buy electric vehicles and to install solar panels in their homes. The electricity grid has become less carbon intensive over time. Using several California datasets, we document that these ongoing shifts in consumer behavior have flattened household transportation carbon dioxide Engel curves over the years 2018 to 2022. While household electricity emissions as a function of income have flattened, the natural gas Engel curves have not. We explore the political economy implications of the ongoing decarbonization of the private vehicle fleet. Based on voting data from California, we document that communities tend to support higher fuel taxes when their vehicle fleet is more fuel efficient.
Author contact info: Robert Huang Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: huangrob@usc.edu Matthew E. Kahn Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: kahnme@usc.edu

Divestment and Engagement: The Effect of Green Investors on Corporate Carbon Emissions - Kahn, Matthew E; Matsusaka, John; Shu, Chong (National Bureau of Economic Research Working Paper Series, 2023)
This paper investigates if green investors can influence corporate greenhouse gas emissions through capital markets, and if so, whether they have a bigger effect by divesting their stock and limiting polluters’ access to capital, or by acquiring polluters’ stock and engaging with management. We focus on public pension funds, classifying them as green or nongreen based on which political party controlled the fund. To isolate the causal effects of green ownership, we use exogenous variation caused by state-level politics that shifted control of the funds, and portfolio rebalancing in response to returns on non-equity investment. Our main finding is that companies reduced their greenhouse gas emissions when stock ownership by green funds increased and did not alter their emissions when ownership by nongreen funds changed. Other evidence based on activist funds, voting, and shareholder proposals suggests that ownership mattered because of active engagement by green investors and not simply because management adapted proactively to changing shareholder preferences. We do not find that companies with green investors were more likely to sell off their high-emission facilities (greenwashing). Overall, our findings suggest that (a) corporate managers respond to the environmental preferences of their investors; (b) divestment of polluting companies may lead to greater emissions; and (c) private markets may be able to address environmental challenges independent of government regulation.
Author contact info: Matthew E. Kahn Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: kahnme@usc.edu John Matsusaka University of Southern California Marshall School of Business 3670 Trousdale Pkwy Los Angeles, CA 90089 E-Mail: matsusak@usc.edu Chong Shu Spencer Fox Eccles Business Building Salt Lake City, UT 84112 United States Tel: 2132589705 E-Mail: chong.shu@eccles.utah.edu