Women's Empowerment and the Intrinsic Demand for Agency: Experimental Evidence from Nigeria - Bakhtiar, M. Mehrab; Fafchamps, Marcel; Goldstein, Markus; Leonard, Kenneth L; Papineni, Sreelakshmi (National Bureau of Economic Research Working Paper Series, 2022)
Most studies of intrahousehold resource allocation examine outcomes and do not consider the decision-making process by which those outcomes are achieved. We conduct an original lab-in-the-field experiment on the decision-making process of married couples over the allocation of rival and non-rival household goods. The experiment measures individual preferences over allocations and traces the process of consultation, communication, deferral, and accommodation by which couples implement these preferences. We find few differences in individual preferences over allocations of goods. However, wives and husbands have strong preferences over process: women prefer to defer budget allocation decisions to their husband even when deferral is costly and is not observed by the husband; the reverse is true for men. Our study follows a randomized controlled trial that ended a year earlier and gave large cash transfers over fifteen months to half of the women in the study. We estimate the effect of treatment on the demand for agency among women and find that the receipt of cash transfers does not change women's bargaining process except in a secret condition when the decision to defer is shrouded from her husband: only in that case does the cash transfer increase women's expressed demand for agency.
Author contact info: M. Mehrab Bakhtiar International Food Policy Research Institute House 10A, Road 35, Gulshan 2, Dhaka Bangladesh E-Mail: m.bakhtiar@cgiar.org Marcel Fafchamps Freeman Spogli Institute Stanford University 616 Jane Stanford Way Stanford, CA 94305 Tel: 650/497-4602 E-Mail: fafchamp@stanford.edu Markus Goldstein E-Mail: markusgold@gmail.com Kenneth Leonard Department of Agriculture and Resource Economics 2200 Symons Hall University of Maryland College Park, MD 20742 Tel: (301) 405 8589 E-Mail: kleonard@arec.umd.edu Sreelakshmi Papineni The World Bank 1818 H Street, NW Washington, DC 20433 E-Mail: spapineni@worldbank.org

Economies of Density and Congestion in the Sharing Economy - Caunedo, Julieta; Kala, Namrata; Zhang, Haimeng (National Bureau of Economic Research Working Paper Series, 2022)
The sharing economy for a wide range of goods and services is expanding across the world. To direct the benefits from sharing capital services towards small-scale producers, governments in the developing world are increasingly intervening in fast-growing mechanization rental markets. However, the distributional and efficiency effects of these interventions are not well understood. Using a novel framework and newly collected data, we study an intervention in farm equipment rentals in India. We document large dispersion in rental rates, unused service capacity and delays in service provision. We then evaluate the impact of an increase in subsidized equipment supply in a calibrated model of frictional rental markets, optimal queueing and service dispatch. The constrained efficient allocation prioritizes largescale producers because they economize on equipment travel cost; but small-scale producers are also valuable because they maximize machine-capacity utilization by increasing demand density. Through counterfactuals, we show that even when providers prioritize large-scale farmers, service finding rates for small-scale producers may exceed those of large-scale producers. The ability of additional supply to reach small-scale producers depends on the joint spatial and size distribution of demand, a novel rationale for the heterogeneous impact of subsidies to capital documented in the literature.
Author contact info: Julieta Caunedo 452 Uris Hall Cornell University Ithaca, NY 14853 E-Mail: jdc364@cornell.edu Namrata Kala MIT Sloan School of Management 100 Main Street, E62-517 Cambridge, MA 02142 Tel: 203/500-4675 E-Mail: kala@mit.edu Haimeng Zhang E-Mail: hzhang@iese.edu

Central Banks as Dollar Lenders of Last Resort: Implications for Regulation and Reserve Holdings - Das, Mitali; Gopinath, Gita; Kim, Taehoon; Stein, Jeremy C (National Bureau of Economic Research Working Paper Series, 2022)
This paper explores how non-U.S. central banks behave when firms in their economies engage in currency mismatch, borrowing more heavily in dollars than justified by their operating exposures. We begin by documenting that, in a panel of 53 countries, central bank holdings of dollar reserves are significantly correlated with the dollar-denominated bank borrowing of their non-financial corporate sectors, controlling for a number of known covariates of reserve accumulation. We then build a model in which the central bank can deal with private-sector mismatch, and the associated risk of a domestic financial crisis, in two ways: (i) by imposing ex ante financial regulations such as bank capital requirements; or (ii) by building a stockpile of dollar reserves that allow it to serve as an ex post dollar lender of last resort. The model highlights a novel externality: individual central banks may tend to over-accumulate dollar reserves, relative to what a global planner would choose. This is because individual central banks do not internalize that their hoarding of reserves exacerbates a global scarcity of dollar-denominated safe assets, which lowers dollar interest rates and encourages firms to increase the currency mismatch of their liabilities. Relative to the decentralized outcome, a global planner may prefer stricter financial regulation (e.g., higher bank capital requirements) and reduced holdings of dollar reserves.
Author contact info: Mitali Das International Monetary Fund 700 19th Street NW Washington, DC 20431 E-Mail: mdas@imf.org Gita Gopinath International Monetary Fund 700 19th St. NW Washington, DC 20431 Tel: 617/495-8161 Fax: 617/495-7730 E-Mail: ggopinath@imf.org Taehoon Kim International Monetary Fund 700 19th St. NW Washington, DC 20431 E-Mail: tkim@imf.org Jeremy C. Stein Department of Economics Harvard University Littauer 219 Cambridge, MA 02138 Tel: 617/496-6455 E-Mail: jeremy_stein@harvard.edu

Nothing Propinks Like Propinquity: Using Machine Learning to Estimate the Effects of Spatial Proximity in the Major League Baseball Draft - Ahmadi, Majid; Durst, Nathan; Lachman, Jeff; List, John A; List, Mason; List, Noah; Vayalinkal, Atom T (National Bureau of Economic Research Working Paper Series, 2022)
Recent models and empirical work on network formation emphasize the importance of propinquity in producing strong interpersonal connections. Yet, one might wonder how deep such insights run, as thus far empirical results rely on survey and lab-based evidence. In this study, we examine propinquity in a high-stakes setting of talent allocation: the Major League Baseball (MLB) Draft from 2000-2019 (30,000 players were drafted from a player pool of more than a million potential draftees). Our findings can be summarized in four parts. First, propinquity is alive and well in our setting, and spans even the latter years of our sample, when higher-level statistical exercises have become the norm rather than the exception. Second, the measured effect size is consequential, as MLB clubs pay a significant opportunity cost in terms of inferior talent acquired due to propinquity bias: for example, their draft picks are 38% less likely to ever play a MLB game relative to players drafted without propinquity bias. Third, those players who benefit from propinquity bias fare better both in terms of the timing of their draft picks and their initial financial contract, conditional on draft order. Finally, the effect is found to be the most pronounced in later rounds of the draft, where the Scouting Director has the greatest latitude.
Author contact info: Majid Ahmadi University of Chicago E-Mail: mahmadi@uchicago.edu Nathan Durst E-Mail: n_durst@msn.com Jeff Lachman E-Mail: jeffrey.lachman@gmail.com John A. List Department of Economics University of Chicago 1126 East 59th Chicago, IL 60637 Tel: 301/405-1288 Fax: 301/314-9091 E-Mail: jlist@uchicago.edu Mason List E-Mail: mlist@ucls.uchicago.edu Noah List E-Mail: nlist@college.harvard.edu Atom Vayalinkal University of Toronto Max Gluskin House 150 St. George Street Toronto, ON M5R 2T7 Canada E-Mail: atom.vayalinkal@mail.utoronto.ca

Common Ownership, Competition, and Top Management Incentives - Anton, Miguel; Ederer, Florian; Gine, Mireia; Schmalz, Martin C (National Bureau of Economic Research Working Paper Series, 2022)
We present a mechanism based on managerial incentives through which common ownership affects product market outcomes. Firm-level variation in common ownership causes variation in managerial incentives and productivity across firms, which leads to intra-industry and intra-firm cross-market variation in prices, output, markups, and market shares that is consistent with empirical evidence. The organizational structure of multiproduct firms and the passivity of common owners determine whether higher prices under common ownership result from higher costs or from higher markups. Using panel regressions and a difference-in-differences design we document that managerial incentives are less performance-sensitive in firms with more common ownership.
Author contact info: Miguel Antón IESE Business School Av. Pearson 21 Barcelona 08034 Tel: +34633432181 E-Mail: manton@iese.edu Florian Ederer Questrom School of Business Boston University 595 Commonwealth Avenie Boston, MA 02215 E-Mail: florian.ederer@gmail.com Mireia Giné IESE Business School Av. Pearson 21 Barcelona 08034 E-Mail: mgine@iese.edu Martin C. Schmalz University of Oxford Park End Street Oxford United Kingdom E-Mail: Martin.C.Schmalz@gmail.com

Theory for Extending Single-Product Production Function Estimation to Multi-Product Settings - Dhyne, Emmanuel; Petrin, Amil; Smeets, Valerie; Warzynski, Frederic (National Bureau of Economic Research Working Paper Series, 2022)
We introduce a new methodology for estimating multi-product production functions. It embeds the seminal contributions of Diewert (1973) and Lau (1976) in our extended version of the semi-parametric econometric framework of Olley and Pakes (1996), where we address the simultaneity of inputs and outputs by allowing for the possibility of a possible vector of unobserved ”productivities,” all of which may be freely correlated with inputs and outputs. We show how to use the multi-product production function to recover estimates of firm-product marginal costs using the input and output elasticities by extending Hall’s (1988) single-product result to our multi-product setting using McFadden (1978). We focus on six 6-digit Belgian ”industries” that produce two products, finding all but five of the forty-eight input coefficients are positive and thirty eight are strongly significant. We find outputs are substitutes as the coefficients on ”other good output” is always negative and highly significant. 100% of marginal cost estimates are positive and close to 80% of markups are estimated to be greater than 1. We find very similar results when we move to 4-digit industries, when we use similar multi-product data from France, and when we use the trans-log approximation.
Author contact info: Emmanuel Dhyne National Bank of Belgium Boulevard de Berlaimont, 14 1000 Brussels Belgium E-Mail: emmanuel.dhyne@nbb.be Amil Petrin Department of Economics University of Minnesota 4-101 Hanson Hall Minneapolis, MN 55455 Tel: 612/625-0145 Fax: 612/624-0209 E-Mail: petrin@umn.edu Valerie Smeets Aarhus University Hermodsvej 22 8230 Århus Denmark Tel: +45 89 48 64 21 E-Mail: vas@asb.dk Frederic Warzynski Aarhus University E-Mail: fwa@asb.dk

Crypto Wash Trading - Cong, Lin William; Li, Xi; Tang, Ke; Yang, (National Bureau of Economic Research Working Paper Series, 2022)
We introduce systematic tests exploiting robust statistical and behavioral patterns in trading to detect fake transactions on 29 cryptocurrency exchanges. Regulated exchanges feature patterns consistently observed in financial markets and nature; abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume. We further document how these fabricated volumes (trillions of dollars annually) improve exchange ranking, temporarily distort prices, and relate to exchange characteristics (e.g., age and userbase), market conditions, and regulation.
Author contact info: Lin William Cong SC Johnson College of Business Cornell University Sage Hall Ithaca, NY 14853 Tel: 607/255-7859 E-Mail: will.cong@cornell.edu Xi Li 5 Barrack Rd, Newcastle upon Tyne NE1 4SE united kingdom E-Mail: xi.li@newcastle.ac.uk Ke Tang Tsinghua University Beijing China E-Mail: ketang@tsinghua.edu.cn Yang Yang Tsinghua University Beijing China E-Mail: bbhgchina@gmail.com

Methods for Measuring School Effectiveness - Angrist, Joshua; Hull, Peter; Walters, Christopher R (National Bureau of Economic Research Working Paper Series, 2022)
Many personal and policy decisions turn on perceptions of school effectiveness, defined here as the causal effect of attendance at a particular school or set of schools on student test scores and other outcomes. Widely-disseminated school ratings frameworks compare average student achievement across schools, but uncontrolled differences in means may owe more to selection bias than to causal effects. Such selection problems have motivated a wave of econometric innovation that uses elements of random and quasi-experimental variation to measure school effectiveness. This chapter reviews these empirical strategies, highlighting solved problems and open questions. Empirical examples are used throughout.
Author contact info: Joshua Angrist Department of Economics, E52-436 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8909 Fax: 617/253-1330 E-Mail: angrist@mit.edu Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu Christopher R. Walters Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/643-8596 E-Mail: crwalters@econ.berkeley.edu

Health Care Spending Growth Has Slowed: Will the Bend in the Curve Continue? - Smith, Sheila D; Newhouse, Joseph P; Cuckler, Gigi A (National Bureau of Economic Research Working Paper Series, 2022)
Over 2009-2019 the seemingly inexorable rise in health care’s share of GDP markedly slowed, both in the US and elsewhere. To address whether this slowdown represents a reduced steady-state growth rate or just a temporary pause we specify and estimate a decomposition of health care spending growth. The post-2009 slowdown was importantly influenced by four factors. Population aging increased health care’s share of GDP, but three other factors more than offset the effect of aging: a temporary income effect stemming from the Great Recession; slowing relative medical price inflation; and a possibly longer lasting slowdown in the nature of technological change to increase the rate of cost-saving innovation. Looking forward, the post-2009 moderation in the role of technological change as a driver of growth, if sustained, implies a reduction of 0.8 percentage points in health care spending growth; a sizeable decline in the context of the 2.0 percentage point differential in growth between health care spending and GDP in the 1970 to 2019 period.
Author contact info: Sheila D. Smith 7500 Security Boulevard Baltimore, MD 21244 United States E-Mail: Sheila.Smith@cms.hhs.gov Joseph P. Newhouse Division of Health Policy Research and Education Harvard University 180 Longwood Avenue Boston, MA 02115-5899 Tel: 617/432-1325 Fax: 617/432-3503 E-Mail: newhouse@hcp.med.harvard.edu Gigi A. Cuckler 7500 Security Boulevard 21244 Baltimore, MD 21244 United States E-Mail: Gigi.Cuckler@cms.hhs.gov

Do Ordeals Work for Selection Markets? Evidence from Health Insurance Auto-Enrollment - Shepard, Mark; Wagner, Myles (National Bureau of Economic Research Working Paper Series, 2022)
Are application hassles, or “ordeals,” an effective way to limit public program enrollment? We provide new evidence by studying (removal of) an auto-enrollment policy for health insurance, adding an extra step to enroll. This minor ordeal has a major impact, reducing enrollment by 33% and differentially excluding young, healthy, and economically disadvantaged people. Using a simple model, we show that adverse selection – a classic feature of insurance markets – undermines ordeals’ standard rationale of excluding low-value individuals, since they are also low-cost and may not be inefficient. Our analysis illustrates why ordeals targeting is unlikely to work well in selection markets.
Author contact info: Mark Shepard Harvard Kennedy School Mailbox 114 79 JFK Street Cambridge, MA 02138 Tel: 617/496-5062 E-Mail: mark_shepard@hks.harvard.edu Myles Wagner 180A Longwood Ave Boston 02115 E-Mail: mylwagner@gmail.com

Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China - Fang, Hanming; Li, Ming; Wu, Zenan (National Bureau of Economic Research Working Paper Series, 2022)
We argue that inter-jurisdictional competition in a regionally decentralized authoritarian regime distorts local politicians’ incentives in resource allocation among firms from their own city and a competing city. We develop a tournament model of project selection that captures the driving forces of local protectionism. The model robustly predicts that the joint presence of regional spillover and the incentive for political competition leads to biased resource allocations against the competing regions. Combining several unique data sets, we test our model predictions in the context of government procurement allocation and firms' equity investment across Chinese cities. We find that, first, when local politicians are in more intensive political competition, they allocate less government procurement contracts to firms in the competing city; second, local firms, especially local SOEs, internalize the local politicians’ career concerns and invest less in the competing cities. Our paper provides a political economy explanation for inefficient local protectionism in an autocracy incentivized by tournament-style political competition.
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 Ming Li School of Management and Economics Chinese University of Hong Kong, Shenzhen Longxiang Avenue 2001 Shenzhen, Guangdong China E-Mail: liming2020@cuhk.edu.cn Zenan Wu School of Economics Peking University Beijing, China E-Mail: zenan@pku.edu.cn

The Economics of the Public Option: Evidence from Local Pharmaceutical Markets - Atal, Juan Pablo; Cuesta, José Ignacio; González, Felipe; Otero, Cristóbal (National Bureau of Economic Research Working Paper Series, 2022)
We study the effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile. Public pharmacies sell the same drugs at a third of private pharmacy prices, because of stronger upstream bargaining and market power in the private sector, but are of lower quality. Public pharmacies induced market segmentation and price increases in the private sector, which benefited the switchers to the public option but harmed the stayers. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.5 percent.
Author contact info: Juan Pablo Atal University of Pennsylvania Department of Economics The Ronald O. Perelman Center for Political Science and Economics 133 South 36th Street Suite 150 Philadelphia, PA 19104 E-Mail: ataljp@econ.upenn.edu José Ignacio Cuesta Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305 Tel: 312/493-4083 E-Mail: jicuesta@stanford.edu Felipe González Queen Mary University of London School of Economics and Finance Mile End Road London E1 4NS United Kingdom E-Mail: fagonza4@gmail.com Cristobal Otero 665 W 130 St Kravis Hall Office 593 New York, NY 10027 United States E-Mail: c.otero@columbia.edu

Identification and Estimation of Discrete Choice Demand Models when Observed and Unobserved Characteristics are Correlated - Petrin, Amil; Ponder, Mark; Seo, Boyoung (National Bureau of Economic Research Working Paper Series, 2022)
The standard Berry, Levinsohn, and Pakes (1995) (BLP) approach to estimation of demand and supply parameters assumes that the product characteristic observed by consumers and producers but not the researcher is conditionally mean independent of observed characteristics. We extend BLP to allow all product characteristics to be endogenous, so the unobserved characteristic can be correlated with the observed characteristics. We derive moment conditions based on the assumption that firms choose product characteristics to maximize expected profits given their beliefs at that time about market conditions and that the “mistake” in the amount of the characteristic that is revealed once all products are on the market is conditionally mean independent of the firm’s information set. Using the original BLP dataset we find that observed and unobserved product characteristics are highly positively correlated, biasing demand elasticities upward, as average estimated price elasticities double in absolute value and average markups fall by 50%.
Author contact info: Amil Petrin Department of Economics University of Minnesota 4-101 Hanson Hall Minneapolis, MN 55455 Tel: 612/625-0145 Fax: 612/624-0209 E-Mail: petrin@umn.edu Mark Ponder NERA Economic Consulting 360 Hamilton Ave White Plains, NY 10601 E-Mail: mark.ponder@nera.com Boyoung Seo Kelley School of Business Bloomington, Indi E-Mail: seob@indiana.edu

Refining Public Policies with Machine Learning: The Case of Tax Auditing - Battaglini, Marco; Guiso, Luigi; Lacava, Chiara; Miller, Douglas L; Patacchini, Eleonora (National Bureau of Economic Research Working Paper Series, 2022)
We study the extent to which ML techniques can be used to improve tax auditing efficiency using administrative data, without the need of randomized audits. Using Italy's population data on sole proprietorship tax returns, audits and their outcome, we develop a new approach to address the so called selective labels problem - the fact that a ML algorithm must necessarily be trained on endogenously selected data. We document the existence of substantial margins for raising revenue from audits by improving the selection of taxpayers to audit with ML. Replacing the 10% least productive audits with an equal number of taxpayers selected by our trained algorithm raises detected tax evasion by as much as 38%, and evasion that is actually payed back by 29%.
Author contact info: Marco Battaglini Department of Economics Uris Hall Cornell University Ithaca, NY 14850 Tel: 607-255-3052 E-Mail: battaglini@cornell.edu Luigi Guiso Axa Professor of Household Finance Einaudi Institute for Economics and Finance Via Sallustiana 62 - 00187 Rome, Italy Fax: 39 06 4792 4858 E-Mail: luigi.guiso55@gmail.com Chiara Lacava Goethe University Frankfurt House of Finance Theodor-W.-Adorno-Platz 3 Frankfurt am Main, HE 60320 Germany E-Mail: lacava@econ.uni-frankfurt.de Douglas L. Miller Department of Policy Analysis and Management MVR Hall Cornell University Ithaca, NY 14853 E-Mail: dlm336@cornell.edu Eleonora Patacchini Department of Economics Cornell University 430 Uris Hall Ithaca, NY 14853 E-Mail: ep454@cornell.edu

Lasting Scars: The Impact of Depression in Early Adulthood on Subsequent Labor Market Outcomes - Wang, Buyi; Frank, Richard G; Glied, Sherry A (National Bureau of Economic Research Working Paper Series, 2022)
A growing body of evidence indicates that poor health early in life can leave lasting scars on adult health and economic outcomes. While much of this literature focuses on childhood experiences, mechanisms generating these lasting effects – recurrence of illness and interruption of human capital accumulation – are not limited to childhood. In this study, we examine how an episode of depression experienced in early adulthood affects subsequent labor market outcomes. We find that, at age 50, people who had met diagnostic criteria for depression when surveyed at ages 27-35 earn 10% lower hourly wages (conditional on occupation) and work 120-180 fewer hours annually, together generating 24% lower annual wage incomes. A portion of this income penalty (21-39%) occurs because depression is often a chronic condition, recurring later in life. But a substantial share (25-55%) occurs because depression in early adulthood disrupts human capital accumulation, by reducing work experience and by influencing selection into occupations with skill distributions that offer lower potential for wage growth. These lingering effects of early depression reinforce the importance of early and multifaceted intervention to address depression and its follow-on effects in the workplace.
Author contact info: Buyi Wang Columbia University E-Mail: bw2733@columbia.edu Richard G. Frank The Brookings Institution 1775 Massachusetts Avenue NW Washington, DC 20036 E-Mail: RFrank@brookings.edu Sherry A. Glied Robert F. Wagner Graduate School of Public Service New York University 295 Lafayette Street, 2nd Floor New York, NY 10012 Tel: 212-998-7527 Fax: 212-995-4161 E-Mail: sherry.glied@nyu.edu

Search Frictions and Product Design in the Municipal Bond Market - Brancaccio, Giulia; Kang, Karam (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows that product design shapes search frictions and that intermediaries leverage this channel to increase their rents in the context of the U.S. municipal bond market. The majority of bonds are designed via negotiations between a local government and its underwriter. They are then traded in a decentralized market, where the underwriter often also acts as an intermediary. Exploiting variations in state regulations that limit government officials’ conflicts of interest, we provide evidence that bond design from the government’s perspective involves a trade-off between flexibility and liquidity, but the underwriter benefits from designing and trading complex bonds. Motivated by these findings, we build and estimate a model of bond origination and trades to quantify market inefficiency driven by underwriters’ role in intermediating trades and discuss policy implications.
Author contact info: Giulia Brancaccio New York University Kaufman Management Center 44 West 4th Street New York, NY 10012 E-Mail: giulia.brancaccio@nyu.edu Karam Kang Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 E-Mail: karam.kang@wisc.edu

Heterogeneous Downward Nominal Wage Rigidity: Foundations of a Nonlinear Phillips Curve - Schmitt-Grohé, Stephanie; Uribe, Martín (National Bureau of Economic Research Working Paper Series, 2022)
We propose a model with heterogeneous downward nominal wage rigidity for individual labor varieties. The model delivers a nonlinear wage Phillips curve linking current wage inflation with current unemployment that is relatively steep at high levels of inflation and flat at low levels of inflation. The predicted nonlinear Phillips curve matches well the pattern of wage inflation and unemployment observed in the United States over the past 40 years. In particular, it accounts for the resilience of the labor market in the tightening cycle following the Covid-19 inflation spike and for the missing inflation in the recovery from the 2008 great contraction. Finally, although the model features occasionally binding constraints for individual labor types, there are no such constraints in the aggregate, making the model amenable to perturbation analysis.
Author contact info: Stephanie Schmitt-Grohé Department of Economics Columbia University 420 West 118th Street, MC 3308 New York, NY 10027 Tel: 212/854-8059 Fax: 212/854-4010 E-Mail: stephanie.schmittgrohe@columbia.edu Martín Uribe Department of Economics Columbia University International Affairs Building New York, NY 10027 Tel: 212 851 4008 Fax: 212 854 8059 E-Mail: martin.uribe@columbia.edu

An Approach to Testing Reference Points - Rees-Jones, Alex; Wang, Ao (National Bureau of Economic Research Working Paper Series, 2022)
We present a general approach to experimentally testing candidate reference points. This approach builds from Prospect Theory’s prediction that an increase in payoffs is perfectly offset by an equivalent increase in the reference point. Violation of this prediction can be tested with modifications to existing econometric techniques in experiments of a particular design. The resulting approach to testing theories of the reference point is minimally parametric, robust to broad classes of heterogeneity, yet still implementable in comparatively small sample sizes. We demonstrate the application of this approach in an experiment that tests the role of salience in setting reference points.
Author contact info: Alex Rees-Jones University of Pennsylvania The Wharton School Department of Business Economics and Public Policy 3733 Spruce Street Philadelphia, PA 19104-6372 E-Mail: alre@wharton.upenn.edu Ao Wang Department of Economics Faculty of Arts and Social Sciences National University of Singapore AS2 #06-02, 1 Arts Link Singapore 117570 Singapore E-Mail: ao.wang@nus.edu.sg

Who Stands on the Shoulders of Chinese (Scientific) Giants? Evidence from Chemistry - Qiu, Shumin; Steinwender, Claudia; Azoulay, Pierre (National Bureau of Economic Research Working Paper Series, 2022)
In recent decades, Chinese researchers have become preeminent contributors to the scientific enterprise, as reflected by the number of publications originating from Chinese research institutions. China’s rise in science has the potential to push forward the global frontier, but mere production of knowledge does not guarantee that others are able to build on it. We ask whether chemistry research originating from China offers broad shoulders for follow-on scientists to stand on. In the raw publication and citation data, Chinese-authored articles receive only half the citations from the US compared to articles from other countries. We show that even after carefully controlling for the quality of Chinese research, Chinese PIs’ articles receive on average 28% fewer citations from US researchers. Our results point to the existence of frictions in the dissemination of Chinese research across borders, even in a domain where Chinese scientists have long excelled. These frictions do not reflect lower actual (or even perceived) quality of Chinese research, and do not appear to be motivated by animus against Chinese researchers. Only Chinese researchers with unusually deep networks in the US can overcome, at least in part, the citation discount.
Author contact info: Shumin Qiu East China University of Science and Technology School of Business Shanghai 200237 China E-Mail: qiushm@ecust.edu.cn Claudia Steinwender Ludwig Maximilian University of Munich Department of Economics Ludwigstr. 28 (Vgb.) Munich D-80539 Germany E-Mail: claudia.steinwender@econ.lmu.de Pierre Azoulay MIT Sloan School of Management 100 Main Street, E62-487 Cambridge, MA 02142 Tel: 617/258-9766 Fax: 617/253-2660 E-Mail: pazoulay@mit.edu

Corporate Social Responsibility - Hong, Harrison; Shore, Edward P (National Bureau of Economic Research Working Paper Series, 2022)
Is shareholder interest in corporate social responsibility driven by pecuniary motives (abnormal rates of return) or non-pecuniary ones (willingness to sacrifice returns to address various firm externalities)? To answer this question, we categorize the literature into seven tests: (1) costs of capital, (2) performance of portfolios, (3) ownership by types of institutions, (4) surveys and experiments, (5) managerial motives, (6) shareholder proposals, and (7) firm inclusion in responsibility indices. These tests and the most recent proposals data predominantly indicate that shareholders are driven by non-pecuniary motives. To stimulate further research on welfare implications for global warming, we assess whether estimates of the returns shareholders are willing to sacrifice (or, ‘greeniums’), along with the increasing amounts of assets pledged to firms that become sustainable, are consistent with the growth of aggregate investments in the decarbonization sector.
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 Edward P. Shore Department of Economics Columbia University 420 West 118th Street New York, NY 10025 USA E-Mail: eps2148@columbia.edu

ACA Medicaid Expansions and Maternal Morbidity - Chatterji, Pinka; Glenn, Hanna; Markowitz, Sara; Montez, Jennifer Karas (National Bureau of Economic Research Working Paper Series, 2022)
In this paper, we test whether the Affordable Care Act Medicaid expansions are associated with in-hospital maternal morbidity. The ACA expansions may have affected maternal morbidity by increasing pre-conception access to health care, and by improving the quality of delivery care through enhancing hospitals’ financial positions. We use difference-in-difference models in conjunction with event studies. Data come from individual-level birth certificates and state-level hospital discharge data. The results show little evidence that the expansions are associated with overall maternal morbidity or indicators of specific adverse events including eclampsia, ruptured uterus, and unplanned hysterectomy. The results are consistent with prior research showing that the ACA Medicaid expansions are not statistically associated with pre-pregnancy health or maternal health during pregnancy. Our results add to this story and find little evidence of improvements in maternal health upon delivery.
Author contact info: Pinka Chatterji State University of New York at Albany Economics Department 1400 Washington Avenue Albany, NY 12222 Tel: 518/442-4746 E-Mail: pchatterji@albany.edu Hanna Glenn Department of Economics Emory University Rich Memorial Building 1602 Fishburne Dr. Atlanta, GA 30322 E-Mail: hanna.lynn.kagele@emory.edu Sara Markowitz Department of Economics Emory University Rich Memorial Building 1602 Fishburne Dr. Atlanta, GA 30322 Tel: (404) 712-8167 E-Mail: sara.markowitz@emory.edu Jennifer Karas Montez Department of Sociology Maxwell School of Citizenship & Public Affairs Syracuse University Syracuse, NY 13244 E-Mail: jmontez@syr.edu

U.S. School Finance: Resources and Outcomes - Handel, Danielle V; Hanushek, Eric A (National Bureau of Economic Research Working Paper Series, 2022)
The impact of school resources on student outcomes was first raised in the 1960s and has been controversial since then. This issue enters into the decision making on school finance in both legislatures and the courts. The historical research found little consistent or systematic relationship of spending and achievement, but this research frequently suffers from significant concerns about the underlying estimation strategies. More recent work has re-opened the fundamental resource-achievement relationship with more compelling analyses that offer stronger identification of resource impacts. A thorough review of existing studies, however, leads to conclusions similar to those in the historical work: how resources are used is key to the outcomes. At the same time, the research has not been successful at identifying mechanisms underlying successful use of resources or for ascertaining when added school investments are likely to be well-used. Direct investigations of alternative input policies (capital spending, reducing class size, and salary incentives for teachers) do not provide clear support for such specific policy initiatives in the United States.
Author contact info: Danielle V. Handel SIEPR Stanford University Stanford, CA 94305 E-Mail: dvhandel@stanford.edu Eric A. Hanushek Hoover Institution Stanford University Stanford, CA 94305-6010 Tel: 650/736-0942 Fax: 650/723-1687 E-Mail: hanushek@stanford.edu

Detecting Fraud in Development Aid - Ensminger, Jean; Leder-Luis, Jetson (National Bureau of Economic Research Working Paper Series, 2022)
When organizations have limited accountability, antifraud measures, including auditing, often face barriers due to institutional resistance and practical difficulties on the ground. This is especially true in development aid, where aid organizations face incentives to suppress information about misappropriated funds and may operate with limited transparency. We develop new statistical tests to uncover strategic data manipulation consistent with fraud. These tests help identify falsified expense reports and facilitate monitoring in difficult-to-audit circumstances, relying only on mandated reporting of data. While the digits of naturally occurring data follow the Benford’s Law distribution, humanly-produced data instead reflect behavioral biases and incentives to misreport. Our new tests improve upon existing Benford’s Law tests by being sensitive to the value of digits reported, which distinguishes between intent to defraud and error, and by improving statistical power to allow for finer partitioning of the data. We apply this method to a World Bank development project in Kenya. Our evidence is consistent with higher levels of fraud in harder to monitor sectors and in a Kenyan election year when graft also had political value. The results are validated by qualitative data and a forensic audit conducted by the World Bank. We produce simulations that demonstrate the superiority of our new tests to the standards in the field. Our tests are useful beyond development aid, including for monitoring corporate accounting and government expenditures.
Author contact info: Jean Ensminger California Institute of Technology HSS 228-77 Pasadena, CA 91125 E-Mail: jensming@hss.caltech.edu Jetson Leder-Luis Questrom School of Business Boston University 595 Commonwealth Avenue Boston, MA 02215 Tel: 914/844-9457 E-Mail: jetson@bu.edu

Racial Concordance and the Quality of Medical Care: Evidence from the Military - Frakes, Michael D; Gruber, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
One explanation for insufficient use of primary care in the U.S. is a lack of trust between patients and providers – particularly along racial lines. We assess the role of racial concordance between patients and medical providers in driving use of preventive care and the implications for patient outcomes. We use unique data from the Military Health System, where we observe providers as patients so that we can identify their race, and where moves across bases change exposure to provider race. We consider patients with four chronic, deadly, but ultimately manageable illnesses, where the relationship with the provider may have the most direct and important impact on health. We find striking evidence that racial concordance leads to improved maintenance of preventive care – and ultimately lower patient mortality. Pooling across these diseases, we estimate that a one-standard deviation increase in the share of providers who are Black leads to a 15% relative decline in Black mortality among those with these manageable illnesses. Our results further suggest that between 55 and 69% of this mortality impact arises through improved medication use and adherence, with other aspects of the provider-patient relationship accounting for the residual.
Author contact info: Michael D. Frakes Duke University School of Law 210 Science Drive Box 90362 Durham, NC 27708 Tel: 919-613-7185 E-Mail: Michael.frakes@law.duke.edu 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

Evictions and Psychiatric Treatment - Bradford, Ashley; Maclean, Johanna Catherine (National Bureau of Economic Research Working Paper Series, 2022)
Stable housing is critical for health, employment, education, and other social outcomes. Evictions reflect a form of housing instability that is experienced by millions of Americans each year. Inadequately treated psychiatric disorders have the potential to influence evictions in several ways. For example, these disorders may impede labor market performance and thus the ability to pay rent, or increase the likelihood of risky and/or nuisance behaviors that can lead to a lease violation. We estimate the effect of local access to psychiatric treatment on eviction rates. We combine data on the number of psychiatric treatment centers that offer outpatient and residential care within a county with eviction rates in a two-way fixed-effects framework. Our findings imply that ten additional psychiatric treatment centers in a county lead to a reduction of 2.1% in the eviction rate.
Author contact info: Ashley Bradford E-Mail: bradford@gatech.edu 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

Anticipated Gender Discrimination and Grade Disclosure - Lepage, Louis-Pierre; Li, Xiaomeng; Zafar, Basit (National Bureau of Economic Research Working Paper Series, 2022)
We study a unique grading policy at a large US public university allowing students to mask their letter grades into a “Pass”, after having observed their original grade. Using administrative transcript records, we find that female students are substantially less likely to mask their grades than male students, even after accounting for differences in grades, GPA, and course/major taking. We present a framework showing how anticipated discrimination in the labor market can distort incentives to mask across gender. Consistent with the framework, a survey reveals that students anticipate that female students, particularly in STEM, Business, and Economics, will face labor market discrimination which makes them less likely to mask. Our survey allows us to distinguish between anticipated discrimination and other explanations which could contribute to the masking gap, such as preferences for risk or transparency. We find that anticipated discrimination can explain a sizable fraction of the gender gap in masking.
Author contact info: Louis-Pierre Lepage Stockholm University E-Mail: louis-pierre.lepage@sofi.su.se Xiaomeng Li Department of Economics 611 Tappan St. Ann Arbor E-Mail: lixiaom@umich.edu Basit Zafar Department of Economics University of Michigan 611 Tappan Street Ann Arbor, Michigan 48109 E-Mail: basitak@gmail.com

The Scale and Nature of Neighborhood Effects on Children: Evidence from a Danish Social Housing Experiment - Billings, Stephen B; Hoekstra, Mark; Rotger, Gabriel Pons (National Bureau of Economic Research Working Paper Series, 2022)
Recent research documents a causal impact of place on the long-run outcomes of children. However, little is known about which neighborhood characteristics are most important, and at what scale neighborhood effects operate. By using the random assignment of public housing along with administrative data from Denmark, we get inside the “black box” of neighborhood effects by defining neighborhoods using various characteristics and scales. Results indicate effects on mental health and especially education are large but local, while effects on drug possession operate on a much broader scale. Additionally, unemployment and education are better predictors of outcomes than neighborhood income.
Author contact info: Stephen B. Billings University of Colorado Department of Finance Leeds School of Business Boulder, CO 80309 E-Mail: stephen.billings@colorado.edu Mark Hoekstra Department of Economics Baylor University Hankamer School of Business Waco, TX 76706 E-Mail: Mark_Hoekstra@baylor.edu Gabriel Pons Rotger E-Mail: gpr@vive.dk

Evolving Reputation for Commitment: The Rise, Fall and Stabilization of US Inflation - King, Robert G; Lu, Yang K (National Bureau of Economic Research Working Paper Series, 2022)
A parsimonious model of shifting policy regimes can simultaneously capture expected and actual US inflation during 1969-2005. Our model features a forward-looking New Keynesian Phillips curve and purposeful policymakers that can or cannot commit. Private sector learning about policymaker type leads to a reputation state variable. We use model inflation forecasting rules to extract state variables from SPF inflation forecasts. US inflation is tracked by optimal policy without commitment before 1981 and by optimal policy with commitment afterward. In theory and quantification, the interaction of private sector learning and optimal policy within regimes is central to expected and actual inflation.
Author contact info: Robert G. King Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-5941 E-Mail: rking@bu.edu Yang K. Lu Department of Economics Hong Kong University of Science and Technology Clearwater Bay, Kowloon Boston, MA 02215 United States Tel: 16173535941 E-Mail: yanglu@ust.hk

Designing Randomized Controlled Trials with External Validity in Mind - Chassang, Sylvain; Kapon, Samuel (National Bureau of Economic Research Working Paper Series, 2022)
This paper describes a number of strategies that experimenters may use to improve the external validity of their own findings, and of their research field as a whole. The paper emphasizes a dynamic view of research processes, in which learning about treatment and treatment adoption does not cease after a given study is performed. External validity need not be an unattainable goal in such a context. However, because researchers today need not be the same as researchers and policy-makers tomorrow, dynamic research processes are affected by research externalities, i.e. research practices that have high social value but low private returns. The paper identifies several of these research externalities and argues that funding organizations can have a significant impact at a relatively modest cost by subsidizing external-validity add-on modules specifically targeting research externalities.
Author contact info: Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: chassang@princeton.edu Samuel Kapon Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: kapon@princeton.edu

Missing Data in Asset Pricing Panels - Freyberger, Joachim; Höppner, Björn; Neuhierl, Andreas; Weber, Michael (National Bureau of Economic Research Working Paper Series, 2022)
Missing data for return predictors is a common problem in cross sectional asset pricing. Most papers do not explicitly discuss how they deal with missing data but conventional treatments focus on the subset of firms with no missing data for any predictor or impute the unconditional mean. Both methods have undesirable properties - they are either inefficient or lead to biased estimators and incorrect inference. We propose a simple and computationally attractive alternative using conditional mean imputations and weighted least squares, cast in a generalized method of moments (GMM) framework. This method allows us to use all observations with observed returns, it results in valid inference, and it can be applied in non-linear and high-dimensional settings. In Monte Carlo simulations, we find that it performs almost as well as the efficient but computationally costly GMM estimator in many cases. We apply our procedure to a large panel of return predictors and find that it leads to improved out-of-sample predictability.
Author contact info: Joachim Freyberger 15917 Kettington Rd University of Bonn Adenauerallee 24-26, 53113 Bonn Chesterfield, MO 63017 United States Tel: 8016230706 E-Mail: freyberger@uni-bonn.de Björn Höppner University of Bonn Adenauerallee 24-26, 53113 Bonn Germany E-Mail: b.hoeppner@uni-bonn.de Andreas Neuhierl One Brookings Drive Washington University in St. Louis Olin Business School St. Louis, MO 63130 E-Mail: andreas.neuhierl@wustl.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

The Stench of Failure: How Perception Affects House Prices - Cortés, Kristle; Singh, Mandeep; Solomon, David H; Strahan, Philip (National Bureau of Economic Research Working Paper Series, 2022)
In Australian real estate markets, about a third of properties are sold at auction. We show that properties that fail auctions sell later for a 2.6% discount. This effect increases for properties failing multiple auctions and when no bids are made. Consistent with a causal channel, the effect holds when auction failure is instrumented by the tendency of owners to anchor on nearby better properties (and thus set reserve prices too high). Prices cluster just below salient round numbers, and the discount fades over time, inconsistent with our effects reflecting unobserved property characteristics. We test for several mechanisms and conclude that most of the pricing discounts reflect stigma, which reduces potential buyers’ willingness to pay.
Author contact info: Kristle R. Cortés UNSW Business School School of Banking and Finance Office 348, Level 3, Central Wing Gate 2, High Street University of New South Wales Kensington 2052, Sydney New South Wales Australia Tel: 8479248912 E-Mail: kristle.cortes@unsw.edu.au Mandeep Singh 15 Prince's Gardens London SW7 1NA United Kingdom E-Mail: m.singh@imperial.ac.uk David H. Solomon Boston College 140 Commonwealth Ave Fulton Hall Room 330 Chestnut Hill, MA 02467 E-Mail: david.solomon@bc.edu Philip Strahan Carroll School of Management 324B Fulton Hall Boston College Chestnut Hill, MA 02467 Tel: 617/552-6430 E-Mail: philip.strahan@bc.edu

Wellbeing Rankings - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2022)
Combining data on around four million respondents from the Gallup World Poll and the US Daily Tracker Poll we rank 164 countries, the 50 states of the United States and the District of Colombia on eight wellbeing measures. These are four positive affect measures - life satisfaction, enjoyment, smiling and being well-rested – and four negative affect variables – pain, sadness, anger and worry. Pooling the data for 2008-2017 we find country and state rankings differ markedly depending on whether they are ranked using positive or negative affect measures. The United States ranks lower on negative than positive affect, that is, its country wellbeing ranking looks worse using negative affect than it does when using positive affect. Combining rankings on all eight measures into a summary ranking index for 215 geographical locations we find that nine of the top ten and 16 of the top 20 ranked are US states. Only one US state ranks outside the top 100 – West Virginia (101). Iraq ranks lowest - just below South Sudan. Country-level rankings on the summary wellbeing index differ sharply from those reported in the World Happiness Index and are more comparable to those obtained with the Human Development Index.
Author contact info: David G. Blanchflower Bruce V. Rauner Professor of Economics 6106 Rockefeller Hall Dartmouth College Hanover, NH 03755-3514 Tel: 603/646-2536 Fax: 603/646-2122 E-Mail: blanchflower@dartmouth.edu Alex Bryson Professor of Quantitative Social Science UCL Social Research Institute University College London 20 Bedford Way London WC1H 0AL London United Kingdom Tel: +44 7969179755 E-Mail: a.bryson@ucl.ac.uk

Does Performance Pay Enhance Social Accountability? Evidence from Remote Schools in Indonesia - Gaduh, Arya; Pradhan, Menno; Priebe, Jan; Susanti, Dewi (National Bureau of Economic Research Working Paper Series, 2022)
Social accountability offers a viable alternative to top-down supervision of service delivery in remote areas when travel cost renders the latter ineffective. However, this bottom-up approach may not be effective when the community has weak authority relative to the service provider. This paper investigates whether giving communities authority over teacher performance pay improves the effectiveness of social accountability in Indonesia’s remote schools. We tested incentive contracts based on either camera-verified teacher presence or community ratings of teacher performance. Social accountability had the strongest and most persistent impact on student learning when combined with the former. The results indicate that when the principal (community) has weak authority vis-à-vis the agent (regular teachers), increasing that authority using an incomplete but verifiable contract works better than using a more comprehensive but subjective one.
Author contact info: Arya Gaduh Department of Economics University of Arkansas 402 Business Building Fayatteville, AR 72701 Tel: 479/575-8776 E-Mail: AGaduh@walton.uark.edu Menno Pradhan VU University / University of Amsterdam De Boelelaan 1105 1081 HV Amsterdam The Netherlands E-Mail: m.p.pradhan@vu.nl Jan Priebe E-Mail: jpriebe@uni-goettingen.de Dewi Susanti Global School Leaders 12329 Culver Blvd Los Angeles, CA 90066-6221 E-Mail: dewi@globalschoolleaders.org

Public Information as a Source of Disagreement Among Shareholders - Bouton, Laurent; Llorente-Saguer, Aniol; Macé, Antonin; Meirowitz, Adam; Pi, Shaoting; Xefteris, Dimitrios (National Bureau of Economic Research Working Paper Series, 2022)
We study how investors’ beliefs about firm value, and hence their willingness to trade, respond to the release of public information. We consider a standard rational expectations model with homogeneous investors (common preferences, priors, and opinions) with the novelty that information, both public and private, pertains to the decisions the firm will make in the future and whether it is value-enhancing (what we refer to as the path-forward), instead of being directly about the value of the firm. Our analysis shows that, counter to the received wisdom, standard models can explain the well-documented pattern of increased in disagreement and trade volume after public announcements. Two economic insights emerge. First, investors holding different information about the path-forward of the firm may nonetheless have the same assessment of the firm’s value. The release of public information may then reinforce or contradict interim beliefs about the path-forward, and hence lead to divergence in investors’ assessments of the firm’s value and then an increase in trade volume. Second, investors who participate in shareholders’ meetings may have an informational advantage relative to investors that observe only public information about the meeting. The former group know both how they voted and their private information before voting, while others only know the total vote tally. The exploitation of that advantage leads to a surge in trade after public disclosure of meeting outcomes.
Author contact info: Laurent Bouton Georgetown University Department of Economics 37th & O Streets, NW Washington,DC 20057 Tel: 202/687-6109 E-Mail: boutonllj@gmail.com Aniol Llorente-Saguer School of Economics and Finance Queen Mary, University of London Mile End Road, London E1 4NS United Kingdom E-Mail: a.llorente-saguer@qmul.ac.uk Antonin Macé Paris School of Economics 48 boulevard Jourdan 75014 Paris E-Mail: antonin.mace@gmail.com Adam Meirowitz Yale University Department of Political Science 115 Prospect St. Rosenkranz Hall New Haven, CT 06520 E-Mail: adam.meirowitz@yale.edu Shaoting Pi Iowa State University Department of Finance 3127 Gerdin Business Bldg. 1200, 2167 Union Dr. Ames, IA 50011 E-Mail: shaoting@iastate.edu Dimitrios Xefteris University of Cyprus Department of Economics E-Mail: xefteris.dimitrios@ucy.ac.cy

Using Machine Learning for Efficient Flexible Regression Adjustment in Economic Experiments - List, John A; Muir, Ian; Sun, Gregory K (National Bureau of Economic Research Working Paper Series, 2022)
This study investigates how to use regression adjustment to reduce variance in experimental data. We show that the estimators recommended in the literature satisfy an orthogonality property with respect to the parameters of the adjustment. This observation greatly simplifies the derivation of the asymptotic variance of these estimators and allows us to solve for the efficient regression adjustment in a large class of adjustments. Our efficiency results generalize a number of previous results known in the literature. We then discuss how this efficient regression adjustment can be feasibly implemented. We show the practical relevance of our theory in two ways. First, we use our efficiency results to improve common practices currently employed in field experiments. Second, we show how our theory allows researchers to robustly incorporate machine learning techniques into their experimental estimators to minimize variance.
Author contact info: John A. List Department of Economics University of Chicago 1126 East 59th Chicago, IL 60637 Tel: 301/405-1288 Fax: 301/314-9091 E-Mail: jlist@uchicago.edu Ian Muir Walmart E-Mail: muir.ian.m@gmail.com Gregory K. Sun E-Mail: greg.s@wustl.edu

Optimal Gradualism - Lehr, Nils Haakon; Restrepo, Pascual (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies how gradualism affects the welfare gains from trade, technology, and reforms. When people face adjustment frictions, gradual shocks create less adverse distributional effects in the short run. We show that there are welfare gains from inducing a more gradual transition via temporary taxes on trade and technology, and provide formulas for the optimal path for taxes. Our formulas account for the possibility that reallocation effort responds to policy, and for the existence of income taxes and assistance programs. Using these formulas, we compute the optimal temporary taxes needed to mitigate the distributional consequences of rising import competition from China and the deployment of automation technologies substituting for routine jobs. Our formulas can also be used to compute the optimal timing of economic reforms or trade liberalizations, and we apply them to study Colombia’s trade liberalization in 1990—a prominent example where optimal policy called for a more gradual reform.
Author contact info: Nils Haakon Lehr 375 Market St Boston, MA 02135 E-Mail: nilslehr@bu.edu Pascual Restrepo Department of Economics Boston University 270 Bay State Road Boston, MA 02215 E-Mail: pascual@bu.edu

Dissecting the Sinews of Power: International Trade and the Rise of Britain’s Fiscal-Military State, 1689-1823 - Dal Bó, Ernesto; Hutková, Karolina; Leucht, Lukas; Yuchtman, Noam (National Bureau of Economic Research Working Paper Series, 2022)
We evaluate the role of taxes on trade in the development of imperial Britain’s fiscal-military state. Influential work, e.g., Brewer’s (1989) "Sinews of Power," attributed increased fiscal capacity to the taxation of domestic, rather than traded, goods: excise revenues, coarsely associated with domestic goods, grew faster than customs revenues. We construct new historical revenue series disaggregating excise revenues from traded and domestic goods. We find substantial growth in taxes on traded goods, accounting for over half of indirect taxation around 1800. This challenges the conventional wisdom attributing the development of the British state to domestic factors: international factors mattered, too.
Author contact info: Ernesto Dal Bó University of California, Berkeley Haas School of Business 545 Student Services Building #1900 Berkeley, CA 94720-1900 Tel: 510 643 1606 E-Mail: dalbo@haas.berkeley.edu Karolina Hutková E-Mail: k.hutkova@lse.ac.uk Lukas Leucht E-Mail: lukas_leucht@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

Non-Fundamental Flows and Foreign Exchange Rates - Aldunate, Felipe E; Da, Zhi; Larrain, Borja; Sialm, Clemens (National Bureau of Economic Research Working Paper Series, 2022)
Frequent, yet uninformed, fund flows in Chilean pension plans generate substantial trading in currency markets due to the high allocation to international securities. These non-fundamental flows have a significant impact on the Chilean peso, which is estimated to have a relatively low price elasticity of 0.81. Hedging by the banking sector propagates the price pressure to currency forward markets and results in violations of the covered interest rate parity. Using trading data and bank balance sheet data, we confirm that regulatory requirements and banks’ risk bearing constraints create limits of arbitrage.
Author contact info: Felipe E. Aldunate Av. Plaza 1905 Las Condes Santiago, RM Chile E-Mail: faldunate.ese@uandes.cl 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 Borja Larrain Escuela de Administracion Pontificia Universidad Catolica de Chile Avda Vicuna Mackenna 4860 Macul, Santiago Chile E-Mail: borja.larrain@uc.cl Clemens Sialm University of Texas at Austin McCombs School of Business 2110 Speedway; B6600 Austin, TX 78712-1276 Tel: 512-232-6835 E-Mail: clemens.sialm@mccombs.utexas.edu

The 15-Minute City Quantified Using Mobility Data - Abbiasov, Timur; Heine, Cate; Glaeser, Edward L; Ratti, Carlo; Sabouri, Sadegh; Salazar Miranda, Arianna; Santi, Paolo (National Bureau of Economic Research Working Paper Series, 2022)
Americans travel 7 to 9 miles on average for shopping and recreational activities, which is far longer than the 15-minute (walking) city advocated by ecologically-oriented urban planners. This paper provides a comprehensive analysis of local trip behavior in US cities using GPS data on individual trips from 40 million mobile devices. We define local usage as the share of trips made within 15-minutes walking distance from home, and find that the median US city resident makes only 12% of their daily trips within such a short distance. We find that differences in access to local services can explain eighty percent of the variation in 15-minute usage across metropolitan areas and 74 percent of the variation in usage within metropolitan areas. Differences in historic zoning permissiveness within New York suggest a causal link between access and usage, and that less restrictive zoning rules, such as permitting more mixed-use development, would lead to shorter travel times. Finally, we document a strong correlation between local usage and experienced segregation for poorer, but not richer, urbanites, which suggests that 15-minute cities may also exacerbate the social isolation of marginalized communities.
Author contact info: Timur Abbiasov Senseable City Lab Massachusetts Institute of Technology E-Mail: abbiasov@mit.edu Cate Heine Senseable City Lab E-Mail: cheine@mit.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 Carlo Ratti Senseable City Lab E-Mail: ratti@mit.edu Sadegh Sabouri Senseable City Lab E-Mail: sabouri@mit.edu Arianna Salazar Miranda Senseable City Lab E-Mail: ariana@mit.edu Paolo Santi Senseable City Lab E-Mail: psanti@mit.edu

Monetary Policy When the Central Bank Shapes Financial-Market Sentiment - Kashyap, Anil K; Stein, Jeremy C (National Bureau of Economic Research Working Paper Series, 2022)
Recent research has found that monetary policy works in part by influencing the risk premiums on both traded financial-market securities and intermediated loans. Research has also shown that when risk premiums are compressed, there is an increased likelihood of a reversal that damages the credit-supply mechanism and the real economy. Together these effects create an intertemporal tradeoff for monetary policy, as stimulating the economy today can sow the seeds of a future downturn that might be difficult to offset. We introduce a simple model of this tradeoff and draw out its implications for the conduct of monetary policy.
Author contact info: Anil K Kashyap Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-7260 Fax: 773/702-0458 E-Mail: anil.kashyap@chicagobooth.edu Jeremy C. Stein Department of Economics Harvard University Littauer 219 Cambridge, MA 02138 Tel: 617/496-6455 E-Mail: jeremy_stein@harvard.edu

Hispanic Americans in the Labor Market: Patterns Over Time and Across Generations - Antman, Francisca M; Duncan, Brian; Trejo, Stephen J (National Bureau of Economic Research Working Paper Series, 2022)
This article reviews evidence on the labor market performance of Hispanics in the United States, with a particular focus on the US-born segment of this population. After discussing critical issues that arise in the US data sources commonly used to study Hispanics, we document how Hispanics currently compare with other Americans in terms of education, earnings, and labor supply, and then we discuss long-term trends in these outcomes. Relative to non-Hispanic Whites, US-born Hispanics from most national origin groups possess sizeable deficits in earnings, which in large part reflect corresponding educational deficits. Over time, rates of high school completion by US-born Hispanics have almost converged to those of non-Hispanic Whites, but the large Hispanic deficits in college completion have instead widened. Finally, from the perspective of immigrant generations, Hispanics experience substantial improvements in education and earnings between first-generation immigrants and the second-generation consisting of the US-born children of immigrants. Continued progress beyond the second generation is obscured by measurement issues arising from high rates of Hispanic intermarriage and the fact that later-generation descendants of Hispanic immigrants often do not self-identify as Hispanic when they come from families with mixed ethnic origins.
Author contact info: Francisca M. Antman University of Colorado Boulder Department of Economics 256 UCB Boulder, CO 80309 USA E-Mail: francisca.antman@colorado.edu Brian Duncan Department of Economics University of Colorado Denver Campus Box 181 P.O. Box 173364 Denver, CO 80217-3364 E-Mail: brian.duncan@ucdenver.edu Stephen J. Trejo Department of Economics University of Texas at Austin 2225 Speedway Stop C3100 Austin, TX 78712 Tel: 512/475-8512 Fax: 512/471-3510 E-Mail: trejo@austin.utexas.edu

Quantifying the Costs and Benefits of Quantitative Easing - Levin, Andrew T; Lu, Brian L; Nelson, William R (National Bureau of Economic Research Working Paper Series, 2022)
We conduct a systematic analysis of the costs and benefits of large-scale securities purchases, using the Federal Reserve’s QE4 program as a concrete example. This program was initiated at the onset of the pandemic in March 2020 and continued for two years, leading to a doubling of the Fed’s securities holdings to about $8.5 trillion as of March 2022. QE4 was initially aimed at mitigating strains in markets for Treasuries and agency mortgage-backed securities but was subsequently aimed more broadly at supporting market functioning and providing monetary stimulus. Nonetheless, QE4 did not have any notable benefits in reducing term premiums. Moreover, since the securities purchases were financed by expanding the Fed’s short-term liabilities, QE4 amplified the interest rate risk associated with the publicly-held debt of the consolidated federal government. Our simulation analysis indicates that QE4 is likely to reduce the Federal Reserve’s remittances to the U.S. Treasury by about $760 billion over the next ten years.
Author contact info: Andrew T. Levin Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-8138 Fax: 603/646-2122 E-Mail: andrew.t.levin@dartmouth.edu Brian L. Lu Rockefeller Hall Hanover, NH 03755 USA E-Mail: brian.L.lu.22@dartmouth.edu William R. Nelson 1300 Eye Street NW Suite 1100 West Washington, DC 20005-3008 USA E-Mail: bill.nelson@bpi.com

The Disappearing Index Effect - Greenwood, Robin; Sammon, Marco C (National Bureau of Economic Research Working Paper Series, 2022)
The abnormal return associated with a stock being added to the S&P 500 has fallen from an average of 3.4% in the 1980s and 7.6% in the 1990s to 0.8% over the past decade. This has occurred despite a significant increase in the percentage of stock market assets linked to the index. A similar pattern has occurred for index deletions, with large negative abnormal returns on average during the 1980s and 1990s, but only -0.6% between 2010 and 2020. We investigate potential drivers of this surprising phenomenon and discuss the implications for market efficiency.
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 Marco C. Sammon Harvard Business School Bloomberg Center 340 25 Harvard Way Boston, MA 02163 E-Mail: mcsammon@gmail.com

Children and Grandchildren of Union Army Veterans: New Data Collections to Study the Persistence of Longevity and Socioeconomic Status Across Generations - Costa, Dora; Lewis, CoraLee; Yetter, Noelle (National Bureau of Economic Research Working Paper Series, 2022)
This paper introduces four new intergenerational and multigenerational datasets which follow both sons and daughters and which can be used to study the persistence of longevity, socioeconomic status, family structure, and geographic mobility across generations. The data follow the children of Black and White Union Army veterans from birth to death, linking them to the available censuses. The White samples include an over-sample of children of ex-POWs. A separate collection links grandchildren of White Union Army veterans to their death records. The data were created with high quality manual linkage procedures utilizing a wide variety of records to establish links.
Author contact info: Dora Costa Bunche Hall 9272 Department of Economics UCLA Box 951477 Los Angeles, CA 90095-1477 Tel: (310) 825-4249 Fax: (310) 825-9528 E-Mail: costa@econ.ucla.edu CoraLee Lewis UCLA E-Mail: coraleesuzanne@gmail.com Noelle Yetter UCLA E-Mail: Noelle.Yetter@verizon.net

How Regressive are Mobility-Related User Fees and Gasoline Taxes? - Glaeser, Edward L; Gorback, Caitlin S; Poterba, James M (National Bureau of Economic Research Working Paper Series, 2022)
Pigouvian taxes and user fees can address environmental externalities and efficiently fund transportation infrastructure, but these policies may place burdens on poorer households. This paper presents new evidence on the distributional consequences of the gasoline tax, bus and light rail charges and a vehicle miles traveled (VMT) tax. Gas taxes have become more regressive over time, partially because of environmentally-oriented technological change, although the share of expenditures on gas taxes declines with expenditures much less than the share of income spent on gas taxes declines with income. Replacing the gasoline tax with a household-level VMT tax would increase the average tax burden on households in the top income and expenditure deciles, because of their greater use of hybrid-electric and battery-electric vehicles. This progressive shift would be small given current levels of hybrid and electric vehicle ownership, but will be larger in the future if such vehicles continue to be more common among higher than lower income households. An expanded commercial VMT would place a larger burden, as a share of expenditures, on lower income or expenditure households, because better-off households consume more non-tradable goods that do not require transportation. User charges for airports, subways and commuter rail are progressive, while bus fees loom much larger for lower income households.
Author contact info: 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 Caitlin S. Gorback 2110 Speedway Finance Department CBA 6.308 Austin, TX 78705 Tel: 8326032304 E-Mail: Caitlin.Gorback@mccombs.utexas.edu James M. Poterba E-Mail: poterba@mit.edu

The Cost of Imbalance in Clinical Trials - Chassang, Sylvain; Feng, Rong (National Bureau of Economic Research Working Paper Series, 2022)
Clinical trials following the “gold standard” of random assignment frequently use independent lotteries to allocate patients to treatment and control arms. However, independent assignment can generate treatment and control arms that are unbalanced (i.e. treatment and control populations with significantly different demographics), which reduces power. Other assignment methods such as matched pair designs ensure balance across arms while maintaining randomization and permitting inference. This paper seeks to measure the cost of imbalance with respect to gender in a sample of roughly 2000 clinical studies. We document significant imbalance: 25% of experiments have at least 26% more men in one treatment arm than in the other. In addition, clinical trials with greater imbalance have more dispersed treatment effects, indicating that imbalance reduces the informativeness of experiments. A simple structural model suggests that for a typical experiment, using a balanced random design could deliver informativeness gains equivalent to increasing the sample size by 18%.
Author contact info: Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: chassang@princeton.edu Rong Feng E-Mail: rmfeng@gmail.com

Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China - Heblich, Stephan; Seror, Marlon; Xu, Hao; Zylberberg, Yanos (National Bureau of Economic Research Working Paper Series, 2022)
We identify negative spillovers exerted by large, successful manufacturing plants on other local production facilities in China. A short-lived alliance between the U.S.S.R. and China led to the construction of 150 "Million-Rouble plants" in the 1950s. Our identification strategy exploits the ephemeral geopolitical context and the relative position of allied and enemy airbases to isolate exogenous variation in plant location decisions. We find a boom-and-bust pattern in hosting counties: treated counties are twice as productive as control counties in 1982, but 30% less productive in 2010. The average other establishment in treated counties is unproductive, does not innovate, and charges high markups. We find that (over)specialization limits technological spillovers. This prevents the emergence of new industrial clusters and leads to a flight of entrepreneurs.
Author contact info: Stephan Heblich Munk School of Global Affairs and Public Policy University of Toronto 1 Devonshire Place Toronto, ON M5S 3K7 E-Mail: stephan.heblich@utoronto.ca Marlon Seror Department of Economics UQAM 320 rue Ste Catherine Est H2X 3X2 Montreal Canada E-Mail: seror.marlon@uqam.ca Hao Xu No.25, Finance Street Beijing 100033 China E-Mail: sysxuhao@163.com Yanos Zylberberg 8 Woodland Road Bristol BS8 1TN UK E-Mail: yanos.zylberberg@bristol.ac.uk

The Effect of Financial Resources on Homeownership, Marriage, and Fertility: Evidence from State Lotteries - Bulman, George; Goodman, Sarena; Isen, Adam (National Bureau of Economic Research Working Paper Series, 2022)
This paper leverages the universe of U.S. tax data and state lottery wins between 2000 and 2019 to estimate the causal effect of financial resources on three key lifecycle outcomes for young adults. We find large and persistent effects on homeownership, with a response function that exhibits substantial concavity but also an extremely high upper bound, and larger responses among higher-income individuals. Resources generate persistent increases in marriage for single men and women but do not increase the likelihood existing marriages are preserved. Fertility is modestly accelerated by a lottery win, but there is little effect on total fertility. Our results support a causal pathway behind differences in homeownership and marriage by socioeconomic status and inform theories of household formation and the family.
Author contact info: George Bulman Department of Economics University of California, Santa Cruz 1156 High Street Santa Cruz, CA 95064 Tel: 650/521-1603 E-Mail: gbulman@ucsc.edu Sarena Goodman Federal Reserve Board of Governors 20th & Constitution Ave., NW Washington, DC 20551 USA E-Mail: sarena.f.goodman@frb.gov Adam Isen E-Mail: adam.isen@gmail.com

Immigration and Work Schedules: Theory and Evidence - Bond, Timothy N; Giuntella, Osea; Lonsky, Jakub (National Bureau of Economic Research Working Paper Series, 2022)
We develop a theoretical framework to analyze the effects of immigration on native job amenities, focusing on work schedules. Immigrants have a comparative advantage in production at, and lower disamenity cost for nighttime work, which leads them to disproportionately choose nighttime employment. Because day and night tasks are imperfect substitutes, the relative price of day tasks increases as their supply becomes relatively more scarce. We provide empirical support for our theory. Native workers in local labor markets that experienced higher rates of immigration are more likely to work day shifts and receive a lower compensating differential for nighttime work.
Author contact info: Timothy N. Bond Department of Economics Mitchell E. Daniels, Jr. School of Business Purdue University 403 Mitch Daniels Blvd. West Lafayette, IN 47907 Tel: +17654963664 E-Mail: tnbond@purdue.edu Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Jakub Lonsky E-Mail: Jakub.Lonsky@liverpool.ac.uk

The Employment Effects of Mobile Internet in Developing Countries - Chiplunkar, Gaurav; Goldberg, Pinelopi Koujianou (National Bureau of Economic Research Working Paper Series, 2022)
We examine the employment effects of 3G mobile internet expansion in developing countries. We find that 3G significantly increases the labor force participation rate of women and the employment rates of both men and women. Our results suggest that 3G affects the type of jobs and there is a distinct gender dimension to these effects. Men transition away from unpaid agricultural work into operating small agricultural enterprises, while women take more unpaid jobs, especially in agriculture, and operate more small businesses in all sectors. Both men and women are more likely to work in wage jobs in the service sector.
Author contact info: Gaurav Chiplunkar 100, Darden Blvd. Charlottesville, VA 22905 USA E-Mail: chiplunkarg@darden.virginia.edu Pinelopi K. Goldberg Yale University Department of Economics 87 Trumbull Street P.O. Box 208264 New Haven, CT E-Mail: penny.goldberg@yale.edu

When do "Nudges" Increase Welfare? - Allcott, Hunt; Cohen, Daniel; Morrison, William; Taubinsky, Dmitry (National Bureau of Economic Research Working Paper Series, 2022)
Policymakers are increasingly interested in non-standard policy instruments (NPIs), or “nudges,” such as simplified information disclosure and warning labels. We characterize the welfare effects of NPIs using public finance sufficient statistic approaches, allowing for endogenous prices, market power, and optimal or suboptimal taxes. While many empirical evaluations have focused on whether NPIs increase ostensibly beneficial behaviors on average, we show that this can be a poor guide to welfare. Welfare also depends on whether the NPI reduces the variance of distortions from heterogenous biases and externalities, and the average effect becomes irrelevant with zero pass-through or optimal taxes. We apply our framework to randomized experiments evaluating automotive fuel economy labels and sugary drink health labels. In both experiments, the labels increase ostensibly beneficial behaviors but also may decrease welfare in our model, because they increase the variance of distortions.
Author contact info: Hunt Allcott Stanford University Stanford, CA 94305 E-Mail: allcott@stanford.edu Daniel Cohen E-Mail: daniel.cohen@kellogg.northwestern.edu William Morrison University of California, Berkeley 530 Evans Hall MC #3880 Berkeley, CA 94720 E-Mail: wmorrison@berkeley.edu Dmitry Taubinsky University of California, Berkeley Department of Economics 530 Evans Hall #3880 Berkeley, CA 94720-3880 E-Mail: dmitry.taubinsky@berkeley.edu

The Impact of Paid Family Leave on Families with Health Shocks - Coile, Courtney; Rossin-Slater, Maya; Su, Amanda (National Bureau of Economic Research Working Paper Series, 2022)
This paper analyzes the impact of paid family leave (PFL) policies in California, New Jersey, and New York on the labor market and mental health outcomes of individuals whose spouses or children experience health shocks. We use data from the 1996-2019 restricted-use version of the Medical Expenditure Panel Survey (MEPS), which provides state of residence and the precise timing of hospitalizations and surgeries, our health shock measures. We use difference-in-difference and event-study models to compare the differences in post-health-shock labor market and mental health outcomes between spouses and parents before and after PFL implementation relative to analogous differences in states with no change in PFL access. We find that PFL access leads to a 7.0 percentage point decline in the likelihood that the (healthy) wives of individuals with medical conditions or limitations who experience a hospitalization or surgery report “leaving a job to care for home or family” in the post-health-shock rounds. Impacts of PFL access on women's mental health outcomes and on men whose spouses have health shocks are more mixed, and we find no effects on parents of children with health shocks. Lastly, we show that improvements in job continuity are concentrated among caregivers with 12 or fewer years of education, suggesting that government-provided PFL might reduce disparities in leave access.
Author contact info: 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 Maya Rossin-Slater Department of Health Policy Stanford University School of Medicine 615 Crothers Way Encina Commons, MC 6019 Stanford, CA 94305-6006 E-Mail: mrossin@stanford.edu Amanda Su Department of Health Policy Stanford University School of Medicine 615 Crothers Way Encina Commons Stanford, CA 94305-6006 E-Mail: amandasu@stanford.edu

A Theory of Gross and Net Capital Flows over the Global Financial Cycle - Davis, J. Scott; van Wincoop, Eric (National Bureau of Economic Research Working Paper Series, 2022)
We develop a theory to account for changes in gross and net capital flows over the global financial cycle (GFC). The theory relies critically on portfolio heterogeneity among investors within and across countries, related to risky portfolio shares and portfolio shares allocated to foreign assets. A global drop in risky asset prices during a downturn of the GFC changes relative wealth within and across countries due to portfolio heterogeneity. This leads to changes in gross and net capital flows that are consistent with the stylized facts: all countries experience a decline in gross capital flows (retrenchment), while countries that have a net debt of safe assets experience a rise in net outflows of safe assets (reduced accumulation of safe debt). This is accomplished through a rise in total net outflows and a drop in net outflows of risky assets. The model is applied to 20 advanced countries and calibrated to micro data related to within country portfolio heterogeneity, as well as cross country heterogeneity of net foreign asset positions of safe and risky assets. The implications of the calibrated model for gross and net capital flows are quantitatively consistent with the data.
Author contact info: 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

Do Foreign Yield Curves Predict U.S. Recessions and GDP Growth? - Ahmed, Rashad; Chinn, Menzie D (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows that foreign term spreads constructed from bond yields of non- U.S. G-7 constituents predict future U.S. recessions and that foreign term spreads are stronger predictors of U.S. recessions occurring within the next year than U.S. term spreads. U.S. and foreign term spreads are both informative of the U.S. economy but over different horizons and for different components of economic activity. Smaller U.S. term spreads lead to smaller foreign term spreads and U.S. Dollar appreciation. Smaller foreign term spreads do not lead to significant U.S. Dollar depreciation but do lead to persistent declines in U.S. exports and FDI flows into the United States. These findings are consistent with the proposition that foreign term spreads embed growth spillovers from the U.S. and the resulting Dollar strength and slowdown abroad spill back to the United States.
Author contact info: Rashad Ahmed Office of the Comptroller of the Currency U.S. Department of the Treasury E-Mail: rashad.ahmed@occ.treas.gov Menzie D. Chinn Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-7397 Fax: 608/262-2033 E-Mail: mchinn@lafollette.wisc.edu

How Abundant Are Reserves? Evidence from the Wholesale Payment System - Afonso, Gara; Duffie, Darrell; Rigon, Lorenzo; Shin, Hyun Song (National Bureau of Economic Research Working Paper Series, 2022)
Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with abundant reserve balances, we show that outgoing payments remain highly sensitive to incoming payments. By providing a window on liquidity constraints revealed by payment behavior, our results shed light on thresholds for the adequacy of reserve balances. Our findings are timely, given the ongoing shrinking of central bank balance sheets around the world in response to inflation.
Author contact info: Gara Afonso Federal Reserve Bank of NY 33 Liberty Street New York, NY 10045 E-Mail: Gara.Afonso@ny.frb.org Darrell Duffie Graduate School of Business Stanford University Stanford, CA 94305-7298 Tel: 650/723-1976 Fax: 650/725-7979 E-Mail: duffie@stanford.edu Lorenzo Rigon Stanford Department of Economics 579 Jane Stanford Way Stanford, CA 94305 U.S. E-Mail: lrigon@stanford.edu Hyun Song Shin Bank for International Settlements Centralbahnplatz 2 4051 Basel Switzerland Tel: + 41 61 280 80 80 E-Mail: Hyunsong.shin@bis.org

Why Transform Y? A Critical Assessment of Dependent-Variable Transformations in Regression Models for Skewed and Sometimes-Zero Outcomes - Mullahy, John; Norton, Edward C (National Bureau of Economic Research Working Paper Series, 2022)
Dependent variables that are non-negative, follow right-skewed distributions, and have large probability mass at zero arise often in empirical economics. Two classes of models that transform the dependent variable y — the natural logarithm of y plus a constant and the inverse hyperbolic sine — have been widely used in empirical work. We show that these two classes of models share several features that raise concerns about their application. The concerns are particularly prominent when dependent variables are frequently observed at zero, which in many instances is the main motivation for using them in the first place. The crux of the concern is that these models have an extra parameter that is generally not determined by theory but whose values have enormous consequences for point estimates. As these parameters go to extreme values estimated marginal effects on outcomes' natural scales approach those of either an untransformed linear regression or a normed linear probability model. Across a wide variety of simulated data, two-part models yield correct marginal effects, as do OLS on the untransformed y and Poisson regression. If researchers care about estimating marginal effects, we recommend using these simpler models that do not rely on transformations.
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 Edward C. Norton Department of Health Management and Policy Department of Economics University of Michigan School of Public Health 1415 Washington Heights, M3108 SPHII Ann Arbor, MI 48109-2029 Tel: 734/615-5738 Fax: 734/764-4338 E-Mail: ecnorton@umich.edu

Productivity and Wages: What Was the Productivity-Wage Link in the Digital Revolution of the Past, and What Might Occur in the AI Revolution of the Future? - Lazear, Edward; Shaw, Kathryn L; Hayes, Grant E; Jedras, James M (National Bureau of Economic Research Working Paper Series, 2022)
Wages have been spreading out across workers over time – or in other words, the 90th/50th wage ratio has risen over time. A key question is, has the productivity distribution also spread out across worker skill levels over time? Using our calculations of productivity by skill level for the U.S., we show that the distributions of both wages and productivity have spread out over time, as the right tail lengthens for both. We add OECD countries, showing that the wage-productivity correlation exists, such that gains in aggregate productivity, or GDP per person, have resulted in higher wages for workers at the top and bottom of the wage distribution. However, across countries, those workers in the upper income ranks have seen their wages rise the most over time. The most likely international factor explaining these wage increases is the skill-biased technological change of the digital revolution. The new AI revolution that has just begun seems to be having a similar skill-biased effects on wages. But this current AI, called “supervised learning,” is relatively similar to past technological change. The AI of the distant future will be “unsupervised learning,” and it could eventually have an effect on the jobs of the most highly skilled.
Author contact info: Edward P. Lazear Graduate School of Business Stanford University Stanford, CA 94305 Tel: 650/723-9136 Fax: 650/723-0498 E-Mail: no email, deceased Kathryn L. Shaw Graduate School of Business Stanford University Stanford, CA 94305-5015 Tel: 650/725-4168 Fax: 650/725-0468 E-Mail: kathryns@stanford.edu Grant E. Hayes Booth School of Business University of Chicago Chicago, IL 60637 E-Mail: grantehayes@gmail.com James M. Jedras E-Mail: james.m.jedras@gmail.com

Corporate Decision-Making under Uncertainty: Review and Future Research Directions - Campello, Murillo; Kankanhalli, Gaurav (National Bureau of Economic Research Working Paper Series, 2022)
Uncertainty over future business conditions lies at the heart of firm decision-making. Uncertainty can arise from a myriad of sources and is difficult to measure. We present a simple conceptual framework showing how several key corporate decisions are affected by uncertainty. We also highlight recent advances in the measurement of uncertainty, distinguishing between approaches that gauge aggregate uncertainty and those that capture different dimensions of firm-specific uncertainty. These approaches incorporate information obtained from market prices, big data, machine learning techniques, surveys, and more. We then review the growing body of empirical work that studies the role played by uncertainty in shaping outcomes ranging across corporate investment, asset base composition, innovation, liquidity management, payouts, and mergers. Our review outlines several opportunities for future research.
Author contact info: Murillo Campello Johnson Graduate School of Management Cornell University 114 East Avenue 369 Sage Hall Ithaca, NY 14853-6201 Tel: 607-255-1282 E-Mail: campello@cornell.edu Gaurav Kankanhalli Joseph M. Katz Graduate School of Business University of Pittsburgh 226 Mervis Hall Pittsburgh, PA 15260 E-Mail: gkankanhalli@katz.pitt.edu

When Will Arctic Sea Ice Disappear? Projections of Area, Extent, Thickness, and Volume - Diebold, Francis X; Rudebusch, Glenn D; Göbel, Maximilian; Goulet Coulombe, Philippe; Zhang, Boyuan (National Bureau of Economic Research Working Paper Series, 2022)
Rapidly diminishing Arctic summer sea ice is a strong signal of the pace of global climate change. We provide point, interval, and density forecasts for four measures of Arctic sea ice: area, extent, thickness, and volume. Importantly, we enforce the joint constraint that these measures must simultaneously arrive at an ice-free Arctic. We apply this constrained joint forecast procedure to models relating sea ice to atmospheric carbon dioxide concentration and models relating sea ice directly to time. The resulting "carbon-trend" and "time-trend" projections are mutually consistent and predict a nearly ice-free summer Arctic Ocean by the mid-2030s with an 80% probability. Moreover, the carbon-trend projections show that global adoption of a lower carbon path would likely delay the arrival of a seasonally ice-free Arctic by only a few years.
Author contact info: Francis X. Diebold Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-1507 E-Mail: fdiebold@sas.upenn.edu Glenn D. Rudebusch Brookings Institution E-Mail: no email available Maximilian Göbel E-Mail: maximilian.goebel@unibocconi.it Philippe Goulet Coulombe E-Mail: gouletc@sas.upenn.edu Boyuan Zhang Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104-6297 E-Mail: boyuanz@sas.upenn.edu

State-Building in a Diverse Society - Carlitz, Ruth; Morjaria, Ameet; Mueller, Joris M; Osafo-Kwaako, Philip (National Bureau of Economic Research Working Paper Series, 2022)
Diversity can pose fundamental challenges to state-building and development. The Tanzanian Ujamaa policy—one of post-colonial Africa’s largest state-building experiments—addressed these challenges by resettling a diverse population in planned villages, where children received political education. We combine differences in exposure to Ujamaa across space and age to identify long-term impacts of the policy. Analysis of contemporary surveys shows persistent, positive effects on national identity and state legitimacy. Exposed cohorts are also more likely to marry across ethnic lines. Our preferred interpretation, supported by evidence that considers alternative hypotheses, is that changes to educational content drive our results. Our findings also point to trade-offs associated with state-building: while the policy contributed to establishing the new state as a legitimate central authority, simultaneously it lowered demands for democratic accountability.
Author contact info: Ruth Carlitz E-Mail: r.d.carlitz@uva.nl Ameet Morjaria Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: a.morjaria@kellogg.northwestern.edu Joris M. Mueller National University of Singapore Department of Economics AS2 04-26, 1 Arts Link Singapore 117570 Singapore Tel: +6592956505 E-Mail: jorismueller@nus.edu.sg Philip Osafo-Kwaako E-Mail: osafo@alum.mit.edu

Managers and the Management of Organizations - Roberts, John; Shaw, Kathryn L (National Bureau of Economic Research Working Paper Series, 2022)
We critically review the emerging literature in Organizational and Personnel Economics concerning the role of managers and management practices. Our focus is on the middle managers who populate the hierarchies between top executives and front-line employees. We are especially concerned with research that brings together theoretical modeling and empirical investigation.
Author contact info: John Roberts 835 Santa Fe Ave Stanford University Stanford, Cali 94305 United States Tel: (650) 283 6408 E-Mail: jroberts@stanford.edu Kathryn L. Shaw Graduate School of Business Stanford University Stanford, CA 94305-5015 Tel: 650/725-4168 Fax: 650/725-0468 E-Mail: kathryns@stanford.edu

FDI Inflows and Domestic Firms: Adjustments to New Export Opportunities - McCaig, Brian; Pavcnik, Nina; Wong, Woan Foong (National Bureau of Economic Research Working Paper Series, 2022)
We investigate a low-income country’s long run employment response to new export opportunities. The U.S.–Vietnam Bilateral Trade Agreement reduced U.S. import tariffs on exports from Vietnam. Employment grew faster in the industries most exposed to the U.S. tariff reductions and this was driven by foreign affiliates of multinationals entering Vietnam. Foreign entrants continue to expand employment long after entry–even after 16 years. Most foreign entrants are exporters and from East Asia, highlighting that opportunities created by bilateral agreements are not just limited to signing parties. Vietnam’s subsequent capacity growth allows it to export to other markets over time.
Author contact info: Brian McCaig Department of Economics Wilfrid Laurier University 75 University Avenue West Waterloo, ON N2L 3C5 Canada E-Mail: bmccaig@wlu.ca Nina Pavcnik Department of Economics 6106 Rockefeller Center Dartmouth College Hanover, NH 03755 Tel: 603/646-2537 Fax: 603/646-2122 E-Mail: nina.pavcnik@dartmouth.edu Woan Foong Wong Economics Department 1285 University Of Oregon Eugene, OR 97403 E-Mail: wongwoanfoong@gmail.com

Private Sanctions - Hart, Oliver D; Thesmar, David; Zingales, Luigi (National Bureau of Economic Research Working Paper Series, 2022)
We survey a representative sample of the U.S. population to understand stakeholders’ desire to see their firms leave Russia after the invasion of Ukraine. Only 37% of the respondents think that leaving Russia is a pure business decision, and only 30% think that sanctions are a pure matter for the government. If a firm does not conform to the desire to leave Russia, 66% of the respondents are willing to boycott it (exit). We randomize a (hypothetical) cost of exiting the firm. This cost has a strong effect on the stated propensity to exit. This sensitivity allows us to provide a natural $ equivalent of moral motivations for exiting. We try to distinguish deontological and impact related motives to exit, by randomizing beliefs about the impact on the firm. We find a clear effect of impact for shareholders, but not for consumers and employees. Our results continue to hold on the subsample of participants who actually donate part of their survey compensation to Ukraine. In our survey, consumers emerge as the most powerful force to control the morality of firms. We discuss the geopolitical and economic implications of a world where private corporations can discontinue profitable business relationships for moral or political reasons.
Author contact info: Oliver D. Hart Department of Economics Littauer Center 220 Harvard University Cambridge, MA 02138 Tel: 617/496-3461 Fax: 617-495-7730 E-Mail: ohart@harvard.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 Luigi Zingales Booth School of Business The University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-3196 Fax: 773/834-2081 E-Mail: luigi.zingales@ChicagoBooth.edu

A Fiscal Theory of Persistent Inflation - Bianchi, Francesco; Faccini, Renato; Melosi, Leonardo (National Bureau of Economic Research Working Paper Series, 2022)
We develop a new class of general equilibrium models with partially unfunded debt to propose a fiscal theory of persistent inflation. In response to business cycle shocks, the monetary authority controls inflation and the fiscal authority stabilizes debt. How- ever, the central bank accommodates unfunded fiscal shocks, causing persistent movements in inflation, output, and real interest rates. In an estimated quantitative model, fiscal inflation accounts for the bulk of inflation dynamics. In the aftermath of the pandemic, unfunded fiscal shocks sustain the recovery, but also cause a persistent increase in inflation. The model is able to predict the inflationary effects of the ARPA fiscal stimulus out of sample and with real time data.
Author contact info: Francesco Bianchi Johns Hopkins University Department of Economics 3400 N. Charles Street 544E Wyman Bldg. Baltimore, Maryland 21218 E-Mail: francesco.bianchi@jhu.edu Renato Faccini Danmarks Nationalbank Research department Langelinie AllÃ© 47 2100 Copenhagen Denmark E-Mail: rmmf@nationalbanken.dk Leonardo Melosi Federal Reserve Bank of Chicago 230 S. LaSalle street Chicago, IL 60604 Tel: +44 (0)20 7000 8432 E-Mail: lmelosi@gmail.com

Noise-Robust De-Duplication at Scale - Silcock, Emily; D'Amico-Wong, Luca; Yang, Jinglin; Dell, Melissa (National Bureau of Economic Research Working Paper Series, 2022)
Identifying near duplicates within large, noisy text corpora has a myriad of applications that range from de-duplicating training datasets, reducing privacy risk, and evaluating test set leakage, to identifying reproduced news articles and literature within large corpora. Across these diverse applications, the overwhelming majority of work relies on N-grams. Limited efforts have been made to evaluate how well N-gram methods perform, in part because it is unclear how one could create an unbiased evaluation dataset for a massive corpus. This study uses the unique timeliness of historical news wires to create a 27,210 document dataset, with 122,876 positive duplicate pairs, for studying noise-robust de-duplication. The time-sensitivity of news makes comprehensive hand labelling feasible - despite the massive overall size of the corpus - as duplicates occur within a narrow date range. The study then develops and evaluates a range of de-duplication methods: hashing and N-gram overlap (which predominate in the literature), a contrastively trained bi-encoder, and a ``re-rank'' style approach combining a bi- and cross-encoder. The neural approaches significantly outperform hashing and N-gram overlap. We show that the bi-encoder scales well, de-duplicating a 10 million article corpus on a single GPU card in a matter of hours. We also apply our pre-trained model to the RealNews and patent portions of C4 (Colossal Clean Crawled Corpus), illustrating that a neural approach can identify many near duplicates missed by hashing, in the presence of various types of noise. The public release of our NEWS-COPY de-duplication dataset, de-duplicated RealNews and patent corpuses, and the pre-trained models will facilitate further research and applications.
Author contact info: Emily Silcock Department of Economics Harvard University Cambridge, MA 02138 E-Mail: silcock@nber.org Luca D'Amico-Wong E-Mail: ldamicowong@college.harvard.edu Jinglin Yang E-Mail: jinglin.yang@berkeley.edu Melissa Dell Department of Economics Harvard University Littauer M-24 Cambridge, MA 02138 Tel: 617/384-7272 Fax: 617/495-7730 E-Mail: melissadell@fas.harvard.edu

The Importance of Modeling Income Taxes Over time. U.S. Reforms and Outcomes - Borella, Margherita; De Nardi, Mariacristina; Pak, Michael; Russo, Nicolo; Yang, Fang (National Bureau of Economic Research Working Paper Series, 2022)
While “’Tis impossible to be sure of any thing but Death and Taxes” Bullock (1716), the structure of taxes and their burden have undergone large and frequent changes over time. We provide a brief history of U.S. federal income tax reforms since the 1960s, calculate effective federal income tax rates for each wave of the Panel Study of Income Dynamics, and discuss how effective taxation changed from 1969 to 2016. We show that most tax regimes are short-lived and that the variation in taxes over time and across groups is large. We also use an estimated dynamic model of couples and singles to show that the various tax regimes that we estimate imply very different labor market and saving behavior. These findings stress the importance of studying and modeling tax changes over time and across groups.
Author contact info: Margherita Borella Università di Torino Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche Torino, Italy E-Mail: margherita.borella@unito.it Mariacristina De Nardi University of Minnesota 1925 S 4th St Minneapolis, MN 55455 E-Mail: denardim@nber.org Michael Pak E-Mail: michaeltpak@gmail.com Nicolo Russo Campus Westend Theodor-W.-Adorno-Platz 4 60323 Frankfurt am Main Germany E-Mail: russo@econ.uni-frankfurt.de Fang Yang Research Department Federal Reserve Bank Of Dallas 2200 N. Pearl St. Dallas, Texa 75201 United States Tel: (214) 922-5617 E-Mail: fang.yang@dal.frb.org

Wage Garnishment in the United States: New Facts from Administrative Payroll Records - DeFusco, Anthony A; Enriquez, Brandon M; Yellen, Margaret B (National Bureau of Economic Research Working Paper Series, 2022)
Wage garnishment allows creditors to deduct money directly from workers’ paychecks to re-pay defaulted debts. We document new facts about wage garnishment between 2014–2019 using data from a large payroll processor who distributes paychecks to approximately 20%of U.S. private-sector workers. As of 2019, over one in every 100 workers was being garnished for delinquent debt. The average garnished worker experiences garnishment for five months, during which approximately 11% of gross earnings is remitted to their creditor(s). The beginning of a new garnishment is associated with an increase in job turnover rates but no intensive margin change in hours worked.
Author contact info: Anthony A. DeFusco Wisconsin School of Business University of Wisconsin-Madison 975 University Avenue Office 5285 Madison, WI 53715 E-Mail: anthony.defusco@wisc.edu Brandon M. Enriquez E-Mail: enriquez@mit.edu Margaret B. Yellen E-Mail: myellen@mit.edu

Are Retirement Planning Tools Substitutes or Complements to Financial Capability? - Goda, Gopi Shah; Levy, Matthew R; Flaherty Manchester, Colleen; Sojourner, Aaron; Tasoff, Joshua; Xiao, Jiusi (National Bureau of Economic Research Working Paper Series, 2022)
We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers' retirement-savings decisions. In both conditions, the calculator projects workers' retirement income goal. In the treatment condition, it also projects retirement income based on defined-contribution savings, prominently displays the gap between projected goal and actual retirement income, and allows users to interactively explore how alternative, future contribution choices would affect the gap. The treatment increased average annual retirement contributions by $174 (2.3 percent). However, effects were larger for those with greater financial knowledge, suggesting this type of tool complements, rather than substitutes for, underlying financial capability.
Author contact info: Gopi Shah Goda Stanford University SIEPR 366 Galvez St. Stanford, CA 94305 Tel: 650/736-0480 Fax: 650/723-8611 E-Mail: gopi.shah.goda@gmail.com Matthew Levy Department of Economics London School of Economics and Political Science Houghton Street London WC2A 2AE Tel: 617-495-5365 Fax: 617-496-1636 E-Mail: m.r.levy@lse.ac.uk Colleen Flaherty Manchester Work and Organizations University of Minnesota Room 3-300R 321 - 19th Avenue South Minneapolis, MN 55455 Tel: 612-625-9667 E-Mail: cmanch@umn.edu Aaron Sojourner 300 S. Westnedge Avenue Kalamazoo, Mich 49007 United States of America Tel: 269-343-5541 E-Mail: sojourner@upjohn.org Joshua Tasoff Claremont Graduate University Department of Economics 160 East Tenth Street Claremont, CA 91711 E-Mail: joshua.tasoff@cgu.edu Jiusi Xiao 160 East Tenth St. Claremont, CA 91711 USA E-Mail: jiusi.xiao@cgu.edu

Preferred Habitats and Timing in the World’s Safe Asset - Tabova, Alexandra M; Warnock, Francis E (National Bureau of Economic Research Working Paper Series, 2022)
We build the first-ever comprehensive security-level dataset on the size, flows, coupon payments and returns of foreign and U.S. investors’ Treasury portfolios. Portfolio composition is such that private investors, whether U.S. or foreign, should all else equal earn higher returns than foreign governments; private investors hold longer-duration higher-return Treasuries, whereas foreign governments hold shorter-duration lower-return Treasuries. But all else is not equal. Foreign governments earn higher returns because U.S. and foreign private investors’ poor timing substantially reduces their returns. Moreover, we find that foreigners beat the (non-Fed) market or, to put it another way, that there is no convenience yield attributable to foreigners paying (through poor returns) for non-pecuniary benefits. U.S. investors earn a small and insignificant 19 basis points less than market returns. One simple but far-reaching implication: When assessing U.S. Treasuries it might be useful to differentiate by the investor’s type (private or government) but not by country (U.S. or foreign).
Author contact info: Alexandra M. Tabova Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue N.W. Washington, DC 20551 Tel: 202-452-2343 E-Mail: alexandra.m.tabova@frb.gov Francis E. Warnock Darden Business School University of Virginia Charlottesville, VA 22906-6550 Tel: 434/924-6076 Fax: 434/243-8945 E-Mail: warnockf@darden.virginia.edu

Mutual Fund Revenue Sharing in 401(k) Plans - Pool, Veronika K; Sialm, Clemens; Stefanescu, Irina (National Bureau of Economic Research Working Paper Series, 2022)
Recordkeepers in DC pension plans are often paid indirectly in the form of revenue sharing from third-party funds on the menu. We show that these arrangements affect the investment menu of 401(k) plans. Revenue-sharing funds are more likely to be added to the menu and are less likely to be deleted. Overall, revenue-sharing plans are more expensive as higher expense ratios are not offset by lower direct fees or by superior performance. Rebates increase with the market power of the recordkeeper suggesting that third-party funds may revenue share to gain access to retirement assets.
Author contact info: Veronika K. Pool Vanderbilt University 401 21st Avenue South Nashville, TN 37203 E-Mail: veronika.pool@vanderbilt.edu Clemens Sialm University of Texas at Austin McCombs School of Business 2110 Speedway; B6600 Austin, TX 78712-1276 Tel: 512-232-6835 E-Mail: clemens.sialm@mccombs.utexas.edu Irina Stefanescu Federal Reserve Board Washington, DC 20551 E-Mail: irina.stefanescu@frb.gov

The Macroeconomic Implications of US Market Power in Safe Assets - Choi, Jason; Kirpalani, Rishabh; Perez, Diego J (National Bureau of Economic Research Working Paper Series, 2022)
The US government is the dominant supplier of global safe assets and faces a downward-sloping demand for its debt. In this paper, we ask if the US exercises its market power when issuing debt and study its macroeconomic consequences. We develop a model of the global economy in which US public debt generates a non-pecuniary value for its holders, analyze the equilibrium in which the US government is the monopoly provider of this safe asset, and contrast this case with the one in which the US government acts as a price taker. We use variation in estimated demand elasticities for US debt during high- and low-volatility regimes to empirically distinguish between these two models and find that the data reject the price-taking behavior in favor of the monopoly one. We then quantify the distortions due to market power and find that it generates a significant underprovision of safe assets, a sizable markup in the convenience yield, and large welfare benefits for the US to the detriment of the rest of the world. Finally, we study the implications of increasing competition in safe assets from other sovereigns and private institutions.
Author contact info: Jason Choi 212 Max Gluskin House 150 St. George Street Toronto, Onta Canada E-Mail: jasonhj.choi@utoronto.ca Rishabh Kirpalani Department of Economics University of Wisconsin-Madison Madison, WI 53706 E-Mail: rishabh.kirpalani@wisc.edu Diego J. Perez Department of Economics New York University 19 West 4th Street New York, NY 10012 Tel: 650/766-5042 E-Mail: diego.perez@nyu.edu

Adverse Selection and Network Design Under Regulated Plan Prices: Evidence from Medicaid - Kreider, Amanda R; Layton, Timothy J; Shepard, Mark; Wallace, Jacob (National Bureau of Economic Research Working Paper Series, 2022)
Health plans for the poor increasingly limit access to specialty hospitals. We investigate the role of adverse selection in generating this equilibrium among private plans in Medicaid. Studying a network change, we find that covering a top cancer hospital causes severe adverse selection, increasing demand for a plan by 50% among enrollees with cancer versus no impact for others. Medicaid’s fixed insurer payments make offsetting this selection, and the contract distortions it induces, challenging, requiring either infeasibly high payment rates or near-perfect risk adjustment. By contrast, a small explicit bonus for covering the hospital is sufficient to make coverage profitable.
Author contact info: Amanda R. Kreider Colonial Penn Center #108 3641 Locust Walk Philadelphia, PA 19104 Tel: 610-322-6236 E-Mail: akreid@wharton.upenn.edu Timothy Layton Harvard Medical School Department of Health Care Policy 180 Longwood Avenue Boston, MA 02115 Tel: 617/432-4465 E-Mail: layton@hcp.med.harvard.edu Mark Shepard Harvard Kennedy School Mailbox 114 79 JFK Street Cambridge, MA 02138 Tel: 617/496-5062 E-Mail: mark_shepard@hks.harvard.edu Jacob Wallace Yale School of Public Health Department of Health Policy and Management 60 College Street New Haven, CT 06520 E-Mail: jacob.wallace@yale.edu

Corporate Governance Implications of the Growth in Indexing - Brav, Alon; Malenko, Nadya; Malenko, Andrey (National Bureau of Economic Research Working Paper Series, 2022)
Passively managed funds have grown to become some of the largest shareholders in publicly traded companies, but there is considerable debate about the effects of this growth on corporate governance. The goal of this paper is to review the literature on the governance implications of passive fund growth and discuss directions for future research. In particular, we present a framework to understand the incentives of passive and actively managed funds to engage in governance, review the empirical evidence in the context of this framework, and highlight the questions that remain unanswered.
Author contact info: Alon Brav Fuqua School of Business Duke University One Towerview Drive Durham, NC 27708 Tel: 919/660-2908 Fax: 919/684-2818 E-Mail: brav@duke.edu Nadya Malenko 140 Commonwealth Avenue Carroll School of Management Boston College Chestnut Hill, MA 02467 E-Mail: malenko@bc.edu Andrey Malenko 140 Commonwealth Ave Carroll School of Management, Boston College Chestnut Hill, MA 02467 Tel: 8572344706 E-Mail: malenkoa@bc.edu

Missing Workers and Missing Jobs Since the Pandemic - Hobijn, Bart; Şahin, Ayşegül (National Bureau of Economic Research Working Paper Series, 2022)
Since the start of the pandemic the U.S. labor market has been characterized as being plagued by missing jobs, i.e. payroll employment has fallen more than five million jobs short of its pre-pandemic trend, and missing workers, i.e. the participation rate has declined by 1.2 percentage points: A pandemic-induced shortage of workers has restrained job creation and, as a result, been a substantial drag on post-pandemic job growth. In this paper, we show that this is a misinterpretation of the data for two reasons. The first is that the number of missing jobs is inflated because it is based on the unrealistic assumption that the pre-pandemic tailwinds for job growth from the decline in the unemployment rate and cyclical upward pressures on participation would have continued in 2020 and beyond if the pandemic would not have occurred. Second, the number of workers missing due to COVID is overstated because the bulk of the 1.2 percentage-point decline in the participation rate since the start of the pandemic reflects a continuation of its long-run downward trend that was already part of projections before the pandemic broke out. Instead, our payroll jobs accounting yields an 810 thousand cyclical shortfall in payroll jobs in October 2022 compared to right before the pandemic. At the recent pace of job growth, even without monetary and fiscal tightening, we expect a substantial deceleration of payroll growth in the coming months.
Author contact info: Bart Hobijn Federal Reserve Bank of Chicago 230 S. LaSalle St. Chicago, IL 60604 E-Mail: bart.hobijn@barthobijn.net Ayşegül Şahin Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 Tel: 512/471-3664 E-Mail: aysegul.sahin@austin.utexas.edu

Tax-Loss Harvesting with Cryptocurrencies - Cong, Lin William; Landsman, Wayne; Maydew, Edward; Rabetti, Daniel (National Bureau of Economic Research Working Paper Series, 2022)
We describe the landscape of taxation in the crypto markets, especially that concerning U.S. taxpayers, and examine how recent increases in tax scrutiny have led to changes in trading behavior by crypto traders. We predict under a simple theoretical framework and then empirically document that increased tax scrutiny leads crypto investors to utilize legal tax planning with tax-loss harvesting as an alternative to non-compliance. In particular, domestic traders increase tax-loss harvesting following the increase in tax scrutiny, and U.S. exchanges exhibit a significantly greater amount of wash trading. Additional findings suggest that broad-based and targeted changes in tax scrutiny can differentially affect crypto traders' preference for U.S.-based exchanges. We also discuss other gray areas for tax regulation related to new crypto assets such as Non-Fungible Tokens and Decentralized Finance protocols that further highlight the importance of coordinating tax policy and other regulations.
Author contact info: Lin William Cong SC Johnson College of Business Cornell University Sage Hall Ithaca, NY 14853 Tel: 607/255-7859 E-Mail: will.cong@cornell.edu Wayne Landsman McColl Building 4013 Chapel Hill, NC 27599-3490 United States E-Mail: wayne_landsman@unc.edu Edward Maydew Kenan-Flager Business School University of North Carolina-Chapel Hill Campus Box 3490, McColl Building Chapel Hill, NC 27599-3490 E-Mail: edward_maydew@unc.edu Daniel Rabetti Cornell Fintech Initiative and Coller School of Management Tel Aviv University Tel Aviv, Israel, 6997801 Israel Tel: 972 549107234 E-Mail: rabetti@mail.tau.ac.il

Heads Up: Does Air Pollution Cause Workplace Accidents? - Lavy, Victor; Rachkovski, Genia; Yoresh, Omry (National Bureau of Economic Research Working Paper Series, 2022)
Literature has shown that air pollution can have short- and long-term adverse effects on physiological and cognitive performance. In this study, we estimate the effect of increased nitrogen dioxide (NO2), one of the primary air pollutants, on the likelihood of accidents in construction sites, a significant factor related to productivity losses in the labor market. Using data from all construction sites and pollution monitoring stations in Israel, we find a strong and significant connection between air pollution and construction site accidents. We find that a 10-ppb increase in NO2 levels increases the likelihood of an accident by as much as 25 percent. We present a mechanism where the effect of pollution is exacerbated in conditions with high cognitive strain or worker fatigue. Finally, we perform a cost–benefit analysis, supported by a nonparametric estimation examining a potential welfare-improving policy to subsidize the closure of construction sites on highly polluted days.
Author contact info: 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 Genia Rachkovski E-Mail: genia.rachkovski@u.northwestern.edu Omry Yoresh 32 Lincoln's Inn Fields London WC2A 3PH United Kingdom E-Mail: omry.yoresh@mail.huji.ac.il

Preferences, Inequities, and Incentives in the Substitute Teacher Labor Market - Kraft, Matthew A; Conklin, Megan Lane; Falken, Grace T (National Bureau of Economic Research Working Paper Series, 2022)
We examine the labor supply decisions of substitute teachers – a large, on-demand market with broad shortages and inequitable supply. In 2018, Chicago Public Schools implemented a targeted bonus program designed to reduce unfilled teacher absences in largely segregated Black schools with historically low substitute coverage rates. Using a regression discontinuity design, we find that incentive pay substantially improved coverage equity and raised student achievement. Changes in labor supply were concentrated among Black and Hispanic substitutes from nearby neighborhoods with experience in incentive schools. Wage elasticity estimates suggest incentives would need to be 50% of daily wages to close fill-rate gaps.
Author contact info: Matthew A. Kraft Brown University PO Box 1938 Providence, RI 02912 Tel: 401/863-3795 E-Mail: mkraft@brown.edu Megan Lane Conklin Upbeat- Director of Insights & Analytics E-Mail: megan@teachupbeat.com Grace T. Falken E-Mail: gfalken@uw.edu

Pros and Cons of Globalization: Income-Based Attitudes - Razin, Assaf (National Bureau of Economic Research Working Paper Series, 2022)
Which income group is pro-globalization or anti-globalization—the wealthy skilled-labor or the poor low-skilled labor? How globalization affect income-based attitudes towards globalization? The paper addresses these issues in the framework of a small open economy which trades in goods and financial securities with the rest of the world. Income-based political cleavages analyzed are grounded on trade-related and macro-related fundamentals, familiar from a standard open-economy model. They are: (i) The degree of trade border frictions, (ii) The degree of international finance frictions, (iii) The relative factor abundance that determines the capital intensity of the country’s exports; and, (iv) The domestic savings and productivity of domestic investment, which determines whether the country is a financial capital exporter or importer.
Author contact info: Assaf Razin Eitan Berglas School of Economics Tel Aviv University Tel Aviv 69978 ISRAEL Tel: 972/58-7900033 Fax: 972/3-640-9908 E-Mail: razin@tauex.tau.ac.il

Regulatory Incentives for Innovation: The FDA's Breakthrough Therapy Designation - Chandra, Amitabh; Kao, Jennifer; Miller, Kathleen L; Stern, Ariel D (National Bureau of Economic Research Working Paper Series, 2022)
Regulators of new products confront a tradeoff between speeding a new product to market and collecting additional product quality information. The FDA’s Breakthrough Therapy Designation (BTD) provides an opportunity to understand if a regulator can use new policy to innovate around this tradeoff—i.e., whether it improved regulator productivity by allowing products to come to market more quickly without compromising quality. We find that the BTD program shortened clinical development times by 23 percent and did not impact the ex post safety profile of drugs with the designation. In exploring mechanisms, we find that the BTD program had the greatest impact on less experienced firms and was associated with reduced BTD clinical trial design complexity. The results suggest that targeted regulatory innovation can shorten R&D periods without compromising the quality of new products.
Author contact info: Amitabh Chandra John F. Kennedy School of Government Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/496-7356 E-Mail: amitabh_chandra@harvard.edu Jennifer L. Kao University of California, Los Angeles Anderson School of Management 110 Westwood Plaza—D510 Los Angeles, CA 90095 E-Mail: jennifer.kao@anderson.ucla.edu Kathleen L. Miller US Food and Drug Administration 10903 New Hampshire Avenue Silver Spring, MD 20993 USA E-Mail: kathleen.miller@fda.hhs.gov Ariel Dora Stern Harvard Business School Morgan Hall 433 Boston, MA 02163 Tel: 617-495-2332 E-Mail: astern@hbs.edu

The Impact of School Spending on Civic Engagement: Evidence from School Finance Reforms - Asker, Erdal; Brunner, Eric; Ross, Stephen (National Bureau of Economic Research Working Paper Series, 2022)
A primary rationale for public provision of K-12 education and state financing of school spending is that education fosters civic engagement and the development of social capital. However, limited evidence exists on whether and how school spending affects civic engagement. Virtually all studies focus on the impact of educational attainment (as opposed to school spending) on political activity. We provide the first causal evidence on how school spending affects volunteerism as well as voting. The court-ordered and legislative school finance reforms that occurred throughout the United States over recent decades led to large and plausibly exogenous shocks to K-12 school spending. We estimate difference-in-difference-in-differences (DDD) models to isolate the causal impact of school spending on civic engagement. Using data from the National Education Longitudinal Study of 1988 (NELS), the Education Longitudinal Study of 2002 (ELS), and the High School Longitudinal Study of 2009 (HSLS), we find that exogenous increases in school spending led to increases in the probability that young adults volunteer and the amount of time they spend volunteering. In contrast, we find little evidence that school spending impacts voting. Consistent with prior studies, we find that increases in school spending increase high school graduation and college attendance.
Author contact info: Erdal Asker 560 Parliament Garden Way NW, Room BB427 Atlanta, Ga 30144 United States Tel: 8606349556 E-Mail: easker@kennesaw.edu Eric Brunner Department of Public Policy University of Connecticut 10 Prospect Street, 4th Floor Hartford, CT 06103 E-Mail: eric.brunner1@gmail.com Stephen Ross Department of Economics University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063 Tel: 860/486-3533 E-Mail: stephen.l.ross@uconn.edu

Cultural Stereotypes of Multinational Banks - Eichengreen, Barry; Saka, Orkun (National Bureau of Economic Research Working Paper Series, 2022)
Using hand-collected data spanning more than a decade on European banks’ sovereign debt portfolios, we show that the trust of residents of a bank’s countries of operation in the residents of a potential target country of investment has a positive, statistically significant, and economically important effect on its cross-border exposures. In identifying cultural stereotypes at the bank level, we show that corporate culture at bank headquarters is influenced by foreign subsidiaries for several reasons, including banks’ tendency to hire internally across borders for high-level managerial positions. We therefore leverage the geography of multinational bank branch networks to construct a bank-specific measure of culture that varies across banks headquartered in the same country, at the same point in time, with regard to the same target country. We find stereotypes and their effect on bank exposures to be persistent over time, stronger for less diversified banks, and weaker for target countries whose bonds appear more frequently in bank portfolios. Cultural stereotypes are particularly salient when governments are hit by sovereign debt crises.
Author contact info: Barry Eichengreen Department of Economics University of California, Berkeley 549 Evans Hall 3880 Berkeley, CA 94720-3880 Tel: 510/642-2772 Fax: 510/643-0926 E-Mail: eichengr@econ.Berkeley.edu Orkun Saka City, University of London Northampton Square London EC1V 0HB United Kingdom E-Mail: o.saka@city.ac.uk

Central Bank Digital Currencies, an Old Tale With a New Chapter - Bordo, Michael D; Roberds, William (National Bureau of Economic Research Working Paper Series, 2022)
We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs.
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 William Roberds Research Department Federal Reserve Bank of Atlanta 104 Marietta Street, NW Atlanta, GA 30303-2713 Tel: 404-521-8970 E-Mail: no email available

How Do Investors Value ESG? - Baker, Malcolm; Egan, Mark L; Sarkar, Suproteem K (National Bureau of Economic Research Working Paper Series, 2022)
Environmental, social, and governance (ESG) objectives have risen to near the top of the agenda for corporate executives and boards, driven in large part by their perceptions of shareholder interest. We quantify the value that shareholders place on ESG using a revealed preference approach, where shareholders pay higher fees for ESG-oriented index funds in exchange for their financial and non-financial benefits. We find that investors are willing, on average, to pay 20 basis points more per annum for an investment in a fund with an ESG mandate as compared to an otherwise identical mutual fund without an ESG mandate, suggesting that investors as a group expect commensurately higher pre-fee, gross returns, either financial or non-financial, from an ESG mandate. Our point estimate has risen from 9 basis points in 2019 when our sample begins to as much as 28 basis points in 2022. When we incorporate the possibility that investors are willing to accept lower financial returns in exchange for the psychic and societal benefits of ESG, when we consider that the holdings of ESG and non-ESG index funds overlap, when we measure the ESG ratings of these holdings, and when we focus on 401(k) participants who report being concerned about climate change or who work in industries with lower levels of emissions, we find that the implicit value that investors place on ESG stocks is higher still. A simple model of supply suggests that the large majority of these benefits accrue to investors and firms, with intermediaries capturing 5.9 basis points in fees, half of which reflect higher markups.
Author contact info: Malcolm Baker Baker Library 261 Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617/495-6566 Fax: 617/496-5271 E-Mail: mbaker@hbs.edu Mark L. Egan Harvard Business School Baker Library 365 Soldiers Field Boston, MA 02163 Tel: 617/495-6823 E-Mail: megan@hbs.edu Suproteem K. Sarkar Harvard University E-Mail: suproteemsarkar@g.harvard.edu

How do Workers and Households Adjust to Robots? Evidence from China - Giuntella, Osea; Lu, Yi; Wang, Tianyi (National Bureau of Economic Research Working Paper Series, 2022)
We analyze the effects of exposure to industrial robots on labor markets and household behaviors, exploring longitudinal household data from China. We find that a one standard deviation increase in robot exposure led to a decline in labor force participation (-1%), employment (-7.5%), and hourly wages (-9%) of Chinese workers. At the same time, among those who kept working, robot exposure increased the number of hours worked by 14%. These effects were concentrated among the less educated and larger among men, prime-age, and older workers. We then explore how individuals and families responded to increased exposure to robots. We find that more exposed workers increased their participation in technical training and were significantly more likely to retire earlier. Despite the negative impact on wages and employment, we find no evidence of an effect on consumption or savings, which is explained by an increase in borrowing (+10%). While there is no evidence of an effect on marital behavior, we document that robot exposure led to a small decline in the number of children (-1%). Finally, we find that robot exposure increased family time investment in the education of children (+10%) as well as the investment in children’s after-school academic and extra-curricular activities (+24%).
Author contact info: Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Yi Lu School of Economics and Management Tsinghua University Beijing, China, 100084 E-Mail: luyi@sem.tsinghua.edu.cn Tianyi Wang University of Toronto Department of Economics Toronto, Ontario M5S 3G7 Canada E-Mail: tianyiwang.wang@utoronto.ca

(Un)Conventional Monetary and Fiscal Policy - Wu, Jing Cynthia; Xie, Yinxi (National Bureau of Economic Research Working Paper Series, 2022)
We build a tractable New Keynesian model to jointly study four types of monetary and fiscal policy. We find quantitative easing (QE), lump-sum fiscal transfers, and government spending have the same effects on the aggregate economy when fiscal policy is fully tax financed. Compared with these three policies, conventional monetary policy is more inflationary for the same amount of stimulus. QE and transfers have redistribution consequences, whereas government spending and conventional monetary policy do not. Ricardian equivalence breaks: tax-financed fiscal policy is more stimulative than debt-financed policy. Finally, we study optimal policy coordination and find that adjusting two types of policy instruments, the policy rate together with QE or fiscal transfers, can stabilize three targets simultaneously: inflation, the aggregate output gap, and cross-sectional consumption dispersion.
Author contact info: Jing Cynthia Wu Department of Economics 3060 Jenkins Nanovic Hall University of Notre Dame Notre Dame, IN 46556 E-Mail: j.cynthia.wu@gmail.com Yinxi Xie Bank of Canada 234 Wellington Street West Ottawa, ON K1A 0G9 Canada E-Mail: yinxi.xie.econ@gmail.com

Economic Research on Privacy Regulation: Lessons from the GDPR and Beyond - Johnson, Garrett (National Bureau of Economic Research Working Paper Series, 2022)
This paper reviews the economic literature on the European Union's General Data Protection Regulation (GDPR). I highlight key challenges for studying the regulation including the difficulty of finding a suitable control group, variable firm compliance and regulatory enforcement, as well as the regulation's impact on data observability. The economic literature on the GDPR to date has largely—though not universally—documented harms to firms. These harms include firm performance, innovation, competition, the web, and marketing. On the elusive consumer welfare side, the literature documents some objective privacy improvements as well as helpful survey evidence. The literature also examines the consequences of the GDPR's design decisions and illuminates how the GDPR works in practice. Finally, I suggest opportunities for future research on the GDPR as well as privacy regulation and privacy-related innovation more broadly.
Author contact info: Garrett Johnson Questrom School of Business 595 Commonwealth Avenue Boston, MA 02215 United States Tel: 6173534677 E-Mail: garjoh@bu.edu

Scaling Agricultural Policy Interventions - Bergquist, Lauren F; Faber, Benjamin; Fally, Thibault; Hoelzlein, Matthias; Miguel, Edward; Rodríguez-Clare, Andrés (National Bureau of Economic Research Working Paper Series, 2022)
Policies aimed at raising agricultural productivity have been a centerpiece in the fight against global poverty. Their impacts are often measured using field or quasi-experiments that provide strong causal identification, but may be too small-scale to capture the general equilibrium (GE) effects that emerge once the policy is scaled up. We propose a new approach for quantifying large-scale GE policy counterfactuals that can both complement and be informed by evidence from field and quasi-experiments. We develop a quantitative model of farm production, consumption and trading that captures important features of this setting, and propose a new solution method that relies on rich but widely available microdata. We showcase our approach in the context of a subsidy for modern inputs in Uganda, using variation from field and quasi-experiments for parameter estimation. We find that both the average and distributional impacts of the subsidy differ meaningfully when comparing a local intervention to one at scale, even for the same sample of farmers, and quantify the underlying mechanisms. We further document new insights on how GE forces differ as a function of saturation rates at different geographical scales, and on the importance of capturing a granular economic geography for counterfactual analysis.
Author contact info: Lauren F. Bergquist Department of Economics and Jackson School of Global Affairs Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: lauren.bergquist@yale.edu Benjamin Faber Department of Economics University of California, Berkeley 697A Evans Hall Berkeley, CA 94720 E-Mail: benfaber@econ.berkeley.edu Thibault Fally Department of Agricultural and Resource Economics University of California, Berkeley Giannini Hall, 207 Berkeley, CA 94720-3310 Tel: 720/237-6158 E-Mail: fally@berkeley.edu Matthias Hoelzlein University of Notre Dame 3035 Jenkins-Nanovic Halls Notre Dame, IN 46556 Tel: +15107017955 E-Mail: mhoelzle@nd.edu Edward Miguel Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 Tel: 510/642-7162 Fax: 510/642-6615 E-Mail: emiguel@econ.berkeley.edu Andrés Rodríguez-Clare University of California at Berkeley Department of Economics Berkeley, CA 94720-3880 E-Mail: arc@berkeley.edu

A Quantity-Based Approach to Constructing Climate Risk Hedge Portfolios - Alekseev, Georgij; Giglio, Stefano; Maingi, Quinn; Selgrad, Julia; Stroebel, Johannes (National Bureau of Economic Research Working Paper Series, 2022)
We propose a new methodology to build portfolios that hedge the economic and financial risks from climate change. Our quantity-based approach exploits information on how mutual fund managers trade in response to idiosyncratic changes in their climate risk beliefs. We exploit two types of idiosyncratic belief shocks: (i) instances when fund advisers experience local extreme heat events that are known to shift climate change beliefs, and (ii) instances when fund managers change the language in shareholder disclosures to express concerns about climate risks. We use the funds’ observed portfolio changes around such idiosyncratic belief shocks to predict how investors will reallocate their capital in response to aggregate climate news shocks that shift the beliefs and asset demands of many investors and thus move equilibrium prices. We show that a portfolio that is long stocks that investors tend to buy after experiencing negative idiosyncratic climate belief shocks, and short stocks that investors tend to sell, appreciates in value in periods with negative aggregate climate news shocks. Our quantity-based portfolios have superior out-of-sample hedge performance compared to portfolios constructed using existing alternative methods. The key advantage of the quantity-based approach is that it learns from rich cross-sectional trading responses rather than time-series price information, which is particularly limited in the case of newly emerging risks such as those from climate change. We also demonstrate the versatility of the quantity-based approach by constructing successful hedge portfolios for aggregate unemployment and house price risk.
Author contact info: Georgij Alekseev Palantir E-Mail: galeksee@stern.nyu.edu Stefano Giglio Yale School of Management 165 Whitney Avenue New Haven, CT 06520 Tel: 203/432-3373 E-Mail: stefano.giglio@yale.edu Quinn Maingi Stern School of Business New York University 44 West Fourth Street Suite 9-175A New York, NY 10012 E-Mail: rmaingi@stern.nyu.edu Julia Selgrad NYU Stern 44 West 4th Street, New York, NY 10012 E-Mail: jselgrad@stern.nyu.edu Johannes Stroebel Stern School of Business New York University 44 West 4th Street New York, NY 10012 Tel: 650/888-3441 E-Mail: johannes.stroebel@nyu.edu

Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? - Jacobsen, Mark R; Sallee, James M; Shapiro, Joseph S; van Benthem, Arthur A (National Bureau of Economic Research Working Paper Series, 2022)
The world has 1.4 billion passenger vehicles. How should governments regulate their air pollution emissions? A Pigouvian tax is technologically infeasible. Most countries instead rely on exhaust standards that limit air pollution emissions per mile for new vehicles. We assess the effectiveness and efficiency of these standards, which are the centerpiece of US Clean Air Act regulation of transportation, and counterfactual policies. We show that the air pollution emissions per mile of new US vehicles has fallen spectacularly, by over 99 percent, since standards began in 1967. Several research designs with a half century of data suggest that exhaust standards have caused most of this decline. Yet exhaust standards are not cost-effective in part because they fail to encourage scrap of older vehicles, which account for the majority of emissions. To study counterfactual policies, we develop an analytical and a quantitative model of the vehicle fleet. Analysis of these models suggests that tighter exhaust standards increase social welfare and that increasing registration fees on dirty vehicles yields even larger gains by accelerating scrap, though both reforms have complex effects on inequality.
Author contact info: Mark R. Jacobsen Department of Economics University of California, San Diego 9500 Gilman Drive, MC 0508 La Jolla, CA 92093 Tel: 858/822-7767 Fax: 858/534-7040 E-Mail: m3jacobs@ucsd.edu James M. Sallee Department of Agricultural and Resource Economics University of California, Berkeley 207 Giannini Hall Berkeley, California 94720-3310 Tel: 510-643-5519 Fax: 510-643-8911 E-Mail: sallee@berkeley.edu Joseph S. Shapiro University of California, Berkeley #3310 Berkeley, CA 94720 E-Mail: joseph.shapiro@berkeley.edu 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

What Do Changes in State Test Scores Imply for Later Life Outcomes? - Doty, Elena; Kane, Thomas J; Patterson, Tyler; Staiger, Douglas O (National Bureau of Economic Research Working Paper Series, 2022)
In the three decades before the pandemic, mean achievement of U.S. 8th graders in math rose by more than half a standard deviation on the National Assessment of Educational Progress (NAEP). Between 2019 and 2022, U.S. students had forfeited 40 percent of that rise. To anticipate the consequences of the recent decline, we investigate the past relationship between NAEP scores and students’ later life outcomes by year and state of birth. We find that a standard deviation improvement in a birth cohort’s 8th grade math achievement was associated with an 8 percent rise in income, as well as improved educational attainment and declines in teen motherhood, incarceration and arrest rates. If allowed to become permanent, our findings imply that the recent losses would represent a 1.6 percent decline in present value of lifetime earnings for the average K-12 student (or $19,400), totaling $900 billion for the 48 million students enrolled in public schools during the 2020-21 school year.
Author contact info: Elena Doty E-Mail: elena.doty@gmail.com Thomas J. Kane Harvard Graduate School of Education Center for Education Policy Research 50 Church St., 4th Floor Cambridge, MA 02138 Tel: 617/496-4359 E-Mail: kaneto@gse.harvard.edu Tyler Patterson Center for Education Policy Research 50 Church Street, 4th Floor Cambridge, MA 02138 E-Mail: tyler_patterson@gse.harvard.edu Douglas O. Staiger Dartmouth College Department of Economics HB6106, 301 Rockefeller Hall Hanover, NH 03755-3514 Tel: 603/646-2979 Fax: 603/646-2122 E-Mail: douglas.staiger@dartmouth.edu

Using Measures of Race to Make Clinical Predictions: Decision Making, Patient Health, and Fairness - Manski, Charles F; Mullahy, John; Venkataramani, Atheendar (National Bureau of Economic Research Working Paper Series, 2022)
The use of race measures in clinical prediction models and algorithms has become a highly contentious issue, driven by concerns that inclusion of race as a covariate exacerbates and perpetuates long-standing disparities in quality of health care provided to racial and ethnic minority patients. We seek to inform and ground this debate by evaluating the inclusion of race—even if imperfectly measured—in probabilistic predictions of illness that aim to inform clinical decision making. First, adopting a utilitarian framework to formalize social welfare, our analysis reveals that patients of all races are better off when clinical decisions are jointly guided by patient race and other observable covariates. In this sense, race is not a particularly special covariate: any covariate with predictive power (i.e., one that changes conditional probabilities of illness) should be used to optimize clinical decisions. We then extend the model to a two-period setting where prevention activities that address systemic drivers of disease are relevant and find that the same basic conclusions emerge. Finally, we discuss formal non-utilitarian concepts of fairness and disparity-aversion that have been proposed to guide societal allocation of health care resources.
Author contact info: Charles F. Manski Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208-2600 Tel: 847/491-8223 Fax: 847/491-7001 E-Mail: cfmanski@northwestern.edu 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 Atheendar Venkataramani Department of Medical Ethics and Health Policy University of Pennsylvania 423 Guardian Drive Philadelphia, PA 19104 E-Mail: atheenv@pennmedicine.upenn.edu

Picking Winners? Government Subsidies and Firm Productivity in China - Branstetter, Lee G; Li, Guangwei; Ren, Mengjia (National Bureau of Economic Research Working Paper Series, 2022)
Are Chinese industrial policies making the targeted Chinese firms more productive? Alternatively, are efforts to promote productivity undercut by efforts to maintain or expand employment in less productive enterprises? In this paper, we attempt to shed light on these questions through the analysis of previously underutilized microdata on direct government subsidies provided to China’s publicly traded firms. We categorize subsidies into different types. We then estimate total-factor productivity (TFP) for Chinese listed firms and investigate the relationship between these estimates of TFP and the allocation of government subsidies. We find little evidence that the Chinese government consistently “picks winners”. Firms’ ex-ante productivity is negatively correlated with subsidies received by firms, and subsidies appear to have a negative impact on firms’ ex-post productivity growth throughout our data window, 2007 to 2018. Neither subsidies given out under the name of R&D and innovation promotion nor industrial and equipment upgrading positively affect firms’ productivity growth. On the other hand, we find a positive impact of subsidy on current year employment, both for the aggregated and employment-related subsidies. These findings suggest that China’s increasingly prescriptive industrial policies may have generated limited effects in promoting productivity.
Author contact info: Lee G. Branstetter Heinz College Hamburg Hall 2222 Carnegie Mellon University Pittsburgh, PA 15213 Tel: 412/268-4649 E-Mail: branstet@andrew.cmu.edu Guangwei Li Room 324, SEM Building 393 Middle Huaxia Road Pudong, Shanghai 201210, China E-Mail: ligw@shanghaitech.edu.cn Mengjia Ren Carnegie Mellon University - Heinz College 4800 Forbes Ave Pittsburgh, PA 15213 United States E-Mail: rmjdaisy@cmu.edu

Taxes and the Labor Supply of the Stars - Keniston, Daniel; Peralta, Abigail Allison M (National Bureau of Economic Research Working Paper Series, 2022)
Do high taxes cause superstars to work less? We test this hypothesis using complete data on Hollywood movie stars' labor supply from 1927 to 2014. Changes to marginal tax rates in high tax brackets have no significant effect on the number of films a movie star makes each year. However, in years with high taxes, stars produce more highly rated movies with award-winning directors, potentially substituting prestigious films for pecuniary gains
Author contact info: Daniel Keniston Louisiana State University Department of Economics 2325 Business Education Complex South 501 South Quad Drive Baton Rouge, LA 70803 E-Mail: dkeniston@lsu.edu Abigail Allison M. Peralta E-Mail: aperalta@lsu.edu

The Regulation of Medical AI: Policy Approaches, Data, and Innovation Incentives - Stern, Ariel Dora (National Bureau of Economic Research Working Paper Series, 2022)
For those who follow health and technology news, it is difficult to go more than a few days without reading about a compelling new application of Artificial Intelligence (AI) to health care. AI has myriad applications in medicine and its adjacent industries, with AI-driven tools already in use in basic science, translational medicine, and numerous corners of health care delivery, including administrative work, diagnosis, and treatment. In diagnosis and treatment, a large and growing number of AI tools meet the statutory definition of a medical device or that of an in-vitro diagnostic. Those that do are subject to regulation by local authorities, resulting in both practical and strategic implications for manufacturers, along with a more complex set of innovation incentives. This chapter presents background on medical device regulation—especially as it relates to software products—and quantitatively describes the emergence of AI among FDA-regulated products. The empirical section of this chapter explores characteristics of AI-supported/driven medical devices (“AI devices”) in the United States. It presents data on their origins (by firm type and country), their safety profiles (as measured by associated adverse events and recalls), and concludes with a discussion of the implications of regulation for innovation incentives in medical AI.
Author contact info: Ariel Dora Stern Harvard Business School Morgan Hall 433 Boston, MA 02163 Tel: 617-495-2332 E-Mail: astern@hbs.edu

How do Behavioral Approaches to Increase Savings Compare? Evidence from Multiple Interventions in the U.S. Army - Patterson, Richard W; Skimmyhorn, William L (National Bureau of Economic Research Working Paper Series, 2022)
Information provision, choice simplification, social messaging, active-choice frameworks, and automatic enrollment all increase retirement savings. However, gauging the relative efficacy of these approaches is challenging because the supporting evidence spans widely different institutional settings, populations, and time periods. In this study, we leverage experimental and quasi-experimental variation in a constant setting, the U.S. military between 2016-2018, to examine the effects of nearly two dozen experiments for four leading policy options (i.e., information emails, action steps, target contribution rates, active choice, and automatic enrollment) designed to increase retirement savings. Consistent with previous literature, we find sizable effects of savings interventions on participation and cumulative contributions that increase with the intensity of the intervention. We then exploit cost data to complete the first cost-effectiveness analysis in the literature. Our analysis suggests that active choice programs are the most cost-effective method to generate new program participation and contributions for small, medium, and large firms, while automatic enrollment is more cost-effective for very large firms.
Author contact info: Richard W. Patterson Brigham Young University 2121 WVB Provo, UT 84602 E-Mail: rich_patterson@byu.edu William L. Skimmyhorn Raymond A. Mason School of Business The College of William & Mary 101 Ukrop Way Williamsburg, VA 23187 USA E-Mail: bill.skimmyhorn@mason.wm.edu

Financial Regret at Older Ages and Longevity Awareness - Hurwitz, Abigail; Mitchell, Olivia S (National Bureau of Economic Research Working Paper Series, 2022)
Many older people express regret about undersaving; here, we extend prior work by reporting regret about five other critical financial topics. Using the Health and Retirement Study, we first show that older people who regret past financial decisions differ significantly from those who do not. Second, in an experiment, we demonstrate that informing people about objective survival probabilities increases regret about not buying lifetime income by 42% overall, and by more among the high income or those in good health. We also document that, for some, providing such information increases regret about having claimed social security early and undersaving. These results may explain previous findings about why survival information can alter financial decisions.
Author contact info: Abigail Hurwitz Hebrew University of Jerusalem Environmental Economics and Management Jerusalem Israel Tel: +972545443281 E-Mail: abigail.hurwitz@mail.huji.ac.il Olivia S. Mitchell University of Pennsylvania The Wharton School 3620 Locust Walk, St 3000 SH-DH Philadelphia, PA 19104-6302 Tel: 215-898-0424 E-Mail: mitchelo@wharton.upenn.edu

Internal Adjustment Costs of Firm-Specific Factors and the Neoclassical Theory of the Firm - Chetty, V.K.; Heckman, James J (National Bureau of Economic Research Working Paper Series, 2022)
This paper considers the consequences of a two-sector vertically-integrated model of firms producing output using firm-specific capital with a second sector producing firm-specific capital by adapting raw capital purchased in the market. Analysts rarely observe each sector separately. Aggregating over both sectors produces short-run and long-run factor demand functions that appear to be perverse, but when disaggregated obey standard neoclassical properties. Adjustment costs create the appearance of static inefficiency in the presence of dynamic efficiency.
Author contact info: V.K. Chetty Department of Family Medicine Boston University Chobanian and Avedisian School of Medicine 771 Albany Street Boston, MA 02118 USA E-Mail: vchetty@bu.edu 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

Measuring Religion from Behavior: Climate Shocks and Religious Adherence in Afghanistan - Dube, Oeindrila; Blumenstock, Joshua; Callen, Michael (National Bureau of Economic Research Working Paper Series, 2022)
Religious adherence has been hard to study in part because it is hard to measure. We develop a new measure of religious adherence, which is granular in both time and space, using anonymized mobile phone transaction records. After validating the measure with traditional data, we show how it can shed light on the nature of religious adherence in Islamic societies. Exploiting random variation in climate, we find that as economic conditions in Afghanistan worsen, people become more religiously observant. The effects are most pronounced in areas where droughts have the biggest economic consequences, such as croplands without access to irrigation.
Author contact info: Oeindrila Dube University of Chicago Harris School of Public Policy 1307 E 60th St Chicago, IL 60637 E-Mail: odube@uchicago.edu Joshua Blumenstock School of Information 102 South Hall University of California, Berkeley E-Mail: jblumenstock@berkeley.edu Michael Callen London School of Economics Houghton Street London, WC2A 2AE United Kingdom E-Mail: m.j.callen@lse.ac.uk

Maternal and Infant Health Inequality: New Evidence from Linked Administrative Data - Kennedy-Moulton, Kate; Miller, Sarah; Persson, Petra; Rossin-Slater, Maya; Wherry, Laura; Aldana, Gloria (National Bureau of Economic Research Working Paper Series, 2022)
We use linked administrative data that combines the universe of California birth records, hospitalizations, and death records with parental income from Internal Revenue Service tax records to provide novel evidence on economic inequality in infant and maternal health. We find that birth outcomes vary non-monotonically with parental income, and that children of parents in the top ventile of the income distribution have higher rates of low birth weight and preterm birth than those in the bottom ventile. However, unlike birth outcomes, infant mortality varies monotonically with income, and infants of parents in the top ventile of the income distribution—who have the worst birth outcomes—have a death rate that is half that of infants of parents in the bottom ventile. When studying maternal health, we find that although mothers in the top and bottom income ventiles have similar rates of severe maternal morbidity, the former group are three times less likely to die than the latter. At the same time, these disparities by parental income are small when compared to racial disparities, and we observe virtually no convergence in health outcomes across racial and ethnic groups as income rises. Indeed, infant and maternal health in Black families at the top of the income distribution is markedly worse than that of white families at the bottom of the income distribution. Lastly, we benchmark the health gradients in California to those in Sweden, finding that infant and maternal health is worse in California than in Sweden for most outcomes throughout the entire income distribution.
Author contact info: Kate Kennedy-Moulton E-Mail: kam2373@columbia.edu Sarah Miller Ross School of Business University of Michigan 701 Tappan Street Ann Arbor, MI 48109 Tel: 734/647-6978 E-Mail: mille@umich.edu Petra Persson Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-4116 E-Mail: perssonp@stanford.edu Maya Rossin-Slater Department of Health Policy Stanford University School of Medicine 615 Crothers Way Encina Commons, MC 6019 Stanford, CA 94305-6006 E-Mail: mrossin@stanford.edu Laura Wherry Wagner Graduate School of Public Service New York University 295 Lafayette Street New York, NY 10012 Tel: 212/998-7444 E-Mail: laura.wherry@nyu.edu Gloria Aldana 4600 Silver Hill Road Suitland, MD 20746 E-Mail: gloria.g.aldana@census.gov

Inflation Hedging on Main Street? Evidence from Retail TIPS Fund Flows - Nagel, Stefan; Yan, Zhen (National Bureau of Economic Research Working Paper Series, 2022)
Households participating in financial markets pay attention to inflation news when making their investment decisions, even in an environment of mostly low and stable inflation. ETFs and open-ended mutual funds holding Treasury Inflation-Protected Securities (TIPS) receive inflows from retail investors, and nominal Treasury ETF experience outflows, when long-horizon market-based inflation expectations measures increase. Changes in household survey expectations or in measures of inflation uncertainty do not contribute much in explaining retail TIPS fund flows. Retail flows into TIPS funds are asymmetric, with strong reactions only to positive inflation news, and sticky, with flow responses to news gradually playing out over several months. Retail investors appear to pay some attention to regular Federal Reserve announcements, but major events such as the ``taper tantrum'' in May 2013, the presidential election in November 2016, and the COVID-19 crisis in March 2020 are associated with particularly large retail TIPS fund flows.
Author contact info: Stefan Nagel University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: stefan.nagel@chicagobooth.edu Zhen Yan Arrowstreet Capital 200 Clarendon St #30 Boston, MA 02116 E-Mail: zachyan@umich.edu

The Cost of Regulatory Compliance in the United States - Trebbi, Francesco; Zhang, Miao Ben (National Bureau of Economic Research Working Paper Series, 2022)
We quantify firms’ compliance costs of regulation from 2002 to 2014 in terms of their labor input expenditure to comply with government rules, a primary component of regulatory compliance spending for large portions of the U.S. economy. Detailed establishment-level occupation data, in combination with occupation-specific task information, allow us to recover the share of an establishment’s wage bill owing to employees engaged in regulatory compliance. Regulatory costs account on average for 1.34 percent of the total wage bill of a firm, but vary substantially across and within industries, and have increased over time. We investigate the returns to scale in regulatory compliance and find an inverted-U shape, with the percentage regulatory spending peaking for an establishment size of around 500 employees. Finally, we develop an instrumental variable methodology for decoupling the role of regulatory requirements from that of enforcement in driving firms’ compliance costs.
Author contact info: Francesco Trebbi Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: ftrebbi@berkeley.edu Miao Ben Zhang University of Southern California 701 Exposition Blvd HOH-722 Los Angeles, CA 90089 Tel: 2138219887 E-Mail: miao.zhang@marshall.usc.edu

Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning - Jack, B. Kelsey; Jayachandran, Seema; Kala, Namrata; Pande, Rohini (National Bureau of Economic Research Working Paper Series, 2022)
Particulate matter significantly reduces life expectancy in India. We use a randomized controlled trial in the Indian state of Punjab to evaluate the effectiveness of conditional cash transfers (also known as payments for ecosystem services, or PES) in reducing crop residue burning, which is a major contributor to the region’s poor air quality. Credit constraints and distrust may make farmers less likely to comply with standard PES contracts, which only pay the participant after verification of compliance. We randomize paying a portion of the money upfront and unconditionally. Despite receiving a lower reward for compliance, farmers offered partial upfront payment are 8-12 percentage points more likely to comply than are farmers offered the standard contract. Burning measures derived from satellite imagery indicate that PES with upfront payments significantly reduced burning, while standard PES payments were inframarginal. We also show that PES with an upfront component is a cost-effective way to improve India’s air quality.
Author contact info: Kelsey Jack University of California, Santa Barbara 2400 Bren Hall Santa Barbara, CA 93106-5131 E-Mail: kelseyjack@ucsb.edu Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu Namrata Kala MIT Sloan School of Management 100 Main Street, E62-517 Cambridge, MA 02142 Tel: 203/500-4675 E-Mail: kala@mit.edu Rohini Pande Yale University Department of Economics 27 Hillhouse Avenue New Haven, CT 06520 Tel: 617-384-5267 Fax: 617-496-8753 E-Mail: rohini.pande@yale.edu

Supply Chain Resilience: Evidence from Indian Firms - Khanna, Gaurav; Morales, Nicolas; Pandalai-Nayar, Nitya (National Bureau of Economic Research Working Paper Series, 2022)
We characterize what features make supply chains more resilient. Using new data on the universe of firm-to-firm transactions from an Indian state, we identify firms with larger supplier risk following the Covid-19 lockdowns. Using an event-study design we find firms with suppliers in strict-lockdown districts experienced 4.5pp higher separation rates (a 15% increase relative to baseline). We study which characteristics increase supply-chain resilience. Firms that buy more complex products, with fewer available suppliers, are less likely to break links. We explore how firms change post-shock supplier composition. Firms with higher supplier risk form new links with larger and better-connected suppliers.
Author contact info: Gaurav Khanna School of Global Policy and Strategy University of California, San Diego 9500 Gilman Drive La Jolla, Cali 92093 United States Tel: 2025278521 E-Mail: gakhanna@ucsd.edu Nicolas Morales Federal Reserve Bank of Richmond 701 E Byrd St Richmond, VA 23219 E-Mail: nicolas.morales.uy@gmail.com Nitya Pandalai-Nayar Department of Economics University of Texas at Austin 3.142 BRB, 2225 Speedway Austin, TX 78713 Tel: 503/616-1616 E-Mail: npnayar@utexas.edu

Predictable Price Pressure - Hartzmark, Samuel M; Solomon, David H (National Bureau of Economic Research Working Paper Series, 2022)
We demonstrate that predictable uninformed cash flows forecast market and individual stock returns. Buying pressure from dividend payments (announced weeks prior) predicts higher value-weighted market returns, with returns for the top quintile of payment days four times higher than the lowest. This holds internationally, and increases when reinvestment is high and market liquidity is low. High stock expense firms have lower returns from selling pressure after blackout periods, by 117 b.p. in four days. We estimate market-level price multipliers of 1.5 to 2.3. These results suggest price pressure is a widespread result of flows, not an anomaly.
Author contact info: Samuel M. Hartzmark Boston College Carroll School of Management 140 Commonwealth Ave Chestnut Hill, MA 02467 E-Mail: samuel.hartzmark@bc.edu David H. Solomon Boston College 140 Commonwealth Ave Fulton Hall Room 330 Chestnut Hill, MA 02467 E-Mail: david.solomon@bc.edu

Employee Evaluation and Skill Investments: Evidence from Public School Teachers - Taylor, Eric S (National Bureau of Economic Research Working Paper Series, 2022)
When an employee expects repeated evaluation and performance incentives over time, the potential future rewards create an incentive to invest in building relevant skills. Because new skills benefit job performance, the effects of an evaluation program can persist after the rewards end or even anticipate the start of rewards. I test for persistence and anticipation effects, along with more conventional predictions, using a quasi-experiment in Tennessee schools. Performance improves with new evaluation measures, but gains are larger when the teacher expects future rewards linked to future scores. Performance rises further when incentives start and remains higher even after incentives end.
Author contact info: Eric S. Taylor Harvard Graduate School of Education Gutman Library 469 6 Appian Way Cambridge, MA 02138 Tel: 617/496-1232 E-Mail: eric_taylor@gse.harvard.edu

Teachers’ Use of Class Time and Student Achievement - Burgess, Simon M; Rawal, Shenila; Taylor, Eric S (National Bureau of Economic Research Working Paper Series, 2022)
We study teachers’ choices about how to allocate class time across different instructional activities, for example, lecturing, open discussion, or individual practice. Our data come from secondary schools in England, specifically classes preceding GCSE exams. Students score higher in math when their teacher devotes more class time to individual practice and assessment. In contrast, students score higher in English if there is more discussion and work with classmates. Class time allocation predicts test scores separate from the quality of the teacher’s instruction during the activities. These results suggest opportunities to improve student achievement without changes in teachers’ skills.
Author contact info: Simon M. Burgess School of Economics Mary Paley Building Priory Road University of Bristol Bristol BS8 1TX United Kingdom E-Mail: Simon.Burgess@bristol.ac.uk Shenila Rawal 7 Queens Square Lyndhurst Road Ascot Berkshire SL5 9FE England E-Mail: shenilarawal@aol.com Eric S. Taylor Harvard Graduate School of Education Gutman Library 469 6 Appian Way Cambridge, MA 02138 Tel: 617/496-1232 E-Mail: eric_taylor@gse.harvard.edu

Families, Labor Markets, and Policy - Albanesi, Stefania; Olivetti, Claudia; Petrongolo, Barbara (National Bureau of Economic Research Working Paper Series, 2022)
Using comparable data for 24 countries since the 1970s, we document gender convergence in schooling, employment and earnings, marriage delay and the accompanying decline in fertility, and the large remaining gaps in labor market outcomes, especially among parents. A model of time allocation illustrates how the specialization of spouses in home or market production responds to preferences, comparative advantages and public policies. We draw lessons from existing evidence on the impacts of family policies on women's careers and children's wellbeing. There is to date little or no evidence of beneficial effects of longer parental leave (or fathers' quotas) on maternal participation and earnings. In most cases longer leave delays mothers' return to work, without long-lasting consequences on their careers. More generous childcare funding instead encourages female participation whenever subsidized childcare replaces maternal childcare. Impacts on child development depend on counterfactual childcare arrangements and tend to be more beneficial for disadvantaged households. In-work benefits targeted to low-earners have clear positive impacts on lone mothers' employment and negligible impacts on other groups. While most of this literature takes policy as exogenous, political economy aspects of policy adoption help understand the interplay between societal changes, family policies and gender equality.
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 Claudia Olivetti Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 E-Mail: claudia.olivetti@dartmouth.edu Barbara Petrongolo Department of Economics University of Oxford UNITED KINGDOM United Kingdom E-Mail: barbara.petrongolo@economics.ox.ac.uk

The Impact of Oil and Gas Extraction on Infant Health - Hill, Elaine L (National Bureau of Economic Research Working Paper Series, 2022)
The benefits and costs of resource extraction are currently being hotly debated in the case of unconventional natural gas development (commonly known as “fracking"). Colorado provides a unique research environment to study the health impacts of conventional and unconventional forms of oil and gas development (OGD) given its long history of conventional OGD and recent expansion of unconventional OGD. I utilize detailed vital statistics and the mother's residential address to define proximity to drilling activity. Using a difference-in-differences model that compares mothers residing within 1 km to mothers residing 1 - 5 km of a well (before and during/after drilling), I find that proximity to wells before birth increases adverse birth outcomes and pregnancy-related complications. I find impacts on the extensive and intensive margins and across well types. I also present results suggesting no impacts on fertility or mobility. These results are robust to multiple specifications and suggest that policies to mitigate against the risks of living near OGD may be warranted.
Author contact info: Elaine L. Hill Department of Public Health Sciences Department of Economics University of Rochester 265 Crittenden Boulevard Rochester, NY 14642 E-Mail: elaine_hill@urmc.rochester.edu

Responsible Sourcing? Theory and Evidence from Costa Rica - Alfaro-Urena, Alonso; Faber, Benjamin; Gaubert, Cecile; Manelici, Isabela; Vasquez, Jose P (National Bureau of Economic Research Working Paper Series, 2022)
Multinational enterprises (MNEs) increasingly impose “Responsible Sourcing” (RS) standards on their suppliers worldwide, including requirements on worker compensation, benefits and working conditions. Are these policies just “hot air” or do they impact exposed suppliers and their workers? What is the welfare incidence of RS in sourcing countries? To answer these questions, we develop a quantitative general equilibrium (GE) model of RS and combine it with a unique new database. In the theory, we show that the welfare implications of RS are ambiguous, depending on an interplay between what is akin to an export tax (+) and a labor market distortion (–). Empirically, we combine the near-universe of RS rollouts by MNE subsidiaries in Costa Rica since 2009 with firm-to-firm transactions and matched employer-employee microdata. We find that RS rollouts lead to significant reductions in firm sales and employment at exposed suppliers, an increase in their salaries to initially low-wage workers and a reduction in their low-wage employment share. We then use the estimated effects and the microdata to calibrate the model and quantify GE counterfactuals. We find that while MNE RS policies have led to significant gains among the roughly one third of low-wage workers employed at exposed suppliers ex ante, the majority of low-wage workers lose due to adverse indirect effects on their wages and the domestic price index.
Author contact info: Alonso Alfaro-Urena Central Bank of Costa Rica Costa Rica E-Mail: alfaroua@bccr.fi.cr Benjamin Faber Department of Economics University of California, Berkeley 697A Evans Hall Berkeley, CA 94720 E-Mail: benfaber@econ.berkeley.edu Cecile Gaubert Department of Economics University of California, Berkeley 687 Evans Hall Berkeley, CA 94720 Tel: 510/643-5397 Fax: 510/642-0822 E-Mail: cecile.gaubert@berkeley.edu Isabela Manelici E-Mail: i.manelici@lse.ac.uk Jose P. Vasquez London School of Economics London United Kingdom E-Mail: j.p.vasquez@lse.ac.uk

Funding Black High-Growth Startups - Cook, Lisa D; Marx, Matt; Yimfor, Emmanuel (National Bureau of Economic Research Working Paper Series, 2022)
We analyze determinants of access to venture capital for Black founders of high-growth startups. We combine image- and name-processing algorithms with clerical review to identify race for over 100,000 startup founders “at risk” for venture funding. Black founders raise roughly one-third as much venture capital in the five years after founding vs. other startups formed in the same year, industry, and state. What explains the gap? We attribute about a third of the gap to four factors: Black startups have smaller founding teams; Black founders are less likely to have worked at the same companies or attended the same schools as investors who fund startups in the same industry and geography; Black startups are less likely to be located in geographies with plentiful venture capital, and Black startups are less likely to have a patent. We then bound our estimates of the funding gap and show that, to explain the gap, omitted variables would have to be nearly four times as important as the variables we fix. The funding gap is not statistically different from zero in later funding stages (post Series B), suggesting that some investors initially hold—but later amend—incorrect beliefs about Black-founded startups. We also exploit the hiring of Black partners and show that they are more likely to fund successful Black startups, consistent with segmented networks.
Author contact info: Lisa D. Cook Department of Economics Michigan State University 486 W. Circle Drive East Lansing, MI 48824 Tel: 5174894148 E-Mail: cooklisad@gmail.com Matt Marx Cornell University 137 Reservoir Avenue Ithaca, NY 14853 Tel: 607/255-6598 E-Mail: mmarx@cornell.edu Emmanuel Yimfor Columbia Business School Department of Finance Columbia University 665 W 130th St. New York, NY 10027 E-Mail: eay2121@columbia.edu

Overcoming Behavioral Impediments to Maternal Care: Experimental Evidence on Domain Knowledge and Nudgeability from Recalcitrant Pakistan - Cyan, Musharraf R; Cesur, Resul; Civelek, Yasin; Yedgenov, Bauyrzhan; Rothenberg, Richard (National Bureau of Economic Research Working Paper Series, 2022)
We conducted a large-scale field experiment to calibrate phone messaging to its potential of overcoming behavioral barriers to maternal care uptake in the countryside of a developing country, where a significant share of women forgoes life-saving maternity-related care even when within reach. The high-arching goal of our intervention is to test if and to what extent filling out insufficient domain knowledge (i.e., childbearing-related health literacy) generates responsiveness to nudges for adopting maternal care among the rural poor of Pakistan. We find that informational nudges sent in a random order using the appropriate medium of communication, voice messages, during pregnancy significantly improve care-seeking behaviors, measured by antenatal care, postpartum checkup, and postnatal visits, through improved literacy. Importantly, we document that high-frequency voice calls timed to gestational age substantially increase the efficacy of informational nudges, including boosting facility deliveries, once domain knowledge is built and nudgeability established. Nevertheless, small financial incentives trump the productivity of informational voice calls in both improving health literacy and boosting care uptake, likely due to participants equating the intrinsic value of the intended behavioral change to the size of the monetary reward. These results are scalable to a large number of populations across developing nations.
Author contact info: Musharraf Cyan United Nations Development Program 4th Floor, Serena Business Complex Khayaban-e-Suharwardy Islamabad Pakistan E-Mail: musharraf.rasool@undp.org Resul Cesur University of Connecticut School of Business 2100 Hillside Road Storrs, CT 06269 Tel: 860/486-6315 E-Mail: cesur@uconn.edu Yasin Civelek New York, NY 10065 USA E-Mail: yac4004@med.cornell.edu Bauyrzhan Yedgenov 1064 Curran St NW Apt C Atlanta GA 30318 E-Mail: baur382@gmail.com Richard Rothenberg E-Mail: rrothenberg@gsu.edu

International Climate Agreements and the Scream of Greta - Maggi, Giovanni; Staiger, Robert W (National Bureau of Economic Research Working Paper Series, 2022)
Current policies directed at mitigating global warming appear unlikely to prevent temperatures from rising to levels that would trigger a precipitous increase in the costs of climate change. Various attempts at international cooperation to avoid this outcome have failed. Why is this problem so intractable? Can we expect an 11th-hour solution? Will some countries, or even all, succumb on the equilibrium path? We address these questions through a model that features the possibility of climate catastrophe and emphasizes the role of international externalities that a country’s policies exert on other countries and intertemporal externalities that current generations exert on future generations. Within this setting, we explore the extent to which international agreements can mitigate the problem of climate change. Our analysis illuminates the role that international climate agreements can be expected to play in addressing climate change, and it points to important limitations on what such agreements can achieve, even under the best of circumstances.
Author contact info: Giovanni Maggi Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/432-3569 Fax: 203/432-6323 E-Mail: giovanni.maggi@yale.edu Robert W. Staiger Department of Economics Dartmouth College 319 Silsby Hanover, NH 03755 Tel: (603)-646-9345 E-Mail: rstaiger@dartmouth.edu

Cognitive Decline and Dynamic Selection - Darden, Michael E (National Bureau of Economic Research Working Paper Series, 2022)
Understanding cognitive health, its decline, and the investments that shape its age profile in later life are important in an aging society, and yet, estimating the cognitive health production function is complicated by non-random mortality and sample attrition. I study this dynamic selection problem in the context of education, race, and cigarette smoking, characteristics thought to affect the level, but not slope, of cognitive decline. I develop a general framework that involves estimation of a system of dynamic equations consistent with the Grossman (1972) model. Exploiting exciting longitudinal data from the National Health and Aging Trends Study (NHATS), I find substantially wider gaps in cognitive health by these characteristics relative to cross-sectional comparisons, in some cases by 100%. Furthermore, these gaps grow in age, which suggests that the bias generated by dynamic selection is not constant. The implication of these results is that theories of cognitive decline need to accommodate differential rates of change -- rather than just differences in levels -- in cognitive health by education and race. Connecting theory and empirical work offers an important tool for economists studying health investment and health in older populations.
Author contact info: Michael E. Darden Johns Hopkins University Carey Business School 555 Pennsylvania Ave. 20001 Washington, DC 20001 United States E-Mail: mdarden4@jhu.edu

On the Geographic Implications of Carbon Taxes - Conte, Bruno; Desmet, Klaus; Rossi-Hansberg, Esteban (National Bureau of Economic Research Working Paper Series, 2022)
A unilateral carbon tax trades off the distortionary costs of taxation and the future gains from slowing down global warming. Because the cost is local and immediate, whereas the benefit is global and delayed, this tradeoff tends to be unfavorable to unilateral carbon taxes. We show that this logic breaks down in a world with trade and migration where economic geography is shaped by agglomeration economies and congestion forces. Using a multisector dynamic spatial integrated assessment model (S-IAM), this paper predicts that a carbon tax introduced by the European Union (EU) and rebated locally can, if not too large, increase the size of Europe’s economy by concentrating economic activity in its high-productivity non-agricultural core and by incentivizing immigration to the EU. The resulting change in the spatial distribution of economic activity improves global efficiency and welfare. A unilateral carbon tax with local rebating introduced by the US generates similar global welfare gains. Other forms of rebating can dilute or revert this positive effect.
Author contact info: Bruno Conte Department of Economics Universitat Pompeu Fabra Carrer Ramon Trias Fargas 25-27 Barcelona 08005 Spain E-Mail: bruno.conte@upf.edu Klaus Desmet Department of Economics and Cox School of Business Southern Methodist University 3300 Dyer, Suite 301 Dallas, TX 75205 Tel: 214/768-2689 E-Mail: kdesmet@smu.edu Esteban Rossi-Hansberg The Kenneth C. Griffin Department of Economics University of Chicago 5757 S. University Avenue Chicago, IL 60637 Tel: (650) 714 2093 E-Mail: rossihansberg@uchicago.edu

Subjective Evaluations and Stratification in Graduate Education - Bai, Jessica; Esche, Matthew; MacLeod, W. Bentley; Shi, Yifan (National Bureau of Economic Research Working Paper Series, 2022)
We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals.
Author contact info: Jessica Bai Department of Economics Harvard University Cambridge, MA 02138 E-Mail: jbai@g.harvard.edu Matthew Esche Department of Economics Columbia University 420 West 118th Street, MC 3308 New York, NY 10027 E-Mail: matthew.esche@columbia.edu W. Bentley MacLeod Department of Economics Princeton University 214 Robertson Hall, 20 Prospect St. Princeton, NJ 08544-1013 Tel: 609-258-1856 E-Mail: wbmacleod@wbmacleod.net Yifan Shi Department of Economics Columbia University 420 West 118th Street, MC 3308 New York, NY 10027 E-Mail: ys3094@columbia.edu

Does "Made in China 2025" Work for China? Evidence from Chinese Listed Firms - Branstetter, Lee G; Li, Guangwei (National Bureau of Economic Research Working Paper Series, 2022)
Rising concern over the impact of Chinese industrial policy has led to severe trade tensions between China and some of its major trading partners. In recent years, foreign criticism has increasingly focused on the so-called "Made in China 2025" initiative. In this paper, we use information extracted from Chinese listed firms' financial reports and a difference-in-differences approach to examine how the "Made in China 2025" policy initiative has impacted firms' receipt of subsidies, R&D expenditure, patenting, productivity, and profitability. We find that while more innovation promotion subsidies seem to flow into the listed firms targeted by the policy, we see little statistical evidence of productivity improvement or increases in R&D expenditure, patenting and profitability. This paper suggests that the “Made in China 2025” initiative may have not yet achieved its target goals.
Author contact info: Lee G. Branstetter Heinz College Hamburg Hall 2222 Carnegie Mellon University Pittsburgh, PA 15213 Tel: 412/268-4649 E-Mail: branstet@andrew.cmu.edu Guangwei Li Room 324, SEM Building 393 Middle Huaxia Road Pudong, Shanghai 201210, China E-Mail: ligw@shanghaitech.edu.cn

How Much Lifetime Social Security Benefits Are Americans Leaving On the Table? - Altig, David; Kotlikoff, Laurence J; Ye, Victor Yifan (National Bureau of Economic Research Working Paper Series, 2022)
Americans are notoriously bad savers. Large numbers are reaching old age too poor to finance retirements that could last longer than they worked. This study uses the 2018 American Community Survey to impute retirement ages for 2019 Survey of Consumer Finance (SCF) respondents. Next, we run the SCF respondents through the Fiscal Analyzer (TFA) to measure the size and distribution of forgone lifetime Social Security benefits. TFA is a life-cycle, consumption-smoothing research tool that incorporates Social Security and all other major federal and state tax and benefit policies. The program can optimize lifetime Social Security choices. We find that virtually all American workers age 45 to 62 should wait beyond age 65 to collect. More than 90 percent should wait till age 70. Only 10.2 percent appear to do so. The median loss for this age group in the present value of household lifetime discretionary spending is $182,370. Optimizing would produce a 10.4 percent increase in typical workers’ lifetime spending. For one in four, the lifetime spending gain exceeds 17 percent. For one in ten, the gain exceeds 26 percent. Among the poorest fifth of 45 to 62 year-olds, the median lifetime spending increase is 15.9 percent, with one in four gaining more than 27.4 percent.
Author contact info: David Altig Federal Reserve Bank of Atlanta 1000 Peachtree St. NE Atlanta, GA 30309 USA Tel: 216-269-9079 E-Mail: Dave.Altig@atl.frb.org Laurence J. Kotlikoff Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4002 Fax: 617/353-4001 E-Mail: kotlikoff@gmail.com Victor Yifan Ye Boston University 270 Bay State Road Boston, MA 02215 Tel: 9197683548 E-Mail: victor@yifanye.com

Does War Foster Cooperation or Parochialism? Evidence from a Natural Experiment among Turkish Conscripts - Kibris, Arzu; Cesur, Resul (National Bureau of Economic Research Working Paper Series, 2022)
Exploiting a natural experiment and an innovative survey design, we study the social and political legacies of armed conflict exposure (ACE) among Turkish conscripts. Our empirical framework identifies the causal impact and isolates the mediating pathways for the average male randomly picked from the population. Contrary to the arguments that war fosters prosociality and posttraumatic growth, we find little evidence that ACE promotes cooperative behaviors. Instead, we document evidence that ACE fosters parochialism, measured by increased opposition to peaceful means of conflict resolution, animosity towards minorities, and the tendency to support right-wing political parties. As the study design eliminates the need for social insurance, security concerns, and community-level paradigm shifts, and our analysis rules out labor market outcomes, human capital formation, and military socialization from the list of the usual suspects, we conclude that, in the absence of favorable neoclassical mediating pathways boosting demand for cohesion, violence exposure, in and of itself, is not sufficient foster cooperative behaviors but promotes parochialism. Further analyses show war-driven grievances, the normalization of violence in everyday life, and changes in parochial norms and preferences as the transmitting pathways.
Author contact info: Arzu Kibris E-Mail: a.kibris@warwick.ac.uk Resul Cesur University of Connecticut School of Business 2100 Hillside Road Storrs, CT 06269 Tel: 860/486-6315 E-Mail: cesur@uconn.edu

Global Profit Shifting, 1975-2019 - Wier, Ludvig S; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
This paper constructs time series of global profit shifting covering the 2015–19 period, during which major international efforts were implemented to curb profit shifting. We find that (i) multinational profits grew faster than global profits, (ii) the share of multinational profits booked in tax havens remained constant at around 37 per cent, and (iii) the fraction of global corporate tax revenue lost due to profit shifting rose from 9 to 10 per cent. We extend our time series back to 1975 and document a remarkable increase of multinational profits and global profit shifting from 1975 to 2019.
Author contact info: Ludvig S. Wier Ministry of Finance (Denmark) Christiansborg Slotsplads 1 1218 CPH, Denmark E-Mail: ludvig.wier@econ.ku.dk Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

Scope, Scale and Concentration: The 21st Century Firm - Hoberg, Gerard; Phillips, Gordon M (National Bureau of Economic Research Working Paper Series, 2022)
We provide evidence that over the past 30 years, U.S. firms have expanded their scope of operations. Increases in scope and scale were achieved largely without increasing traditional operating segments. Scope expansion significantly increases valuation and is primarily realized through acquisitions and investment in R&D, but not through capital expenditures. We show that traditional concentration ratios do not capture this expansion of scope. Our findings point to a new type of firm that increases scope through related expansion, which is highly valued by the market.
Author contact info: Gerard Hoberg University of Southern California Marshall School of Business BRI-308 (FBE Faculty) Los Angeles, CA 90089 United States E-Mail: hoberg@marshall.usc.edu Gordon M. Phillips Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 E-Mail: gordon.m.phillips@gmail.com

Intellectual Property Protection Lost and Competition: An Examination Using Machine Learning - Acikalin, Utku U; Caskurlu, Tolga; Hoberg, Gerard; Phillips, Gordon M (National Bureau of Economic Research Working Paper Series, 2022)
We examine the impact of lost intellectual property protection on innovation, competition, acquisitions, lawsuits and employment agreements. We consider firms whose ability to protect intellectual property (IP) using patents is weakened following the Alice Corp. vs. CLS Bank International Supreme Court decision. This decision has impacted patents in multiple areas including business methods, software, and bioinformatics. We use state-of-the-art machine learning techniques to identify firms’ existing patent portfolios’ potential exposure to the Alice decision. While all affected firms decrease patenting post-Alice, we find an unequal impact of decreased patent protection. Large affected firms benefit as their sales and market valuations increase, and their exposure to lawsuits decreases. They also acquire fewer firms post-Alice. Small affected firms lose as they face increased competition, product-market encroachment, and lower profits and valuations. They increase R&D and have their employees sign more nondisclosure agreements.
Author contact info: Utku U. Acikalin TOBB University of Economics and Technology Istanbul Turkey E-Mail: u.acikalin@etu.edu.tr Tolga Caskurlu Amsterdam Business School Plantage Muidergracht 12, M3.8 Netherlands E-Mail: t.caskurlu@uva.nl Gerard Hoberg University of Southern California Marshall School of Business BRI-308 (FBE Faculty) Los Angeles, CA 90089 United States E-Mail: hoberg@marshall.usc.edu Gordon M. Phillips Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 E-Mail: gordon.m.phillips@gmail.com

Can Anti-Vaping Policies Curb Drinking Externalities? Evidence from E-Cigarette Taxation and Traffic Fatalities - Dave, Dhaval M; Liang, Yang; Maclean, Johanna Catherine; Sabia, Joseph J; Braaksma, Matthew (National Bureau of Economic Research Working Paper Series, 2022)
Teenage drinking is a major public health concern, generating social costs of over $28 billion per year, including substantial external costs associated with alcohol-related traffic fatalities. At the same time, the high rate of electronic nicotine delivery systems (ENDS) use among teenagers has been deemed “an epidemic” by the U.S. Surgeon General, with state and local policymakers turning to e-cigarette taxes as a popular policy tool to curb nicotine vaping. This study is the first to explore the spillover effects of e-cigarette taxes on teenage drinking and alcohol-related traffic fatalities. We find that a one-dollar increase in e-cigarette taxes is associated with a 1 to 2 percentage-point reduction in the probability of binge drinking among teenagers and a 5 to 10 percent reduction in traffic fatalities involving teenagers driving under the influence of alcohol. Together, these results suggest the presence of alcohol-related health benefits from e-cigarette taxation.
Author contact info: Dhaval M. Dave Bentley University Department of Economics 175 Forest Street, AAC 195 Waltham, MA 02452-4705 E-Mail: ddave@bentley.edu Yang Liang San Diego State University Department of Economics Center for Health Economics & Policy Studies 5500 Campanile Drive San Diego, CA 92182 E-Mail: yang.liang@sdsu.edu 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 Joseph J. Sabia San Diego State University Department of Economics Center for Health Economics & Policy Studies 5500 Campanile Drive San Diego, CA 92182 E-Mail: jsabia@sdsu.edu Matthew Braaksma University of Minnesota & Center for Health Economics & Policy Studies 1925 Fourth Street South Minneapolis, MN 55455 United States E-Mail: mbraaksma9474@sdsu.edu

Targeting Precision Medicine: Evidence from Prenatal Screening - Conner, Peter; Einav, Liran; Finkelstein, Amy; Persson, Petra; Williams, Heidi L (National Bureau of Economic Research Working Paper Series, 2022)
Medical technologies can target care to patients identified through screening, raising questions of how broadly to screen for potential use. We explore this empirically in the context of a non-invasive prenatal screening, cfDNA, which is used to target a more costly invasive test that elevates miscarriage risk. Using Swedish administrative data on prenatal choices for pregnancies conceived between 2011 and 2019 – a period in which Swedish regions began providing coverage for the new screening – we document that coverage of cfDNA substantially increases cfDNA screening and reduces invasive testing. To assess the impact of counterfactual targeting of cfDNA coverage, we develop and estimate a stylized model of prenatal choices. We find that narrow targeting of cfDNA coverage can improve outcomes and reduce costs, while broader coverage also improves outcomes but with increased costs. These findings point to the potential gains from well-designed targeting of screening, but at the same time highlight the importance of the targeting design.
Author contact info: Peter Conner Norrbacka S3:03 Stockholm 17176 Sweden E-Mail: peter.conner@ki.se Liran Einav Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/723-3704 Fax: 650/725-5702 E-Mail: leinav@stanford.edu Amy Finkelstein Department of Economics, E52-442 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4149 Fax: 617/868-2742 E-Mail: afink@mit.edu Petra Persson Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-4116 E-Mail: perssonp@stanford.edu Heidi L. Williams Department of Economics 6106 Rockefeller Center, Office 328 Dartmouth College Hanover, NH 03755 Tel: 617-669-0577 E-Mail: heidi.lie.williams@dartmouth.edu

Distributional Effects of Local Minimum Wages: A Spatial Job Search Approach - Todd, Petra E; Zhang, Weilong (National Bureau of Economic Research Working Paper Series, 2022)
This paper develops and estimates a spatial general equilibrium job search model to study the effects of local and universal (federal) minimum wage policies on employment, wages, job postings, vacancies, migration/commuting, and welfare. In the model, workers, who differ in terms of location and education levels, search for jobs locally and in a neighboring area. If they receive remote offers, they decide whether to migrate or commute. Firms post vacancies in multiple locations and make offers subject to minimum wage constraints. The model is estimated using multiple databases, including the American Community Survey (ACS) and Quarterly Workforce Indicators (QWI), and exploiting minimum wage variation across state borders as well as time series variation (2005-2015). Results show that local minimum wage increases lead firms to post fewer wage offers in both local and neighboring areas and lead lower education workers to reduce interstate commuting. An out-of-sample validation finds that model forecasts of commuting responses to city minimum wage hikes are similar to patterns in the data. A welfare analysis shows how minimum wage effects vary by worker type and with the minimum wage level. Low skill workers benefit from local wage increases up to $10.75/hour and high skill workers up to $12.25/hour. The greatest per capital welfare gain (including both workers and firms) is achieved by a universal minimum wage increase of $12.75/hour.
Author contact info: Petra E. Todd Department of Economics University of Pennsylvania 3718 Locust Walk Philadelphia, PA 19104 Tel: 215/898-4084 Fax: 215/573-2057 E-Mail: ptodd@econ.upenn.edu Weilong Zhang Faculty of Economics Austin Robinson Building, Sidgwick Avenue Sidgwick Avenue Cambridge CB3 9DD Cambridge CB3 9DD UNITED KINGDOM Tel: 07763790726 E-Mail: wz301@cam.ac.uk

Should Central Banks Have an Inequality Objective? - Chang, Roberto (National Bureau of Economic Research Working Paper Series, 2022)
Should central banks care about inequality? To address this question, we extend a standard model of time inconsistency in monetary policy to allow for heterogeneity. As in the standard analysis, lack of policy commitment leads to a bias towards socially excessive inflation. But the novel result is that, in the presence of heterogeneity, the bias can be offset by assigning the central bank a mandate under which agents with higher nominal wealth are given a higher relative weight than under the social welfare function. In other words, society should choose a central banker that is less egalitarian than itself, a result reminiscent of Rogoff's "conservative central banker". Our analysis underscores that including a concern for redistribution in the central bank's mandate can enhance policy credibility, but the details can be unexpected and should reflect the role of the mandate in overcoming policy distortions.
Author contact info: Roberto Chang Rutgers University Department of Economics 75 Hamilton Street New Brunswick, NJ 08901 Tel: 732/932-7269 Fax: 732/932-7416 E-Mail: chang@econ.rutgers.edu

US Immigration from Latin America in Historical Perspective - Hanson, Gordon H; Orrenius, Pia; Zavodny, Madeline (National Bureau of Economic Research Working Paper Series, 2022)
The share of US residents who were born in Latin America and the Caribbean plateaued recently, after a half century of rapid growth. Our review of the evidence on the US immigration wave from the region suggests that it bears many similarities to the major immigration waves of the 19th and early 20th centuries, that the demographic and economic forces behind Latin American migrant inflows appear to have weakened across most sending countries, and that a continued slowdown of immigration from Latin America post-pandemic has the potential to disrupt labor-intensive sectors in many US regional labor markets.
Author contact info: Gordon H. Hanson Harvard Kennedy School Harvard University 79 John F. Kennedy St. Cambridge, MA 02138 E-Mail: gordon_hanson@hks.harvard.edu Pia Orrenius Federal Reserve Bank of Dallas 2200 No. Pearl Street Dallas, TX 75201 E-Mail: pia.orrenius@dal.frb.org Madeline Zavodny University of North Florida 1 UNF Drive Jacksonville, FL 32224 E-Mail: m.zavodny@unf.edu

Can Information and Advising Affect Postsecondary Participation and Attainment for Non-Traditional Students? Evidence from a Large-Scale Experiment with the U.S. Army - Barr, Andrew C; Bird, Kelli A; Castleman, Benjamin L; Skimmyhorn, William L (National Bureau of Economic Research Working Paper Series, 2022)
Lack of information and advising prior to college matriculation may contribute to poor post-secondary outcomes among non-traditional students. We conducted a large-scale, multi-arm field experiment with the U.S. Army to investigate whether a package of research-based personalized information and access to advising affects postsecondary choices and attainment among a large non-traditional adult population. We find no impact of the intervention on whether veterans enroll in college, on the quality of their college enrollment, or on their persistence in college. Our results suggest that influencing non-traditional populations’ educational decisions and outcomes will require substantially more intensive programs.
Author contact info: Andrew C. Barr Department of Economics Texas A&M University 4228 TAMU College Station, TX 77843-4228 Tel: 804/921-4821 E-Mail: abarr@tamu.edu Kelli A. Bird University of Virginia E-Mail: kb7ud@virginia.edu Benjamin L. Castleman University of Virginia Curry School of Education 405 Emmett Street South P.O. Box 400277 Charlottesville, VA 22902 Tel: 434-243-5419 E-Mail: ben.castleman@gmail.com William L. Skimmyhorn Raymond A. Mason School of Business The College of William & Mary 101 Ukrop Way Williamsburg, VA 23187 USA E-Mail: bill.skimmyhorn@mason.wm.edu

Firm Responses to State Hiring Subsidies: Regression Discontinuity Evidence from a Tax Credit Formula - Hyman, Benjamin G; Freedman, Matthew; Khanna, Shantanu; Neumark, David (National Bureau of Economic Research Working Paper Series, 2022)
We examine firm responses to location-based hiring subsidies. We leverage institutional features of the California Competes Tax Credit (CCTC), a large-scale business incentive program that incorporates best practices from prior job creation policies. The CCTC award selection procedure combines formula-based and discretionary components. Leveraging applicant score eligibility cutoffs in a regression discontinuity design and taking advantage of rich longitudinal microdata on establishments and their parent firms, we find that firms expand activity in California in response to CCTC awards, particularly in disadvantaged parts of the state. Our results suggest that targeted and audited hiring subsidies can be effective in promoting local business expansions. We also examine the potential spillovers to other states and do not find strong evidence that the CCTC induces significant cross-state displacement effects.
Author contact info: Benjamin G. Hyman Federal Reserve Bank of New York Research and Statistics Group 33 Liberty Street New York, NY 10045 E-Mail: ben.hyman@ny.frb.org Matthew Freedman Department of Economics University of California, Irvine 3151 Social Science Plaza Irvine, CA 92697 E-Mail: matthew.freedman@uci.edu Shantanu Khanna 310 G Renaissance Park Northeastern University Boston, MA 02115 E-Mail: s.khanna@northeastern.edu David Neumark Department of Economics University of California, Irvine 3151 Social Science Plaza Irvine, CA 92697 Tel: 949-824-8496 Fax: 949/824-2182 E-Mail: dneumark@uci.edu

The Gift of a Lifetime: The Hospital, Modern Medicine, and Mortality - Hollingsworth, Alex; Karbownik, Krzysztof; Thomasson, Melissa A; Wray, Anthony (National Bureau of Economic Research Working Paper Series, 2022)
We explore how access to modern hospitals and medicine affects mortality by leveraging efforts of The Duke Endowment to modernize hospitals in the early-twentieth century. The Endowment helped communities build and expand hospitals, obtain state-of-the-art medical technology, attract qualified medical personnel, and refine management practices. We find that Duke support increased the size and quality of the medical sector, fostering growth in not-for-profit hospitals and high-quality physicians. Duke funding reduced both infant mortality - with larger effects for Black infants than White infants - and long-run mortality. Finally, we find that communities aided by Duke benefited more from medical innovations.
Author contact info: 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 Krzysztof Karbownik Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 E-Mail: krzysztof.karbownik@emory.edu Melissa A. Thomasson Miami University/FSB Department of Economics MSC 1035 800 E. High Street, Rm. #2054 Oxford, OH 45056 Tel: 513/529-2858 Fax: 513/529-8047 E-Mail: thomasma@miamioh.edu Anthony Wray Department of Economics University of Southern Denmark Campusvej 55 Odense M DK-5230 Denmark E-Mail: wray@sam.sdu.dk

The Remote Work Revolution: Impact on Real Estate Values and the Urban Environment - Van Nieuwerburgh, Stijn (National Bureau of Economic Research Working Paper Series, 2022)
The covid-19 pandemic induced a major shift in the prevalence of remote and hybrid work arrangements. This article reviews the effects of this remote work revolution for residential and commercial real estate values and for the future of cities. It also discusses consequences for productivity, innovation, local public finance, and the climate, as well as potential policy responses.
Author contact info: Stijn Van Nieuwerburgh Columbia University Graduate School of Business Kravis Hall, office 796 665 West 130th Street New York, NY 10027 E-Mail: svnieuwe@gsb.columbia.edu

Who Benefits from Hazardous Waste Cleanups? Evidence from the Housing Market - Cassidy, Alecia W; Hill, Elaine L; Ma, Lala (National Bureau of Economic Research Working Paper Series, 2022)
The Resource Conservation and Recovery Act (RCRA) manages cleanup of hazardous waste releases at over 3,500 sites across the US, which covers approximately 17.5% of all developed land in the country. This paper evaluates the national and distributional housing market impacts of cleanups performed under RCRA and estimates the program's impacts on neighborhood change. We find that cleanups near residential properties yield significant, yet localized, increases in home prices, and that impacts are concentrated in the lower deciles of the price distribution. Importantly, we find no evidence of sorting along socio-demographic dimensions in response to cleanup. Our findings suggest that cleanup benefits accrue to the residents who are the original “hosts” of pollution and could correct pre-existing disparities in exposure to land-based contamination.
Author contact info: 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 Elaine L. Hill Department of Public Health Sciences Department of Economics University of Rochester 265 Crittenden Boulevard Rochester, NY 14642 E-Mail: elaine_hill@urmc.rochester.edu Lala Ma University of Kentucky Gatton College of Business & Economics Department of Economics E-Mail: lala.ma@uky.edu

Sea Level Rise Exposure and Municipal Bond Yields - Goldsmith-Pinkham, Paul; Gustafson, Matthew T; Lewis, Ryan C; Schwert, Michael (National Bureau of Economic Research Working Paper Series, 2022)
Municipal bond markets begin pricing sea level rise (SLR) exposure risk in 2013, coinciding with upward revisions to worst-case SLR projections and accompanying uncertainty around these projections. The effect is larger for long-maturity bonds and is not solely driven by near-term flood risk. We use a structural model of credit risk to quantify the implied economic impact and distinguish the effects of underlying asset values and uncertainty. The SLR exposure premium exhibits a different trend from house prices and is unaffected by house price controls. Taken together, our results highlight the importance of climate uncertainty in driving municipal bond prices.
Author contact info: Paul Goldsmith-Pinkham Yale School of Management 165 Whitney Avenue New Haven, CT 06511 E-Mail: paulgp@gmail.com Matthew Gustafson Smeal College of Business Pennsylvania State University 335 Business Building University Park, PA 16802 E-Mail: mtg15@psu.edu Ryan Lewis Leeds School of Business 995 Regent Street Leeds School of Business Boulder, CO 80302 E-Mail: ryan.c.lewis@colorado.edu Michael Schwert One Greenwich Plaza Greenwich, CT 06830 Tel: 2037423005 E-Mail: mschwert@aqrarbitrage.com

Automation and the Workforce: A Firm-Level View from the 2019 Annual Business Survey - Acemoglu, Daron; Anderson, Gary W; Beede, David N; Buffington, Cathy; Childress, Eric E; Dinlersoz, Emin; Foster, Lucia S; Goldschlag, Nathan; Haltiwanger, John C; Kroff, Zachary; Restrepo, Pascual; Zolas, Nikolas (National Bureau of Economic Research Working Paper Series, 2022)
This paper describes the adoption of automation technologies by US firms across all economic sectors by leveraging a new module introduced in the 2019 Annual Business Survey, conducted by the US Census Bureau in partnership with the National Center for Science and Engineering Statistics (NCSES). The module collects data from over 300,000 firms on the use of five advanced technologies: AI, robotics, dedicated equipment, specialized software, and cloud computing. The adoption of these technologies remains low (especially for AI and robotics), varies substantially across industries, and concentrates on large and young firms. However, because larger firms are much more likely to adopt them, 12-64% of US workers and 22-72% of manufacturing workers are exposed to these technologies. Firms report a variety of motivations for adoption, including automating tasks previously performed by labor. Consistent with the use of these technologies for automation, adopters have higher labor productivity and lower labor shares. In particular, the use of these technologies is associated with a 11.4% higher labor productivity, which accounts for 20-30% of the difference in labor productivity between large firms and the median firm in an industry. Adopters report that these technologies raised skill requirements and led to greater demand for skilled labor but brought limited or ambiguous effects to their employment levels.
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 Gary W. Anderson National Science Foundation 2415 Eisenhower Avenue Alexandria, VA 22314 E-Mail: no available email David N. Beede Center for Enterprise Dissemination U.S. Census Bureau E-Mail: david.n.beede@census.gov Cathy Buffington E-Mail: Catherine.D.Buffington@census.gov Eric E. Childress George Mason University 4400 University Dr. Fairfax, VA 22030 E-Mail: echildre@gmu.edu Emin Dinlersoz E-Mail: emin.m.dinlersoz@census.gov Lucia S. Foster US Bureau of the Census Washington, DC 20233 E-Mail: lucia.s.foster@census.gov Nathan Goldschlag Center for Economic Studies US Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: Nathan.Goldschlag@census.gov John C. Haltiwanger Department of Economics University of Maryland College Park, MD 20742 Tel: 301/405-3504 Fax: 301/405-3542 E-Mail: haltiwan@econ.umd.edu Zachary Kroff Center for Economic Studies U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 Tel: 301-763-2199 E-Mail: zachary.kroff@census.gov Pascual Restrepo Department of Economics Boston University 270 Bay State Road Boston, MA 02215 E-Mail: pascual@bu.edu Nikolas Zolas Center for Economic Studies U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: nick.zolas@gmail.com

Heterogeneity in Damages from A Pandemic - Finkelstein, Amy; Kocks, Geoffrey; Polyakova, Maria; Udalova, Victoria (National Bureau of Economic Research Working Paper Series, 2022)
We use linked survey and administrative data to document and decompose the striking differences across demographic groups in both economic and health impacts of the first year of the COVID-19 pandemic in the United States. The impacts of the pandemic on all-cause mortality and on employment were concentrated in the same racial, ethnic, and education groups, with non-White individuals and those without a college degree experiencing higher excess all-cause mortality as well as a greater employment loss. Observable differences in living arrangements and the nature of work – which likely affected exposure to the virus and to economic contractions – can explain 15 percent of the Hispanic-White difference in excess mortality, almost one-quarter of the non- Hispanic Black-White difference, and almost half of the difference between those with and without a Bachelor’s degree; they can also explain 35 to 40 percent of the differences in economic damages between these groups. These findings underscore the importance of non-medical factors in contributing to the disparate impacts of public health shocks.
Author contact info: Amy Finkelstein Department of Economics, E52-442 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4149 Fax: 617/868-2742 E-Mail: afink@mit.edu Geoffrey Kocks Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 8109081223 E-Mail: gkocks@mit.edu Maria Polyakova Center for Health Policy Stanford School of Medicine Encina Commons, Room 182 615 Crothers Way Stanford, CA 94305 Tel: 650/498-7528 E-Mail: maria.polyakova@stanford.edu Victoria Udalova U.S. Census Bureau 4600 Silver Hill Road Washingon, DC 20233 E-Mail: victoria.m.udalova@census.gov

The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice - Gormley, Todd A; Gupta, Vishal K; Matsa, David A; Mortal, Sandra C; Yang, Lukai (National Bureau of Economic Research Working Paper Series, 2022)
In 2017, “The Big Three” institutional investors launched campaigns to increase gender diversity on corporate boards. We estimate that their campaigns led American corporations to add at least 2.5 times as many female directors in 2019 as they had in 2016. Firms increased diversity by identifying candidates beyond managers’ existing networks and by placing less emphasis on candidates’ executive experience. Firms also promoted more female directors to key board positions, indicating firms’ responses went beyond tokenism. Our results highlight index investors’ ability to effectuate broad-based governance changes and the important impact of investor buy-in in increasing corporate-leadership diversity.
Author contact info: Todd A. Gormley Olin Business School Washington University in St. Louis One Brookings Drive Campus Box 1133 St. Louis, MO 63130 Tel: (314) 935-7171 E-Mail: gormley@wustl.edu Vishal K. Gupta Culverhouse College of Business The University of Alabama 361 Stadium Blvd. Tuscaloosa, AL 35487 E-Mail: vkgupta@cba.ua.edu David A. Matsa Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8337 Fax: 847/491-5719 E-Mail: dmatsa@kellogg.northwestern.edu Sandra C. Mortal Culverhouse College of Business The University of Alabama 361 Stadium Blvd. Tuscaloosa, AL 35487 E-Mail: sandramortal@gmail.com Lukai Yang International Banking and Finance Studies A.R. Sanchez, Jr. School of Business Texas A&M International University 5201 University Boulevard Laredo, TX 78041 E-Mail: lukai.yang@tamiu.edu

Collaboration Between and Within Groups - Iaryczower, Matias; Oliveros, Santiago; Parihar, Parth (National Bureau of Economic Research Working Paper Series, 2022)
We study the ability of multi-group teams to undertake binary projects in a decentralized environment. The equilibrium outcomes of our model display familiar features in collaborative settings, including inefficient gradualism, inaction, and contribution cycles, wherein groups alternate taking responsibility for moving the project forward. Expected delay grows more than proportionally with project size, and some welfare-enhancing projects are not completed, even as agents become arbitrarily patient. A team composed of two equally large groups can complete larger projects than a fully homogenous team, even as the difference in preferences for completion among the two groups is arbitrarily small. Moreover, if the project is sufficiently large, the two-group team always completes the project strictly faster.
Author contact info: Matias Iaryczower 305 Fisher Hall Department of Politics Princeton University Princeton, NJ 08544 Tel: 609-258-1018 E-Mail: miaryc@princeton.edu Santiago Oliveros Department of Economics University of Bristol The Priory Road Complex Priory Road Clifton Bristol, BS8 1TU United Kingdom E-Mail: s.oliveros@bristol.ac.uk Parth Parihar Badia Fiesolana, SP53, Fiesole, FI 50014 Department of Economics European University Institute (EUI) Florence 50014 Italy E-Mail: parth.parihar@eui.eu

Identification and Estimation of Continuous-Time Job Search Models with Preference Shocks - Arcidiacono, Peter; Gyetvai, Attila; Maurel, Arnaud; Jardim, Ekaterina S (National Bureau of Economic Research Working Paper Series, 2022)
This paper applies some of the key insights of dynamic discrete choice models to continuous-time job search models. We propose a novel framework that incorporates preference shocks into search models, resulting in a tight connection between value functions and conditional choice probabilities. Including preference shocks allows us to establish constructive identification of all the model parameters. Our method also makes it possible to estimate rich nonstationary job search models in a simple and tractable way, without having to solve any differential equations. We apply our framework to rich longitudinal data from Hungarian administrative records, allowing for nonstationarities in offer arrival rates, wage offers, and in the flow payoff of unemployment. Longer unemployment durations are associated with substantially worse wage offers and lower offer arrival rates, which results in accepted wages falling over time.
Author contact info: Peter Arcidiacono Department of Economics 201A Social Sciences Building Duke University Durham, NC 27708 Tel: 919/660-1816 Fax: 919/684-8974 E-Mail: psarcidi@econ.duke.edu Attila Gyetvai E-Mail: ate.gyetvai@gmail.com Arnaud Maurel Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708 Tel: 919/660-1851 Fax: 919/684-8974 E-Mail: apm16@duke.edu Ekaterina S. Jardim Amazon.com, Inc. Seattle, WA E-Mail: ekaterinajardim@gmail.com

Investment and Subjective Uncertainty - Bloom, Nicholas; Davis, Steven J; Foster, Lucia S; Ohlmacher, Scott W; Saporta-Eksten, Itay (National Bureau of Economic Research Working Paper Series, 2022)
A longstanding challenge in evaluating the impact of uncertainty on investment is obtaining measures of managers’ subjective uncertainty. We address this challenge by using a detailed new survey measure of subjective uncertainty collected by the U.S. Census Bureau for approximately 25,000 manufacturing plants. We find three key results. First, investment is strongly and robustly negatively associated with higher uncertainty, with a two standard deviation increase in uncertainty associated with about a 6% reduction in investment. Second, uncertainty is also negatively related to employment growth and overall shipments (sales) growth, which highlights the damaging impact of uncertainty on firm growth. Third, flexible inputs like rental capital and temporary workers show a positive relationship to uncertainty, demonstrating that businesses switch from less flexible to more flexible factor inputs at higher levels of uncertainty.
Author contact info: Nicholas Bloom Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/725-3266 Fax: 650/725-5702 E-Mail: nbloom@stanford.edu Steven J. Davis Hoover Institution Stanford University 434 Galvez Mall Stanford, CA 94305 Tel: 773/251-1795 Fax: 773/834-0733 E-Mail: stevend5@stanford.edu Lucia S. Foster US Bureau of the Census Washington, DC 20233 E-Mail: lucia.s.foster@census.gov Scott W. Ohlmacher 20th Street and C St. NW Federal Reserve Board of Governors M-2948 Washington, DC 20551 E-Mail: Scott.W.Ohlmacher@frb.gov Itay Saporta-Eksten The Eitan Berglas School of Economics Tel Aviv University P.O.B. 39040 Ramat Aviv, Tel Aviv, 6997801 E-Mail: itaysap@tauex.tau.ac.il

Public Childcare, Labor Market Outcomes of Caregivers, and Child Development: Experimental Evidence from Brazil - Attanasio, Orazio; Paes de Barros, Ricardo; Carneiro, Pedro; Evans, David K; Lima, Lycia; Olinto, Pedro; Schady, Norbert (National Bureau of Economic Research Working Paper Series, 2022)
This study examines the impact of publicly provided daycare for children aged 0-3 on outcomes of children and their caregivers over the course of seven years after enrollment into daycare. At the end of 2007, the city of Rio de Janeiro in Brazil used a lottery to assign children to limited public daycare openings. Winning the lottery translated to a 34 percent increase in time in daycare during a child’s first four years of life. This allowed caregivers more time to work, resulting in higher incomes for beneficiary households in the first year of daycare attendance and 4 years later (but not after 7 years, by which time all children were eligible for universal schooling). The rise in labor force participation is driven primarily by grandparents and by adolescent siblings residing in the same household as (and possibly caring for) the child, and not by parents, most of whom were already working. Beneficiary children saw sustained gains in height-for-age and weight-for-age, due to better nutritional intake at school and at home. Gains in beneficiary children’s cognitive development were observed 4 years after enrolment but not later.
Author contact info: Orazio Attanasio Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: orazio.attanasio@yale.edu Ricardo Paes de Barros E-Mail: ricardopb1@insper.edu.br Pedro Carneiro Department of Economics University College Gower Street London WC1E 6BT United Kingdom E-Mail: p.carneiro@ucl.ac.uk David K. Evans 2055 L Street NW Washington, DC 20036 USA E-Mail: devans@cgdev.org Lycia Lima Fundação Getulio Vargas - Sao Paulo School of Economics Rua Itapeva 474 São Paulo Brazil E-Mail: lycia.lima@fgv.br Pedro Olinto 1818 H St, NW Washington, DC 20433 USA E-Mail: polinto@worldbank.org Norbert Schady The World Bank 1818 H. Street, NW Washington, DC 20433 E-Mail: nschady@worldbank.org

Inflation and Capital Flows - Bengui, Julien; Coulibaly, Louphou (National Bureau of Economic Research Working Paper Series, 2022)
Over the latest monetary policy tightening cycle, capital has been flowing from jurisdictions with the least aggressive hiking profiles to those with the most aggressive ones. This pattern of capital flows is consistent with the predictions of a standard open-economy model with nominal rigidities where cost-push shocks generate an inflationary episode and capital flows freely across countries. Yet, by raising demand for domestic non-tradable goods and services, capital inflows cause unwelcome upward pressure on firms’ costs in countries most severely hit by these shocks. We argue that a reverse pattern of capital flows would have improved the output-inflation trade-off globally, hence requiring a less aggressive monetary tightening in most severely hit countries and delivering overall welfare gains.
Author contact info: Julien Bengui Bank of Canada International Economic Analysis Department 234 Wellington Street Ottawa ON K1A 0G9 Canada E-Mail: jbengui@gmail.com Louphou Coulibaly Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 E-Mail: lcoulibaly@wisc.edu

Experience Rating as an Automatic Stabilizer - Duggan, Mark; Johnston, Andrew C; Guo, Audrey (National Bureau of Economic Research Working Paper Series, 2022)
Unemployment insurance taxes are experience-rated to penalize firms that dismiss workers. We examine whether experience rating acts as an automatic stabilizer in the labor market. We exploit the fact that penalties for layoffs vary by state using detailed data on state tax schedules, and we measure whether firms react less to labor-demand shocks in the presence of greater layoff penalties. The average penalty for layoffs reduces firm adjustment to negative shocks by 11 percent. The results imply experience rating has a stabilizing influence on labor markets. Experience rating saved, for instance, nearly a million jobs in the Great Recession.
Author contact info: Mark Duggan Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 E-Mail: mgduggan@stanford.edu Andrew C. Johnston Department of Economics University of California, Merced 5200 N Lake Road Merced, CA 95340 Tel: 949/290-1948 E-Mail: acjohnston@ucmerced.edu Audrey Guo Department of Economics Santa Clara University 500 El Camino Real Santa Clara, CA 95053 Tel: 4802429969 E-Mail: aguo@scu.edu

Trade and Selection with Heterogeneous Firms and Perfect Competition - Bai, Xue; Chatterjee, Arpita; Krishna, Kala; Ma, Hong (National Bureau of Economic Research Working Paper Series, 2022)
This paper develops a new model with heterogeneous firms under perfect competition in a Heckscher-Ohlin-Samuelson setting. We show that trade need not make selection in the comparative advantage sector stricter as suggested by earlier work. Selection is driven by the capital intensity in entry costs relative to production costs. If trade raises (reduces) the wage rental ratio, and entry costs are more labor intensive than production costs in a sector, then the ratio of entry cost to production costs will rise (fall) and selection will become weaker (stricter) in this sector. Moreover, we show that the central theorems of the HOS model (as well as the standard generalizations using duality) carry over in our setting.
Author contact info: Xue Bai Department of Economics Brock University 1812 Sir Issac Brock Way St. Catharines, ON L2S 3A1 Canada E-Mail: xbai@brocku.ca Arpita Chatterjee University of New South Wales and IIM Bangalore School of Economics UNSW, SYDNEY, 2052 Australia E-Mail: chatterjee.econ@gmail.com 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 Hong Ma Tsinghua University Department of Economics Beijing, China E-Mail: mahong@sem.tsinghua.edu.cn

The Economics of Carbon Accounting and Carbon Offsets - Heal, Geoffrey (National Bureau of Economic Research Working Paper Series, 2022)
I provide a rigorous framework for accounting for corporate greenhouse gas emissions, based on the Greenhouse Gas Protocol. I show that only Scope 1 emissions are of interest from a national policy perspective: that emissions in Scopes 2 and 3 are duplicative, and that downstream Scope 3 emissions in total are equal to total Scope 1 emissions. The correct measure of a company's contributions to national GHG emissions is its Scope 1 emissions plus a part of the emissions of the household and government sectors. This is not generally the same as the level of emissions for which a company bears some responsibility, legal or otherwise. I apply some of these ideas to an analysis of carbon offsets, trying to understand the conditions under which offsets are a valid mechanism for reducing emissions by formalizing the ideas of additionality and leakage.
Author contact info: Geoffrey Heal Graduate School of Business 582 Kravis Hall Columbia University 665 W 130th St New York, NY 10027 Tel: 212/854-6459 E-Mail: gmh1@gsb.columbia.edu

Valuing Excess Deaths Caused by Climate Change - Bressler, R. Daniel; Heal, Geoffrey (National Bureau of Economic Research Working Paper Series, 2022)
Valuing deaths caused by climate change in Benefit Cost Analysis (BCA) is complex and controversial, having caused disagreement and acrimony in past high-profile settings. Furthermore, it is of first order consequence to the value of the social cost of carbon (SCC). Despite this, the underlying considerations remain under-analyzed. We address this by assessing the theory behind different approaches to BCA, and by evaluating how they fare when applied to global externalities like climate change. The pure Kaldor-Hicks approach to BCA – measuring costs in market dollars unadjusted for diminishing marginal utility and valuing premature deaths in rich areas more than poor areas – relies on assumptions that are debated in domestic contexts, but, as we show, clearly do not hold in the context of climate change. We show that this approach is equivalent to defining a Negishi weighted social welfare function. Furthermore, we show that if costs are measured in purchasing power parity adjusted money – as is typical for the SCC – then the Kaldor-Hicks potential compensation criterion no longer necessarily holds. We conclude that the first-best BCA approach in the climate context is welfare weighting. This approach accounts for diminishing marginal utility using empirical estimates for the curvature of the utility function, and it better captures what a social planner naturally cares about: real net benefits and the welfare people get from those net benefits. The current U.S. practice – identical to the pure Kaldor-Hicks approach except that it gives a uniform population average value to all premature deaths – is preferred over the pure Kaldor-Hicks approach because it implicitly welfare weights premature mortality costs. However, the fully welfare weighted approach is first-best because it accounts for diminishing marginal utility across all costs, not just premature mortality risk.
Author contact info: R. Daniel Bressler 420 W 118th St #1410 New York, NY 10027 United States Tel: 18473378634 E-Mail: rdb2148@columbia.edu Geoffrey Heal Graduate School of Business 582 Kravis Hall Columbia University 665 W 130th St New York, NY 10027 Tel: 212/854-6459 E-Mail: gmh1@gsb.columbia.edu

The Effect of the COVID-19 Pandemic Recession on Less Educated Women's Human Capital: Some Projections - Drozd, Mark M; Moffitt, Robert A; Zhao, Xinyu (National Bureau of Economic Research Working Paper Series, 2022)
The recession induced by the COVID-19 pandemic resulted in major declines in employment of women, both from the demand side as firms reduced employment and from the supply side resulting from school closures and the closing of many child care facilities. We provide projections of possible impacts of this reduction on less-educated women’s future human capital framed within the traditional Mincerian model that implies that wage growth falls if a recession reduces the growth of work experience. We develop a new and modified form of the Mincerian log wage equation which we argue captures the effect of women’s work experience on their human capital in a way superior to the traditional form of that equation. Using that modified form, we estimate the impact of recession-induced loss of work experience on wages. Our model, estimated on pre-COVID data, incorporates special features anticipated to be of importance in the pandemic, including the degree to which negative aggregate shocks occur to pandemic-specific industries, whether the impact of shocks varies by telecommuting occupation, and how the impact varies with the presence of preschool and school-age children who are affected by school and child-care facility closures. We find that wage losses one year out from 2020 are relatively modest on average, generally less than one percent, with the largest for married women without children in the home. But losses are greater for married women at young ages, mothers with very young children, and for those working in COVID-impacted industries. School and child care closures increase projected negative wage impacts for married mothers by an additional 50 percent.
Author contact info: Mark M. Drozd Department of Economics Johns Hopkins University 3400 N. Charles Street Baltimore, MD 21218 E-Mail: mdrozd1@jhu.edu Robert A. Moffitt Department of Economics Johns Hopkins University 3400 North Charles Street Baltimore, MD 21218 Tel: 410/516-7611 Fax: 410/516-7600 E-Mail: moffitt@jhu.edu Xinyu Zhao Department of Economics, Johns Hopkins University 3400 N. Charles Street Baltimore, MD 21218 USA E-Mail: xzhao47@jhu.edu

Racial and Ethnic Inequality and the China Shock - Kahn, Lisa B; Oldenski, Lindsay; Park, Geunyong (National Bureau of Economic Research Working Paper Series, 2022)
Minority workers generally have worse economic outcomes than whites, and are disproportionately impacted by many negative shocks. However, we show that Black-white employment gaps narrowed as a result of China’s WTO accession because Black workers live in areas that are less exposed to imports from China and transition to non-manufacturing employment at higher rates. Hispanic populations, however, are more exposed than whites because of their industry mix and experience larger employment losses for a given level of exposure. The China shock widened Hispanic-white gaps, though this effect was short lived. The lasting negative effects were driven primarily by white workers.
Author contact info: Lisa B. Kahn Department of Economics University of Rochester 280 Hutchison Rd P.O. Box 270156 Rochester, NY 14627 E-Mail: lisa.kahn@rochester.edu Lindsay Oldenski Georgetown University 37th and O Streets, NW Washington DC, 20057 E-Mail: Lindsay.Oldenski@georgetown.edu Geunyong Park Department of Strategy and Policy National University of Singapore 15 Kent Ridge Drive Singapore E-Mail: park.geunyong@nus.edu.sg

Communicating Social Security Reform - Caplin, Andrew; Lee, Eungik; Leth-Petersen, Søren; Sæverud, Johan (National Bureau of Economic Research Working Paper Series, 2022)
Despite its centrality in monetary policy, communication is not a focus in social security reform. We investigate the potential for active communication to dissipate apparently widespread public confusion about the future of social security. We implement a simple information treatment in which we randomly provide survey respondents access to the longevity-based eligibility age implemented by reform that Denmark launched in 2006. Absent treatment, younger workers not only have biased beliefs, expecting to become eligible for social security earlier than policy makers intend, but also are highly uncertain about eligibility age. The information treatment eliminates the bias, suggesting it results from misunderstanding. Yet it has no influence on uncertainty, suggesting this is driven by unavoidable demographic and political uncertainties. Our results highlight the value of communication strategies and belief measurement as policy instruments outside the monetary policy arena.
Author contact info: Andrew Caplin Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8950 Fax: 212/995-3932 E-Mail: andrew.caplin@nyu.edu Eungik Lee Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 E-Mail: lee.eungik@gmail.com Søren Leth-Petersen Department of Economics and CEBI University of Copenhagen Oster Farimagsgade 5 Building 26 DK-1353 Copenhagen K Denmark Tel: +45 35323084 E-Mail: Soren.Leth-Petersen@econ.ku.dk Johan Sæverud Department of Economics and CEBI University of Copenhagen Osterfarimagsgade 5 Building 26 Copenhagen DK-1353 Denmark E-Mail: js@econ.ku.dk

From Lapdogs to Watchdogs: Random Auditor Assignment and Municipal Fiscal Performance - Vannutelli, Silvia (National Bureau of Economic Research Working Paper Series, 2022)
A fundamental question in organizational economics is how to structure organizations to better align incentives across levels. While monitoring could mitigate agency problems, it can itself be rendered ineffective if auditors are corruptible. In this paper, I evaluate the consequences of changes in the design of monitoring institutions that limit auditors' conflicts of interest. I exploit the staggered introduction of a reform that removed the control of auditors' appointment from local politicians and introduced a random assignment mechanism. I obtain four main findings. First, random matching severs auditors-mayors connections. Second, treated municipalities significantly improve their net surpluses and debt repayments, per national government objectives. Third, the fiscal improvement results from a sizeable increase in tax capacity. Fourth, treatment effects are a combination of selection, matching, and incentive effects. These findings highlight the value of auditor independence and illustrate how changes in the organizational design of the state can improve governance.
Author contact info: Silvia Vannutelli Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 617/368-0475 E-Mail: silvia.vannutelli@northwestern.edu

Do Pandemics Change Healthcare? Evidence from the Great Influenza - Esteves, Rui; Mitchener, Kris James; Nencka, Peter; Thomasson, Melissa A (National Bureau of Economic Research Working Paper Series, 2022)
Using newly digitized U.S. city-level data on hospitals, we explore how pandemics alter preferences for healthcare. We find that cities with higher levels of mortality during the Great Influenza of 1918-1919 subsequently expanded hospital capacity by more than cities experiencing less influenza mortality: cities in the top half of the mortality distribution increased their count of hospitals by 8-10 percent in the years after the pandemic. This effect persisted to 1960 and was driven by increases in non-governmental hospitals. Growth responded most in richer cities, exacerbating existing inequalities in access to healthcare. We do not find evidence that government-run hospitals or other types of city-level spending related to healthcare responded to pandemic intensity, suggesting that large health shocks do not necessarily lead to increased public provision of health services.
Author contact info: Rui Esteves Geneva Graduate Institute Chemin Eugène-Rigot 2 Geneva Switzerland E-Mail: rui.esteves@graduateinstitute.ch Kris James Mitchener Department of Economics Leavey School of Business Santa Clara University Santa Clara, CA 95053 Tel: 408/554-4340 Fax: 408/554-2331 E-Mail: kmitchener@scu.edu Peter Nencka Department of Economics Miami University 800 E. High Street Oxford, OH 45056 Tel: 2627511159 E-Mail: nenckap@miamioh.edu Melissa A. Thomasson Miami University/FSB Department of Economics MSC 1035 800 E. High Street, Rm. #2054 Oxford, OH 45056 Tel: 513/529-2858 Fax: 513/529-8047 E-Mail: thomasma@miamioh.edu

Shared Models in Networks, Organizations, and Groups - Schwartzstein, Joshua; Sunderam, Adi (National Bureau of Economic Research Working Paper Series, 2022)
To understand new information, we exchange models or interpretations with others. This paper provides a framework for thinking about such social exchanges of models. The key assumption is that people adopt the interpretation in their network that best explains the data, given their prior beliefs. An implication is that interpretations evolve within a network. For many network structures, social learning mutes reactions to data: the exchange of models leaves beliefs closer to priors than they were before. Our results shed light on why disagreements persist as new information arrives, as well as the goal and structure of meetings in organizations.
Author contact info: Joshua Schwartzstein Baker Library 461 Harvard Business School Soldiers Field Boston, MA 02163 E-Mail: jschwartzstein@hbs.edu Adi Sunderam Harvard Business School Baker Library 359 Soldiers Field Boston, MA 02163 Tel: 617/495-6644 E-Mail: asunderam@hbs.edu

Bank Risk and Stockholding (1910-1934) - Jaremski, Matthew S (National Bureau of Economic Research Working Paper Series, 2022)
The massive rise in U.S. stockholding during the early twentieth century resulted in the deepening of securities markets, the spread of investment banks, and the expansion of publicly held corporations. This paper makes use of a unique panel database of South Dakota bank stockholders from 1910-1934 to study bank stockholder growth as well as its effect on bank composition and risk. Overall, the average number of stockholders in a bank rose from 8 to 21 over the period with much of the rise occurring after 1924, but many banks remained highly concentrated. The new stockholders are associated with a subsequent increase in a bank’s proportion of loans-to-assets, but no direct effect on bank closure outside of this balance sheet effect. The data thus illustrate the start of a movement towards more diffuse bank stockholding and its potential consequences for the industry.
Author contact info: Matthew S. Jaremski Utah State University Department of Economics and Finance 3565 Old Main Hill Logan, UT 84322 E-Mail: matthew.jaremski@usu.edu

How Has COVID-19 Impacted Disability Employment? - Ne'eman, Ari; Maestas, Nicole (National Bureau of Economic Research Working Paper Series, 2022)
While the COVID-19 public health emergency has had disastrous health impacts for people with disabilities, it remains unclear what impact the associated economic recession and subsequent recovery have had on disability employment. Objective: We evaluated employment trends for people with and without disabilities over the course of the COVID-19 recession and subsequent economic recovery, both overall and by occupational category (essential, non-essential, teleworkable, non-teleworkable, frontline, nonfrontline). We made use of data from the nationally representative Current Population Survey. Linear probability models were used to estimate percent changes in employment-to-population ratios and identify differences between disabled and non-disabled employment in each quarter broadly and within specific occupational categories. As the COVID-19 recession began in Q2 2020, people with disabilities experienced employment losses that were proportionately similar to those experienced by people without disabilities. However, during the subsequent economic recovery, the employment rate of people with disabilities has grown more quickly in Q4 2021 through Q2 2022, driven by increased labor force participation. These employment gains have been concentrated in teleworkable, essential, and non- frontline occupations. Our findings suggest that people with disabilities are disproportionately benefiting from the rapid recovery from the initial economic contraction at the start of the pandemic.
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

A New Test for Market Efficiency and Uncovered Interest Parity - Baillie, Richard T; Diebold, Francis X; Kapetanios, George; Kim, Kun Ho (National Bureau of Economic Research Working Paper Series, 2022)
We suggest a new single-equation test for Uncovered Interest Parity (UIP) based on a dynamic regression approach. The method provides consistent and asymptotically efficient parameter estimates, and is not dependent on assumptions of strict exogeneity. This new approach is asymptotically more efficient than the common approach of using OLS with HAC robust standard errors in the static forward premium regression. The coefficient estimates when spot return changes are regressed on the forward premium are all positive and remarkably stable across currencies. These estimates are considerably larger than those of previous studies, which frequently find negative coefficients. The method also has the advantage of showing dynamic effects of risk premia, or other events that may lead to rejection of UIP or the efficient markets hypothesis.
Author contact info: Richard T. Baillie Department of Economics Michigan State University East Lansing, MI 48824 Tel: 517-355-1864 E-Mail: baillie@msu.edu Francis X. Diebold Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-1507 E-Mail: fdiebold@sas.upenn.edu George Kapetanios King's College London Banking & Finance Department Bush House 30 Aldwych London, WC2B 4BG United Kingdom E-Mail: george.kapetanios@kcl.ac.uk Kun Kim 1450 Guy Street Department of Finance John Molson School of Business Concordia University Montreal, Quebec H3H 0A1 Canada Tel: 5148482424 E-Mail: kunho.kim@concordia.ca

Firm Sorting and Spatial Inequality - Lindenlaub, Ilse; Oh, Ryungha; Peters, Michael (National Bureau of Economic Research Working Paper Series, 2022)
We study the importance of spatial firm sorting for inequality both between and within local labor markets. We develop a novel model of spatial firm sorting, in which heterogeneous firms first choose a location and then hire workers in a frictional local labor market. Firms’ location choices are guided by a fundamental trade-off: Operating in productive locations increases output per worker, but sharing a labor market with other productive firms makes it hard to poach and retain workers, and hence limits firm size. We provide conditions under which there is positive firm sorting, with more productive firms settling in more productive locations. We show that positive firm sorting increases both the mean and the dispersion of wages in productive markets relative to less productive ones. The main mechanism is that firm sorting steepens the job ladder in productive places. We estimate our model using administrative data from Germany and identify firm sorting from a novel fact: Average local labor shares are lower in productive locations, which indicates a higher concentration of top firms with strong monopsony power. We infer that there is positive sorting of firms across space. Quantitatively, firm sorting can account for at least 16% of the spatial variation in mean wages and at least 38% of the variation in within-location wage dispersion.
Author contact info: Ilse Lindenlaub Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: ilse.lindenlaub@yale.edu Ryungha Oh Department of Economics, Yale University New Haven, CT 06511 US Tel: 2033935370 E-Mail: ryungha.oh@yale.edu Michael Peters Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/436-8475 E-Mail: m.peters@yale.edu

A New Racial Disparity in Traffic Fatalities - Chalfin, Aaron; Massenkoff, Maxim N (National Bureau of Economic Research Working Paper Series, 2022)
In 2015, for the first time in nearly forty years, the rate of motor vehicle fatalities for Black Americans exceeded that of white Americans. By 2020, the gap in death rates stood at 34%, accounting for approximately 4,000 excess deaths between 2014 and 2020. This disproportionate increase occurred in nearly all states, in rural as well as urban areas, and was shared by drivers of all ages and genders. We consider a variety of potential explanations for the emerging race gap including race-specific changes in time spent driving, the circumstances of driving, the quality of medical care for crash victims, decreases in other types of mortality, changes in policing, and risky driving behaviors such as speeding, driving without a seat belt and driving while intoxicated. We can rule out many of these factors as important contributors to the race gap, but find evidence for two of them. The first is opportunity: Relative to white Americans, Black Americans are spending more time in vehicles than they have in the past. Changes in time spent driving, while modest, likely explain an important share of the emergent race gap. The second is a relative increase in drug use, manifested by a quadrupling of the rate of overdose deaths among Black Americans after 2014. Increased drug use appears to have resulted in a concomitant increase in fatal crashes involving drivers under the influence of drugs. Finally, we consider whether the emerging race gap is explained by the so-called "Ferguson effect," the idea that police officers have pulled back from enforcement activity in recent years. On the one hand, traffic stops made by police officers do appear to have declined after 2014. However, the decline in traffic stops does not appear to be race-specific and there is little evidence of a broad increase in risky driving behaviors like speeding and driving without a seat belt.
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 Maxim N. Massenkoff Graduate School of Defense Management Naval Postgraduate School Monterey, CA 93943 E-Mail: maxim.massenkoff@nps.edu

Deferred Acceptance with News Utility - Dreyfuss, Bnaya; Glicksohn, Ofer; Heffetz, Ori; Romm, Assaf (National Bureau of Economic Research Working Paper Series, 2022)
Can incorporating expectations-based-reference-dependence (EBRD) considerations reduce seemingly dominated choices in the Deferred Acceptance (DA) mechanism? We run two experiments (total N = 500) where participants are randomly assigned into one of four DA variants—{static, dynamic} × {student proposing, student receiving}—and play ten simulated large-market school-assignment problems. While a standard, reference-independent model predicts the same straightforward behavior across all problems and variants, a news-utility EBRD model predicts stark differences across variants and problems. As the EBRD model predicts, we find that (i) across variants, dynamic student receiving leads to significantly fewer deviations from straightforward behavior, (ii) across problems, deviations increase with competitiveness, and (iii) within specific problems, the specific deviations predicted by the EBRD model are indeed those commonly observed in the data.
Author contact info: Bnaya Dreyfuss Department of Economics, Littauer Center Harvard University Cambridge, Mass 02138 United States E-Mail: bdreyfuss@g.harvard.edu Ofer Glicksohn Mt. Scopus Department of Economics Jerusalem Israel E-Mail: ofer.glicksohn@mail.huji.ac.il Ori Heffetz S.C. Johnson Graduate School of Management Cornell University 324 Sage Hall Ithaca, NY 14853 Tel: 607/255-4668 E-Mail: oh33@cornell.edu Assaf Romm Hebrew University of Jerusalem Tel: 16175866438 E-Mail: assaf.romm@mail.huji.ac.il

Give Me a Pass: Flexible Credit for Entrepreneurs in Colombia - Brune, Lasse; Giné, Xavier; Karlan, Dean (National Bureau of Economic Research Working Paper Series, 2022)
Although microcredit has reached millions, recent randomized evaluations find limited average business impacts. Contract rigidity, specifically the fixed and frequent installments, may limit productive risk-taking and thus diminish impact on average profits but risk triggering moral hazard. We test this with a Colombian lender that experimentally compared, for a sample of new borrowers, rigid lending to a loan product that included three “passes” to push off a monthly payment to the future. The flexible loan did lead to some shifts in investment behavior but no average impact on revenue or profits level or variance, and did lead to higher default.
Author contact info: Lasse Brune Northwestern University Scott Hall Evanston, IL E-Mail: lasse.brune@northwestern.edu Xavier Giné The World Bank 1818 H Street N.W. Mail Stop MC 3-307 Washington, DC 20433 Tel: (202) 473-0451 Fax: (202) 522-1155 E-Mail: xgine@worldbank.org Dean Karlan Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8706 E-Mail: dean.karlan@gmail.com

Smiles in Profiles: Improving Fairness and Efficiency Using Estimates of User Preferences in Online Marketplaces - Athey, Susan; Karlan, Dean; Palikot, Emil; Yuan, (National Bureau of Economic Research Working Paper Series, 2022)
Online platforms often face the challenge of being both fair (i.e., non-discriminatory) and efficient (i.e., maximizing revenue). Using computer vision algorithms and observational data from a micro-lending marketplace, we find that the choices that online borrowers make when creating online profiles impact both of these objectives. We further support this finding with a web-based randomized survey experiment. In the experiment, we create profile images using Generative Adversarial Networks that differ in a specific feature and estimate the impact of the feature on lender demand. We then evaluate counterfactual platform policies based on the changeable profile features, and identify approaches that can ameliorate the fairness-efficiency tension.
Author contact info: Susan Athey Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 Tel: 650/725-8696 Fax: 650/725-5702 E-Mail: athey@stanford.edu Dean Karlan Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8706 E-Mail: dean.karlan@gmail.com Emil Palikot 306 Fair Oaks st San Francisco, CA 94110 E-Mail: emil.palikot@gmail.com Yuan Yuan 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 9494674878 E-Mail: yuany3@andrew.cmu.edu

Effects of the Earned Income Tax Credit for Childless Adults: A Regression Discontinuity Approach - Meer, Jonathan; Witter, Joshua (National Bureau of Economic Research Working Paper Series, 2022)
Most antipoverty policy in the United States focuses on families with children, but efforts to assist childless adults have gained traction in recent years. We examine the impact of the Earned Income Tax Credit on the labor force outcomes of childless adults using the age-25 eligibility discontinuity. We find no impacts on labor force participation and employment outcomes, which may be due to lack of information about the credit, lack of behavioral response due to its small size, or that childless adults already have very high labor force participation rates.
Author contact info: Jonathan Meer Department of Economics TAMU 4228 College Station, TX 77843 Tel: 979/845-2059 Fax: 979/847-8757 E-Mail: jmeer@econmail.tamu.edu Joshua Witter E-Mail: witter.joshua@gmail.com

Legal Activism, State Policy, and Racial Inequality in Teacher Salaries and Educational Attainment in the Mid-Century American South - Cascio, Elizabeth U; Lewis, Ethan G (National Bureau of Economic Research Working Paper Series, 2022)
In the late 1930s, the NAACP launched a campaign to equalize Black and white teacher salaries in the de jure segregated schools of the American South. Using newly collected county panel data spanning three decades, this paper first documents heterogeneous within-state impacts of the campaign on teacher salaries. In states that reinforced successful NAACP litigation by introducing universal minimum salary schedules based on objective criteria, the relatively large wage penalty historically suffered by Black teachers in districts with higher Black enrollment shares disappeared by the mid-1950s. In states that resisted by adopting salary schedules using the National Teacher Examination as a measure of teaching efficacy, that penalty remained. In the second part of the paper, we estimate the effect of teacher pay on educational attainment exploiting variation in Black salary gains over time across counties with different Black enrollment shares, and across states by whether subsequent state policy reinforced or resisted court rulings favorable to the NAACP. We find that Black teacher salary gains contributed to the large reductions in racial inequality in school enrollment and grade progression in the South at mid-century.
Author contact info: Elizabeth U. Cascio Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 Tel: (603) 646-4096 Fax: (603) 646-2122 E-Mail: elizabeth.u.cascio@dartmouth.edu Ethan G. Lewis Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-2943 Fax: 603/646-2122 E-Mail: ethan.g.lewis@dartmouth.edu

Disaggregated Economic Accounts - Andersen, Asger L; Huber, Kilian; Johannesen, Niels; Straub, Ludwig; Vestergaard, Emil Toft (National Bureau of Economic Research Working Paper Series, 2022)
We develop and analyze a new system of disaggregated economic accounts. The system breaks down national accounting positions into bilateral flows between consistently defined groups of consumers (“consumer cells”), groups of producers (“producer cells”), the government, and the rest of the world. We disaggregate the full circular flow of money, including consumer spending, labor compensation, firm surplus, foreign trade, taxes, and trade in intermediates. The measurement is comprehensive, so that the disaggregated flows add up to national aggregates and fulfill all national accounting identities. We implement the disaggregated system for small region-by-industry cells in Denmark. We present new facts on a “triangular trade” pattern across regions: spending by rural consumers disproportionately flows into urban regions, urban consumers spend more abroad, and export revenue mostly flows into rural regions. Building on a general equilibrium model with many consumer and producer cells, we illustrate that the structure of disaggregated economic accounts shapes the propagation of shocks: fiscal policy is more effective when targeted at rural consumers, and urban consumers gain the most from foreign trade.
Author contact info: Asger L. Andersen E-Mail: asger.lau.andersen@econ.ku.dk Kilian Huber Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 E-Mail: kilianhuber@uchicago.edu Niels Johannesen University of Copenhagen Department of Economics and CEBI Denmark E-Mail: niels.johannesen@econ.ku.dk Ludwig Straub Department of Economics Harvard University Littauer Center Cambridge, MA 02138 E-Mail: ludwigstraub@g.harvard.edu Emil Toft Vestergaard E-Mail: emilth@gmail.com

How Substitutable Are Workers? Evidence from Worker Deaths - Jäger, Simon; Heining, Jörg (National Bureau of Economic Research Working Paper Series, 2022)
We estimate how exogenous worker exits affect firms’ demand for incumbent workers and new hires. Drawing on administrative data from Germany, we analyze 34,000 unexpected worker deaths, which, on average, raise the remaining workers’ wages and retention probabilities. The average effect masks substantial heterogeneity: Coworkers in the same occupation as the deceased see positive wage effects; coworkers in other occupations experience wage decreases when a high-skilled or specialized worker dies. Our findings imply substantial replacement costs, which are larger in thin markets and when skills are specialized.
Author contact info: Simon Jäger Department of Economics, E52-454 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: sjaeger@mit.edu Jörg Heining Institute for Employment Research (IAB) E-Mail: Joerg.Heining@iab.de

The NBER Orange Book Dataset: A User’s Guide - Durvasula, Maya; Hemphill, C. Scott; Ouellette, Lisa Larrimore; Sampat, Bhaven N; Williams, Heidi L (National Bureau of Economic Research Working Paper Series, 2022)
This paper introduces a newly digitized, open-access version of the Food and Drug Administration’s “Orange Book”—a linkage between approved small-molecule drugs and the patents that protect them. The Orange Book also reports any applicable regulatory exclusivity that prevents competitive entry. We summarize the Orange Book’s coverage and discuss the opportunities and challenges associated with using these data for research. Empirical validations against various administrative datasets suggest that Orange Book records are, largely, complete and accurate. We conclude with a specific use case—calculating legal exclusivity periods for drugs—to highlight the types of choices that researchers must make when using this resource.
Author contact info: Maya Durvasula Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: mdurvas@stanford.edu C. Scott Hemphill New York University School of Law. 40 Washington Sq. South New York, NY 10012 USA Tel: 212-992-6156 E-Mail: hemphill@nyu.edu Lisa Larrimore Ouellette Stanford Law School 559 Nathan Abbott Way Stanford, CA 94305 Tel: 650-721-2928 E-Mail: ouellette@law.stanford.edu Bhaven N. Sampat Arizona State University Consortium for Science, Policy, and Outcomes 1800 I Street NW, Suite 300 Washington, DC 20006 E-Mail: bhaven.sampat@asu.edu Heidi L. Williams Department of Economics 6106 Rockefeller Center, Office 328 Dartmouth College Hanover, NH 03755 Tel: 617-669-0577 E-Mail: heidi.lie.williams@dartmouth.edu

Heterogeneity in School Value-Added and the Private Premium - Andrabi, Tahir; Bau, Natalie; Das, Jishnu; Khwaja, Asim Ijaz (National Bureau of Economic Research Working Paper Series, 2022)
Using rich panel data from Pakistan, we compute test score based measures of quality (School Value-Addeds or SVAs) for more than 800 schools across 112 villages and verify that they are valid and unbiased. With the SVA measures, we then document three striking features of the schooling environment. First, there is substantial within-village variation in quality. The annualized difference in learning between the best and worst performing school in the same village is 0.4 sd; compounded over 5 years of primary schooling, this difference is similar in size to the test score gap between low- and high-income countries. Second, students learn more in private schools (0.15 sd per year on average), but substantial within-sector variation in quality means that the effects of reallocating students from public to private schools can range from -0.35sd to +0.65sd. Thus, there is a range of possible causal estimates of the private premium, a feature of the environment we illustrate using three different identification approaches. Finally, parents appear to recognize and reward SVA in the private sector, but the link between parental demand and SVA is weaker in the public sector. These results have implications for both the measurement of the private premium and how we design and evaluate policies that reallocate children across schools, such as school closures and vouchers.
Author contact info: Tahir Andrabi Department of Economics Pomona College Claremont, CA 91711 E-Mail: tandrabi@pomona.edu Natalie Bau Department of Economics University of California at Los Angeles Bunche Hall 8283 315 Portola Plaza Los Angeles, CA 90095 E-Mail: nbau@g.ucla.edu Jishnu Das McCourt School of Public Policy Georgetown University 37th & O Street NW Washington, DC 20057 Tel: 202/687-0433 E-Mail: jishnu.das@georgetown.edu Asim Ijaz Khwaja Harvard Kennedy School Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/494-7790 Fax: 617/496-8753 E-Mail: asim_ijaz_khwaja@harvard.edu

Air Quality and Suicide - Persico, Claudia; Marcotte, Dave E (National Bureau of Economic Research Working Paper Series, 2022)
We conduct the first-ever large-scale study of the relationship between air pollution and suicide using detailed cause of death data from all death certificates in the U.S. between 2003 and 2010. Using wind direction as an instrument for daily pollution exposure, we find that a 1 μg/m3 increase in daily PM2.5 is associated with a 0.49% increase in daily suicides and 0.171 more suicide-related hospitalizations (a 50% increase). Estimates using 2SLS are larger and more robust, suggesting a bias towards zero arising from measurement error. Event study estimates further illustrate that contemporaneous pollution exposure matters more than exposure to pollution in previous weeks.
Author contact info: Claudia Persico American University School of Public Affairs 4400 Massachusetts Ave NW Washington, DC 20016 Tel: 202/885-2719 E-Mail: cpersico@american.edu Dave Marcotte School of Public Affairs American University 4400 Massachusetts Avenue NW Washington, DC 20016 E-Mail: marcotte@american.edu

Marriage Matching over Five Centuries in China - Shiue, Carol H; Keller, Wolfgang (National Bureau of Economic Research Working Paper Series, 2022)
In the marriage market, families make investments on behalf of their young so that they are able to form a household with their preferred partner. We analyze marriage markets in a central region of China between about 1300 and 1850 through the lens of a model of marriage matching and intergenerational transmission of inequality. For both female and male children, marriage patterns are far from being random, instead, there is positive assortative matching. This is present for the entire income distribution, though at the highest levels matching on income is thirty times of what it is at low income levels. Over the sample period the degree of matching falls, and more so for young females, although from a lower level than young males. Lower marriage matching in the 18th and 19th centuries is accompanied by lower inequality across households, yielding a positive time series correlation between sorting and inequality. There are also intergenerational matching returns. Children of parents who are strongly matched tend to be able to marry into relatively high-income in-law families, conditional on the incomes in both the father’s and the mother’s families. Matching in the parent generation pays off more strongly for male than for female children.
Author contact info: Carol H. Shiue Department of Economics University of Colorado at Boulder Boulder, CO 80309 E-Mail: carol.shiue@colorado.edu Wolfgang Keller Department of Economics University of Colorado, Boulder Boulder, CO 80309-0256 Tel: 303/735 5507 Fax: 303/492 8960 E-Mail: Wolfgang.Keller@colorado.edu

Legalizing Entrepreneurship - Bahar, Dany; Cowgill, Bo; Guzman, Jorge (National Bureau of Economic Research Working Paper Series, 2022)
We use administrative data linked to the complete formal business registry to study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a resident visa. Immigrants who receive the visa increase their economic activity in the form of higher entrepreneurship by a factor as high as 12, bringing it to parity with native Colombians four years later. To establish causal estimates, we develop a novel extension of a regression discontinuity design. Our design uses variation in the running-variable (coming from rain) to instrument for migrants’ choices to apply for visas.
Author contact info: Dany Bahar 111 Thayer St Providence, RI 02912 United States E-Mail: dany_bahar@brown.edu Bo Cowgill Columbia Business School New York, New York Tel: (650) 492-8252 E-Mail: bo.cowgill.work@gmail.com Jorge Guzman Columbia Business School Kravis Hall, 975 655 W 130th St New York, NY 10027 E-Mail: jag2367@gsb.columbia.edu

National Wage Setting - Hazell, Jonathon; Patterson, Christina; Sarsons, Heather; Taska, Bledi (National Bureau of Economic Research Working Paper Series, 2022)
How do firms set wages across space? Using job-level vacancy data and a survey of HR managers, we show that 40-50% of a job’s posted wages are identical across locations within a firm. Moreover, nominal posted wages within the firm vary relatively little with local prices, a pattern we verify with other measures of job level wages. Using the co-movement of wage growth across establishments, we argue these patterns reflect national wage setting---a significant minority of firms choose to set the same nominal wage for a job across all their establishments, despite varying local labor market conditions.
Author contact info: Jonathon Hazell Department of Economics London School of Economics 32 Lincoln's Inn Fields United Kingdom E-Mail: jadhazell@gmail.com Christina Patterson Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 E-Mail: christina.patterson@chicagobooth.edu Heather Sarsons Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: hsarsons@mail.ubc.ca Bledi Taska E-Mail: bt540@nyu.edu

The Effects of Combat Deployments on Veterans' Outcomes - Bruhn, Jesse M; Greenberg, Kyle; Gudgeon, Matthew; Rose, Evan K; Shem-Tov, Yotam (National Bureau of Economic Research Working Paper Series, 2022)
As millions of soldiers deployed to Iraq or Afghanistan between 2001 and 2021, Veteran Affairs Disability Compensation payments quadrupled and the veteran suicide rate rose rapidly. We estimate causal effects of combat deployments on soldiers’ well-being. To eliminate non-random selection into deployment, we leverage quasi-random assignment of newly recruited soldiers to units on staggered deployment cycles. Deployments increase injuries, combat deaths, and disability compensation, but we find limited evidence that they affect suicide, deaths of despair, financial health, incarceration, or education. More dangerous deployments have similarly limited effects. Our estimates suggest that deployment cannot explain either the recent rise in disability payments, which is more likely driven by policy changes, or the surge in noncombat deaths, which is better explained by shifts in observable characteristics of soldiers.
Author contact info: Jesse Bruhn Department of Economics Brown University Providence, RI 02912 E-Mail: jesse_bruhn@brown.edu Kyle Greenberg U.S. Military Academy at West Point Department of Social Sciences West Point, NY 10996 E-Mail: kyle.greenberg@westpoint.edu Matthew Gudgeon Department of Economics Tufts University 177 College Avenue Medford, MA 02155 United States E-Mail: matthew.gudgeon@tufts.edu Evan K. Rose Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: ekrose@uchicago.edu Yotam Shem-Tov University of California, Los Angeles Department of Economics Box 951477 Los Angeles, CA 90095 E-Mail: shemtov@econ.ucla.edu

Subjective Performance Evaluation, Influence Activities, and Bureaucratic Work Behavior: Evidence from China - de Janvry, Alain; He, Guojun; Sadoulet, Elisabeth; Wang, Shaoda; Zhang, Qiong (National Bureau of Economic Research Working Paper Series, 2022)
Subjective performance evaluation is widely used by firms and governments to provide work incentives. However, delegating evaluation power to local leadership could induce influence activities: employees might devote too much effort to impressing/pleasing their evaluator, relative to working toward the goals of the organization itself. We conduct a large-scale randomized field experiment among Chinese local civil servants to study the existence and implications of influence activities. We find that civil servants do engage in evaluator-specific influence to affect evaluation outcomes, partly in the form of reallocating work efforts toward job tasks that are more important and observable to the evaluator. Importantly, we show that introducing uncertainty about the evaluator’s identity discourages evaluator-specific influence activities and improves bureaucratic work performance.
Author contact info: Alain de Janvry University of California at Berkeley 207 Giannini Hall Berkeley, CA 94720 E-Mail: alain@berkeley.edu Guojun He Faculty of Business and Economics University of Hong Kong Hong Kong 0000 Hong Kong E-Mail: guojun.he@gmail.com Elisabeth Sadoulet University of California at Berkeley 207 Giannini Hall Berkeley, CA 94720 E-Mail: esadoulet@berkeley.edu Shaoda Wang Harris School of Public Policy University of Chicago 1307 E. 60th Street office 2055 Chciago, IL 60637 Tel: 773-236-9614 E-Mail: shaoda@uchicago.edu Qiong Zhang Room 419B, Quishi Building 59 Zhongguancun Street Haidian District Beijing 100872 China E-Mail: zhangqiong8@ruc.edu.cn

Opening the Black Box: Task and Skill Mix and Productivity Dispersion - Blackwood, G. Jacob; Cunningham, Cindy; Dey, Matthew; Foster, Lucia S; Grim, Cheryl; Haltiwanger, John C; Nesbit, Rachel L; Pabilonia, Sabrina Wulff; Stewart, Jay; Tuttle, Cody; Wolf, Zoltan (National Bureau of Economic Research Working Paper Series, 2022)
An important gap in most empirical studies of establishment-level productivity is the limited information about workers’ characteristics and their tasks. Skill-adjusted labor input measures have been shown to be important for aggregate productivity measurement. Moreover, the theoretical literature on differences in production technologies across businesses increasingly emphasizes the task content of production. Our ultimate objective is to open this black box of tasks and skills at the establishment-level by combining establishment-level data on occupations from the Bureau of Labor Statistics (BLS) with a restricted-access establishment-level productivity dataset created by the BLS-Census Bureau Collaborative Micro-productivity Project. We take a first step toward this objective by exploring the conceptual, specification, and measurement issues to be confronted. We provide suggestive empirical analysis of the relationship between within-industry dispersion in productivity and tasks and skills. We find that within-industry productivity dispersion is strongly positively related to within-industry task/skill dispersion.
Author contact info: G. Jacob Blackwood Amherst College E-Mail: jblackwood@amherst.edu Cindy Cunningham Bureau of Labor Statistics 2 Massachusetts Ave NE #2180 Washington, DC 20212 E-Mail: cunningham.cynthia@bls.gov Matthew Dey Bureau of Labor Statistics 2 Massachusetts Ave NE Washington, DC 20212 E-Mail: Dey.Matthew@bls.gov Lucia S. Foster US Bureau of the Census Washington, DC 20233 E-Mail: lucia.s.foster@census.gov Cheryl Grim E-Mail: cheryl.ann.grim@census.gov John C. Haltiwanger Department of Economics University of Maryland College Park, MD 20742 Tel: 301/405-3504 Fax: 301/405-3542 E-Mail: haltiwan@econ.umd.edu Rachel L. Nesbit U.S. Census Bureau E-Mail: rnesbit@umd.edu Sabrina Pabilonia Office of Productivity and Technology U.S. Bureau of Labor Statistics 2 Massachusetts Avenue, N.E. Washington, DC 20212-0001 E-Mail: Pabilonia.Sabrina@bls.gov Jay Stewart Bureau of Labor Statistics 2 Massachusetts Avenue, NE Washington, DC 20212-0002 Tel: 202-691-7376 E-Mail: Stewart.Jay@bls.gov Cody Tuttle University of Texas at Austin 2225 Speedway Bernard and Audre Rapoport Building Austin, TX 78705 E-Mail: cody.tuttle@utexas.edu Zoltan Wolf Westat E-Mail: zoltan.wolf@census.gov

An Optimal Mechanism to Fund the Development of Vaccines Against Emerging Epidemics - Snyder, Christopher M; Hoyt, Kendall; Gouglas, Dimitrios (National Bureau of Economic Research Working Paper Series, 2022)
We derive the optimal funding mechanism to incentivize development and production of vaccines against diseases with epidemic potential. In the model, suppliers' costs are private information and investments are noncontractible, precluding cost-reimbursement contracts, requiring fixed-price contracts conditioned on delivery of a successful product. The high failure risk for individual vaccines calls for incentivizing multiple entrants, accomplished by the optimal mechanism, a (w+1)-price reverse Vickrey auction with reserve. Our analysis determines the optimal number of entrants and required funding level. Based on a distribution of supplier costs estimated from survey data, we simulate the optimal mechanism's performance in scenarios ranging from a small outbreak, causing harm in the millions of dollars, to the Covid-19 pandemic, causing harm in the trillions. We assess which mechanism features contribute most to its optimality.
Author contact info: Christopher M. Snyder Department of Economics Dartmouth College 301 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-0642 Fax: 603/646-2122 E-Mail: chris.snyder@dartmouth.edu Kendall Hoyt Geisel School of Medicine Dartmouth College 1 Rope Ferry Rd Hanover, NH 03755 E-Mail: kendall.l.hoyt@dartmouth.edu Dimitrios Gouglas E-Mail: dimitrios.gouglas@cepi.net

The Impact of Large-Scale Social Media Advertising Campaigns on COVID-19 Vaccination: Evidence from Two Randomized Controlled Trials - Ho, Lisa Y; Breza, Emily; Alsan, Marcella; Banerjee, Abhijit; Chandrasekhar, Arun G; Cody Stanford, Fatima; Fior, Renato; Goldsmith-Pinkham, Paul; Holland, Kelly; Hoppe, Emily; Jean, Louis-Maël; Ogbu-Nwobodo, Lucy; et al. (National Bureau of Economic Research Working Paper Series, 2022)
COVID-19 vaccines are widely available in wealthy countries, yet many people remain unvaccinated. Understanding the effectiveness -- or lack thereof -- of popular vaccination campaign strategies is therefore critical. In this paper, we report results from two studies that tested strategies central to current vaccination outreach: (1) direct communication by health professionals addressing questions about vaccination and (2) efforts to motivate individuals to promote vaccination within their social networks. Near the peak of the Omicron wave, doctor- and nurse-produced videos were disseminated to 17.8 million Facebook users in the US and 11.5 million in France. In both countries, we cannot reject the null of no effect of any of the interventions on any of the outcome variables (first doses - US and France, second doses and boosters - US). We can reject very small effects on first doses during the interventions in both countries (0.16pp - US, 0.021pp - France). In contrast with similar campaigns earlier in the pandemic to encourage health-preserving behaviors, messaging at this stage of the pandemic -- whether aimed at the unvaccinated or those tasked with encouraging others -- did not change vaccination decisions.
Author contact info: Lisa Y. Ho 4 Cogswell Avenue Apartment 1 Cambridge, Mass 02140 Tel: 5106505455 E-Mail: lisaho@mit.edu Emily Breza Harvard University Littauer Center, M28 1805 Cambridge Street Cambridge, MA 02138 Tel: 617-496-9589 E-Mail: ebreza@fas.harvard.edu Marcella Alsan Kennedy School of Government Harvard University 79 John F. Kennedy St. Rubenstein Bldg R403 Cambridge, MA 02138 E-Mail: marcella_alsan@hks.harvard.edu Abhijit Banerjee Department of Economics, E52-540 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8855 Fax: 617/253-1330 E-Mail: banerjee@mit.edu Arun G. Chandrasekhar Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: arungc@stanford.edu Fatima Cody Stanford Massachusetts General Hospital Harvard Medical School E-Mail: fstanford@mgh.harvard.edu Renato Fior 55 Bd Diderot CS 22305 PARIS 75610 France E-Mail: renato.fior@aphp.fr Paul Goldsmith-Pinkham Yale School of Management 165 Whitney Avenue New Haven, CT 06511 E-Mail: paulgp@gmail.com Kelly Holland Lynn Community Health Center 269 Union St Lynn, MA 01901 E-Mail: kholland@lchcnet.org Emily Hoppe Johns Hopkins School of Nursing 525 N. Wolfe St. Baltimore, MD 21205 E-Mail: ehoppe1@jhu.edu Louis-Mael Jean E-Mail: lmjean@povertyactionlab.org Lucy Ogbu-Nwobodo E-Mail: logbu-nwobodo@mgh.harvard.edu Benjamin A. Olken Department of Economics, E52-542 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/588-1437 Fax: 617/868-2742 E-Mail: bolken@mit.edu Carlos Torres Massachusetts General Hospital Harvard Medical School E-Mail: ctorres4@partners.org Pierre-Luc P. Vautrey MIT Department of Economics Building E52-300 50 Memorial Drive Cambridge, MA 02142 E-Mail: no email available Erica Warner 55 Fruit St Boston, MA 02114 E-Mail: ewarner@mgh.harvard.edu Esther Duflo Department of Economics, E52-544 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-7013 E-Mail: eduflo@mit.edu

The Economics of Women's Rights - Tertilt, Michèle; Doepke, Matthias; Hannusch, Anne; Montenbruck, Laura (National Bureau of Economic Research Working Paper Series, 2022)
Two centuries ago, in most countries around the world, women were unable to vote, had no say over their own children or property, and could not obtain a divorce. Women have gradually gained rights in many areas of life, and this legal expansion has been closely intertwined with economic development. We aim to understand the drivers behind these reforms. To this end, we distinguish between four types of women’s rights—economic, political, labor, and body—and document their evolution over the past 50 years across countries. We summarize the political-economy mechanisms that link economic development to changes in women's rights and show empirically that these mechanisms account for a large share of the variation in women's rights across countries and over time.
Author contact info: Michèle Tertilt Department of Economics University of Mannheim L7, 3-5 68131 Mannheim Germany Tel: +49-621-181-1902 E-Mail: tertilt@uni-mannheim.de Matthias Doepke Northwestern University Department of Economics 2211 Campus Drive Evanston, IL 60208 Tel: 847-491-8207 E-Mail: doepke@northwestern.edu Anne Hannusch L7, 3-5 Room P.03 Mannheim 68161 Germany E-Mail: hannusch@uni-mannheim.de Laura Montenbruck University of Mannheim L7, 3-5 68161 Mannheim Germany E-Mail: laura.montenbruck@uni-mannheim.de

Improving Household Debt Management with Robo-Advice - Chak, Ida; Croxson, Karen; D’Acunto, Francesco; Reuter, Jonathan; Rossi, Alberto G; Shaw, Jonathan M (National Bureau of Economic Research Working Paper Series, 2022)
Poor debt-management skills lower financial security and wealth accumulation. Because optimal solutions to credit repayment problems depend on neither risk preferences nor beliefs, loan repayment is a prime application for robo-advising. Vulnerable households, though, tend to distrust new technologies and override suggestions that do not align with ingrained heuristics, such as matching the minimum payment on a credit card balance. Lower adoption rates by these groups might increase rather than reduce wealth inequalities. To assess these trade-offs, we design and implement an RCT in which robo-advice for borrower repayment decisions is offered to a set of representative UK consumers. The availability of free robo-advice significantly improves average loan repayment choices. When their willingness to pay is elicited, many subjects report values larger than the monetary benefits of the tool, perhaps due to lower cognitive and psychological costs decision-makers face when making assisted choices. Non-adopters and overriders report lower trust in algorithms at the end of the experiment. We find no evidence of learning from robo-advice, which barely improves subsequent unassisted choices, even when paired with explicit tips. In fact, robo-advice usage crowds out learning-by-doing, which is highest for those who make all choices unassisted.
Author contact info: Ida Chak Financial Conduct Authority 12 Endeavour Square London E20 1JN United Kingdom E-Mail: Ida-chak@hotmail.com Karen Croxson Financial Conduct Authority 12 Endeavour Square London E20 1JN United Kingdom E-Mail: No email available Francesco D’Acunto McDonough School of Business Georgetown University Washington, DC 20057 E-Mail: francesco.dacunto@georgetown.edu Jonathan Reuter Carroll School of Management Boston College 224B Fulton Hall 140 Commonwealth Avenue Chestnut Hill, MA 02467 Tel: 617/552-2863 Fax: 617/552-0431 E-Mail: reuterj@bc.edu Alberto G. Rossi McDonough School of Business Georgetown University Washington, DC 20057 E-Mail: agr60@georgetown.edu Jonathan M. Shaw Financial Conduct Authority 12 Endeavour Square London E20 1JN United Kingdom E-Mail: Jonathan.Shaw@fca.org.uk

The Effect of Performance Pay Incentives on Market Frictions: Evidence from Medicare - Gupta, Atul; David, Guy; Kim, Lucy (Kunhee) (National Bureau of Economic Research Working Paper Series, 2022)
Medicare has increased the use of performance pay incentives for hospitals, with the goal of increasing care coordination across providers, reducing market frictions, and ultimately to improve quality of care. This paper provides new empirical evidence by using novel operations and claims data from a large, independent home health care firm with the Hospital Readmissions Reduction Program (HRRP) penalty on hospitals providing identifying variation. We find that the penalty incentive to reduce re-hospitalizations passed through from hospitals to the firm at least for some types of patients, since it provided more care inputs for heart disease patients discharged from hospitals at greater penalty risk and that contributed more patients to the firm. This evidence suggests that HRRP helped increase coordination between hospitals and home health firms without formal integration. Greater home health effort does not appear to have led to lower patient readmissions.
Author contact info: Atul Gupta Wharton Health Care Management 3641 Locust Walk, CPC 306 Philadelphia, PA 19104 Tel: 215/573-9075 E-Mail: atulgup@wharton.upenn.edu Guy David The Wharton School University of Pennsylvania 305 Colonial Penn Center 3641 Locust Walk Philadelphia, PA 19104-6218 Tel: 215/573-5780 Fax: 215/573-2157 E-Mail: gdavid2@wharton.upenn.edu Lucy (Kunhee) Kim E-Mail: kim.kunhee@gmail.com

Regression Discontinuity Evidence on the Effectiveness of the Minimum Legal E-Cigarette Purchasing Age - DeSimone, Jeffrey S; Grossman, Daniel S; Ziebarth, Nicolas R (National Bureau of Economic Research Working Paper Series, 2022)
Increases in youth vaping rates and concerns of a new generation of nicotine addicts recently prompted an increase in the federal minimum legal purchase age (MLPA) for tobacco products, including e-cigarettes, to 21 years. This study presents the first regression discontinuity evidence on the effectiveness of e-cigarette MLPA laws. Using data on 12th graders from Monitoring the Future, we obtain robust evidence that federal and state age-18 MLPAs decreased underage e-cigarette use by 15–20% and frequent use by 20–40%. These findings suggest that the age-21 federal MLPA could meaningfully reduce e-cigarette use among 18–20-year-olds.
Author contact info: Jeffrey DeSimone Department of Economics Duke University 308J Social Sciences Box 90097 Durham, NC 27708-0097 E-Mail: jeffrey.desimone@duke.edu Daniel S. Grossman Department of Economics West Virginia University Morgantown, WV 26506-6025 Tel: 304/293-7860 E-Mail: daniel.grossman@mail.wvu.edu Nicolas R. Ziebarth ZEW Mannheim D-68161, Mannheim Germany E-Mail: nicolas.ziebarth@zew.de

Understanding U.S. Inflation During the COVID Era - Ball, Laurence M; Leigh, Daniel; Mishra, Prachi (National Bureau of Economic Research Working Paper Series, 2022)
This paper analyzes the dramatic rise in U.S. inflation since 2020, which we decompose into a rise in core inflation as measured by the weighted median inflation rate and deviations of headline inflation from core. We explain the rise in core with two factors, the tightening of the labor market as captured by the ratio of job vacancies to unemployment, and the pass-through into core from past shocks to headline inflation. The headline shocks themselves are explained largely by increases in energy prices and by supply chain problems as captured by backlogs of orders for goods and services. Looking forward, we simulate the future path of inflation for alternative paths of the unemployment rate, focusing on the projections of Federal Reserve policymakers in which unemployment rises only modestly to 4.4 percent. We find that this unemployment path returns inflation to near the Fed’s target only under optimistic assumptions about both inflation expectations and the Beveridge curve relating the unemployment and vacancy rates. Under less benign assumptions about these factors, the inflation rate remains well above target unless unemployment rises by more than the Fed projects.
Author contact info: Laurence M. Ball Department of Economics Johns Hopkins University Baltimore, MD 21218 Tel: 410/516-7605 Fax: 410/516-7600 E-Mail: lball@jhu.edu Daniel Leigh International Monetary Fund Research Department 700 19th Street, NW Rm. 10-700N Washington, DC 20431 E-Mail: dleigh@imf.org Prachi Mishra IMF Research Department 700 19th Street NW Washington, DC 20431 E-Mail: pmishra@imf.org

AI, Skill, and Productivity: The Case of Taxi Drivers - Kanazawa, Kyogo; Kawaguchi, Daiji; Shigeoka, Hitoshi; Watanabe, Yasutora (National Bureau of Economic Research Working Paper Series, 2022)
We examine the impact of Artificial Intelligence (AI) on productivity in the context of taxi drivers. The AI we study assists drivers with finding customers by suggesting routes along which the demand is predicted to be high. We find that AI improves drivers’ productivity by shortening the cruising time, and such gain is accrued only to low-skilled drivers, narrowing the productivity gap between high- and low-skilled drivers by 14%. The result indicates that AI's impact on human labor is more nuanced and complex than a job displacement story, which was the primary focus of existing studies.
Author contact info: Kyogo Kanazawa Department of Economics 7-3-1 Hongo, Bunkyo-ku Tokyo 113-8654 Japan E-Mail: kanazawa-kyogo@g.ecc.u-tokyo.ac.jp Daiji Kawaguchi University of Tokyo Graduate School of Economics Hongo 7-3-1, Bunkyo-ku Tokyo. 113-0033, JAPAN E-Mail: kawaguchi@e.u-tokyo.ac.jp Hitoshi Shigeoka Department of Economics Simon Fraser University 8888 University Drive, WMC 4653 Burnaby, BC V5A 1S6 Tel: 778/782-5348 E-Mail: hitoshi_shigeoka@sfu.ca Yasutora Watanabe Department of Economics University of Tokyo Japan E-Mail: Yasutora.Watanabe@gmail.com

The Impact of Joint versus Separate Prediction Mode on Forecasting Accuracy - Imas, Alex; Jung, Minah H; Saccardo, Silvia; Vosgerau, Joachim (National Bureau of Economic Research Working Paper Series, 2022)
Forecasters predicting how people change their behavior in response to a treatment or intervention often consider a set of alternatives. In contrast, those who are treated are typically exposed to only one of the treatment alternatives. For example, managers selecting a wage schedule consider a set of alternative wages while employees are hired at a given rate. We show that forecasts made in joint-prediction mode—which considers a set of alternatives—generate predictions that expect substantially larger behavioral responses than those made in separate-prediction mode—which considers the response to only one treatment realization in isolation. Results show the latter to be more accurate in matching people’s actual responses to interventions and treatment changes. We present applications to managerial decision-making and forecasting of scientific results.
Author contact info: Alex Imas Booth School of Business University of Chicago 5897 S. Woodlawn Avenue Chicago, IL 60637 Tel: 224/392-3669 E-Mail: alex.imas@chicagobooth.edu Minah H. Jung E-Mail: minah.jung@stern.nyu.edu Silvia Saccardo Department of Social and Decision Sciences Carnegie Mellon University 5000 Forbes Avenue BP 208 Pittsburgh, PA 15213 E-Mail: ssaccard@andrew.cmu.edu Joachim Vosgerau Università Bocconi Via Röntgen 1 20136 Milano, Italia E-Mail: joachim.vosgerau@unibocconi.it

Parenting Promotes Social Mobility Within and Across Generations - García, Jorge Luis; Heckman, James J (National Bureau of Economic Research Working Paper Series, 2022)
This paper compares early childhood enrichment programs that promote social mobility for disadvantaged children within and across generations. Instead of conducting a standard meta-analysis, we present a harmonized primary data analysis of programs that shape current policy. Our analysis is a template for rigorous syntheses and comparisons across programs. We analyze new long-run life-cycle data collected for iconic programs when participants are middle-aged and their children are in their twenties. The iconic programs are omnibus in nature and offer many services to children and their parents. We compare them with relatively low-cost more focused home-visiting programs. Successful interventions target both children and their caregivers. They engage caregivers and improve the home lives of children. They permanently boost cognitive and non-cognitive skills. Participants in programs that enrich home environments grow up with better skills, jobs, earnings, marital stability, and health, as well as reduced participation in crime. Long-run monetized gains are substantially greater than program costs for iconic programs. We investigate the mechanisms promoting successful family lives for participants and find intergenerational effects on their children. A study of focused home-visiting programs that target parents enables us to isolate a crucial component of successful programs: they activate and promote parenting skills of child caregivers. The home-visiting programs we analyze produce outcomes comparable to those of the iconic omnibus programs. National implementation of the programs with long-run follow up that we analyze would substantially shrink the overall US Black-White earnings gap.
Author contact info: Jorge Luis García John E. Walker Department of Economics Clemson University 309-C Wilbur O. and Ann Powers Hall Clemson, SC 29634 Tel: 864/656-3481 E-Mail: jlgarci@clemson.edu 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

The U.S. Postal Savings System and the Collapse of B&Ls During the Great Depression - Fleitas, Sebastián; Jaremski, Matthew S; Sprick Schuster, Steven (National Bureau of Economic Research Working Paper Series, 2022)
Building and Loan Associations (B&Ls) financed over half of new houses constructed in the U.S. during the 1920s but they lost their predominance within the following decades as they were pushed to convert into Savings and Loans (S&Ls). This study examines whether the U.S. government-insured Postal Savings System attracted funds away from B&Ls precisely when they needed them the most in the Great Depression. Annual town- and county-level data from 1920 through 1935 for 3 states show that the sudden rise in local postal savings was associated with local downturns in B&Ls. Using a panel vector autoregression, we find that postal savings significantly reduced the amount of money in B&Ls, yet B&Ls had no significant effect on postal savings banks. Alternatively, postal savings had no significant effect on commercial banks. The results suggest that this competitive dynamic prevented B&Ls from rebounding in the mid-1930s and helped contribute to Great Depression’s local real estate lending decline.
Author contact info: Sebastián Fleitas Department of Economics Universidad Católica de Chile Chile E-Mail: sebastian.fleitas@uc.cl Matthew S. Jaremski Utah State University Department of Economics and Finance 3565 Old Main Hill Logan, UT 84322 E-Mail: matthew.jaremski@usu.edu Steven Sprick Schuster E-Mail: stevenschuster@gmail.com

The Productivity of Professions: Evidence from the Emergency Department - Chan, David C, Jr; Chen, Yiqun (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the productivity of nurse practitioners (NPs) and physicians, two professions performing overlapping tasks but with stark differences in background, training, and pay. Using quasi-experimental variation in patient assignment to NPs versus physicians in 44 Veterans Health Administration emergency departments, we find that, on average, NPs use more resources but achieve worse patient outcomes relative to physicians. The costs of lower productivity surpass the pay differences between the professions. Yet even larger productivity variation exists within each profession, implying substantial productivity overlap between the two professions. Within professions, wages and assigned patient complexity vary only weakly with productivity.
Author contact info: David C. Chan Jr Department of Health Policy 117 Encina Commons Stanford, CA 94305 Tel: 650/725-9582 E-Mail: david.c.chan@stanford.edu Yiqun Chen Department of Economics University of Illinois at Chicago 601 South Morgan Street, 708 UH Chicago, IL 60607 Tel: 312/996-5518 E-Mail: yqchen@uic.edu

Artificial Intelligence, the Evolution of the Healthcare Value Chain, and the Future of the Physician - Dranove, David; Garthwaite, Craig (National Bureau of Economic Research Working Paper Series, 2022)
Artificial intelligence (AI) is transforming production across all sectors of the economy, with the potential to both complement and substitute for traditional labor inputs. Healthcare is no exception. Dozens of recent academic studies demonstrate that AI can contribute to the healthcare value chain, by improving both diagnostic accuracy and treatment recommendations. In these ways, AI may wither complement or substitute for physicians. We argue that AI represents the culmination of decades of efforts to enhance medical decision making. Using an historical lens that considers long-standing institutional features of healthcare markets, we identify numerous obstacles to the implementation of AI in medical care, and identify which specialties are most at risk for substitution by AI.
Author contact info: David Dranove Department of Strategy Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: d-dranove@kellogg.northwestern.edu Craig Garthwaite Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2509 Fax: 847/467-1777 E-Mail: c-garthwaite@kellogg.northwestern.edu

Should Mothers Work? How Perceptions of the Social Norm Affect Individual Attitudes Toward Work in the U.S. - Cortés, Patricia; Koşar, Gizem; Pan, Jessica; Zafar, Basit (National Bureau of Economic Research Working Paper Series, 2022)
We study how peer beliefs shape individual attitudes toward maternal labor supply using realistic hypothetical scenarios that elicit recommendations on the labor supply choices of a mother with a young child and an information treatment embedded within representative surveys. Across the scenarios, we find that individuals systematically overestimate the extent of gender conservativeness of the people around them. Exposure to information on peer beliefs leads to a shift in recommendations, driven largely by information-based belief updating. The information treatment also increases (intended and actual) donations to a non-profit organization advocating for women in the workplace.
Author contact info: Patricia Cortés Questrom School of Business Boston University 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/353-3646 E-Mail: pcortes@bu.edu Gizem Koşar Microeconomic Studies Federal Reserve Bank of New York 33 Liberty Street New York, NY 10045 E-Mail: gizem.kosar@gmail.com Jessica Pan Department of Economics National University of Singapore 1 Arts Link Singapore E-Mail: jesspan@nus.edu.sg Basit Zafar Department of Economics University of Michigan 611 Tappan Street Ann Arbor, Michigan 48109 E-Mail: basitak@gmail.com

Epidemiological Expectations - Carroll, Christopher D; Wang, Tao (National Bureau of Economic Research Working Paper Series, 2022)
‘Epidemiological’ models of belief formation put social interactions at their core; such models are widely used by scholars who are not economists to study the dynamics of beliefs in populations. We survey the literature in which economists attempting to model the consequences of beliefs about the future – ‘expectations’ – have employed a full-fledged epidemiological approach to explore an economic question. We draw connections to related work on ‘contagion,’ narrative economics, news/rumor spreading, and the spread of internet memes. A main theme of the paper is that a number of independent developments have recently converged to make epidemiological expectations (‘EE’) modeling more feasible and appealing than in the past.
Author contact info: Christopher D. Carroll Department of Economics Mergenthaler 441 Johns Hopkins University Baltimore, MD 21218 Tel: 410/516-7602 Fax: 410/516-7600 E-Mail: ccarroll@jhu.edu Tao Wang Bank of Canada Ottawa, ON K1A 0G9 Canada E-Mail: taowangeconomics@gmail.com

The Unicorn Puzzle - Davydova, Daria; Fahlenbrach, Rüdiger; Sanz, Leandro; Stulz, René M (National Bureau of Economic Research Working Paper Series, 2022)
From 2010 to 2021, 639 US VC-funded firms achieved unicorn status. We investigate why there are so many unicorns and why founders grant investors privileges to obtain unicorn status. Unicorns rely more than other VC-funded startups on organizational capital and network effects. Unicorn status enables startups to access new sources of capital, and growth in available funding causes the number of unicorns to increase. As a result, unicorns can stay private longer, which enables them to grow their organizational intangible assets with less expropriation risk and better capture the economies of scale on which their business model relies.
Author contact info: Daria Davydova E-Mail: daria.davydova@epfl.ch Rüdiger Fahlenbrach Swiss Finance Institute @ EPFL Quartier UNIL-Dorigny, Extranef 211 CH – 1015 Lausanne Switzerland E-Mail: ruediger.fahlenbrach@epfl.ch Leandro Sanz 810 Fisher Hall 2100 Neil Avenue Columbus, OH 43210 United States E-Mail: sanz.8@osu.edu René M. Stulz The Ohio State University Fisher College of Business 806A Fisher Hall Columbus, OH 43210-1144 Tel: 614/292-1970 Fax: 614/292-2359 E-Mail: stulz@cob.osu.edu

Mapping the Knowledge Space: Exploiting Unassisted Machine Learning Tools - Teodoridis, Florenta; Lu, Jino; Furman, Jeffrey L (National Bureau of Economic Research Working Paper Series, 2022)
Understanding factors affecting the direction of innovation is a central aim of research in the economics of innovation. Progress on this topic has been inhibited by difficulties in measuring distance and movement in knowledge space. We describe a methodology that infers the mapping of the knowledge landscape based on text documents. The approach is based on an unassisted machine learning technique, Hierarchical Dirichlet Process (HDP), which flexibly identifies patterns in text corpora. The resulting mapping of the knowledge landscape enables calculations of distance and movement, measures that are valuable in several contexts for research in innovation. We benchmark and demonstrate the benefits of this approach in the context of 44 years of USPTO data.
Author contact info: Florenta Teodoridis University of Southern California Marshall School of Business 701 Exposition Blvd, HOH 503 Los Angeles, CA 90089 E-Mail: florenta.teodoridis@marshall.usc.edu Jino Lu E-Mail: jino.lu@marshall.usc.edu Jeffrey L. Furman Boston University Questrom School of Business 595 Commonwealth Ave - #653a Boston, MA 02215 Tel: 617/353-4656 E-Mail: furman@bu.edu

The Ex-Ante Moral Hazard Effects of COVID-19 Vaccines - Agrawal, Virat; Sood, Neeraj; Whaley, Christopher M (National Bureau of Economic Research Working Paper Series, 2022)
A long-standing economic question is how protection against harm from insurance or other harm reducing interventions leads to potentially offsetting behavior changes (ex-ante moral hazard). Immunization is a type of insurance, as individuals incur an upfront cost when they get vaccinated, but it protects individuals if they are exposed to a vaccine preventable disease. In this study, we empirically evaluate the ex-ante moral hazard effects of COVID-19 vaccines. First, exploiting the discontinuity in vaccination rates at age 65 due to early eligibility of older population, we compared vaccination rates and risk mitigation behavior between those just above and just below 65 years of age. We find no evidence of decrease in risk mitigating behavior among the 65 years old and older population. Second, leveraging state-level variation in the timing of when people in different age groups became eligible for vaccination, we estimate that COVID-19 vaccination has no effect on risk mitigating behaviors in adult population. Our findings imply minimal moral hazard effects of COVID-19 vaccines in the short-term.
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

A Theory of Fiscal Responsibility and Irresponsibility - Halac, Marina; Yared, Pierre (National Bureau of Economic Research Working Paper Series, 2022)
We propose a political economy mechanism that explains the presence of fiscal regimes punctuated by crisis periods. Our model focuses on the interaction between successive deficit-biased governments subject to i.i.d. fiscal shocks. We show that the economy transitions between a fiscally responsible regime and a fiscally irresponsible regime, with transitions occurring during crises when fiscal needs are large. Under fiscal responsibility, governments limit their spending to avoid transitioning to fiscal irresponsibility. Under fiscal irresponsibility, governments spend excessively and precipitate crises that lead to the reinstatement of fiscal responsibility. Regime transitions can only occur if governments' deficit bias is large enough.
Author contact info: Marina Halac Yale University Department of Economics 30 Hillhouse Avenue, Room 22B New Haven, CT 06511 E-Mail: marina.halac@yale.edu Pierre Yared Columbia University Graduate School of Business 3022 Broadway, Uris Hall 823 New York, NY 10027 Tel: 212/854-9670 Fax: 212/662-8474 E-Mail: pyared@columbia.edu

Modeling Machine Learning: A Cognitive Economic Approach - Caplin, Andrew; Martin, Daniel J; Marx, Philip (National Bureau of Economic Research Working Paper Series, 2022)
We apply methodological innovations from cognitive economics that were designed to study human cognition to instead better understand machine learning. We first show that the folk theory of machine learning – that an algorithms learns optimally to minimize the loss function used in training – rests on a shaky foundation. We then identify a path forward by translating ideas from the costly learning branch of cognitive economics. We find that changes in the loss function impact learning just as they might if the algorithm was a rational human being who found learning costly according to a revealed pseudo-cost function that may or may not correspond to actual resource costs. Our approach can be leveraged to determine more effective loss functions given a third party’s objective, be it a firm or a policy maker.
Author contact info: Andrew Caplin Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8950 Fax: 212/995-3932 E-Mail: andrew.caplin@nyu.edu Daniel J. Martin Northwestern University Kellogg School of Management 2211 Campus Drive Evanston, IL 60208 E-Mail: daniel@martinonline.org Philip Marx Department of Economics Louisiana State University 501 South Quad Dr. Baton Rouge, LA 70803 E-Mail: pmarx@lsu.edu

Overweight Grandsons and Grandfathers' Starvation Exposure - Costa, Dora (National Bureau of Economic Research Working Paper Series, 2022)
Much of the increase in the prevalence of overweight and obesity has been in developing countries with a history of famines and malnutrition. Prior research has pointed to the association between overweight and famine exposure during developmental ages as one of several explanations and has hypothesized that ancestral famine exposure may play a role. Data limitations have prevented researchers from investigating the multigenerational effects of famine shocks on descendant overweight. This paper examines overweight among adult grandsons of grandfathers exposed to starvation during developmental ages. I study grandsons born to grandfathers who served in the Union Army during the US Civil War (1861-5) where some grandfathers experienced severe net malnutrition because they were POWs during times of extreme hardship. I find that male-line but not female-line grandsons of grandfathers who experienced a severe captivity during their growing years faced a 21% increase in mean overweight and a 2% increase in mean BMI compared to grandsons of non-POWs. This increase was mediated by fathers’ and to a lesser extent own in-utero conditions, as proxied by season of birth, suggesting a dynamic process of inheritance. Male-line grandsons descended from grandfathers who experienced a harsh captivity faced a 22-28% greater risk of dying every year after age 45 relative to grandsons descended from non-POWs, with overweight accounting for 9-14% of the excess risk.
Author contact info: Dora Costa Bunche Hall 9272 Department of Economics UCLA Box 951477 Los Angeles, CA 90095-1477 Tel: (310) 825-4249 Fax: (310) 825-9528 E-Mail: costa@econ.ucla.edu

Economic Activity Across Space: A Supply and Demand Approach - Allen, Treb; Arkolakis, Costas (National Bureau of Economic Research Working Paper Series, 2022)
What do recent advances in economic geography teach us about the spatial distribution of economic activity? We show that the equilibrium distribution of economic activity can be determined simply by the intersection of labor supply and demand curves. We discuss how to estimate these curves and highlight the importance of global geography – i.e. the connections between locations through the trading network – in determining how various policy relevant changes to geography shape the spatial economy.
Author contact info: Treb Allen Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 E-Mail: treb@dartmouth.edu 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

Cross-Border Mergers and Acquisitions - Erel, Isil; Jang, Yeejin; Weisbach, Michael S (National Bureau of Economic Research Working Paper Series, 2022)
One of the most consequential events in any firm’s lifetime is a major acquisition. Because of their importance, mergers and acquisitions (M&As) have been an enormous area of research. However, the vast majority of this research and survey papers summarizing this research have focused on domestic deals. Cross-border ones, however, constitute about 30% of the total number and 37% of the total volume of M&As around the world since the early 1990s. We survey the literature on cross-border M&As, focusing on international factors that can lead firms to acquire a firm in another country. Such factors include differences in economic development, laws, institutions, culture, labor rights, protection of intellectual property, taxes, and corporate governance.
Author contact info: Isil Erel Fisher College of Business The Ohio State University 2100 Neil Avenue Columbus, OH 43210 Tel: 614/292-5174 E-Mail: erel@fisher.osu.edu Yeejin Jang University of New South Wales School of Banking & Finance E-Mail: y.jang@unsw.edu.au Michael S. Weisbach Department of Finance Fisher College of Business The Ohio State University 2100 Neil Ave. Columbus, OH 43210 Tel: 614/292-3264 E-Mail: weisbach.2@osu.edu

Economic Impact Payments and Household Spending During the Pandemic - Parker, Jonathan A; Schild, Jake; Erhard, Laura; Johnson, David (National Bureau of Economic Research Working Paper Series, 2022)
Households spent only a small fraction of their 2020 Economic Impact Payment (EIPs) within a couple of months of arrival, consistent with i) pandemic constraints on spending, ii) other pandemic programs and social insurance, and iii) the broader disbursement of the EIPs compared to the economic losses during the early stages of the pandemic. While these EIPs did not fill an urgent economic need for most households, the first round of EIPs did provide timely pandemic insurance to some households who were more exposed to the economic losses from the pandemic. Households with lower liquid wealth entering the pandemic and those less able to earn while working from home each raised consumption more following receipt of their EIP. While our measurement for later EIPs is not as reliable, our estimates suggest even less spending on average to the second and third rounds of EIPs. Our point estimates imply less short-term spending on average than in response to economic stimulus payments in 2001 or 2008. While our analysis lacks the power to measure longer-term spending effects, the lack of short-term spending contributed to strong household balance sheets as the direct economic effects of the pandemic on households waned.
Author contact info: Jonathan A. Parker MIT Sloan School of Management 100 Main Street, E62-642 Cambridge, MA 02142-1347 Tel: 617-253-7218 E-Mail: JAParker@MIT.edu Jake Schild Bureau of Labor Statistics U.S. Department of Labor 2 Massachusetts Avenue NE Washington, DC 20212-0001 E-Mail: Schild.Jake@bls.gov Laura Erhard US Bureau of Labor Statistics Division of Consumer Expenditure Surveys 2 Massachusetts Avenue NE Washington, DC 20212-0001 US E-Mail: Erhard.Laura@bls.gov David Johnson 500 Fifth Street, NW Washington, DC 20001 United States Tel: 5713296759 E-Mail: djohnson@nas.edu

Socioeconomic Status and Access to Mental Health Care: The Case of Psychiatric Medications for Children in Ontario Canada - Currie, Janet; Kurdyak, Paul; Zhang, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
We examine differences in the prescribing of psychiatric medications to low-income and higher-income children in the Canadian province of Ontario using rich administrative data that includes diagnosis codes and physician identifiers. Our most striking finding is that conditional on diagnosis and medical history, low-income children are more likely to be prescribed antipsychotics and benzodiazepines than higher-income children who see the same doctors. These are drugs with potentially dangerous side effects that ideally should be prescribed to children only under narrowly proscribed circumstances. Low-income children are also less likely to be prescribed SSRIs, the first-line treatment for depression and anxiety conditional on diagnosis. Hence, socioeconomic differences in the prescribing of psychotropic medications to children persist even in the context of universal public health insurance and universal drug coverage.
Author contact info: Janet Currie Department of Economics Center for Health and Wellbeing 185A Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 Tel: 609-258-7393 E-Mail: jcurrie@princeton.edu Paul Kurdyak University of Toronto and ICES G1 06, 2075 Bayview Avenue Toronto, Ontario M4N3M5 Canada E-Mail: Paul.Kurdyak@camh.ca Jonathan Zhang McMaster University Kenneth Taylor Hall, Room 441 1280 Main Street West Hamilton, ON, L8S 4M4 Canada E-Mail: jonathanzhang@mcmaster.ca

Financial Intermediation and the Funding of Biomedical Innovation: A Review - Lo, Andrew W; Thakor, Richard T (National Bureau of Economic Research Working Paper Series, 2022)
We review the literature on financial intermediation in the process by which new medical therapeutics are financed, developed, and delivered. We discuss the contributing factors that lead to a key finding in the literature—underinvestment in biomedical R&D—and focus on the role that banks and other intermediaries can play in financing biomedical R&D and potentially closing this funding gap. We conclude with a discussion of the role of financial intermediation in the delivery of healthcare to patients.
Author contact info: Andrew W. Lo MIT Sloan School of Management 100 Main Street, E62-618 Cambridge, MA 02142 Tel: 617/253-0920 Fax: 781/891-9783 E-Mail: alo-admin@mit.edu Richard T. Thakor University of Minnesota, 321 19th Avenue South, 3-255 Minneapolis, MN 55455 E-Mail: rthakor@umn.edu

The Electric Ceiling: Limits and Costs of Full Electrification - Rapson, David S; Bushnell, James B (National Bureau of Economic Research Working Paper Series, 2022)
Electrification is a centerpiece of global decarbonization efforts. Yet there are reasons to be skeptical of the inevitability, or at least the optimal pace, of the transition. We discuss several under-appreciated costs of full, or even deep, electrification. Consumer preferences can operate in favor of and in opposition to electrification goals; and electrification is likely to encounter physical and economic obstacles when it reaches some as-yet-unknown level. While we readily acknowledge the external benefits of decarbonization, we also explore several under-appreciated external costs. The credibility and eventual success of decarbonization efforts is enhanced by foreseeing and ideally avoiding predictable but non-obvious costs of promising abatement pathways. Thus, even with all of its promise, the degree of electrification may ultimately reach a limit.
Author contact info: David S. Rapson Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530-302-1024 Fax: 530-752-9382 E-Mail: dsrapson@ucdavis.edu James B. Bushnell Department of Economics One Shields Ave. University of California, Davis Davis, CA 95616 Tel: 530/752-3129 E-Mail: jbbushnell@ucdavis.edu

The Missing Middle Managers: Labor Costs, Firm Structure, and Development - Hjort, Jonas; Malmberg, Hannes; Schoellman, Todd (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows that large, multi-establishment business enterprises face a high cost of middle management in poor countries and that this cost inhibits the growth of the modern sector. We provide new empirical evidence using a database covering compensation for 300,000 middle managers working at modern firms in 146 countries. We estimate that the elasticity of real management costs with respect to real GDP per worker is 0.1. We quantify the importance of this finding using a calibrated appropriate technology model where firms choose whether to adopt the management-intensive modern business structure. Lower management costs in developing countries would increase the revenue share of the modern sector by 10-20 percentage points
Author contact info: Jonas Hjort Department of Economics University College London Drayton House 30 Gordon Street London WC1H 0AX UK E-Mail: jonas.hjort@gmail.com Hannes Malmberg University of Minnesota E-Mail: pmalmber@umn.edu Todd Schoellman Federal Reserve Bank of Minneapolis Research Department 90 Hennepin Ave Minneapolis, MN 55401 Tel: (864) 650-2500 E-Mail: todd.schoellman@gmail.com

Housing Wealth and Consumption: The Role of Heterogeneous Credit Constraints - Aruoba, S. Borağan; Elul, Ronel; Kalemli-Özcan, Ṣebnem (National Bureau of Economic Research Working Paper Series, 2022)
We quantify the role of heterogeneity in households’ financial constraints in explaining the large decline in aggregate consumption between 2006 and 2009 using individual-level data. Financial constraints can explain 56% of the aggregate response of consumption to changes in house prices. Local general equilibrium feedback and decline in bank credit to consumers make up the remaining 44%. Our results show that a large part of the response that was attributed to wealth effects in the prior literature, can in fact be explained by heterogeneity in households’ financial constraints.
Author contact info: S. Borağan Aruoba Department of Economics University of Maryland College Park, MD 20742-7211 Tel: 301/405-3523 E-Mail: aruoba@umd.edu Ronel Elul Research Dept, Federal Reserve Bank of Philadelphi Ten Independence Mall Philadelphia, PA 19106 E-Mail: ronel.elul@phil.frb.org 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