The Governance of Non-Profits and their Social Impact: Evidence from a Randomized Program in Healthcare in the Democratic Republic of Congo - Fangwa, Anicet; Flammer, Caroline; Huysentruyt, Marieke; Quelin, Bertrand (National Bureau of Economic Research Working Paper Series, 2022)
Substantial funding is provided to the healthcare systems of low-income countries. However, an important challenge is to ensure that this funding be used efficiently. This challenge is complicated by the fact that a large share of healthcare services in low-income countries is provided by non-profit health centers that often lack i) effective governance structures and ii) organizational know-how and adequate training. In this paper, we argue that the bundling of performance-based incentives with auditing and feedback (A&F) is a potential way to overcome these obstacles. First, the combination of feedback and performance-based incentives—that is, feedback joint with incentives to act on this feedback and achieve specific health outcomes—helps address the knowledge gap that may otherwise undermine performance-based incentives. Second, coupling feedback with auditing helps ensure that the information underlying the feedback is reliable—a prerequisite for effective feedback. To examine the effectiveness of this bundle, we use data from a randomized governance program conducted in the Democratic Republic of Congo. Within the program, a set of health centers were randomly assigned to a “governance treatment” that consisted of performance-based incentives combined with A&F, while others were not. Consistent with our prediction, we find that the governance treatment led to i) higher operating efficiency and ii) improvements in health outcomes. Furthermore, we find that funding is not a substitute for the governance treatment—health centers that only receive funding increase their scale, but do not show improvements in operating efficiency nor health outcomes.
Author contact info: Anicet Fangwa HEC Paris 1 Rue de la Libération 78350 Jouy-en-Josas France E-Mail: anicet.fangwa@hec.edu Caroline Flammer School of International and Public Affairs and Columbia Climate School Columbia University 420 West 118th Street, Office 1429 New York, NY 10026 E-Mail: caroline.flammer@columbia.edu Marieke Huysentruyt HEC Paris 1 Rue de la Libération 78350 Jouy-en-Josas France E-Mail: huysentruyt@hec.fr Bertrand Quelin HEC Paris 1 Rue de la Libération 78350 Jouy-en-Josas France E-Mail: quelin@hec.fr

The Private Provision of Public Services: Evidence from Random Assignment in Medicaid - Agafiev Macambira, Danil; Geruso, Michael; Lollo, Anthony; Ndumele, Chima D; Wallace, Jacob (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the effects of privatizing social health insurance in the United States. We study this question in the context of the Medicaid program, the largest health insurer in the US and the largest means-tested program in the nation — serving over 90 million low-income families and individuals with disabilities. Exploiting a natural experiment wherein nearly 100,000 Medicaid enrollees were randomly assigned between a state-administered fee-for-service system and private managed care, we find that spending was nearly 10% lower for enrollees assigned to managed care plans. These savings were concentrated in prescription drugs, where we show that prior authorization was the key mechanism plans used to reduce overuse and encourage substitution to lower-cost alternatives without reducing quality. This was distinct from the effects of privatization on medical benefits, where private plans lowered quality and abraded consumers without achieving savings. In contrast to what our findings imply for an efficient public-private division of services, Medicaid has historically favored the public provision of prescription drugs and private outsourcing of medical care.
Author contact info: Danil Agafiev Macambira Yale School of Public Health New Haven, CT 06520 E-Mail: danil.agafievmacambira@yale.edu Michael Geruso University of Texas at Austin Department of Economics 1 University Station C3100 Austin, TX 78712 Tel: 512/475-8704 E-Mail: mike.geruso@utexas.edu Anthony Lollo Yale School of Public Health New Haven, CT 06520 E-Mail: anthony.lollo.jr@gmail.com Chima D. Ndumele E-Mail: chima.ndumele@yale.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

New Frontiers: The Origins and Content of New Work, 1940–2018 - Autor, David; Chin, Caroline; Salomons, Anna M; Seegmiller, Bryan (National Bureau of Economic Research Working Paper Series, 2022)
We address three core questions about the hypothesized role of newly emerging job categories ('new work') in counterbalancing the erosive effect of task-displacing automation on labor demand: what is the substantive content of new work; where does it come from; and what effect does it have on labor demand? To address these questions, we construct a novel database spanning eight decades of new job titles linked both to US Census microdata and to patent-based measures of occupations’ exposure to labor-augmenting and labor-automating innovations. We find, first, that the majority of current employment is in new job specialties introduced after 1940, but the locus of new work creation has shifted—from middle-paid production and clerical occupations over 1940–1980, to high-paid professional and, secondarily, low-paid services since 1980. Second, new work emerges in response to technological innovations that complement the outputs of occupations and demand shocks that raise occupational demand; conversely, innovations that automate tasks or reduce occupational demand slow new work emergence. Third, although flows of augmentation and automation innovations are positively correlated across occupations, the former boosts occupational labor demand while the latter depresses it. Harnessing shocks to the flow of augmentation and automation innovations spurred by breakthrough innovations two decades earlier, we establish that the effects of augmentation and automation innovations on new work emergence and occupational labor demand are causal. Finally, our results suggest that the demand-eroding effects of automation innovations have intensified in the last four decades while the demand-increasing effects of augmentation innovations have not.
Author contact info: David Autor Department of Economics, E52-438 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-7698 Fax: 617/253-1330 E-Mail: dautor@mit.edu Caroline Chin MIT E-Mail: cmchin@mit.edu Anna M. Salomons Utrecht School of Economics Utrecht University Kriekenpitplein 21-22 3584 EC Utrecht The Netherlands E-Mail: salomonsanna@gmail.com Bryan Seegmiller Northwestern University Kellogg School of Management E-Mail: bryan.seegmiller@kellogg.northwestern.edu

Does Occupational Licensing Reduce Value Creation on Digital Platforms? - Blair, Peter Q; Fisher, Mischa (National Bureau of Economic Research Working Paper Series, 2022)
We test whether occupational licensing undercuts a key goal of digital marketplaces— to increase social surplus by increasing the effectiveness of customer search. Our setting is a large online marketplace in the $500B home services industry where a platform converts customer search into sales leads that are accepted for purchase by service providers on the platform. For each of the 21 million observations in our data set, we observe task-level variation in the state licensing requirements that service providers must meet to operate on the platform. Exploiting two natural experiments, we find that licensing reduces the accept rate of sales leads by an average of 25 percent. The accept rate drops because licensing reduces the aggregate labor supply of workers on the platform and not because licensing increases the volume of customer search. We develop a model and derive analytic expressions for the impact of licensing on the welfare of consumers, service providers and the platform as a function of seven sufficient statistics which we estimate from the data. We find that licensing a task reduces service provider surplus and platform surplus without increasing consumer surplus.
Author contact info: Peter Q. Blair Harvard University Graduate School of Education 407 Gutman Library Cambridge, MA 02138 Tel: 617-458-6010 E-Mail: peter_blair@gse.harvard.edu Mischa Fisher Angi Inc. E-Mail: mischa.fisher@angi.com

Where Have All the Workers Gone? Recalls, Retirements, and Reallocation in the COVID Recovery - Forsythe, Eliza; Kahn, Lisa B; Lange, Fabian; Wiczer, David G (National Bureau of Economic Research Working Paper Series, 2022)
At the onset of the COVID pandemic, the U.S. economy suddenly and swiftly lost 20 million jobs. Over the next two years, the economy has been on the recovery path. We assess the labor market two years into the COVID crisis. We show that early employment dynamics were almost entirely driven by temporary layoffs and later recalls. Taking these into account, we show that the labor market remained surprisingly tight throughout the crisis, despite the dramatic job losses. By spring, 2022, the labor market had largely recovered and was characterized by extremely tight markets and a slightly depressed employment-to-population ratio driven largely by retirements. Finally, we see surprisingly little evidence of excess reallocation, despite predictions that COVID would dramatically and permanently change the way we live and work. We do see that employment has reallocated somewhat away from low-skilled service jobs, and, in light of the job vacancy patterns, conclude that worker preferences or changes in job amenities are driving this shift. In addition, the retirements paved the way for movements up the job ladder, making low-skilled customer-facing jobs even less desirable.
Author contact info: Eliza Forsythe University of Illinois, Urbana-Champaign 504 East Armory Avenue Champaign, IL 61821 Tel: (217) 244-8481 E-Mail: eforsyth@illinois.edu 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 Fabian Lange Department of Economics McGill University 855 Sherbrooke Street West Montreal, QC H3A, 2T7 Tel: 514/653-0020 E-Mail: fabian.lange@mcgill.ca David G. Wiczer 1000 Peachtree Street N.E. Atlanta, GA 30309 E-Mail: wiczerd@gmail.com

The Impact of Diversity on Perceptions of Income Distribution and Preferences for Redistribution - Londoño-Vélez, Juliana (National Bureau of Economic Research Working Paper Series, 2022)
Does diversity affect people’s perceptions of income distribution and their preferences for redistribution? I leverage variation from a Colombian financial aid reform boosting the share of low-income students at an elite university. Combining college records and original survey data, I study how diversity affects high-income students’ social networks, perceptions, and preferences by exploiting treatment variation across cohorts and majors using difference-in-differences. Exposure to low-income peers caused high-income students to diversify their social networks, have more accurate perceptions of the income distribution, and support progressive redistribution. My preferred interpretation is that diversity raised students’ concerns about (the lack of) equal opportunity.
Author contact info: Juliana Londoño-Vélez Department of Economics University of California, Los Angeles Bunche Hall 8283 Los Angeles, CA 90095 E-Mail: j.londonovelez@econ.ucla.edu

Family Formation and Crime - Massenkoff, Maxim N; Rose, Evan K (National Bureau of Economic Research Working Paper Series, 2022)
We use administrative data from Washington State to perform a large-scale analysis of the impact of family formation on crime. Our estimates indicate that pregnancy triggers sharp declines in arrests rivaling any known intervention, supporting the view that childbirth is a "turning point" that reduces deviant behavior through social bonds. For mothers, criminal arrests drop precipitously in the first few months of pregnancy, stabilizing at half of pre-pregnancy levels three years after birth. Men show a sustained 20 percent decline in crime that begins at pregnancy, although arrests for domestic violence spike at birth. These effects are concentrated among first-time parents, suggesting that a permanent change in preferences---rather than transitory time and budget shocks---may be responsible. A separate design using parents of stillborn children to estimate counterfactual arrest rates reinforces the main findings. Marriage, in contrast, is not associated with any sudden changes and marks the completion of a gradual 50 percent decline in arrests for both men and women.
Author contact info: Maxim N. Massenkoff Graduate School of Defense Management Naval Postgraduate School Monterey, CA 93943 E-Mail: maxim.massenkoff@nps.edu Evan K. Rose Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: ekrose@uchicago.edu

Internal Migration in the United States: Rates, Selection, and Destination Choice, 1850-1940 - Zimran, Ariell (National Bureau of Economic Research Working Paper Series, 2022)
I study the internal migration of native-born white men in the United States using linked census data covering all possible 10- and 20-year periods 1850--1940. Inter-county migration rates were stable over time. Selection into migration on the basis of occupational status was also largely stable and was neutral or slightly negative. But the orientation of internal migration changed, declining in distance, becoming more directed towards the west, and increasingly driving urbanization. These patterns changed in the 1930s as migration became less common and less urban oriented. These results provide a clearer understanding of historic US internal migration than previously possible.
Author contact info: Ariell Zimran Department of Economics Vanderbilt University 2301 Vanderbilt Place Nashville, TN 37235 Tel: 615/322-1529 E-Mail: ariell.zimran@vanderbilt.edu

Broadband Internet and the Stock Market Investments of Individual Investors - Hvide, Hans K; Meling, Tom G; Mogstad, Magne; Vestad, Ola L (National Bureau of Economic Research Working Paper Series, 2022)
We study the effects of broadband internet use on the investment decisions of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market participation, driven primarily by increased fund ownership. Existing investors tilt their portfolios towards funds, thereby obtaining more diversified portfolios and higher Sharpe ratios, and do not increase their trading activity in stocks. Overall, access to high-speed internet seems to spur a “democratization of finance”, with individuals making investment decisions that are more in line with the advice from portfolio theory.
Author contact info: Hans Hvide University of Bergen Solvberget 12 5038 Bergen Norway E-Mail: hans.hvide@econ.uib.no Tom G. Meling Ohio State University E-Mail: tom.grimstvedt.meling@gmail.com Magne Mogstad Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-3877 E-Mail: magne.mogstad@gmail.com Ola L. Vestad Research Department Statistics Norway Postboks 2633 St. Hanshaugen 0131 Oslo Norway E-Mail: ola.vestad@ssb.no

Eviction and Poverty in American Cities - Collinson, Robert; Humphries, John Eric; Mader, Nicholas S; Reed, Davin K; Tannenbaum, Daniel I; van Dijk, Winnie (National Bureau of Economic Research Working Paper Series, 2022)
More than two million U.S. households have an eviction case filed against them each year. Policymakers at the federal, state, and local levels are increasingly pursuing policies to reduce the number of evictions, citing harm to tenants and high public expenditures related to homelessness. We study the consequences of eviction for tenants using newly linked administrative data from two major urban areas: Cook County (which includes Chicago) and New York City. We document that prior to housing court, tenants experience declines in earnings and employment and increases in financial distress and hospital visits. These pre-trends pose a challenge for disentangling correlation and causation. To address this problem, we use an instrumental variables approach based on cases randomly assigned to judges of varying leniency. We find that an eviction order increases homelessness and hospital visits and reduces earnings, durable goods consumption, and access to credit in the first two years. Effects on housing and labor market outcomes are driven by impacts for female and Black tenants. In the longer-run, eviction increases indebtedness and reduces credit scores.
Author contact info: Robert Collinson Department of Economics University of Notre Dame 3027 Jenkins and Nanovic Halls Notre Dame, IN 46556 Tel: 847/867-1284 E-Mail: rcollin8@nd.edu John Eric Humphries Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 773/980-6575 E-Mail: johneric.humphries@yale.edu Nicholas S. Mader Chapin Hall at the University of Chicago 313 E 60th St Chicago, IL 60637 E-Mail: nmader@chapinhall.org Davin K. Reed Federal Reserve Bank of Philadelphia 10 N Independence Mall W Philadelphia, PA 19106 E-Mail: davin.reed@phil.frb.org Daniel I. Tannenbaum Department of Economics University of Nebraska – Lincoln HLH 525 B P.O. Box 880489 Lincoln, NE 68588 Tel: 402-472-2120 E-Mail: dtannenbaum@unl.edu Winnie van Dijk Department of Economics Yale University 87 Trumbull Street, B228 New Haven, CT 06520 E-Mail: winnie.vandijk@yale.edu

Scared Straight? Threat and Assimilation of Refugees in Germany - Jaschke, Philipp; Sardoschau, Sulin; Tabellini, Marco (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the effects of threat on convergence to local culture and economic assimilation of refugees, exploiting plausibly exogenous variation in their allocation across German regions between 2013 and 2016. We combine novel survey data on cultural preferences and economic outcomes of refugees with corresponding information on locals, and construct a threat index that integrates contemporaneous and historical variables. On average, refugees assimilate both culturally and economically. However, while refugees assigned to more hostile regions converge to local culture more quickly, they do not exhibit faster economic assimilation. Our evidence suggests that refugees exert more assimilation effort in response to local threat, but do not integrate faster because of higher discrimination in more hostile regions.
Author contact info: Philipp Jaschke IAB Regensburger Str. 100 Nürnberg, Bavaria 90478 Germany E-Mail: Philipp.Jaschke@iab.de Sulin Sardoschau Humboldt University Mohrenstrasse 40 Berlin, Berl 10117 Germany E-Mail: sulin.sardoschau@hu-berlin.de Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu

Rationing by Race - Singh, Manasvini; Venkataramani, Atheendar (National Bureau of Economic Research Working Paper Series, 2022)
Discrimination may lead to rationing on the basis of group identity when resources become more scarce. We provide evidence of consequential rationing on the basis of an individual’s race in a high-stakes setting: health care. Using detailed, time-stamped data on over 107,000 patient admissions from a large health system in the U.S., we find that in-hospital mortality increased for Black, but not White, patients as hospitals reached capacity, a state where biases in care provision are likely to emerge or be exacerbated. We identify rationing by wait times as a mechanism, also documenting that sick Black patients wait longer for care than healthy White patients, regardless of capacity levels. Applying text analysis techniques to clinical documentation, we provide suggestive evidence of disparities in provider effort as another mechanism.
Author contact info: Manasvini Singh Carnegie Mellon University Dept of Social and Decision Sciences Pittsburgh, PA 15213 United States E-Mail: msingh01@cmu.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

Unconditional Cash and Family Investments in Infants: Evidence from a Large-Scale Cash Transfer Experiment in the U.S. - Gennetian, Lisa A; Duncan, Greg; Fox, Nathan A; Magnuson, Katherine; Halpern-Meekin, Sarah; Noble, Kimberly G; Yoshikawa, Hirokazu (National Bureau of Economic Research Working Paper Series, 2022)
A key policy question in evaluating social programs to address childhood poverty is how families receiving unconditional financial support would spend those funds. Economists have limited empirical evidence on this topic in the U.S. We provide causal estimates of financial and time investments in infants among families living in poverty from a large-scale, multi-site randomized controlled study of monthly unconditional cash transfers starting at the time of a child’s birth. We find that the cash transfers increased spending on child-specific goods and mothers’ early-learning activities with their infants. The marginal propensity to consume child-focused items from the cash transfer exceeded that from other income, consistent with the behavioral cues in the cash transfer design. We find no statistically detectable offsets in household earnings nor statistically detectable impacts in other pre-registered outcomes related to general household expenditures, maternal labor supply, infants’ time in childcare, or mothers’ subjective well-being.
Author contact info: Lisa A. Gennetian Sanford School of Public Policy Duke University 212 Rubenstein Hall 302 Towerview Road Durham, NC 27708 Tel: 919/613-9341 E-Mail: lisa.gennetian@duke.edu Greg Duncan University of California, Irvine School of Education 2056 Education Building, Mail Code 5500 Irvine, CA 92697 Tel: (949) 824-7831 E-Mail: gduncan@uci.edu Nathan A. Fox University of Maryland Department of Human Development and Quantitative Methodology 3404 Benjamin Building College Park, MD 20742 United States E-Mail: fox@umd.edu Katherine Magnuson School of Social Work University of Wisconsin-Madison 1350 University Avenue Madison, WI 53706 E-Mail: kmagnuson@wisc.edu Sarah Halpern-Meekin University of Wisconsin-Madison La Follette School of Public Affairs 1300 Linden Drive, Office 4107 Madison, WI 53706 E-Mail: sarah.halpernmeekin@wisc.edu Kimberly Noble Teachers College, Columbia University 525 West 120th Street New York, NY 10027 United States E-Mail: kgn2106@tc.columbia.edu Hirokazu Yoshikawa New York University Steinhardt School of Culture, Education, and Human Development 627 Broadway, Room 815 New York, NY 10012 United States E-Mail: hy2042@nyu.edu

Not Learning from Others - Conlon, John J; Mani, Malavika; Rao, Gautam; Ridley, Matthew W; Schilbach, Frank (National Bureau of Economic Research Working Paper Series, 2022)
We provide evidence of a powerful barrier to social learning: people are much less sensitive to information others discover compared to equally-relevant information they discover themselves. In a series of incentivized lab experiments, we ask participants to guess the color composition of balls in an urn after drawing balls with replacement. Participants' guesses are substantially less sensitive to draws made by another player compared to draws made themselves. This result holds when others' signals must be learned through discussion, when they are perfectly communicated by the experimenter, and even when participants see their teammate drawing balls from the urn with their own eyes. We find a crucial role for taking some action to generate one's `own' information, and rule out distrust, confusion, errors in probabilistic thinking, up-front inattention and imperfect recall as channels.
Author contact info: John J. Conlon Harvard University 1805 Cambridge St Cambridge, MA 02138 E-Mail: johnconlon@g.harvard.edu Malavika Mani University of Warwick Department of Economics E-Mail: Malavika.Mani@warwick.ac.uk Gautam Rao Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 857/998-4504 E-Mail: grao@berkeley.edu Matthew W. Ridley 2220 Piedmont Avenue Berkeley, CA 94720 E-Mail: mwridley@berkeley.edu Frank Schilbach MIT Department of Economics, E52-560 The Morris and Sophie Chang Building 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/715-2969 Fax: 617/253-1330 E-Mail: fschilb@mit.edu

The German Model of Industrial Relations: Balancing Flexibility and Collective Action - Jäger, Simon; Noy, Shakked; Schoefer, Benjamin (National Bureau of Economic Research Working Paper Series, 2022)
We give an overview of the “German model” of industrial relations. We organize our review by focusing on the two pillars of the model: sectoral collective bargaining and firm-level codetermination. Relative to the United States, Germany outsources collective bargaining to the sectoral level, resulting in higher coverage and the avoidance of firm-level distributional conflict. Relative to other European countries, Germany makes it easy for employers to avoid coverage or use flexibility provisions to deviate downwards from collective agreements. The greater flexibility of the German system may reduce unemployment, but may also erode bargaining coverage and increase inequality. Meanwhile, firm-level codetermination through worker board representation and works councils creates cooperative dialogue between employers and workers. Board representation has few direct impacts owing to worker representatives’ minority vote share, but works councils, which hold a range of substantive powers, may be more impactful. Overall, the German model highlights tensions between efficiency-enhancing flexibility and equity-enhancing collective action.
Author contact info: Simon Jäger Department of Economics, E52-454 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: sjaeger@mit.edu Shakked Noy Massachusetts Institute of Technology Cambridge, MA 02139 E-Mail: shakked.noy@gmail.com Benjamin Schoefer Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/642-0822 E-Mail: schoefer@berkeley.edu

A Model of Intangible Capital - Crouzet, Nicolas; Eberly, Janice C; Eisfeldt, Andrea L; Papanikolaou, Dimitris (National Bureau of Economic Research Working Paper Series, 2022)
We propose a model that starts from the premise that intangible capital needs to be stored on some medium --- software, patents, essential employees --- before it can be utilized in production. Storage implies that intangible capital may be partially non-rival within the firm, leading to scale economies. However, storage can also compromise the ability of the firm to fully appropriate the returns generated by intangibles. We explore the implications of these two mechanisms for firm scale, scope, and investment decisions, and we outline their connection to recent macroeconomic and financial trends in the US.
Author contact info: Nicolas Crouzet Finance Department Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847-467-5446 E-Mail: n-crouzet@kellogg.northwestern.edu Janice C. Eberly Department of Finance Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/467-1840 Fax: 847/491-5719 E-Mail: eberly@kellogg.northwestern.edu Andrea L. Eisfeldt Anderson School of Management University of California at Los Angeles 110 Westwood Plaza Suite C4.10 Los Angeles, CA 90095 E-Mail: andrea.eisfeldt@anderson.ucla.edu Dimitris Papanikolaou Kellogg School of Management Northwestern University 2211 Campus Drive, Office 4319 Evanston, IL 60208 Tel: 847/491-7704 E-Mail: d-papanikolaou@kellogg.northwestern.edu

Why Don't We Sleep Enough? A Field Experiment Among College Students - Avery, Mallory L; Giuntella, Osea; Jiao, Peiran (National Bureau of Economic Research Working Paper Series, 2022)
This study investigates the mechanisms affecting sleep choice and explores whether commitment devices and monetary incentives can be used to promote healthier sleep habits. To this end, we conducted a field experiment with college students, providing them incentives to sleep and collecting data from wearable activity trackers, surveys, and time-use diaries. Monetary incentives were effective in increasing sleep duration with some evidence of persistence after the incentive was removed. We uncover evidence of demand for commitment. Our results are consistent with partially sophisticated time-inconsistent preferences and overconfidence, and have implications for the effectiveness of information interventions on sleep choice.
Author contact info: Mallory L. Avery Monash University Australia E-Mail: mallory.avery@monash.edu Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Peiran Jiao Maastricht University Netherlands E-Mail: p.jiao@maastrichtuniversity.nl

The Impact of Team Incentives on Performance in Graduate School: Evidence from Two Pilot RCTs - List, John A; Shah, Rohen (National Bureau of Economic Research Working Paper Series, 2022)
In organizations, teams are ubiquitous. “Weakest Link” and “Best Shot” are incentive schemes that tie a group member’s compensation to the output of their group’s least and most productive member, respectively. In this paper, we test the impact of these incentive schemes by conducting two pilot RCTs (one in-person, one online), which included more than 250 graduate students in a graduate math class. Students were placed in study groups of three or four students, and then groups were randomized to either control, Weakest Link, or Best Shot incentives. We find evidence that such incentive approaches can affect test scores, both in-person and online.
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 Rohen Shah The University of Chicago Harris School of Public Policy 1307 E. 60th St Chicago, IL 60637 United States Tel: 734-578-5684 E-Mail: shahr@uchicago.edu

Investing in Infants: The Lasting Effects of Cash Transfers to New Families - Barr, Andrew C; Eggleston, Jonathan; Smith, Alexander A (National Bureau of Economic Research Working Paper Series, 2022)
We provide new evidence that cash transfers following the birth of a first child can have large and long-lasting effects on that child’s outcomes. We take advantage of the January 1 birthdate cutoff for U.S. child-related tax benefits, which results in families of otherwise similar children receiving substantially different refunds during the first year of life. For the average low-income single-child family in our sample this difference amounts to roughly $1,300, or 10 percent of income. Using the universe of administrative federal tax data in selected years, we show that this transfer in infancy increases young adult earnings by at least 1 to 2 percent, with larger effects for males. These effects show up at earlier ages in terms of improved math and reading test scores and a higher likelihood of high school graduation. The observed effects on shorter-run parental outcomes suggest that additional liquidity during the critical window following the birth of a first child leads to persistent increases in family income that likely contribute to the downstream effects on children’s outcomes. The longer-term effects on child earnings alone are large enough that the transfer pays for itself through subsequent increases in federal income tax revenue.
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 Jonathan Eggleston Center for Economic Studies U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: jonathan.s.eggleston@census.gov Alexander A. Smith 165 Union St. Beacon, NY 12508 E-Mail: alexander.smith@westpoint.edu

Material Incentives and Effort Choice: Evidence from an Online Experiment Across Countries - Davies, Elwyn; Fafchamps, Marcel (National Bureau of Economic Research Working Paper Series, 2022)
We conduct an interactive online experiment framed as an employment contract between employer and worker. Subjects from the US, India, and Africa are matched in pairs within and, in some cases, across countries. Employers make a one-period offer to a worker who can either decline or choose a high or low effort. The offer is restricted to be from a variable set of possible contracts: high and low fixed wage; bonus and malus contracts; and bonus and malus with reneging. High effort is always efficient. Self-interest predicts a fraction of observed choices, but many choices are better explained either by conditional reciprocity or by intrinsic motivation. Subjects from India and Africa are more likely to follow intrinsic motivation and they provide high effort more often. US subjects are more likely to follow self-interest and reach a less efficient outcome on average, but workers earn slightly more. We find no evidence that workers favor employers from some countries or that employers treat workers from different countries differently. Individual characteristics and stated attitudes toward worker incentives are unable to predict the behavioral differences observed between countries, thus allowing the possible existence of cultural differences in the response to labor incentives.
Author contact info: Elwyn Davies 1818 H St NW Washington, DC 20433 United States E-Mail: edavies@worldbank.org Marcel Fafchamps Freeman Spogli Institute Stanford University 616 Jane Stanford Way Stanford, CA 94305 Tel: 650/497-4602 E-Mail: fafchamp@stanford.edu

Real-Time Poverty, Material Well-Being, and the Child Tax Credit - Han, Jeehoon; Meyer, Bruce D; Sullivan, James X (National Bureau of Economic Research Working Paper Series, 2022)
In response to the COVID-19 pandemic two new timely poverty measures have been developed to monitor fast-changing economic conditions for the most deprived. The Han et al. near real-time poverty measure uses responses to a global income question on the Monthly Current Population Survey (CPS) that is available for a subsample of those surveyed. The CPSP monthly poverty measure, widely cited in the media, uses data from the Annual Social and Economic Supplement to the CPS and other sources to impute poverty in the Monthly CPS sample based on demographic and employment variables. This paper evaluates the two measures and their estimates of child poverty around the 2021 temporary changes to the Child Tax Credit (CTC). We argue that conceptually the measure based on responses rather than the one based on imputations is preferable, though both measures suffer from important drawbacks. We also conclude that widely publicized claims that child poverty fell by 25 percent when the Advance CTC payments started and subsequently rose by 41 percent when they ended are based on weak evidence and are overstated. The best evidence, though still imperfect, suggests poverty was relatively stable in 2021 and the first half of 2022. Part of the explanation for the lack of change appears to be a compensating decline in employment among low-skilled workers with children. Other evidence tying changes in well-being to the tax credit is confounded by other policy changes.
Author contact info: Jeehoon Han School of Economics Zhejiang University Yuhangtang Road No.866 Hangzhou, 310058 China E-Mail: jeehoonhan3@gmail.com Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu James X. Sullivan Department of Economics 3108 Jenkins Nanovic Halls University of Notre Dame Notre Dame, IN 46556 Tel: 574/631-7587 E-Mail: James.X.Sullivan.197@nd.edu

Patterns, Determinants, and Consequences of Ability Tracking: Evidence from Texas Public Schools - Antonovics, Kate; Black, Sandra E; Cullen, Julie Berry; Meiselman, Akiva Yonah (National Bureau of Economic Research Working Paper Series, 2022)
Little is known about the pervasiveness or determinants of within-school ability tracking in the US. To fill this gap, we use detailed administrative data to estimate the extent of tracking in Texas public schools for grades 4 through 8 over the years 2011-2019. Strikingly, we find that ability tracking across classes within schools overwhelms sorting by ability across districts and schools, as well as sorting by race/ethnicity or economic disadvantage. We also examine how schools operationalize tracking as well as the local characteristics that predict tracking. Finally, we explore how exposure to tracking (and the bundle of associated practices) relates to achievement gains, finding that, on average, tracking increases inequality by slightly improving test scores of higher-achieving students without harming those of lower-achieving students.
Author contact info: Kate Antonovics Department of Economics - 0508 University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093-0508 E-Mail: kantonov@ucsd.edu Sandra E. Black Department of Economics and School of International and Public Affairs Columbia University 1022 International Affairs Building 420 West 118th Street New York, NY 10027 E-Mail: sblack@columbia.edu Julie Berry Cullen Department of Economics - 0508 University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093-0508 Tel: 858/822-2056 Fax: 858/534-7040 E-Mail: jbcullen@ucsd.edu Akiva Yonah Meiselman PhD Research Improving People's Lives Providence, RI 02903 E-Mail: yonah.meiselman@gmail.com

One Size Doesn’t Fit All: Heterogeneous Depositor Compensation During Periods of Uncertainty - Artavanis, Nikolaos; Paravisini, Daniel; Robles Garcia, Claudia; Seru, Amit; Tsoutsoura, Margarita (National Bureau of Economic Research Working Paper Series, 2022)
We develop a new approach to identify different categories of depositors during periods of uncertainty and quantify their compensation to remain in the bank. We isolate withdrawals due to liquidity needs, deterioration of fundamentals, and expectation about withdrawal behavior of other depositors. We exploit variation in the cost of withdrawal induced by the maturity expiration of time deposits around unexpected uncertainty events and high-frequency microdata from a large Greek bank. Deposit withdrawals quadrupled in response to a policy uncertainty shock that doubled the short-run credit default swap (CDS) price of Greek sovereign bonds. About two-thirds of this increase is driven by direct exposure to deteriorating fundamentals, and the remainder due to strategic complementarities. We find that depositors need to be offered annualized returns exceeding 50% to remain in the bank during episodes of high uncertainty. Our findings provide new insights into the design of interventions that prevent runs by targeting depositors with the largest propensity to withdraw.
Author contact info: Nikolaos Artavanis Virginia Tech 1016 Pamplin Hall Blacksburg, VA 24061 USA E-Mail: nartavan@vt.edu Daniel Paravisini Department of Finance London School of Economics Houghton Street London WC2A 2AE Tel: +44 (0)20 7107 5371 Fax: +44 (0)20 7849 4647 E-Mail: d.paravisini@lse.ac.uk Claudia Robles Garcia E-Mail: roblesga@stanford.edu Amit Seru Stanford Graduate School of Business Stanford University 655 Knight Way Tel: 650/736-0223 E-Mail: aseru@stanford.edu Margarita Tsoutsoura Olin Business School Washington University in St. Louis 1 Snow Way Dr St. Louis, MO 63130 E-Mail: tsoutsoura@wustl.edu

The Slaughter of the Bison and Reversal of Fortunes on the Great Plains - Feir, Donn. L; Gillezeau, Rob; Jones, Maggie E.C. (National Bureau of Economic Research Working Paper Series, 2022)
In the late nineteenth century, the North American bison was brought to the brink of extinction in just over a decade. We demonstrate that the loss of the bison had immediate, negative consequences for the Native Americans who relied on them and ultimately resulted in a permanent reversal of fortunes. Once amongst the tallest people in the world, the generations of bison-reliant people born after the slaughter lost their entire height advantage. By the early twentieth century, child mortality was 16 percentage points higher and the probability of reporting an occupation 29.7 percentage points lower in bison nations compared to nations that were never reliant on the bison. Throughout the latter half of the twentieth century and into the present, income per capita has remained 28 percent lower, on average, for bison nations. This persistent gap cannot be explained by differences in agricultural productivity, self-governance, or application of the Dawes Act. We provide evidence that this historical shock altered the dynamic path of development for formerly bison-reliant nations. We demonstrate that limited access to credit constrained the ability of bison nations to adjust through respecialization and migration.
Author contact info: Donn L. Feir Department of Economics University of Victoria PO Box 1700 STN CSC Victoria, BC V8W 2Y2 E-Mail: dfeir@uvic.ca Rob Gillezeau 105 St. George St. Rotman School of Management University of Toronto Toronto, ON M5S 3E6 Canada Tel: 2508575381 E-Mail: rob.gillezeau@utoronto.ca Maggie E.C. Jones Economics Department Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 Tel: 404-727-6364 E-Mail: maggie.ec.jones@gmail.com

Trickle-Down Effects of Affirmative Action: A Case Study in France - De Sousa, José; Niederle, Muriel (National Bureau of Economic Research Working Paper Series, 2022)
The introduction of a quota in the French chess Club Championship in 1990, an activity many players engage in next to playing in individual tournaments, provides a quite unique environment to study its effects on three levels. We find that women selected by the quota improve their performance. We show large spillover and trickle-down effects: There are more and better qualified women. International comparisons confirm that the results are unique to France and that there are no substantial adverse effects on French male players. We discuss the properties of this quota and how to implement it in other environments.
Author contact info: José De Sousa University of Paris-Saclay Department of Economics 54 Boulevard Desgranges 92331 Sceaux, Cedex France E-Mail: jose.de-sousa@universite-paris-saclay.fr Muriel Niederle Department of Economics 579 Jane Stanford Way Stanford University Stanford, CA 94305-6072 Tel: 650/723-7359 Fax: 650/725-5702 E-Mail: niederle@stanford.edu

How and When are High-Frequency Stock Returns Predictable? - Aït-Sahalia, Yacine; Fan, Jianqing; Xue, Lirong; Zhou, Yifeng (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the predictability of ultra high-frequency stock returns and durations to relevant price, volume and transactions events, using machine learning methods. We find that, contrary to low frequency and long horizon returns, where predictability is rare and inconsistent, predictability in high frequency returns and durations is large, systematic and pervasive over short horizons. We identify the relevant predictors constructed from trades and quotes data and examine what determines the variation in predictability across different stock's own characteristics and market environments. Next, we compute how the predictability improves with the timeliness of the data on a scale of milliseconds, providing a valuation of each millisecond gained. Finally, we simulate the impact of getting an (imperfect) peek at the incoming order flow, a look ahead ability that is often attributed to the fastest high frequency traders, in terms of improving the predictability of the following returns and durations.
Author contact info: Yacine Aït-Sahalia Department of Economics Bendheim Center for Finance Princeton University Princeton, NJ 08540 Tel: 609/258-4015 Fax: 609/258-0719 E-Mail: yacine@princeton.edu Jianqing Fan Bendheim Center for Finance 26 Prospect Ave Princeton NJ 08540 E-Mail: jqfan@princeton.edu Lirong Xue Dept. of Operations Research and Financial Engineering Sherred Hall Princeton, NJ 08544 USA E-Mail: lirongx.pu@gmail.com Yifeng Zhou Dept. of Operations Research and Financial Engineering Sherred Hall Princeton, NJ 08544 USA E-Mail: yifengz@alumni.princeton.edu

Estimating Labor Market Power - Azar, José A; Berry, Steven T; Marinescu, Ioana (National Bureau of Economic Research Working Paper Series, 2022)
Job differentiation gives employers market power, allowing them to pay workers less than their marginal productivity. We estimate a differentiated jobs model using application data from Careerbuilder.com. We find direct evidence of substantial job differentiation. Without the use of instruments for wages, job applications appear very inelastic with respect to wages. Plausible instruments produce elastic firm-level application supply curves. Under some assumptions, the implied market level labor supply elasticity is 0.5, while the firm level labor elasticity is 4.8. This suggests that workers may produce 21% more than their wage level, consistent with significant monopsony power.
Author contact info: José A. Azar IESE Business School, University of Navarra E-Mail: jazar@iese.edu Steven T. Berry Department of Economics Yale University Box 208264 87 Trumbull Street New Haven, CT 06520-8264 Tel: 203/432-3556 Fax: 203/432-6323 E-Mail: steven.berry@yale.edu Ioana Marinescu University of Pennsylvania School of Social Policy & Practice 3701 Locust Walk Philadelphia PA, 19104-6214 E-Mail: ioma@upenn.edu

What Makes a Program Good? Evidence from Short-Cycle Higher Education Programs in Five Developing Countries - Dinarte Diaz, Lelys I; Ferreyra, Maria Marta; Urzúa, Sergio S; Bassi, Marina (National Bureau of Economic Research Working Paper Series, 2022)
Short-cycle higher education programs (SCPs) can play a central role in skill development and higher education expansion, yet their quality varies greatly within and among countries. In this paper we explore the relationship between programs’ practices and inputs (quality determinants) and student academic and labor market outcomes. We design and conduct a novel survey to collect program-level information on quality determinants and average outcomes for Brazil, Colombia, Dominican Republic, Ecuador, and Peru. Categories of quality determinants include training and curriculum, infrastructure, faculty, link with productive sector, costs and funding, and other practices on student admission and institutional governance. We also collect administrative, student-level data on higher education and formal employment for SCP students in Brazil and Ecuador and match it to survey data. Using machine learning methods, we select the quality determinants that predict outcomes at the program and student levels. Estimates indicate that some quality determinants may favor academic and labor market outcomes while others may hinder them. Two practices predict improvements in all labor market outcomes in Brazil and Ecuador—teaching numerical competencies and providing job market information—and one practice—teaching numerical competencies—additionally predicts improvements in labor market outcomes for all survey countries. Since quality determinants account for 20-40 percent of the explained variation in student-level outcomes, estimates indicate a role for quality determinants to shrink the quality gap among programs. These findings have implications for the design and replication of high-quality SCPs, their regulation, and the development of information systems.
Author contact info: Lelys I. Dinarte Diaz The World Bank Development Economics Research Group 1818 H Street NW Washington, DC 20433 E-Mail: ldinartediaz@worldbank.org Maria Marta Ferreyra The World Bank 1818 H St NW Washington, DC 20433 E-Mail: mferreyra@worldbank.org Sergio S. Urzúa Department of Economics University of Maryland 3115J Tydings Hall College Park, MD 20742 Tel: 301-405-3266 E-Mail: urzua@econ.umd.edu Marina Bassi 1818 H Street NW Washington, DC 20433 United States E-Mail: mbassi@worldbank.org

Stress, Ethnicity, and Prosocial Behavior - Haushofer, Johannes; Lowes, Sara; Musau, Abednego; Ndetei, David M; Nunn, Nathan; Poll, Moritz; Qian, Nancy (National Bureau of Economic Research Working Paper Series, 2022)
While observational evidence suggests that people behave more prosocially towards members of their own ethnic group, many laboratory studies fail to find this effect. One possible explanation is that coethnic preference only emerges during times of stress. To test this hypothesis, we pharmacologically increase levels of the stress hormone cortisol, after which participants complete laboratory experiments with coethnics and noncoethnics. We find mixed evidence that increased cortisol decreases prosocial behavior. Coethnic preferences do not vary with cortisol. However, in contrast to previous studies, we find strong and robust evidence of coethnic preference.
Author contact info: Johannes Haushofer Department of Economics National University of Singapore 1 Arts Link AS2 #06-02 Singapore 117570 Singapore E-Mail: johannes.haushofer@nus.edu.sg Sara Lowes Department of Economics University of California at San Diego 9500 Gilman Drive La Jolla, CA 92093 E-Mail: slowes@ucsd.edu Abednego Musau University Medical Centre Groningen E-Mail: a.m.musau@umcg.nl David M. Ndetei University of Nairobi and Africa Mental Health Research and Training Foundation P.O. Box 48423 Nairobi, 00100, Kenya Tel: 0722518365 E-Mail: dmndetei@amhf.or.ke Nathan Nunn Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 2E8 Canada E-Mail: nathan.nunn@ubc.ca Moritz Poll Brown University Department of Economics 64 Waterman Street Providence, RI 02912 Tel: (401) 712-1333 E-Mail: moritz.poll@brown.edu Nancy Qian Kellogg School of Management Northwestern University 2001 Sheridan Road Evanston, Il 60208 E-Mail: nancy.qian@kellogg.northwestern.edu

Of Academics and Creative Destruction: Startup Advantage in the Process of Innovation - Kolev, Julian; Haughey, Alexis; Murray, Fiona; Stern, Scott (National Bureau of Economic Research Working Paper Series, 2022)
What is the role of startups within the innovation ecosystem? Since 2000, startups have grown in their share of commercializing research from top U.S. universities; however, prior work has little to say on the particular advantages of startup ventures in the innovation process relative to more traditional alternatives such as academia and established private-sector incumbents. We develop a simple model of startup advantage based on private information held by the initial inventor, and generate predictions related to the value and impact of startup innovation. We then explore these predictions using patents granted within the regional ecosystems of top-25 research universities from 2000 to 2015. Our results show a significant startup advantage in terms of forward citations and outlier-patent rates. Further, startup innovation is both more original and more general than innovation by incumbent firms. Moreover, startups that survive to become “scale-ups” quickly grow to dominate their regional innovation ecosystems. Our findings have important implications for innovation policy.
Author contact info: Julian Kolev 600 Dulany St MDE 2D32 Alexandria, VA 22314 United States E-Mail: julian.kolev@uspto.gov Alexis Haughey 100 Main St Cambridge, MA 02142-1508 USA E-Mail: haugheya@mit.edu Fiona Murray MIT Sloan School of Management 100 Main Street, E62-470 Cambridge, MA 02142 Tel: 617/253-3681 Fax: 617/253-2660 E-Mail: fmurray@mit.edu Scott Stern MIT Sloan School of Management 100 Main Street, E62-476 Cambridge, MA 02142 Tel: 617/253-3053 Fax: 617/253-2660 E-Mail: sstern@mit.edu

Does Environmental Policy Uncertainty Hinder Investments Towards a Low-Carbon Economy? - Noailly, Joelle; Nowzohour, Laura; van den Heuvel, Matthias (National Bureau of Economic Research Working Paper Series, 2022)
We use machine learning algorithms to construct a novel news-based index of US environmental and climate policy uncertainty (EnvPU) available on a monthly basis over the 1990-2019 period. We find that our EnvPU index spikes during the environmental spending disputes of the 1995-1996 government shutdown, in the early 2010s due the failure of the national cap-and-trade climate bill and during the Trump presidency. We examine how elevated levels of environmental policy uncertainty relate to investments in the low-carbon economy. In firm-level estimations, we find that a rise in the EnvPU index is associated with a reduced probability for cleantech startups to receive venture capital (VC) funding. In financial markets, a rise in our EnvPU index is associated with higher stock volatility for firms with above-average green revenue shares. At the macro level, shocks in our index lead to declines in the number of cleantech VC deals and higher volatility of the main benchmark clean energy exchange-traded fund. Overall, our results are consistent with the notion that policy uncertainty has adverse effects on investments for the low-carbon economy.
Author contact info: Joelle Noailly Geneva Graduate Institute, Switzerland & Vrije Universiteit Amsterdam, The Netherlands & Tinbergen Institute, The Netherlands E-Mail: joelle.noailly@graduateinstitute.ch Laura M. Nowzohour Geneva Graduate Institute, Switzerland E-Mail: laura.nowzohour@graduateinstitute.ch Matthias van den Heuvel Switzerland E-Mail: matthiasvandenheuvel@gmail.com

Do Collusive Norms Maximize Profits? Evidence from a Vegetable Market Experiment in India - Banerjee, Abhijit; Fischer, Greg; Karlan, Dean; Lowe, Matt; Roth, Benjamin N (National Bureau of Economic Research Working Paper Series, 2022)
Social norms have been shown to facilitate anti-competitive behavior in decentralized markets. We demonstrate these norms can also reduce aggregate profits. First, we present descriptive evidence of competition-suppressing norms in Kolkata vegetable markets. We then report on a market-level experiment in which we induced a temporary relaxation of these norms by subsidizing some vendors to sell additional produce. Our intervention raised profits at the market level by over 60%, excluding the subsidy. Nevertheless, after the subsidy ended vendors largely stopped selling the additional produce. Our results suggest anti-competitive norms may partially explain the pervasiveness of small-scale firms in developing countries.
Author contact info: 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 Greg Fischer London School of Economics E-Mail: g.fischer@lse.ac.uk Dean Karlan Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8706 E-Mail: dean.karlan@gmail.com Matt Lowe 6000 Iona Drive Vancouver, BC V6T 2E8 Canada Tel: 6048220672 E-Mail: matt.lowe89@gmail.com Benjamin N. Roth Harvard Business School Soldiers Field Road Boston, MA 02163 E-Mail: broth@hbs.edu

Locus of Control and Prosocial Behavior - Andor, Mark A; Cox, James; Gerster, Andreas; Price, Michael; Sommer, Stephan; Tomberg, Lukas (National Bureau of Economic Research Working Paper Series, 2022)
We investigate how locus of control beliefs – the extent to which individuals attribute control over events in their life to themselves as opposed to outside factors – affect prosocial behavior and the private provision of public goods. We begin by developing a conceptual framework showing how locus of control beliefs serve as a weight placed on the returns from one’s own contributions (impure altruism) and others contributions (pure altruism). Using multiple data sets from Germany and the U.S., we show that individuals who relate consequences to their own behavior are more likely to contribute to climate change mitigation, to donate money and in-kind gifts to charitable causes, to share money with others, to cast a vote in parliamentary elections, and to donate blood. Our results provide comprehensive evidence that locus of control beliefs affect prosocial behavior.
Author contact info: Mark A. Andor RWI - Leibniz Institute for Economic Research Hohenzollernstraße 1-3 Essen NRW 45128 Germany E-Mail: andor@rwi-essen.de James Cox Department of Economics Andrew Young School of Policy Studies P.O. Box 3992 Atlanta, GA 30302-3992 E-Mail: jccox@gsu.edu Andreas Gerster University of Mannheim L 7, 3-5 Mannheim 68161 Germany E-Mail: gerster@uni-mannheim.de Michael K. Price Department of Economics, Finance, and Legal Studies The University of Alabama 250 Alston Hall Box 870224 Tuscaloosa, AL 35487 E-Mail: mkprice2@ua.edu Stephan Sommer RWI - Leibniz Institute for Economic Research Hohenzollernstraße 1-3 Essen NRW 45128 Germany E-Mail: stephan.sommer@rwi-essen.de Lukas Tomberg RWI - Leibniz Institute for Economic Research Hohenzollernstraße 1-3 Essen NRW 45128 Germany E-Mail: lukas.tomberg@rwi-essen.de

What Can Time-Series Regressions Tell Us About Policy Counterfactuals? - Wolf, Christian K; McKay, Alisdair (National Bureau of Economic Research Working Paper Series, 2022)
We show that, in a general family of linearized structural macroeconomic models, knowledge of the empirically estimable causal effects of contemporaneous and news shocks to the prevailing policy rule is sufficient to construct counterfactuals under alternative policy rules. If the researcher is willing to postulate a loss function, our results furthermore allow her to recover an optimal policy rule for that loss. Under our assumptions, the derived counterfactuals and optimal policies are robust to the Lucas critique. We then discuss strategies for applying these insights when only a limited amount of empirical causal evidence on policy shock transmission is available.
Author contact info: Christian K. Wolf MIT Department of Economics The Morris and Sophie Chang Building 50 Memorial Drive Cambridge, MA 02139 E-Mail: ckwolf@mit.edu Alisdair McKay Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 Tel: 612/204-5439 E-Mail: alisdair.mckay@gmail.com

What Do Long Data Tell Us About the Inflation Hike Post COVID-19 Pandemic? - Schmitt-Grohé, Stephanie; Uribe, Martín (National Bureau of Economic Research Working Paper Series, 2022)
To what extent is the recent spike in inflation driven by a change in its permanent component? We estimate a semi-structural model of output, inflation, and the nominal interest rate in the United States over the period 1900-2021. The model predicts that between 2019 and 2021 the permanent component of inflation rose by 51 basis points. If instead we estimate the model using postwar data (1955--2021), the permanent component of inflation is predicted to have increased by 238 basis points. A possible interpretation of this finding is that the model estimated on the shorter sample assigns a larger increase in the permanent component of inflation because the period 1955-2021 does not contain sudden sparks in inflation like the one observed in the aftermath of the COVID-19 pandemic but only gradual ones---the great inflation of the 70s took more than 10 years to build up. By contrast, the period 1900-1954 is plagued with sudden inflation hikes---including one around the 1918 Spanish flu pandemic---which the estimated model endogenously recalls and uses to interpret inflation around the COVID-19 episode. This result suggests that prewar data might be of use to understand recent inflation dynamics.
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

Overreaction and Diagnostic Expectations in Macroeconomics - Bordalo, Pedro; Gennaioli, Nicola; Shleifer, Andrei (National Bureau of Economic Research Working Paper Series, 2022)
We present the case for the centrality of overreaction in expectations for addressing important challenges in finance and macroeconomics. First, non-rational expectations by market participants can be measured and modeled in ways that address some of the key challenges posed by the rational expectations revolution, most importantly the idea that economic agents are forward-looking. Second, belief overreaction can account for many long-standing empirical puzzles in macro and finance, which emphasize the extreme volatility and boom-bust dynamics of key time series, such as stock prices, credit, and investment. Third, overreaction relies on psychology and is disciplined by survey data on expectations. This suggests that relaxing the assumption of rational expectations is a promising strategy, helps theory and evidence go together, and offers a unified view of a great deal of data.
Author contact info: Pedro Bordalo Saïd Business School University of Oxford Park End Street Oxford, OX1 1HP United Kingdom E-Mail: pedro.bordalo@sbs.ox.ac.uk Nicola Gennaioli Department of Finance Università Bocconi Via Roentgen 1 20136 Milan, Italy E-Mail: nicola.gennaioli@unibocconi.it Andrei Shleifer Department of Economics Harvard University Littauer Center M-9 Cambridge, MA 02138 Tel: 617/495-5046 Fax: 617/496-1708 E-Mail: ashleifer@harvard.edu

Gendered Ageism and Disablism and Employment of Older Workers - McLaughlin, Joanne S; Neumark, David (National Bureau of Economic Research Working Paper Series, 2022)
Gendered discrimination based on age and disability is a pressing issue, because this discrimination can interfere with the goal of lengthening work lives, especially for older women. In the United States, the Age Discrimination in Employment Act and the Americans with Disabilities Act prohibit age and disability discrimination in employment, while Title VII of the Civil Rights Act bars discrimination against women. However, because gender and age (and disability) discrimination fall under different statutes, these laws may be inadequate to protect against discrimination based on gendered ageism and disablism. Legal rulings in the United States generally do not recognize intersecting claims – discrimination based on two or more protected characteristics – when those characteristics are covered by separate statutes. This may help explain the evidence that age discrimination is worse for women than for men. We discuss the theory and methods we can use to analyze these issues, and the relevant laws and their failure to protect women from gendered ageism. We review evidence on gendered age discrimination, and evidence on the effects of discrimination laws and how well they protect from intersectional discrimination. Finally, we discuss potential changes in policies that could better protect against gendered age discrimination.
Author contact info: Joanne S. McLaughlin Department of Economics University at Buffalo 441 Fronczak Hall Buffalo, NY 14260 Tel: 716-645-8685 E-Mail: mcl.joanne.song@gmail.com 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

Invention Value, Inventive Capability and the Large Firm Advantage - Arora, Ashish; Cohen, Wesley M; Lee, Honggi; Sebastian, Divya (National Bureau of Economic Research Working Paper Series, 2022)
Do large firms produce more valuable inventions, and if so, why? After confirming that large firms indeed produce more valuable inventions, we consider two possible sources: a superior ability to invent, or a superior ability to extract value from their inventions. We develop a simple model that discriminates between the two explanations. Using a sample of 2,786 public corporations, and measures of both patent quality and patent value, we find that, while average invention value rises with size, average invention quality declines, suggesting, per our model, that the large firm advantage is not due to superior inventive capability, but due to the superior ability to extract value. We provide evidence suggesting that this superior ability to extract value is due to greater commercialization capabilities of larger firms.
Author contact info: Ashish Arora Fuqua School of Business Duke University Box 90120 Durham, NC 27708-0120 Tel: 919 660 7746 Fax: 919 684-2818 E-Mail: ashish.arora@duke.edu Wesley M. Cohen The Fuqua School of Business Duke University Box 90120 Durham, NC 27708-0120 Tel: 919-451-9770 Fax: NA E-Mail: wcohen@duke.edu Honggi Lee University of New Hampshire 10 Garrison Ave. Durham, NH 03824 E-Mail: honggi.lee@unh.edu Divya Sebastian Fuqua School of Business 100 Fuqua Drive Durham, NC 27708 U.S.A. E-Mail: divya.sebastian@duke.edu

Imagining the Future: Memory, Simulation and Beliefs about Covid - Bordalo, Pedro; Burro, Giovanni; Coffman, Katherine B; Gennaioli, Nicola; Shleifer, Andrei (National Bureau of Economic Research Working Paper Series, 2022)
How do people form beliefs about novel risks, with which they have little or no experience? A 2020 US survey of beliefs about the lethality of Covid reveals that the elderly underestimate, and the young overestimate, their own risks, and that people with more health adversities are more pessimistic, even for others. A model in which people selectively recall frequent and similar past experiences, including from other domains, and use them to imagine (simulate) the novel risk, explains our findings. An experience increases perceived risk if it makes that risk easier to imagine, but decreases it by interfering with recall of experiences that fuel imagination. The model yields new predictions on how non-Covid experiences shape beliefs about Covid, for which we find empirical support. These findings cannot be explained by conventional experience effects, and highlight memory mechanisms shaping which experiences are recalled and how they are used to form beliefs.
Author contact info: Pedro Bordalo Saïd Business School University of Oxford Park End Street Oxford, OX1 1HP United Kingdom E-Mail: pedro.bordalo@sbs.ox.ac.uk Giovanni Burro Bocconi University Via Roberto Sarfatti, 25 20100 Milano MI Italy E-Mail: giovanni.burro@unibocconi.it Katherine B. Coffman 445 Baker Library Harvard Business School Boston, MA 02163 E-Mail: kcoffman@hbs.edu Nicola Gennaioli Department of Finance Università Bocconi Via Roentgen 1 20136 Milan, Italy E-Mail: nicola.gennaioli@unibocconi.it Andrei Shleifer Department of Economics Harvard University Littauer Center M-9 Cambridge, MA 02138 Tel: 617/495-5046 Fax: 617/496-1708 E-Mail: ashleifer@harvard.edu

Corporate Political Spending and State Tax Policy: Evidence from Citizens United - Slattery, Cailin R; Tazhitdinova, Alisa; Robinson, Sarah (National Bureau of Economic Research Working Paper Series, 2022)
To what extent is U.S. state tax policy affected by corporate political contributions? The 2010 Supreme Court Citizens United v. Federal Election Commission ruling provides an exogenous shock to corporate campaign spending, allowing corporations to spend on elections in 23 states which previously had spending bans. Ten years after the ruling and for a wide range of outcomes, we are not able to identify economically or statistically significant effects of corporate independent expenditures on state tax policy, including tax rates, discretionary tax breaks, and tax revenues.
Author contact info: Cailin R. Slattery Business & Public Policy Group Haas School of Business University of California, Berkeley Berkeley, CA 94720 E-Mail: cailin.slattery@berkeley.edu Alisa Tazhitdinova Department of Economics University of California, Santa Barbara Santa Barbara, CA 93106 E-Mail: tazhitda@ucsb.edu Sarah Robinson Robert Day School of Economics and Finance Claremont McKenna College 500 E Ninth St Claremont, CA 91711 E-Mail: sarah.robinson@claremontmckenna.edu

Consumer Demand with Social Influences: Evidence from an E-Commerce Platform - Caoui, El Hadi; Farronato, Chiara; Horton, John J; Schultz, Robert (National Bureau of Economic Research Working Paper Series, 2022)
For some kinds of goods, rarity itself is valued. "Fashionable'" goods are demanded in part because they are unique. In this paper, we explore the economics of rare goods using auctions of limited-edition shoes held by an e-commerce platform. We model endogenous entry and bidding in multi-unit auctions and construct demand curves from realized bids. We find that doubling inventory reduces willingness to pay by 7-15%. From the producer perspective, ignoring the value of rarity leads to substantial overproduction: auctioned quantities are 82% above the profit-maximizing level. From the consumer perspective however, the negative spillovers of restricting quantity more than offset the benefits of rarer goods.
Author contact info: El Hadi Caoui Rotman School of Management 105 St George Street Toronto, ON M5S 3E6 Canada E-Mail: elhadi.caoui@rotman.utoronto.ca Chiara Farronato Harvard Business School Morgan Hall 427 Soldiers Field Boston, MA 02163 Tel: 617/495-6542 E-Mail: cfarronato@hbs.edu John J. Horton Massachusetts Institute of Technology Sloan School of Management 100 Main St Cambridge, MA 02142 E-Mail: john.joseph.horton@gmail.com Robert Schultz United States E-Mail: schultro@umich.edu

Genetic Endowments, Income Dynamics, and Wealth Accumulation Over the Lifecycle - Barth, Daniel; Papageorge, Nicholas W; Thom, Kevin; Velásquez-Giraldo, Mateo (National Bureau of Economic Research Working Paper Series, 2022)
A growing literature on gene-by-environment (G × E) interactions — much of it concerned with education and human capital — asks how policy and other environmental factors can affect inequality related to genetic factors. Economic models are typically absent from this literature, but could play a vital role in understanding how counterfactual reforms might interact with genetics to shape behavior, outcomes, and welfare. We estimate a life-cycle model of consumption and savings with portfolio decisions, allowing a measure of the genetic endowments that predict educational attainment to directly affect income, labor disutility, stock market participation costs, and returns to risky assets. Our estimates suggest that, even after accounting for completed education, childhood SES, and inheritances, genetic factors linked to educational attainment increase wealth both through life-cycle income profiles and through differences in rates of return on invested wealth. Counterfactual exercises predict how social security reforms would modify the genetic endowment-welfare gradient. Strikingly, some policies may simultaneously flatten gene-wealth gradients but increase gene-welfare inequality. Typical G × E analyses, lacking an optimizing framework, could fail to reveal this distinction. This highlights the value of economic theory in understanding the policy implications of G × E findings, particularly for counterfactual environments.
Author contact info: Daniel Barth Board of Governors of the Federal Reserve System E-Mail: daniel.j.barth@frb.gov Nicholas W. Papageorge Department of Economics Johns Hopkins University 3400 N. Charles Street Baltimore, MD 21218 Tel: 410/516-4938 E-Mail: papageorge@jhu.edu Kevin Thom Department of Economics University of Wisconsin-Milwaukee E-Mail: kthom.work@gmail.com Mateo Velásquez-Giraldo Department of Economics Johns Hopkins University E-Mail: mvelasq2@jhu.edu

Agency, Gender, and Endowments Effects in the Efficiency and Equity of Team Allocation Decisions - Fafchamps, Marcel; Kebede, Bereket (National Bureau of Economic Research Working Paper Series, 2022)
We conduct a novel lab experiment in which pairs of subjects make separable decisions about allocative efficiency and equity in different agency structures. In terms of equity, subjects appropriate all surplus when they can, and share equally when they have to negotiate. They achieve high efficiency in general, albeit less so when the allocation of surplus is negotiated and negotiations fail. Allocative efficiency is reduced by input and output endowment effects, particularly in negotiated allocation games where subjects seek to create a sense of entitlement over joint surplus so as to achieve a more equitable income distribution. We find few differences across gender or gender pairings. Subjects are then given a choice between negotiating, paying to decide alone, or be paid to let their assigned partner decide. We find that demand for agency or delegation is sensitive to the price of agency, irrespective of gender. But female subjects are more likely to delegate to their partner if it is a male. We also find that a large fraction of both male and female subjects show a preference for negotiating that appears intrinsically motivated.
Author contact info: Marcel Fafchamps Freeman Spogli Institute Stanford University 616 Jane Stanford Way Stanford, CA 94305 Tel: 650/497-4602 E-Mail: fafchamp@stanford.edu Bereket Kebede School of International Development University of East Anglia Norwich Research Park Norwich NR4 7TJ United Kingdom E-Mail: B.Kebede@uea.ac.uk

Externalities in the Wildland - Urban Interface: Private Decisions, Collective Action, and Results from Wildfire Simulation Models for California - Kunreuther, Howard; Demidov, Artem; Pauly, Mark; Turcic, Matija; Wilson, Michael (National Bureau of Economic Research Working Paper Series, 2022)
Much of the property damage from wildfires occurs when fires spread into built up areas, the wildland urban interface. Fire spread within such areas occurs from house to house, as embers from one burning structure ignite neighboring ones. Actions can be taken to mitigate the chances that a given house will ignite. This size and configuration of this external benefit depends on the assumed process of fire spread. In this paper we use a simulation model based on plausible parameters to illustrate likely patterns of marginal benefit from mitigation as a function of building density and effectiveness of mitigation. The model indicates that a common pattern is for marginal benefit to unmitigated neighbors to be low at low levels of community mitigation, rise to a maximum, and then fall quickly to a low level. This maximum marginal benefit (known as “herd immunity”) helps to indicate the optimal pattern of mitigation in a community. However individual owners in Nash equilibrium will not take the spillover benefits into account. We use the distribution of house values in a California community relative to an assumed cost of mitigation to illustrate in the model the level of mitigation owners will undertake when they make independent investment decisions, and the corrective actions that can lead to the social optimum. We discuss the use of rules or subsidies for insurance premium adjustments based on mitigation activities. Because it will rarely be optimal to mitigate all homes, the optimal solution may involve unequal treatment and raise equity issues.
Author contact info: Howard Kunreuther E-Mail: N/A user is deceased Artem Demidov University of Pennsylvania Philadelphia, PA 19104 E-Mail: demid026@sas.upenn.edu Mark Pauly The Wharton School University of Pennsylvania Philadelphia, PA 19104 E-Mail: pauly@wharton.upenn.edu Matija Turcic University of Pennsylvania Philadelphia, PA 19104 E-Mail: matijat@sas.upenn.edu Michael Wilson University of Pennsylvania Philadelphia, PA 19104 E-Mail: mjwilson@upenn.edu

Dynamic Price Competition: Theory and Evidence from Airline Markets - Betancourt, Jose M; Hortaçsu, Ali; Oery, Aniko; Williams, Kevin R (National Bureau of Economic Research Working Paper Series, 2022)
We introduce a model of dynamic pricing in perishable goods markets with competition and provide conditions for equilibrium uniqueness. Pricing dynamics are rich because both own and competitor scarcity affect future profits. We identify new competitive forces that can lead to misallocation due to selling units too quickly: the Bertrand scarcity trap. We empirically estimate our model using daily prices and bookings for competing U.S. airlines. We compare competitive equilibrium outcomes to those where firms use pricing heuristics based on observed internal pricing rules at a large airline. We find that pricing heuristics increase revenues (4-5%) and consumer surplus (3%).
Author contact info: Jose M. Betancourt Yale University E-Mail: jose.betancourtvalencia@yale.edu Ali Hortaçsu Kenneth C. Griffin Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-5841 E-Mail: hortacsu@uchicago.edu Aniko Oery Yale School of Management 165 Whitney Ave New Haven, CT 06520 E-Mail: aoery@andrew.cmu.edu Kevin R. Williams Yale School of Management 165 Whitney Avenue New Haven, CT 06520 Tel: 203/444-5576 E-Mail: kevin.williams@yale.edu

Causal Narratives - Kendall, Chad W; Charles, Constantin (National Bureau of Economic Research Working Paper Series, 2022)
We study causal narratives – narratives which describe a (potentially incorrect) causal relationship between variables. In a series of experiments across a range of data-generating processes, we show that exogenously generated causal narratives manipulate decisions in ways inconsistent with rational theory. Instead, decisions are generally consistent with a behavioral theory, but with important exceptions, including when subjects face multiple narratives with contradictory recommendations. To study the generation and transmission of causal narratives, we show that they arise endogenously when subjects observe a dataset and provide advice to future subjects. These homegrown causal narratives mislead both the sender and receiver.
Author contact info: Chad W. Kendall Marshall School of Business University of Southern California 701 Exposition Blvd, Ste. 231 Los Angeles, CA 90089 Tel: 213/740-7804 E-Mail: chadkend@marshall.usc.edu Constantin Charles Tel: +44 (0)7850692491 E-Mail: c.charles@lse.ac.uk

Overconfidence and Technology Adoption in Health Care - Comin, Diego A; Skinner, Jonathan S; Staiger, Douglas O (National Bureau of Economic Research Working Paper Series, 2022)
Variation in technology adoption is a key driver of differences in productivity. Previous studies sought to explain variations in technology adoption by heterogeneity in profitability, costs of adoption, or other factors. Less is known about how adoption is affected by bias in the perceived skill to implement the technology. We develop a Bayesian framework in which the use of the technology depends on perceived skill, while the outcomes from using it depend on actual skill. We study the determinants of adoption in the case of implantable cardiac defibrillators (ICDs) for which we document large differences across hospitals in the rate of adoption between 2002-2006, and a strong reversal from 2006-2013. We find that perception bias explains two-thirds of the cross-hospital variation in ICD use. A dynamic version of the model with learning about bias predicts accurately the subsequent decline in ICD use between 2006-2013. These results suggest an important role for misperception in explaining the wide variation in the adoption of new technologies.
Author contact info: Diego A. Comin Dartmouth College Economics Department 6106 Rockefeller Hall, Room 327 Hanover, NH 03755 Tel: (603) 646-2531 E-Mail: diego.comin@dartmouth.edu Jonathan S. Skinner Department of Economics 6106 Rockefeller Hall Dartmouth College Hanover, NH 03755 Tel: 603/646-2535 Fax: 603/646-2122 E-Mail: jonathan.skinner@dartmouth.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

Scapegoating and Discrimination in Times of Crisis: Evidence from Airbnb - Luca, Michael; Pronkina, Elizaveta; Rossi, Michelangelo (National Bureau of Economic Research Working Paper Series, 2022)
We present evidence that discrimination against Asian-American Airbnb users sharply increased at the start of the COVID-19 pandemic. Using a DiD approach, we find that hosts with distinctively Asian names experienced a 20 percent decline in guests relative to hosts with distinctively White names. In contrast, we do not see spikes in discrimination against Black or Hispanic hosts. Our results suggest that the rise in anti-Asian sentiment in 2020 translated to discrimination in economic activity, highlighting the ways in which scapegoating minority groups can shape markets. Our results also point to the role of platform design choices in enabling discrimination.
Author contact info: Michael Luca Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617/495-8382 E-Mail: mluca@hbs.edu Elizaveta Pronkina Place du Marechal de Lattre de Tassigny PARIS 75016 France E-Mail: elizaveta.pronkina@dauphine.psl.eu Michelangelo Rossi Télécom Paris Département Sciences Économiques et Sociales 19 place Marguerite Perey Palaiseau 91120 France E-Mail: michelangelo.rossi@telecom-paris.fr

The Next Wave of Energy Innovation: Which Technologies? Which Skills? - Popp, David; Vona, Francesco; Gregoire-Zawilski, Myriam; Marin, Giovanni (National Bureau of Economic Research Working Paper Series, 2022)
The costs of low-carbon energy fell dramatically over the past decade, leading to rapid growth in its deployment. However, many challenges remain to deploy low-carbon energy at a scale necessary to meet net zero carbon emission targets. If net zero goals are to be met, developing complementary technologies and skills will be a necessary part of the next wave of low-carbon energy innovation. These include both improvements in physical capital, such as smart grids to aid integration of intermittent renewables, and human capital, to develop the skills workers need for a low-carbon economy. We document recent trends in energy innovation and discuss the lessons learnt for policy. We then discuss the potential role for complementary innovation in both physical capital—using smart grids as an example of how policy can help—and human capital, where we show how a task approach to labor informs policy and research on the worker skills needed for the energy transition.
Author contact info: David Popp Department of Public Administration and International Affairs Syracuse University The Maxwell School 426 Eggers Hall Syracuse, NY 13244-1020 Tel: 315/443-2482 Fax: 315/443-1081 E-Mail: dcpopp@maxwell.syr.edu Francesco Vona Department of Environmental Science and Policy University of Milan Via Celoria 2 I-20133 Milano Italy E-Mail: francesco.vona@unimi.it Myriam Gregoire-Zawilski Center for Policy Research Syracuse University Syracuse, NY 13244 E-Mail: mgregoir@syr.edu Giovanni Marin Università di Urbino Carlo Bo Via Aurelio Saffi, 42 61029 Urbino Italy E-Mail: giovanni.marin@uniurb.it

How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective - Caplin, Andrew; Lee, Minjoon; Leth-Petersen, Søren; Saeverud, Johan; Shapiro, Matthew D (National Bureau of Economic Research Working Paper Series, 2022)
How worker productivity evolves with tenure and experience is central to economics, shaping, for example, life-cycle earnings and the losses from involuntary job separation. Yet, worker-level productivity is hard to identify from observational data. This paper introduces direct measurement of worker productivity in a firm survey designed to separate the role of on-the-job tenure from total experience in determining productivity growth. A key innovation is to elicit what managers know about the productivity of their workers. Several findings emerge concerning the initial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistent with wages not being allocative period-by-period. (2) Previous experience is a substitute, but a far less than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs in the extent to which previous experience substitutes for tenure. The survey makes use of administrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters not measured in the survey.
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 Minjoon Lee Department of Economics Carleton University Ottawa, ON K1S 5B6 Canada E-Mail: minjoon.lee@carleton.ca 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 Matthew D. Shapiro Department of Economics University of Michigan 611 Tappan St Ann Arbor, MI 48109-1220 Tel: 734/764-5419 Fax: 734 764-2769 E-Mail: shapiro@umich.edu

Intergenerational Spillover Effects of Language Training for Refugees - Foged, Mette; Hasager, Linea; Peri, Giovanni; Arendt, Jacob N; Bolvig, Iben (National Bureau of Economic Research Working Paper Series, 2022)
Children of refugees are among the most economically disadvantaged youth in several European countries. They are more likely to drop out of school and to commit crime. We show that a reform in Denmark in 1999, that expanded language training for adult refugees and improved their economic integration, had significant intergenerational spillover effects in terms of higher completion rates from lower secondary school and lower juvenile crime rates. The effects on crime are driven by boys who were below school-starting age when their parents were treated.
Author contact info: Mette Foged Department of Economics Univertsity of Copenhagen Øster Farigmagsgade 5, building 26 1353 Copenhagen K Denmark E-Mail: Mette.Foged@econ.ku.dk Linea Hasager CReAM, Department of Economics University College London Drayton House, 30 Gordon Street London WC1H 0AX United Kingdom E-Mail: l.hasager@ucl.ac.uk Giovanni Peri Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530/752-3033 E-Mail: gperi@ucdavis.edu Jacob N. Arendt The Rockwool Foundation’s Research Unit Ny Kongensgade 6, DK 1472 Copenhagen K Denmark E-Mail: jar@rff.dk Iben Bolvig The Danish Center for Social Science Research (VIVE) Olof Palmes Alle 22, DK 8200 Aarhus N Denmark E-Mail: IbBo@vive.dk

Why are Banks’ Holdings of Liquid Assets So High? - Stulz, René M; Taboada, Alvaro G; van Dijk, Mathijs A (National Bureau of Economic Research Working Paper Series, 2022)
Banks hold large amounts of liquid assets compared to non-financial firms and to before the global financial crisis (GFC). The transaction and precautionary motives for holding liquid assets cannot explain the size and evolution of bank liquid asset holdings. We introduce a portfolio motive that leads banks to invest in liquid assets when they have exhausted their ability to make profitable loans. With this motive, loans and liquid assets are substitutes. Post-GFC capital requirement increases lowered the profitability of loans relative to liquid assets and help explain why liquid asset holdings are larger and more so for large banks.
Author contact info: 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 Alvaro G. Taboada Mississippi State University College of Business 310-H McCool Hall, P.O. Box 9580 Mississippi State, MS 39762 E-Mail: ataboada@business.msstate.edu Mathijs A. van Dijk Rotterdam School of Management Erasmus University P.O. Box 1738 3000 DR Rotterdam The Netherlands E-Mail: madijk@rsm.nl

The Benefits and Costs of U.S. Employer COVID-19 Vaccine Mandates - Ferranna, Maddalena; Robinson, Lisa A; Cadarette, Daniel; Eber, Michael; Bloom, David E (National Bureau of Economic Research Working Paper Series, 2022)
In 2021, the Biden Administration issued mandates requiring COVID-19 vaccinations for U.S. federal employees and contractors and for some healthcare and private sector workers. Although these mandates have been subject to legal challenges and some have been halted or delayed, rigorous appraisal of their benefits and costs accompanied neither the decision to implement them nor the efforts to terminate them. This paper aims to help fill that gap. We estimate the direct costs and health-related benefits that would have accrued if these vaccination requirements had been implemented as intended. Compared with the vaccination rates observed in January 2022, we find that the mandates could have led to 15 million additional vaccinated individuals, increasing the overall proportion of the fully vaccinated U.S. population to 68%. The associated net benefits depend on the evolution of the pandemic from the time of mandate enactment—information unavailable ex ante to analysts or policymakers. In scenarios involving the emergence of a novel, more transmissible variant, against which vaccination and previous infection offer moderate protection, the estimated net benefits reach more than $16,000 per additional vaccinated individual, with more than 20,000 total deaths averted in total. In scenarios involving a fading pandemic, existing vaccination-acquired or infection-acquired immunity provides sufficient protection, and the mandates’ benefits are unlikely to exceed their costs. Thus, mandates may be most useful when the consequences of inaction are catastrophic. However, we do not compare the effects of mandates with alternative policies for increasing vaccination rates or promoting other protective measures, which may receive stronger public support and be less likely to be overturned by litigation.
Author contact info: Maddalena Ferranna Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, 1202-B Boston, MA 02115 E-Mail: ferranna@usc.edu Lisa A. Robinson Center for Health Decision Science and Center for Risk Analysis Harvard T.H. Chan School of Public Health 718 Huntington Avenue Boston, MA 02115 USA Tel: 6174322013 E-Mail: robinson@hsph.harvard.edu Daniel Cadarette Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, Suite 1202 Boston, MA 02115 E-Mail: dcadarette@hsph.harvard.edu Michael R. Eber Center for Health Decision Science, Harvard T.H. Chan School of Public Health Graduate School of Arts and Sciences, Harvard University 718 Huntington Avenue Boston, MA 02115 E-Mail: meber@g.harvard.edu David E. Bloom Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, Suite 1202 Boston, MA 02115 Tel: 617/432-0866 Fax: 617/432-6733 E-Mail: dbloom@hsph.harvard.edu

Climate Change Around the World - Krusell, Per; Smith, Anthony A, Jr. (National Bureau of Economic Research Working Paper Series, 2022)
The economic effects of climate change vary across both time and space. To study these effects, this paper builds a global economy-climate model featuring a high degree of geographic resolution. Carbon emissions from the use of energy in production increase the Earth's (average) temperature and local, or regional, temperatures respond more or less sensitively to this increase. Each of the approximately 19,000 regions makes optimal consumption-savings and energy-use decisions as its climate (or regional temperature) and, consequently, its productivity change over time. The relationship between regional temperature and regional productivity has an inverted U-shape, calibrated so that the high-resolution model replicates estimates of aggregate global damages from global warming. At the global level, then, the high-resolution model nests standard one-region economy-climate models, while at the same time it features realistic spatial variation in climate and economic activity. The central result is that the effects of climate change vary dramatically across space---with many regions gaining while others lose---and the global average effects, while negative, are dwarfed quantitatively by the differences across space. A tax on carbon increases average (global) welfare, but there is a large disparity of views on it across regions, with both winners and losers. Climate change also leads to large increases in global inequality, across both regions and countries. These findings vary little as capital markets range from closed (autarky) to open (free capital mobility).
Author contact info: Per Krusell Institute for International Economic Studies Stockholm University 106 91 STOCKHOLM SWEDEN E-Mail: per.krusell@iies.su.se Anthony A. Smith Jr. Department of Economics Yale University P.O. Box 208268 New Haven, CT 06520 Tel: 203/432-3583 Fax: 203/436-2626 E-Mail: tony.smith@yale.edu

The Macroeconomic Consequences of Natural Rate Shocks: An Empirical Investigation - Schmitt-Grohé, Stephanie; Uribe, Martín (National Bureau of Economic Research Working Paper Series, 2022)
Much of the empirical literature on the natural rate of interest has focused on estimating its path. This paper studies the effects of natural rate shocks on output and inflation. It estimates a semi-structural model inspired by the DSGE literature. A decline in the natural rate is found to have a large negative effect on the trend of output and to be contractionary and deflationary in the short run. When the economy is constrained by the zero lower bound (ZLB), these results are consistent with the secular stagnation hypothesis. However, negative natural rate shocks are found to depress the trend of output even outside of the ZLB, calling for a more general theory of secular stagnation.
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

Internationalizing Like China - Clayton, Christopher; Dos Santos, Amanda; Maggiori, Matteo; Schreger, Jesse (National Bureau of Economic Research Working Paper Series, 2022)
We empirically characterize how China is internationalizing the Renminbi by staggering the entry of different types of foreign investors into its domestic bond market and propose a dynamic reputation model to explain this strategy. Our framework rationalize China’s strategy as trying to build credibility as an international currency issuer while reducing the cost of capital flight. We provide a sufficient statistic to measure countries' reputation over time and show that it can be estimated using micro data on foreign investors' portfolios. We use our framework to explore how countries compete to become a reserve currency provider.
Author contact info: Christopher Clayton Yale School of Management 165 Whitney Avenue P.O. Box 208200 New Haven, CT 06520-8200 E-Mail: christopherdclayton@gmail.com Amanda Dos Santos Columbia University E-Mail: amanda.dossantos@gsb.columbia.edu Matteo Maggiori Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: maggiori@stanford.edu Jesse Schreger Columbia Business School 665 W 130th St Kravis Hall, 551 New York, NY 10027 Tel: 212-851-0171 Fax: 212-662-8474 E-Mail: jesse.schreger@columbia.edu

Lessons from U.S.-China Trade Relations - Caliendo, Lorenzo; Parro, Fernando (National Bureau of Economic Research Working Paper Series, 2022)
We review theoretical and empirical work on the economic effects of the United States and China trade relations during the last decades. We first discuss the origins of the China shock, its measurement, and present methods used to study its economic effects on different outcomes. We then focus on the recent U.S.-China trade war. We discuss methods used to evaluate its effects, describe its economic effects, and analyze if this increase in trade protectionism reverted the effects of the China shock. The main lessons learned in this review are: (i) the aggregate gains from U.S.-China trade created winners and losers; (ii) China's trade expansion seems not to be the main cause of the decline in U.S. manufacturing employment during the same period; and (iii) the recent trade war generated welfare losses, had small employment effects, and was ineffective in reversing the distributional effects due to the China shock.
Author contact info: Lorenzo Caliendo Yale University School of Management 135 Prospect Street New Haven, CT 06520 Tel: 203/432-4069 E-Mail: lorenzo.caliendo@yale.edu Fernando Parro Pennsylvania State University Department of Economics University Park, PA 16801 Tel: 202/812-5314 E-Mail: fxp5102@psu.edu

Superiority-Seeking and the Preference for Exclusion - Imas, Alex; Madarász, Kristóf (National Bureau of Economic Research Working Paper Series, 2022)
We propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive superiority-seeking, and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains. In bilateral exchange, there is a reluctance to trade and people exhibit a ‘social endowment effect.’ People’s value of consuming a good increases in its scarcity, which generates a motive for firms and organizations to cater to such preferences by engaging in exclusionary policies. Randomly barring potential consumers from the opportunity to acquire a product increases the seller’s profits both in standard monopoly and auction settings. Such non-price-based exclusion leads to higher revenues than the classic optimal sales mechanisms. A series of experiments provides direct support for these predictions. In basic exchange, a person’s willingness to pay for a good increases as more people are explicitly barred from the opportunity to acquire it. In auctions, randomly excluding people from the opportunity to bid substantially increases bids amongst those who retain this option. Exclusion leads to bigger gains in expected revenue than increasing competition through inclusion. Our model of superiority-seeking generates ‘Veblen effects,’ rationalizes attitudes against redistribution, and provides a novel motive for social stratification and discrimination.
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 Kristóf Madarász London School of Economics Houghton St. London, WC2A 2AE UK E-Mail: kristof.madarasz@gmail.com

Noisy Foresight - Chakraborty, Anujit; Kendall, Chad W (National Bureau of Economic Research Working Paper Series, 2022)
Rational agents must perform backwards induction by thinking contingently about future states and actions, but failures of backwards induction and contingent reasoning are ubiquitous. How do boundedly-rational agents make decisions when they fail to correctly forecast actions in the future? We construct an individual decision-making experiment to collect a rich dataset in which subjects must reason only about their own future actions. We demonstrate substantial mistakes relative to the rational benchmark, and use the rich dataset to estimate several possible models of boundedly-rational foresight. We find that a model in which subjects expect to make more mistakes when the payoff consequences of their future actions are more similar best explains behavior.
Author contact info: Anujit Chakraborty Department of Economics, University of California, Davis Davis, CA United States E-Mail: chakraborty@ucdavis.edu Chad W. Kendall Marshall School of Business University of Southern California 701 Exposition Blvd, Ste. 231 Los Angeles, CA 90089 Tel: 213/740-7804 E-Mail: chadkend@marshall.usc.edu

Green Energy Jobs in the US: What Are They, and Where Are They? - Curtis, E. Mark; Marinescu, Ioana (National Bureau of Economic Research Working Paper Series, 2022)
Does the growth of renewable energy benefit US workers, and which workers stand to benefit the most? Until now, evidence on green energy jobs has been limited due to measurement issues. We use data on nearly all jobs posted online in the US, as collected by Burning Glass Technology, and we create a new measure of green jobs, defined here as solar and wind jobs. We use job titles and task requirements to define green jobs. We find that both solar and wind job postings have more than tripled since 2010, with solar jobs seeing especially strong growth that precedes the growth of new installed solar capacity. In 2019, we identify approximately 52,500 solar job openings and 13,500 wind job openings. Solar jobs are mostly (33%) in sales occupations, and in the utilities industry (16%). Wind jobs are most represented among installation and maintenance occupations (37%), and in the manufacturing industry (29%). Green jobs are created in occupations that are about 21% higher paying than average. The pay premium is even higher for jobs with a low educational requirement. Finally, green jobs tend to locate in counties with high shares of employment in fossil fuel extraction. Overall, our results suggest that the growth of renewable energy leads to the creation of relatively high paying jobs, which are more often than not located in areas that stand to lose from a decline in fossil fuel extraction jobs.
Author contact info: E. Mark Curtis Wake Forest University Department of Economics Winston-Salem, NC 27109 E-Mail: curtisem@wfu.edu Ioana Marinescu University of Pennsylvania School of Social Policy & Practice 3701 Locust Walk Philadelphia PA, 19104-6214 E-Mail: ioma@upenn.edu

The Returns to College Major Choice: Average and Distributional Effects, Career Trajectories, and Earnings Variability - Andrews, Rodney J; Imberman, Scott A; Lovenheim, Michael F; Stange, Kevin M (National Bureau of Economic Research Working Paper Series, 2022)
Motivated by the large returns to skill in the labor market, there is a growing body of research examining labor market returns to college major. Prior research focuses almost exclusively on mean effects and pays little attention to earnings growth and variability. Using data from Texas on public K-12 students followed through college and into the labor market, we find that the focus on mean differences mask important features of the returns to college majors. First, earnings growth varies with major choice, making returns sensitive to the experience distribution of the sample. Second, quantile treatment effect estimates show considerable cross sectional differences in earnings returns. Third, major choice affects earnings variability within workers over time. We use our results to simulate a lifecycle utility model and compare mid-career utility and mean earnings returns across fields while highlighting the important role of risk preferences. For four-year students, utility returns align with earnings returns, and utility returns increase as students become more risk averse. Results for two-year students are broadly similar, though risk preferences interact with cross-sectional earnings returns variation in complex ways that highlight the importance of different dimensions of risk in driving the returns to major choice.
Author contact info: Rodney J. Andrews E-Mail: N/A user is deceased Scott A. Imberman Michigan State University 486 W. Circle Drive 110 Marshall-Adams Hall East Lansing, MI 48824-1038 E-Mail: imberman@msu.edu Michael F. Lovenheim Brooks School of Public Policy ILR School, and Department of Economics Cornell University 271 Ives Hall Ithaca, NY 14853 E-Mail: mfl55@cornell.edu Kevin M. Stange Gerald R. Ford School of Public Policy University of Michigan 5236 Weill Hall 735 South State Street Ann Arbor, MI 48109 Tel: 734/615-6990 E-Mail: kstange@umich.edu

Unconventional Monetary Policy According to HANK - Sims, Eric R; Wu, Jing Cynthia; Zhang, Ji (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the implications of household heterogeneity for the effectiveness of quantitative easing (QE). We consider a heterogeneous agent New Keynesian (HANK) model with uninsurable household income risk. Financial intermediaries are subject to an endogenous leverage constraint that allows QE to matter. We find that macro aggregates react very similarly to a QE shock in the HANK model compared to a representative agent (RANK) version of the model. This finding is robust across different micro- and macro- distributions of wealth.
Author contact info: Eric R. Sims Department of Economics University of Notre Dame 3060 Jenkins Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-6309 Fax: 574/631-4783 E-Mail: esims1@nd.edu 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 Ji Zhang Tsinghua University 43 Chengfu Road PBC School of Finance Haidian District, Beijing, 100083 China E-Mail: zhangji@pbcsf.tsinghua.edu.cn

Fiscal Histories - Cochrane, John H (National Bureau of Economic Research Working Paper Series, 2022)
The fiscal theory states that inflation adjusts so that the real value of government debt equals the present value of real primary surpluses. Monetary policy remains important. The central bank can set an interest rate target, which determines the path of expected inflation, while news about the present value of surpluses drives unexpected inflation. I use fiscal theory to interpret historical episodes, including the rise and fall of inflation in the 1970s and 1980s, the long quiet zero bound of the 2010s, and the reemergence of inflation in 2021, as well as to analyze the gold standard, currency pegs, the ends of hyperinflations, currency crashes, and the success of inflation targets. Going forward, fiscal theory warns that inflation will have to be tamed by coordinated monetary and fiscal policy. I thank Erik Hurst, Ed Nelson, Nina Pavcnik, and Timothy Taylor for helpful comments.
Author contact info: John H. Cochrane Hoover Institution 434 Galvez Mall Stanford University Stanford, CA 94305-6010 Tel: 650 723 6708 E-Mail: john.cochrane@stanford.edu

Independent Contracting, Self-Employment, and Gig Work: Evidence from California Tax Data - Bernhardt, Annette; Campos, Christopher; Prohofsky, Allen; Ramesh, Aparna; Rothstein, Jesse (National Bureau of Economic Research Working Paper Series, 2022)
We use de-identified data from California personal income tax returns to measure the frequency and nature of independent contracting and self-employment work in California. We identify this work by the presence of a Schedule C on the tax return and/or the receipt of a Form 1099 information return. We estimate that 14.4% of California workers aged 18-64 in tax year 2016 had some independent contracting or self-employment income; about half of these workers also had earnings from traditional W-2 jobs during the year. We find that only a small share (1.4%) of workers had earnings from online labor platforms (often called gig work). Workers with low earnings were significantly more likely to earn independent contracting or self-employment income and to rely primarily or exclusively on that income. We explore the characteristics of workers engaging in independent contracting and self-employment and their distribution across family type, geography, and industry.
Author contact info: Annette Bernhardt Institute for Research on Labor and Employment University of California, Berkeley 2521 Channing Way #5555 Berkeley, Cali 94720 Tel: 510-643-7213 E-Mail: annette.bernhardt@berkeley.edu Christopher Campos Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 818/631-7106 E-Mail: Christopher.Campos@chicagobooth.edu Allen Prohofsky Franchise Tax Board PO Box 942857 Sacramento, CA 95827-0500 E-Mail: Allen.Prohofsky@ftb.ca.gov Aparna Ramesh California Policy Lab University of California, Berkeley 2521 Channing Way #5555 Berkeley, CA 94720 E-Mail: aparna.ramesh@berkeley.edu Jesse Rothstein Goldman School of Public Policy and Department of Economics University of California, Berkeley 2607 Hearst Avenue #7320 Berkeley, CA 94720-7320 Tel: 510/495-0646 Fax: 510/643-9657 E-Mail: rothstein@berkeley.edu

The Political Economy of the Decline of Antitrust Enforcement in the United States - Lancieri, Filippo; Posner, Eric A; Zingales, Luigi (National Bureau of Economic Research Working Paper Series, 2022)
Antitrust enforcement in the United States has declined since the 1960s. Building on several new datasets, we argue that this decline did not reflect a popular demand for weaker enforcement or any other kind of democratic sanction. The decline was engineered by unelected regulators and judges who, with a few exceptions, did not express skepticism about antitrust law in confirmation hearings. We find little evidence that academic ideas played an important role in the decline of antitrust enforcement except where they coincided with the interests of big business, which appears to have exercised influence behind the scenes.
Author contact info: Filippo Lancieri 5807 S. Woodlawn Ave Chicago, IL 60637 US E-Mail: filippo.lancieri@gess.ethz.ch Eric A. Posner University of Chicago Law School 1111 E. 60th Street Chicago, IL 60637 E-Mail: eposner@uchicago.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

Quality Regulation and Competition: Evidence from Pharmaceutical Markets - Atal, Juan Pablo; Cuesta, José Ignacio; Sæthre, Morten (National Bureau of Economic Research Working Paper Series, 2022)
Quality regulation attempts to ensure quality and foster competition by reducing vertical differentiation, but it may also have adverse effects on market structure. We study this trade-off in the context of pharmaceutical bioequivalence, which is the primary quality standard for generic drugs. Exploiting the introduction of bioequivalence in Chile, we find that stronger regulation decreased the number of drugs in the market by 21% and increased average paid prices by 13%. We estimate a model of drug entry, certification, and demand to study the role of drug quality, aversion against generics, and certification costs in shaping the equilibrium effects of quality regulation. We find that quality regulation increased demand for generic drugs by resolving asymmetric information and reducing aversion against unbranded generics, which induced entry of high-quality drugs in place of low-quality drugs. Consumer welfare increased despite higher prices and a lower number of firms. We compare minimum quality standards to quality disclosure and other designs of quality regulation.
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 Morten Sæthre Norwegian School of Economics Helleveien 30 5045 Bergen Norway E-Mail: morten.saethre@nhh.no

China's Financial System and Economy: A Review - He, Zhiguo; Wei, (National Bureau of Economic Research Working Paper Series, 2022)
China's financial system has been integral to its spectacular economic growth over the past 40 years. We review the recent literature on China's financial system and its connections to the Chinese economy based on the categories of Aggregate Financing to the Real Economy (AFRE), a broad measure of the nation's yearly flow of liquidity accounting for unique features of China's financial system. While early work on China's financial system emphasizes the state-owned enterprise (SOE) reform, the recent literature explores other more market-based financing channels—including shadow banking—that grew rapidly after 2010 and have become important components of AFRE. These new financing channels are not only intertwined with each other, but more importantly often ultimately tied back to the dominant banking sector in China. Understanding the mechanisms behind these channels and their intrinsic connections is crucial to alleviate capital allocation distortion and mitigate potential systemic financial risk in China.
Author contact info: Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Wei Wei 1101 East 58th Street Chicago, IL 60637 USA E-Mail: weiw20@uchicago.edu

When the Kids Grow Up: Women's Employment and Earnings across the Family Cycle - Goldin, Claudia; Pekkala Kerr, Sari; Olivetti, Claudia (National Bureau of Economic Research Working Paper Series, 2022)
Women earn less than men, and that is especially true of mothers relative to fathers. Much of the widening occurs after family formation when mothers reduce their hours of work. But what happens when the kids grow up? To answer that question, we estimate three earning gaps: the “motherhood penalty,” the “price of being female,” and the “fatherhood premium.” When added together these three produce the “parental gender gap,” defined as the difference in income between mothers and fathers. We estimate earnings gaps for two education groups (college graduates and high school graduates who did not complete college) using longitudinal data from the NLSY79 that tracks respondents from their twenties to their fifties. As the children grow up and as women work more hours, the motherhood penalty is greatly reduced, especially for the less-educated group. But fathers manage to expand their relative gains, particularly among college graduates. The parental gender gap in earnings remains substantial for both education groups.
Author contact info: Claudia Goldin Department of Economics 229 Littauer Harvard University Cambridge MA 02138 Tel: 617/613-1200 Fax: 617/613-1245 E-Mail: cgoldin@harvard.edu Sari Pekkala Kerr Wellesley College 106 Central Street Wellesley, MA 02481 E-Mail: skerr3@wellesley.edu Claudia Olivetti Department of Economics Dartmouth College 6106 Rockefeller Hall Hanover, NH 03755 E-Mail: claudia.olivetti@dartmouth.edu

The Wage Curve After the Great Recession - Blanchflower, David G; Bryson, Alex; Spurling, Jackson (National Bureau of Economic Research Working Paper Series, 2022)
Most economists maintain that the labor market in the United States is ‘tight’ because unemployment rates are low. They infer from this that there is potential for wage-push inflation. However, real wages are falling rapidly at present and, prior to that, real wages had been stagnant for some time. We show that unemployment is not key to understanding wage formation in the USA and hasn’t been since the Great Recession. Instead, we show rates of under-employment (the percentage of workers with part-time hours who would prefer more hours) and the rate of non-employment which includes both the unemployed and those out of the labor force who are not working significantly reduce wage pressures in the United States. This finding holds in panel data with state and year fixed effects and is supportive of a wage curve which fits the data much better than a Phillips Curve. We find no role for vacancies; the V:U ratio is negatively not positively associated with wage growth since 2020. The implication is that the reserve army of labor which acts as a brake on wage growth extends beyond the unemployed and operates from within and outside the firm.
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 Jackson D. Spurling Department of Economics Dartmouth College Hanover, NH 03755 Tel: 8026983434 E-Mail: jackson.d.spurling.23@dartmouth.edu

Taxing Externalities: Revenue vs. Welfare Gains with an Application to U.S. Carbon Taxes - Kotchen, Matthew (National Bureau of Economic Research Working Paper Series, 2022)
This paper asserts that reporting of the ratio of welfare gains to tax revenue should be standard protocol in economic analyses of externality correcting taxes. That this comparison might matter is somewhat of a “blind spot” in most economic analyses, for it plays virtually no role when economists recommend taxes to internalize externalities. A simple model illustrates how the ratio of welfare gains to tax revenue plays a central role in a political economy and efficiency framing of Pigouvian type taxes. The analysis also shows intuitive results about how the ratio is increasing in the marginal external costs and the equilibrium elasticity to a tax. The second part of the paper illustrates the wide range of potential results with application of carbon taxes to different fuels in the United States. For example, assuming a social cost of carbon (SCC) and a carbon tax equal to $50 per tonne, the central estimates imply ratios of 12.1 for coal, 0.36 for natural gas, and very close to zero for diesel and gasoline. When all four fuels are combined, the ratios indicate a more proportional balance between welfare gains and tax revenue, with overall estimates ranging between 0.7 and 2.8. The paper concludes with a general appeal for economists to pay more attention to the relative magnitudes of efficiency gains and tax revenue when analyzing and advocating for externality correcting taxes.
Author contact info: Matthew Kotchen School of the Environment, School of Management, and Department of Economics Yale University 195 Prospect Street New Haven, CT 06511 Tel: 203/432-9533 Fax: 203/436-9150 E-Mail: matthew.kotchen@yale.edu

Do Funding Agencies Select and Enable Risky Research: Evidence from ERC Using Novelty as a Proxy of Risk Taking - Veugelers, Reinhilde; Wang, Jian; Stephan, Paula (National Bureau of Economic Research Working Paper Series, 2022)
Concern exists that public funding of science is increasingly risk averse. Funders have addressed this concern by soliciting the submission of high-risk research to either regular or specially designed programs. Little evidence, however, has been gathered to examine the extent to which such programs and initiatives accomplish their stated goal. This paper sets out to study this using data from the European Research Council (ERC), a program within the EC, established in 2007 to support high-risk/high-gain research. We examine whether the ERC selected researchers with a track record of conducting risky research. We proxy high-risk by a measure of novelty in the publication records of applicants both before and after the application, recognizing that it is but one dimension of risk. We control and interact the risk measure with high-gain by tracking whether the applicant has one or more top 1% highly cited papers in their field. We find that applicants with a history of risky research are less likely to be selected for funding than those without such a history, especially early career applicants. This selection penalty for high-risk also holds among those applicants with a history of high-gain publications. To test whether receiving a long and generous prestigious ERC grant promotes risk taking, we employ a diff-in-diff approach. We find no evidence of a significant positive risk treatment effect for advanced grantees. Only for early career grantees do we find that recipients are more likely to engage in risky research, but only compared to applicants who are unsuccessful at the second stage. This positive treatment effect is in part due to unsuccessful applicants cutting back on risky research. We cautiously interpret this as a “lesson learned” that risk is not rewarded.
Author contact info: Reinhilde Veugelers KU Leuven MSI & ECOOM Naamsestraat 69 3000 Leuven and Bruegel and PIIE and CEPR Belgium E-Mail: reinhilde.veugelers@kuleuven.be Jian Wang Leiden University LIACS & CWTS Niels Bohrweg 1 Leiden 2333 CA Netherlands E-Mail: j.wang@sbb.leidenuniv.nl Paula Stephan Department of Economics Andrew Young School of Policy Studies Georgia State University Box 3992 Atlanta, GA 30302-3992 Tel: 404/413-0160 Fax: 404/413-0145 E-Mail: pstephan@gsu.edu

Origins of International Factor Structures - Jiang, Zhengyang; Richmond, Robert J (National Bureau of Economic Research Working Paper Series, 2022)
We show that exchange rate correlations tend to be explained by the global trade network while consumption correlations tend to be explained by productivity correlations. Sharing common trade linkages with other countries increases exchange rate correlations beyond bilateral linkages. We explain these findings using a model of the global trade network with market segmentation. Interdependent global production generates international comovements, while market segmentation disconnects the drivers of exchange rate correlations from the drivers of consumption correlations. Moreover, we show that the trade network generates common factors found in exchange rates. Our findings offer a trade-based account of the origins of international comovements and shed light on important frictions in international markets.
Author contact info: Zhengyang Jiang Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2848 E-Mail: zhengyang.jiang@kellogg.northwestern.edu Robert J. Richmond Stern School of Business New York University 44 W. 4th Street, 9-81 New York, NY 10012 Tel: 303/668-8773 E-Mail: rrichmon@stern.nyu.edu

Non-Tariff Barriers in the U.S.-China Trade War - Chen, Tuo; Hsieh, Chang-Tai; Song, Zheng Michael (National Bureau of Economic Research Working Paper Series, 2022)
We use Chinese customs data to show that unofficial non-tariff barriers were responsible for 50% of the overall reduction in Chinese imports from the U.S. during the height of the U.S.-China trade war in 2018 and 2019. We infer non-tariff barriers from the change in imports of U.S. products relative to imports from other countries of the same HS-6 product, after controlling for the change in the relative price of U.S. imports to the same product sold by other countries. These barriers were imposed on a small number of agricultural products, did not apply to state-owned importers, and were larger for products where the share of state importers in total imports of the U.S. product was large. Non-tariff barriers were responsible for more than 90% of the welfare cost to Chinese consumers of the U.S.-China trade war. The welfare loss to China of a given reduction in imports from the U.S. from non-tariff barriers is about six times larger than an equivalent import decline due to higher tariffs. Non-tariff barriers are more costly compared to tariffs because they applied to some importers and not others, which results in misallocation, and because non-tariff barriers do not generate revenues.
Author contact info: Tuo Chen Tsinghua University School of Economics and Manage Haidian, Beijing China Tel: 0086-10-62772085 Fax: 0086-10-62772085 E-Mail: chentuo115@gmail.com Chang-Tai Hsieh Booth School of Business University of Chicago 5807 S Woodlawn Ave Chicago, IL 60637 Tel: 773/8340590 Fax: 484-589-3583 E-Mail: chsieh@chicagoBooth.edu Zheng Michael Song Department of Economics Chinese University of Hong Kong Shatin, N.T., Hong Kong E-Mail: zheng.michael.song@gmail.com

Globotics and Macroeconomics: Globalisation and Automation of the Service Sector - Baldwin, Richard (National Bureau of Economic Research Working Paper Series, 2022)
Globalisation affects the functioning of the macroeconomy. The macroeconomy’s functioning, in turn, conditions the conduct and impact of monetary policy. This is why globalisation matters for central banks. It is also why central bankers should pay attention to the evolution of globalisation. And evolve it has. This paper argues that the future of trade is trade in services – especially trade in intermediate services. Barriers are radically higher and falling radically faster for services versus goods, and, unlike farm and factory goods, there is no capacity constraint when it comes to the export of intermediate services from emerging markets. Undertaking the macroeconomic analysis for services trade that was done in the 2000s for goods trade, however, will require a substantial upgrading of the data available.
Author contact info: Richard Baldwin International Institute for Management Development Ch. de Bellerive 23 CH-1001, Lausanne Switzerland Tel: 41-21-618-0111 E-Mail: richard.baldwin@imd.org

Fertility and Labor Market Responses to Reductions in Mortality - Bhalotra, Sonia R; Venkataramani, Atheendar; Walther, Selma (National Bureau of Economic Research Working Paper Series, 2022)
We investigate women’s fertility, labor and marriage market responses to a health innovation that led to reductions in mortality from treatable causes, and especially large declines in child mortality. We find delayed childbearing, with lower intensive and extensive margin fertility, a decline in the chances of ever having married, increased labor force participation and an improvement in occupational status. Our results provide the first evidence that improvements in child survival allow women to start fertility later and invest more in the labor market. We present a new theory of fertility that incorporates dynamic choices and reconciles our findings with existing models of behavior.
Author contact info: Sonia R. Bhalotra Department of Economics University of Warwick Coventry United Kingdom E-Mail: Sonia.Bhalotra@warwick.ac.uk Atheendar Venkataramani Department of Medical Ethics and Health Policy University of Pennsylvania 423 Guardian Drive Philadelphia, PA 19104 E-Mail: atheenv@pennmedicine.upenn.edu Selma Walther Department of Economics University of Sussex Brighton BN1 9RH United Kingdom E-Mail: s.walther@sussex.ac.uk

Spending and Job-Finding Impacts of Expanded Unemployment Benefits: Evidence from Administrative Micro Data - Ganong, Peter; Greig, Fiona E; Noel, Pascal J; Sullivan, Daniel M; Vavra, Joseph S (National Bureau of Economic Research Working Paper Series, 2022)
We show that the largest increase in unemployment benefits in U.S. history had large spending impacts and small job-finding impacts. This finding has three implications. First, increased benefits were important for explaining aggregate spending dynamics—but not employment dynamics— during the pandemic. Second, benefit expansions allow us to study the MPC of normally low-liquidity households in a high-liquidity state. These households still have high MPCs. This suggests a role for permanent behavioral characteristics, rather than just current liquidity, in driving spending behavior. Third, the mechanisms driving our results imply that temporary benefit supplements are a promising countercyclical tool.
Author contact info: Peter Ganong Harris School of Public Policy University of Chicago 1307 East 60th Street Chicago, IL 60637 E-Mail: ganong@uchicago.edu Fiona E. Greig JP Morgan Chase Institute 601 Pennsylvania Avenue Suite 07 Washington, DC 20004 E-Mail: fiona_greig@vanguard.com Pascal J. Noel Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-1407 E-Mail: pascal.noel@chicagobooth.edu Daniel M. Sullivan 875 15th St NW Washington, DC 20005 E-Mail: sullivan.dm3@gmail.com Joseph S. Vavra Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-0959 E-Mail: joseph.vavra@chicagobooth.edu

Producing Health: Measuring Value Added of Nursing Homes - Einav, Liran; Finkelstein, Amy; Mahoney, Neale (National Bureau of Economic Research Working Paper Series, 2022)
We develop a stylized model that allows us to estimate a value-added measure for nursing homes (“SNFs”) which accounts for patient selection both into and out of a SNF. We use the model, together with detailed data on the physical and mental health of about 6 million Medicare SNF patients between 2011 and 2016, to estimate the value added for about 14,000 distinct SNFs. We document substantial heterogeneity in value added. Nationwide, compared to a 10th percentile SNF, a 90th percentile SNF is able to discharge a patient at the same health level about a week sooner, which is about one third of the median length of stay. Heterogeneity in value added within a market is almost as large as it is nationwide. Our results point to the potential for substantial gains through policies that encourage reallocation of patients to higher-quality SNFs within their market.
Author contact info: Liran Einav Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/723-3704 Fax: 650/725-5702 E-Mail: leinav@stanford.edu 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 Neale Mahoney Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: nmahoney@stanford.edu

Social Capital II: Determinants of Economic Connectedness - Chetty, Raj; Jackson, Matthew O; Kuchler, Theresa; Stroebel, Johannes; Hendren, Nathaniel; Fluegge, Robert B; Gong, Sara; Gonzalez, Federico; Grondin, Armelle; Jacob, Matthew; Johnston, Drew; Koenen, Martin; et al. (National Bureau of Economic Research Working Paper Series, 2022)
Low levels of social interaction across class lines have generated widespread concern and are associated with worse outcomes, such as lower rates of upward income mobility. Here, we analyze the determinants of cross-class interaction using data from Facebook, building upon the analysis in the first paper in this series. We show that about half of the social disconnection across socioeconomic lines—measured as the difference in the share of high-socioeconomic status (SES) friends between low- and high-SES people—is explained by differences in exposure to high- SES people in groups such as schools and religious organizations. The other half is explained by friending bias—the tendency for low-SES people to befriend high-SES people at lower rates even conditional on exposure. Friending bias is shaped by the structure of the groups in which people interact. For example, friending bias is higher in larger and more diverse groups and lower in religious organizations than in schools and workplaces. Distinguishing exposure from friending bias is helpful for identifying interventions to increase cross-SES friendships (economic connectedness). Using fluctuations in the share of high-SES students across high school cohorts, we show that increases in high-SES exposure lead low-SES people to form more friendships with high-SES people in schools that exhibit low levels of friending bias. Hence, socioeconomic integration can increase economic connectedness in communities where friending bias is low. In contrast, when friending bias is high, increasing cross-SES interaction among existing members may be necessary to increase economic connectedness. To support such efforts, we release privacy-protected statistics on economic connectedness, exposure, and friending bias for each ZIP code, high school, and college in the U.S. at www.socialcapital.org.
Author contact info: Raj Chetty Department of Economics Harvard University Littauer 321 Cambridge, MA 02138 Tel: 617/744-9492 E-Mail: chetty79@gmail.com Matthew O. Jackson Department of Economics Stanford University Stanford, CA 94305-6072 Tel: 650 723 3544 E-Mail: jacksonm@stanford.edu Theresa Kuchler Stern School of Business New York University 44 West 4th Street New York, NY 10012 E-Mail: tkuchler@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 Nathaniel Hendren Massachusetts Institute of Technology 1534 Cambridge St #1 Cambridge, MA 02139 Tel: 773-344-8990 E-Mail: nhendren@mit.edu Robert B. Fluegge Harvard University 1805 Cambridge St. Cambridge, MA 02115 E-Mail: rfluegge@g.harvard.edu Sara Gong Stern School of Business New York University 44 West 4th Street New York, NY 10012 E-Mail: sgong@stern.nyu.edu Federico Gonzalez Harvard University E-Mail: federico_gonzalez@g.harvard.edu Armelle Grondin Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: agrondin@fas.harvard.edu Matthew Jacob Harvard University E-Mail: mjacob@g.harvard.edu Drew M. Johnston Harvard University E-Mail: drewjohnston@g.harvard.edu Martin Koenen Harvard University E-Mail: martin_koenen@fas.harvard.edu Eduardo Laguna-Müggenburg Grammarly 475 Sansome St. San Francisco, CA 94111 E-Mail: edu.laguna@stanford.edu Florian Mudekereza Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: florianmudekereza@g.harvard.edu Tom Rutter Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: trutter@g.harvard.edu Nicolaj Thor Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: nthor@g.harvard.edu Wilbur Townsend E-Mail: wilbur.townsend@gmail.com Ruby Zhang E-Mail: rzhang15@g.harvard.edu Michael Bailey Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: mcbailey@fb.com Pablo Barbera Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: pbarbera@fb.com Monica D. Bhole Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: mbhole@meta.com Nils Wernerfelt Kellogg School of Management 2211 Campus Drive Evanston, IL 60208 E-Mail: nils.wernerfelt@gmail.com

Social Capital I: Measurement and Associations with Economic Mobility - Chetty, Raj; Jackson, Matthew O; Kuchler, Theresa; Stroebel, Johannes; Hendren, Nathaniel; Fluegge, Robert B; Gong, Sara; González, Federico; Grondin, Armelle; Jacob, Matthew; Johnston, Drew; Koenen, Martin; et al. (National Bureau of Economic Research Working Paper Series, 2022)
In this paper—the first in a series of two papers that use data on 21 billion friendships from Facebook to study social capital—we measure and analyze three types of social capital by ZIP code in the United States: (i) connectedness between different types of people, such as those with low vs. high socioeconomic status (SES); (ii) social cohesion, such as the extent of cliques in friendship networks; and (iii) civic engagement, such as rates of volunteering. These measures vary substantially across areas, but are not highly correlated with each other. We demonstrate the importance of distinguishing these forms of social capital by analyzing their associations with economic mobility across areas. The fraction of high-SES friends among low-SES individuals—which we term economic connectedness—is among the strongest predictors of upward income mobility identified to date, whereas other social capital measures are not strongly associated with economic mobility. If children with low-SES parents were to grow up in counties with economic connectedness comparable to that of the average child with high-SES parents, their incomes in adulthood would increase by 20% on average. Differences in economic connectedness can explain well-known relationships between upward income mobility and racial segregation, poverty rates, and inequality. To support further research and policy interventions, we publicly release privacy-protected statistics on social capital by ZIP code at www.socialcapital.org.
Author contact info: Raj Chetty Department of Economics Harvard University Littauer 321 Cambridge, MA 02138 Tel: 617/744-9492 E-Mail: chetty79@gmail.com Matthew O. Jackson Department of Economics Stanford University Stanford, CA 94305-6072 Tel: 650 723 3544 E-Mail: jacksonm@stanford.edu Theresa Kuchler Stern School of Business New York University 44 West 4th Street New York, NY 10012 E-Mail: tkuchler@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 Nathaniel Hendren Massachusetts Institute of Technology 1534 Cambridge St #1 Cambridge, MA 02139 Tel: 773-344-8990 E-Mail: nhendren@mit.edu Robert B. Fluegge Harvard University 1805 Cambridge St. Cambridge, MA 02115 E-Mail: rfluegge@g.harvard.edu Sara Gong Stern School of Business New York University 44 West 4th Street New York, NY 10012 E-Mail: sgong@stern.nyu.edu Federico Gonzalez Harvard University E-Mail: federico_gonzalez@g.harvard.edu Armelle Grondin Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: agrondin@fas.harvard.edu Matthew Jacob Harvard University E-Mail: mjacob@g.harvard.edu Drew M. Johnston Harvard University E-Mail: drewjohnston@g.harvard.edu Martin Koenen Harvard University E-Mail: martin_koenen@fas.harvard.edu Eduardo Laguna-Müggenburg Grammarly 475 Sansome St. San Francisco, CA 94111 E-Mail: edu.laguna@stanford.edu Florian Mudekereza Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: florianmudekereza@g.harvard.edu Tom Rutter Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: trutter@g.harvard.edu Nicolaj Thor Opportunity Insights 1280 Massachusetts Ave Second floor Cambridge, MA 02138 E-Mail: nthor@g.harvard.edu Wilbur Townsend E-Mail: wilbur.townsend@gmail.com Ruby Zhang E-Mail: rzhang15@g.harvard.edu Michael Bailey Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: mcbailey@fb.com Pablo Barbera Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: pbarbera@fb.com Monica D. Bhole Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: mbhole@meta.com Nils Wernerfelt Kellogg School of Management 2211 Campus Drive Evanston, IL 60208 E-Mail: nils.wernerfelt@gmail.com

The Impact of the Clean Air Act on Particulate Matter in the 1970s. - Cropper, Maureen L; Muller, Nicholas Z; Park, Yongjoon; Perez-Zetune, Victoria (National Bureau of Economic Research Working Paper Series, 2022)
We examine whether counties designated as out of attainment with the National Ambient Air Quality Standards (NAAQS) under the 1970 CAA experienced larger reductions in Total Suspended Particulates (TSP) during the 1970s than attainment counties. We answer this question using the official designation of nonattainment status which, between 1972 and 1978, was by Air Quality Control Region (AQCR). Data from balanced panels of TSP monitors in operation from 1969-78 and from 1971-78 are used to examine the impact of nonattainment status on TSP. We also examine the impact of nonattainment on TSP using the definition in the literature, which designates a county as out of attainment if any of its monitors violated the NAAQS. Using the official (AQCR) nonattainment designation, TSP, on average, fell by 10.2 μg/m3 using the 1969 panel and 9.1 μg/m3 using the 1971 panel. Using the definition of nonattainment in the literature yields smaller reductions: 6.0 μg/m3 using the 1969-78 panel and 7.7 μg/m3 using the 1971-78 panel. Using the correct definition of nonattainment in difference-in-differences (DID) models calls into question whether these results can be interpreted as causal. When counties are characterized using the official nonattainment designation, the parallel trends assumption, crucial to causal inference in the DID context, is violated.
Author contact info: Maureen L. Cropper University of Maryland Nicholas Z. Muller Department of Engineering, and Public Policy Tepper School of Business Carnegie Mellon University 4215 Tepper Quad 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412-268-8121 E-Mail: nicholas.muller74@gmail.com Yongjoon Park Department of Resource Economics University of Massachusetts Amherst 80 Campus Center Way Amherst, MA 01003 E-Mail: yongjoonpark@umass.edu Victoria Perez-Zetune 1310 North Courthouse Rd Suite 880 Arlington, VA 22201 USA E-Mail: perevi01@gmail.com

The Race Between Education, Technology, and Institutions - Vogel, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
I generalize the canonical model--in which relative supply and demand for worker skills shape the skill premium--incorporating monopsony power, minimum wages, and unemployment. I estimate the extended canonical model using national data and, separately, state-level data. I show that incorporating the minimum wage improves the out-of-sample fit of the traditional canonical model. I document that minimum wages--together with supply and demand--play a central role in shaping the evolution of the U.S. college premium and the differential evolution of state-level college premia. Lending credibility to these conclusions, the state and national estimates are not only qualitatively, but also quantitatively consistent.
Author contact info: Jonathan Vogel Department of Economics University of California at Los Angeles 8283 Bunche Hall Mail Code 147703 Los Angeles, CA 90095 Tel: 310/794-7278 E-Mail: jonathan.e.vogel@gmail.com

Screening with Multitasking: Theory and Empirical Evidence from Teacher Tenure Reform - Dinerstein, Michael; Opper, Isaac M (National Bureau of Economic Research Working Paper Series, 2022)
What happens when employers screen their employees but only observe a subset of output? We specify a model with heterogeneous employees and show that their response to the screening affects output in both the probationary period and the post-probationary period. The post-probationary impact is due to their heterogeneous responses affecting which individuals are retained and hence the screening efficiency. We show that the impact of the endogenous response on both the unobserved outcome and screening efficiency depends on whether increased effort on one task increases or decreases the marginal cost of effort on the other task. If the response decreases unobserved output in the probationary period then it increases the screening efficiency, and vice versa. We then assess these predictions empirically by studying a change to teacher tenure policy in New York City, which increased the role that a single measure—test score value-added—played in tenure decisions. We show that in response to the policy teachers increased test score value-added and decreased output that did not enter the tenure decision. The increase in test score value-added was largest for the teachers with more ability to improve students' untargeted outcomes, increasing their likelihood of getting tenure. We estimate that the endogenous response to the policy announcement reduced the screening efficiency gap—defined as the reduction of screening efficiency stemming from the partial observability of output—by 28%, effectively shifting some of the cost of partial observability from the post-tenure period to the pre-tenure period.
Author contact info: Michael Dinerstein Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/795-2937 Fax: 773/702-8490 E-Mail: mdinerstein@uchicago.edu Isaac M. Opper E-Mail: iopper@rand.org

Social Protection and Social Distancing During the Pandemic: Mobile Money Transfers in Ghana - Karlan, Dean; Lowe, Matt; Osei, Robert Darko; Osei-Akoto, Isaac; Roth, Benjamin N; Udry, Christopher R (National Bureau of Economic Research Working Paper Series, 2022)
We study the impact of mobile money transfers to a representative sample of low-income Ghanaians during the COVID-19 pandemic. The announcement of the upcoming transfers affects neither consumption, well-being, nor social distancing. Once disbursed, transfers increase food expenditure by 8%, income by 20%, and a social distancing index by 0.08 standard deviations. Over 40% of the transfers were spent on food. The positive effects on income mostly persist at final measurement, eight months after the last transfer. Together, we learn that cash transfers can support households economically while also promoting adherence to public health protocols during a pandemic.
Author contact info: Dean Karlan Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8706 E-Mail: dean.karlan@gmail.com Matt Lowe 6000 Iona Drive Vancouver, BC V6T 2E8 Canada Tel: 6048220672 E-Mail: matt.lowe89@gmail.com Robert Darko Osei ISSER E-Mail: rdosei@isser.edu.gh Isaac Osei-Akoto ISSER E-Mail: ioseiak@ug.edu.gh Benjamin N. Roth Harvard Business School Soldiers Field Road Boston, MA 02163 E-Mail: broth@hbs.edu Christopher R. Udry Northwestern University Department of Economics Weinberg College of Arts and Sciences 2211 Campus Drive #3247 Evanston, IL 60208 Tel: 203/432-3637 E-Mail: christopher.udry@northwestern.edu

Still Worth the Trip? School Busing Effects in Boston and New York - Angrist, Joshua; Gray-Lobe, Guthrie; Idoux, Clemence M; Pathak, Parag A (National Bureau of Economic Research Working Paper Series, 2022)
School assignment in Boston and New York City came to national attention in the 1970s as courts across the country tried to integrate schools. Today, district-wide choice allows Boston and New York students to enroll far from home, perhaps enhancing integration. Urban school transportation is increasingly costly, however, and has unclear integration and education consequences. We estimate the causal effects of non-neighborhood school enrollment and school travel on integration, achievement, and college enrollment using an identification strategy that exploits partly-random assignment in the Boston and New York school matches. Instrumental variables estimates suggest distance and travel boost integration for those who choose to travel, but have little or no effect on test scores and college attendance. We argue that small effects on educational outcomes reflect modest effects of distance and travel on school quality as measured by value-added.
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 Guthrie Gray-Lobe University of Chicago Development Innovation Lab Department of Economics E-Mail: graylobe@uchicago.edu Clemence M. Idoux Department of Economics University of California, San Diego 9500 Gilman Drive LaJolla, CA 92093 E-Mail: cidoux@ucsd.edu Parag A. Pathak Department of Economics, E52-426 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-7458 E-Mail: ppathak@mit.edu

Stigma in Welfare Programs - Celhay, Pablo A; Meyer, Bruce D; Mittag, Nikolas (National Bureau of Economic Research Working Paper Series, 2022)
Stigma of welfare participation is important for policy and survey design, because it deters program take-up and increases misreporting. Stigma is also relevant to the literature on social image concerns, yet empirical evidence is scant because stigma is difficult to empirically identify. We use a novel approach to studying stigma by examining the relationship between program participation in a recipient’s local network and underreporting program participation in surveys. We find a robust negative relationship and rule out explanations other than stigma. Stigma decreases when more peers engage in the stigmatized behavior and when such actions are less observable.
Author contact info: Pablo A. Celhay School of Government and Economics Institute Pontificia Universidad Católica de Chile Avda. Vicuña Mackenna 4860 Macul, Santiago Chile E-Mail: pacelhay@uc.cl Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu Nikolas Mittag CERGE-EI Politickych veznu 7 Prague Czech Republic E-Mail: nikolasmittag@posteo.de

Social Media and the Behavior of Politicians: Evidence from Facebook in Brazil - Bessone, Pedro; Campante, Filipe R; Ferraz, Claudio; Souza, Pedro (National Bureau of Economic Research Working Paper Series, 2022)
We study the relationship between the spread of social media platforms and the communication and responsiveness of politicians towards voters, in the context of the expansion of Facebook in Brazil. We use self-collected data on the universe of Facebook activities by federal legislators and the variation in access induced by the spread of the 3G mobile phone network to establish three sets of findings: (i) Politicians use social media extensively to communicate with constituents, finely targeting localities while addressing policy-relevant topics; (ii) They increase their online engagement, especially with places where they have a large pre-existing vote share; but (iii) They shift their offline engagement (measured by speeches and earmarked transfers) away from connected municipalities within their base of support. Our results suggest that, rather than increasing responsiveness, social media may enable politicians to solidify their position with core supporters using communication strategies, while shifting resources away towards localities that lag in social media presence.
Author contact info: Pedro Bessone Applied Scientist Uber Technologies San Francisco, CA 94103 Tel: 8572180237 E-Mail: pedrobtepedino@gmail.com Filipe R. Campante School of Advanced International Studies (SAIS) and Carey Business School Johns Hopkins University 555 Pennsylvania Ave NW Washington, DC 20001 E-Mail: fcampante@jhu.edu Claudio Ferraz Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 E-Mail: claudio.ferraz@ubc.ca Pedro Souza Queen Mary University of London School of Economics and Finance London E1 4NS United Kingdom E-Mail: p.souza@qmul.ac.uk

Macroeconomic Forecasting using Filtered Signals from a Stock Market Cross Section - Chatelais, Nicolas; Stalla-Bourdillon, Arthur; Chinn, Menzie D (National Bureau of Economic Research Working Paper Series, 2022)
After the Covid-shock in March 2020, stock prices declined abruptly, reflecting both the deterioration of investors’ expectations of economic activity as well as the surge in aggregate risk aversion. In the following months however, whereas economic activity remained sluggish, equity markets sharply bounced back. This disconnect between equity values and macro-variables can be partially explained by other factors, namely the decline in risk-free interest rates, and, for the US, the strong profitability of the IT sector. As a result, an econometrician trying to forecast economic activity with aggregate stock market variables during the Covid-crisis is likely to get poor results. The main idea of the paper is thus to rely on sectorally disaggregated equity variables within a factor model to predict future US economic activity. We find, first, that the factor model better predicts future economic activity compared to aggregate equity variables or to usual benchmarks used in macroeconomic forecasting (both in-sample and out-of-sample). Second, we show that the strong performance of the factor model comes from the fact that the model filters out the “expected returns” component of the sectoral equity variables as well as the foreign component of aggregate future cash flows, and that it also overweights upstream and “value” sectors that are found to be closely linked to the future state of the US business cycle.
Author contact info: Nicolas Chatelais Banque de France 31 rue Croix des Petits-Champs PARIS 75049 France E-Mail: Nicolas.CHATELAIS@banque-france.fr Arthur Stalla-Bourdillon Banque de France 31 rue Croix des Petits-Champs, 75049 Paris France E-Mail: Arthur.STALLA-BOURDILLON@banque-france.fr 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

The Causal Effects of Youth Cigarette Addiction and Education - Hai, Rong; Heckman, James J (National Bureau of Economic Research Working Paper Series, 2022)
We develop and estimate a life-cycle model in a rational addiction framework where youth choose to smoke, attend school, work part-time, and consume while facing borrowing constraints. The model features multiple channels for studying the reciprocal causal effects of addiction and education. Variations in endowments and cigarette prices are sources of identification. We show that education causally reduces smoking. A counterfactual experiment finds that in absence of cigarettes, college attendance rises by three percentage points in the population. A practical alternative of 40% additional excise tax achieves similar results. Impacts vary substantially across persons of different cognitive and non-cognitive abilities.
Author contact info: Rong Hai Department of Economics University of Miami 523 F Jenkins Coral Gables, FL 33146 E-Mail: rhai@bus.miami.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 Effect of Vaccine Mandates on Disease Spread: Evidence from College COVID-19 Mandates - Acton, Riley K; Cao, Wenjia; Cook, Emily E; Imberman, Scott A; Lovenheim, Michael F (National Bureau of Economic Research Working Paper Series, 2022)
Since the spring of 2021, nearly 700 colleges and universities in the U.S. have mandated that their students become vaccinated against the COVID-19 virus. We leverage rich data on colleges’ vaccination policies and semester start dates, along with a variety of county-level public health outcomes, to provide the first estimates of the effects of these mandates on the communities surrounding four-year, residential colleges. In event study specifications, we find that, over the first 13 weeks of the fall 2021 semester, college vaccine mandates reduced new COVID-19 cases by 339 per 100,000 county residents and new deaths by 5.4 per 100,000 residents, with an estimated value of lives saved between $9.7 million and $27.4 million per 100,000 residents. These figures suggest that the mandates reduced total US COVID-19 deaths in autumn 2021 by approximately 5%.
Author contact info: Riley K. Acton Department of Economics Miami University 800 E. High St. Oxford, OH 45056 E-Mail: actonr@miamioh.edu Wenjia Cao E-Mail: caowenj1@msu.edu Emily E. Cook Tulane University Department of Economics 302 Tilton Hall 6823 St. Charles Avenue New Orleans, LA 70118 Tel: 540-308-0807 E-Mail: ecook4@tulane.edu Scott A. Imberman Michigan State University 486 W. Circle Drive 110 Marshall-Adams Hall East Lansing, MI 48824-1038 E-Mail: imberman@msu.edu Michael F. Lovenheim Brooks School of Public Policy ILR School, and Department of Economics Cornell University 271 Ives Hall Ithaca, NY 14853 E-Mail: mfl55@cornell.edu

Long Story Short: Omitted Variable Bias in Causal Machine Learning - Chernozhukov, Victor; Cinelli, Carlos; Newey, Whitney; Sharma, Amit; Syrgkanis, Vasilis (National Bureau of Economic Research Working Paper Series, 2022)
We derive general, yet simple, sharp bounds on the size of the omitted variable bias for a broad class of causal parameters that can be identified as linear functionals of the conditional expectation function of the outcome. Such functionals encompass many of the traditional targets of investigation in causal inference studies, such as, for example, (weighted) average of potential outcomes, average treatment effects (including subgroup effects, such as the effect on the treated), (weighted) average derivatives, and policy effects from shifts in covariate distribution -- all for general, nonparametric causal models. Our construction relies on the Riesz-Frechet representation of the target functional. Specifically, we show how the bound on the bias depends only on the additional variation that the latent variables create both in the outcome and in the Riesz representer for the parameter of interest. Moreover, in many important cases (e.g, average treatment effects and avearage derivatives) the bound is shown to depend on easily interpretable quantities that measure the explanatory power of the omitted variables. Therefore, simple plausibility judgments on the maximum explanatory power of omitted variables (in explaining treatment and outcome variation) are sufficient to place overall bounds on the size of the bias. Furthermore, we use debiased machine learning to provide flexible and efficient statistical inference on learnable components of the bounds. Finally, empirical examples demonstrate the usefulness of the approach.
Author contact info: Victor Chernozhukov Department of Economics Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, Mass. 02139 E-Mail: vchern@mit.edu Carlos Cinelli University of Washington Department of Statistics Box 354322 Seattle, WA 98195-4322 USA E-Mail: cinelli@uw.edu Whitney Newey Department of Economics, E52-424 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-6420 Fax: 617/253-1330 E-Mail: wnewey@mit.edu Amit Sharma No. 9, Lavelle Road Bengaluru, Karn 560 001 India E-Mail: amshar@microsoft.com Vasilis Syrgkanis 583 Alvarado Row Stanford, CA 94305 E-Mail: bsyrganis@gmail.com

Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes - Domènech-Arumí, Gerard; Vannutelli, Silvia (National Bureau of Economic Research Working Paper Series, 2022)
We exploit an unanticipated labor market reform to estimate the effects of pro-cyclical changes in long-term unemployment assistance (UA). In July 2012, Spain raised the minimum age to receive unlimited-duration UA from 52 to 55. Using a difference-in-differences design, we document that shorter benefits caused (i) shorter non-employment duration, especially among younger workers; (ii) higher labor force exit and other programs' take-up, especially among older workers; (iii) lower wages upon re-employment. The reform induced moderate government savings. Our results highlight the importance of considering the interplay with labor market conditions when designing long-term benefit schedules that affect workers close to retirement.
Author contact info: Gerard Domenech-Arumi Université Libre de Bruxelles ECARES – Solvay Brussels School of Economics and Management Ave F D Roosevelt 42 Brussels, Brus 1050 Belgium E-Mail: gerard.domenech.arumi@ulb.ac.be Silvia Vannutelli Kellogg Global Hub Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 617/368-0475 E-Mail: silvia.vannutelli@northwestern.edu

Precautionary Protectionism - Traiberman, Sharon; Rotemberg, Martin (National Bureau of Economic Research Working Paper Series, 2022)
We develop a dynamic extension of Dornbusch et al. (1977) with “rustiness”: the home country has relatively higher unit costs tomorrow for goods it is not producing today. We solve for optimal tariff policy when there is a potential for a crisis: an increase in demand for goods produced abroad. Optimally, the home planner never protects goods where comparative advantage is sufficiently low, not even the goods directly affected by the crises. However, for marginally competitive goods, the optimal policy trades off comparative advantage and demand. The extent of industrial policy is non-monotonic in both the size of the demand shock and in its variance.
Author contact info: Sharon Traiberman Department of Economics New York University 19 West 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8900 E-Mail: sharon.traiberman@gmail.com Martin Rotemberg E-Mail: mrotemberg@nyu.edu

Covering Undocumented Immigrants: The Effects of a Large-Scale Prenatal Care Intervention - Miller, Sarah; Wherry, Laura; Aldana, Gloria (National Bureau of Economic Research Working Paper Series, 2022)
We examine the short- and long-term effects of expanded Medicaid pregnancy coverage to undocumented immigrants using a novel dataset that links California birth records to Census surveys and administrative records on mortality, earnings, educational attainment, and public program participation. We identify siblings born to immigrant mothers before and after the policy and implement a mothers’ fixed effects design to estimate policy impacts. We find the policy increased insurance and prenatal care among pregnant immigrant women, and improved birth outcomes. Later in life, their children experience better educational outcomes, have fewer children at young ages, and receive less public support.
Author contact info: 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 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

Labor Misallocation Across Firms and Regions - Heise, Sebastian; Porzio, Tommaso (National Bureau of Economic Research Working Paper Series, 2022)
We develop a frictional labor market model with multiple regions and heterogeneous firms to study how frictions impeding labor mobility across space affect the joint allocation of labor across firms and regions. Bringing the model to matched employer-employee data from Germany, we find that spatial frictions generate large misallocation of labor across firms within regions. By shielding firms from competition for workers from other regions, spatial frictions allow low productivity firms to expand, reducing aggregate productivity. Overall, we show that taking into account the characteristics of the local labor market is important to quantify the aggregate losses from spatial frictions.
Author contact info: Sebastian Heise Federal Reserve Bank of New York Research and Statistics Group 33 Liberty Street New York, NY 10045 Tel: 2127208208 E-Mail: sebastian.heise@ny.frb.org Tommaso Porzio Columbia Business School 3022 Broadway Uris Hall 824 New York, NY 10027 E-Mail: tommaso.porzio@columbia.edu

Policy Uncertainty in the Market for Coal Electricity: The Case of Air Toxics Standards - Gowrisankaran, Gautam; Langer, Ashley; Zhang, Wendan (National Bureau of Economic Research Working Paper Series, 2022)
Uncertainty over government policy affects important and irreversible decisions, including firm technology adoption, entry, and exit. The real options literature has found that higher outcome variance may delay irreversible decisions. This paper considers the effect of changes in the timing of uncertainty resolution surrounding the Mercury and Air Toxics Standard (MATS). We estimate a dynamic oligopoly model of technology adoption and exit for coal-fired electricity generators that recovers generators' beliefs regarding future MATS enforcement. We develop a computationally tractable equilibrium concept called Approximate Belief Oligopoly Equilibrium in which all players make decisions incorporating their impact on a reduced set of market states. Generators subject to MATS experienced substantial policy uncertainty: the perceived enforcement probability was as low as 43%. Resolving policy uncertainty early increases expected discounted generator profits by $0.930 billion, but increases pollution by $0.809 to $2.206 billion. Resolving uncertainty early attenuates extreme outcomes in expectation, in this case reducing expected exit.
Author contact info: Gautam Gowrisankaran Department of Economics Columbia University 420 West 118th St. Rm. 1026 IAB, MC 3308 New York, NY 10027 E-Mail: gautamg2@gmail.com Ashley Langer Department of Economics University of Arizona McClelland Hall 401 Tucson, AZ 85721 Tel: 520/621-0117 E-Mail: alanger@arizona.edu Wendan Zhang Renmin University of China E-Mail: wzhang357@ruc.edu.cn

Sovereign Debt and Economic Growth when Government is Myopic and Self-interested - Acharya, Viral V; Rajan, Raghuram; Shim, Jack (National Bureau of Economic Research Working Paper Series, 2022)
We examine how a sovereign’s ability to borrow abroad affects the country’s growth and steady state consumption, assuming that the government is both myopic and self-interested. Surprisingly, government myopia can increase a country’s access to external borrowing. In turn, access to borrowing can extend the government’s effective horizon as the government’s ability to borrow hinges on it convincing creditors they will be repaid, which gives it a stake in incentivizing private production and savings despite its self-interest. In a high-saving country, the lengthening of the government’s effective horizon can incentivize it to tax less, resulting in a “growth boost", with higher steady-state household consumption than if it could not borrow. However, in a country that saves little, the government may engage in more repressive policies to enhance its debt capacity and spending. This could lead to a “growth trap” where household steady-state consumption is lower than if the government had no access to external borrowing. We discuss the effectiveness of alternative debt policies, including declaring the sovereign’s debt “odious”, debt relief, and debt ceilings.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Raghuram Rajan Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-4437 Fax: 773/702-0458 E-Mail: raghuram.rajan@ChicagoBooth.edu Jack Shim New York University Stern School of Business 44 West 4th St PhD office New York, NY 10012 E-Mail: jackbshim@gmail.com

Rise and Fall of Empires in the Industrial Era: A Story of Shifting Comparative Advantages - Bonfatti, Roberto; Coşar, Kerem (National Bureau of Economic Research Working Paper Series, 2022)
The last two centuries witnessed the rise and fall of empires. We construct a model which rationalises this in terms of the changing trade gains from empires. In the model, empires are arrangements that reduce trade cost between an industrial metropole and the agricultural periphery. During early industrialisation, the value of such bilateral trade increases, and so does the value of empires. As industrialisation diffuses, and as manufactures become more differentiated, trade becomes more multilateral and intra-industry, reducing the value of empires. Our results are consistent with long-term changes in income distribution and trade patterns, and with previous historical arguments.
Author contact info: Roberto Bonfatti University of Padova Dip. di Scienze Economiche e Aziendali via del Santo 33 35100 Padova Italy E-Mail: roberto.bonfatti@nottingham.ac.uk Kerem Coşar Department of Economics University of Virginia P.O. Box 400182 Charlottesville, VA 22904 Tel: 434/924-6754 E-Mail: Kerem.cosar@virginia.edu

The Distributional Impact of the Minimum Wage in the Short and Long Run - Hurst, Erik; Kehoe, Patrick J; Pastorino, Elena; Winberry, Thomas (National Bureau of Economic Research Working Paper Series, 2022)
We develop a framework with rich worker heterogeneity, firm monopsony power, and putty-clay technology to study the distributional impact of the minimum wage in the short and long run. Our production technology is disciplined to be consistent with the small estimated employment effects of the minimum wage in the short run and the large estimated elasticities of substitution across inputs in the long run. We find that in the short run, a large increase in the minimum wage has a small effect on employment and therefore increases the labor income of the workers who were earning less than the new minimum wage. In the long run, however, the minimum wage has perverse distributional implications in that it reduces the employment, income, and welfare of precisely the low-income workers it is meant to help. Nonetheless, these long-run effects take time to fully materialize because firms slowly adjust their mix of inputs. Existing transfer programs, such as the earned income tax credit (EITC), are more effective at improving long-run outcomes for workers at the low end of the wage distribution. But combining existing programs with a modest increase in the minimum wage generates even larger welfare gains for low-earning workers.
Author contact info: Erik Hurst Booth School of Business University of Chicago Harper Center Chicago, IL 60637 Tel: 773/834-4073 Fax: 773/702-0458 E-Mail: erik.hurst@chicagobooth.edu Patrick J. Kehoe Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: patrickjameskehoe@gmail.com Elena Pastorino Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/725-9935 E-Mail: epastori@stanford.edu Thomas Winberry University of Pennsylvania 2300 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 Tel: 215-898-7622 E-Mail: twinb@wharton.upenn.edu

First Foot Forward: A Two-Step Econometric Method for Parsing and Estimating the Impacts of Multiple Identities - Hanks, Andrew S; Kniffin, Kevin M; Qian, Xuechao; Wang, Bo; Weinberg, Bruce A (National Bureau of Economic Research Working Paper Series, 2022)
Marketing and strategy researchers have often studied how organizations navigate multiple identities in relation to category spanning but extant literature pays less attention to understanding how individuals do so. Moreover, current econometric approaches only scratch the surface with respect to addressing the impact of multiple identities in professional settings. As a model domain to study labor market returns when individuals have more than one identity, we focus on interdisciplinary dissertators in the United States since evidence shows clear uptrends in dissertators engaging multiple professional identities and unclear trends in their outcomes. Our novel estimation method leverages a two-step process to characterize salaries of interdisciplinary dissertators as functions of the identities (academic fields) they acquire as graduate students. We estimate a first-stage regression of log earnings for monodisciplinarians on field dummies and respondent characteristics. After capturing the estimated field coefficients, we then regress log earnings for interdisciplinarians on linear and non-linear functions of these coefficients. Our estimates robustly reject the hypothesis that interdisciplinarians receive a salary premium. We also find evidence that the academic market, but not other employment sectors, particularly compensates researchers based on their primary discipline, an outcome that challenges emphases on interdisciplinarity. While our findings for interdisciplinarians point to the primary identity holding predominant importance for doctoral graduates in the United States, our two-step method provides a framework for parsing and estimating the varied impacts of multiple identities across a wide range of contexts.
Author contact info: Andrew S. Hanks Ohio State University 229A Ramseyer Hall 29 Woodruff Ave. Columbus, OH 43210 Tel: 6146881787 E-Mail: hanks.46@osu.edu Kevin M. Kniffin Dyson School of Applied Economics and Management SC Johnson College of Business Cornell University Warren Hall 111 Ithaca, NY 14853 USA E-Mail: kmk276@cornell.edu Xuechao Qian Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 Tel: (614)795-6667 E-Mail: qian.211@buckeyemail.osu.edu Bo Wang School of Finance Nankai University 38 Tongyan Road, Jinnan District, Tianjin P.R.China Tel: +86 18581011773 E-Mail: wang.6207@buckeyemail.osu.edu Bruce A. Weinberg The Ohio State University Department of Economics 410 Arps Hall 1945 North High Street Columbus, OH 43210 Fax: 614/292-3906 E-Mail: weinberg.27@osu.edu

How Hybrid Working From Home Works Out - Bloom, Nicholas; Han, Ruobing; Liang, James (National Bureau of Economic Research Working Paper Series, 2022)
Hybrid working from home (hybrid), whereby employees work a mix of days at home and at work each week, has become common for graduate employees. This paper evaluates a randomized control trial of hybrid on 1612 graduate engineers, marketing and finance employees of a large technology firm. There are four key results. First, hybrid was highly valued by employees on average, reducing attrition by 33% and improving job-satisfaction measures. Second, hybrid reduced working hours on home days and increased them on office days and the weekend, altering the structure of the working week. Third, hybrid increased messaging and video calls, even when all employees were in the office, reflecting a move towards more electronic communication. Finally, there were large differences in the valuations of hybrid between managers and non-managers. Non-managers were more likely to volunteer into the hybrid experiment, to work from home on eligible days, to predict positive impacts on productivity, and to reduce their attrition under hybrid. In contrast, managers were less likely to volunteer, less likely to work from home on eligible days, predicted a negative average impact of hybrid on productivity, and saw increased attrition rates under hybrid.
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 Ruobing Han 579 Jane Stanford Way, Stanford, 94305. California, USA. E-Mail: hanruobing@cuhk.edu.cn James Liang Trip.com 968 Jin Zhong Road, Shanghai, 200335 China E-Mail: liangjz@trip.com

Simple Tests for Selection: Learning More from Instrumental Variables - Black, Dan A; Joo,; LaLonde, Robert; Smith, Jeffrey A; Taylor, Evan J (National Bureau of Economic Research Working Paper Series, 2022)
We provide simple tests for selection on unobserved variables in the Vytlacil-Imbens-Angrist framework for Local Average Treatment Effects (LATEs). Our setup allows researchers not only to test for selection on either or both of the treated and untreated outcomes, but also to assess the magnitude of the selection effect. We show that it applies to the standard binary instrument case, as well as to experiments with imperfect compliance and fuzzy regression discontinuity designs, and we link it to broader discussions regarding instrumental variables. We illustrate the substantive value added by our framework with three empirical applications drawn from the literature.
Author contact info: Dan A. Black Harris School University of Chicago 1307 E. 60th St. Chicago, IL 60637 E-Mail: danblack@uchicago.edu Joonhwi Joo University of Texas at Dallas 800 W. Campbell Rd. JSOM 13-326 Richardson, TX 75080 E-Mail: joonhwi.joo@utdallas.edu Robert J. LaLonde E-Mail: N/A user is deceased Jeffrey A. Smith Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706-1393 Tel: 608-262-3066 E-Mail: econjeff@ssc.wisc.edu Evan J. Taylor Department of Economics University of Arizona Tucson, AZ 85718 E-Mail: evantaylor@arizona.edu

American Agriculture, Water Resources, and Climate Change - Libecap, Gary D; Dinar, Ariel (National Bureau of Economic Research Working Paper Series, 2022)
This paper highlights the role of agriculture in the American economy and society over time and points to farmer historical and contemporary responses to varying climatic conditions. It indicates the importance of water as an input to agricultural production and identifies possible impacts of climate change on access to water. It then summarizes a set of eleven papers from an NBER research project on water, climate change, and the agricultural sector.
Author contact info: Gary D. Libecap Distinguished Professor, Bren School of Environmental Science and Management Distinguished Professor of Economics University of California, Santa Barbara (Emeritus) 400 Daly Avenue Missoula, Montana 59801 Tel: 520-444-1695 E-Mail: glibecap@bren.ucsb.edu Ariel Dinar School of Public Policy University of California, Riverside 900 University Blvd Riverside, CA 92521 United States E-Mail: adinar@ucr.edu

Banking on Transparency for the Poor: Experimental Evidence from India - Field, Erica M; Rigol, Natalia; Troyer Moore, Charity M; Pande, Rohini; Schaner, Simone G (National Bureau of Economic Research Working Paper Series, 2022)
Do information frictions limit the benefits of financial inclusion drives for the rural poor? We evaluate an experimental intervention among recently banked poor Indian women receiving government cash transfers via direct deposit. Treated women were provided automated voice calls confirming details of transactions posted to their accounts. The intervention increased women's knowledge of account balances and trust in their local banking agent. Indicative of improved consumption-smoothing by income-constrained women, administrative data show that treated women accessed government transfers faster when the service was active, with treatment effects dissipating after the notifications were discontinued. On average, other aspects of account use remained unchanged. However, consistent with account information benefiting those with high transaction costs more, the intervention increased account use among women who lived more than an hour from the kiosk.
Author contact info: Erica M. Field Department of Economics Duke University Social Sciences Building Box 90097 Durham, NC 27708 Tel: 919/660-1800 Fax: 919/684-8974 E-Mail: emf23@duke.edu Natalia Rigol Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617-495-5682 E-Mail: nrigol@hbs.edu Charity M. Troyer Moore Director for South Asia Economics Research MacMillan Center Yale University 34 Hillhouse Ave New Haven, CT 06520 E-Mail: charity.moore@yale.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 Simone G. Schaner Department of Economics and Center for Economic and Social Research University of Southern California 635 Downey Way Los Angeles, CA 90089 Tel: 213-821-6023 Fax: 213.821.2716 E-Mail: schaner@usc.edu

The Effect of Macroeconomic Uncertainty on Firm Decisions - Kumar, Saten; Gorodnichenko, Yuriy; Coibion, Olivier (National Bureau of Economic Research Working Paper Series, 2022)
Using a new survey of firms in New Zealand, we document how exogenous variation in the macroeconomic uncertainty perceived by firms affects their economic decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of some firms. The effects on their decisions relative to their initial plans as well as relative to an untreated control group are measured in a follow-up survey six months later. We find that as firms become more uncertain, they reduce their prices, employment, and investment, their sales decline, and they become less likely to invest in new technologies or open new facilities. These ex-post effects of uncertainty are similar to how firms say they would respond to higher uncertainty when asked hypothetical questions.
Author contact info: Saten Kumar Auckland University of Technology School of Economics 55 Wellesley St Auckland, 1010, New Zealand E-Mail: saten.kumar@aut.ac.nz Yuriy Gorodnichenko Department of Economics 530 Evans Hall #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/643-0720 Fax: 510/642-6615 E-Mail: ygorodni@econ.berkeley.edu Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com

Help Really Wanted? The Impact of Age Stereotypes in Job Ads on Applications from Older Workers - Burn, Ian; Firoozi, Daniel; Ladd, Daniel; Neumark, David (National Bureau of Economic Research Working Paper Series, 2022)
Correspondence studies have found evidence of age discrimination in callback rates for older workers, but less is known about whether job advertisements can themselves shape the age composition of the applicant pool. We construct job ads for administrative assistant, retail, and security guard jobs, using language from real job ads collected in a prior large-scale correspondence study (Neumark et al., 2019a). We modify the job-ad language to randomly vary whether or not the job ad includes ageist language regarding age-related stereotypes. Our main analysis relies on machine learning methods to design job ads based on the semantic similarity between phrases in job ads and age-related stereotypes. In contrast to a correspondence study in which job searchers are artificial and researchers study the responses of real employers, in our research the job ads are artificial and we study the responses of real job searchers. We find that job-ad language related to ageist stereotypes, even when the language is not blatantly or specifically age-related, deters older workers from applying for jobs. The change in the age distribution of applicants is large, with significant declines in the average and median age, the 75th percentile of the age distribution, and the share of applicants over 40. Based on these estimates and those from the correspondence study, and the fact that we use real-world ageist job-ad language, we conclude that job-ad language that deters older workers from applying for jobs can have roughly as large an impact on hiring of older workers as direct age discrimination in hiring.
Author contact info: Ian Burn University of Liverpool Department of Economics Chatham St, Liverpool L69 7ZH United Kingdom E-Mail: ian.burn@liverpool.ac.uk Daniel Firoozi 500 East 9th Street Claremont, CA 91711 United States E-Mail: dfiroozi@cmc.edu Daniel Ladd 3151 Social Sciences Plaza Irvine, Unit 92697 US E-Mail: dladd@uci.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

Are Menthol Smokers Different? An Economic Perspective - Cheng, Yu-Chun; Kenkel, Donald S; Mathios, Alan D; Wang, Hua (National Bureau of Economic Research Working Paper Series, 2022)
Of the 45.7 million current smokers in the U.S. age 12 and over, more than 18.5 million usually smoke menthol cigarettes. The Food and Drug Administration recently proposed a tobacco product standard that would prohibit menthol as a characterizing flavor in cigarettes. The FDA concludes that the prohibition of menthol in cigarettes is appropriate for public health, meeting the criterion established by the 2009 Tobacco Control Act. In this paper we explore whether there are internality-based market failures that provide an applied welfare economics rationale to prohibit menthol. Our empirical approach provides descriptive evidence from the 2018-2019 Tobacco Use Supplement to the Current Population Survey on how menthol use is associated with smokers’ market demand along multiple intensive and extensive margins. We also use direct measures of smoking-related misinformation and internalities, and stated preference data, from a 2021 Cornell Online Survey. We acknowledge that the associations we document in observational data might reflect bias due to self-selection into menthol use. We discuss several lines of evidence about whether self-selection into menthol use might be mainly quasi-random. We leave it to reader whether there is convincing evidence that differential levels of internality-based market failures are a sufficient justification for the proposed prohibition of menthol cigarettes.
Author contact info: Yu-Chun Cheng Department of Economics Cornell University E-Mail: yc2572@cornell.edu Donald S. Kenkel Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Rensselaer Hall Ithaca, NY 14853 E-Mail: dsk10@cornell.edu Alan D. Mathios Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Renssellaer Hall Ithaca NY 14853 E-Mail: adm5@cornell.edu Hua Wang Jeb E. Brooks School of Public Policy MVR Hall Cornell University Ithaca NY 14853 E-Mail: hw227@cornell.edu

Were Small Businesses More Likely to Permanently Close in the Pandemic? - Fairlie, Robert W; Fossen, Frank M; Johnsen, Reid L; Droboniku, Gentian (National Bureau of Economic Research Working Paper Series, 2022)
Previous estimates indicate that COVID-19 led to a large drop in the number of operating businesses operating early in the pandemic, but surprisingly little is known on whether these shutdowns turned into permanent closures and whether small businesses were disproportionately hit. This paper provides the first analysis of permanent business closures using confidential administrative firm-level panel data covering the universe of businesses filing sales taxes from the California Department of Tax and Fee Administration. We find large increases in closures rates in the first two quarters of 2020, but a strong reversal of this trend in the third quarter of 2020. The increase in closures rates in the first two quarters of the pandemic was substantially larger for small businesses than large businesses, but the rebound in the third quarter was also larger. The disproportionate closing of small businesses led to a sharp concentration of market share among larger businesses as indicated by the Herfindahl-Hirschman Index with only a partial reversal after the initial increase. The findings highlight the fragility of small businesses during a large adverse shock and the consequences for the competitiveness of markets.
Author contact info: Robert W. Fairlie Department of Public Policy University of California, Los Angeles P.O.Box 951656 Los Angeles, CA 90095 Tel: 831/459-3332 E-Mail: rfairlie@ucla.edu Frank M. Fossen University of Nevada, Reno Department of Economics Reno, NV 89557-0030 Tel: (775) 682-9131 E-Mail: ffossen@unr.edu Reid L. Johnsen E-Mail: reid.johnsen@cdtfa.ca.gov Gentian Droboniku E-Mail: Gentian.Droboniku@cdtfa.ca.gov

World War II Blues: The Long–lasting Mental Health Effect of Childhood Trauma - Akbulut-Yuksel, Mevlude; Tekin, Erdal; Turan, Belgi (National Bureau of Economic Research Working Paper Series, 2022)
There has been a revival of warfare and threats of interstate war in recent years as the number of countries engaged in armed conflict surged dramatically, reaching to levels unprecedented since the end of Cold War. This is happening at a time when the global burden of mental health illness is also on the rise. We examine the causal impact of early life exposure to warfare on long–term mental health, using novel data on the amount of bombs dropped in German cities by Allied Air Forces during World War II (WWII) and German Socioeconomic Panel. Our identification strategy leverages a generalized difference-in-differences design, exploiting the plausibly exogenous variation in the bombing intensity suffered by German cities during the war as a quasi-experiment. We find that cohorts younger than age five at the onset of WWII or those born during the war are in significantly worse mental health later in life when they are between ages late 50s and 70s. Specifically, an increase of one-standard deviation in the bombing intensity experienced during WWII is associated with about a 10 percent decline in an individual’s long–term standardized mental health score. This effect is equivalent to a 16.8 percent increase in the likelihood of being diagnosed with clinical depression. Our analysis also reveals that this impact is most pronounced among the youngest children including those who might have been in-utero at some point during the war. Our investigation further suggests that measures capturing the extent of destruction in healthcare infrastructure, the increase in the capacity burden of the healthcare system, and wealth loss during WWII exacerbate the adverse impact of bombing exposure on long–term mental health, while the size of war relief funds transferred to municipalities following the war has a mitigating impact. Our findings are robust across a variety of empirical checks and specifications. With the mental health impact of childhood exposure to warfare persisting well into the late stages of life, the global burden of mental illness may be aggravated for many years to come. Our findings imply that prioritizing children and a long–term horizon in public health planning and response may be critical to mitigating the adverse mental health consequences of exposure to armed conflict.
Author contact info: Mevlude Akbulut-Yuksel Department of Economics Dalhousie University PO Box 15000 6214 University Avenue Halifax, Nova Scotia B3H 4R2 CANADA E-Mail: mevlude@dal.ca Erdal Tekin School of Public Affairs American University 4400 Massachusetts Avenue NW Washington, DC 20016-8070 Tel: (202) 885-6361 E-Mail: tekin@american.edu Belgi Turan Department of Economics TOBB University of Economics and Technology Sogutozu, Ankara TURKEY E-Mail: belgituran@etu.edu.tr

Adverse Selection as a Policy Instrument: Unraveling Climate Change - Cicala, Steve; Hémous, David; Olsen, Morten G (National Bureau of Economic Research Working Paper Series, 2022)
This paper applies principles of adverse selection to overcome obstacles that prevent the implementation of Pigouvian policies to internalize externalities. Focusing on negative externalities from production (such as pollution), we consider settings in which aggregate emissions are known, but individual contributions are unobserved by the government. We evaluate a policy that gives firms the option to pay a tax on their voluntarily and verifiably disclosed emissions, or pay an output tax based on the average rate of emissions among the undisclosed firms. The certification of relatively clean firms raises the output-based tax, setting off a process of unraveling in favor of disclosure. We derive sufficient statistics formulas to calculate the welfare of such a program relative to mandatory output or emissions taxes. We find that the voluntary certification mechanism would deliver significant gains over output-based taxation in two empirical applications: methane emissions from oil and gas fields, and carbon emissions from imported steel.
Author contact info: Steve Cicala Tufts University Department of Economics Joyce Cummings Center Room 640E 177 College Ave. Medford, MA 02155 E-Mail: scicala@gmail.com David Hémous University of Zurich Schönberggasse 1 8001 Zürich, Switzerland E-Mail: david.hemous@econ.uzh.ch Morten G. Olsen University of Copenhagen Department of Economics Øster Farimagsgade 5, DK-1353, Denmark E-Mail: mgo@econ.ku.dk

The Impact of Climate Change on Mortality in the United States: Benefits and Costs of Adaptation - Deschenes, Olivier (National Bureau of Economic Research Working Paper Series, 2022)
This paper reviews and extends the recent empirical literature on the impact of climate change on mortality and adaptation in the United States. The analysis produces several new facts. First, the reductions in the impact of extreme heat on mortality risk previously documented up to 2004 have continued up to 2019, consistent with continued investments in health-protecting adaptations to high temperatures. The second part of the paper examines the private and external costs of electricity generation and consumption related to high temperatures, a commonly-used proxy for measuring the consumption of adaptation services. Extreme temperatures increase electricity demand in the residential sector (relative to moderate temperatures), but not in the commercial, industrial, and transportation end-use sectors. The additional electricity demand in response to high temperatures results in significant external costs due to the release of local and global pollutants caused by the combustion of fossil fuels in order to produce electricity. These external costs, documented for the first time in this paper, are one order of magnitude larger than the private cost of adaptation associated with electricity consumption.
Author contact info: Olivier Deschenes Department of Economics 2127 North Hall University of California, Santa Barbara Santa Barbara, CA 93106 Tel: 805/893-5617 Fax: 805/893-8830 E-Mail: olivier@econ.ucsb.edu

Fear of Appreciation and Current Account Adjustment - Bergin, Paul; Kim, Kyunghun; Pyun, Ju H (National Bureau of Economic Research Working Paper Series, 2022)
This paper finds that limited exchange rate flexibility in the form of “fear of appreciation” slows adjustment of current account imbalances, providing a novel perspective on Friedman’s conjecture regarding exchange-rate flexibility. We present evidence that countries classified as more flexible have faster convergence than peggers for current account deficits, but not so for surpluses. An implication is that current account surpluses are more persistent than deficits on average. Evidence indicates that this asymmetry is associated with a one-sided muting of exchange rate appreciations. We develop a multi-country DSGE model augmented with a “fear of appreciation” policy rule, solved as an occasionally binding constraint. It can explain greater persistence of current account surpluses compared to deficits in general equilibrium where surpluses and deficits must cancel in aggregate.
Author contact info: Paul Bergin Department of Economics University of California, Davis One Shields Ave. Davis, CA 95616 Tel: 530/752-8398 Fax: 530/752-9382 E-Mail: prbergin@ucdavis.edu Kyunghun Kim School of Economics Hongik University 94 Wausan-ro, Mapo-gu Seoul 04066 Korea E-Mail: khkim@hongik.ac.kr Ju H. Pyun Korea University Business School 145 Anam-Ro Seongbuk-Gu Seoul 02841 Korea E-Mail: jhpyun@korea.ac.kr

Natural Disasters and Municipal Bonds - Auh, Jun Kyung; Choi, Jaewon; Deryugina, Tatyana; Park, Tim (National Bureau of Economic Research Working Paper Series, 2022)
Climate change is increasing the frequency of natural disasters, which could make municipal bonds a riskier asset class. We study the effects of natural disasters on municipal bond returns, exploiting the repeat sales approach to overcome the challenge that municipal bonds trade extremely infrequently. We find substantial price effects that materialize gradually: returns of uninsured bonds fall slowly in the weeks following a disaster, by 0.31% on average, translating into investor losses of almost $10 billion. Source of bond revenue, bond insurance, disaster severity, federal disaster aid, and local financial conditions all affect the magnitude of the price effects.
Author contact info: Jun Kyung Auh McDonough School of Business Georgetown University 37th and O Streets NW, Hariri 583 Washington DC, 20037 E-Mail: junkyung.auh@georgetown.edu Jaewon Choi Department of Finance University of Illinois at Urbana-Champaign E-Mail: jaewchoi1203@gmail.com Tatyana Deryugina Department of Finance University of Illinois at Urbana-Champaign 515 East Gregory Drive, MC-520 Champaign, IL 61820 Tel: 925/349-8999 E-Mail: deryugin@illinois.edu Tim Park 1900 16th Street, Suite 1100 Denver, CO 80202 United States E-Mail: Tim.Park@analysisgroup.com

Measuring Climate Change Impacts on Agriculture: An Equilibrium Perspective on Supply-Side Approaches - Gouel, Christophe (National Bureau of Economic Research Working Paper Series, 2022)
A popular approach for estimating climate change impacts on agriculture is to rely on supply-side reduced-form regressions. These methods, which include the Ricardian approach, focus on how farmers and agricultural land market react to changes in climatic conditions, under the implicit assumption that crop prices stay constant. To test whether this assumption is innocuous, I use a quantitative trade model of global agricultural markets to emulate the findings of a supply-side approach as well as to calculate welfare changes accounting for price changes. The results show that both welfare measures are weakly correlated and can be of opposite signs, and that the supply-side approach tends to underestimate the cost of climate change. The main drivers of these differences are the neglects of the imperfect substitutability of crops in demand and of terms-of-trade changes. The supply-side approach provides a valid approximation of the welfare cost of climate change only if crops are almost perfectly substitutable in demand and trade costs are neglected, a situation in which it is reasonable to assume constant prices.
Author contact info: Christophe Gouel INRAE, Paris-Saclay Applied Economics AgroParisTech 22 place de l'Agronomie 91120 Palaiseau christophe.gouel@inrae.fr France E-Mail: christophe.gouel@inrae.fr

Pricing Power in Advertising Markets: Theory and Evidence - Gentzkow, Matthew; Shapiro, Jesse M; Yang, Frank; Yurukoglu, Ali (National Bureau of Economic Research Working Paper Series, 2022)
Existing theories of media competition imply that advertisers will pay a lower price in equilibrium to reach consumers who multi-home across competing outlets. We generalize, extend, and test this prediction. We find that television outlets whose viewers watch more television charge a lower price per impression to advertisers. This finding helps rationalize well-known stylized facts such as a premium for younger and more male audiences on television. A quantitative version of our model whose only free parameter is a scale normalization can explain 35 percent of the variation in price per impression across owners of television networks, and aligns with recent trends in television advertising revenue. We use the model to quantify the impact of mergers and the effect of Netflix ad carriage on prices for linear television advertising. We then extend our analysis to social media markets where we find evidence of a premium for older audiences (who multi-home less), and we discuss implications for competition across ad formats.
Author contact info: Matthew Gentzkow Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-3721 Fax: 650/725-5702 E-Mail: gentzkow@stanford.edu Jesse M. Shapiro Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617-444-9571 E-Mail: jesse_shapiro@fas.harvard.edu Frank Yang Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 Tel: 6125621866 E-Mail: shuny@stanford.edu Ali Yurukoglu Graduate School of Business Stanford University Stanford, CA 94305 Tel: 650/721-1293 E-Mail: ayurukog@stanford.edu

Central Bank Communication with the General Public: Promise or False Hope? - Blinder, Alan S; Ehrmann, Michael; de Haan, Jakob; Jansen, David-Jan (National Bureau of Economic Research Working Paper Series, 2022)
Central banks are increasingly reaching out to the general public to motivate and explain their monetary policy actions. One major aim of this outreach is to guide inflation expectations; another is to ensure accountability and create trust. This article surveys a rapidly-growing literature on central bank communication with the public. We first discuss why and how such communication is more challenging than communicating with expert audiences. Then we survey the empirical evidence on the extent to which this new outreach does in fact affect inflation expectations and trust. On balance, we see some promise in the potential to inform the public better, but many challenges along the way.
Author contact info: Alan S. Blinder Department of Economics Princeton University Princeton, NJ 08544-1021 Tel: 609/258-3358 Fax: 609/258-5398 E-Mail: blinder@princeton.edu Michael Ehrmann D-60640 Frankfurt am Main GERMANY Europe E-Mail: michael.ehrmann@ecb.int Jakob de Haan Faculty of Economics and Business University of Groningen PO Box 800 9700 AV Groningen Netherlands E-Mail: jakob.de.haan@rug.nl David-Jan Jansen De Nederlandsche Bank Westeinde 1 PO Box 98 1000 AB Amsterdam The Netherlands E-Mail: d.jansen@dnb.nl

Blending Theory and Data: A Space Odyssey - Donaldson, Dave (National Bureau of Economic Research Working Paper Series, 2022)
This article describes methods used in the field of spatial economics that combine insights from economic theory and evidence from data in order to answer counter- factual questions. I outline a general framework that emphasizes three elements: a specific question to be answered, a set of empirical relationships that can be identified from exogeneity assumptions, and a theoretical model that is used to extrapolate from such empirical relationships to the answer that is required. I then illustrate the application of these elements via a series of twelve examples drawn from the fields of international, regional, and urban economics. These applications are chosen to illustrate the various techniques that researchers use to minimize the theoretical assumptions that are needed to traverse the distance between identified empirical patterns and the questions that need to be answered.
Author contact info: Dave Donaldson Department of Economics, E52-554 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4790 Fax: 617/253-1330 E-Mail: ddonald@mit.edu

College Costs, Financial Aid, and Student Decisions - Dynarski, Susan; Page, Lindsay C; Scott-Clayton, Judith (National Bureau of Economic Research Working Paper Series, 2022)
The increasing tension between the perceived necessity of a college degree and the challenge of paying for it has led to a proliferation of financial aid policy in the U.S. and around the world. More students are receiving more aid today, and more different types of aid, than ever before. Half a century of policy experimentation has led to an equally impressive accumulation of research evidence, facilitated by methodological advances and the widespread availability of student-level administrative data. In this chapter, we present the economic rationale for financial aid, a summary of how aid works in the U.S. context, and common methodological challenges in the study of financial aid. We then review the evidence from both inside and outside the U.S. on the causal impact of a variety of financial aid policies and programs on students’ college decisions, attainment, and post-college outcomes, and summarize the overarching themes with respect to margins of impact, mechanisms, and heterogeneity. We conclude with a discussion of future directions for research.
Author contact info: Susan Dynarski Harvard University Graduate School of Education 13 Appian Way Cambridge, MA 02138 Fax: NA E-Mail: susan_dynarski@harvard.edu Lindsay C. Page Annenberg Institute for School Reform Brown University Box 1985 Providence, RI 02912 Tel: 401.863.7990 E-Mail: Lindsay_page@brown.edu Judith Scott-Clayton Teachers College Columbia University 525 W.120th Street, Box 174 New York, NY 10027 Tel: 212/678-3478 Fax: 212/678-3699 E-Mail: scott-clayton@tc.columbia.edu

The Effects of Teacher Quality on Adult Criminal Justice Contact - Rose, Evan K; Schellenberg, Jonathan T; Shem-Tov, Yotam (National Bureau of Economic Research Working Paper Series, 2022)
This paper estimates teachers' impacts on their students' future criminal justice contact (CJC). Using a unique data set linking the universe of North Carolina public school data to administrative arrest records, we find a standard deviation of teacher effects on students' future arrests of 2.7 percentage points (11% of the sample mean). Teachers' effects on CJC are orthogonal to their effects on academic achievement, implying assignment to a high test score value-added teacher does not reduce future CJC. However, teachers who reduce suspensions and improve attendance substantially reduce future arrests. Similar patterns emerge when allowing teacher impacts to vary by student sex, race, socio-economic status, and school. The results suggest that the development of non-cognitive skills is central to the returns to education for crime and highlight an important dimension of teachers' social value missed by test score-based quality metrics.
Author contact info: Evan K. Rose Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: ekrose@uchicago.edu Jonathan T. Schellenberg Amazon Web Services San Francisco, CA E-Mail: jschellenberg@econ.berkeley.edu Yotam Shem-Tov University of California, Los Angeles Department of Economics Box 951477 Los Angeles, CA 90095 E-Mail: shemtov@econ.ucla.edu

Digital Public Health Interventions at Scale: The Impact of Social Media Advertising on Beliefs and Outcomes Related to COVID Vaccines - Athey, Susan; Grabarz, Kristen; Luca, Michael; Wernerfelt, Nils C (National Bureau of Economic Research Working Paper Series, 2022)
Public health organizations increasingly use social media advertising campaigns in pursuit of public health goals. In this paper, we evaluate the impact of about $40 million of social media advertisements that were run and experimentally tested on Facebook and Instagram, aimed at increasing COVID-19 vaccination rates in the first year of the vaccine roll-out. The 819 randomized experiments in our sample were run by 174 different public health organizations and collectively reached 2.1 billion individuals in 15 languages. We find that these campaigns are, on average, effective at influencing self-reported beliefs - shifting opinions close to 1% at baseline with a cost per influenced person of about $3.41. Combining this result with an estimate of the relationship between survey outcomes and vaccination rates derived from observational data yields an estimated cost per additional vaccination of about $5.68. There is further evidence that campaigns are especially effective at influencing users’ knowledge of how to get vaccines. Our results represent, to the best of our knowledge, the largest set of online public health interventions analyzed to date.
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 Kristen Grabarz Harvard Business School Soldiers Field Boston, MA 02163 E-Mail: grabarzkristen@gmail.com Michael Luca Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617/495-8382 E-Mail: mluca@hbs.edu Nils Wernerfelt Kellogg School of Management 2211 Campus Drive Evanston, IL 60208 E-Mail: nils.wernerfelt@gmail.com

Tertiarization Like China - Chen, Xilu; Pei, Guangyu; Song, Zheng Michael; Zilibotti, Fabrizio (National Bureau of Economic Research Working Paper Series, 2022)
This article documents a rapid shift toward services (tertiarization) of the Chinese economy since 2005, as evidenced by the significant increase in both employment and value-added shares of the service sector. Notably, our analysis reveals that a variety of measures of productivity growth have been greater in the service sector than in the manufacturing sector. Firm-level measures of dynamism corroborate this ongoing tertiarization trend, which is not limited to services used as inputs to industrial production but also extends to consumer services. These findings are robust across different growth accounting methodologies, including a recently proposed method by Fan et al. (2023) that addresses challenges associated with the measurement of quality improvements in service industries.
Author contact info: Xilu Chen 135 Xingang West Rd, Haizhu District Room 205, Wu S.T. Library Sun Yat-sen University Guangzhou, Guangdong 510275 China E-Mail: chenxlu23@mail.sysu.edu.cn Guangyu Pei Department of Economics The Chinese University of Hong Kong Shatin, Hong Kong, China E-Mail: guangyu.pei@cuhk.edu.hk Zheng Michael Song Department of Economics Chinese University of Hong Kong Shatin, N.T., Hong Kong E-Mail: zheng.michael.song@gmail.com Fabrizio Zilibotti Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/432-9561 E-Mail: fabrizio.zilibotti@yale.edu

A Study of Bid-rigging in Procurement Auctions: Evidence from Indonesia, Georgia, Mongolia, Malta, and State of California - Kawai, Kei; Nakabayashi, Jun; Shimamoto, Daichi (National Bureau of Economic Research Working Paper Series, 2022)
We apply a Regression Discontinuity based approach to screen for collusion developed in Kawai et al. (2022) to public procurement data from five countries. We find that bidders who win by a very small margin have significantly lower backlog than those who lose by a very small margin in the sample of procurement auctions from Indonesia, suggesting that bidders collude by bid rotation. Our results suggest that the proportion of noncompetitive auctions is at least about 5% for all E-procurement auctions and about 3% for all auctions in Indonesia. We cannot reject the null of competition in other countries.
Author contact info: Kei Kawai Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 E-Mail: kei@berkeley.edu Jun Nakabayashi Kyoto University Yoshidahonmachi, Sakyo Ward Kyoto Osaka 606-8317 Japan E-Mail: nakabayashi.1@eco.kindai.ac.jp Daichi Shimamoto Kindai University 3-4-1 Kowakae Higashiosaka City Japan E-Mail: d.shimamoto0407@gmail.com

Liquidity, Financial Centrality, and the Value of Key Players - Chandrasekhar, Arun G; Townsend, Robert; Xandri, Juan Pablo (National Bureau of Economic Research Working Paper Series, 2022)
Consider an economy in which agents face income risk but interact in a stochastic financial network where the randomness is dictated by both chance and choice. We study the financial centrality of an agent defined as the ex-ante marginal social value of providing a small liquid asset to that agent. We show financially central agents are not only those who are linked often, but are more likely to be linked when (i) the realized network is fragmented, (ii) income risk is high, (iii) shocks are positively correlated, (iv) attitudes toward risk are more sensitive in the aggregate, and (v) there are tail risks. We apply our framework to models of financial markets with participation shocks, supply chains subject to disruptions, and village risk-sharing networks. We also study how the stochastic financial network structure influences bargaining, thereby endogenizing Pareto weights in the planner's problem. Evidence from Thai villages is consistent with these bargaining foundations, showing that agents who are more central indeed receive greater Pareto weight. We conclude by examining the welfare consequences of targeting larger liquid assets to key traders in markets, and to the most liquidity-sensitive links in supply chains.
Author contact info: Arun G. Chandrasekhar Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: arungc@stanford.edu Robert Townsend Department of Economics, E52-538 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/452-3722 Fax: 617/253-1330 E-Mail: rtownsen@mit.edu Juan Pablo Xandri Department of Economics Princeton University Fisher Hall, Office 212 Princeton, NJ 08544 E-Mail: jxandri@princeton.edu

Heterogeneity in Disease Resistance and the Impact of Antibiotics in the US. - Cook, C. Justin; Fletcher, Jason (National Bureau of Economic Research Working Paper Series, 2022)
We hypothesize that the impact of antibiotics is moderated by a population’s inherent (genetic) resistance to infectious disease. Using the introduction of sulfa drugs in 1937, we show that US states that are more genetically susceptible to infectious disease saw larger declines in their bacterial mortality rates following the introduction of sulfa drugs in 1937. This suggests area-level genetic endowments of disease resistance and the discovery of medical technologies have acted as substitutes in determining levels of health across the US. We also document immediate effects of sulfa drug exposure to the age of the workforce and cumulative effects on educational attainment for cohorts exposed to sulfa drugs in early life.
Author contact info: Justin Cook School of Social Sciences, Humanities and Arts University of California, Merced Merced, CA 95343 E-Mail: jcook9@ucmerced.edu Jason Fletcher University of Wisconsin-Madison La Follette School of Public Affairs 1225 Observatory Drive Madison, WI 53706 E-Mail: jfletcher@lafollette.wisc.edu

What Motivates Leaders to Invest in Nation-Building? - Giuliano, Paola; Reich, Bryony; Riboni, Alessandro (National Bureau of Economic Research Working Paper Series, 2022)
Why do some leaders invest in significant nation-building policies and others do not? Why does nation-building occur at certain junctures in time and not others? In our research, we investigate what motivates leaders to nation build. We argue that threats to their regime motivate rulers to invest in significant nation-building and that the type of threats that provoke nation-building have largely materialized since the 19th century.
Author contact info: Paola Giuliano Anderson School of Management UCLA 110 Westwood Plaza C517 Entrepreneurs Hall Los Angeles, CA 90095-1481 Tel: 310/206-6890 Fax: 310/825-4011 E-Mail: paola.giuliano@anderson.ucla.edu Bryony Reich Northwestern University Kellogg School of Management GLOBAL Hub 4263 2211 Campus Drive Evanston, IL 60208 E-Mail: bryony.reich@kellogg.northwestern.edu Alessandro Riboni École Polytechnique Departement d'Economie Palaiseau, France E-Mail: alessandro.riboni@gmail.com

A New Interpretation of Productivity Growth Dynamics in the Pre-Pandemic and Pandemic Era U.S. Economy, 1950-2022 - Gordon, Robert J; Sayed, Hassan (National Bureau of Economic Research Working Paper Series, 2022)
The dismal decade of 2010-19 recorded the slowest productivity growth of any decade in U.S. history, only 1.1 percent per year in the business sector. Yet the pandemic appears to have created a resurgence in productivity growth with a 4.1 percent rate achieved in the four quarters of 2020. This paper provides a unified framework that explains productivity growth in both the pre-pandemic and pandemic-era U.S. economy. The key insight is that in their panicked reaction to the collapse of output in the 2008-09 recession, business firms overreacted with “excess layoffs,” adjusting hours to the output decline with a far higher elasticity than normal. Our regression analysis, which allows post-recession rehiring that gradually unwinds the excess layoffs, explains why productivity growth was countercyclical in 2009 and why it was so slow in 2010-16 as rehiring boosted hours growth. Post-sample simulations explain why productivity growth was so high in 2020 and why it fell to only 0.6 percent in the five quarters of 2021-22. The paper includes implications for the future long-term evolution of productivity growth in the business sector and total economy. A new data file on quarterly productivity levels and changes for 17 industries provides new perspectives for 2006-22 and particularly for the nine pandemic quarters of 2020-22. Positive pandemic-era productivity growth can be entirely explained by a surge in the performance of work-from-home service industries, while goods industries soared and then slumped, while contact services recorded strongly negative productivity growth throughout 2020-22.
Author contact info: Robert J. Gordon Department of Economics Northwestern University Evanston, IL 60208-2600 Tel: 847/491-3616 Fax: 847/869-7343 E-Mail: rjg@northwestern.edu Hassan Sayed Department of Economics Princeton University Princeton, NJ 08544 E-Mail: hsayed@princeton.edu

Firms and Unemployment Insurance Take-up - Lachowska, Marta; Sorkin, Isaac; Woodbury, Stephen A (National Bureau of Economic Research Working Paper Series, 2022)
We use administrative data to quantify the employer’s role in unemployment insurance (UI) take-up. First, there are employer effects in both claiming and appeals, and, consistent with deterrence effects, these are negatively correlated. Second, low-wage workers are less likely to claim and more likely to have their claims appealed than median-wage workers, and employer effects explain a large share of these income gradients. Third, high-claiming and low-appealing employers are desirable employers: they are higher-paying and have lower separation rates. Finally, the dominant source of targeting error in the UI system is that eligible workers do not apply. Our findings emphasize a novel dimension of the role of employers in the labor market, and have implications for the financing of UI.
Author contact info: Marta Lachowska W.E. Upjohn Institute for Employment Research 300 S. Westnedge Avenue Kalamazoo, MI 49007 Tel: 269-385-0432 Fax: 269-343-3308 E-Mail: marta@upjohn.org Isaac Sorkin Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 608/440-0052 E-Mail: sorkin@stanford.edu Stephen A. Woodbury Department of Economics Michigan State University 486 West Circle Drive, Room 110 East Lansing, MI 48824 E-Mail: woodbur2@msu.edu

Fighting Climate Change: International Attitudes Toward Climate Policies - Dechezleprêtre, Antoine; Fabre, Adrien; Kruse, Tobias; Planterose, Bluebery; Sanchez Chico, Ana; Stantcheva, Stefanie (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies how people across the world perceive and understand climate change and climate policies, which factors determine their support for climate action, and what type of information shifts their policy views. We design and run new largescale surveys on more than 40,000 respondents in 20 countries, covering the major greenhouse gas emitters in developed and developing economies. We thus provide new, comprehensive, international microdata on people’s perceptions, understanding, and policy views related to climate change, combined with detailed background information on their socioeconomic characteristics, energy use, and lifestyles. We show that, across countries, support for climate policies hinges on three key perceptions centered around the effectiveness of the policies in reducing emissions (effectiveness concerns), their distributional impacts on lower-income households (inequality concerns), and their impact on the respondents’ household (self-interest). In the experimental part, we show randomly selected subsamples pedagogical videos on either the impacts of climate change in their country or how major climate policies work – their effectiveness in reducing emissions and their distributional implications. Explaining how policies work and who can benefit from them is critical to fostering policy support, whereas simply informing people about climate change’s impacts is ineffective.
Author contact info: Antoine Dechezleprêtre 2 rue Andre Pascal PARIS 75016 France E-Mail: antoine.dechezlepretre@oecd.org Adrien Fabre CIRED 45bis Av. de la Belle Gabrielle 94130 Nogent-sur-Marne France E-Mail: fabre.adri1@gmail.com Tobias Kruse OECD 2 rue André Pascal 75775 Paris Cedex 16 PARIS France E-Mail: Tobias.Kruse@oecd.org Bluebery Planterose Paris School of Economics 48 Boulevard Jourdan Paris, 75014 France E-Mail: bluebery.planterose@psemail.eu Ana Sanchez Chico Harvard University E-Mail: sanchezchicoana@gmail.com Stefanie Stantcheva Department of Economics Littauer Center 232 Harvard University Cambridge, MA 02138 Tel: 617-496-2614 E-Mail: sstantcheva@fas.harvard.edu

New Pricing Models, Same Old Phillips Curves? - Auclert, Adrien; Rigato, Rodolfo D; Rognlie, Matthew; Straub, Ludwig (National Bureau of Economic Research Working Paper Series, 2022)
We show that, in a broad class of menu cost models, the first-order dynamics of aggregate inflation in response to arbitrary shocks to aggregate costs are nearly the same as in Calvo models with suitably chosen Calvo adjustment frequencies. We first prove that the canonical menu cost model is first-order equivalent to a mixture of two time-dependent models, which reflect the extensive and intensive margins of price adjustment. We then show numerically that, in any plausible parameterization, this mixture is well-approximated by a single Calvo model. This close numerical fit carries over to other standard specifications of menu cost models. Thus, for shocks that are not too large, the Phillips curve for a menu cost model looks like the New Keynesian Phillips curve, but with a higher slope.
Author contact info: Adrien Auclert Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: aauclert@stanford.edu Rodolfo Rigato 1805 Cambridge Street Littauer G29 Cambridge, MA 02138 United States E-Mail: dinisrigato@g.harvard.edu Matthew Rognlie Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8215 E-Mail: matthew.rognlie@northwestern.edu Ludwig Straub Department of Economics Harvard University Littauer Center Cambridge, MA 02138 E-Mail: ludwigstraub@g.harvard.edu

Carbon Pricing, Clean Electricity Standards, and Clean Electricity Subsidies on the Path to Zero Emissions - Borenstein, Severin; Kellogg, Ryan (National Bureau of Economic Research Working Paper Series, 2022)
We categorize the primary incentive-based mechanisms under consideration for addressing greenhouse gas emissions from electricity generation—pricing carbon, setting intensity standards, and subsidizing clean energy—and compare their market outcomes under similar expansions of clean electricity generation. While pricing emissions gives strong incentives to first eliminate generation with the highest social cost, a clean energy standard incentivizes earliest phaseout of the generation with the highest private cost. We show that the importance of this distinction depends on the correlation between private costs and emissions rates. We then estimate this correlation for US electricity generation and fuel prices as of 2019. The results indicate that the emissions difference between a carbon tax and clean energy standard that phase out fossil fuel generation over the same timeframe may actually be quite small, though it depends on fossil fuel prices during the phaseout. We also discuss how each of these policy options is likely to impact electricity prices, quantity demanded, government revenue, and economic efficiency. Large pre-existing markups of retail electricity prices over marginal costs are likely to considerably weaken or even reverse the usual assumed efficiency advantage of carbon pricing policies over alternatives, including direct subsidization of clean electricity generation.
Author contact info: Severin Borenstein Haas School of Business University of California, Berkeley Berkeley, CA 94720-1900 Tel: 510/642-3689 E-Mail: severinborenstein@berkeley.edu Ryan Kellogg University of Chicago Harris School of Public Policy 1307 East 60th Street Chicago, IL 60637 E-Mail: kelloggr@uchicagoedu.mail.onmicrosoft.com

Confidence, Self-Selection and Bias in the Aggregate - Enke, Benjamin; Graeber, Thomas; Oprea, Ryan (National Bureau of Economic Research Working Paper Series, 2022)
The influence of behavioral biases on aggregate outcomes like prices and allocations depends in part on self-selection: whether rational people opt more strongly into aggregate interactions than biased individuals. We conduct a series of betting market, auction and committee experiments using 15 classic cognitive bias tasks. We document that some cognitive errors are strongly reduced through self-selection, while others are not affected at all. A large part of this variation is explained by the quality of people's meta-cognition. In some cognitive tasks, confidence and performance are strongly positively correlated, while for others this link is absent or even negative.
Author contact info: Benjamin Enke Department of Economics Harvard University Littauer M008 Cambridge, MA 02138 Tel: 617/496-5895 E-Mail: enke@fas.harvard.edu Thomas Graeber Harvard Business School Harvard University E-Mail: tgraeber@hbs.edu Ryan Oprea UC Santa Barbara Santa Barbara, CA 93106 E-Mail: roprea@gmail.com

New Evidence on the Demand for Advice within Retirement Plans - Reuter, Jonathan; Richardson, David P (National Bureau of Economic Research Working Paper Series, 2022)
We study demand for advice within defined contribution retirement plans offered by 23 institutions where TIAA is sole recordkeeper. Advice seeking increases with age, account balance, annual contribution level, web access, and changes in marital status. More provocatively, participants who invest solely through target date funds—the dominant default investment option—are significantly less likely to seek any form of advice throughout the age distribution, raising the possibility that reliance upon defaults crowds out advice seeking. Advice seeking increases significantly following the introduction of online tools, but is only weakly correlated with market returns and investment menu changes.
Author contact info: 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 David P. Richardson TIAA-CREF Institute 8500 Andrew Carnegie Blvd. Charlotte, NC 28262 E-Mail: dprichardson@tiaa.org

Expectations and the Rate of Inflation - Werning, Iván (National Bureau of Economic Research Working Paper Series, 2022)
What is the effect of higher expectations of future inflation on current inflation? I compute this passthrough for a series of canonical firm-pricing models, but allowing for arbitrary (non-rational) expectations. In the Calvo model, the expectational-passthrough can be made arbitrarily close to zero for sufficiently high stickiness, but in practice, for reasonable parameters, passthrough is close to its upper bound of 1. In the Taylor model, in contrast, the upper bound for passthrough is ½ instead of 1. For a general time-dependent model I show that: (i) passthrough is given by a measurable sufficient statistic: the ratio of the average duration of ongoing price spells to that of completed price spells; (ii) the lowest theoretically possible passthrough equals ½ by Taylor pricing; and (iii) passthrough can be theoretically greater than 1 with hazards that decrease over time; (iv) breaking down the passthrough across horizons, it is expectations in the near future that matters the most, expectations of long-run inflation are completely irrelevant; (v) I provide a generalized Phillips curve for current inflation as a linear function of expectations of future inflation and realized past inflations; (vi) I show that the sum of all coefficients, both past and future, sums to one, so that the long-run Phillips curve is vertical. Finally, I study state-dependent “menu cost” models and show that passthrough in these models can be extremely low or extremely high, depending on the exact specification and inflation rate. I suggest a model where firms must pay a fixed cost for changing their sS pricing policy bands. This extension gives a passthrough of 0 for small enough changes in expectations.
Author contact info: Iván Werning Department of Economics, E52-536 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/452-3662 Fax: 617/253-1330 E-Mail: iwerning@mit.edu

Ancestral Livelihoods and Moral Universalism: Evidence from Transhumant Pastoralist Societies - Le Rossignol, Etienne; Lowes, Sara (National Bureau of Economic Research Working Paper Series, 2022)
Moral universalism, the extent to which individuals exhibit similar altruism and trust towards in-group and out-group members, varies widely across societies. We test the hypothesis from anthropology that the requirements of transhumant pastoralism – a livelihood in which populations seasonally migrate and herd livestock – made individuals highly interdependent and cohesive within groups but hostile to individuals beyond the radius of extended kin. Using global data, we find that historical reliance on transhumant pastoralism is strongly predictive of greater in-group relative to out-group trust. This result is consistent across countries, between residents of the same country, among second-generation migrants, and with an instrumental variable strategy. We find evidence that these results are specific to transhumant pastoralism. The effects are particularly pronounced when transhumant pastoralists interact with groups that rely on other forms of economic production and in areas that are prone to climate shocks and conflict. Finally, we explore the economic implications of limited moral universalism. We find that greater reliance on transhumant pastoralism is associated with less objective promotion criteria within firms and smaller firm size.
Author contact info: Etienne Le Rossignol University of Namur PARIS France E-Mail: etienne.lerossignol@unamur.be Sara Lowes Department of Economics University of California at San Diego 9500 Gilman Drive La Jolla, CA 92093 E-Mail: slowes@ucsd.edu

The Real State: Inside the Congo's Traffic Police Agency - de la Sierra, Raúl Sanchez; Titeca, Kristof; Xie, Haoyang (Stan); Nkuku, Albert Malukisa; Lameke, Aimable Amani (National Bureau of Economic Research Working Paper Series, 2022)
We analyze the organization of corruption in a state agency. The dual mandate of the Democratic Republic of the Congo’s traffic police agency is to manage traffic and to enforce the traffic code. We first document that, in the capital’s branch, Kinshasa, traffic violation fines account for only 22% of the revenue of the branch. The remaining 78%, unofficial, comes from bribes paid by drivers, of which 63% is generated through a “quota scheme:” managers at police stations ask agents posted at street intersections to escort drivers to the stations, where the managers extract a bribe from the drivers. Experimentally decreasing the quota, hence mitigating its effect, we find that the quota scheme worsens the agency’s ability to fulfill its first mandate, while not improving its ability to fulfill the second. First, the quota causes 65% of all traffic jams and almost all accidents at the branch’s intersections. Second, we find evidence suggesting that it fuels false allegations against drivers—extortion—at a higher rate than it fuels true ones, consistent with the scheme not creating incentives to comply with the code. The findings emphasize that the manager’s demand for unofficial revenue is significant and creates profits and distortions beyond those that would be made possible via corruption by individual state officials.
Author contact info: Raúl Sánchez de la Sierra Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: raul@uchicago.edu Kristof Titeca University of Antwerp Institute of Development Policy Prinsstraat 13 2000 Antwerpen Belgium E-Mail: kristof.titeca@uantwerp.be Haoyang (Stan) Xie University of Chicago Becker Friedman Institute 5757 S University Ave Chicago, IL 60637 E-Mail: stanxie@uchicago.edu Albert Malukisa Nkuku Universite Catholique du Congo Kinshasa Democratic Republic of the Congo E-Mail: albert.malukisa@ucc.ac.cd Aimable Amani Lameke Marakuja Kivu Research Bukavu, South Kivu Democratic Republic of the Congo E-Mail: amanilamek@gmail.com

Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms - Kapor, Adam; Karnani, Mohit; Neilson, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
We study the welfare and human-capital impacts of the configuration of on- and off-platform options in the context of Chile’s centralized higher education platform, leveraging administrative data and two policy changes: an expansion of the number of on-platform slots by approximately 40% and the introduction of a large scholarship program. We first show that more programs’ joining the platform led students to start college sooner and raised the share of students who graduated on time. We then develop a model of college applications, offers, waitlists, and matriculation choices, which we estimate using students’ ranked-ordered applications, on- and off-platform enrollment, and on-time graduation outcomes. When more programs join the platform, welfare increases, and the extent of aftermarket frictions matters less for welfare, enrollment, and graduation rates. High-SES students have greater access to off-platform options, and gains from platform expansion are larger for students from lower-SES backgrounds. Our results indicate that expanding the scope of a higher education platform can have real impacts on welfare and human capital.
Author contact info: Adam Kapor Department of Economics Princeton University 280 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 203/710-0527 E-Mail: akapor@princeton.edu Mohit Karnani Massachusetts Institute of Technology E-Mail: mohit@nber.org Christopher Neilson Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: christopher.neilson@yale.edu

A Luna-tic Stablecoin Crash - Uhlig, Harald (National Bureau of Economic Research Working Paper Series, 2022)
After remaining close to 1 US Dollar since its inception in November 2020, the algorithmic stablecoin UST crashed in the two weeks of May 9th to May 15th, 2022, leading to a price collapse of the underlying LUNA token and the erasure of more than 50 Billion U.S. Dollar or 90% in market value. I provide a novel theory to account for these phenomena and use it to shed light on the data. I break new ground methodologically by showing how crashes unfold gradually, and by introducing the method of quantitative interpretation. To obtain a gradual unfolding of the crash, I allow for the possibility that the market might return to normal at any moment. Suspension of convertibility happens, once the price has fallen sufficiently far. Agents price LUNA, taking into account these probabilities as well as the ongoing inflow from burning UST coins. Agents sell their UST coins when the probability of an eventual suspension of convertibility exceeds some agent-specific threshold. The implications of the theory are highlighted in an analytically tractable example. The theory is then used as a guide to examine and interpret the data, using bi-hourly observations. I use the observed data to quantify theory variables and use them in turn to interpret the data. I find that the majority of the UST coin holders waited until the probability of suspension was rather high, before deciding to burn their holdings.
Author contact info: Harald Uhlig Dept. of Economics University of Chicago 1126 E 59th Street Chicago, IL 60637 Tel: 773/702-3702 Fax: 773/702-8490 E-Mail: huhlig@uchicago.edu

Misinformation, Consumer Risk Perceptions, and Markets: The Impact of an Information Shock on Vaping and Smoking Cessation - Jin, Lawrence; Kenkel, Donald S; Lovenheim, Michael F; Mathios, Alan D; Wang, Hua (National Bureau of Economic Research Working Paper Series, 2022)
Smoking is the leading preventable cause of death in the U.S. Because e-cigarettes do not involve the combustion of tobacco, vaping offers the potential to prevent most of the health consequences of smoking. We study the impact of an information shock created by an outbreak of lung injuries apparently related to e-cigarettes. We use data from multiple sources: surveys of risk perceptions conducted before, during, and after the outbreak; an in-depth survey we conducted on risk perceptions and vaping and smoking behavior; and national aggregate time-series sales data. We find that after the outbreak, consumer perceptions of the riskiness of e-cigarettes sharply increased, so that in contrast to almost all experts, the majority of consumers perceive e-cigarettes to be relatively and absolutely riskier than cigarettes. From our estimated e-cigarette demand models, we conclude that the information shock reduced e-cigarette demand by about 30 percent. We also estimate that the information shock decreased the use of e-cigarettes for smoking cessation, again by about 30 percent. Over time, the reduced smoking cessation due to the information shock will in turn increase smoking-related illness and death.
Author contact info: Lawrence Jin Lee Kuan Yew School of Public Policy National University of Singapore E-Mail: lawrencejin@gmail.com Donald S. Kenkel Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Rensselaer Hall Ithaca, NY 14853 E-Mail: dsk10@cornell.edu Michael F. Lovenheim Brooks School of Public Policy ILR School, and Department of Economics Cornell University 271 Ives Hall Ithaca, NY 14853 E-Mail: mfl55@cornell.edu Alan D. Mathios Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Renssellaer Hall Ithaca NY 14853 E-Mail: adm5@cornell.edu Hua Wang Jeb E. Brooks School of Public Policy MVR Hall Cornell University Ithaca NY 14853 E-Mail: hw227@cornell.edu

Financing Health Care Delivery - Gruber, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
I review the key issues that arise in financing health care delivery. I begin by documenting the key features of health care markets that make financing so central in this sector, such as the skewed and unpredictable nature of health care spending and market failures in health care delivery. I then review the key issues that public and private payers face in designing health care markets, from the proper mix of public and private provision to the role of risk bearing for consumers and providers. Finally, I illustrate how these issues manifest in practice by comparing the design of insurance systems in the United States and Canada.
Author contact info: Jonathan Gruber Department of Economics, E52-434 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8892 Fax: 617/253-1330 E-Mail: gruberj@mit.edu

A Portfolio Approach to Global Imbalances - Jiang, Zhengyang; Richmond, Robert J; Zhang, Tony (National Bureau of Economic Research Working Paper Series, 2022)
We use a portfolio-based framework to understand what drives the decline of the U.S. net foreign asset (NFA) position and the reversal in returns earned on the US NFA (exorbitant privilege). We show that global savings gluts and monetary policies widened the U.S. NFA position, while investor demand shifts partially offset this widening. Moreover, U.S. privilege declined after 2010, in accordance with increasing foreign demand for U.S. equity. We also highlight a quantity dimension of the U.S. privilege: the U.S. can issue substantially more debt than other countries for a given yield increase.
Author contact info: Zhengyang Jiang Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2848 E-Mail: zhengyang.jiang@kellogg.northwestern.edu Robert J. Richmond Stern School of Business New York University 44 W. 4th Street, 9-81 New York, NY 10012 Tel: 303/668-8773 E-Mail: rrichmon@stern.nyu.edu Tony Zhang Federal Reserve Board 20th Street and Constitution Avenue N.W. Washington, DC 20551 E-Mail: tony.zhang@frb.gov

Racial Inequality in the U.S. Unemployment Insurance System - Skandalis, Daphné; Marinescu, Ioana; Massenkoff, Maxim N (National Bureau of Economic Research Working Paper Series, 2022)
The decentralized US unemployment insurance (UI) system lets states decide on key rules. Decentralization could help states efficiently adapt to local economic conditions, but it could also generate racial inequality. We build a novel nationally representative dataset of UI claimants and document a 18:3% gap in UI entitlements between Black and white claimants. After accounting for claimants' work history, we show that state rules differences alone create a 8:4% racial gap. Yet, our welfare analysis indicates that state rules differences are inefficient. Reducing UI rule disparities across states would thus enhance both racial equity and economic efficiency.
Author contact info: Daphne Skandalis University of Copenhagen Øster Farimagsgade 5 1353 Copenhagen Denmark E-Mail: dskandalis@gmail.com Ioana Marinescu University of Pennsylvania School of Social Policy & Practice 3701 Locust Walk Philadelphia PA, 19104-6214 E-Mail: ioma@upenn.edu Maxim N. Massenkoff Graduate School of Defense Management Naval Postgraduate School Monterey, CA 93943 E-Mail: maxim.massenkoff@nps.edu

The Spanish Mission Legacy on Native American Reservations - Alston, Lee J; Duggan, Marie Christine; Ramos Pastrana, Julio Alberto (National Bureau of Economic Research Working Paper Series, 2022)
We explore the long run impact of the Spanish missions on Native American outcomes in the early 20th century. Native communities who interacted with Spanish missionaries developed into enclaves which blended Catholicism with native culture. Some survived assaults on their property rights by Mexico and the US to persist as reservations into the 20th century. We found that having extensive contact with missions increased the percentage of Native Americans Catholic, decreased crime rates, and increased income from agriculture and overall earnings from wages. Surprisingly, we found no impact on education.
Author contact info: Lee J. Alston Department of Economics Wylie Hall Indiana University 100 South Woodlawn Avenue Bloomington, IN 47405 Tel: (812) 855 1021 Fax: (812) 855-3150 E-Mail: ljalston@iu.edu Marie Christine Duggan 330 Hurricane Road Keene, New 03431-2161 United States Tel: 603-831-4386 E-Mail: mduggan@keene.edu Julio Alberto Ramos Pastrana School of Public Policy Pennsylvania State University State College, PA 16801 USA E-Mail: julioramos@psu.edu

Expecting Floods: Firm Entry, Employment, and Aggregate Implications - Jia, Ruixue; Ma, Xiao; Xie, Victoria Wenxin (National Bureau of Economic Research Working Paper Series, 2022)
Flood events and flood risk have been increasing in the past few decades and have important consequences for the economy. Using county-level and ZIP-code-level data from the United States during 1998–2018, we document that (1) increased flood risk has a large negative impact on firm entry, employment, and output in the long run; and (2) flood events reduce output in the short run while their impact on firm entry and employment is limited. Motivated by these findings, we construct a spatial equilibrium model to characterize how flood risk shapes firms’ location choices and workers’ employment, which we use to estimate the aggregate impact of increased flood risk on the economy. We find that flood risk reduced U.S. aggregate output by 0.52% in 2018, 80% of which stemmed from expectation effects and 20% from direct damages. We also apply our model to study the distributional consequences and forecast the impact of future changes in flood risk. Our results highlight the importance of considering the adjustment of firms and workers in response to risk in evaluating the consequences of natural disasters.
Author contact info: Ruixue Jia School of Global Policy and Strategy University of California at San Diego 9500 Gilman Drive #0519 La Jolla, CA 92093 Tel: 858/534-5969 E-Mail: ruixue.jia@gmail.com Xiao Ma Peking University HSBC Business School E-Mail: xiaomaecon@gmail.com Victoria Wenxin Xie 500 El Camino Real Santa Clara, CA 95054 E-Mail: wxie@scu.edu

Partisan Entrepreneurship - Engelberg, Joseph; Guzman, Jorge; Lu, Runjing; Mullins, William (National Bureau of Economic Research Working Paper Series, 2022)
Republicans start more firms than Democrats. In a sample of 40 million party-identified Americans between 2005 and 2017, we find that 6% of Republicans and 4% of Democrats become entrepreneurs. This partisan entrepreneurship gap is time-varying: Republicans increase their relative entrepreneurship during Republican administrations and decrease it during Democratic administrations, amounting to a partisan reallocation of 170,000 new firms over our 13-year sample. We find sharp changes in partisan entrepreneurship around the elections of President Obama and President Trump, and the strongest effects among the most politically active partisans: those that donate and vote.
Author contact info: Joseph Engelberg Rady School of Management University of California at San Diego Otterson Hall, Room 4S154 9500 Gilman Drive #0553 LaJolla, CA 92093-0553 E-Mail: jengelberg@ucsd.edu Jorge Guzman Columbia Business School Kravis Hall, 975 655 W 130th St New York, NY 10027 E-Mail: jag2367@gsb.columbia.edu Runjing Lu Alberta School of Business University of Alberta 11211 Saskatchewan Dr. NW Edmonton, Canada Canada E-Mail: runjing1@ualberta.ca William Mullins Rady School of Management University of California, San Diego 9500 Gilman Drive, MC 0553 La Jolla, CA 92093-0553 E-Mail: wmullins@ucsd.edu

Another Day, Another Visit: Impact of Arkansas's Mandatory Waiting Period for Women Seeking an Abortion by Demographic Groups - Altindağ, Onur; Joyce, Theodore J (National Bureau of Economic Research Working Paper Series, 2022)
Twenty-six states require that women seeking an abortion wait between 18 and 72 hours after receipt of counseling before the abortion can be completed. Thirteen states require that the counseling be given in person necessitating at least two visits to the provider. In April of 2015, Arkansas increased the waiting period for an abortion from 24 to 48 hours and more significantly, required that women receive the counseling in person. We use a regression discontinuity design to analyze the immediate effect of Arkansas’s 2015 mandatory waiting period (MWP) law on abortion rates. We use de-identified, individual-level data from the Arkansas Department of Health (DOH) on all abortions performed in Arkansas from 2000 to 2020. Abortion rates fell 17 percent among all women, but 22 percent among white non-Hispanics and 14 percent among black non-Hispanics immediately after the law went into effect. We show that the law decreased abortion rates the most among unmarried adults with children. Abortion is now illegal in Arkansas. Given the decline in abortion rates associated the MWP’s two-visit requirement, abortion rates will likely fall further as travel distance to the nearest legal provider increases.
Author contact info: Onur Altindağ Bentley University 175 Forest St Waltham, Mass 02452-4713 United States E-Mail: oaltindag@bentley.edu Theodore J. Joyce Baruch College, CUNY and National Bureau of Economic Research 39 Broadway, Suite 1620 New York, NY 10006 E-Mail: theodore.joyce@baruch.cuny.edu

A New Way of Forecasting Recessions - Leamer, Edward E (National Bureau of Economic Research Working Paper Series, 2022)
This paper proposes a new way of displaying and analyzing macroeconomic time series to form recession forecasts. The proposed data displays contain the last three years of each expansion. These allow observers to see for themselves what is different about the last year before recession. Based on a statistical model, the most recent data are then probabilistically inserted into these images where the recent data are most similar to the historical data. This amounts to a forecast. The traditional probit model used to forecast recessions inappropriately treats every observation as a separate experiment. This new method deals with these intra-correlation issues. The one variable that is causing a recession alarm is inflation. The unemployment rate is also alarming if the covid-19 data are omitted. The slope of the yield curve, the three-month Treasury yield, and housing starts are all two or three years from the end of the expansion. A probit model that conducts a “horse race” among these five variables reveals it is the bond market variables that best predict recessions. This leaves the Fed under control, but the 1970s data suggests it takes a recession to combat high inflation.
Author contact info: Edward E. Leamer John E. Anderson Graduate School of Management UCLA Box 951481 Los Angeles, CA 90095-1481 Tel: 310/206-1452 Fax: 310/825-4011 E-Mail: edward.leamer@anderson.ucla.edu

Short-Term Tax Cuts, Long-Term Stimulus - Cloyne, James; Martinez, Joseba; Mumtaz, Haroon; Surico, Paolo (National Bureau of Economic Research Working Paper Series, 2022)
We study the persistent effects of temporary changes in U.S. federal corporate and personal income tax rates using a narrative identification approach. A corporate income tax cut leads to a sustained increase in GDP and productivity, with peak effects between five and eight years. R&D spending and capital investment display hump-shaped responses while hours worked and employment are much less affected. In contrast, personal income tax cuts trigger a short-lived boost to GDP, productivity and hours worked but have no long-term effects. We develop and estimate an endogenous growth model with variable factor utilization and show that these features generate a pro-cyclical response of productivity which is key to account for our empirical findings.
Author contact info: James Cloyne Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 E-Mail: jcloyne@ucdavis.edu Joseba Martinez London Business School Department of Economics Regents Park NW1 4SA London UK E-Mail: jmartinez@london.edu Haroon Mumtaz Queen Mary University of London Mile End Road London United Kingdom E-Mail: h.mumtaz@qmul.ac.uk Paolo Surico London Business School Regent's Park NW1 4SA London (United Kingdom) Tel: 44-20-7601-4279 Fax: 44-20-7601-4610 E-Mail: psurico@london.edu

Malleability of Alcohol Consumption: Evidence from Migrants - Hinnosaar, Marit; Liu, Elaine M (National Bureau of Economic Research Working Paper Series, 2022)
How malleable is alcohol consumption? Specifically, how much is alcohol consumption driven by the current environment versus individual characteristics? To answer this question, we analyze changes in alcohol purchases when consumers move from one state to another in the United States. We find that if a household moves to a state with a higher (lower) average alcohol purchases than the origin state, the household is likely to increase (decrease) its alcohol purchases right after the move. The current environment explains about two-thirds of the differences in alcohol purchases. The adjustment takes place both on the extensive and intensive margins.
Author contact info: Marit Hinnosaar University of Nottingham United Kingdom E-Mail: marit.hinnosaar@gmail.com Elaine M. Liu Department of Economics University of Houston McElhinney Hall 223D Houston, TX 77004 Tel: 713/743-3861 Fax: 713/743-3798 E-Mail: emliu@uh.edu

Trade, Leakage, and the Design of a Carbon Tax - Weisbach, David; Kortum, Samuel S; Wang, Michael; Yao, Yujia (National Bureau of Economic Research Working Paper Series, 2022)
Climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. When climate policies vary across countries, energy-intensive industries have an incentive to relocate to places with few or no emissions restrictions, an effect known as leakage. Relocated industries would continue to pollute but would be operating in a less desirable location. We consider solutions to the leakage problem in a simple setting where one region of the world imposes a climate policy and the rest of the world is passive. We solve the model analytically and also calibrate and simulate the model. Our model and analysis imply: (1) optimal climate policies tax both the supply of fossil fuels and the demand for fossil fuels; (2) on the demand side, absent administrative costs, optimal policies would tax both the use of fossil fuels in domestic production and the domestic consumption of goods created with fossil fuels, but with the tax rate on production lower due to leakage; (3) taxing only production (on the demand side), however, would be substantially simpler, and almost as effective as taxing both production and consumption, because it would avoid the need for border adjustments on imports of goods; (4) the effectiveness of the latter strategy depends on a low foreign elasticity of energy supply, which means that forming a taxing coalition to ensure a low foreign elasticity of energy supply can act as a substitute for border adjustments on goods
Author contact info: David Weisbach University of Chicago Law School 1111 East 60th Street Chicago, IL 60615 United States Tel: 17735104250 E-Mail: d-weisbach@uchicago.edu Samuel S. Kortum Yale University Michael Wang Northwestern University Feinberg School of Medicine E-Mail: mcwang1995@gmail.com Yujia Yao International Monetary Fund E-Mail: YYao3@imf.org

Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample - Chapman, Jonathan; Snowberg, Erik; Wang, Stephanie W; Camerer, Colin (National Bureau of Economic Research Working Paper Series, 2022)
We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N=3,000). We find that around 50% of the U.S. population is loss tolerant, with many participants accepting negative-expected-value gambles. This is counter to earlier findings—which mostly come from lab/student samples—and expert predictions that 70-90% of participants are loss averse. Consistent with the difference between our study and the prior literature, loss aversion is more prevalent in people with high cognitive ability. Loss-tolerant individuals are more likely to report recent gambling and to have experienced financial shocks. These results support the general hypothesis that individuals value gains and losses differently, although the tendency in a large proportion of the population to emphasize gains over losses is an overlooked behavioral phenomenon.
Author contact info: Jonathan Chapman Department of Economics University of Bologna Bologna Italy E-Mail: jnchapman.econ@gmail.com Erik Snowberg David Eccles School of Business University of Utah Salt Lake City, UT 84112-8914 E-Mail: Erik.Snowberg@ubc.ca Stephanie W. Wang University of Pittsburgh Department of Economics 4906 Wesley W. Posvar Hall 230 South Bouquet Stre Pittsburgh, PA 15260 E-Mail: swwang@pitt.edu Colin Camerer Division of the Humanities and Social Sciences California Institute of Technology 1200 E. California Blvd. MC 228-77 Pasadena, CA 91125 E-Mail: camerer@hss.caltech.edu

Ghosting the Tax Authority: Fake Firms and Tax Fraud - Carrillo, Paul; Donaldson, Dave; Pomeranz, Dina; Singhal, Monica (National Bureau of Economic Research Working Paper Series, 2022)
An important but poorly understood form of firm tax evasion arises from the use of "ghost firms"—fake firms that issue fraudulent receipts so that their clients can claim false deductions. We provide a unique window into this global phenomenon using transaction-level tax data from Ecuador. Ghost transactions are widespread, prevalent among large firms and firms with high-income owners, and exhibit suspicious patterns in comparison to ordinary transactions: bunching at round numbers, at the end of the fiscal year, and just below financial system thresholds. We go on to study an innovative enforcement intervention that targeted ghost clients rather than ghosts themselves, which led to substantial tax recovery.
Author contact info: Paul Carrillo George Washington University 2115 G St. N.W. Suite 364 Washington, DC 20052 E-Mail: pcarrill@gwu.edu Dave Donaldson Department of Economics, E52-554 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4790 Fax: 617/253-1330 E-Mail: ddonald@mit.edu Dina Pomeranz Department of Economics University of Zurich Schoenberggasse 1 8057 Zurich Switzerland E-Mail: dinadpomeranz@gmail.com Monica Singhal Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530/754-1545 E-Mail: msinghal@ucdavis.edu

Operating Hedge and Gross Profitability Premium - Kogan, Leonid; Li, Jun; Zhang, Harold (National Bureau of Economic Research Working Paper Series, 2022)
We show theoretically that variable production costs lower systematic risk of firms’ cash flows if capital and variable inputs are complementary in firms’ production and input prices are pro-cyclical. In our dynamic model, this operating hedge effect is weaker for more profitable firms, giving rise to a gross profitability premium. Moreover, gross profitability and value factors are distinct and negatively correlated, and their premia are not captured by the CAPM. We estimate the model by the simulated method of moments, and find that its main implications for stock returns and cash flow dynamics are quantitatively consistent with the data.
Author contact info: Leonid Kogan MIT Sloan School of Management 100 Main Street, E62-636 Cambridge, MA 02142 Tel: 617/504-9728 Fax: 617/258-6855 E-Mail: lkogan@mit.edu Jun Li Office 14-510 Jindal School of Management University of Texas at Dallas 800 West Campbell Road Richardson Richardson, TX 75080 USA E-Mail: Jun.Li3@utdallas.edu Harold Zhang University of Texas at Dallas Jindal School of Management Richardson, TX 75083 USA Tel: (972) 883 4777 E-Mail: hxz054000@utdallas.edu

Global Supply Chain Pressures, International Trade, and Inflation - di Giovanni, Julian; Kalemli-Özcan, Ṣebnem; Silva, Alvaro; Yildirim, Muhammed A (National Bureau of Economic Research Working Paper Series, 2022)
We study the impact of the Covid-19 pandemic on Euro Area inflation and how it compares to the experiences of other countries, such as the United States, over the two-year period 2020-21. Our model-based calibration exercises deliver four key results: 1) Compositional effects – the switch from services to goods consumption – are amplified through global input-output linkages, affecting both trade and inflation. 2) Inflation can be higher under sector-specific labor shortages relative to a scenario with no such supply shocks. 3) Foreign shocks and global supply chain bottlenecks played an outsized role relative to domestic aggregate demand shocks in explaining Euro Area inflation over 2020-21. 4) International trade did not respond to changes in GDP as strongly as it did during the 2008-09 crisis despite strong demand for goods. These lower trade elasticities in part reflect supply chain bottlenecks. These four results imply that policies aimed at stimulating aggregate demand would not have produced as high an inflation as the one observed in the data without the negative sectoral supply shocks.
Author contact info: Julian di Giovanni Federal Reserve Bank of New York Research and Statistics Group 33 Liberty Street New York, NY 10045 E-Mail: juliandigiovanni@gmail.com Ṣebnem Kalemli-Özcan Department of Economics University of Maryland Tydings Hall 4118D College Park, MD 20742-7211 Tel: 301/405-3266 E-Mail: kalemli@econ.umd.edu Alvaro Silva Department of Economics University of Maryland Tydings Hall 4118A College Park, MD 20742-7211 E-Mail: asilvub@umd.edu Muhammed A. Yildirim Koc University Rumelifeneri Yolu Sariyer Istanbul 34450 TURKEY E-Mail: yildirim@gmail.com

Minimum Wages and Labor Markets in the Twin Cities - Karabarbounis, Loukas; Lise, Jeremy; Nath, Anusha (National Bureau of Economic Research Working Paper Series, 2022)
We present new evidence on the labor market effects of large minimum wage increases by examining the policy changes implemented by Minneapolis and Saint Paul. Beginning with synthetic difference-in-differences methods, we find that the increase in the minimum wage decreased substantially restaurant and retail employment, even after accounting for potential confounding effects from the pandemic and civil unrest. Next, using variation in exposure to the minimum wage across establishments and workers within zip codes and industries of the Twin Cities, we find employment effects that are about half as large as those from the time series. The cross-sectional estimates difference out contemporaneous city-industry effects across establishments and workers, but they do not include equilibrium effects induced by the minimum wage such as changes in entry. We quantify a model of establishment dynamics to reconcile the different estimates and argue that they plausibly reflect lower and upper bounds of employment losses. We use the model to show that our estimates are consistent with an establishment elasticity of labor demand of –1 and illustrate how they can inform deeper parameters characterizing product and labor market competition, factor substitution, and establishment dynamics.
Author contact info: Loukas Karabarbounis University of Minnesota Department of Economics Hanson Hall Minneapolis, MN 55455 Tel: 612-204-5498 E-Mail: loukas@umn.edu Jeremy Lise Department of Economics University of Minnesota E-Mail: jlise@umn.edu Anusha Nath Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: Anusha.Nath@mpls.frb.org

Will the Developing World’s Growing Middle Class Support Low Carbon Policies? - Kahn, Matthew E; Lall, Somik (National Bureau of Economic Research Working Paper Series, 2022)
As billions of people in the developing world seek to increase their living standards, their aspirations pose a challenge to global efforts to cut greenhouse gas emissions. The emerging middle class are buying and operating energy intensive durables ranging from vehicles to air conditioners to computers. Owners of these durables represent an interest group with a stake in opposing carbon pricing. The political economy of encouraging middle class support for carbon pricing hinges on offsetting its perceived negative income effects. Rising environmentalism in the developing world could also increase support for credible GHG reduction policy. We quantify these effects as we estimate Engel curves of durables ownership, compare the grid’s carbon intensity by nation and study the demographic correlates of support for prioritizing environmental protection.
Author contact info: Matthew E. Kahn Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: kahnme@usc.edu Somik Lall Lead Economist and Head of Climate Team Office of the Chief Economist for Equitable Growth, Finance, and Institutions World Bank 1818 H ST NW Washington DC, 20433 E-Mail: Slall1@worldbank.org

Intergenerational Transmission of Health at Birth: Fathers Matter Too! - Giuntella, Osea; La Mattina, Giulia; Quintana-Domeque, Climent (National Bureau of Economic Research Working Paper Series, 2022)
We use a unique data set of linked birth records from Florida to analyze the intergenerational transmission of health at birth by parental gender. We show that both paternal and maternal birth weights signiﬁcantly predict the child’s birth weight, even after accounting for all genetic and environmental factors that are common and time-invariant within a family. Our estimates reveal that a one standard deviation increase in mother’s birth weight (535 grams) translates into a 0.13-0.24 standard deviations increase in child’s birth weight (70-128 grams), accounting or not for maternal grandmother ﬁxed eﬀects. On the father’s side, we ﬁnd that a one standard deviation increase in father’s birth weight (563 grams) translates into a 0.10-0.15 standard deviations increase in child’s birth weight (56-78 grams), accounting or not for paternal grandmother ﬁxed eﬀects. The signiﬁcant role of both maternal and paternal health at birth in explaining oﬀspring health at birth is conﬁrmed when using alternative metrics: intrauterine growth, being small for gestational age or being too heavy (i.e., macrosomic).
Author contact info: Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Giulia La Mattina 4202 E. Fowler Avenue, CMC206A Tampa, FL 33620 E-Mail: glamattina@usf.edu Climent Quintana-Domeque University of Exeter Business School Department of Economics Streatham Court Rennes Drive Exeter EX4 4PU United Kingdom E-Mail: c.quintana-domeque@exeter.ac.uk

When Is Discrimination Unfair? - Kuhn, Peter J; Osaki, Trevor T (National Bureau of Economic Research Working Paper Series, 2022)
Using a vignette-based survey experiment on Amazon’s Mechanical Turk, we measure how people’s assessments of the fairness of race-based hiring decisions vary with the motivation and circumstances surrounding the discriminatory act and the races of the parties involved. Regardless of their political leaning, our subjects react in very similar ways to the employer’s motivations for the action, such as the quality of information on which statistical discrimination is based. Compared to conservatives, moderates and liberals are much less accepting of discriminatory actions, and consider the discriminatee’s race when making their fairness assessments. We describe four pre-registered models of fairness – (simple) utilitarianism, race-blind rules (RBRs), racial in-group bias, and belief-based utilitarianism (BBU) – and show that the latter two are inconsistent with major aggregate patterns in our data. Instead, we argue that a two-group framework, in which one group (mostly self-described conservatives) values employers’ decision rights and the remaining respondents value utilitarian concerns, explains our main findings well. In this model, both groups also value applying a consistent set of fairness rules in a race-blind manner.
Author contact info: Peter J. Kuhn Department of Economics University of California, Santa Barbara 2127 North Hall Santa Barbara, CA 93106 Tel: 805/893-3666 Fax: 805/893-8830 E-Mail: pjkuhn@econ.ucsb.edu Trevor T. Osaki E-Mail: tosaki@ucsb.edu

Data and Welfare in Credit Markets - Jansen, Mark; Nagel, Fabian; Yannelis, Constantine; Zhang, Anthony Lee (National Bureau of Economic Research Working Paper Series, 2022)
We show how to measure the welfare effects arising from increased data availability. When lenders have more data on prospective borrower costs, they can charge prices that are more aligned with these costs. This increases total social welfare and transfers surplus from borrowers to lenders. We show that the magnitudes of the welfare changes can be estimated using only quantity data and variation in prices. We apply the methodology on bankruptcy flag removals and find that removing prior bankruptcy information substantially increases the social surplus of previously bankrupt consumers, at the cost of a modest decrease in total social welfare. This suggests that flag removals have low efficiency costs for redistributing surplus to previously bankrupt borrowers. We show how the framework can be extended to incorporate adverse selection and imperfect competition.
Author contact info: Mark Jansen 1655 E. Campus Drive Salt Lake City, Utah 84112 United States Tel: 8012136910 E-Mail: mark.jansen@utah.edu Fabian Nagel University of Chicago Booth School of Business 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: fnagel0@chicagobooth.edu Constantine Yannelis Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 217/721-0587 E-Mail: constantine.yannelis@chicagobooth.edu Anthony Lee Zhang University of Chicago Booth School of Business 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: anthony.zhang@chicagobooth.edu

Common Fund Flows: Flow Hedging and Factor Pricing - Dou, Winston Wei; Kogan, Leonid; Wu, Wei (National Bureau of Economic Research Working Paper Series, 2022)
Active equity funds care about fund size, affected by fund flows that obey a strong factor structure with the common component responding to macroeconomic shocks. Funds hedge against common flows by tilting their portfolios toward low-flow-beta stocks, while household/retail and index investors overweight high-flow-beta stocks in equilibrium. Consequently, common flows earn a risk premium, leading to a multi-factor asset-pricing model resembling the ICAPM, even with myopic agents and unsophisticated fund clients. Exploiting quasi-experiments induced by the local-natural-disaster occurrences and the unexpected trade-war announcements, we find that an increased outflow risk faced by funds leads to more aggressive flow-hedging portfolio tilts.
Author contact info: Winston Wei Dou The Wharton School University of Pennsylvania 2318 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/746-0005 E-Mail: wdou@wharton.upenn.edu Leonid Kogan MIT Sloan School of Management 100 Main Street, E62-636 Cambridge, MA 02142 Tel: 617/504-9728 Fax: 617/258-6855 E-Mail: lkogan@mit.edu Wei Wu Department of Finance Mays Business School 360 Wehner Building (4218) Texas A&M University College Station, TX 77843-4218 E-Mail: wwu@mays.tamu.edu

Combating Cross-Border Externalities - Chen, Shiyi; Graff Zivin, Joshua S; Wang, Huanhuan; Xiong, Jiaxin (National Bureau of Economic Research Working Paper Series, 2022)
This paper investigates the impact of a pioneering pollution reduction program, the Ecological Compensation Initiative (ECI) in China, which establishes side payments between upstream and downstream provinces along the same river. The program includes both Coasian and pay-for-performance elements. Instructed by a theoretical model, we employ a difference-in-differences empirical design and find strong evidence that the ECI mitigates the spillover effect of water pollution at the province boundary and brings about sharp reductions in water pollutant emissions from upstream firms, especially those in heavily polluting industries. This initiative also reduces upstream firms’ output and pollution intensity relative to downstream firms. The impact is stronger for upstream firms closer to the river and the point at which it enters the downstream province. Further evidence shows a significant increase in the rate of firms’ entry into neighboring prefectures, but no impact on firms’ exit from that region due to the initiative. Evidence from similar programs, later established in other river systems, suggests that cross-jurisdictional negotiations can effectively mitigate cross-border pollution externalities.
Author contact info: Shiyi Chen School of Economics Fudan University 220 Handan Rd Yangpu District Shanghai China E-Mail: shiyichen@fudan.edu.cn Joshua S. Graff Zivin University of California, San Diego 9500 Gilman Drive, MC 0519 La Jolla, CA 92093-0519 Tel: 858/822-6438 E-Mail: jgraffzivin@ucsd.edu Huanhuan Wang East China Normal University School of Law Shanghai China E-Mail: hhwang@law.ecnu.edu.cn Jiaxin Xiong School of Economics Fudan University 220 Handan Rd Yangpu District Shanghai China E-Mail: jxxiong20@fudan.edu.cn

Attrition from Administrative Data: Problems and Solutions with an Application to Postsecondary Education - Foote, Andrew; Stange, Kevin M (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the bias arising from individuals’ migration from administrative outcome data, with a focus on the labor market consequences of postsecondary education. We find that out-of-state migration is particularly problematic for high-earners, flagship graduates, and certain majors. Consequently, the effect of graduating from a flagship university is 10% higher than one would estimate using in-state earnings exclusively, though the extent of bias differs substantially across contexts. The impact of obtaining a 2-year CTE credential is also understated, as are earnings differences across majors. Approaches to testing for and bounding this bias are considered.
Author contact info: Andrew Foote U.S. Census Bureau 4600 Silverhill Road Suitland, MD 20746 E-Mail: andrew.foote@census.gov Kevin M. Stange Gerald R. Ford School of Public Policy University of Michigan 5236 Weill Hall 735 South State Street Ann Arbor, MI 48109 Tel: 734/615-6990 E-Mail: kstange@umich.edu

The Value of Pharmacy Benefit Management - Mulligan, Casey B (National Bureau of Economic Research Working Paper Series, 2022)
In theory, equilibrium profits for drug patent holders would not involve significant restraints on production and patient utilization if the market had a mechanism for two-part pricing (Oi 1971) or quantity commitments (Murphy, Snyder, and Topel 2014). In fact, patent expiration has little effect on drug utilization especially when those drugs are delivered through insurance plans. This paper provides a quantitative model consistent with the theory and evidence in which pharmacy benefit management on behalf of insurance plans serves these and other purposes in both monopoly and oligopoly provider settings. Calibrating the model to the U.S. market, I conclude that pharmacy benefit management is worth at least $145 billion annually beyond its resource costs. PBM services add at least $192 billion annually in value to society compared to a manufacturer price-control regime. Requiring all PBM services to be self-provided by plan sponsors would forgo about 40 percent of the net value of PBM services largely by increasing management costs. Due to changes in the incidence of PBM services over the drug life cycle, the services encourage innovation even though they reduce the profits of incumbent manufacturers.
Author contact info: Casey B. Mulligan University of Chicago Department of Economics 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-9017 Fax: 773/702-8490 E-Mail: c-mulligan@uchicago.edu

Acquisitions, Management, and Efficiency in Rwanda's Coffee Industry - Macchiavello, Rocco; Morjaria, Ameet (National Bureau of Economic Research Working Paper Series, 2022)
Well-functioning markets allocate assets to owners that improve firms’ management and performance. We study the effects of ownership changes on coffee mills in Rwanda – an industry in which managing relationships with farmers and seasonal workers is important and that has seen many ownership changes in recent years. We combine administrative data, a survey panel of mills and an original survey of acquirers that allows us to construct acquirer-specific and target-specific control groups. A difference-in-differences design reveals that ownership changes do not improve performance unless the mill is acquired by a foreign firm. Our preferred interpretation – supported by detailed survey evidence that considers alternative hypotheses – is that foreign firms successfully implement management changes in key operational areas. Upon acquisition, both domestic and foreign owned mills attempt to implement similar changes, but domestic firms face resistance from workers and farmers. Domestic owners have relationships with their local communities, which can create opportunities to establish new mills and acquire existing ones. However, these same relationships create pressure to maintain status-quo relational arrangements, which makes it harder to implement managerial changes.
Author contact info: Rocco Macchiavello Management Department London School of Economics London United Kingdom E-Mail: R.Macchiavello@lse.ac.uk Ameet Morjaria Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: a.morjaria@kellogg.northwestern.edu

Real-Time Inequality - Blanchet, Thomas; Saez, Emmanuel; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
This paper constructs high-frequency and timely income distributions for the United States. We develop a methodology to combine the information contained in high-frequency public data sources—including monthly household and employment surveys, quarterly censuses of employment and wages, and monthly and quarterly national accounts statistics—in a unified framework. This allows us to estimate economic growth by income groups, race, and gender consistent with quarterly releases of macroeconomic growth, and to track the distributional impacts of government policies during and in the aftermath of recessions in real time. We test and successfully validate our methodology by implementing it retrospectively back to 1976. Analyzing the Covid-19 pandemic, we find that all income groups recovered their pre-crisis pretax income level within 20 months of the beginning of the recession. Although the recovery was primarily driven by jobs rather than wage growth, real wages experienced significant gains at the bottom of the distribution in 2021 and 2022, highlighting the equalizing effects of tight labor markets. After accounting for taxes and cash transfers, real disposable income for the bottom 50% was nearly 20% higher in 2021 than in 2019, but fell in 2022 as the expansion of the welfare state during the pandemic was rolled back. All estimates are available at https://realtimeinequality.org and are updated with each quarterly release of the national accounts, within a few hours.
Author contact info: Thomas Blanchet University of California Evans Hall #3880 Berkeley, CA 94720 United States E-Mail: thomas.blanchet@icloud.com Emmanuel Saez Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 Tel: 510/642-4631 Fax: 510/642-6615 E-Mail: saez@econ.berkeley.edu Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

STEM Summer Programs for Underrepresented Youth Increase STEM Degrees - Cohodes, Sarah R; Ho, Helen; Robles, Silvia C (National Bureau of Economic Research Working Paper Series, 2022)
The federal government and many individual organizations have invested in programs to support diversity in the STEM pipeline, including STEM summer programs for high school students, but there is little rigorous evidence of their efficacy. We fielded a randomized controlled trial to study a suite of such programs targeted to underrepresented high school students at an elite, technical institution. The STEM summer programs differ in their length (one week, six weeks, or six months) and modality (on-site or online). Students offered seats in the STEM summer programs are more likely to enroll in, persist through, and graduate from college, with gains in institutional quality coming from both the host institution and other elite universities. The programs also increase the likelihood that students graduate with a degree in a STEM field, with the most intensive program increasing four-year graduation with a STEM degree attainment by 33 percent. The shift to STEM degrees increases potential earnings by 2 to 6 percent. Program-induced gains in college quality fully account for the gains in graduation, but gains in STEM degree attainment are larger than predicted based on institutional differences.
Author contact info: Sarah Cohodes Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 E-Mail: scohodes@umich.edu Helen Ho The People Lab Harvard Kennedy School 79 John F. Kennedy Street Cambridge, MA 02138 E-Mail: helenho@hks.harvard.edu Silvia Robles Mathematica 220 E. Huron St. Ann Arbor, MI 48104 E-Mail: SRobles@mathematica-mpr.com

Restoring Confidence in Troubled Financial Institutions After a Financial Crisis - Calomiris, Charles W; Carlson, Mark (National Bureau of Economic Research Working Paper Series, 2022)
After an unprecedented number of banks suspended operations during the Panic of 1893, the head regulator of banks chartered by the United States government allowed about 100 banks to reopen after certifying their solvency. We evaluate whether actions by bank owners to change management, contract with depositors to extend liability maturity structure, write off bad assets, and/or inject capital affected bank survival and deposit retention. This historical episode is particularly informative because there was no expectation of government intervention. We find that contracting with depositors provided short-term benefits while dealing with bad assets was key for long-run viability.
Author contact info: Charles W. Calomiris Columbia Business School Kravis 1101 665 W 130th St. New York, NY 10027 Tel: 212/854-8748 Fax: 212/316-9219 E-Mail: cc374@columbia.edu Mark Carlson Federal Reserve Board 20th and Constitution Ave., NW Washington, DC 20551 E-Mail: mark.a.carlson@frb.gov

Trade Policy and Global Sourcing: An Efficiency Rationale for Tariff Escalation - Antràs, Pol; Fort, Teresa C; Gutiérrez, Agustín; Tintelnot, Felix (National Bureau of Economic Research Working Paper Series, 2022)
Import tariffs tend to be higher for final goods than for inputs, a phenomenon commonly referred to as tariff escalation. Yet neoclassical trade theory – and modern Ricardian trade models, in particular – predict that welfare-maximizing tariffs are uniform across sectors. We show that tariff escalation can be rationalized on efficiency grounds in the presence of scale economies. When both downstream and upstream sectors produce under increasing returns to scale, a unilateral tariff in either sector boosts the size and productivity of that sector, raising welfare. While these forces are reinforced up the chain for final-good tariffs, input tariffs may drive final-good producers to relocate abroad, mitigating their potential productivity benefits. The welfare benefits of final-good tariffs thus tend to be larger, with the optimal degree of tariff escalation increasing in the extent of downstream returns to scale. A quantitative evaluation of the US-China trade war demonstrates that any welfare gains from the increase in US tariffs are overwhelmingly driven by final-good tariffs.
Author contact info: Pol Antràs Department of Economics Harvard University 1805 Cambridge Street Littauer Center 210 Cambridge, MA 02138 Tel: 617/495-1236 Fax: 617/495-8570 E-Mail: pantras@fas.harvard.edu Teresa C. Fort Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 Tel: 603/646-8963 E-Mail: teresa.fort@tuck.dartmouth.edu Agustin Gutierrez Kenneth C. Griffin Department of Economics University of Chicago 5757 South University Avenue Chicago, IL 60637 E-Mail: agusting@uchicago.edu Felix Tintelnot Kenneth C. Griffin Department of Economics University of Chicago 5757 South University Avenue Chicago, IL 60637 Tel: 773/702-5403 E-Mail: felix.tintelnot@gmail.com

Training, Communications Patterns, and Spillovers Inside Organizations - Espinosa, Miguel; Stanton, Christopher T (National Bureau of Economic Research Working Paper Series, 2022)
Most organizations utilize hierarchies to facilitate specialization, with managers assisting workers on tasks beyond their capabilities. As workers gain skills, they require less help, freeing up manager time. In this paper, we estimate direct productivity treatment effects for individual workers and spillovers to managers after a randomly assigned training program for frontline workers in a Colombian government agency. Trained workers improved their individual production, while help requests to managers declined, enabling managers to focus on higher-value work. Accounting for vertical spillovers to managers meaningfully changes the organization's implied return on investment from training.
Author contact info: Miguel Espinosa Via Roentgen 1 E-Mail: miguel.espinosa@unibocconi.it Christopher T. Stanton 210 Rock Center Harvard University Harvard Business School Boston, MA 02163 Tel: 617/495-3795 E-Mail: christopher.t.stanton@gmail.com

Foundation of the Small Open Economy Model with Product Differentiation - Caliendo, Lorenzo; Feenstra, Robert C (National Bureau of Economic Research Working Paper Series, 2022)
We derive a small open economy (SOE) as the limit of an economy as the number or size of its trading partners goes to infinity and trade costs also go to infinity. We obtain this limit in the Armington, Eaton-Kortum, Krugman, and Melitz models. In all cases, the trade of the SOE with the foreign countries approaches a finite limit, and the domestic expenditure share for the SOE approaches a limit that is not zero or unity. The foreign countries can be either infinitely many SOEs, or alternatively, one or many large countries with domestic expenditure shares that approach unity. We illustrate the usefulness of this framework by obtaining a formula for the optimal tariff in the SOE -- depending on the elasticity of domestic wages with respect to the tariff -- that is consistent with all models.
Author contact info: Lorenzo Caliendo Yale University School of Management 135 Prospect Street New Haven, CT 06520 Tel: 203/432-4069 E-Mail: lorenzo.caliendo@yale.edu Robert C. Feenstra 2400 Rivendell Lane Davis, CA 95616 Tel: 530/574-7668 Fax: 530/752-9382 E-Mail: rcfeenstra@ucdavis.edu

Intermediary Balance Sheets and the Treasury Yield Curve - Du, Wenxin; Hébert, Benjamin M; Li, Wenhao (National Bureau of Economic Research Working Paper Series, 2022)
We document a regime change in the Treasury market post-Global Financial Crisis (GFC): dealers switched from net short to net long Treasury bonds. We construct “net-long” and “netshort” curves that account for balance sheet and financing costs, and show that actual yields moved from the net short curve pre-GFC to the net long curve post-GFC. Our theory shows the regime shift caused negative swap spreads and co-movement among swap spreads, dealer positions, and covered-interest-parity violations. Furthermore, the effects of various monetary and regulatory policies are regime-dependent. We highlight Treasury supply as a plausible driver of this regime shift.
Author contact info: Wenxin Du Columbia Business School 665 West 130th St. New York, NY 10027 Tel: 773/834-5354 E-Mail: wenxin.du@columbia.edu Benjamin M. Hébert Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 Tel: 617/869-8502 E-Mail: bhebert@stanford.edu Wenhao Li University of Southern California Marshall School of Business Los Angeles, CA E-Mail: liwenhao@marshall.usc.edu

The Shadow of the Neolithic Revolution on Life Expectancy: A Double-Edged Sword - Franck, Raphaël; Galor, Oded; Moav, Omer; Özak, Ömer (National Bureau of Economic Research Working Paper Series, 2022)
This research explores the persistent effect of the Neolithic Revolution on the evolution of life expectancy in the course of human history. It advances the hypothesis and establishes empirically that the onset of the Neolithic Revolution and the associated rise in infectious diseases triggered a process of adaptation reducing mortality from infectious diseases while increasing the propensity for autoimmune and inflammatory diseases. Exploiting an exogenous source of variation in the timing of the Neolithic Revolution across French regions, the analysis establishes the presence of these conflicting forces - the beneficial effects on life expectancy before the second epidemiological transition and their adverse effects thereafter.
Author contact info: Raphaël Franck Hebrew University of Jerusalem Department of Economics Mount Scopus Jerusalem 91905 Israel E-Mail: raphael.franck@mail.huji.ac.il Oded Galor Department of Economics Brown University Box B Providence, RI 02912 Tel: 401/863-2117 Fax: 401/863-1970 E-Mail: oded_galor@brown.edu Omer Moav University of Warwick and IDC E-Mail: omer.moav100@gmail.com Omer Ozak 3300 Dyer St, Suite 301R Box 0496 3300 Dyer Street Suite 301, Umphrey Lee Center Box 0496 Dallas, TX 75275 United States Tel: 2147682755 Fax: 214-768-1821 E-Mail: ozak.smu@gmail.com

Pareto Improvements in the Contest for College Admissions - Krishna, Kala; Lychagin, Sergey; Olszewski, Wojciech; Siegel, Ron; Tergiman, Chloe (National Bureau of Economic Research Working Paper Series, 2022)
College admissions in many countries are based on a centrally administered test. Applicants invest a great deal of resources to improve their performance on the test, and there is growing concern about the large costs associated with these activities. We consider modifying such tests by introducing performance-disclosure policies that pool intervals of performance rankings, and investigate how such policies can improve students’ welfare in a Pareto sense. Pooling aﬀects the equilibrium allocation of studentso colleges, which hurts some students and beneﬁts others, but also aﬀects the eﬀort students exert. We characterize the Pareto frontier of Pareto improving policies, and also identify improvements that are robust to the distribution of college seats. We illustrate the potential applicability of our results with an empirical estimation that uses data on college admissions in Turkey. We ﬁnd that a policy that pools a large fraction of the lowest performing students leads to a Pareto improvement in a contest based on the estimated parameters. We then conduct a laboratory experiment based on the estimated parameters to examine the eﬀect of such pooling on subjects’ behavior. The ﬁndings generally support our theoretical predictions. Our work suggests that identifying and introducing Pareto improving performance-disclosure policies may be a feasible and practical way to improve college admissions based on centralized tests.
Author contact info: 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 Sergey Lychagin Department of Economics Central European University Nador u. 9 Budapest 1051 Hungary E-Mail: lychagin@gmail.com Wojciech Olszewski 2001 Sheridan Road Evanston, IL 60208 E-Mail: wo@northwestern.edu Ron Siegel The Pennsylvania State University 412 Kern Graduate Building University Park, PA 16801 E-Mail: ron.siegel@gmail.com Chloe Tergiman Smeal College of Business Penn State University E-Mail: cjt16@psu.edu

Screening Adaptive Cartels - Ortner, Juan M; Chassang, Sylvain; Kawai, Kei; Nakabayashi, Jun (National Bureau of Economic Research Working Paper Series, 2022)
We propose an equilibrium theory of data-driven antitrust oversight in which regulators launch investigations on the basis of suspicious bidding patterns and cartels can adapt to the statistical screens used by regulators. We emphasize the use of asymptotically safe tests, i.e. tests that are passed with probability approaching one by competitive firms, regardless of the underlying economic environment. Our main result establishes that screening for collusion with safe tests is a robust improvement over laissez-faire. Safe tests do not create new collusive equilibria, and do not hurt competitive industries. In addition, safe tests can have strict bite, including unraveling all collusive equilibria in some settings. We provide evidence that cartel adaptation to regulatory oversight is a real concern.
Author contact info: Juan M. Ortner Boston University 270 Bay State Rd. Boston, MA 02215 E-Mail: jortner@bu.edu Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: chassang@princeton.edu Kei Kawai Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 E-Mail: kei@berkeley.edu Jun Nakabayashi Kyoto University Yoshidahonmachi, Sakyo Ward Kyoto Osaka 606-8317 Japan E-Mail: nakabayashi.1@eco.kindai.ac.jp

Using Divide-and-Conquer to Improve Tax Collection - Kapon, Samuel; Del Carpio, Lucia; Chassang, Sylvain (National Bureau of Economic Research Working Paper Series, 2022)
Tax collection by capacity constrained governments may exhibit multiple equilibria: if delinquency is low, limited enforcement capacity is enough to discipline deviators; if delinquency is high, limited enforcement capacity is overstretched and no longer dissuasive. In principle, divide-and-conquer, a theoretically important but untested principle from mechanism design, can be used to unravel the undesirable high-delinquency equilibrium. We investigate the challenge of doing so in practice. Our preferred mechanism takes the form of Prioritized Iterative Enforcement (PIE). Tax-payers are assigned a rank trading-off expected collection and expected capacity use. Tax-payers are then iteratively threatened in small groups for which collection capacity is sufficient to induce compliance. After repayment occurs, unused collection capacity is released to issue the next round of threats. In partnership with a district of Lima (Peru) we experimentally evaluate the impact of PIE on the collection of property taxes from 13432 tax-payers. Reduced-form evidence both validates and refines the theoretical benchmark. A structural model of tax-payer behavior suggests that, keeping the number of collection actions fixed, PIE would increase tax revenue by 11.3%.
Author contact info: Samuel Kapon Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: kapon@princeton.edu Lucia Del Carpio INSEAD 3022 Boulevard de Constance 77300 Fontainebleau France E-Mail: Lucia.delcarpio@insead.edu Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: chassang@princeton.edu

The Virtue of Complexity in Return Prediction - Kelly, Bryan T; Malamud, Semyon; Zhou, Kangying (National Bureau of Economic Research Working Paper Series, 2022)
Much of the extant literature predicts market returns with “simple” models that use only a few parameters. Contrary to conventional wisdom, we theoretically prove that simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. We empirically document the virtue of complexity in US equity market return prediction. Our findings establish the rationale for modeling expected returns through machine learning.
Author contact info: Bryan T. Kelly Yale School of Management 165 Whitney Ave. New Haven, CT 06511 Tel: 203-432-2221 E-Mail: bryan.kelly@yale.edu Semyon Malamud Swiss Finance Institute @ EPFL Quartier UNIL-Dorigny, Extranef 213 CH - 1015 Lausanne Switzerland E-Mail: semyon.malamud@epfl.ch Kangying Zhou Yale University 165 Whitney Ave Ph.D. Suite New Haven, CT 06511 Tel: 8729047871 E-Mail: kangying.zhou@yale.edu

Information Spillovers and Sovereign Debt: Theory Meets the Eurozone Crisis - Cole, Harold L; Neuhann, Daniel; Ordoñez, Guillermo (National Bureau of Economic Research Working Paper Series, 2022)
We develop a theory of information spillovers in sovereign bond markets in which investors can acquire information about default risk before trading in primary and secondary markets. If primary markets are structured as multi-unit discriminatory-price auctions, an endogenous winner’s curse leads to strategic complementarities in information acquisition. As a result, shocks to default risk in one country may trigger crisis episodes with widespread information acquisition, sharp increases in the level and volatility of yields in risky countries, falling yields in safe countries, endogenous market segmentation, and arbitrage profits between primary and secondary markets. These predictions are consistent with the behavior of primary and secondary market yields, market segmentation, and measures of information acquisition during the Eurozone sovereign debt crisis.
Author contact info: Harold L. Cole Economics Department University of Pennsylvania 3718 Locust Walk 160 McNeil Building Philadelphia, PA 19104 Tel: 215-898-7788 E-Mail: colehl@sas.upenn.edu Daniel Neuhann Department of Finance CBA 6.278 McCombs School of Business 2110 Speedway, Stop B6600 Austin, TX 78712 Tel: 512-232-9375 E-Mail: daniel.neuhann@mccombs.utexas.edu Guillermo Ordoñez University of Pennsylvania Department of Economics PCPSE - Room 505 133 South 36th Street Philadelphia, PA 19104 Tel: (215) 898-1875 Fax: (215) 573-2057 E-Mail: ordonez@econ.upenn.edu

The Privacy Elasticity of Behavior: Conceptualization and Application - Dekel, Inbal; Cummings, Rachel; Heffetz, Ori; Ligett, Katrina (National Bureau of Economic Research Working Paper Series, 2022)
We propose and initiate the study of privacy elasticity—the responsiveness of economic variables to small changes in the level of privacy given to participants in an economic system. Individuals rarely experience either full privacy or a complete lack of privacy; we use differential privacy—a computer-science theory increasingly adopted by industry and government—as a standardized means of quantifying continuous privacy changes. The resulting privacy measure implies a privacy-elasticity notion that is portable and comparable across contexts. We discuss applications, and demonstrate the feasibility of this approach by estimating the privacy elasticity of public-good contributions in a lab experiment.
Author contact info: Inbal Dekel The Bogen Family Department of Economics The Hebrew University of Jerusalem Jerusalem Israel E-Mail: inbal.dekel1@mail.huji.ac.il Rachel Cummings Industrial Engineering and Operations Research, Columbia University 535E S.W. Mudd Mail Code: 4704 New York, NY 10027 E-Mail: rac2239@columbia.edu 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 Katrina Ligett The Rachel and Selim Benin School of Computer Science and Engineering The Hebrew University of Jerusalem Jerusalem Israel E-Mail: katrina.ligett@mail.huji.ac.il

Political Adverse Selection - Bursztyn, Leonardo; Kolstad, Jonathan T; Rao, Aakaash; Tebaldi, Pietro; Yuchtman, Noam (National Bureau of Economic Research Working Paper Series, 2022)
We study how the politicization of policies designed to correct market failures can undermine their effectiveness. The Patient Protection and Affordable Care Act (ACA) was among the most politically divisive expansions of the US government. We examine whether partisanship distorted enrollment and market outcomes in the ACA insurance marketplaces. Controlling for observable characteristics and holding fixed plans and premiums available, Republicans enrolled less than Democrats and independents in ACA marketplace plans. Selection out of the ACA marketplaces was strongest among Republicans with lower expected healthcare costs, generating adverse selection. Computing enrollment and average cost with and without partisan differences, we find that this political adverse selection reduced enrollment by around three million people and raised average costs in the marketplaces, increasing the level of public spending necessary to provide subsidies to low-income enrollees by around $105 per enrollee per year. Lower enrollments and higher costs are concentrated in more Republican areas, potentially contributing to polarized views of the ACA.
Author contact info: Leonardo Bursztyn Department of Economics University of Chicago 1126 E. 59th Street Chicago, IL 60637 E-Mail: bursztyn@g.uchicago.edu Jonathan T. Kolstad Haas School of Business University of California, Berkeley Berkeley, CA 94720 E-Mail: jkolstad@berkeley.edu Aakaash Rao Harvard University Department of Economics Littauer Center of Public Administration 1805 Cambridge St Cambridge, MA 02138 Tel: 5129248016 E-Mail: arao@g.harvard.edu Pietro Tebaldi Department of Economics Columbia University IAB, MC 3308 New York, NY 10027 E-Mail: pt2571@columbia.edu Noam Yuchtman University of Oxford Department of Economics Manor Rd Oxford OX1 3UQ United Kingdom E-Mail: noam.yuchtman@economics.ox.ac.uk

Can Fiscal Externalities Be Internalized? - Luttmer, Erzo F.P. (National Bureau of Economic Research Working Paper Series, 2022)
Subsidies and in-kind transfers give rise to negative fiscal externalities. However, internalizing negative fiscal externalities through taxation would undo the subsidy or in-kind transfer that caused them. Similarly, positive fiscal externalities cannot be internalized though government subsidies. This paper describes a mechanism that transfers fiscal externalities from the government to private parties. Such transfers generate incentives within the private sector to reduce inefficiencies caused by fiscal externalities. Thus, the paper offers a straightforward, but powerful, insight: transferring fiscal externalities to third parties extends the reach of the Coase Theorem to inefficiencies stemming from fiscal externalities.
Author contact info: Erzo F.P. Luttmer 6106 Rockefeller Center, Room 305 Department of Economics Dartmouth College Hanover, NH 03755 Tel: 603/646-6479 E-Mail: Erzo.FP.Luttmer@Dartmouth.Edu

Are Effective Teachers for Students with Disabilities Effective Teachers for All? - Wood, W. Jesse; Lai, Ijun; Filosa, Neil R; Imberman, Scott A; Jones, Nathan D; Strunk, Katharine O (National Bureau of Economic Research Working Paper Series, 2022)
The success of many students with disabilities (SWDs) depends on access to high-quality general education teachers. Yet, most measures of teacher value-added measures (VAM) fail to distinguish between a teacher’s effectiveness in educating students with and without disabilities. We create two VAM measures: one focusing on teachers’ effectiveness in improving outcomes for SWDs, and one for non-SWDs. We find top-performing teachers for non-SWDs often have relatively lower VAMs for SWDs, and that SWDs sort to teachers with lower scores in both VAMs. Overall, SWD-specific VAMs may be more suitable for identifying which teachers have a history of effectiveness with SWDs and could play a role in ensuring that students are being optimally assigned to these teachers.
Author contact info: W. Jesse Wood E-Mail: wood.w.jesse@gmail.com Ijun Lai Mathematica 505 14th St. Oakland, CA 94612 Tel: 510-830-3700 E-Mail: ijun.lai@gmail.com Neil R. Filosa E-Mail: filosane@msu.edu Scott A. Imberman Michigan State University 486 W. Circle Drive 110 Marshall-Adams Hall East Lansing, MI 48824-1038 E-Mail: imberman@msu.edu Nathan Jones Boston University Wheelock College of Education & Human Development Two Silber Way Boston, MA 02215 E-Mail: ndjones@bu.edu Katharine O. Strunk College of Education Michigan State University 238 Erickson Hall 620 Farm Lane East Lansing, MI 48824 E-Mail: kstrunk@msu.edu

u* = √uv - Michaillat, Pascal; Saez, Emmanuel (National Bureau of Economic Research Working Paper Series, 2022)
Most governments are mandated to maintain their economies at full employment. We propose that the best marker of full employment is the efficient unemployment rate, u*. We define u* as the unemployment rate that minimizes the nonproductive use of labor—both jobseeking and recruiting. The nonproductive use of labor is well measured by the number of jobseekers and vacancies, u + v. Through the Beveridge curve, the number of vacancies is inversely related to the number of jobseekers. With such symmetry, the labor market is efficient when there are as many jobseekers as vacancies (u = v), too tight when there are more vacancies than jobseekers (v > u), and too slack when there are more jobseekers than vacancies (u > v). Accordingly, the efficient unemployment rate is the geometric average of the unemployment and vacancy rates: u* = √uv. We compute u* for the United States between 1930 and 2022. We find for instance that the US labor market has been over full employment (u < u*) since May 2021.
Author contact info: Pascal Michaillat Economics Department University of California, Santa Cruz 1156 High Street Santa Cruz, CA 95064 E-Mail: pascal.michaillat@gmail.com Emmanuel Saez Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 Tel: 510/642-4631 Fax: 510/642-6615 E-Mail: saez@econ.berkeley.edu

Fed Implied Market Prices and Risk Premia - Calomiris, Charles W; Harris, Joanna; Mamaysky, Harry; Tessari, Cristina (National Bureau of Economic Research Working Paper Series, 2022)
We introduce FDIF, a measure of Fed communication surprise based on the text of FOMC statements. FDIF measures the difference between text-implied and actual values of key market variables. Positive FDIF of countercyclical variables (e.g., credit spreads) is associated with negative macroeconomic forecast revisions; the opposite holds for procyclical variables. Industries that hedge bad FDIF news earn low returns on FOMC announcement days, but high returns on non-FOMC days. The opposite holds for FDIF-exposed industries, and the return differences are large. Controlling for FDIF exposure, rate-based policy surprise measures are not priced in the cross-section of industry returns.
Author contact info: Charles W. Calomiris Columbia Business School Kravis 1101 665 W 130th St. New York, NY 10027 Tel: 212/854-8748 Fax: 212/316-9219 E-Mail: cc374@columbia.edu Joanna Harris The University of Chicago Harris School of Public Policy E-Mail: joanna.harris@chicagobooth.edu Harry Mamaysky Columbia Business School Kravis 1153 665 W 130th St. New York, NY 10027 E-Mail: hm2646@columbia.edu Cristina Tessari E-Mail: cristina.tessari@gs.com

Officer-Involved: The Media Language of Police Killings - Moreno-Medina, Jonathan; Ouss, Aurelie; Bayer, Patrick; Ba, Bocar A (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines language patterns in US television news coverage of police killings. We first document that the media employ semantic structures that obfuscate responsibility—such as passive voice, nominalizations, and intransitive verbs—more frequently for police killings than for civilian killings. Using field variation and an online experiment, we demonstrate that these language differences matter. In the field, we find that people who happened to have taken a survey just after more obfuscatory coverage of a police killing are more likely to support police funding. In our online experiment, participants are less likely to hold police officers morally responsible and demand penalties when exposed to obfuscatory language, especially when the victim is unarmed. Returning to the news data, we find higher use of obfuscatory language when victims are unarmed, when video footage is available, or when the suspect is not fleeing—in other words, situations when obfuscation matters most. Turning to the causes of this differential obfuscation, our evidence is not consistent with either demand-side drivers or supply-side factors associated with TV station ownership and political leaning. Instead, our results point to original narratives crafted by police departments as a more likely driver of obfuscation. Our study emphasizes the importance of considering semantic language structures in understanding how media shapes perceptions, extending beyond coverage quantity and slant.
Author contact info: Jonathan Moreno-Medina Department of Economics University of Texas at San Antonio Business Building One UTSA Circle San Antonio, TX 78249 E-Mail: jonathan.moreno-medina@utsa.edu Aurelie Ouss Department of Criminology University of Pennsylvania 571 McNeil Building 3718 Locust Walk Philadelphia, PA 19104 Fax: 215/746-0592 E-Mail: aouss@upenn.edu Patrick Bayer Department of Economics Duke University 213 Social Sciences Durham, NC 27708 Tel: 919/660-1832 E-Mail: patrick.bayer@duke.edu Bocar A. Ba Department of Economics Duke University 213 Social Sciences Durham, NC 27708 E-Mail: bocar.ba@duke.edu

Waivers for the Public Service Loan Forgiveness Program: Who Would Benefit from Takeup? - Briones, Diego A; Ruby, Nathaniel; Turner, Sarah (National Bureau of Economic Research Working Paper Series, 2022)
For workers employed in the public and non-profit sectors, the Public Service Loan Forgiveness (PSLF) program offers the potential for full forgiveness of federal student loans for those with 10-years of full-time work experience. In practice, the benefits of the PSLF program have been illusory for many. In the first year of eligibility for forgiveness (2017), only 96 borrowers claimed benefits and even by the end of April of 2022 only 130,730 had received benefits. Administrative problems related to the certification of public service employment and the determination of qualifying loans led the Department of Education to issue temporary waivers (which expire in October of 2022) which essentially provide a path to forgiveness retroactively. In this paper, we explore the overall impact and distributional implications of potential full participation in loan forgiveness enabled by the PSLF waiver program using the 2018 Survey of Income and Program Participation (SIPP). Our estimates identify more than $100 billion in loan forgiveness available to as many as 3.5 million borrowers through the PSLF waiver program. Potential beneficiaries of this initiative are disproportionately employed in occupations like teaching and health care. Full take-up of the PSLF waiver would lead to a narrowing of the racial gap in student debt burden. However, the distribution of potential benefits of the PSLF waiver depends critically on the extent to which those with high income or advanced degrees are differentially likely to take-up benefits conditional on eligibility.
Author contact info: Diego A. Briones Department of Economics University of Virginia Monroe Hall 248 McCormick Rd Charlottesville, VA 22904 E-Mail: dab5xq@virginia.edu Nathaniel Ruby Department of Economics University of Virginia McCormick Road Monroe Hall Charlottesville, VA 22904 E-Mail: nathaniel.ruby@email.virginia.edu Sarah Turner Department of Economics University of Virginia Monroe Hall 248 McCormick Rd Charlottesville, VA 22904 Tel: 434/924-7857 Fax: 434/924-1384 E-Mail: set5h@virginia.edu

Local Projections vs. VARs: Lessons From Thousands of DGPs - Li, Dake; Plagborg-Møller, Mikkel; Wolf, Christian K (National Bureau of Economic Research Working Paper Series, 2022)
We conduct a simulation study of Local Projection (LP) and Vector Autoregression (VAR) estimators of structural impulse responses across thousands of data generating processes, designed to mimic the properties of the universe of U.S. macroeconomic data. Our analysis considers various identification schemes and several variants of LP and VAR estimators. A clear bias-variance trade-off emerges: LP estimators have lower bias than VAR estimators but substantially higher variance at intermediate and long horizons. Consequently, unless researchers are overwhelmingly concerned with bias, shrinkage via Bayesian VARs or penalized LPs is attractive.
Author contact info: Dake Li E-Mail: dakel@princeton.edu Mikkel Plagborg-Møller Princeton University Department of Economics Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 6092589806 E-Mail: mikkelpm@princeton.edu Christian K. Wolf MIT Department of Economics The Morris and Sophie Chang Building 50 Memorial Drive Cambridge, MA 02139 E-Mail: ckwolf@mit.edu

How Did Federal Aid to States and Localities Affect Testing and Vaccine Delivery? - Clemens, Jeffrey; Hoxie, Philip G; Kearns, John; Veuger, Stan (National Bureau of Economic Research Working Paper Series, 2022)
We estimate whether federal aid for state and local governments played a role in advancing population testing for COVID-19 and the administration of vaccines. To overcome biases that can result from the endogeneity of federal aid allocations, we use an instrumental-variables estimator reliant on the substantial variation in federal aid predicted by variation in states’ congressional representation. We find that federal fiscal assistance dollars had a modest if any impact on the pace of vaccine rollouts, may have improved the equitability of vaccine administration, and had a substantial impact on the volume of tests administered. Regarding the total number of vaccines delivered, we estimate that an additional $1,000 in fiscal relief per resident, which would amount to $330 billion nationwide, translated into just under 1,200 extra doses of the vaccine being delivered per 100,000 people, with the upper bound of our confidence interval suggesting that we can rule out effects in excess of 7,030 extra doses per 100,000 people. We find that federal dollars predict a smaller gap between the vaccination rates of those with a college education relative to those with a high school education. Finally, our baseline estimate implies that each $1,000 in COVID-19 relief aid per capita generated 55,850 additional tests per 100,000 people.
Author contact info: Jeffrey Clemens Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-5713 E-Mail: jeffclemens@ucsd.edu Philip G. Hoxie Department of Economics University of California San Diego 9500 Gilman Dr. #0508 La Jolla, CA 92093 E-Mail: phoxie@ucsd.edu John Kearns American Enterprise Institute 1789 Massachusetts Avenue Washington, DC 20036 E-Mail: John.Kearns@aei.org Stan Veuger American Enterprise Institute 1789 Massachusetts Avenue Washington, DC 20036 E-Mail: stan.veuger@aei.org

The Quality of Financial Advice: What Influences Client Recommendations? - d'Astous, Philippe; Gemmo, Irina; Michaud, Pierre-Carl (National Bureau of Economic Research Working Paper Series, 2022)
In this paper, we conduct an experiment with a large sample of financial planner professionals in Canada to elicit factors which may influence client recommendations. Using repeated client vignettes, we find that recommendations are often in-line with what one would expect from economic theory. In particular, advice is sensitive in expected ways to relative costs and benefits of particular options. In some domains, we find evidence that planners are more likely to recommend products they own themselves, their spouse owns, or they are licensed to sell. In the investment domain, we also find that planners are more likely to recommend products that clients inquire about even when this type of solicitation is randomized across clients and options. Finally, we find that planners are systematically sensitive to the gender of the client even when gender is uninformative regarding which recommendation to make.
Author contact info: Philippe d'Astous Associate Professor Finance Department HEC Montreal Canada E-Mail: philippe.dastous@hec.ca Irina Gemmo Assistant Professor Finance Department HEC Montreal Canada E-Mail: irina.gemmo@hec.ca Pierre-Carl Michaud HEC Montréal 3000 Côte-Sainte-Catherine Road Montréal QC H3T 2A7 Tel: 514/340-6466 E-Mail: pierre-carl.michaud@hec.ca

Persecution and Migrant Self-Selection: Evidence from the Collapse of the Communist Bloc - Abramitzky, Ran; Baseler, Travis; Sin, Isabelle (National Bureau of Economic Research Working Paper Series, 2022)
How does persecution affect who migrates? We analyze migrants’ self-selection out of the USSR and its satellite states before and after the collapse of Communism using census microdata from the three largest destination countries: Germany, Israel, and the United States. We find that migrants arriving before and around the time of the collapse (who were more likely to have moved because of persecution) were more educated and had better labor market outcomes in the destination than those arriving later. This change is not fully explained by the removal of emigration restrictions in the Communist Bloc. Instead, we show that this pattern is consistent with more positive self-selection of migrants who are motivated by persecution. When the highly educated disproportionately forgo migrating to enjoy the amenities of their home country, persecution can induce them to leave.
Author contact info: Ran Abramitzky Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-9276 Fax: 650/725-5702 E-Mail: ranabr@stanford.edu Travis Baseler E-Mail: travis.baseler@rochester.edu Isabelle Sin Motu Economic and Public Policy Research Level 1 97 Cuba Street Wellington 6142 New Zealand E-Mail: isabelle.sin@gmail.com

Shareholder Power and the Decline of Labor - Falato, Antonio; Kim, Hyunseob; von Wachter, Till M (National Bureau of Economic Research Working Paper Series, 2022)
Shareholder power in the US grew over recent decades due to a steep rise in concentrated institutional ownership. Using establishment-level data from the US Census Bureau’s Longitudinal Business Database for 1982-2015, this paper examines the impact of increases in concentrated institutional ownership on employment, wages, shareholder returns, and labor productivity. Consistent with theory of the firm based on conflicts of interests between shareholders and stakeholders, we find that establishments of firms that experience an increase in ownership by larger and more concentrated institutional shareholders have lower employment and wages. This result holds in both panel regressions with establishment fixed effects and a difference-in-differences design that exploits large increases in concentrated institutional ownership, and is robust to controls for industry and local shocks. The result is more pronounced in industries where labor is relatively less unionized, in more monopsonistic local labor markets, and for dedicated and activist institutional shareholders. The labor losses are accompanied by higher shareholder returns but no improvements in labor productivity, suggesting that shareholder power mainly reallocates rents away from workers. Our results imply that the rise in concentrated institutional ownership could explain about a quarter of the secular decline in the aggregate labor share.
Author contact info: Antonio Falato Federal Reserve Board Mail Stop #89 20th Street & Constitution Ave. NW Washington, DC 20551 Tel: 202-452-2861 E-Mail: antonio.falato@frb.gov Hyunseob Kim Federal Reserve Bank of Chicago 230 South LaSalle St. Chicago, IL 60604 United States E-Mail: hyunseob.kim@chi.frb.org Till M. von Wachter Department of Economics University of California, Los Angeles 8283 Bunche Hall MC 147703 Los Angeles, CA 90095 Tel: 310-825-5665 Fax: 310-825-9528 E-Mail: tvwachter@econ.ucla.edu

Economic vs. Epidemiological Approaches to Measuring the Human Capital Impacts of Infectious Disease Elimination - Chuard, Caroline; Schwandt, Hannes; Becker, Alexander D; Haraguchi, Masahiko (National Bureau of Economic Research Working Paper Series, 2022)
A rich economic literature has examined the human capital impacts of disease-eliminating health interventions, such as the rollout of new vaccines. This literature is based on reduced-form approaches which exploit proxies for disease burden, such as mortality, instead of actual infection counts, which are difficult to measure. We develop an epidemiological dynamic accounting model based on the susceptible-infected-recovered (SIR) framework to derive precise measles infection shares across U.S. cohorts born around the introduction of the measles vaccine. Measles is highly infectious and fully immunizing which makes the disease an ideal candidate for epidemiological modeling. Our epidemiological model is strongly predictive of future measles outbreaks but the derived measles infection shares are not systematically related to cohorts' later educational, economic, or health outcomes. The reduced-form approach, on the other hand, shows that these long-term outcomes strongly improved among vaccinated cohorts in states with high pre-vaccine measles mortality. Our results suggest that differences in disease severity are more relevant for long-term human capital impacts than raw differences in actual infection rates, supporting the reduced-form approach used in the economic literature.
Author contact info: Caroline Chuard Varnbüelstrasse 14 St. Gallen 9000 Switzerland E-Mail: caroline.chuard@unisg.ch Hannes Schwandt School of Education and Social Policy Northwestern University 2120 Campus Drive Evanston, Il 60208 E-Mail: schwandt@northwestern.edu Alexander D. Becker 144 Main St Whitehouse Station, NJ 08889 United States E-Mail: alexdavidbecker@gmail.com Masahiko Haraguchi Harvard T.H. Chan School of Public Health Harvard University 677 Huntington Avenue Boston, MA 02115 E-Mail: mharaguchi@hsph.harvard.edu

Effects of Restrictive Abortion Legislation on Cohort Mortality Evidence from 19th Century Law Variation - Lahey, Joanna N; Wanamaker, Marianne H (National Bureau of Economic Research Working Paper Series, 2022)
Recent studies based on 20th century US data conclude that abortion access raises children’s average socioeconomic outcomes. We generalize a model of fertility, highlighting assumptions under which these abortion predictions can be reversed. Using 19th century abortion restrictions, we empirically demonstrate these points. Despite a more than 5 percent increase in birth rates among abortion-restricted cohorts, we find little evidence of negative selection at birth. Longevity was affected nevertheless; in the first ten years of life, children in these larger cohorts died of infectious disease more frequently. These mortality effects diminish with age, potentially reversing at older ages as a result of disease immunity or other offsetting factors.
Author contact info: Joanna Lahey The Bush School Texas A&M University Mailstop 4220 College Station, TX 77843 Tel: 979/458-3463 E-Mail: jlahey47@gmail.com Marianne H. Wanamaker Department of Economics University of Tennessee 524 Stokely Management Center Knoxville, TN 37996 Tel: 865/974-1700 E-Mail: wanamaker@utk.edu

Dependent Coverage and Parental "Job Lock": Evidence from the Affordable Care Act - Bae, Hannah; Meckel, Katherine; Shi, Maggie (National Bureau of Economic Research Working Paper Series, 2022)
A common feature of employer-sponsored insurance is coverage for dependents. While prior work shows that employees trade off job mobility for their own coverage, there is less evidence on the intra-family spillovers of dependent coverage onto parental labor supply. We study this using a panel of insurance claims that links dependent insurance enrollment with a proxy for parental job tenure. We develop a regression discontinuity design that exploits variation in coverage eligibility by dependent birth date from the Affordable Care Act. We find that a one percent increase in the dependent enrollment likelihood increases parental job retention by 0.20 percent.
Author contact info: Hannah Bae 9500 Gilman Dr. #0508 La Jolla, CA 92093 Tel: 8583448942 E-Mail: hbae@ucsd.edu Katherine Meckel Department of Economics Econ 210 University of California at San Diego 9500 Gilman Drive #0508 LaJolla, CA 92093 E-Mail: kmeckel@ucsd.edu Maggie Shi Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: m.shi@uchicago.edu

Optimal Income Taxation - Kaplow, Louis (National Bureau of Economic Research Working Paper Series, 2022)
This article explores subjects in optimal income taxation characterized by recent research interest, practical importance in light of concerns about inequality, potential for misunderstanding, and prospects for advancement. Throughout, the analysis highlights paths for further investigation. Areas of focus include multidimensional abilities and endogenous wages; asymmetric information and the income of founders; production and consumption externalities from labor effort; market power and rents; behavioral phenomena relating to perceptions of the income tax schedule, myopic labor supply, and the interactions of savings, savings policies, and labor supply; optimal income transfers; the relationship between optimal income taxation and the use of other instruments; and issues relating to the social welfare function and utility functions, including nonwelfarist objectives, welfare weights, heterogeneous preferences, and taxation of the family.
Author contact info: Louis Kaplow Harvard University Hauser 322 Cambridge, MA 02138 Tel: 617/495-4101 Fax: 617/496-4880 E-Mail: meskridge@law.harvard.edu

Decomposing Trends in U.S. Air Pollution Disparities from Electricity - Hernandez-Cortes, Danae; Meng, Kyle C; Weber, Paige E (National Bureau of Economic Research Working Paper Series, 2022)
This paper quantifies and decomposes recent trends in U.S. PM2.5 disparities from the electricity sector using a high-resolution pollution transport model. Between 2000-2018, PM2.5 concentrations from electricity fell by 89% for the average individual, more than double the decline rate in overall U.S. ambient PM2.5 concentrations. Across racial/ethnic groups, we detect a dramatic convergence: since 2000, the Black-White PM2.5 disparity from electricity has narrowed by 95% and the Hispanic-White PM2.5 disparity has narrowed by 93%, though these disparities still exist in 2018. A decomposition reveals nearly all of these disparity trends can be attributed roughly equally to improvements in emissions intensities and compositional changes in electric generators, with small contributions from scale and residential location changes. This suggests both local air pollution policies and recent coal-to-natural gas fuel switching have played major roles in reducing U.S. racial/ethnic pollution disparities from electricity. While we detect similarly large PM2.5 improvements for the average low and high income individual, PM2.5 disparities by income are relatively small, with little change over time.
Author contact info: Danae Hernandez-Cortes School of Sustainability, Wrigley Hall, 800 Cady Mall #108 Arizona State University Tempe, AZ 85281 E-Mail: Danae.Hernandez-Cortes@asu.edu Kyle C. Meng Bren School of Environmental Science and Management Department of Economics University of California, Santa Barbara 4416 Bren Hall Santa Barbara, CA 93106 Tel: 805/893-5055 E-Mail: kmeng@bren.ucsb.edu Paige E. Weber 345 Giannini Hall University of California Berkeley, CA 94720-3050 United States Tel: 3108977983 E-Mail: paigeweber@berkeley.edu

The Shift to Remote Work Lessens Wage-Growth Pressures - Barrero, Jose Maria; Bloom, Nicholas; Davis, Steven J; Meyer, Brent H; Mihaylov, Emil (National Bureau of Economic Research Working Paper Series, 2022)
The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanism in the wage-setting behavior of U.S. employers, and we develop novel survey data to quantify its force. Our data imply a cumulative wage-growth moderation of 2.0 percentage points over two years. This moderation offsets more than half the real-wage catchup effect that Blanchard (2022) highlights in his analysis of near-term inflation pressures. The amenity-values gains associated with the recent rise of remote work also lower labor’s share of national income by 1.1 percentage points. In addition, the “unexpected compression” of wages since early 2020 (Autor and Dube, 2022) is partly explained by the same amenity-value effect, which operates differentially across the earnings distribution.
Author contact info: Jose Maria Barrero Instituto Tecnologico Autonomo de Mexico Av. Camino a Santa Teresa #930 Col. Heroes de Padierna CP. 10700. Alc. Magdalena Contreras CDMX Mexico E-Mail: barsanjmb@gmail.com 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 Brent H. Meyer Research Department Federal Reserve Bank of Atlanta 1100 Peachtree Street NE Atlanta, Geor 30309 United States Tel: 4044988852 E-Mail: brent.meyer@atl.frb.org Emil Mihaylov Federal Reserve Bank of Atlanta 1000 Peachtree Street, NE Atlanta, GA 30309 E-Mail: emil.mihaylov@atl.frb.org

Is GDP Becoming Obsolete? The “Beyond GDP” Debate - Hulten, Charles R; Nakamura, Leonard I (National Bureau of Economic Research Working Paper Series, 2022)
GDP is a closely watched indicator of the current health of the economy and an indispensable tool of economic policy. It is not, however, a persuasive indicator of individual wellbeing or collective economic progress. There have been calls to refocus or replace GDP with a metric that better reflects the welfare dimension. In response, the U.S. agency responsible for the GDP accounts recently launched a “GDP and Beyond” program. This is by no means an easy undertaking, given the subjective and idiosyncratic nature of much of individual wellbeing. Indeed, some sources of wellbeing may prove impossible to measure accurately. This paper joins the Beyond GDP effort by extending the standard utility maximization model of economic theory to include those non-GDP sources of wellbeing for which a monetary value can be established using a willingness-to-pay approach. We have termed our measure expanded GDP (EGDP) in our previous work, and the current paper extends that framework to include a welfare-adjusted stock of wealth, derived using the same general approach used to obtain EGDP. This welfare-expanded stock is useful for issues involving the sustainability of wellbeing over time. Finally, we propose a way of connecting GDP and the large literature on happiness and collective wellbeing by incorporating a survey-based subjective index of perceived wellbeing into the conventional ordinal utility framework. Our conclusion is that both the GDP and wellbeing metrics are important but address different questions: the size of the economy on one hand and true extent of economic progress on the other.
Author contact info: Charles R. Hulten Department of Economics University of Maryland Room 3114, Tydings Hall College Park, MD 20742 E-Mail: chulten@umd.edu Leonard I. Nakamura Federal Reserve Bank of Philadelphia 10 Independence Mall Economic Research Philadelphia, PA 19106 USA Tel: 2155743804 E-Mail: leonard.nakamura@phil.frb.org

Crash Narratives - Goetzmann, William N; Kim, Dasol; Shiller, Robert J (National Bureau of Economic Research Working Paper Series, 2022)
The financial press is a conduit for popular narratives that reflect collective memory about historical events. Some collective memories relate to major stock market crashes, and investors may rely on associated narratives, or “crash narratives,” to inform current beliefs and choices. Using recent advances in computational linguistics, we develop a higher-order measure of narrativity based on newspaper articles that appear following major crashes. We provide evidence that crash narratives propagate broadly once they appear in news articles, and significantly explain predictive variation in market volatility. We exploit investor heterogeneity using survey data to distinguish the effects of narrativity and fundamental conditions and find consistent evidence. Finally, we develop a measure of pure narrativity to examine when the financial press is more likely to employ narratives.
Author contact info: William N. Goetzmann School of Management Yale University Box 208200 New Haven, CT 06520-8200 Tel: 203/432-5950 Fax: 203/432-3003 E-Mail: william.goetzmann@yale.edu Dasol Kim 324 Livingston Street 717 14th Street NW New Haven, CT 06511 United States Tel: 2037104213 E-Mail: dasol.kim@ofr.treasury.gov Robert J. Shiller Yale University, Cowles Foundation Box 208281 30 Hillhouse Avenue New Haven, CT 06520-8281 Tel: 203/432-3708 Fax: 203/432-6167 E-Mail: robert.shiller@yale.edu

An Evaluation of a National Program to Reduce Student Absenteeism in High School - Baker, Michael; Drange, Nina; Gjefsen, Hege Marie (National Bureau of Economic Research Working Paper Series, 2022)
Starting in the 2016/17 academic year, high school students in Norway who missed more than 10 percent of the hours in a given course without a medical excuse could not receive a final grade. We examine the impacts of this policy on student absenteeism, the incidence of the no grade penalty and two measures of student achievement. The policy had the intended impact on absenteeism, reducing total absence by 20-28 percent, and chronic absence by 29-39 percent in the high school grades. This behavioral response was largely sufficient to avoid the academic penalty for absence over the 10 percent threshold under the new law. Finally, we find a mixed impact on student achievement: little impact on externally graded, end of year exams, and modest evidence of a positive impact of 6 percent of a standard deviation on teacher awarded GPA.
Author contact info: Michael Baker Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 Tel: 416/978-4138 Fax: 416/978-6713 E-Mail: m.baker@utoronto.ca Nina Drange Frisch Centre and Statistics Norway Norway E-Mail: n.e.drange@frisch.uio.no Hege Marie Gjefsen Norwegian Institute of Public Health E-Mail: hegemariegjefsen@gmail.com

Price Setting with Strategic Complementarities as a Mean Field Game - Alvarez, Fernando E; Lippi, Francesco; Souganidis, Takis (National Bureau of Economic Research Working Paper Series, 2022)
We study the propagation of monetary shocks in a sticky-price general-equilibrium economy where the firms’ pricing strategy feature a complementarity with the decisions of other firms. In a dynamic equilibrium the firm’s price-setting decisions depend on aggregates, which in turn depend on firms’ decisions. We cast this fixed-point problem as a Mean Field Game and establish several analytic results. We study existence and uniqueness of the equilibrium and characterize the impulse response function (IRF) of output following an aggregate “MIT” shock. We prove that strategic complementarities make the IRF larger at each horizon, in a convex fashion. We establish that complementarities may give rise to an IRF with a hump-shaped profile. As the complementarity becomes large enough the IRF diverges and at a critical point there is no equilibrium. Finally, we show that the amplification effect of the strategic interactions is similar across models. For instance, the Calvo model and the Golosov-Lucas model display a comparable amplification, in spite of the fact that the non-neutrality in Calvo is much larger.
Author contact info: Fernando E. Alvarez University of Chicago Department of Economics 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-4412 Fax: 773/702-8490 E-Mail: f-alvarez1@uchicago.edu Francesco Lippi Luiss University E-Mail: francescolippi@gmail.com Takis Souganidis University of Chicago 5734 S. University Avenue Chicago, IL 60637 E-Mail: souganidis@math.uchicago.edu

Expanding Capacity for Vaccines Against Covid-19 and Future Pandemics: A Review of Economic Issues - Athey, Susan; Camilo Castillo, Juan; Chaudhuri, Esha; Kremer, Michael; Simoes Gomes, Alexandre; Snyder, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
We review economic arguments for using public policy to accelerate vaccine supply during a pandemic. Rapidly vaccinating a large share of the global population helps avoid economic, mortality, and social losses, which in the case of Covid-19 mounted into trillions of dollars. However, pharmaceutical firms are unlikely to have private incentives to invest in vaccine capacity at the socially optimal scale and speed. The socially optimal level of public spending may cause some sticker shock but—as epitomized by the tagline “spending billions to save trillions”—is eclipsed by the benefits and can be restrained with the help of careful policy design and advance preparations. Capacity is so valuable during a pandemic that fractional dosing and other measures to stretch available capacity should be explored.
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 Juan Camilo Castillo Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 650/422-9875 E-Mail: jccast@upenn.edu Esha Chaudhuri E-Mail: echaudhuri@college.harvard.edu Michael Kremer University of Chicago Department of Economics 1126 E. 59th St. Chicago, IL 60637 Tel: 773/702-6710 Fax: 773/702-8490 E-Mail: kremermr@uchicago.edu Alexandre Simoes Gomes Development Innovation Lab University of Chicago E-Mail: asimoes@uchicago.edu 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

On the Role of Learning, Human Capital, and Performance Incentives for Wages - Camargo, Braz; Lange, Fabian; Pastorino, Elena (National Bureau of Economic Research Working Paper Series, 2022)
Performance pay in general amounts to only a small fraction of total pay. In this paper, we show that performance pay is nevertheless important for the level and dynamics of wages over the life cycle because of the incentives it indirectly provides for human capital acquisition and because of its impact on the variability of total pay. We articulate this argument in the context of a model that combines three key mechanisms for wage growth and dispersion: employer learning about workers’ ability, human capital acquisition, and performance incentives. We use this model to account for the experience profile of wages, their dispersion, and their composition in terms of fixed and variable (performance) pay. The model admits an analytical decomposition of performance pay into four terms that capture (i) the trade-off between risk and incentives characteristic of settings of moral hazard; (ii) the insurance that firms provide against the wage risk due to the uncertainty about ability; (iii) incentives for effort arising from this uncertainty (career concerns); and (iv) incentives for effort generated by the prospect of human capital acquisition. We prove the model is identified under standard assumptions. Despite its parsimony, the model fits the data very well, including the empirical finding that performance pay as a share of total pay first increases and then decreases with experience. This feature of performance pay, which we are the first to document, runs contrary to the prediction of standard models of performance incentives that the ratio of performance pay to total pay increases with experience, especially at the end of the life cycle. Our estimates imply that effort to produce output augments human capital. Also, human capital acquisition and insurance against uncertainty about ability are quantitatively the main determinants of performance pay. Career-concerns incentives, on which the theoretical literature has focused, and the strength of the contemporaneous trade-off between risk and incentives—the primary determinant of variable pay in static moral-hazard models—are instead much less relevant. Importantly, we find that through the cumulative impact of effort on the job on human capital acquisition and the contribution of variable pay to the variance of total pay, performance incentives are a crucial source of wage growth and dispersion over the life cycle.
Author contact info: Braz M. de Camargo Sao Paulo School of Economics Rua Itapeva 474 Sao Paulo, SP 01332-000 Brazil Tel: 1137993350 E-Mail: braz.camargo@fgv.br Fabian Lange Department of Economics McGill University 855 Sherbrooke Street West Montreal, QC H3A, 2T7 Tel: 514/653-0020 E-Mail: fabian.lange@mcgill.ca Elena Pastorino Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/725-9935 E-Mail: epastori@stanford.edu