Measuring Knowledge and Learning - Heckman, James J; Zhou, Jin (National Bureau of Economic Research Working Paper Series, 2022)
Empirical studies in the economics of education, the measurement of skill gaps, the impacts of interventions on skill formation, and the value-added literature rely on psychometrically validated test scores. Test scores are taken as measures of an invariant scale of human capital compared over time and people. We examine if conventional skill measures are comparable on mastery of specific task knowledge. An unusually rich dataset from an early childhood intervention is used to test the assumption of scale invariance. We reject the scale invariance hypothesis for multiple skills and cast doubt on the uncritical use of test scores in research.
Author contact info: James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Jin Zhou Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: jzhou269@cityu.edu.hk

On Wars, Sanctions and Sovereign Default - Bianchi, Javier; Sosa-Padilla, César (National Bureau of Economic Research Working Paper Series, 2022)
This paper explores the role of restrictions on the use of international reserves as economic sanctions. We develop a simple model of the strategic game between a sanctioning (creditor) country and a sanctioned (debtor) country. We characterize how the sanctioning country should impose restrictions optimally, internalizing the geopolitical benefits and the potential losses of a default by the sanctioned country. A calibrated version of the model can account for the sequence of events leading to the Russian default. Moreover, it suggests that for every dollar of economic damage inflicted to Russia, the US is willing to give up 0.50 dollars of its own consumption.
Author contact info: Javier Bianchi Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: javieribianchi@gmail.com César Sosa-Padilla Department of Economics University of Notre Dame 3060 Jenkins Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-4784 E-Mail: csosapad@nd.edu

Why Does Disability Increase During Recessions? Evidence from Medicare - Carey, Colleen; Miller, Nolan H; Molitor, David (National Bureau of Economic Research Working Paper Series, 2022)
Social Security Disability Insurance (DI) awards rise in recessions, especially for older adults. Using Medicare data, we investigate whether this pattern is driven by changes in health or the cost of entering DI. Higher unemployment at application corresponds to increased DI entry, lower medical spending, and lower mortality among new entrants. Leveraging age-based discontinuities in disability eligibility criteria at older ages, we find that workers induced into DI by poor economic conditions have similar spending and mortality outcomes to those induced by relaxed eligibility criteria, suggesting that changes in entry costs can fully account for cyclical DI entry.
Author contact info: Colleen Carey Department of Economics and Brooks School of Public Policy Cornell University Martha van Rensselaer Hall, Room 298 Ithaca, NY 14853 Tel: 607/255-9627 E-Mail: colleenmariecarey@gmail.com Nolan H. Miller College of Business University of Illinois 4033 BIF 515 East Gregory Drive Champaign, IL 61820 Tel: 217/244-2847 E-Mail: nmiller@illinois.edu David Molitor University of Illinois at Urbana-Champaign 340 Wohlers Hall 1206 S. Sixth Street Champaign, IL 61820 Tel: 217/244-0504 E-Mail: dmolitor@illinois.edu

Who Protests, What Do They Protest, and Why? - Chenoweth, Erica; Hamilton, Barton H; Lee, Hedwig; Papageorge, Nicholas W; Roll, Stephen P; Zahn, Matthew V (National Bureau of Economic Research Working Paper Series, 2022)
We examine individuals’ decision to attend Black Lives Matter protests and demonstrations calling for less stringent public health measures to combat COVID-19 (e.g., for swifter reopening of businesses). Our analysis is facilitated by a unique staggered panel data set originally constructed to study the socioeconomic impacts of COVID-19. A wave of data collected in the summer of 2020 was expanded to capture details about protest attendance, political views, and support for different movements. We find that protests may provide novel and policy relevant information about potentially widely-held and mainstream social preferences that are obscured by extremist politics. We present evidence that protesters are a diverse yet representative part of the population and that the decision to protest is deliberate in the sense that it is responsive to incentives and issue salience. We also provide novel evidence of movement overlap—attending a Black Lives Matter protest is associated with a higher likelihood of attending a protest calling for fewer public health restrictions. This finding counters typical narratives characterizing these two protest movements as diametrically opposed. In a political landscape dominated by the voices of extremists, our findings suggest we can draw a line between recent protest behavior and a less radical and less extreme majority (sometimes called the “exhausted” majority) that espouses more nuanced views than the politicians, policymakers and institutions that are supposed to represent them.
Author contact info: Erica Chenoweth Harvard Kennedy School 79 John F. Kennedy Street Cambridge, MA 02138 United States E-Mail: erica_chenoweth@hks.harvard.edu Barton H. Hamilton Olin Business School Washington University in St. Louis Campus Box 1133 One Brookings Dr. St. Louis, MO 63130 E-Mail: hamiltonb@wustl.edu Hedwig Lee Duke University Department of Sociology 276 Reuben-Cooke 417 Chapel Drive Durham, NC 27708 United States E-Mail: hedwig.lee@duke.edu 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 Stephen P. Roll One Brookings Drive Campus Box 1196 St. Louis, MO 63130 E-Mail: roll.48@osu.edu Matthew V. Zahn Economics Department Johns Hopkins University Wyman Park Building 3400 N. Charles St Baltimore, MD 21218 E-Mail: matthew.zahn@jhu.edu

The Macroeconomic Expectations of U.S. Managers - McClure, Ethan M. L; Coibion, Olivier; Gorodnichenko, Yuriy (National Bureau of Economic Research Working Paper Series, 2022)
Using responses obtained through the Nielsen Homescan panel survey, we explore the differences between managers’ and non-managers’ expectations and perceptions of inflation and unemployment. By and large, managers and non-managers exhibit similar average inflation and unemployment expectations as well as similar levels of disagreement and sensitivity to information provided in a randomized control trial. Finally, the inflation expectations of managers deviate systematically from the predictions of “anchored” expectations.
Author contact info: Ethan M. L. McClure Department of Economics 530 Evans Hall #3880 University of California, Berkeley Berkeley, CA 94720-3880 E-Mail: ethanmlmcclure@berkeley.edu Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com 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

Investing in Early Childhood Development in Preschool and at Home - Duncan, Greg; Kalil, Ariel; Mogstad, Magne; Rege, Mari (National Bureau of Economic Research Working Paper Series, 2022)
The foundations for successful child development are established in early childhood. Two main policy approaches for strengthening these foundations have been subsidized preschool programs and programs targeting the home environment. Our chapter reviews a large body of empirical work investigating whether these programs make a difference for children’s development, and if so, how and under what conditions do they help, how cost-effective are they, and which programs are scalable. We start by reviewing studies that estimate how much of the variation in child outcomes can be explained by genetics versus environmental factors. These studies demonstrate that variation in environmental factors plays a key role in explaining individual life outcomes. This suggests that early childhood programs might play a significant role in helping children realize their potential in life. Nevertheless, our review of early childhood programs demonstrates that the evidence is mixed – some programs are successful in fostering lasting skill development, but many are not. We conclude that existing research on early childhood education falls short of sufficiently answering fundamental questions about what works for whom and why. A tighter link between theory, econometric methods and data is essential to compare and reconcile the mixed and sometimes conflicting empirical results across studies, and to understand when and why the impacts of home environment and pre-school interventions fadeout.
Author contact info: 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 Ariel Kalil Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: akalil@uchicago.edu Magne Mogstad Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-3877 E-Mail: magne.mogstad@gmail.com Mari Rege Department of Economics and Finance University of Stavanger 4036 Stavanger Norway E-Mail: mari.rege@uis.no

Collective Hold-Up - Iaryczower, Matias; Oliveros, Santiago (National Bureau of Economic Research Working Paper Series, 2022)
We consider dynamic processes of coalition formation in which a principal bargains sequentially with a group of agents. This problem is at the core of a variety of applications in economics and politics, including a lobbyist seeking to pass a bill, an entrepreneur setting up a start-up, or a firm seeking the approval of corrupt bureaucrats. We show that when the principal’s willingness to pay is high, strengthening the bargaining position of the agents generates delay and reduces agents’ welfare. This occurs in spite of the lack of informational asymmetries or discriminatory offers. When this collective action problem is severe enough, agents prefer to give up considerable bargaining power in favor of the principal.
Author contact info: Matias Iaryczower 305 Fisher Hall Department of Politics Princeton University Princeton, NJ 08544 Tel: 609-258-1018 E-Mail: miaryc@princeton.edu Santiago Oliveros Department of Economics University of Bristol The Priory Road Complex Priory Road Clifton Bristol, BS8 1TU United Kingdom E-Mail: s.oliveros@bristol.ac.uk

The Opioid Crisis, Health, Healthcare, and Crime: A Review Of Quasi-Experimental Economic Studies - Maclean, Johanna Catherine; Mallatt, Justine; Ruhm, Christopher J; Simon, Kosali I (National Bureau of Economic Research Working Paper Series, 2022)
Opioid use is one of the most substantial and long-lasting public health crises faced by the United States. This crisis, which began by the mid-1990s and continues through the time of writing, causes 136 fatal opioid overdoses each day and costs the U.S. at least $596 billion each year. These numbers, while incredibly large, likely do not capture the full toll of the crisis on American society. In this study, we review quasi-experimental studies that examine the relationship between opioids and health and healthcare, and crime outcomes in the U.S. We focus on the U.S., a country particularly hard hit by the crisis which has adopted a broad array of policies aimed at curbing it. Our findings align with the general perception that the opioid crisis has negatively impacted a range of health outcomes and increased healthcare costs, with limited evidence that opioids (which are designed to reduce chronic pain) have enhanced work capacity or other metrics that might capture intended benefits from appropriate use of these medications. While opioids have worsened many health outcomes, the healthcare system played a role in the emergence of the epidemic and its continuation. Further, studies suggest that opioids increase crime, although the link is not as strong as has been observed in previous drug epidemics; this finding is consistent with the pharmacological difference between opioids and stimulant substances (e.g., cocaine) that dominated earlier drug epidemic periods characterized by higher levels of crime. Through the provision of treatment to address underlying addiction and the development of strategies to effectively curtail access to opioids, the healthcare system potentially has an important role in attempts to end the crisis.
Author contact info: Johanna Catherine Maclean Schar School of Policy and Government George Mason University Mason Square Van Metre Hall 3351 Fairfax Drive Arlington, VA 22201 E-Mail: jmaclea@gmu.edu Justine Mallatt Bureau of Economic Analysis 4600 Silver Hill Road Suitland, MD 20746 E-Mail: Justine.Mallatt@bea.gov Christopher J. Ruhm Frank Batten School of Leadership and Public Policy University of Virginia 235 McCormick Rd. P.O. Box 400893 Charlottesville, VA 22904-4893 E-Mail: ruhm@virginia.edu Kosali I. Simon O’Neill School of Public and Environmental Affairs Indiana University 1315 East Tenth Street Bloomington, IN 47405-1701 Tel: (812) 856-3850 E-Mail: simonkos@indiana.edu

The Fed's International Dollar Liquidity Facilities: New Evidence on Effects - Goldberg, Linda S; Ravazzolo, Fabiola (National Bureau of Economic Research Working Paper Series, 2022)
In March 2020, the Federal Reserve eased the terms on its standing swap lines in collaboration with other central banks, reactivated temporary swap agreements, and then introduced the new Foreign and International Monetary Authorities (FIMA) repo facility. We provide new evidence on how the central bank swap lines and FIMA repo facility reduce strains in global dollar funding markets and US Treasury markets during extreme stress events. These facilities are found to contribute to the narrowing of foreign exchange swap basis spreads and to reduce the sensitivity of global funding strain metrics to risk sentiment deterioration. Cross border flows through banks for excess liquidity support purposes are reduced in the near term, and the risk sensitivity of equity and bond fund flows declines. However, access to these facilities leave longer-term patterns of liquidity and capital flows across borders broadly unchanged. While official sector liquidity hoarding and “dash for cash” type of activity is expected to be lower with access to these facilities, initial evidence does not show general differential changes in foreign exchange reserve holdings by foreign central banks in line with the type of liquidity access.
Author contact info: Linda S. Goldberg Federal Reserve Bank-New York 33 Liberty Street New York, NY 10045 Tel: 212/720-2836 Fax: 212/720-6831 E-Mail: linda.goldberg@ny.frb.org Fabiola Ravazzolo Markets Group 33 Liberty Street New York, NY 10045 USA E-Mail: fabiola.ravazzolo@ny.frb.org

The Design of Defined Contribution Plans - Bhattacharya, Vivek; Illanes, Gastón (National Bureau of Economic Research Working Paper Series, 2022)
Defined contribution (DC) plans are a major vehicle for retirement savings in the US, holding almost $10 trillion in assets under management. In recent years, the quality and availability of these plans has been the subject of active policy attention and of several major lawsuits. This paper studies how employers and plan providers (recordkeepers) design these plans. We argue that low plan quality and limited provision can come from two sources. First, employer willingness to pay may be misaligned with that of workers or of regulators. Second, the market for recordkeeping may be imperfectly competitive. We propose a model of plan design and estimate that while both frictions are at play, significant changes to plan quality require modifying employer preferences. Accordingly, we evaluate proposed policies and conclude that only direct quality regulation can lead to significant quality improvements. Recent proposals can increase plan provision but have negligible quality effects.
Author contact info: Vivek Bhattacharya Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8213 E-Mail: vivek.bhattacharya@northwestern.edu Gastón Illanes Department of Economics Northwestern University Kellogg Global Hub, Room 3421 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8227 E-Mail: gaston.illanes@northwestern.edu

AI, Trade and Creative Destruction: A First Look - Trefler, Daniel; Sun, Ruiqi (National Bureau of Economic Research Working Paper Series, 2022)
Artificial Intelligence is a powerful new technology that will likely have large impacts on the size, direction and composition of international trade flows. Yet almost nothing is known empirically about this. One AI-enabled set of services that can be tracked resides in the palm of our hands: the Mobile Apps used by half the world's population. To analyze the impact of AI on international trade in mobile App services we merge 2014-2020 data on international downloads of mobile Apps with data on the AI patents held by each App's parent company. From this we build a measure of AI deployment. We instrument AI deployment using cost-shifters from the theory of comparative advantage: Countries with a large stock of AI expertise will have a comparative advantage producing AI-intensive Apps. We show the following IV results. (1) Bilateral Trade: AI deployment increases App downloads by a factor of six. (2) Variety Effects: AI deployment doubles the number of exported App varieties. (3) Creative Destruction: AI deployment increases creative destruction (entry and exit of Apps) and in 2020 the net effect was an increase in welfare of between 2.5% and 10.6%.
Author contact info: Daniel Trefler Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 Tel: 416/946-7945 Fax: 416/978-5433 E-Mail: dtrefler@rotman.utoronto.ca Ruiqi Sun Rotman School of Management 105 St. George Street Toronto, ON M5S3E6 Canada Tel: 4379890196 E-Mail: sunrq.17@pbcsf.tsinghua.edu.cn

Educational Inequality* - Blanden, Jo; Doepke, Matthias; Stuhler, Jan (National Bureau of Economic Research Working Paper Series, 2022)
This chapter provides new evidence on educational inequality and reviews the literature on the causes and consequences of unequal education. We document large achievement gaps between children from different socio-economic backgrounds, show how patterns of educational inequality vary across countries, time, and generations, and establish a link between educational inequality and social mobility. We interpret this evidence from the perspective of economic models of skill acquisition and investment in human capital. The models account for different channels underlying unequal education and highlight how endogenous responses in parents' and children's educational investments generate a close link between economic inequality and educational inequality. Given concerns over the extended school closures during the Covid-19 pandemic, we also summarize early evidence on the impact of the pandemic on children's education and on possible long-run repercussions for educational inequality.
Author contact info: Jo Blanden Guildford Surrey Surrey GU2 7XH United Kingdom E-Mail: j.blanden@surrey.ac.uk Matthias Doepke Northwestern University Department of Economics 2211 Campus Drive Evanston, IL 60208 Tel: 847-491-8207 E-Mail: doepke@northwestern.edu Jan Stuhler Department of Economics Universidad Carlos III de Madrid Calle Madrid 126 28903 Getafe Spain E-Mail: jstuhler@eco.uc3m.es

Should Copula Endogeneity Correction Include Generated Regressors for Higher-order Terms? No, It Hurts - Qian, Yi; Xie, Hui; Koschmann, Anthony (National Bureau of Economic Research Working Paper Series, 2022)
Causal inference in empirical studies is often challenging because of the presence of endogenous regressors. The classical approach to the problem requires using instrumental variables that must satisfy the stringent condition of exclusion restriction. A forefront of recent research is a new paradigm of handling endogenous regressors without using instrumental variables. Park and Gupta (Marketing Science, 2012) proposed instrument-free estimation using copulas that has been increasingly used in practical applications to address endogeneity bias. A relevant issue not studied is how to handle the higher-order terms (e.g., interaction and quadratic terms) of endogenous regressors using the copula approach. Recent applications of the approach have used disparate ways of handling these higher-order endogenous terms with unclear consequences. We show that once copula correction terms for the main effects of endogenous regressors are included as generated regressors, there is no need to include additional correction terms for the higher-order terms. This simplicity in handling higher-order endogenous regression terms is a merit of the instrument-free copula bias correction approach. More importantly, adding these unnecessary correction terms has harmful effects and leads to sub-optimal solutions of endogeneity bias, including finite-sample estimation bias and substantially inflated variability in estimates.
Author contact info: Yi Qian Sauder School of Business University of British Columbia 2053 Main Mall Vancouver, BC V6T 1Z2 Tel: 604/827-5154 E-Mail: yi.qian@sauder.ubc.ca Hui Xie Department of Biostatistics School of Public Health University of Illinois at Chicago E-Mail: huixie@uic.edu Anthony Koschmann Eastern Michigan University 121 Hill Hall College of Business Ypsilanti, MI 48178 Tel: 775-843-6268 E-Mail: akoschma@emich.edu

Expectations Data in Asset Pricing - Adam, Klaus; Nagel, Stefan (National Bureau of Economic Research Working Paper Series, 2022)
Asset prices reflect investors' subjective beliefs about future cash flows and prices. In this chapter, we review recent research on the formation of these beliefs and their role in asset pricing. Return expectations of individual and professional investors in surveys differ markedly from those implied by rational expectations models. Variation in subjective expectations of future cash flows and price levels appear to account for much of aggregate stock market volatility. Mapping the survey evidence into agent expectations in asset pricing models is complicated by measurement errors and belief heterogeneity. Recent efforts to build asset pricing models that match the survey evidence on subjective belief dynamics include various forms of learning about payout or price dynamics, extrapolative expectations, and diagnostic expectations. Challenges for future research include the exploration of subjective risk perceptions, aggregation of measured beliefs, and links between asset market expectations and the macroeconomy.
Author contact info: Klaus Adam University of Mannheim Department of Economics L7, 3-5 68131 Mannheim Germany E-Mail: adam@uni-mannheim.de Stefan Nagel University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: stefan.nagel@chicagobooth.edu

A Linear Panel Model with Heterogeneous Coefficients and Variation in Exposure - Sun, Liyang; Shapiro, Jesse M (National Bureau of Economic Research Working Paper Series, 2022)
Linear panel models featuring unit and time fixed effects appear in many areas of empirical economics. An active literature studies the interpretation of the ordinary least squares estimator of the model, commonly called the two-way fixed effects (TWFE) estimator, in the presence of unmodeled coefficient heterogeneity. We illustrate some implications for the case where the research design takes advantage of variation across units (say, US states) in exposure to some treatment (say, a policy change). In this case, the TWFE can fail to estimate the average (or even a weighted average) of the units' coefficients. Under some conditions, there exists no estimator that is guaranteed to estimate even a weighted average. Building on the literature, we note that when there is a unit totally unaffected by treatment, it is possible to estimate an average effect by replacing the TWFE with an average of difference-in-differences estimators.
Author contact info: Liyang Sun Calle Casado del Alisal 5 Madrid 28014 Spain E-Mail: lsun20@cemfi.es Jesse M. Shapiro Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617-444-9571 E-Mail: jesse_shapiro@fas.harvard.edu

The New Corporate Governance - Hart, Oliver D; Zingales, Luigi (National Bureau of Economic Research Working Paper Series, 2022)
In the last few years, there has been a dramatic increase in shareholder engagement on environmental and social issues. In some cases shareholders are pushing companies to take actions that may reduce market value. It is hard to understand this behavior using the dominant corporate governance paradigm based on shareholder value maximization. We explain how jurisprudence has sustained this criterion in spite of its economic weaknesses. To overcome these weaknesses we propose the criterion of shareholder welfare maximization and argue that it can better explain observed behavior. Finally, we outline how shareholder welfare maximization can be implemented in practice.
Author contact info: Oliver D. Hart Department of Economics Littauer Center 220 Harvard University Cambridge, MA 02138 Tel: 617/496-3461 Fax: 617-495-7730 E-Mail: ohart@harvard.edu 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

Understanding the Economic Impact of COVID-19 on Women - Goldin, Claudia (National Bureau of Economic Research Working Paper Series, 2022)
The impact of the pandemic on the employment, labor supply, and caregiving of women is assessed. Compared with previous recessions, that induced by COVID-19 impacted women’s employment and labor force participation more relative to men. But the big divide was less between men and women than it was between the more- and the less-educated. Contrary to many accounts, women did not exit the labor force in large numbers, and they did not greatly decrease their hours of work. The aggregate female labor force participation rate did not plummet. The ability to balance caregiving and work differed greatly by education, occupation, and race. The more educated could work from home. Those who began the period employed in various in-person “service” occupations and establishments experienced large reductions in employment. Black women were more negatively impacted beyond other factors considered and the health impact of COVID-19 is a probable reason. The estimation of the pandemic’s impact depends on the counterfactual used. The real story of women during the pandemic concerns the fact that employed women who were educating their children, and working adult daughters who were caring for their parents, were stressed because they were in the labor force, not because they left.
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

The Trade Reform Wave of 1985-1995 - Irwin, Douglas A (National Bureau of Economic Research Working Paper Series, 2022)
The decade from 1985 to 1995 was an unprecedented period of declining barriers to global trade. The reform wave was especially pronounced in developing countries where overvalued currencies were eliminated, quantitative import restrictions dismantled, and import tariffs reduced. What accounts for this remarkable transformation in policy? This paper focuses on how many of these restrictions were imposed for balance of payments purposes. As the benefits of managing payments imbalances through exchange rate adjustments rather than import controls came to be understood, economists in high-ranking government positions had the opportunity to shift policy in this direction. Perhaps surprisingly, special interests played little role in fostering the move to more open markets.
Author contact info: Douglas A. Irwin Department of Economics Dartmouth College Hanover, NH 03755 Tel: 603/646-2942 Fax: 603/646-2122 E-Mail: douglas.irwin@dartmouth.edu

An Evaluation of the Paycheck Protection Program Using Administrative Payroll Microdata - Autor, David; Cho, David; Crane, Leland D; Goldar, Mita; Lutz, Byron; Montes, Joshua K; Peterman, William B; Ratner, David D; Villar Vallenas, Daniel; Yildirmaz, Ahu (National Bureau of Economic Research Working Paper Series, 2022)
The Paycheck Protection Program (PPP), a principal element of the fiscal stimulus enacted by Congress during the COVID-19 pandemic, aimed to assist small businesses to maintain employment and wages during the crisis. We use high-frequency administrative payroll data from ADP--one of the world’s largest payroll processing firms--to estimate the causal effect of the PPP on the evolution of employment at PPP-eligible firms relative to PPP-ineligible firms, where eligibility is determined by industry-specific firm-size cutoffs. We estimate that the PPP boosted employment at eligible firms by between 2 percent to 5 percent at its peak in mid-2020, with this effect waning to 0 to 3 percent throughout the remainder of the year. Employers retained an estimated additional 3.6 million jobs due to the PPP as of mid-May 2020, and 1.4 million jobs at the end of 2020. The implied cost per year of employment retained was $169,000 to $258,000, equal to 3.4 to 5.2 times median earnings.
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 David Cho Federal Reserve Board of Governors 20th and C Streets, NW Mail Stop 80 Washington, DC 20551 Tel: 202-785-6023 E-Mail: david.cho@frb.gov Leland D. Crane Federal Reserve Board of Governors 20th Street and C Street, NW Washington, DC 20551 E-Mail: leland.d.crane@frb.gov Mita Goldar ADP E-Mail: mitagoldar@yahoo.com Byron Lutz Federal Reserve Board of Governors Research Division 20th and C Streets, NW Washington, DC 20551-0001 E-Mail: Byron.F.Lutz@frb.gov Joshua K. Montes Federal Reserve Board of Governors 20th & C St. NW MS- 80 Washington, DC 20551 E-Mail: joshua.k.montes@frb.gov William B. Peterman Federal Reserve Board of Governors 20th & C St. NW Washington, DC 20551 E-Mail: william.b.peterman@frb.gov David D. Ratner Federal Reserve Board of Governors 20th Street and Constitution Avenue N.W. Washington, DC 20551 E-Mail: david.d.ratner@frb.gov Daniel Villar Vallenas Federal Reserve Board of Governors 20th Street and Constitution Avenue N.W. Washington, D.C. 20551 E-Mail: daniel.villar@frb.gov Ahu Yildirmaz The Coleridge Initiative E-Mail: ahu.yildirmaz@coleridgeinitiative.org

The Narrow Channel of Quantitative Easing: Evidence from YCC Down Under - Lucca, David; Wright, Jonathan H (National Bureau of Economic Research Working Paper Series, 2022)
We study the recent Australian experience with yield curve control (YCC) of government bonds as perhaps the best evidence of how this policy might work in other developed economies. We interpret the evidence with a simple model in which YCC affects prices of both government and other bonds via “broad” transmission channels, but only government bond prices through “narrow” liquidity channels. YCC seemingly worked well in 2020 while the market expected short rates to stay at zero for long. But as the global recovery and inflation gained momentum in 2021, liftoff expectations moved up, the Reserve Bank of Australia purchased most of the outstanding amount of the targeted government bond, and its yield dislocated from other financial market instruments. The model and empirical evidence point to narrow transmission channels playing more prominent roles than broad channels considered in prior studies of quantitative easing (QE), such as portfolio balance effects and signaling about short term rates. We argue that asset-specific narrow channels may be primary transmission mechanisms of quantity-based QE policies as well.
Author contact info: David Lucca 250 Vesey Street New York, NY 10281 USA E-Mail: david.lucca@gmail.com Jonathan H. Wright Department of Economics Johns Hopkins University 3400 N. Charles Street Baltimore, MD 21218 Tel: 410/516-5728 Fax: 410/516-7600 E-Mail: wrightj@jhu.edu

Causal Effects of Countercyclical Interest Rates: Evidence from the Classical Gold Standard - Mitchener, Kris James; Pina, Gonçalo Alves (National Bureau of Economic Research Working Paper Series, 2022)
We estimate the causal impact of countercyclical interest rates on macroeconomic outcomes in open economies. To identify countercyclical interest rates, we construct a new database of short-term interest rates, principal exports, and international commodity prices for 40 economies from 1870 to 1913. This era of capital mobility, nominal anchors, specialization and trade integration, exposed economies to multiple exogenous demand-side shocks. Specialization and trade integration subjected economies to a “commodity lottery” in the form of price fluctuations in world markets. Capital mobility and a currency peg exposed them to interest-rate movements originating in the U.K., the largest economy and linchpin of the classical gold standard. We identify (i) positive effects of commodity-export prices on real GDP and the domestic price level and (ii) negative effects of exogenous changes in short-term interest rates on the same variables. We then show that countercyclical interest rates, defined relative to export-price shocks, stabilized both output and the domestic price level. This stabilization was more effective for the price level than for output.
Author contact info: Kris James Mitchener Department of Economics Leavey School of Business Santa Clara University Santa Clara, CA 95053 Tel: 408/554-4340 Fax: 408/554-2331 E-Mail: kmitchener@scu.edu Goncalo A. Pina ESCP Business School Heubnerweg 8-10 Berlin, BER 14059 Germany E-Mail: gpina@escp.eu

The Demand For Protection and the Persistently High Rates of Gun Violence Among Young Black Males - Evans, William N; Kotowski, Maciej H (National Bureau of Economic Research Working Paper Series, 2022)
We develop a theoretical model to explain both the high level and persistence in gun violence for black males ages 15–24 consistent with the empirical literature. A person may carry a gun for instrumental (i.e., criminal) reasons or for its perceived protective benefit. Discerning underlying motives is difficult. A shock to the instrumental benefit can move the equilibrium to one with a high gun prevalence. The model demonstrates that there are larger returns to reducing the value of guns for crime than trying to reduce their protective benefit, suggesting different policy paths to combat the problem of gun violence.
Author contact info: William N. Evans Keough-Hesburgh Professor of Economics Department of Economics University of Notre Dame 3111 Jenkins Nanovic Halls Notre Dame, IN 46556-7000 E-Mail: wevans1@nd.edu Maciej H. Kotowski Department of Economics 3060 Jenkins Nanovic Hall Notre Dame, IN 46556 United States E-Mail: mkotowsk@nd.edu

Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador - Alvarez, Fernando E; Argente, David; Van Patten, Diana (National Bureau of Economic Research Working Paper Series, 2022)
A currency’s essential feature is to be a medium of exchange. We leverage a quasi-natural experiment—El Salvador as the ﬁrst country to make bitcoin legal tender—to study a cryptocurrency’s potential to be used in daily transactions. The government also launched and provided incentives to download and use a digital wallet named Chivo, which shares features with Central Bank Digital Currencies (CBDCs) and allows users to trade bitcoin and dollars. Were Chivo Wallet and bitcoin actually adopted after this “big push”? Conducting a representative face-to-face survey and relying on blockchain data to obtain all Chivo transactions, we document how usage of digital payments and bitcoin is low, concentrated, and has been decreasing over time. We ﬁnd that privacy concerns are key barriers to adoption, which speaks to a policy debate on crypto and CBDCs that has had anonymity at its core. We also estimate the technology’s adoption cost and its network externalities.
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 David Argente Yale University 165 Whitney Ave New Haven, CT 06511 E-Mail: david.argente@yale.edu Diana Van Patten Yale School of Management 165 Whitney Avenue New Haven, CT 06511 Tel: 310/902-5529 E-Mail: diana.vanpatten@yale.edu

Interdependent Preferences and the Mitigation of Market Failure - Heal, Geoffrey (National Bureau of Economic Research Working Paper Series, 2022)
I consider the effect of caring, empathy, altruism or positive reciprocity towards others - which I collectively call positive preference interdependence (PPI) - on the internalization of interpersonal externalities and on the level of private contributions to the provision of public goods. I show that if preferences depend positively on the well-being of others, then in an extreme case external effects are fully internalized, and private contributions to the provision of a public good will be sufficient for it to be provided at an efficient level. Furthermore I show that when PPI is less than perfect, an increase in the level shown by any agent will lead to a Pareto improvement in the case of interpersonal externalities and an increase in the level of provision of the public good, and that as PPI levels increase towards their upper bound, the level of provision of the public good converges to the efficient level. An increase in caring, empathy, altruism or positive reciprocity, an increase in PPI, in the presence of externalities or public goods is Pareto improving. As it is well-documented that people display some degree of PPI, it is arguable that our failure to provide public goods optimally or to manage externalities efficiently is attributable to lack of empathy/altruism/positive reciprocity as well as to the free rider problem.
Author contact info: Geoffrey Heal Graduate School of Business 582 Kravis Hall Columbia University 665 W 130th St New York, NY 10027 Tel: 212/854-6459 E-Mail: gmh1@gsb.columbia.edu

Career Concerns and the Dynamics of Electoral Accountability - Iaryczower, Matias; Meirowitz, Adam; Lopez-Moctezuma, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
Quantifying the value that legislators give to reelection relative to policy is crucial to understanding electoral accountability. We estimate the preferences for office and policy of members of the US Senate, using a structural approach that exploits variation in polls, position-taking and advertising throughout the electoral cycle. We then combine these preference estimates with estimates of the electoral effectiveness of policy moderation and political advertising to quantify electoral accountability in competitive and uncompetitive elections. We find that senators differ markedly in the value they give to securing office relative to policy gains: while over a fourth of senators are highly ideological, a sizable number of senators are willing to make relatively large policy concessions to attain electoral gains. Nevertheless, electoral accountability is only moderate on average, due to the relatively low impact of changes in senators’ policy stance on voter support.
Author contact info: Matias Iaryczower 305 Fisher Hall Department of Politics Princeton University Princeton, NJ 08544 Tel: 609-258-1018 E-Mail: miaryc@princeton.edu Adam Meirowitz Yale University Department of Political Science 115 Prospect St. Rosenkranz Hall New Haven, CT 06520 E-Mail: adam.meirowitz@yale.edu Gabriel Lopez-Moctezuma Division of Humanities and Social Sciences California Institute of Technology E-Mail: glmoctezuma@caltech.edu

Representation Failure - Iaryczower, Matias; Montero, Sergio; Kim, Galileu (National Bureau of Economic Research Working Paper Series, 2022)
Democratic representation is constrained by the alternatives available to voters. In this paper, we develop a methodology to gauge the extent to which the “supply side” of politics hinders voter welfare. Using rich data on thousands of candidates in three Brazilian legislative elections, we quantify the relative value voters place on candidates’ policy positions and non-ideological attributes, and we evaluate voters’ welfare given the set of candidates they face. Our estimates uncover substantial welfare losses to voters relative to three alternative benchmarks of ideal representation. On average, the typical voter suffers only a moderate loss due to policy incongruence but a large loss due to shortages in candidates’ non-ideological characteristics. To evaluate the welfare consequences of potential institutional reforms, we develop and estimate a model of equilibrium policy determination. Through counterfactual experiments, we show that institutional reforms aimed at improving the quality of representation may have sizable unintended consequences due to equilibrium policy adjustments.
Author contact info: Matias Iaryczower 305 Fisher Hall Department of Politics Princeton University Princeton, NJ 08544 Tel: 609-258-1018 E-Mail: miaryc@princeton.edu Sergio Montero Department of Political Science Harkness Hall 320 University of Rochester Rochester, NY 14627 E-Mail: smontero@rochester.edu Galileu Kim 1818 H Street Washington DC, DC 20433 USA E-Mail: galileukim@gmail.com

What the Students for Fair Admissions Cases Reveal About Racial Preferences - Arcidiacono, Peter; Kinsler, Josh; Ransom, Tyler (National Bureau of Economic Research Working Paper Series, 2022)
Using detailed admissions data made public in the SFFA v. Harvard and SFFA v. UNC cases, we examine how racial preferences for under-represented minorities (URMs) aﬀect their admissions to Harvard and UNC-Chapel Hill. At Harvard, the admit rates for typical African American applicants are on average over four times larger than if they had been treated as white. For typical Hispanic applicants the increase is 2.4 times. At UNC, preferences vary substantially by whether the applicant is in-state or out-of-state. For in-state applicants, racial preferences result in an over 70% increase in the African American admit rate. For out-of-state applicants, the increase is more than tenfold. Both universities provide larger racial preferences to URMs from higher socioeconomic backgrounds.
Author contact info: Peter Arcidiacono Department of Economics 201A Social Sciences Building Duke University Durham, NC 27708 Tel: 919/660-1816 Fax: 919/684-8974 E-Mail: psarcidi@econ.duke.edu Josh Kinsler University of Georgia E-Mail: jkinsler@uga.edu Tyler Ransom Department of Economics University of Oklahoma 158 CCD1 308 Cate Center Drive Norman, OK 73072 Tel: (405) 325-2861 E-Mail: ransom@ou.edu

Is the Price Right? The Role of Economic Tradeoffs in Explaining Reactions to Price Surges - Elias, Julio J; Lacetera, Nicola; Macis, Mario (National Bureau of Economic Research Working Paper Series, 2022)
Public authorities often introduce price controls in response to price surges, potentially causing inefficiencies and shortages. In a survey experiment with 7,612 Canadian and US respondents, we find that unregulated price increases cause general disapproval and strong moral reactions. However, acceptance is higher, and demand for regulation lower, when potential economic tradeoffs between controlled and unregulated prices are salient, and if the incentives resulting from price surges ultimately enhance access to goods. Highlighting tradeoffs also reduces the polarization of moral reactions between supporters and opponents of unregulated pricing. Text analysis of open-ended answers further supports our findings, and a donation experiment shows consistency between stated and revealed preferences.
Author contact info: Julio J. Elias Universidad del CEMA Av. Córdoba 374 (C1054AAP) Ciudad de Buenos Aires Argentina E-Mail: je49@cema.edu.ar Nicola Lacetera University of Toronto Institute for Management and Innovation 3359 Mississauga Road, Room KN 235 Mississauga, ON L5L 1C6 E-Mail: nicola.lacetera@utoronto.ca Mario Macis Johns Hopkins University Carey Business School 1717 Massachusetts Ave, Office 359 Washington, DC 20036 E-Mail: mmacis@jhu.edu

Learning Through Imitation: an Experiment - Agranov, Marina; Lopez-Moctezuma, Gabriel; Strack, Philipp; Tamuz, Omer (National Bureau of Economic Research Working Paper Series, 2022)
We compare how well agents aggregate information in two repeated social learning environments. In the first setting agents have access to a public data set. In the second they have access to the same data, and also to the past actions of others. Despite the fact that actions contain no additional payoff relevant information, and despite potential herd behavior, free riding and information overload issues, observing and imitating the actions of others leads agents to take the optimal action more often in the second setting. We also investigate the effect of group size, as well as a setting in which agents observe private data and others’ actions.
Author contact info: Marina Agranov Division of Humanities and Social Sciences California Institute of Technology 228-77 Caltech Pasadena, CA 91125 Tel: 626/395-3559 E-Mail: magranov@hss.caltech.edu Gabriel Lopez-Moctezuma Division of Humanities and Social Sciences California Institute of Technology E-Mail: glmoctezuma@caltech.edu Philipp Strack Yale University E-Mail: philipp.strack@gmail.com Omer Tamuz Caltech 1200 E California Blvd Pasadena, CA 91125 USA E-Mail: omertamuz@gmail.com

Optimal Taxation of Risky Entrepreneurial Capital - Boar, Corina; Knowles, Matthew P (National Bureau of Economic Research Working Paper Series, 2022)
We study optimal taxation in a model with endogenous financial frictions, risky investment and occupational choice, where the wealth distribution affects how efficiently capital is used. The planner chooses linear taxes on wealth, capital and labor income to maximize the steady state utility of a newborn agent. Most agents in the model are poor, leading to an equity motive for taxation. We calibrate the model to the US economy and find low positive levels of optimal capital income and wealth taxes. We express optimal tax rates as a closed-form function of the size of tax bases and their elasticities with respect to tax rates, highlighting the forces behind the result. Because financial frictions are endogenous, higher capital income tax rates tighten financial frictions and reduce output. Thus, optimal capital income taxes are lower than in models with exogenous frictions.
Author contact info: Corina Boar Department of Economics New York University 19 West 4th Street New York, NY 10003 Tel: 585/775-7686 E-Mail: corina.boar@gmail.com Matthew P. Knowles E-Mail: knowles@wiso.uni-koeln.de

Neighborhood Choice After COVID: The Role of Rents, Amenities, and Work-From-Home - Ferreira, Fernando V; Wong, Maisy (National Bureau of Economic Research Working Paper Series, 2022)
We investigate how neighborhood preferences and choices changed one year after the beginning of the COVID pandemic. We study a Neighborhood Choice Program that helped graduating students choose where to live by providing new information about rents and amenities. Using panel data on neighborhood rankings before and after information, we find that changes in rankings favor neighborhoods where social and professional network shares are higher by 2.2 percentage points, rents are lower by $432, and are 2.4 kilometers farther from the city center. Interestingly, we did not detect this movement away from downtowns when the program was offered prior to the pandemic. We then estimate a neighborhood choice model to recover MWTP for amenities both before and after the pandemic. Our estimates reveal that MWTP for network shares post COVID is markedly lower than prior to COVID. Finally, we perform counterfactuals to quantitatively assess how changes in preferences affect where people live, and find that weaker network preferences are most impactful, while heterogeneity by commute and work-from-home are less relevant.
Author contact info: Fernando V. Ferreira Wharton Real Estate University of Pennsylvania 430 Vance Hall 3733 Spruce Street Philadelphia, PA 19104-6301 Tel: 215/898-7181 E-Mail: fferreir@wharton.upenn.edu Maisy Wong Wharton Real Estate University of Pennsylvania 434 Vance Hall 3733 Spruce Street Philadelphia, PA 19104-6301 Tel: 215/746-3470 E-Mail: maisy@wharton.upenn.edu

Pharmacy Benefit Managers and Vertical Relationships in Drug Supply: State of Current Research - Brot-Goldberg, Zarek C; Che, Catherine; Handel, Benjamin R (National Bureau of Economic Research Working Paper Series, 2022)
Despite their importance to the supply of prescription drugs, there has been limited research on pharmacy benefit managers (PBMs) and their vertical relationships to insurers and drug manufacturers. This paper provides an overview of the current state of research on this topic, motivates why further research is needed, and discusses promising theoretical and empirical directions for that research.
Author contact info: Zarek Brot-Goldberg University of Chicago Harris School of Public Policy 1307 E 60th St. Chicago, IL 60637 E-Mail: zarek@uchicago.edu Catherine Che Department of Economics University of California, Berkeley 508-1 Evans Hall #3880 Berkeley, CA 94720 E-Mail: cjche@berkeley.edu Benjamin R. Handel Department of Economics University of California, Berkeley 508-1 Evans Hall #3880 Berkeley, CA 94720 Tel: 609/240-5199 Fax: 510/642-6615 E-Mail: handel@berkeley.edu

Pandemic-Era Uncertainty - Meyer, Brent H; Mihaylov, Emil; Barrero, Jose Maria; Davis, Steven J; Altig, David; Bloom, Nicholas (National Bureau of Economic Research Working Paper Series, 2022)
We examine several measures of uncertainty to make five points. First, equity market traders and executives at nonfinancial firms have shared similar assessments about one-year-ahead uncertainty since the pandemic struck. Both the one-year VIX and our survey-based measure of firm-level uncertainty at a one-year forecast horizon doubled at the onset of the pandemic and then fell about half-way back to pre-pandemic levels by mid 2021. Second, and in contrast, the 1-month VIX, a Twitter-based Economic Uncertainty Index, and macro forecaster disagreement all rose sharply in reaction to the pandemic but retrenched almost completely by mid 2021. Third, Categorical Policy Uncertainty Indexes highlight the changing sources of uncertainty – from healthcare and fiscal policy uncertainty in spring 2020 to elevated uncertainty around monetary policy and national security as of March 2022. Fourth, firm-level risk perceptions skewed heavily to the downside in spring 2020 but shifted rapidly to the upside from fall 2020 onwards. Perceived upside uncertainty remains highly elevated as of early 2022. Fifth, our survey evidence suggests that elevated uncertainty is exerting only mild restraint on capital investment plans for 2022 and 2023, perhaps because perceived risks are so skewed to the upside.
Author contact info: 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 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 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 David Altig Federal Reserve Bank of Atlanta 1000 Peachtree St. NE Atlanta, GA 30309 USA Tel: 216-269-9079 E-Mail: Dave.Altig@atl.frb.org 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

Asymmetric Investment Rates - Bai, Hang; Li, Erica X. N; Xue, Chen; Zhang, Lu (National Bureau of Economic Research Working Paper Series, 2022)
Integrating national accounting with financial accounting, we provide firm-specific estimates of current-cost capital stocks for the entire Compustat universe, as well as an array of estimates of investment flows, economic depreciation rates, and capital and investment price deflators. The firm-level current-cost investment rate distribution is heavily right-skewed, with a small fraction of negative investment rates, 5.51%, but a huge fraction of positive investment rates, 91.64%. Despite a tiny fraction of inactive investment rates, 2.85%, firm-level investment also seems lumpy, featuring a fraction of 32.66% for positive spikes (investment rates higher than 20%). For a typical firm, 39% of total investment is completed within 20% of the sample years.
Author contact info: Hang Bai University of Connecticut 2100 Hillside Road Storrs, CT 06269 USA E-Mail: hang.bai@uconn.edu Erica X. N. Li Cheung Kong Graduate School of Business 1 East Chang An Avenue Oriental Plaza Beijing 100738 China E-Mail: xnli@ckgsb.edu.cn Chen Xue Lindner College of Business University of Cincinnati 2906 Woodside Dr. 2338 Lindner Hall Cincinnati, OH 45221 USA E-Mail: xuecx@ucmail.uc.edu Lu Zhang Fisher College of Business The Ohio State University 2100 Neil Avenue Columbus, OH 43210 Tel: 585-267-6250 E-Mail: zhanglu@fisher.osu.edu

The Anatomy of U.S. Sick Leave Schemes: Evidence from Public School Teachers - Cronin, Christopher J; Harris, Matthew C; Ziebarth, Nicolas R (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies how U.S. employees use paid sick leave. The most common U.S. sick-leave schemes operate as individualized credit accounts---paid leave is earned over time and unused leave accumulates, producing an employee-specific "leave balance." We construct a unique administrative dataset containing the daily balance information and leave behavior of 982 public school teachers from 2010 to 2018. We have three main findings: First, we provide evidence of judicious sick-leave use---namely, teachers use more sick leave during higher flu activity---but no evidence of inappropriate use for the purposes of leisure. Second, we find that leave use is increasing in the leave balance with an average balance-use elasticity of 0.45. This relationship is strongest at the very bottom of the balance distribution. Third, we find that a higher leave balance reduces the likelihood that a teacher works sick ("presenteeism"), especially during flu season. Taken together, these results suggest that a simple alteration to the current sick-leave scheme could reduce the likelihood of presenteeism, thereby lowering infection risk in schools, with few adverse consequences.
Author contact info: Christopher J. Cronin University of Notre Dame 3060 Jenkins Nanovic Halls Notre Dame, IN 46556 Tel: 5746310427 E-Mail: ccronin1@nd.edu Matthew C. Harris University of Tennessee Haslam College of Business 722A Stokely Management Center 916 Volunteer Boulevard Knoxville, TN 37996 E-Mail: mharris@utk.edu Nicolas R. Ziebarth ZEW Mannheim D-68161, Mannheim Germany E-Mail: nicolas.ziebarth@zew.de

Modeling the Great Recession as a Bank Panic: Challenges - Christiano, Lawrence; Dalgic, Hüsnü; Li, Xiaoming (National Bureau of Economic Research Working Paper Series, 2022)
We highlight two challenges for the notion that a pure panic bank run played an important role in the dynamics in the Great Recession. First, the conclusion depends critically on ruling out any entry of new net worth into a sector experiencing a run. When interpreted as reflecting a cost of entry into banking, the resulting costs seem implausibly large across a range of models. Second, we show that the qualitative features of run equilibria (their existence, how many there are, etc.) are highly sensitive to minor technical changes in assumptions about banker entry. We report another result that is of independent interest. In particular, we describe implementation problems associated with standard macroprudential policy tools for reducing the risk of bank panic.
Author contact info: Lawrence Christiano Department of Economics Northwestern University 2001 Sheridan Road Evanston, IL 60208 Tel: 847/491-8231 Fax: 847/491-7001 E-Mail: l-christiano@northwestern.edu Husnu Dalgic University of Mannheim E-Mail: cagri.dalgic@gmail.com Xiaoming Li School of International Trade and Economics University of International Business and Economics 10 East Huixin Rd. Beijing 100029 China E-Mail: xmLI.15@saif.sjtu.edu.cn

The Inherent Trade-Off Between the Environmental and Anti-Poverty Goals of Payments for Ecosystem Services - Jayachandran, Seema (National Bureau of Economic Research Working Paper Series, 2022)
Conservation programs in low-income countries often have dual goals of protecting the environment and reducing poverty. This article discusses the tension between these two goals in payments for ecosystem services (PES) programs. Participants who undertake a pro-environment behavior receive a payment, which can be decomposed into two parts: the amount that compensates them for the cost of changing their behavior and the extra amount that is a "pure transfer" to them. To maximize the program's environmental benefits, a policy maker would like to set the pure transfer component to zero, but the pure transfer is the only part of the payment that increases participants' economic well-being. In practice, PES programs pay out some pure transfers, and the extent of the anti-poverty benefits depends on whether the pure transfers are de facto targeted to the poor. I lay out these points and then illustrate them with data from a randomized trial of payments for forest protection in Uganda. I provide evidence that the economic gains from participation in PES are indeed larger for those with low costs to fulfill the program's conservation requirements. I also show that, in this context, poorer eligible households enjoyed more improvement in their economic well-being than richer ones did.
Author contact info: Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu

Partially Linear Models under Data Combination - D'Haultfoeuille, Xavier; Gaillac, Christophe; Maurel, Arnaud (National Bureau of Economic Research Working Paper Series, 2022)
We consider the identification of and inference on a partially linear model, when the outcome of interest and some of the covariates are observed in two different datasets that cannot be linked. This type of data combination problem arises very frequently in empirical microeconomics. Using recent tools from optimal transport theory, we derive a constructive characterization of the sharp identified set. We then build on this result and develop a novel inference method that exploits the specific geometric properties of the identified set. Our method exhibits good performances in finite samples, while remaining very tractable. Finally, we apply our methodology to study intergenerational income mobility over the period 1850-1930 in the United States. Our method allows to relax the exclusion restrictions used in earlier work while delivering confidence regions that are informative.
Author contact info: Xavier D'Haultfoeuille CREST 5 avenue Henry Le Chatelier 91764 Palaiseau cedex FRANCE E-Mail: xavier.dhaultfoeuille@ensae.fr Christophe Gaillac Nuffield College New Rd Oxford OX1 1NF UK Tel: 0669049330 E-Mail: christophe.gaillac@economics.ox.ac.uk Arnaud Maurel Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708 Tel: 919/660-1851 Fax: 919/684-8974 E-Mail: apm16@duke.edu

Air Pollution and the Labor Market: Evidence from Wildfire Smoke - Borgschulte, Mark; Molitor, David; Zou, Eric (National Bureau of Economic Research Working Paper Series, 2022)
We study how air pollution impacts the U.S. labor market by analyzing effects of drifting wildfire smoke that can affect populations far from the fires themselves. We link satellite smoke plumes with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1 percent. Extensive margin responses, including employment reductions and labor force exits, can explain 13 percent of the overall earnings losses. The implied welfare cost of lost earnings due to air pollution exposure is on par with standard valuations of the mortality burden. The findings suggest that labor market channels warrant greater consideration in policy responses to air pollution.
Author contact info: Mark Borgschulte UIUC Economics 214 David Kinley Hall 1407 W Gregory Dr Urbana, IL 61801 E-Mail: markborg@illinois.edu David Molitor University of Illinois at Urbana-Champaign 340 Wohlers Hall 1206 S. Sixth Street Champaign, IL 61820 Tel: 217/244-0504 E-Mail: dmolitor@illinois.edu Eric Zou Stephen M. Ross School Of Business University of Michigan 701 Tappan Ave Ann Arbor, MI 48109 E-Mail: ericzou@umich.edu

A Comparative Perspective on Long-Term Care Systems - Kotschy, Rainer; Bloom, David E (National Bureau of Economic Research Working Paper Series, 2022)
This paper investigates challenges of aging for long-term care. Our analysis proceeds in three steps. In the first step, we estimate the prospective care demand for 30 developed countries based on projected aging and disabilities among the elderly. In the second step, we outline challenges for care systems with respect to shortages of care workers, increasing skill requirements for care workers, barriers to universal and equitable access to care, and cost containment subject to adequate care quality. In the third step, we identify solutions for these challenges by comparing the care systems of Germany, Israel, Japan, the Netherlands, and South Korea.
Author contact info: Rainer Kotschy 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: rkotschy@hsph.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

Additive Growth - Philippon, Thomas (National Bureau of Economic Research Working Paper Series, 2022)
Growth theory is based on the assumption of exponential total factor productivity (TFP) growth. Across countries and time periods I find that TFP growth is actually linear. The additive growth model, unlike the exponential one, provides useful long-term forecasts for TFP. For the distant past the model suggests piecewise linear evolutions where the size of TFP increments changes in the late 1600’s, the early 1800’s, and around 1930. For the distant future the model predicts ever increasing increments in standards of living but with falling real interest rates and growth rates that converge to zero. The model suggests stable TFP growth in the US, but a TFP slowdown in the Euro area since the late 1990s.
Author contact info: Thomas Philippon New York University Stern School of Business 44 West 4th Street, Suite 9-190 New York, NY 10012-1126 Tel: 212/998-0490 Fax: 212/995-4233 E-Mail: tphilipp@stern.nyu.edu

Cohort Effects on Expected Co-Movement - Goetzmann, William N; Watanabe, Akiko; Watanabe, Masahiro (National Bureau of Economic Research Working Paper Series, 2022)
The covariance of asset returns with economic states of the world is a fundamental input to asset pricing models. Using a semi-annual survey of forecasts by a panel of U.S. economists over more than 70 years, we infer forecaster beliefs about covariance between the S&P index and macro-economic factors. We find evidence that life-experience was a significant determinant of beliefs about the co-movement of inflation and stock returns
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 Akiko Watanabe University of Alberta School of Business E-Mail: fujimoto@ualberta.ca Masahiro Watanabe School of Business - Finance University of Alberta Edmonton, Alberta T6G 2R6, Canada E-Mail: masa@ualberta.ca

The Economics of Fertility: A New Era - Doepke, Matthias; Hannusch, Anne; Kindermann, Fabian; Tertilt, Michèle (National Bureau of Economic Research Working Paper Series, 2022)
In this survey, we argue that the economic analysis of fertility has entered a new era. First-generation models of fertility choice were designed to account for two empirical regularities that, in the past, held both across countries and across families in a given country: a negative relationship between income and fertility, and another negative relationship between women's labor force participation and fertility. The economics of fertility has entered a new era because these stylized facts no longer universally hold. In high-income countries, the income-fertility relationship has flattened and in some cases reversed, and the cross-country relationship between women's labor force participation and fertility is now positive. We summarize these new facts and describe new models that are designed to address them. The common theme of these new theories is that they view factors that determine the compatibility of women's career and family goals as key drivers of fertility. We highlight four factors that facilitate combining a career with a family: family policy, cooperative fathers, favorable social norms, and flexible labor markets. We also review other recent developments in the literature, and we point out promising new directions for future research on the economics of fertility.
Author contact info: Matthias Doepke Northwestern University Department of Economics 2211 Campus Drive Evanston, IL 60208 Tel: 847-491-8207 E-Mail: doepke@northwestern.edu Anne Hannusch L7, 3-5 Room P.03 Mannheim 68161 Germany E-Mail: hannusch@uni-mannheim.de Fabian Kindermann University of Regensburg Department of Economics 93040 Regensburg Germany E-Mail: fabian.kindermann@ur.de Michèle Tertilt Department of Economics University of Mannheim L7, 3-5 68131 Mannheim Germany Tel: +49-621-181-1902 E-Mail: tertilt@uni-mannheim.de

Increasing the Demand for Workers with a Criminal Record - Cullen, Zoe B; Dobbie, Will S; Hoffman, Mitchell (National Bureau of Economic Research Working Paper Series, 2022)
State and local policies increasingly restrict employers’ access to criminal records, but without addressing the underlying reasons that employers may conduct criminal background checks. Employers may thus still want to ask about a job applicant’s criminal record later in the hiring process or make inaccurate judgments based on an applicant’s demographic characteristics. In this paper, we use a field experiment conducted in partnership with a nationwide staffing platform to test policies that more directly address the reasons that employers may conduct criminal background checks. The experiment asked hiring managers at nearly a thousand U.S. businesses to make incentive-compatible decisions under different randomized conditions. We find that 39% of businesses in our sample are willing to work with individuals with a criminal record at baseline, which rises to over 50% when businesses are offered crime and safety insurance, a single performance review, or a limited background check covering just the past year. Wage subsidies can achieve similar increases but at substantially higher cost. Based on our findings, the staffing platform relaxed the criminal background check requirement and offered crime and safety insurance to interested businesses.
Author contact info: Zoe B. Cullen Rock Center 210 Harvard Business School 60 N. Harvard Boston, MA 02163 Tel: 617/495-1867 E-Mail: zcullen@hbs.edu Will S. Dobbie Harvard Kennedy School 79 John F. Kennedy St. Cambridge, MA 02138 E-Mail: willdobbie@gmail.com Mitchell Hoffman Department of Economics University of California, Santa Barbara 3016 North Hall Santa Barbara, CA 93106 E-Mail: hoffman2@ucsb.edu

Trends in Retirement and Retirement Income Choices by TIAA Participants: 2000–2018 - Brown, Jeffrey R; Poterba, James M; Richardson, David P (National Bureau of Economic Research Working Paper Series, 2022)
This paper documents trends over the last two decades in retirement behavior and retirement income choices by participants in TIAA, a large and mature defined contribution plan with a wide range of withdrawal options. Between 2000 and 2018, the average retirement age rose by approximately 1.3 years for female and 2 years for male participants. There is considerable variation in the elapsed time between the last contribution to and the first income draw from participants’ plan accounts; only 40% take an initial income payment within 48 months of their last contribution, which is likely to coincide with retirement. Later retirement and lags between retirement and the first retirement income payout led to a growing fraction of participants reaching the Required Minimum Distribution (RMD) age before starting income draws. The fraction of first-time income recipients who took no income until their RMD rose from 10% (2000) to 52% (2018), while the fraction of these recipients who selected a life-contingent annuitized payout stream declined from 61 to 18%. Among those who began receiving income before age 70, annuitization rates were significantly higher than among those who did so at older ages. Aggregating across all income recipients at a point in time, not just the new recipients, the proportion who had a life annuity as part of their payout strategy fell from 52% in 2008 to 31% in 2018. At the same time, the proportion of all income recipients taking an RMD payment rose from 16 to 29%. About one-fifth of retirees received more than one type of income; the most common pairing was an RMD and a life annuity. The data suggest that the RMD is becoming the de facto default distribution option for newly-retired TIAA participants.
Author contact info: Jeffrey R. Brown Gies College of Business University of Illinois at Urbana-Champaign 1206 S. Sixth Street Champaign, IL 61820 Tel: 217/333-3322 E-Mail: brownjr@illinois.edu James M. Poterba E-Mail: poterba@mit.edu David P. Richardson TIAA-CREF Institute 8500 Andrew Carnegie Blvd. Charlotte, NC 28262 E-Mail: dprichardson@tiaa.org

Measuring Firm Activity from Outer Space - Bilicka, Katarzyna A; Seidel, André (National Bureau of Economic Research Working Paper Series, 2022)
To understand how global firm networks operate, we need consistent information on their activities, unbiased by their reporting choices. In this paper, we collect a novel dataset on the light that factories emit at night for a large sample of car manufacturing plants. We show that nightlight data can measure activity at such a granular level, using annual firm financial data and high-frequency data related to Covid-19 pandemic production shocks. We use this data to quantify the extent of misreported global operations of these car manufacturing firms and examine differences between sources of nightlight.
Author contact info: Katarzyna A. Bilicka Jon M Huntsman School of Business 3500 Old Main Hill Utah State University Logan, UT 84322 E-Mail: kat.bilicka@usu.edu André Seidel Bergen Norway E-Mail: andre.seidel@uib.no

The Savings Glut of the Old: Population Aging, the Risk Premium, and the Murder-Suicide of the Rentier - Kopecky, Joseph; Taylor, Alan M (National Bureau of Economic Research Working Paper Series, 2022)
Population aging has been linked to a global savings glut and a decline in safe real interest rates. Conversely, risky real returns have not fallen as much, if at all, with equity risk premia on the rise. An existing literature can explain changes in safe rates using demographics. We go further to account for divergent returns on different assets as well as the underlying surge in the wealth-income ratio and its asset composition. Empirical evidence from historical panel data shows that demographic shifts are correlated with asset returns and risk premia. We build a heterogeneous agent life-cycle model with two assets (a safe bond and equity) and with aggregate risk. Aging demographics can help to simultaneously explain three key trends: the rising wealth-income ratio, the falling risk free rate, and an increasing risk premium. The shifts exert less pressure on risky returns as high-wealth elderly reallocate away from equities: aging makes retirement saving a “crowded trade” but more so for bonds. Projecting our model to 2050, aging pushes the safe rate below zero, but the risk premium remains elevated, as post-boomer demographics push asset returns to unprecedented and persistently low levels.
Author contact info: Joseph Kopecky Department of Economics Room 3014 Arts Building Trinity College Dublin Ireland E-Mail: jkopecky@tcd.ie Alan M. Taylor Columbia University 1313 International Affairs 420 West 118th Street New York, NY 10027 E-Mail: amt2314@columbia.edu

US Sanctions Reinforce the Dollar’s Dominance - Dooley, Michael P; Folkerts-Landau, David; Garber, Peter M (National Bureau of Economic Research Working Paper Series, 2022)
Recent sanctions on the use of Russia’s international reserve assets seem likely to reduce the appeal of US dollar reserves as a “shock absorber” for international payments. But international reserves are also a means to reassure foreign investors that problematic countries will not confiscate their investments. The “collateral” motive for holding dollar reserves has been enhanced by the demonstration that the United States is willing and able to sanction misbehavior. Geopolitically risky countries now more than ever need to reassure foreign investors that their investments are safe from expropriation. We conclude that recent events will strengthen the role of the dollar as the key international reserve currency.
Author contact info: Michael P. Dooley Department of Economics Engineering II University of California, Santa Cruz Santa Cruz, CA 95064 Tel: 831 334 0554 E-Mail: MPD@UCSC.EDU David Folkerts-Landau Deutsche Bank Deutsche Bank AG London 1 Great Winchester Street London EC2 2EQ United Kingdom E-Mail: david.folkerts-landau@db.com Peter M. Garber 16 Silvermine Woods Wilton, CT 06897 Tel: 9174950120 E-Mail: vic2eroy@gmail.com

Who is Neoliberal? Durkheimian Individualism and Support for Market Mechanisms - Landier, Augustin; Thesmar, David (National Bureau of Economic Research Working Paper Series, 2022)
This paper investigates the drivers of support for market mechanisms (competition and optimizing behavior by agents). We elicit such attitudes using concrete and simplified situations where respondents face a tradeoff between an economically efficient situation and a pro-social objective. We find that support for deviation from efficient solutions achieved through market mechanism is strongly correlated with moral values as defined by Haidt (2013): care, fairness, loyalty and authority. While the traditional left-right divide spans some of this variation, an even bigger role is played by what we label “individualism”, the average support for all 4 values, a moral stance orthogonal to the left-right divide. We ground this measure of individualism in the sociology of Emile Durkheim.
Author contact info: Augustin Landier HEC Paris 1 rue de la libération 78351 Jouy en Josas Cedex France E-Mail: landier@hec.fr David Thesmar MIT Sloan School of Management 100 Main Street, E62-632 Cambridge, MA 02142 Tel: 617/225-9767 E-Mail: thesmar@mit.edu

The Impact of U.S.-China Tensions on U.S. Science - Jia, Ruixue; Roberts, Margaret E; Wang, Ye; Yang, Eddie (National Bureau of Economic Research Working Paper Series, 2022)
While there has been much discussion about recent investigations of foreign influence in research, very little work has quantified how these investigations have affected the productivity of U.S. scientists. We uncover evidence of adverse effects on U.S. scientists with collaborators in China using publication data from PubMed and Dimensions during 2010–2021. By studying the publication records of over 113,000 scientists during 2015–2021, we find that the investigations coincide with a decline in the productivity of scientists with previous collaborations with scientists in China in comparison to scientists with international collaborators outside of China, especially when the impact of publications (proxied by citations) is considered. The decline is particularly salient for fields with more pre-investigation NIH funding and U.S.-China collaborations. Our findings suggest that scientific research may be very sensitive to political tensions, and we further explore these mechanisms with qualitative interviews with scientists.
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 Margaret E. Roberts Department of Political Science UCSD La Jolla, CA 92093 US E-Mail: meroberts@ucsd.edu Ye Wang School of Global Policy and Strategy UCSD La Jolla, CA 92093 US E-Mail: yew006@ucsd.edu Eddie Yang Department of Political Science UCSD La Jolla, CA 92093 US E-Mail: z5yang@ucsd.edu

Guns, Privacy, and Crime - Acquisti, Alessandro; Tucker, Catherine (National Bureau of Economic Research Working Paper Series, 2022)
Open government holds promise of both a more efficient but more accountable and transparent government. It is not clear, however, how transparent information about citizens and their interaction with government, however, affects the welfare of those citizens, and if so in what direction. We investigate this by using as a natural experiment the effect of the online publication of the names and addresses of holders of handgun carry permits on criminals' propensity to commit burglaries. In December 2008, a Memphis, TN newspaper published a searchable online database of names, zip codes, and ages of Tennessee handgun carry permit holders. We use detailed crime and handgun carry permit data for the city of Memphis to estimate the impact of publicity about the database on burglaries. We find that burglaries increased in zip codes with fewer gun permits, and decreased in those with more gun permits, after the database was publicized.
Author contact info: Alessandro Acquisti Heinz College Carnegie Mellon University 5000 Forbes Avenue, HBH 2105C Pittsburgh, PA 15213 E-Mail: acquisti@andrew.cmu.edu Catherine Tucker MIT Sloan School of Management 100 Main Street, E62-533 Cambridge, MA 02142 Tel: 617/252-1499 Fax: 617/258-7597 E-Mail: cetucker@mit.edu

A Reassessment of Monetary Policy Surprises and High-Frequency Identification - Bauer, Michael D; Swanson, Eric T (National Bureau of Economic Research Working Paper Series, 2022)
High-frequency changes in interest rates around FOMC announcements are an important tool for identifying the effects of monetary policy on asset prices and the macroeconomy. However, some recent studies have questioned both the exogeneity and the relevance of these monetary policy surprises as instruments, especially for estimating the macroeconomic effects of monetary policy shocks. For example, monetary policy surprises are correlated with macroeconomic and financial data that is publicly available prior to the FOMC announcement. We address these concerns in two ways: First, we expand the set of monetary policy announcements to include speeches by the Fed Chair, which doubles the number and importance of announcements; Second, we explain the predictability of the monetary policy surprises in terms of the “Fed response to news” channel of Bauer and Swanson (2021) and account for it by orthogonalizing the surprises with respect to macroeconomic and financial data that pre-date the announcement. Our subsequent reassessment of the effects of monetary policy yields two key results: First, estimates of the high-frequency effects on asset prices are largely unchanged; Second, estimates of the effects on the macroeconomy are substantially larger and more significant than what previous studies using high-frequency data have typically found.
Author contact info: Michael D. Bauer 101 Market St San Francisco, CA 94105 USA Tel: +1-619-857-9156 E-Mail: michael.d.bauer@gmail.com Eric T. Swanson Department of Economics University of California at Irvine 3151 Social Science Plaza Irvine, CA 92697-5100 Tel: 949/824-8305 E-Mail: eric.swanson@uci.edu

Independent Regulators and Financial Stability: Evidence from Gubernatorial Campaigns and a Progressive Era Policy Experiment - Del Angel, Marco; Richardson, Gary (National Bureau of Economic Research Working Paper Series, 2022)
Regulatory independence forms a foundation for modern financial systems. To illuminate the value of this ubiquitous institution, we examine a Progressive Era policy experiment in which hitherto independent regulators came under gubernatorial supervision. After this change, failure rates declined during gubernatorial election campaigns for banks under gubernatorial jurisdiction. Declines did not occur during campaigns for other officials or for nationally chartered banks. Declines in bank resolutions during campaigns reduced business bankruptcies. We corroborate these claims with new data and novel IV regressions. Our results indicate that political subservience of financial regulators links electoral and economic cycles.
Author contact info: Marco Del Angel 403 Verano PL Irvine, CA 92617 E-Mail: marcom3@uci.edu Gary Richardson Department of Economics University of California, Irvine 3155 Social Sciences Plaza Irvine, CA 92697-5100 Tel: 949/824-3189 Fax: 949/824-2182 E-Mail: garyr@uci.edu

Stubborn Beliefs in Search Equilibrium - Menzio, Guido (National Bureau of Economic Research Working Paper Series, 2022)
I study a search equilibrium model of the labor market in which workers have stubborn beliefs about their labor market prospects, i.e. beliefs about their probability of finding a job and the wage they will earn that do not respond to aggregate fluctuations in fundamentals. I show that, when workers have stubborn beliefs, the response of the wage bargained by a firm and a worker to aggregate shocks is dampened. As a result, the response of labor market tightness, job-finding probability, unemployment and vacancies to aggregate fluctuations is amplified. I show that stubborn beliefs generate cyclical inefficiencies in the labor market that can be corrected with countercyclical employment subsidies. I find that the response of the labor market to negative shocks is the same even if only a small fraction of workers has stubborn beliefs. In contrast, if the fraction of workers with stubborn beliefs is small, the response of the labor market to positive shocks is approximately the same as under rational expectations.
Author contact info: Guido Menzio Department of Economics New York University 19 West 4th Street, New York, NY 10012 E-Mail: gm1310@nyu.edu

Programming FPGAs for Economics: An Introduction to Electrical Engineering Economics - Cheela, Bhagath; DeHon, André; Fernández-Villaverde, Jesús; Peri, Alessandro (National Bureau of Economic Research Working Paper Series, 2022)
We show how to use field-programmable gate arrays (FPGAs) and their associated high-level synthesis (HLS) compilers to solve heterogeneous agent models with incomplete markets and aggregate uncertainty (Krusell and Smith, 1998). We document that the acceleration delivered by one single FPGA is comparable to that provided by using 74 CPU cores in a conventional cluster. We describe how to achieve multiple acceleration opportunities—pipeline, data-level parallelism, and data precision—with minimal modification of the C code written for a traditional sequential processor, which we then deploy on FPGAs easily available at Amazon Web Services. We quantify the speedup and cost of these accelerations. Our paper is the first step toward a new field, electrical engineering economics, focused on designing computational accelerators for economics to tackle challenging quantitative models.
Author contact info: Bhagath Singh Cheela University of Pennsylvania Philadelphia, Penn 19104 United States E-Mail: cheelabhagath@gmail.com André DeHon University of Pennsylvania Philadelphia, Penn 19104 United States E-Mail: andre@acm.org Jesús Fernández-Villaverde Department of Economics University of Pennsylvania The Ronald O. Perelman Center for Political Science and Economics 133 South 36th Street Suite 150 Philadelphia, PA 19104 E-Mail: jesusfv@econ.upenn.edu Alessandro Peri Department of Economics UCB 256 University of Colorado Boulder, CO 80309 USA E-Mail: alessandro.peri@colorado.edu

Heterogeneity in Place Effects on Health: The Case of Time Preferences and Adolescent Obesity - Datar, Ashlesha; Nicosia, Nancy; Samek, Anya (National Bureau of Economic Research Working Paper Series, 2022)
We leverage a natural experiment in combination with data on adolescents’ time preferences to assess whether there is heterogeneity in place effects on adolescent obesity. We exploit the plausibly exogenous assignment of military servicemembers, and consequently their children, to different installations to identify place effects. Adolescents’ time preferences are measured by a validated survey scale. Using the obesity rate in the assigned installation county as a summary measure of its obesity-related environments, we show that exposure to counties with higher obesity rates increases the likelihood of obesity among less patient adolescents but not among their more patient counterparts.
Author contact info: Ashlesha Datar University of Southern California 635 Downey Way Los Angeles, CA 90089 E-Mail: adatar@usc.edu Nancy Nicosia RAND 20 Park Plaza Suite 920 Boston MA 02116 Tel: 617-338-2509 E-Mail: nicosia@rand.org Anya Samek University of California, San Diego Rady School of Management Wells Fargo Hall 9500 Gilman Drive #0553 La Jolla, CA 92093-0553 E-Mail: anyasamek@gmail.com

Optimal Exploration and Price Paths of a Non-renewable Commodity with Stochastic Discoveries - Ekeland, Ivar; Schlenker, Wolfram; Tankov, Peter; Wright, Brian (National Bureau of Economic Research Working Paper Series, 2022)
We address the long-standing challenge of adding optimal exploration to the classic Hotelling model of a non-renewable resource. We completely solve such a model, using impulse control. The model, extending Arrow and Chang (1982), has two state variables: “proven” reserves and a finite unexplored area available for exploration at constant marginal cost, with a Poisson process for new discoveries. We prove that a frontier of critical levels of proven reserves exists, above which exploration ceases, and below which it happens at infinite speed. This frontier is increasing in explored area, and higher reserve levels along this critical threshold indicate more scarcity, not less. In a stochastic generalization of Hotelling’s rule, the expected shadow price of reserves rises at the rate of interest across exploratory episodes. The trajectories of prices realized prior to exhaustion of the exploratory area may jump up or down upon exploration. Conditional on non-exhaustion, expected price rises at a rate bounded above by the rate of interest, explaining why most empirical tests based on past price histories reject Hotelling’s rule. Starting when the unexplored area is sufficiently close to zero, all price paths rise at less than the rate of interest until exhaustion of the unexplored area.
Author contact info: Ivar Ekeland Centre de Recherches de Mathématiques de la Décision (CEREMADE) Université Paris-Dauphine 16 place du Maréchal de Lattre de Tassigny 75775 CEDEX 16 Paris, FRANCE PARIS France E-Mail: ekeland@ceremade.dauphine.fr Wolfram Schlenker School of International and Public Affairs (SIPA) Columbia University 420 West 118th St New York, NY 10027 Tel: 212/854-1806 Fax: 212/854-5765 E-Mail: wolfram.schlenker@columbia.edu Peter Tankov ENSAE Institut Polytechnique de Paris 5, avenue Henry Le Chatelier 91120 Palaiseau Palaiseau France E-Mail: peter.tankov@ensae.fr Brian Wright University of California, Berkeley Agricultural and Resource Economics Berkeley, CA 94720-3310 E-Mail: bwright@berkeley.edu

Returns to Different Postsecondary Investments: Institution Type, Academic Programs, and Credentials - Lovenheim, Michael F; Smith, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
Early research on the returns to higher education treated the postsecondary system as a monolith. In reality, postsecondary education in the United States and around the world is highly differentiated, with a variety of options that differ by credential (associates degree, bachelor’s degree, diploma, certificate, graduate degree), the control of the institution (public, private not-for-profit, private for-profit), the quality/resources of the institution, field of study, and exposure to remedial education. In this Chapter, we review the literature on the returns to these different types of higher education investments, which has received increasing attention in recent decades. We first provide an overview of the structure of higher education in the U.S. and around the world, followed by a model that helps clarify and articulate the assumptions employed by different estimators used in the literature. We then discuss the research on the return to institution type, focusing on the return to two-year, four-year, and for-profit institutions as well as the return to college quality within and across these institution types. We also present the research on the return to different educational programs, including vocational credentials, remedial education, field of study, and graduate school. The wide variation in the returns to different postsecondary investments that we document leads to the question of how students from different backgrounds sort into these different institutions and programs. We discuss the emerging research showing that lower-SES students, especially in the U.S., are more likely to sort into colleges and programs with lower returns as well as results from recent U.S.-based interventions and policies designed to support success among students from disadvantaged backgrounds. The Chapter concludes with some broad directions for future research.
Author contact info: 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 Jonathan Smith Andrew Young School of Policy Studies Georgia State University P.O. Box 3992 Atlanta, GA 30302-3992 E-Mail: jsmith500@gsu.edu

Substance Abuse during the Pandemic: Implications for Labor-Force Participation - Greenwood, Jeremy; Guner, Nezih; Kopecky, Karen (National Bureau of Economic Research Working Paper Series, 2022)
The labor-force participation rates of prime-age U.S. workers dropped in March 2020—the start of the COVID-19 pandemic—and have still not fully recovered. At the same time, substance-abuse deaths were elevated during the pandemic relative to trend indicating an increase in the number of substance abusers, and abusers of opioids and crystal methamphetamine have lower labor-force participation rates than non-abusers. Could increased substance abuse during the pandemic be a factor contributing to the fall in labor-force participation? Estimates of the number of additional substance abusers during the pandemic presented here suggest that increased substance abuse accounts for between 9 and 26 percent of the decline in prime-age labor-force participation between February 2020 and June 2021.
Author contact info: Jeremy Greenwood University of Pennsylvania Nezih Guner CEMFI Calle Casado del Alisal, 5 28014 Madrid Spain E-Mail: ngunermail@gmail.com Karen Kopecky Federal Reserve Bank of Cleveland 1455 E 6th St Cleveland, OH 44114 E-Mail: karen.kopecky@clev.frb.org

A p Theory of Taxes and Debt Management - Jiang, Wei; Sargent, Thomas J; Wang, Neng; Yang, Jinqiang (National Bureau of Economic Research Working Paper Series, 2022)
Distortions induce a benevolent government that must finance an exogenous expenditure process to smooth taxes. An optimal fiscal plan determines the marginal cost —p’ of servicing government debt and makes government debt risk-free. A convenience yield tilts debts forward and taxes backward. An option to default determines debt capacity. Debt-GDP ratio dynamics are driven by 1) a primary deficit, 2) interest payments, 3) GDP growth, and 4) hedging costs. We provide quantitative comparative dynamic statements about debt capacity, debt-GDP ratio transition dynamics, and time to exhaust debt capacity.
Author contact info: Wei Jiang Clear Water Bay, Kowloon Hong Kong 100025 Hong Kong E-Mail: weijiang@ust.hk Thomas J. Sargent Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 612/373-4383 Fax: 650/723-1687 E-Mail: thomas.sargent@nyu.edu Neng Wang Columbia Business School 3022 Broadway, Uris Hall 812 New York, NY 10027 Tel: 212/854-3869 Fax: 212/662-8474 E-Mail: nw2128@columbia.edu Jinqiang Yang Shanghai University of Finance and Economics Guoding Rd. 777 Shanghai, 200433 China E-Mail: yang.jinqiang@mail.sufe.edu.cn

Intimate Partner Violence and Income: Quasi-Experimental Evidence from the Earned Income Tax Credit - Cesur, Resul; Rodriguez-Planas, Núria; Roff, Jennifer; Simon, David (National Bureau of Economic Research Working Paper Series, 2022)
We estimate the impact of an exogenous increase in income on the incidence and intensity of intimate partner violence (IPV). Using the National Crime Victimization Survey data from 1992 to 2000, we exploit time and family-size variation in the Earned Income Tax Credit (EITC) by comparing IPV victimization of women with one or more children (our “treated” group) to that of women with no children (our comparison group) before and after OBRA-93. The OBRA-93 expansion reduces both reports of any physical or sexual assault and counts of physical or sexual assaults per 100 women surveyed, with the effects being strongest for those groups more likely to both experience IPV and be eligible for EITC: unmarried women and black women. If increased income (rather than changes in employment) is the only channel by which the EITC decreases IPV, an additional $1,000 of after-tax income decreases the incidence of physical and sexual violence of unmarried low-educated women by 9.73% and the intensity of physical and sexual violence by 21%. We explore potential mechanisms behind these findings.
Author contact info: Resul Cesur University of Connecticut School of Business 2100 Hillside Road Storrs, CT 06269 Tel: 860/486-6315 E-Mail: cesur@uconn.edu Núria Rodriguez-Planas CUNY, Queens College E-Mail: nrodriguezplanas@gmail.com Jennifer Roff Queens College, CUNY 65-30 Kissena Blvd. Queens, NY 11367-1597 United States E-Mail: jennifer.roff@gmail.com David Simon Department of Economics University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269 Tel: 336/482-6009 E-Mail: david.simon@uconn.edu

A Minimalist Model for the Ruble During the Russian Invasion of Ukraine - Lorenzoni, Guido; Werning, Iván (National Bureau of Economic Research Working Paper Series, 2022)
This note isolates an overlooked economic force for the Ruble to appreciate in response to international sanctions limiting exports to Russia. The economic intuition is that when Russians are unable to buy the mix of foreign goods they wish, then foreign goods becomes less attractive, increasing the demand for domestic goods; to reestablish an equilibrium a real appreciation is needed to raise the relative price of domestic goods and incentivizing the accumulation of foreign assets and the import from non-sanctioning countries. We also review well-known forces for a depreciation (e.g. Russian export reduction). Our analysis emphasizes that the exchange rate is an inadequate signal of welfare impacts and the effectiveness of sanctions.
Author contact info: Guido Lorenzoni University of Chicago Booth School of Business 5807 S. Woodlawn Ave. Chicago, IL 60637 E-Mail: Guido.Lorenzoni@chicagobooth.edu 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

A Final Report Card on the States’ Response to COVID-19 - Kerpen, Phil; Moore, Stephen; Mulligan, Casey B (National Bureau of Economic Research Working Paper Series, 2022)
Almost exactly two years ago COVID-19 spread to the United States. Following the federalism model, the 50 states and their governors and legislators made many of their own pandemic policy choices to mitigate the damage from the virus. States learned from one another over time about what policies worked most and least effectively in terms of containing the virus while minimizing the negative effects of lockdown strategies on businesses and children. This study is an expanded and updated version of an October 2020 report card of how pandemic health, economy, and policy varied across the 50 states and the District of Columbia (Committee to Unleash Prosperity 2020). It examines three variables: health outcomes, economic performance throughout the pandemic, and impact on education.
Author contact info: Phil Kerpen Committee to Unleash Prosperity 1155 15th Street NW Suite 525 Washington, DC 20015 E-Mail: phil@americancommitment.org Stephen Moore The Heritage Foundation 214 Massachusetts Avenue, NE Washington, DC 20002 E-Mail: steve.moore@heritage.org 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

An Equilibrium Analysis of the Effects of Neighborhood-based Interventions on Children - Chyn, Eric; Daruich, Diego (National Bureau of Economic Research Working Paper Series, 2022)
To study the effects of neighborhood and place-based interventions, this paper incorporates neighborhood effects into a general equilibrium (GE) heterogeneous-agent overlapping-generations model with endogenous location choice and child skill development. Importantly, housing costs as well as neighborhood effects are endogenously determined in equilibrium. Having calibrated the model based on U.S. data, we use simulations to show that predictions from the model match reduced form evidence from experimental and quasi-experimental studies of housing mobility and urban development programs. After this validation exercise, we study the long-run and large-scale impacts of vouchers and place-based subsidies. Both policies result in welfare gains by reducing inequality and generating improvements in average skills and productivity, all of which offset higher levels of taxes and other GE effects. We find that a voucher program generates larger long-run welfare gains relative to place-based policies. Our analysis of transition dynamics, however, suggests there may be more political support for place-based policies.
Author contact info: Eric Chyn The University of Texas at Austin Department of Economics 2225 Speedway, Stop C3100 Austin, TX 78712-1690 E-Mail: eric.chyn@austin.utexas.edu Diego Daruich University of Southern California 3670 Trousdale Pkwy Los Angeles, CA 90089 E-Mail: daruich@usc.edu

The Long Run Impacts of Court-Ordered Desegregation - Anstreicher, Garrett; Fletcher, Jason; Thompson, Owen (National Bureau of Economic Research Working Paper Series, 2022)
Court ordered desegregation plans were implemented in hundreds of US school districts nationwide from the 1960s through the 1980s, and were arguably the most substantive national attempt to improve educational access for African American children in modern American history. Using large Census samples that are linked to Social Security records containing county of birth, we implement event studies that estimate the long run effects of exposure to desegregation orders on human capital and labor market outcomes. We find that African Americans who were relatively young when a desegregation order was implemented in their county of birth, and therefore had more exposure to integrated schools, experienced large improvements in adult human capital and labor market outcomes relative to Blacks who were older when a court order was locally implemented. There are no comparable changes in outcomes among whites in counties undergoing an order, or among Blacks who were beyond school ages when a local order was implemented. These effects are strongly concentrated in the South, with largely null findings in other regions. Our data and methodology provide the most comprehensive national assessment to date on the impacts of court ordered desegregation, and strongly indicate that these policies were in fact highly effective at improving the long run socioeconomic outcomes of many Black students.
Author contact info: Garrett Anstreicher 730 N 14th St Room 525Q Lincoln, Nebr 68588 United States Tel: 3195415408 E-Mail: ganstreicher2@unl.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 Owen Thompson Department of Economics Williams College 24 Hopkins Hall Drive Williamstown, MA 01267 Tel: 413/597-2669 E-Mail: ot3@williams.edu

The Social Integration of International Migrants: Evidence from the Networks of Syrians in Germany - Bailey, Michael; Johnston, Drew M; Koenen, Martin; Kuchler, Theresa; Russel, Dominic; Stroebel, Johannes (National Bureau of Economic Research Working Paper Series, 2022)
We use de-identified data from Facebook to study the social integration of Syrian migrants in Germany, a country that received a large influx of refugees during the Syrian Civil War. We construct measures of migrants' social integration based on Syrians' friendship links to Germans, their use of the German language, and their participation in local social groups. We find large variation in Syrians' social integration across German counties, and use a movers' research design to document that these differences are largely due to causal effects of place. Regional differences in the social integration of Syrians are shaped both by the rate at which German natives befriend other locals in general (general friendliness) and the relative rate at which they befriend local Syrian migrants versus German natives (relative friending). We follow the friending behavior of Germans that move across locations to show that both general friendliness and relative friending are more strongly affected by place-based effects such as local institutions than by persistent individual characteristics of natives (e.g., attitudes toward neighbors or migrants). Relative friending is higher in areas with lower unemployment and more completed government-sponsored integration courses. Using variation in teacher availability as an instrument, we find that integration courses had a substantial causal effect on the social integration of Syrian migrants. We also use fluctuations in the presence of Syrian migrants across high school cohorts to show that natives with quasi-random exposure to Syrians in school are more likely to befriend other Syrian migrants in other settings, suggesting that contact between groups can shape subsequent attitudes towards migrants.
Author contact info: Michael Bailey Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: mcbailey@fb.com Drew M. Johnston Harvard University E-Mail: drewjohnston@g.harvard.edu Martin Koenen Harvard University E-Mail: martin_koenen@fas.harvard.edu Theresa Kuchler Stern School of Business New York University 44 West 4th Street New York, NY 10012 E-Mail: tkuchler@stern.nyu.edu Dominic Russel Wyss Hall 20 North Harvard Street Boston, MA 02163 E-Mail: drussel@g.harvard.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

Tax Aversion and the Social Contract in Africa - Robinson, James A (National Bureau of Economic Research Working Paper Series, 2022)
Despite the low levels of taxation and public good provision in Africa, I provide evidence that a large proportion of Africans prefer lower taxation and fewer public goods. This cannot be explained by standard arguments about problems of accountability, governance or state capacity. Instead I argue that it reflects deeply seated ideas about the nature of the state and its potential threats to the autonomy of society. I show the historic social contracts in Africa rarely featured taxation and kept the state to limited jurisdictions. These social contracts have in many ways reproduced themselves and influence the way Africa is governed today.
Author contact info: James A. Robinson University of Chicago Harris School of Public Policy and Department of Political Science 1307 East 60th Street Chicago, Illinois 60637 Tel: 617/496-2839 Fax: 617/495-0438 E-Mail: jamesrobinson@uchicago.edu

Technology and Tax Capacity: Evidence from Local Governments in Ghana - Dzansi, James; Jensen, Anders; Lagakos, David; Telli, Henry (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the role of technology in local-government tax collection capacity in the developing world. We first conduct a new census of all local governments in Ghana to document a strong association between technology use and property tax billing, collection and enforcement. We then randomize the use of a new revenue collection technology within one large municipal government. Revenue collectors using the new technology delivered 27 percent more bills and collected 103 percent more tax revenues than control collectors. Collectors using the new technology learned faster about which households in their assigned areas were willing and able to make payments. We reconcile these experimental findings in a simple Beckerian time-use model in which technology allows revenue collectors to better allocate their time towards households that are the most likely to comply with taxpaying duties. The model’s predictions are consistent with experimental evidence showing that treatment collectors are more likely to target households with greater liquidity, income, awareness of taxpaying duties, and satisfaction with local public goods provision.
Author contact info: James Dzansi International Growth Centre c/o Institute of Statistical, Social & Economic Research University of Ghana Legon, Accra Ghana E-Mail: james.dzansi@theigc.org Anders Jensen Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 Tel: 857/272-9833 E-Mail: anders_jensen@hks.harvard.edu David Lagakos Department of Economics Boston University 270 Bay State Road Boston, MA 02215 E-Mail: lagakos@bu.edu Henry Telli International Growth Centre c/o Institute of Statistical, Social & Economic Research University of Ghana Legon, Accra Ghana Tel: +233268820541 E-Mail: henry.telli@theigc.org

Is There a Foster Care-To-Prison Pipeline? Evidence from Quasi-Randomly Assigned Investigators - Baron, E. Jason; Gross, Max (National Bureau of Economic Research Working Paper Series, 2022)
Foster care placement is strongly associated with crime—for example, close to one fifth of the prison population in the United States is comprised of former foster children—yet there is little evidence on whether this relationship is causal. Leveraging the quasi-random assignment of child welfare investigators and administrative data from Michigan, we show that foster care placement substantially reduced the chances of adult arrests, convictions, and incarceration for children at the margin. Exploring mechanisms, we find that foster care also improved a range of children's safety, academic, and behavioral intermediate outcomes. A likely reason for children's improvements is that their birth parents made positive changes, as most children in our setting reunified with their parents after a short stay in foster care. In light of recent historic federal policy which prioritizes keeping children with their families, our analysis indicates that safely reducing foster care caseloads will require improving efforts to ensure child wellbeing in the home.
Author contact info: E. Jason Baron Economics Department Duke University 228B Social Sciences Building Durham, NC 27708 E-Mail: jason.baron@duke.edu Max Gross 600 Alexander Park Dr Princeton, NJ 08540 Tel: (609) 297-4521 E-Mail: mgross@mathematica-mpr.com

Economic Shocks and Skill Acquisition: Evidence from a National Online Learning Platform at the Onset of COVID-19 - Ganguli, Ina; Haidar, Jamal I; Khwaja, Asim Ijaz; Stemper, Samuel W; Zafar, Basit (National Bureau of Economic Research Working Paper Series, 2022)
We study how large shocks impact individuals’ skilling decisions using data from the largest online learning platform in Saudi Arabia. The onset of the COVID-19 pandemic brought about a massive increase in online skilling, and demand shifted towards courses that offered skills, such as telework, likely to be immediately valuable during the pandemic. Consistent with a model where individuals trade off reskilling costs with their expectations of future labor market conditions and their duration of work, we find that shifts into telework courses were largest for older workers. In contrast, younger workers increased enrollments in courses related to new skills, such as general, occupation-specific, and computer-related skills. Using national administrative employment data, we provide suggestive evidence that these investments in skills in early 2020 helped users maintain employment over the course of the pandemic.
Author contact info: Ina Ganguli Department of Economics Crotty Hall 304 412 N. Pleasant Street University of Massachusetts Amherst Amherst, MA 01002 Tel: 413-545-6230 Fax: 413- 545-2921 E-Mail: iganguli@econs.umass.edu Jamal I. Haidar 79 John F. Kennedy Street Cambridge, MA 02138 United States E-Mail: haidar.jamali@gmail.com Asim Ijaz Khwaja Harvard Kennedy School Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/494-7790 Fax: 617/496-8753 E-Mail: asim_ijaz_khwaja@harvard.edu Samuel W. Stemper 12 Grafton Road Auckland CBD, Auckland, New Zealand 1010 Auckland New Zealand Tel: +64 022 026 9604 E-Mail: sam.stemper@auckland.ac.nz Basit Zafar Department of Economics University of Michigan 611 Tappan Street Ann Arbor, Michigan 48109 E-Mail: basitak@gmail.com

Industries, Mega Firms, and Increasing Inequality - Haltiwanger, John C; Hyatt, Henry R; Spletzer, James (National Bureau of Economic Research Working Paper Series, 2022)
Most of the rise in overall earnings inequality is accounted for by rising between-industry dispersion from ten percent of 4-digit NAICS industries. These thirty industries are clustered especially in high-paying high-tech and low-paying retail sectors. The rise of employment in mega firms is concentrated in the industries that dominate rising earnings inequality. Earnings differentials for the mega firms relative to small firms decline in the low-paying industries but increase in the high-paying industries. A critical component accounting for the rising dispersion in the top thirty industries is an increasing covariance between industry premia and worker characteristics associated with high earnings.
Author contact info: John C. Haltiwanger Department of Economics University of Maryland College Park, MD 20742 Tel: 301/405-3504 Fax: 301/405-3542 E-Mail: haltiwan@econ.umd.edu Henry R. Hyatt Center for Economic Studies U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: henry.r.hyatt@census.gov James Spletzer Center for Economic Studies U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: James.R.Spletzer@gmail.com

The role of Venture Capital and Governments in Clean Energy: Lessons from the First Cleantech Bubble - van den Heuvel, Matthias; Popp, David (National Bureau of Economic Research Working Paper Series, 2022)
After a boom and bust cycle in the early 2010s, venture capital (VC) investments are, once again, flowing towards green businesses. In this paper, we use Crunchbase data on 150,000 US startups founded between 2000 and 2020 to better understand why VC initially did not prove successful in funding new clean energy technologies. Both lackluster demand and a lower potential for outsized returns make clean energy firms less attractive to VC than startups in ICT or biotech. However, we find no clear evidence that characteristics such as high-capital intensity or long development timeframe are behind the lack of success of VC in clean energy. In addition, our results show that while public sector investments can help attract VC investment, the ultimate success rate of firms receiving public funding remains small. Thus, stimulating demand will have a greater impact on clean energy innovation than investing in startups that will then struggle through the “valley of death”. Rather than investing themselves in startups bound to struggle through the valleys of death, governments wishing to support clean energy startups can first implement demand-side policies that make investing in clean energy more viable.
Author contact info: Matthias van den Heuvel Switzerland E-Mail: matthiasvandenheuvel@gmail.com 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

Are Managers Paid for Market Power? - Bao, Renjie; De Loecker, Jan; Eeckhout, Jan (National Bureau of Economic Research Working Paper Series, 2022)
To answer the question whether managers are paid for market power, we propose a theory of executive compensation in an economy where firms have market power, and the market for man- agers is competitive. We identify two distinct channels that contribute to manager pay in the model: market power and firm size. Both increase the profitability of the firm, which makes managers more valuable as it increases their marginal product. Using data on executive compensation from Com- pustat, we quantitatively analyze how market power affects Manager Pay and how it changes over time. We attribute on average 45.8% of Manager Pay to market power, from 38.0% in 1994 to 48.8% in 2019. Over this period, market power accounts for 57.8% of growth. We also find there is a lot of heterogeneity within the distribution of managers. For the top managers, 80.3% of their pay in 2019 is due to market power. Top managers are hired disproportionately by firms with market power, and they get rewarded for it, increasingly so.
Author contact info: Renjie Bao Julis Romo Rabinowitz Building Princeton, NJ 08544 United States E-Mail: renjie.bao@princeton.edu Jan De Loecker Economics Department KU Leuven Naamsestraat 68 3000 Leuven Belgium E-Mail: jan.deloecker@kuleuven.be Jan Eeckhout Department of Economics Universitat Pompeu Fabra Trias Fargas 25 Barcelona 08005 Spain E-Mail: jan.eeckhout@upf.edu

Bubbles and the Value of Innovation - Haddad, Valentin; Ho, Paul; Loualiche, Erik (National Bureau of Economic Research Working Paper Series, 2022)
Booming innovation often coincides with intense speculation in financial markets. Using over a million patents, we document two ways the market valuation of innovation and its economic impact become disconnected during bubbles. Specifically, an innovation raises the stock price of its creator by 40% more than is justified by future outcomes. In contrast, competitors’ stock prices move little despite their profits suffering. We develop a theory of investor disagreement about which firms will succeed that reconciles both the facts, unlike existing models of bubbles. Optimal innovation policy during bubbles must account for the disconnect.
Author contact info: Valentin Haddad University of California, Los Angeles Anderson School of Management Office C4.19 110 Westwood Plaza Los Angeles, CA 90024 E-Mail: vhaddad@ad.ucla.edu Paul Ho Federal Reserve Bank of Richmond 701 East Byrd Street Richmond, VA 23219 E-Mail: paul.ho@rich.frb.org Erik Loualiche University of Minnesota, Carlson School 321 19th Avenue South 3-117 Minneapolis, MN 55455 Tel: 7733447431 E-Mail: eloualic@umn.edu

Idiosyncratic Equity Risk Two Decades Later - Campbell, John Y; Lettau, Martin; Malkiel, Burton G; Xu, Yexiao (National Bureau of Economic Research Working Paper Series, 2022)
This paper reviews the literature on idiosyncratic equity volatility since the publication of “Have Individual Stocks Become More Volatile? An Empirical Exploration of Idiosyncratic Risk” in 2001. We respond to replication studies by Chiah, Gharghori, and Zhong and by Leippold and Svaton, and we present volatility estimates through the end of 2021, significantly extending the period covered in our original paper as well as the two replication studies. After spiking in the 1999- 2000 period, idiosyncratic volatility declined thereafter; but sharp increases in market, industry, and idiosyncratic volatility occurred during the global financial crisis of 2008-2009 and the COVID-19 pandemic of 2020-2021. We argue that market microstructure effects are not of first-order importance for volatility measurement, and we discuss the roles of fundamental factors and investor sentiment in driving the observed fluctuations in volatility.
Author contact info: John Y. Campbell Morton L. and Carole S. Olshan Professor of Economics Department of Economics Harvard University Littauer Center 213 Cambridge, MA 02138 Tel: 617/496-6448 Fax: 617/495-7730 E-Mail: john_campbell@harvard.edu Martin Lettau Haas School of Business University of California, Berkeley 545 Student Services Bldg. #1900 Berkeley, CA 94720-1900 Tel: 510/642-6349 Fax: 510/643-1412 E-Mail: lettau@haas.berkeley.edu Burton G. Malkiel Economics Department Princeton University Princeton, NJ 08544 E-Mail: bmalkiel@princeton.edu Yexiao Xu School of Management University of Texas at Dallas Richardson, TX 75083 E-Mail: yexiaoxu@utdallas.edu

Modeling Uncertainty as Ambiguity: a Review - Ilut, Cosmin L; Schneider, Martin (National Bureau of Economic Research Working Paper Series, 2022)
We survey literature on ambiguity with an emphasis on recent applications in macroeconomics and finance. Like risk, ambiguity leads to cautious behavior and uncertainty premia in asset markets. Unlike risk, ambiguity can generate first order welfare losses. As a result, precautionary behavior and ambiguity premia obtain even when agents have linear utility and are reflected in linear approximations to model dynamics. Quantitative work exploits this insight to estimate models that jointly match the dynamics of asset prices and macro aggregates. In micro data, inertia and inaction due to ambiguity help understand patterns such as non-participation in asset markets, price rigidities and simple contracts. Learning under ambiguity generates asymmetric responses to news that help connect higher moments in micro and macro data. Survey evidence is increasingly used to provide direct evidence on ambiguity averse behavior, as well as to discipline quantitative models.
Author contact info: Cosmin L. Ilut Department of Economics Duke University 223 Social Sciences Building Box 90097 Durham, NC 27708 Tel: 919/660-1844 E-Mail: cosmin.ilut@duke.edu Martin Schneider Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: (650) 721 6320 E-Mail: schneidr@stanford.edu

Can a Website Bring Unemployment Down? Experimental Evidence from France - Ben Dhia, Aïcha; Crépon, Bruno; Mbih, Esther; Paul-Delvaux, Louise; Picard, Bertille; Pons, Vincent (National Bureau of Economic Research Working Paper Series, 2022)
We evaluate the impact of an online platform giving job seekers tips to improve their search and recommendations of new occupations and locations to target, based on their personal data and labor market data. Our experiment used an encouragement design and was conducted in collaboration with the French public employment agency. It includes 212,277 individuals. We find modest effects on search methods: the users of the platform adopt some of its tips and they are more likely to use resources provided by public employment services. However, following individual trajectories for 18 months after the intervention, we do not observe any impact on time spent looking for a job, search scope (occupational or geographical), or self-reported well-being. Most importantly, we do not find any effect on any employment outcome, whether in the short or medium run. We conclude that the enthusiasm around the potential for job-search assistance platforms to help reduce unemployment should be toned down.
Author contact info: Aïcha Ben Dhia Massachusetts Institute of Technology E-Mail: abendhia@mit.edu Bruno Crépon CREST 15, boulevard Gabriel Peri 92245 Malakoff Cedex France E-Mail: crepon@ensae.fr Esther Mbih CREST-Ensae 5 Avenue Henry Le Chatelier Palaiseau 91764 France E-Mail: mbih.esther@gmail.com Louise Paul-Delvaux Harvard University E-Mail: lpauldelvaux@fas.harvard.edu Bertille Picard AMU - AMSE 5-9 Bd Maurice Bourdet Marseille 13001 France E-Mail: bertille.picard@univ-amu.fr Vincent Pons Harvard Business School Morgan Hall 289 Soldiers Field Boston, MA 02163 Tel: 617/495-9329 E-Mail: vpons@hbs.edu

On ESG Investing: Heterogeneous Preferences, Information, and Asset Prices - Goldstein, Itay; Kopytov, Alexandr; Shen, Lin; Xiang, Haotian (National Bureau of Economic Research Working Paper Series, 2022)
We study how environmental, social and governance (ESG) investing reshapes information aggregation by prices. We develop a rational expectations equilibrium model in which traditional and green investors are informed about financial and ESG risks but have different preferences over them. Because of the preference heterogeneity, traditional and green investors trade in the opposite directions based on the same information. We show that the equilibrium price may not be uniquely determined. An increase in the fraction of green investors and an improvement in the ESG information quality can reduce price informativeness about the financial payoff and raise the cost of capital.
Author contact info: Itay Goldstein The Wharton School University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/746-0499 E-Mail: itayg@wharton.upenn.edu Alexandr Kopytov 3141 Carol Simon Hall China/Hong Kong E-Mail: alexandrkopytov91@gmail.com Lin Shen Boulevard de Constance INSEAD 77300, Fontainebleau France E-Mail: lin.shen@insead.edu Haotian Xiang Peking University No.5 Yiheyuan Road Haidian District Beijing 100871 China E-Mail: xiang@gsm.pku.edu.cn

Welfare Implications of Electric-Bike Subsidies: Evidence from Sweden - Anderson, Anders; Hong, Harrison (National Bureau of Economic Research Working Paper Series, 2022)
We evaluate a large-scale Swedish electric bike (E-bike) subsidy program in 2018, similar to those implemented in many other countries. We combine administrative, insurance and survey data to address challenges of welfare analyses such as non-additionality. We find (1) complete pass through of the average $494 subsidy to consumers, (2) a near doubling of E-bikes sold but one-third of the adopters are nonadditional, and (3) a savings of 1.3 tons of carbon emissions during the life of the E-bike. At a cost of $589 per ton, the program is an expensive way to reduce carbon emissions from driving.
Author contact info: Anders Anderson Stockholm School of Economics Drottninggatan 98 Stockholm, Sweden E-Mail: Anders.Anderson@hhs.se Harrison Hong Department of Economics Columbia University 1022 International Affairs Building Mail Code 3308 420 West 118th Street New York, NY 10027 Tel: 212/851-9435 E-Mail: hh2679@columbia.edu

Dads and Daughters: Disentangling Altruism and Investment Motives for Spending on Children - Dizon-Ross, Rebecca; Jayachandran, Seema (National Bureau of Economic Research Working Paper Series, 2022)
This paper tests whether mothers and fathers differ in their spending on their daughters relative to their sons. We compare mothers’ and fathers’ willingness to pay (WTP) for specific goods for their children, diverging from the previous literature’s approach of comparing the expenditure effects of mothers’ versus fathers’ income. Our method, which we apply in Uganda, allows us to estimate gender differences and explore mechanisms with greater precision. A second innovation is that we examine why spending patterns differ between mothers and fathers, e.g., altruism, personal returns to investing in children. We find that fathers have a lower WTP for their daughters’ human capital than their sons’ human capital, whereas mothers do not. We also find evidence that altruism plays a role in the mother-father differences: fathers’ WTP for goods that simply bring joy to their daughters is lower than their WTP for such goods for their sons, but mothers’ is not.
Author contact info: Rebecca Dizon-Ross Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-3265 E-Mail: rdr@chicagobooth.edu Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu

Measuring Relative Poverty through Peer Rankings: Evidence from Côte D’Ivoire - Dupas, Pascaline; Fafchamps, Marcel; Houeix, Deivy (National Bureau of Economic Research Working Paper Series, 2022)
We investigate a method for eliciting relative poverty rankings that aggregates partial poverty rankings obtained from multiple individuals. We first demonstrate that the method works in principle, then apply it in urban Côte d’Ivoire. We find that constructed rankings are often incomplete, not always transitive and sometimes contain cycles. Pairwise rankings reported by respondents and constructed aggregate rankings are poorly correlated with measures of poverty obtained from survey data. Measuring relative poverty through peer rankings appears difficult in urban and periurban settings.
Author contact info: Pascaline Dupas Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: pdupas@princeton.edu Marcel Fafchamps Freeman Spogli Institute Stanford University 616 Jane Stanford Way Stanford, CA 94305 Tel: 650/497-4602 E-Mail: fafchamp@stanford.edu Deivy Houeix E-Mail: houeix@mit.edu

A labor market view on the risks of a U.S. hard landing - Domash, Alex; Summers, Lawrence H (National Bureau of Economic Research Working Paper Series, 2022)
This paper uses historical labor market data to assess the plausibility that the Federal Reserve can engineer a soft landing for the economy. We first show that the labor market today is significantly tighter than implied by the unemployment rate: the vacancy and quit rates currently experienced in the United States correspond to a degree of labor market tightness previously associated with sub-2 percent unemployment rates. We highlight that the super-tight labor market coincides with current wage inflation of 6.5 percent – the highest level experienced in the past 40 years – and that firm-side slack measures predict further increases in wage inflation over the coming year. Finally, we show that high levels of wage inflation have historically been associated with a substantial risk of a recession over the next one to two years. We argue that periods that historically have been hailed as successful soft landings have little in common with the present moment. Our results suggest a very low likelihood that the Federal Reserve can reduce inflation without causing a significant slowdown in economic activity.
Author contact info: Alex Domash Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 E-Mail: alex_domash@hks.harvard.edu Lawrence H. Summers Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 Tel: 617/495-9322 Fax: 617/495-0436 E-Mail: lhs@harvard.edu

Housing Market Expectations - Kuchler, Theresa; Piazzesi, Monika; Stroebel, Johannes (National Bureau of Economic Research Working Paper Series, 2022)
We review the recent literature on the determinants and effects of housing market expectations. We begin by providing an overview of existing surveys that elicit housing market expectations, and discuss how those surveys may be expanded in the future. We then document a number of facts about time-series and cross-sectional patterns of housing market expectations in these survey data, before summarizing research that has studied how individuals form these expectations. Housing market expectations are strongly influenced by recently observed house price changes, by personally or locally observed house price changes, by house price changes observed in a person's social network, and by current home ownership status. Similarly, experienced house price volatility affects expectations uncertainty. We also summarize recent work that documents how differences in housing market expectations translate into differences in individuals’ housing market behaviors, including their home purchasing and mortgage financing decisions. Finally, we highlight research on how expectations affect aggregate outcomes in the housing market.
Author contact info: Theresa Kuchler Stern School of Business New York University 44 West 4th Street New York, NY 10012 E-Mail: tkuchler@stern.nyu.edu Monika Piazzesi Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: (650) 723-9289 E-Mail: piazzesi@stanford.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

Estimating General Equilibrium Spillovers of Large-Scale Shocks - Huber, Kilian (National Bureau of Economic Research Working Paper Series, 2022)
Large-scale shocks directly affect some firms and households and indirectly affect others through general equilibrium spillovers. In this paper, I describe how researchers can directly estimate spillovers using quasi-experimental or experimental variation. I then argue that spillover estimates suffer from distinct sources of mechanical bias that standard empirical tools cannot resolve. These biases are particularly relevant in finance and macroeconomics, where multiple spillover channels and nonlinear effects are common. I offer guidance on how to detect and overcome mechanical biases. An application and several examples highlight that the suggested methods are broadly relevant and can inform policy and multiplier calculations.
Author contact info: Kilian Huber Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 E-Mail: kilianhuber@uchicago.edu

Transferable Skills? Founders as Venture Capitalists - Gompers, Paul A; Mukharlyamov, Vladimir (National Bureau of Economic Research Working Paper Series, 2022)
In this paper we explore whether or not the experience as a founder of a venture capital-backed startup influences the performance of founders who become venture capitalists (VCs). We find that nearly 7% of VCs were previously founders of a venture-backed startup. Having a successful exit and being male and white increase the probability that a founder transitions into a venture capital career. Successful founder-VCs have investment success rates that are 6.5 percentage points higher than professional VCs while unsuccessful founder-VCs have investment success rates that are 4 percentage points lower than professional VCs. While successful founder-VCs do get higher quality deal flow than professional or unsuccessful founder-VCs, observably higher deal quality does not explain the entire difference in performance. Using an instrumental variables approach to separate unobservable deal quality from value-add, we find that the outperformance of successful founder-VCs is consistent with them adding more value post-investment.
Author contact info: Paul Gompers Harvard Business School Baker Library 263 Soldiers Field Boston, MA 02163 Tel: 617/495-6297 Fax: 617/496-8443 E-Mail: pgompers@hbs.edu Vladimir Mukharlyamov McDonough School of Business Georgetown University 3700 O St NW Washington, DC 20057 E-Mail: vladimir.mukharlyamov@georgetown.edu

Economics of Foster Care - Bald, Anthony; Doyle, Joseph J, Jr.; Gross, Max; Jacob, Brian (National Bureau of Economic Research Working Paper Series, 2022)
Foster care provides substitute living arrangements to protect maltreated children. The practice is remarkably common: it is estimated that 5 percent of children in the United States are placed in foster care at some point during childhood. These children exhibit poor outcomes as children and adults, and economists have begun to estimate the causal relationship between foster care and life outcomes. This paper describes tradeoffs in child welfare policy and provides background on the latest trends in foster care practice to highlight areas most in need of rigorous evidence. These trends include efforts to prevent foster care on the demand side and to improve foster home recruitment on the supply side. With increasing data availability and a growing interest in evidence-based practices, there are opportunities for economic research to inform policies that protect vulnerable children.
Author contact info: Anthony Bald Harvard Kennedy School 79 John F. Kennedy St Cambridge, MA 02138 E-Mail: abald@g.harvard.edu Joseph J. Doyle Jr. MIT Sloan School of Management 100 Main Street, E62-516 Cambridge, MA 02142 Tel: 617/452-3761 Fax: 617/258-6855 E-Mail: jjdoyle@mit.edu Max Gross 600 Alexander Park Dr Princeton, NJ 08540 Tel: (609) 297-4521 E-Mail: mgross@mathematica-mpr.com Brian Jacob Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 Tel: 734-615-6994 Fax: NA E-Mail: bajacob@umich.edu

Estimation of a Life-Cycle Model with Human Capital, Labor Supply and Retirement - Fan, Xiaodong; Seshadri, Ananth; Taber, Christopher R (National Bureau of Economic Research Working Paper Series, 2022)
We develop and estimate a life-cycle model in which individuals make decisions about consumption, human capital investment, and labor supply and use it to analyze changes in Social Security rules. The most important aspect of our paper is human capital towards the end of the life cycle which responds to changes in the rules. Retirement arises endogenously as part of the labor supply decision. The model allows for both an endogenous wage process through human capital investment (which is typically assumed exogenous in the retirement literature), an endogenous retirement decision (which is typically assumed exogenous in the human capital literature), and accounts for the Social Security system. We estimate the model using indirect inference to match the life-cycle profiles of employment and measured wages from the SIPP data. The model replicates the main features of the data—in particular the large increase in measured wages and small increase in labor supply at the beginning of the life cycle as well as the small decrease in measured wages but large decrease in labor supply at the end of the life cycle. We use the model to estimate the effects of various changes to tax and Social Security policies and show that allowing for human capital accumulation is critical.
Author contact info: Xiaodong Fan Department of Economics Monash University Clayton, VIC 3800 Australia Tel: +61420284963 E-Mail: xiaodong.fan@monash.edu Ananth Seshadri Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-6196 E-Mail: aseshadr@ssc.wisc.edu Christopher R. Taber Department of Economics University of Wisconsin-Madison 1180 Observatory Dr Social Sciences Building #6448 Madison, WI 53706-1320 Tel: (608) 263-7791 Fax: (608) 262-2033 E-Mail: ctaber@ssc.wisc.edu

Zombie Lending: Theoretical, International and Historical Perspectives - Acharya, Viral V; Crosignani, Matteo; Eisert, Tim; Steffen, Sascha (National Bureau of Economic Research Working Paper Series, 2022)
This paper surveys the theory on zombie lending incentives and the consequences of zombie lending for the real economy. It also offers a historical perspective by reviewing the growing empirical evidence on zombie lending along three dimensions: (i) the role of under-capitalized banks, (ii) effects on zombie firms, and (iii) spillovers and distortions for non-zombie firms. We then provide an overview of how zombie lending can be attenuated. Finally, we use a sample of U.S. publicly listed firms to compare various measures proposed in the literature to classify firms as "zombies." We identify definitions of zombie firms that are adequate to investigate economic inefficiency in the form of real sector competitive distortions of zombie lending. We find that only definitions that are based on interest rate subsidies are able to detect these spillovers and thereby provide evidence in support of credit misallocation.
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 Matteo Crosignani New York Fed E-Mail: mcrosign@gmail.com Tim Eisert Portugal E-Mail: tim.eisert@novasbe.pt Sascha Steffen Frankfurt School of Finance & Management Adickesallee 32-34 60322 Frankfurt Germany Tel: E-Mail: s.steffen@fs.de

Assortative Mating and Wealth Inequality - Fagereng, Andreas; Guiso, Luigi; Pistaferri, Luigi (National Bureau of Economic Research Working Paper Series, 2022)
We use population data on capital income and wealth holdings for Norway to measure asset positions and wealth returns before individuals marry and after the household is formed. These data allow us to establish a number of novel facts. First, individuals sort on personal wealth rather than parents' wealth. Assortative mating on own wealth dominates, and in fact renders assortative mating on parental wealth statistically insignificant. Second, people match also on their personal returns to wealth and assortative mating on returns is as strong as that on wealth. Third, post-marriage returns on family wealth are largely explained by the return of the spouse with the highest pre-marriage return. This suggests that family wealth is largely managed by the spouse with the highest potential to grow it. This is particularly true for households at the top of the wealth distribution at marriage. We use a simple analytical example to illustrate how assortative mating on wealth and returns and wealth management task allocation between spouses affect wealth inequality.
Author contact info: Andreas Fagereng BI Norwegian Business School Nydalsveien 37 0484 Oslo Norway E-Mail: afagereng@gmail.com Luigi Guiso Axa Professor of Household Finance Einaudi Institute for Economics and Finance Via Sallustiana 62 - 00187 Rome, Italy Fax: 39 06 4792 4858 E-Mail: luigi.guiso55@gmail.com Luigi Pistaferri Department of Economics 579 Jane Stanford Way Stanford University Stanford, CA 94305-6072 Tel: 650/724-4904 Fax: 650/725-5702 E-Mail: pista@stanford.edu

Measuring U.S. Fiscal Capacity using Discounted Cash Flow Analysis - Jiang, Zhengyang; Lustig, Hanno; Van Nieuwerburgh, Stijn; Xiaolan, Mindy Z (National Bureau of Economic Research Working Paper Series, 2022)
We use discounted cash flow analysis to measure a country's fiscal capacity. Crucially, the discount rate applied to projected cash flows includes a GDP risk premium. We apply our valuation method to the CBO's projections for the U.S. federal government's deficit between 2022 and 2051 and debt in 2051. In spite of low rates, our current measure of U.S. fiscal capacity is lower than the debt/GDP ratio. Because of the backloading of projected surpluses, the duration of the surplus claim far exceeds the duration of the outstanding Treasury portfolio. This duration mismatch exposes the government to the risk of rising rates, which would trigger the need for higher tax revenue or lower spending. Reducing this risk by front-loading the surpluses also requires major fiscal adjustment.
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 Hanno Lustig Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hlustig@stanford.edu Stijn Van Nieuwerburgh Columbia University Graduate School of Business Kravis Hall, office 796 665 West 130th Street New York, NY 10027 E-Mail: svnieuwe@gsb.columbia.edu Mindy Z. Xiaolan University of Texas at Austin 2110 Speedway B6600 Austin, TX 78703 E-Mail: mindy.xiaolan@mccombs.utexas.edu

Designing Stress Scenarios - Parlatore, Cecilia; Philippon, Thomas (National Bureau of Economic Research Working Paper Series, 2022)
We develop a tractable framework to study the optimal design of stress scenarios. A principal wants to manage the unknown risk exposures of a set of agents. She asks the agents to report their losses under hypothetical scenarios before mandating actions to mitigate the exposures. We show how to apply a Kalman filter to solve the learning problem and we characterize the scenario design as a function of the risk environment, the principal’s preferences, and the available remedial actions. We apply our results to banking stress tests. We show how the principal learns from estimated losses under different scenarios and across different banks. Optimal capital requirements are set to cover losses under an adverse scenario while targeted interventions depend on the covariance between residual exposure uncertainty and physical risks.
Author contact info: Cecilia Parlatore Stern School of Business New York University 44 West 4th Street New York, NY 10012 Tel: 212/998-0171 E-Mail: cps272@stern.nyu.edu Thomas Philippon New York University Stern School of Business 44 West 4th Street, Suite 9-190 New York, NY 10012-1126 Tel: 212/998-0490 Fax: 212/995-4233 E-Mail: tphilipp@stern.nyu.edu

An Economic Analysis of U.S Public Transit Carbon Emissions Dynamics - Huang, Robert; Kahn, Matthew E (National Bureau of Economic Research Working Paper Series, 2022)
Urban public transit agencies spend billions of dollars each year on workers, durable capital and energy to supply transportation services. During a time of rising concern about climate change, the urban public transit sector has not significantly reduced its carbon footprint. Using data for the nation’s transit agencies over the years 2002 to 2019, we benchmark U.S transit agencies with transit agencies in Germany and the United Kingdom. We study U.S urban public sector energy efficiency trends and explain the cross-sectional variation. We present a new operating profits metric that incorporates each transit agency’s annual total carbon emissions.
Author contact info: Robert Huang Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: huangrob@usc.edu Matthew E. Kahn Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: kahnme@usc.edu

Agency MBS as Safe Assets - He, Zhiguo; Song, Zhaogang (National Bureau of Economic Research Working Paper Series, 2022)
Measured as yield spreads against AAA corporate bonds, the convenience premium for agency MBS averaged 47 basis points between 1995 and 2021, about half of the long-term-Treasury convenience premium. Both the MBS convenience premium and the issuance amount vary negatively with the mortgage rate, which is consistent with a prepayment-driven demand channel. This negative dependence contrasts strikingly with the positive dependence of the MBS-repo convenience premium on interest rates, as implied by the “opportunity cost of money” hypothesis. The placing of agencies into conservatorship in 2008 and the introduction of the liquidity coverage ratio in 2013 affected the convenience premium significantly, which is consistent with the safety and regulatory-constraint channels of demand for MBS. Based on “structural” restrictions in standard models, the ratio of MBS to Treasury convenience premia pinpoints the time-varying MBS-specific demand empirically.
Author contact info: Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Zhaogang Song The Johns Hopkins Carey Business School 100 International Drive Baltimore, MD 21202 E-Mail: zsong8@jhu.edu

Health Care Expenditure and Farm Income Loss: Evidence from Natural Disasters - Chang, Hung-Hao; Meyerhoefer, Chad (National Bureau of Economic Research Working Paper Series, 2022)
Farmers have higher rates of disability and illness than the general population and more volatile incomes due to frequent crop and livestock losses from extreme weather events. This raises concerns that sudden, weather-related drops in farm income could reduce access to health care for an already vulnerable population. We estimate the sensitivity of health care use to the loss in farm income brought about by natural disasters in Taiwan. To account for endogenous exposure to disaster risks, we estimate an instrumental variables model and find that farm income elasticities of demand for outpatient care and prescriptions range from 0.11 to 0.32. Reductions in health care use may be due, in part, to changes in time allocations within farm households.
Author contact info: Hung-Hao Chang Department of Agricultural Economics National Taiwan University No 1, Roosevelt Rd, Sec 4 Taipei 10617 Taiwan E-Mail: hunghaochang@ntu.edu.tw Chad Meyerhoefer College of Business Lehigh University Rauch Business Center 621 Taylor Street Bethlehem, PA 18015 Tel: 610/758-3445 Fax: 610/758-4677 E-Mail: chm308@lehigh.edu

Consensus and Disagreement: Information Aggregation under (not so) Naive Learning - Banerjee, Abhijit; Compte, Olivier (National Bureau of Economic Research Working Paper Series, 2022)
We explore a model of non-Bayesian information aggregation in networks. Agents non-cooperatively choose among Friedkin-Johnsen type aggregation rules to maximize payoffs. The DeGroot rule is chosen in equilibrium if and only if there is noiseless information transmission, leading to consensus. With noisy transmission, while some disagreement is inevitable, the optimal choice of rule amplifies the disagreement: even with little noise, individuals place substantial weight on their own initial opinion in every period, exacerbating the disagreement. We use this framework to think about equilibrium versus socially efficient choice of rules and its connection to polarization of opinions across groups.
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 Olivier Compte Paris School of Economics 48 Boulevard Jourdan 6th floor, office 54 PARIS 75014 FRANCE E-Mail: olivier.compte@gmail.com

Counter-stereotypical Messaging and Partisan Cues: Moving the Needle on Vaccines in a Polarized U.S. - Larsen, Bradley; Hetherington, Marc J; Greene, Steven H; Ryan, Timothy J; Maxwell, Rahsaan D; Tadelis, Steven (National Bureau of Economic Research Working Paper Series, 2022)
We report a large-scale randomized controlled trial designed to assess whether the counter-stereotypical messaging and partisan cues can induce people to get COVID-19 vaccines. Our study involved creating a 27-second video compilation of Donald Trump’s comments about the vaccine from Fox News interviews. We presented the video to millions of U.S. YouTube users in October 2021. Results indicate that the campaign increased the number of vaccines in the average treated county by 103. Spread across 1,014 treated counties, the total effect of the campaign was an estimated increase of 104,036 vaccines. The campaign was cost-effective: with an overall budget of about $100,000, the cost to obtain an additional vaccine was about $1 or less.
Author contact info: Bradley Larsen Olin Business School Washington University in St. Louis Campus Box 1133 One Brookings Dr. St. Louis, MO 63130 E-Mail: blarsen@wustl.edu Marc J. Hetherington Department of Political Science University of North Carolina, Chapel Hill 361 Hamilton Hall, CB # 3265 Chapel Hill, NC 27599 E-Mail: marcj@email.unc.edu Steven H. Greene Department of Political Science North Carolina State University Box 8102 Raleigh, NC 27695-8102 E-Mail: shgreene@ncsu.edu Timothy J. Ryan Department of Political Science University of North Carolina, Chapel Hill 361 Hamilton Hall, CB # 3265 Chapel Hill, NC 27599 E-Mail: tjr@email.unc.edu Rahsaan D. Maxwell Department of Political Science University of North Carolina, Chapel Hill 361 Hamilton Hall, CB # 3265 Chapel Hill, NC 27599 E-Mail: rahsaan@email.unc.edu Steven Tadelis Haas School of Business University of California, Berkeley 545 Student Services Building Berkeley, CA 94720 Tel: 510/643-0546 E-Mail: stadelis@haas.berkeley.edu

Labor Substitutability among Schooling Groups - Bils, Mark; Kaymak, Bariş; Wu, Kai-Jie (National Bureau of Economic Research Working Paper Series, 2022)
Knowing the degree of substitutability between schooling groups is essential to understanding the role of human capital in income differences and to assessing the economic impact of such policies as schooling subsidies, immigration systems, or redistributive taxes. We derive a lower bound for the substitutability required for worldwide growth in real GDP from 1960 to 2010 to be consistent with a stable wage premium for schooling despite the rapid growth in schooling, assuming no exogenous worldwide regress in the technology frontier for workers with only primary schooling. That lower bound for the long-run elasticity of substitution is about 4, which is far higher than values commonly used in the literature. Given our bound, we reexamine the importance of human capital in cross-country income differences and the roles of school quality versus the skill bias of technology in greater efficiency gains from schooling in richer countries.
Author contact info: Mark Bils Department of Economics University of Rochester Rochester, NY 14627 Tel: 585/275-0488 Fax: 585/256-2309 E-Mail: mark.bils@rochester.edu Bariş Kaymak Research Department Federal Reserve Bank of Cleveland P.O. Box 6387 Cleveland, OH 44101-1387 United States E-Mail: barkaymak@gmail.com Kai-Jie Wu Department of Economics Pennsylvania State University 606 Kern Building University Park, PA 16802 USA Tel: 8148654621 E-Mail: kai-jie.wu@psu.edu

Valuing Financial Data - Farboodi, Maryam; Singal, Dhruv; Veldkamp, Laura; Venkateswaran, Venky (National Bureau of Economic Research Working Paper Series, 2022)
How should an investor value financial data? The answer is complicated because it depends on the characteristics of all investors. We develop a sufficient statistics approach that uses equilibrium asset return moments to summarize all relevant information about others' characteristics. It can value data that is public or private, about one or many assets, relevant for dividends or for sentiment. While different data types have different valuations, heterogeneous investors value the same data very differently, which suggests a low price elasticity for data demand. Heterogeneous investors' data valuations are also affected very differentially by market illiquidity.
Author contact info: Maryam Farboodi MIT Sloan School of Management 100 Main Street, E62-627 Cambridge, MA 02142 Tel: 617/378-8586 E-Mail: m.farboodi@gmail.com Dhruv Singal 655 W 130 St Kravis Hall 790 WS3 New York, NY 10027 United States of America E-Mail: dhruv.singal@columbia.edu Laura Veldkamp Columbia Business School 725 Kravis Hall 665 W 130th St New York, NY 10027 Tel: 212/998-0527 Fax: 212/995-4218 E-Mail: lv2405@columbia.edu Venky Venkateswaran Stern School of Business New York University 7-87 44 West 4th Street New York, NY 10012 Tel: 213/255-0784 E-Mail: vvenkate@stern.nyu.edu

The Female Happiness Paradox - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2022)
Using data across countries and over time we show that women are unhappier than men in unhappiness and negative affect equations, irrespective of the measure used – anxiety, depression, fearfulness, sadness, loneliness, anger – and they have more days with bad mental health and more restless sleep. Women are also less satisfied with many aspects of their lives such as democracy, the economy, the state of education and health services. They are also less happy in the moment in terms of peace and calm, cheerfulness, feeling active, vigorous, fresh and rested. However, prior evidence on gender differences in global wellbeing metrics – happiness and life satisfaction – is less clear cut. Differences vary over time, location, and with model specification and the inclusion of controls especially marital status. We also show that there are significant variations by month in happiness data regarding whether males are happier than females but find little variation by month in unhappiness data. It matters which months are sampled when measuring positive affect but not with negative affect. These monthly data reveal that women’s happiness was more adversely affected by the COVID shock than men’s, but also that women’s happiness rebounded more quickly suggesting resilience. As a result, we now find strong evidence that males have higher levels of both happiness and life satisfaction in recent years even before the onset of pandemic. As in the past they continue to have lower levels of unhappiness. A detailed analysis of several data files, with various metrics, for the UK confirms that men now are happier than women.
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

Reinsuring the Insurers of Last Resort - Dranove, David; Garthwaite, Craig; Ody, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
Hospitals face large and variable costs from treating indigent care patients. Two methods of “reinsuring” hospitals against these costs are providing these patients with insurance and directly providing hospitals with supplemental payments to cover the expected costs of treating the indigent. Currently, the U.S. uses a hybrid of these approaches, insuring some indigent patients through Medicaid and providing hospitals with supplemental payments through programs such as Medicaid Disproportionate Share. We evaluate the economic fundamentals of supplemental payments in the U.S. safety net. We find that providing indigent care patients with insurance and providing hospitals with supplement payments are imperfect substitutes to hospitals because they differ in the extent to which they protect hospitals from risk, incentivize cost control, and and incentivize certain investments. Overall, we find that supplemental payments are used to increase access to hospitals in areas with many indigent patients, rather than to provide efficient intertemporal risk-protection to hospitals or incentivize cost control.
Author contact info: David Dranove Department of Strategy Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: d-dranove@kellogg.northwestern.edu Craig Garthwaite Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2509 Fax: 847/467-1777 E-Mail: c-garthwaite@kellogg.northwestern.edu Christopher Ody Kellogg School of Management Northwestern University and Analysis Group, Inc. 111 Huntington Avenue 12th Floor Boston, MA 02199 E-Mail: christopher.ody@analysisgroup.com

Intergenerational Mobility Begins Before Birth - Seshadri, Ananth; Zhou, Anson (National Bureau of Economic Research Working Paper Series, 2022)
Nearly 40% of births in the United States are unintended, and this phenomenon is disproportionately common among Black Americans and women with lower education. Given that being born to unprepared parents significantly affects children’s outcomes, could family planning access affect intergenerational persistence of economic status? We extend the standard Becker–Tomes model by incorporating an endogenous family planning choice. When the model is calibrated to match observed patterns of unintended fertility, we find that intergenerational mobility is significantly lower than that in the standard model. In a policy counterfactual where states improve access to family planning services for the poor, intergenerational mobility improves by 0.3 standard deviations on average. When we calibrate the model to match unintended birth rates by race, we find that differences in family planning access alone can account for 20% of the racial gap in upward mobility. Helping women fulfill their goals about family planning and childbearing can improve social mobility and address racial inequality.
Author contact info: Ananth Seshadri Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-6196 E-Mail: aseshadr@ssc.wisc.edu Anson Zhou E-Mail: zhouls@hku.hk

Disruption and Credit Markets - Becker, Bo; Ivashina, Victoria (National Bureau of Economic Research Working Paper Series, 2022)
We show that over the past half century innovative disruptions were central to understanding corporate defaults. In a given year, industries experiencing abnormally high VC or IPO activity subsequently see higher default rates, higher segment exits by conglomerates, and higher yields on bonds issued by the firms in these industries. Overall, we find that disruption is a broad phenomenon, negatively affecting incumbent firms across the spectrum of age, valuation, and levers, with the exception of very large and low-leverage firms, which confirms our central hypothesis.
Author contact info: Bo Becker Stockholm School of Economics Box 6501 113 83 Stockholm Sweden E-Mail: beckerbobo@gmail.com Victoria Ivashina Harvard Business School Baker Library 233 Soldiers Field Boston, MA 02163 Tel: 617/495-8018 Fax: 617/495-6198 E-Mail: vivashina@hbs.edu

Credit Markets, Property Rights, and the Commons - Noack, Frederik; Costello, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
Credit markets and property rights are fundamental for modern economies, but they also have implications for the commons. Using a dynamic model of competitive resource extraction, we show that improving property right security unambiguously increases conservation incentives, but the effect of credit markets on resource extraction effort hinges on the security of property rights. We test these predictions using data on global fisheries, credit markets, and the largest-ever marine property rights assignment. We find that property right security reduces resource extraction, while credit market development increases resource extraction under insecure property rights but reduces resource extraction under secure property rights.
Author contact info: Frederik Noack MacMillan 331, 2357 Main Mall Vancouver, V6T 1Z4 BC, Canada E-Mail: frederik.noack@ubc.ca Christopher Costello Bren School of Environmental Science & Management University of California, Santa Barbara Santa Barbara, CA 93106 Tel: 805/893-5802 Fax: 805/893-7612 E-Mail: costello@bren.ucsb.edu

High-Yield Debt Covenants and Their Real Effects - Bräuning, Falk; Ivashina, Victoria; Ozdagli, Ali (National Bureau of Economic Research Working Paper Series, 2022)
High-yield debt including leveraged loans is characterized by incurrence financial covenants, or “cov-lite” provisions. A traditional loan agreement includes maintenance covenants, which require continuous compliance with the covenant threshold, and their violation shifts the control rights to creditors. Incurrence covenants preserve equity control rights but trigger pre-specified restrictions on the borrower’s actions once the covenant threshold is crossed. We show that the prevalence of incurrence covenants indirectly imposes significant constraints on investments as restricted actions become binding: Similar to the effects associated with the shift of control rights to creditors in traditional loans, the drop in investment under incurrence covenants is large and sudden. The deleveraging and drop in investment and market value associated with such latent violations point to a shock amplification mechanism through contractual restrictions that are at play for a highly levered corporate sector prior to firms filing for bankruptcy and independently of whether they ever do so.
Author contact info: Falk Bräuning Federal Reserve Bank of Boston Research Department 600 Atlantic Avenue Boston, MA 02210 E-Mail: Falk.Braeuning@bos.frb.org Victoria Ivashina Harvard Business School Baker Library 233 Soldiers Field Boston, MA 02163 Tel: 617/495-8018 Fax: 617/495-6198 E-Mail: vivashina@hbs.edu Ali Ozdagli Federal Reserve Bank of Dallas Research Department 2200 N Pearl St Dallas, TX 75201 USA Tel: 6177848574 E-Mail: ali.ozdagli@dal.frb.org

How do Private Equity Fees vary across Public Pensions? - Begenau, Juliane; Siriwardane, Emil (National Bureau of Economic Research Working Paper Series, 2022)
We study how investment fees vary within private-capital funds. Net-of-fee return clustering suggests that most funds have two tiers of fees, and we decompose differences across tiers into both management and performance-based fees. Managers of venture capital funds and those in high demand are less likely to use multiple fee schedules. Some investors consistently pay lower fees relative to others within their funds. Investor size, experience, and past performance explain some but not all of this effect, suggesting that unobserved traits like negotiation skill or bargaining power materially impact the fees that investors pay to access private markets.
Author contact info: Juliane Begenau Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 Tel: 650/724-5661 E-Mail: begenau@stanford.edu Emil Siriwardane Harvard Business School Baker Library 261 Boston, MA 02163 Tel: 617/495-5512 E-Mail: esiriwardane@hbs.edu

Does Entry Remedy Collusion? Evidence from the Generic Prescription Drug Cartel - Starc, Amanda; Wollmann, Thomas G (National Bureau of Economic Research Working Paper Series, 2022)
Entry represents a fundamental threat to cartels. We study the extent and effect of this behavior in the largest price-fixing case in US history, which involves generic drug manufacturing. We link information on the cartel’s internal operations to regulatory filings and market data. There is a substantial increase in entry after cartel formation but regulatory approvals delay most entrants by 2-4 years. We then estimate a structural model to simulate counterfactual equilibria. Absent entry, cartel profits would be dramatically higher. Correspondingly, reducing regulatory delays by just 1-2 years equates to consumer compensating variation of $559 million-$1.3 billion.
Author contact info: Amanda Starc Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 330/338-2067 E-Mail: amanda.starc@kellogg.northwestern.edu Thomas G. Wollmann Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/-834-3768 E-Mail: Thomas.Wollmann@chicagobooth.edu

Smoking, Selection, and Medical Care Expenditures - Darden, Michael E; Kaestner, Robert (National Bureau of Economic Research Working Paper Series, 2022)
The contribution of cigarette smoking to national health expenditures is thought to be large, but our current understanding of the effect of smoking on annual medical expenditures is limited to studies that use cross-sectional data to make comparisons of medical care expenditures between smokers and never smokers at a particular age. We develop a dynamic economic model of smoking and medical care use that highlights two forms of selection: selective mortality and non-random cessation. To test predictions from our model, we construct novel longitudinal profiles of medical expenditures of smokers and never smokers from merged National Health Interview Survey and Medicare claims information. Consistent with our theory, we find that, from a given age, smokers generate higher expenditures prospectively, because of a higher incidence in inpatient usage, and lower expenditures retrospectively, because of lower outpatient usage. Between ages 65 and 84, we find that the expected value of the discounted sum of total expenditures is lower for smokers, mainly because of excess mortality. We find no evidence that cigarette smoking is a burden on Medicare.
Author contact info: Michael E. Darden Johns Hopkins University Carey Business School 555 Pennsylvania Ave. 20001 Washington, DC 20001 United States E-Mail: mdarden4@jhu.edu Robert Kaestner Harris School of Public Policy University of Chicago 1307 East 60th Street (Room 3057) Chicago, IL 60637 E-Mail: kaestner.robert@gmail.com

Vaccination Rates and COVID Outcomes across U.S. States - Barro, Robert J (National Bureau of Economic Research Working Paper Series, 2022)
Rates of COVID deaths, hospitalizations, and cases differ markedly across U.S. states, as do rates of vaccination. This study uses cross-state regressions to assess impacts of vaccinations on COVID outcomes. A number of familiar issues arise concerning cross-sectional regressions, including omitted variables, behavioral responses to vaccination, and reverse causation. The benefits from a field context and from the broad range of observed variations suggest the value from dealing with these issues. Results reveal sizable negative effects of vaccination on deaths, hospitalizations, and cases up to early December 2021, although vaccine efficacy seems to wane over time. The findings for deaths apply to all-cause excess mortality as well as COVID-related mortality. The estimates imply that one expected life saved requires 248 additional doses, with a marginal cost around $55000, far below typical estimates of the value of a statistical life. Results since December 2021 suggest smaller effects of vaccinations on deaths and, especially, hospitalizations and cases, possibly because of diminished effectiveness of vaccines against new forms of the virus, notably the omicron variant. A further possibility is that confidence engendered by vaccinations motivated individuals and governments to lessen non-pharmaceutical interventions, such as masking and social distancing.
Author contact info: Robert J. Barro Department of Economics Littauer Center 218 Harvard University Cambridge, MA 02138 Tel: 617/495-3203 Fax: 617/496-8629 E-Mail: rbarro@harvard.edu

Payment for Order Flow And Asset Choice - Ernst, Thomas; Spatt, Chester S (National Bureau of Economic Research Working Paper Series, 2022)
The paper documents important differences in payment for order flow (PFOF), spreads, and price improvement across asset classes. In stocks we show that PFOF is small. While many retail trades are executed off-exchange, we find that they receive meaningful price improvement, particularly when spreads are at their minimum. In single-name equity options, we show that PFOF is large. While all option trades are executed on-exchange, option exchanges have rules that facilitate internalization. We exploit variation in the Designated Market Maker (DMM) assignments at option exchanges to show that retail traders receive less price improvement, and worse prices, from those DMMs who pay PFOF to brokers. Current debate concerning PFOF has focused on equity routing. We show that option routing is comparatively worse, and this gives rise to a second potential conflict of interest of brokers: encouraging customers to trade assets offering higher PFOF. As fintech has eliminated retail commissions, these cross-asset differences in PFOF have become far more consequential to broker incentives.
Author contact info: Thomas Ernst University of Maryland Robert H Smith School 7699 Mowatt Ln College Park, MD 20740 Tel: 9204271215 E-Mail: ternst@umd.edu Chester S. Spatt 1714 Beechwood Boulevard Pittsburgh, PA 15217 Tel: 4122608153 E-Mail: cspatt@andrew.cmu.edu

Fiscal Capacity and Commercial Bank Lending Under COVID-19 - Aizenman, Joshua; Jinjarak, Yothin; Spiegel, Mark M (National Bureau of Economic Research Working Paper Series, 2022)
We investigate the implications of government indebtedness for the efficacy of expansionary government spending in encouraging commercial bank lending growth during the COVID-19 pandemic. Our sample is a large cross-section of over 3000 banks from 71 countries. To address the likely endogeneity of government assistance, we instrument for extra-normal spending using disparities in pre-existing national political characteristics. Our results indicate that bank lending did respond to fiscal capacity, as higher public debt going into the crisis weakened the expansionary effects of higher spending on bank lending at economically and statistically significant levels. Moreover, this sensitivity was higher among weaker banks, suggesting sensitivity to the perceived implications of spending for government assistance going forward. We also found greater sensitivity in high-income economies and for small and medium-sized banks. Our results are robust to a variety of robustness tests, including perturbations in specification, sample, and estimation methodology.
Author contact info: Joshua Aizenman Economics and SIR University of Southern California University Park Los Angeles, CA 90089-0043 Tel: 213-740-4066 E-Mail: aizenman@usc.edu Yothin Jinjarak ERCD Asian Development Bank Mandaluyong City 1550 Metro Manila, Philippines E-Mail: yjinjarak@adb.org Mark M. Spiegel Economic Research 101 Market Street, MS 1130 United States San Francisco, Cali 94105 E-Mail: mark.spiegel@sf.frb.org

Household Portfolios and Retirement Saving over the Life Cycle - Parker, Jonathan A; Schoar, Antoinette; Cole, Allison T; Simester, Duncan (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows a dramatic change in the investment behavior of the U.S. middleclass. During the 2010s, the average share of investable wealth that people hold in stocks is roughly ten percent larger than in the 1990s, and now has a strong lifecycle pattern, rising modestly early in life and falling significantly as retirement approaches. These changes in portfolio allocation were facilitated by the Pension Protection Act (PPA) of 2006, which allowed employers to adopt target date funds (TDFs) as default options in retirement saving plans. Young workers enrolling at an employer shortly after its plan adopts TDFs as defaults have higher equity shares than those who enroll at that same employer shortly before. In contrast to what we find for portfolios, retirement contribution rates over the life-cycle have been relatively stable across cohorts over time, and we find no evidence that the PPA directly raised contribution rates on average.
Author contact info: Jonathan A. Parker MIT Sloan School of Management 100 Main Street, E62-642 Cambridge, MA 02142-1347 Tel: 617-253-7218 E-Mail: JAParker@MIT.edu Antoinette Schoar MIT Sloan School of Management 100 Main Street, E62-638 Cambridge, MA 02142 Tel: 617/253-3763 Fax: 617/258-6855 E-Mail: aschoar@mit.edu Allison T. Cole 1050 Massachusetts Ave #422 Cambridge, MA 02138 US E-Mail: allison.cole@asu.edu Duncan Simester Sloan School of Management MIT E62-542 100 Main St Cambridge, MA 02142-0679 Tel: (617) 258-0679 Fax: (617) 258-7597 E-Mail: simester@mit.edu

Does Human-algorithm Feedback Loop Lead to Error Propagation? Evidence from Zillow’s Zestimate - Fu, Runshan; Jin, Ginger Zhe; Liu, Meng (National Bureau of Economic Research Working Paper Series, 2022)
We study how home sellers and buyers interact with Zillow’s Zestimate algorithm throughout the sales cycle of residential properties, with an emphasis on the implications of such interactions. In particular, leveraging Zestimate’s algorithm updates as exogenous shocks, we find evidence for a human-algorithm feedback loop: listing and selling outcomes respond significantly to Zestimate, and Zestimate is quickly updated for the focal and comparable homes after a property is listed or sold. This raises a concern that housing market disturbances may propagate and persist because of the feedback loop. However, simulation suggests that disturbances are short-lived and diminish eventually, mainly because all marginal effects across stages of the selling process—though sizable and significant—are less than one. To further validate this insight in the real data, we leverage the COVID-19 pandemic as a natural experiment. We find consistent evidence that the initial disturbances created by the March-2020 declaration of national emergency faded away in a few months. Overall, our results identify the human-algorithm feedback loop in an important real-world setting, but dismiss the concern that such a feedback loop generates persistent error propagation.
Author contact info: Runshan Fu E-Mail: rf2583@stern.nyu.edu Ginger Zhe Jin University of Maryland Department of Economics College Park, MD 20742-7211 Tel: 301/405-3484 Fax: 301/405-3542 E-Mail: ginger@umd.edu Meng Liu Washington University in St. Louis E-Mail: mengl@wustl.edu

Trading-off Bias and Variance in Stratified Experiments and in Staggered Adoption Designs, Under a Boundedness Condition on the Magnitude of the Treatment Effect - de Chaisemartin, Clément (National Bureau of Economic Research Working Paper Series, 2022)
I consider estimation of the average treatment effect (ATE), in a population composed of $G$ groups, when one has unbiased and uncorrelated estimators of each group's conditional average treatment effect (CATE). These conditions are met in stratified randomized experiments. I assume that the outcome is homoscedastic, and that each CATE is bounded in absolute value by B standard deviations of the outcome, for some known B. I derive, across all linear combinations of the CATEs' estimators, the estimator of the ATE with the lowest worst-case mean-squared error. This minimax-linear estimator assigns a weight equal to group g's share in the population to the most precisely estimated CATEs, and a weight proportional to one over the estimator's variance to the least precisely estimated CATEs. I also derive the minimax-linear estimator when the CATEs' estimators are positively correlated, a condition that may be met by differences-in-differences estimators in staggered adoption designs.
Author contact info: Clément de Chaisemartin Department of Economics University of California at Santa Barbara Santa Barbara, CA 93106 E-Mail: clementdechaisemartin@ucsb.edu

Changes in the Distribution of Economic Well-Being during the COVID-19 Pandemic: Evidence from Nationally Representative Consumption Data - Meyer, Bruce D; Murphy, Connacher; Sullivan, James X (National Bureau of Economic Research Working Paper Series, 2022)
We examine the distribution of household consumption, income and savings from 2019 through the end of 2020 using the Consumer Expenditure Survey (CE) and other data. This is the first work to study the impact of the COVID-19 pandemic on economic well-being using nationally representative consumption data. We find that low percentiles of the consumption distribution see pre-pandemic growth and little change with the onset of the pandemic. On the other hand, higher percentiles of the consumption distribution do not increase before the pandemic and fall in 2020. Leveraging the rich demographics of our microdata, we find the most pronounced decline for high-educated families near the top of the consumption distribution and seniors in the top half of the distribution. The decrease in the top half is less evident for non-Whites. These patterns for consumption are different than those for income, particularly in the upper part of the distribution. Liquid assets increase in the upper half of the distribution, consistent with the divergence between the upper half of the income and consumption distributions. Our results suggest that the policy response to the pandemic averted a decrease in consumption for the most materially disadvantaged families, while changes in aggregate consumption accord with the observed patterns in the top of the consumption distribution. The changes for various types of consumption, and the distribution of those changes across the material resource distribution, are consistent with reductions in travel to work—which were large for those with greater material advantage—and restrictions on outlets for consumption.
Author contact info: Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu Connacher Murphy E-Mail: connacher.murphy@gmail.com 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

Invisible Wounds: Health and Well-Being Impacts of Mental Disorder Disability Compensation on Veterans - Silver, David; Zhang, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
We study impacts of the US Department of Veteran Affairs (VA) Disability Compensation program on the health and well-being of the large and rapidly growing population of veterans claiming mental disorders. Our empirical strategy leverages quasi-random assignment of veterans to medical examiners who vary in their assessing tendencies. We find that an additional $1,000 per year in transfers decreases food insecurity and homelessness by 4.1% and 1.3% over five years, while the number of collections on VA debts declines by 6.4%. Despite facing few monetary costs, healthcare utilization increases by 2.5% over the first five years, with greater engagement in preventive care and improved medication adherence. Patient satisfaction surveys suggest that transfers improve communication and trust between veterans and VA clinicians, leading to greater overall satisfaction. Apart from a reduction in self-reported pain, we estimate precise null average effects on mental and physical health, and on mortality. Lastly, those on the margin of claim denial experience worse outcomes on average than other applicants, with suggestive evidence of large treatment effects for this sub-population, highlighting the precarious positions of many marginally (dis)qualified applicants for this program.
Author contact info: David Silver Department of Economics University of California, Santa Barbara 2127 North Hall Santa Barbara, CA 93106 Tel: 719-510-4601 E-Mail: silverdw@gmail.com Jonathan Zhang McMaster University Kenneth Taylor Hall, Room 441 1280 Main Street West Hamilton, ON, L8S 4M4 Canada E-Mail: jonathanzhang@mcmaster.ca

From Scarcity to Abundance: Government and Private Initiatives to Manage the Allocation of N95 Masks in the U.S. During the COVID-19 Pandemic - Joskow, Paul L (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the structure, behavior and performance of the N95 respirator market in the U.S. before and during the COVID-19 pandemic (2020-early 2022). It focuses on the behavior and performance of government and private sector organizations in the allocation of scarce supplies of N95 respirators during the pandemic in the U.S. The experience with the supply, demand, allocation, rationing, and pricing of N95s during the first two years of the pandemic provides instructive examples of how the public and private sectors can work in tandem with regulatory support rather than coercion to achieve widely accepted public health goals. Of particular interest is the adoption of voluntary private market segmentation, rationing and price maintenance policies during roughly the first year of the pandemic, led by the dominant U.S. manufacturer of N95s.
Author contact info: Paul Joskow E-Mail: pjoskow@mit.edu

A Preferred-Habitat Model of Term Premia, Exchange Rates, and Monetary Policy Spillovers - Gourinchas, Pierre-Olivier; Ray, Walker D; Vayanos, Dimitri (National Bureau of Economic Research Working Paper Series, 2022)
We develop a two-country model in which currency and bond markets are populated by different investor clienteles, and segmentation is partly overcome by global arbitrageurs with limited capital. Our model accounts for the empirically documented violations of Uncovered Interest Parity (UIP) and the Expectations Hypothesis, and for how UIP violations depend on bond maturity, investment horizon, and yield curve slope differentials. Large-scale purchases of long-maturity bonds lower domestic and foreign bond yields, and depreciate the currency. Conventional monetary policy is transmitted to domestic and international bond yields as well, but its international transmission is weaker than for unconventional policy.
Author contact info: Pierre-Olivier Gourinchas Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/643-0720 Fax: 510/642-6615 E-Mail: pog@econ.berkeley.edu Walker D. Ray London School of Economics E-Mail: walkerdray@gmail.com Dimitri Vayanos Department of Finance, OLD 3.41 London School of Economics Houghton Street London WC2A 2AE UNITED KINGDOM Tel: +44 (0)20 7955 6382 Fax: +44 (0)20 7955 7420 E-Mail: d.vayanos@lse.ac.uk

Eclipse of Rent-Sharing: The Effects of Managers' Business Education on Wages and the Labor Share in the US and Denmark - Acemoglu, Daron; He, Alex; le Maire, Daniel (National Bureau of Economic Research Working Paper Series, 2022)
This paper provides evidence from the US and Denmark that managers with a business degree (“business managers”) reduce their employees' wages. Within five years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Firms appointing business managers are not on differential trends and do not enjoy higher output, investment, or employment growth thereafter. Using manager retirements and deaths and an IV strategy based on the diffusion of the practice of appointing business managers within industry, region and size quartile cells, we provide additional evidence that these are causal effects. We establish that the proximate cause of these (relative) wage effects are changes in rent-sharing practices following the appointment of business managers. Exploiting exogenous export demand shocks, we show that non-business managers share profits with their workers, whereas business managers do not. But consistent with our first set of results, these business managers show no greater ability to increase sales or profits in response to exporting opportunities. Finally, we use the influence of role models on college major choice to instrument for the decision to enroll in a business degree in Denmark and show that our estimates correspond to causal effects of practices and values acquired in business education - rather than the differential selection into business education of individuals unlikely to share rents with workers.
Author contact info: Daron Acemoglu Department of Economics, E52-446 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-1927 Fax: 617/253-1330 E-Mail: daron@mit.edu Alex X. He 4411 Van Munching Hall Robert H. Smith School of Business University of Maryland College Park, MD 20742 E-Mail: axhe@umd.edu Daniel le Maire Department of Economics Copenhagen, Denmark 1719V E-Mail: Daniel.le.Maire@econ.ku.dk

Difference-in-Differences Estimators of Intertemporal Treatment Effects - de Chaisemartin, Clément; D'Haultfoeuille, Xavier (National Bureau of Economic Research Working Paper Series, 2022)
We study treatment-effect estimation using panel data. The treatment may be nonbinary, non-absorbing, and the outcome may be affected by the treatment lags. We make parallel-trends assumptions, but do not restrict treatment effect heterogeneity, unlike commonly-used two-way-fixed-effects regressions. We propose reduced-form event-study estimators of the effect of being exposed to a weakly higher treatment dose for ℓ periods. We also propose normalized event-study estimators, that estimate a weighted average of the effects of the current treatment and its lags. Finally, we show that the reduced-form estimators can be combined into an economically interpretable cost-benefit ratio.
Author contact info: Clément de Chaisemartin Department of Economics University of California at Santa Barbara Santa Barbara, CA 93106 E-Mail: clementdechaisemartin@ucsb.edu Xavier D'Haultfoeuille CREST 5 avenue Henry Le Chatelier 91764 Palaiseau cedex FRANCE E-Mail: xavier.dhaultfoeuille@ensae.fr

Sovereign Bond Restructuring: Commitment vs. Flexibility - Donaldson, Jason Roderick; Kremens, Lukas; Piacentino, Giorgia (National Bureau of Economic Research Working Paper Series, 2022)
Sovereigns in distress often engage in debt restructuring, typically negotiating with multiple classes of bondholders at once. We use natural experiments to investigate whether sovereign bondholders benefit from committing not to restructure. We find that committing not to restructure one class of bonds is valuable for not only that class, but, in contrast to received theory, for others too. We develop a model to rationalize these cross-bond spillovers. It points to a system of cross-bond equations that, we show, can be exploited to quantify natural experiments and to estimate unobservable elasticities in terms of a few sufficient statistics.
Author contact info: Jason R. Donaldson University of Southern California Tel: 314-484-4124 Fax: jasonrdonaldson@gmail.com E-Mail: j.r.donaldson@wustl.edu Lukas Kremens Department of Finance University of Washington Foster School of Business Seattle, WA 98195 US E-Mail: lkremens@uw.edu Giorgia Piacentino Marshall School of Business University of Southern California 3670 Trousdale Parkway Los Angeles, CA 90089 E-Mail: giorgiapiacentino@gmail.com

Legal Representation in Disability Claims - Hoynes, Hilary W; Maestas, Nicole; Strand, Alexander (National Bureau of Economic Research Working Paper Series, 2022)
Legal representatives play a prominent role in the Social Security Disability Insurance adjudication process, earning fees totaling $1.2 billion in 2019. Long ubiquitous in appellate hearings, disability representatives—including attorneys and non-attorneys—have begun appearing more frequently at the beginning of cases, during the initial review. This development has raised questions about the motives of disability law firms, who are sometimes perceived to prioritize their own interests in response to incentives in the fee structure set by the Social Security Administration. We provide the first estimates of the causal impact of legal representation on case outcomes when representatives are engaged from the initial stage. To address selection into representation, we instrument for initial representation using geographic and temporal variation in disability law firm market shares in the closely related but distinct appellate market. We find that representation increases the probability of initial awards, reduces the probability of appeals, and induces no detectable change in the ultimate probability of award. This pattern indicates that legal representation in the initial stage leads to earlier disability awards to individuals who would otherwise be awarded benefits only on appeal. Furthermore, by securing earlier awards and discouraging unsupported appeals, representation reduces total case processing time by nearly one year.
Author contact info: Hilary W. Hoynes Richard & Rhoda Goldman School of Public Policy University of California, Berkeley 2607 Hearst Avenue Berkeley, CA 94720-7320 Tel: (510) 642-1166 E-Mail: hoynes@berkeley.edu Nicole Maestas Department of Health Care Policy Harvard Medical School 180 Longwood Avenue Boston, MA 02115 Tel: 617/432-3455 E-Mail: maestas@hcp.med.harvard.edu Alexander Strand Social Security Administration Office of Retirement and Disability Policy 500 E. St., NW Washington, DC 20254 E-Mail: Alexander.Strand@ssa.gov

The Change in Poverty from 1995 to 2016 Among Single Parent Families - Corinth, Kevin; Meyer, Bruce D; Wu, Derek (National Bureau of Economic Research Working Paper Series, 2022)
This paper is the first to examine changes in poverty over time using a comprehensive set of linked survey and administrative data, implementing recommendations of the Interagency Technical Working Group on Evaluating Alternative Measures of Poverty. Using the Comprehensive Income Dataset (CID), we correct for measurement error in survey-reported incomes, focusing on single parent families from 1995 to 2016. Our preferred estimates indicate that single parent family poverty declined by 62% over time, while it fell by only 45% using survey data alone. Moreover, survey-reported deep poverty among single parent families increased over time, while it fell using the CID.
Author contact info: Kevin Corinth American Enterprise Institute 1789 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: kcorinth@uchicago.edu 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 Derek Wu Frank Batten School of Leadership and Public Policy University of Virginia 235 McCormick Road Charlottesville, VA 22904 E-Mail: derek.wu@virginia.edu

Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA - Tebaldi, Pietro (National Bureau of Economic Research Working Paper Series, 2022)
In government-sponsored health insurance, subsidy design affects market outcomes. First, holding premiums fixed, subsidies determine insurance uptake and average cost. Insurers then respond to these changes, adjusting premiums. Combining data from the first four years of the California ACA marketplace with a model of insurance demand, cost, and insurers’ competition, I quantify the impact of alternative subsidy designs on premiums, enrollment, costs, public spending, and consumer surplus. Younger individuals are more price sensitive and cheaper to cover. Increasing subsidies to this group would make all buyers better off, increase market participation, and lower average costs and average subsidies.
Author contact info: Pietro Tebaldi Department of Economics Columbia University IAB, MC 3308 New York, NY 10027 E-Mail: pt2571@columbia.edu

Consumer Bankruptcy, Mortgage Default and Labor Supply - Li, Wenli; Meghir, Costas; Oswald, Florian (National Bureau of Economic Research Working Paper Series, 2022)
We specify and estimate a lifecycle model of consumption, housing demand and labor supply in an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty in the model is driven by house price shocks, {education specific} productivity shocks, and catastrophic consumption events, while bankruptcy is governed by the basic institutional framework in the US as implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and mortgages combined with data from the American Community Survey. We use the model to understand the relative importance of the two chapters (7 and 13) for each of our two education groups that differ in both preferences and wage profiles. We also provide an evaluation of the BACPCA reform. Our paper demonstrates importance of distributional effects of Bankruptcy policy.
Author contact info: Wenli Li Research Department Federal Reserve Bank of Philadelphia 10 N Independence Mall W Philadelphia, PA 19106 E-Mail: wenli.li@phil.frb.org Costas Meghir Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/432-3558 E-Mail: c.meghir@yale.edu Florian Oswald Department of Economics Sciences Po 28 rue des Saint Pères 75007 Paris, France France E-Mail: florian.oswald@sciencespo.fr

The Effect of Smoking on Mental Health: Evidence from a Randomized Trial - Meckel, Katherine; Rittenhouse, Katherine P (National Bureau of Economic Research Working Paper Series, 2022)
This paper aims to identify the causal effects of smoking on mental health using data from the Lung Health Study, a randomized trial of smoking cessation treatment with five years of follow-up interviews. In the short-run, distress increases, likely reflecting the effects of nicotine withdrawal. Long-run effects on mental health are small overall, but mask heterogeneity by gender. For women, the cessation program leads to improved mental health, driven by decreases in insomnia and nervousness. Men do not experience these improvements, due in part to a small increase in severe disturbances.
Author contact info: 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 Katherine Rittenhouse Department of Economics Econ 117 University of California San Diego 9500 Gilman Drive La Jolla, CA 92093-0508 E-Mail: katherine.rittenhouse@austin.utexas.edu

Computerization of White Collar Jobs - Dillender, Marcus; Forsythe, Eliza (National Bureau of Economic Research Working Paper Series, 2022)
We investigate the impact of computerization of white-collar jobs on wages and employment. Using online job postings from 2007 and 2010--2016 for office and administrative support (OAS) jobs, we show that when firms adopt new software at the job-title level they increase the skills required of job applicants. Furthermore, firms change the task content of such jobs, broadening them to include tasks associated with higher-skill office functions. We aggregate these patterns to the local labor-market level, instrumenting for local technology adoption with national measures. We find that a 1 standard deviation increase in OAS technology usage reduces employment in OAS occupations by about 1 percentage point and increases wages for college graduates in OAS jobs by over 3 percent. We find negative wage spillovers, with wages falling for both workers with and without a college degree. These results are consistent with technological adoption inducing a realignment in task assignment across occupations, leading office support occupations to become higher skill. We argue relative wage gains for OAS workers indicates that factor-augmenting features of OAS technological change dominate task-substituting features. In addition, while we find that total employment increases, these gains primarily accrue to college-educated women.
Author contact info: Marcus Dillender Department of Medicine, Health, and Society Vanderbilt University 422 Buttrick Hall Nashville, TN 37235 E-Mail: marcus.o.dillender@vanderbilt.edu Eliza Forsythe University of Illinois, Urbana-Champaign 504 East Armory Avenue Champaign, IL 61821 Tel: (217) 244-8481 E-Mail: eforsyth@illinois.edu

Joined at the Hip: Monetary and Fiscal Policy in a Liquidity-Dependent World - Calvo, Guillermo A; Velasco, Andrés (National Bureau of Economic Research Working Paper Series, 2022)
We study the effects of monetary and fiscal policies when both money and government bonds provide liquidity services. Because money is the unit of account, the price of money is the inverse of the price level. If prices are sticky, so is the price of money in terms of goods, and this is one important reason why money is liquid and attractive. By contrast, the price of government bonds is free to jump and often does, especially in response to news about changes in fiscal policy and the supply of bonds. Those movements in government bond prices affect available liquidity, and therefore aggregate demand, inflation and output. Under these conditions, bond-financed fiscal expansions can be contractionary, causing deflation and a temporary recession. To avoid those effects, changes in bond supply must be matched by changes in money supply and in the interest rate on money. We conclude that in a liquidity-dependent world, fiscal and monetary policies are joined at the hip.
Author contact info: Guillermo A. Calvo 455 Central Park West Apt 10 D New York, NY 10025 Tel: 212/854-4264 E-Mail: gc2286@columbia.edu Andrés Velasco School of Public Policy London School of Economics and Political Science Houghton Street London WC2A 2AE United Kingdom Tel: +4420 7955 7982 E-Mail: A.Velasco1@lse.ac.uk

The Power of Certainty: Experimental Evidence on the Effective Design of Free Tuition Programs - Burland, Elizabeth; Dynarski, Susan; Michelmore, Katherine; Owen, Stephanie; Raghuraman, Shwetha (National Bureau of Economic Research Working Paper Series, 2022)
Proposed “free college” policies vary widely in design. The simplest set tuition to zero for everyone. More targeted approaches limit free tuition to those who demonstrate need through an application process. We experimentally test the effects of these two models on the schooling decisions of low-income students. An unconditional free tuition offer from a large public university substantially increases application and enrollment rates. A free tuition offer contingent on proof of need has a much smaller effect on application and none on enrollment. These results are consistent with students placing a high value on financial certainty when making schooling decisions.
Author contact info: Elizabeth Burland University of Michigan 5203 Weill Hall 735 S State St Ann Arbor, MI 48019 USA E-Mail: eburland@umich.edu Susan Dynarski Harvard University Graduate School of Education 13 Appian Way Cambridge, MA 02138 Fax: NA E-Mail: susan_dynarski@harvard.edu Katherine Michelmore Gerald R. Ford School of Public Policy University of Michigan 735 S State St Ann Arbor, MI 48109 E-Mail: kmichelm@umich.edu Stephanie Owen Colby College 5237 Mayflower Hill Waterville, ME 04901 Tel: 301 385 2493 E-Mail: sowen@colby.edu Shwetha Raghuraman University of Michigan Lorch Hall 611 Tappan Ave Ann Arbor, MI 48109 E-Mail: sraghura@umich.edu

A Year Older, A Year Wiser (and Farther from Frontier): Invention Rents and Human Capital Depreciation - Aghion, Philippe; Akcigit, Ufuk; Hyytinen, Ari; Toivanen, Otto (National Bureau of Economic Research Working Paper Series, 2022)
We look at how the arrival of an invention affects wage returns and probability of moving out of employment for white- and blue-collar coworkers of the inventor. First results suggest that older workers are hurt by the arrival of an invention. This negative effect disappears when we control for education and, in particular, for time that since obtaining the last formal degree, i.e., distance to human capital frontier. If anything, this effect is slightly higher for non-STEM than STEM-educated co-workers. This result suggests that retraining programs could be helpful in making the process of creative destruction and economic growth more inclusive.
Author contact info: Philippe Aghion College de France 3 Rue D'Ulm 75005 Paris FRANCE E-Mail: philippe.aghion@insead.edu Ufuk Akcigit Department of Economics University of Chicago 1126 East 59th Street Saieh Hall, Office 403 Chicago, IL 60637 E-Mail: uakcigit@uchicago.edu Ari Hyytinen Department of Finance and Economics Hanken School of Economics E-Mail: ari.hyytinen@hanken.fi Otto Toivanen Professor Otto Toivanen Department of Economics Aalto University School of Business Finland E-Mail: otto.toivanen@aalto.fi

Abundance from Abroad: Migrant Income and Long-Run Economic Development - Khanna, Gaurav; Murathanoglu, Emir; Theoharides, Caroline B; Yang, Dean (National Bureau of Economic Research Working Paper Series, 2022)
How does income from international migrant labor affect the long-run development of migrant-origin areas? We leverage the 1997 Asian Financial Crisis to identify exogenous and persistent changes in international migrant income across regions of the Philippines, derived from spatial variation in exposure to exchange rate shocks. The initial shock to migrant income is magnified in the long run, leading to substantial increases in income in the domestic economy in migrant-origin areas; increases in population education; better-educated migrants; and increased migration in high-skilled jobs. 77.3% of long-run income gains are actually from domestic (rather than international migrant) income. A simple model yields insights on mechanisms and magnitudes, in particular that 23.2% of long-run income gains are due to increased educational investments in origin areas. Improved income prospects from international labor migration not only benefit migrants themselves, but also foster long-run economic development in migrant-origin areas.
Author contact info: Gaurav Khanna School of Global Policy and Strategy University of California, San Diego 9500 Gilman Drive La Jolla, Cali 92093 United States Tel: 2025278521 E-Mail: gakhanna@ucsd.edu Emir Murathanoglu University of Michigan E-Mail: emirmur@umich.edu Caroline B. Theoharides 100 Boltwood Avenue Amherst College Amherst, MA 01002 USA Tel: 7343553283 E-Mail: ctheoharides@amherst.edu Dean Yang University of Michigan Department of Economics and Gerald R. Ford School of Public Policy 735 S. State Street, Room 3316 Ann Arbor, MI 48109 Tel: 734/764-6158 Fax: 734/763-9181 E-Mail: deanyang@umich.edu

Pretrial Juvenile Detention - Baron, E. Jason; Jacob, Brian; Ryan, Joseph P (National Bureau of Economic Research Working Paper Series, 2022)
Roughly one in four juveniles arrested in the U.S. spend time in a detention center prior to their court date. To study the consequences of this practice for youth, we link the universe of individual public school records in Michigan to juvenile and adult criminal justice records. Using a combination of exact matching and inverse probability weighting, we estimate that juvenile detention leads to a 31% decline in the likelihood of graduating high school and a 25% increase in the likelihood of being arrested as an adult. Falsification tests suggest the results are not driven by unobserved heterogeneity.
Author contact info: E. Jason Baron Economics Department Duke University 228B Social Sciences Building Durham, NC 27708 E-Mail: jason.baron@duke.edu Brian Jacob Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 Tel: 734-615-6994 Fax: NA E-Mail: bajacob@umich.edu Joseph P. Ryan School of Social Work University of Michigan 1080 South University Avenue Ann Arbor, MI 48109 E-Mail: joryan@umich.edu

In-group Favoritism and Peer Effects in Wrongful Acquittals: NBA Referees as Judges - Mocan, Naci H; Osborne-Christenson, Eric (National Bureau of Economic Research Working Paper Series, 2022)
We provide the first analysis of racial in-group bias in Type-I and Type-II errors. Using player-referee matched data from NBA games we show that there is no overall racial bias or in-group bias in foul calls made by referees. Similarly, there is no racial bias or in-group bias in Type-I errors (incorrect foul calls). On the other hand, there is significant in-group favoritism in Type-II errors. These are wrongful acquittals where the referee did not blow the whistle although a foul was committed. We also analyze peer effects and find that black referees’ proclivity to make Type-II errors in favor of black players exists as long black referees have at least one black peer referee on the court, and that the bias disappears only if black referees have two white peers. In case of white referees, in-group favoritism in Type-II errors emerges if white referees have two black peers with them on the court. We provide evidence showing that the results are not attributable to skill differences between referees. We also show that a higher Type-I error rate during the season lowers referees’ probability to be selected to officiate a game in the playoffs, whereas variations in the rate of Type-II errors have no impact on the likelihood of a playoff assignment. These results indicate that in-group favoritism takes place in a domain which is not costly (making Type-II errors), and that bias is eliminated when it is costly to the decisionmaker.
Author contact info: Naci H. Mocan Department of Economics Louisiana State University 2439 BEC Baton Rouge, LA 70803-6306 Tel: 225/578-4570 E-Mail: mocan@lsu.edu Eric Osborne-Christenson Department of Economics Pace University 41 Park Row, #1110 New York, NY 10038-1508 E-Mail: eosbornechristenson@pace.edu

Syndicated Lending, Competition and Relative Performance Evaluation - Schneider, Thomas; Strahan, Philip; Yang, Jun (National Bureau of Economic Research Working Paper Series, 2022)
Relative performance evaluation (RPE) intensifies competitive pressure by tying executive compensation to the profits of rivals. We show that these contracts make loan syndication harder by reducing banks’ willingness to participate in loans underwritten by banks named in their RPE contracts. Lead arranger banks which are more frequently named in RPE hold larger shares of the loans they syndicate, and their borrowers face higher spreads. These banks, in turn, lose market share to banks less likely to be named in RPE. Our results highlight the tension between the normal benefits of competition versus the need for cooperation in loan syndication.
Author contact info: Thomas Schneider Old Dominion University Norfolk, VA 23529 E-Mail: tischnei@odu.edu Philip Strahan Carroll School of Management 324B Fulton Hall Boston College Chestnut Hill, MA 02467 Tel: 617/552-6430 E-Mail: philip.strahan@bc.edu Jun Yang Mendoza College of Business University of Notre Dame Notre Dame, IN 46556 E-Mail: jyang23@nd.edu

Black Americans’ Landholdings and Economic Mobility after Emancipation: New Evidence on the Significance of 40 Acres - Collins, William J; Holtkamp, Nicholas C; Wanamaker, Marianne H (National Bureau of Economic Research Working Paper Series, 2022)
The US Civil War ended in 1865 without the distribution of land or compensation to those formerly enslaved—a decision often seen as a cornerstone of racial inequality. We build a dataset to observe Black households’ landholdings in 1880, a key component of their wealth, alongside a sample of White households. We then link their sons to the 1900 census records to observe economic and human capital outcomes. We show that Black landowners (and skilled workers) were able to transmit substantial intergenerational advantages to their sons. But such advantages were small relative to the overall racial gaps in economic status.
Author contact info: William J. Collins Department of Economics Vanderbilt University VU Station B #351819 2301 Vanderbilt Place Nashville, TN 37235-1819 Tel: 615/322-3428 Fax: NA E-Mail: william.collins@vanderbilt.edu Nicholas C. Holtkamp E-Mail: nicholas.holtkamp@hhs.gov 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

Improving the Availability of Unrelated Stem Cell Donors: Evidence from a Major Donor Registry - Haylock, Michael; Kampkötter, Patrick; Macis, Mario; Sauter, Jürgen; Seitz, Susanne; Slonim, Robert; Wiesen, Daniel; Schmidt, Alexander H (National Bureau of Economic Research Working Paper Series, 2022)
The unavailability of potential stem cell donors poses a critical challenge for donor registries worldwide. This study investigates the impact of initiatives of a stem cell donor registry to enhance donors' availability for confirmatory typing. Initiatives ask donors to provide a sample for genetic analysis and/or information on their temporal unavailability. We analyzed 91,479 confirmatory typing requests from DKMS Germany, a large stem cell donor registry, exploiting a quasi-random initiative assignment based on observable characteristics. We find that, first, invitation to the initiatives increases donors' availability. Intention-to-treat estimates yield effects ranging from 2.5 to 3.2 percentage points, and local average treatment effects estimates range from 3.8 to 8.2 percentage points (baseline: 77.1%). Second, the difference in availability between participants and non-participants is over 10 percentage points. The initiatives yield a direct positive effect on donor availability and a selection effect through which participation signals a higher commitment.
Author contact info: Michael Haylock Department of Managerial Accounting University of Tübingen Nauklerstr. 47 Tübingen 72074 Germany E-Mail: michael.haylock@uni-tuebingen.de Patrick Kampkötter Department of Managerial Accounting University of Tübingen Nauklerstr. 47 Tübingen 72074 Germany E-Mail: patrick.kampkoetter@uni-tuebingen.de Mario Macis Johns Hopkins University Carey Business School 1717 Massachusetts Ave, Office 359 Washington, DC 20036 E-Mail: mmacis@jhu.edu Jürgen Sauter DKMS German Bone Marrow Donor Center Tübingen Germany E-Mail: sauter@dkms.de Susanne Seitz DKMS German Bone Marrow Donor Center Tübingen Germany E-Mail: seitz@dkms.de Robert Slonim University of Technology Sydney Business School Building 8, 14/28 Ultimo Rd. Ultimo NSW 2007 Australia E-Mail: robert.slonim@uts.edu.au Daniel Wiesen Department of Health Care Management University of Cologne Albertus-Magnus-Platz 50923 Cologne Germany E-Mail: daniel.wiesen@uni-koeln.de Alexander H. Schmidt DKMS German Bone Marrow Donor Center Tübingen Germany E-Mail: schmidt@dkms.de

Fertility and Savings: The Effect of China’s Two-Child Policy on Household Savings - Baker, Scott R; Benmelech, Efraim; Yang, Zhishu; Zhang, Qi (National Bureau of Economic Research Working Paper Series, 2022)
China’s high household savings rate has attracted great academic interest but remains a puzzle. Potential explanations include demographic, policy, and financial causes. Yet a lack of reliable microlevel data on household finances makes it difficult to assess the relative importance of each factor. This paper uses individual income and spending transactions linked to demographic characteristics and financial information on loan applications and credit availability from a large Chinese bank in Inner Mongolia. We match a large subset of bank customers to administrative records covering marriage and births and obtain a unique view into consumption and saving patterns around important life events. Our results point toward identifying income growth, financial instability, and credit access, rather than such directives as the one-child policy, as the primary causes of high levels of savings among Chinese households.
Author contact info: Scott R. Baker Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 415/244-8274 E-Mail: s-baker@kellogg.northwestern.edu Efraim Benmelech Kellogg School of Management Northwestern University 2001 Sheridan Road Evanston, IL 60208 Tel: 847/491-4462 Fax: 847/491-5719 E-Mail: e-benmelech@kellogg.northwestern.edu Zhishu Yang School of Economics & Management Tsinghua University Beijing, 100084 China Tel: +86 10 6277 1769 Fax: 0086-10-6278-5562 E-Mail: yangzhsh@sem.tsinghua.edu.cn Qi Zhang 800 Dongchuan RD. Minhang District, Shanghai, China E-Mail: zhang.qi@sjtu.edu.cn

Public School Funding, School Quality, and Adult Crime - Baron, E. Jason; Hyman, Joshua M; Vasquez, Brittany N (National Bureau of Economic Research Working Paper Series, 2022)
This paper asks whether improving the quality of public schools can be an effective long-run crime-prevention strategy in the U.S. Specifically, we examine the effect of school quality improvements early in children's lives on the likelihood that they are arrested as adults. We exploit quasi-experimental variation in school quality due to increases in public school funding, leveraging two natural experiments in Michigan and a novel administrative dataset linking the universe of Michigan public school students to adult criminal justice records. The first research design exploits variation in operating expenditures due to Michigan's 1994 school finance reform, Proposal A. The second design exploits variation in capital spending by leveraging close school district capital bond elections in a regression discontinuity framework. In both cases, we find that students exposed to additional funding during elementary school were substantially less likely to be arrested in adulthood. We show that the Marginal Value of Public Funds of improving school quality (via increases in funding) is greater than one, even when considering only the crime-reducing benefits.
Author contact info: E. Jason Baron Economics Department Duke University 228B Social Sciences Building Durham, NC 27708 E-Mail: jason.baron@duke.edu Joshua M. Hyman Department of Economics Amherst College Amherst, MA 01002-5000 E-Mail: jhyman@amherst.edu Brittany N. Vasquez Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 E-Mail: vasqbn@umich.edu

The Benefits and Costs of a U.S. Child Allowance - Garfinkel, Irwin; Sariscsany, Laurel; Ananat, Elizabeth; Collyer, Sophie M; Hartley, Robert Paul; Wang, Buyi; Wimer, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
We conduct a benefit-cost analysis of a U.S. child allowance, based on a systematic literature review of the highest quality available causal evidence on the short- and long-term effects of cash and near-cash transfers. In contrast to the previous studies we synthesize, which tend to measure a subset of benefits and costs available in a particular dataset, we establish a comprehensive accounting of potential effects and secure estimates of each. We produce core estimates of the benefits and costs per child and per adult of increasing household income by $1,000 in one year; these can be applied to value any cash or near-cash program that increases household income. Using microsimulation, we then apply these estimates to determine net aggregate benefits of three child allowance policies, including the expanded Child Tax Credit as enacted for the year 2021 in the American Rescue Plan (ARP). Our estimates indicate that making that expansion permanent would cost $97 billion per year and generate social benefits with net present value of $982 billion per year. Sensitivity analyses indicate that our estimates are robust to alternative assumptions and that all three child allowance policies we evaluate produce very high net returns for the U.S. population.
Author contact info: Irwin Garfinkel Columbia University School of Social Work 1255 Amsterdam Avenue New York, NY 10027 E-Mail: ig3@columbia.edu Laurel Sariscsany Open Sky Policy Institute 1327 H St., Suite 102 Lincoln, NE 68508 USA E-Mail: lsariscsany@openskypolicy.org Elizabeth Ananat Barnard College Columbia University 3009 Broadway Office 1019 Milstein Building New York, NY 10027 E-Mail: eananat@barnard.edu Sophie M. Collyer E-Mail: sophie.collyer@columbia.edu Robert Paul Hartley Columbia School of Social Work 1255 Amsterdam Avenue, #710 New York, NY 10027-5927 E-Mail: r.hartley@columbia.edu Buyi Wang Columbia University E-Mail: bw2733@columbia.edu Christopher Wimer Columbia University 1255 Amsterdam Avenue Office 735 New York, NY 10027 E-Mail: cw2727@columbia.edu

The Education-Innovation Gap - Biasi, Barbara; Ma, Song (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the dissemination of frontier knowledge through higher education. Applying natural language processing (NLP) techniques to the text of 1.7M university course syllabi and 20M academic articles, we construct the “education-innovation gap,” a measure of a syllabus’s distance from frontier knowledge. Using this measure, we document four new facts. First, courses differ greatly in their education-innovation gap, even after controlling for field, course-level, and time. Second, instructors play an important role in shaping course content. Research-active instructors teach more frontier knowledge, particularly when their research is close to the course topic. Third, access to frontier knowledge is unequal: Schools enrolling more socio-economically advantaged students offer courses with a lower gap. Lastly, students from lower-gap schools are more likely to complete a doctoral degree, produce more patents, and earn more after graduation.
Author contact info: Barbara Biasi Yale School of Management 165 Whitney Avenue New Haven, CT 06520 E-Mail: barbara.biasi@yale.edu Song Ma Yale School of Management 165 Whitney Avenue New Haven, CT 06511 Tel: 203/436-4687 E-Mail: song.ma@yale.edu

Strengthening State Capacity: Postal Reform and Innovation during the Gilded Age - Aneja, Abhay; Xu, Guo (National Bureau of Economic Research Working Paper Series, 2022)
We use newly digitized records from the U.S. Post Office to study how strengthening state capacity affects public service delivery and innovation in over 2,700 cities between 1875–1905. Exploiting the gradual expansion of a major civil service reform, cities with a reformed postal office experience fewer errors in delivery, lower unit costs, and an increase in mail handled per worker. This improvement goes with greater information flow, as measured by increased volumes of mail and newspapers. We use personnel data to show that reformed offices see a decline in turnover and an increase in merit-based retention, consistent with a reduction in political interference. We observe more joint patenting involving inventors and businesses from different cities, suggesting that a more effective postal service contributed to innovation and growth during the Gilded Age.
Author contact info: Abhay Aneja University of California at Berkeley School of Law 225 Bancroft Way Berkeley, CA 94720 E-Mail: aneja@berkeley.edu Guo Xu Haas School of Business University of California at Berkeley 2220 Piedmont Avenue Berkeley, CA 94720 Tel: 510/664-5064 E-Mail: guoxu@haas.berkeley.edu

Policing and Management - Kapustin, Max; Neumann, Terrence; Ludwig, Jens (National Bureau of Economic Research Working Paper Series, 2022)
How can we get more ‘output,’ and of the right sort, from policing? The question has only taken on greater importance with recent, widely publicized instances of police misconduct; declines in public trust in police; and a rise in gun violence, all disproportionately concentrated in economically disadvantaged communities of color. Research typically focuses on two levers: (1) police resources, and (2) policing strategies or policies, historically focused on crime control but increasingly also on accountability, transparency, and fairness. Here we examine a third lever: management quality. We present three types of evidence. First, we show there is substantial variability in violent crime and police use of force both across cities and within a city across police districts, and that this variation is related to the timing of police leader tenures. Second, we show that an effort to change police management in selected districts in Chicago generates sizable changes in policing outcomes. Third, as part of that management intervention the department adopted a predictive policing tool that randomizes which high-crime areas it shows to officers. We use that randomization to generate district-specific measures of implementation fidelity and show that, even within the context of a management intervention designed to improve implementation of the department’s strategies, there is variability in implementation.
Author contact info: Max Kapustin Department of Economics Brooks School of Public Policy Cornell University Martha Van Rensselaer Hall Ithaca, NY 14853 E-Mail: kapustin@cornell.edu Terrence Neumann University of Texas, Austin E-Mail: Terrence.Neumann@mccombs.utexas.edu Jens Ludwig Harris School of Public Policy University of Chicago 1307 East 60th Street Chicago, IL 60637 Tel: 773/834-0811 E-Mail: jludwig@uchicago.edu

Cross-subsidization of Bad Credit in a Lending Crisis - Artavanis, Nikolaos; Lee, Brian Jonghwan; Panageas, Stavros; Tsoutsoura, Margarita (National Bureau of Economic Research Working Paper Series, 2022)
We study the corporate-loan pricing decisions of a major Greek bank during the Greek financial crisis. A unique aspect of our dataset is that we observe both the interest rate and the “breakeven rate” of each loan, as computed by the bank’s own loan-pricing department (in effect, the loan’s marginal cost). We document that low-breakeven-rate (safer) borrowers are charged significant markups, whereas high-breakeven-rate (riskier) borrowers are charged small and sometimes even negative markups. We rationalize this de-facto cross-subsidization of riskier borrowers by safer borrowers through the lens of a dynamic model featuring depressed collateral values, impaired capital-market access, and limit pricing.
Author contact info: Nikolaos Artavanis Virginia Tech 1016 Pamplin Hall Blacksburg, VA 24061 USA E-Mail: nartavan@vt.edu Brian Jonghwan Lee Columbia Business School 665 West 130th Street New York, NY 10027 E-Mail: jl5034@columbia.edu Stavros Panageas Anderson School of Management University of California, Los Angeles 110 Westwood Plaza Los Angeles, CA 90095-1481 Tel: (773) 834 4711 E-Mail: stavros.panageas@anderson.ucla.edu Margarita Tsoutsoura Olin Business School Washington University in St. Louis 1 Snow Way Dr St. Louis, MO 63130 E-Mail: tsoutsoura@wustl.edu

Evidence on Retrieved Context: How History Matters - Goetzmann, William N; Watanabe, Akiko; Watanabe, Masahiro (National Bureau of Economic Research Working Paper Series, 2022)
This paper tests the retrieved context model of Wachter and Kahana (2019) using a long-term panel of economic forecasts by participants in the Livingston Survey. Events in historical time contribute additional explanatory power to a relative time series model. Historical precedents for current macroeconomic conditions appear to be more relevant for extreme quantile forecasts. The results are consistent with the use of the retrieved context mechanism for formulating expectations about asset prices. They also suggest that historical events, not just lagged variables in relative time, matter in economic forecasting.
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 Akiko Watanabe University of Alberta School of Business E-Mail: fujimoto@ualberta.ca Masahiro Watanabe School of Business - Finance University of Alberta Edmonton, Alberta T6G 2R6, Canada E-Mail: masa@ualberta.ca

This is Air: The "Non-Health" Effects of Air Pollution - Aguilar-Gomez, Sandra; Dwyer, Holt; Graff Zivin, Joshua S; Neidell, Matthew J (National Bureau of Economic Research Working Paper Series, 2022)
A robust body of evidence shows that air pollution exposure is detrimental to health outcomes, often measured as deaths and hospitalizations. This literature has focused less on subclinical channels that nonetheless impact behavior, performance, and skills. This article reviews the economic research investigating the causal effects of pollution on "non-health" endpoints, including labor productivity, cognitive performance, and multiple forms of decision making. Subclinical effects of pollution can be more challenging to observe than formal health care encounters but may be more pervasive if they affect otherwise healthy people. The wide variety of possible impacts of pollution should be informed by plausible mechanisms and require appropriate hypothesis testing to limit false discovery. Finally, any detected effects of pollution, both in the short and long run, may be dampened by costly efforts to avoid exposure ex-ante and remediate its impacts ex-post; these costs must be considered for a full welfare analysis
Author contact info: Sandra Aguilar-Gomez E-Mail: saguilargomez@ucsd.edu Brendan Dwyer Department of Economics University of California, San Diego La Jolla, CA 92093 E-Mail: bdwyer@ucsd.edu 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 Matthew J. Neidell Department of Health Policy and Management Columbia University 722 W 168th Street, 6th Floor New York, NY 10032 Tel: 212/342-4522 Fax: 212/305-3405 E-Mail: mn2191@columbia.edu

Do Startups Benefit from Their Investors’ Reputation? Evidence from a Randomized Field Experiment - Bernstein, Shai; Mehta, Kunal; Townsend, Richard R; Xu, Ting (National Bureau of Economic Research Working Paper Series, 2022)
We analyze a field experiment conducted on AngelList Talent, a large online search platform for startup jobs. In the experiment, AngelList randomly informed job seekers of whether a startup was funded by a top-tier investor and/or was funded recently. We find that the same startup receives significantly more interest when information about top-tier investors is provided. Information about recent funding has no effect. The effect of top-tier investors is not driven by low-quality candidates and is stronger for earlier-stage startups. The results show that venture capitalists can add value passively, simply by attaching their names to startups.
Author contact info: Shai Bernstein Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617-495-5053 E-Mail: sbernstein@hbs.edu Kunal Mehta Independent Researcher E-Mail: kunalm93@gmail.com Richard R. Townsend Rady School of Management University of California at San Diego 9500 Gilman Drive La Jolla, CA 92093 Tel: 858/246-1632 E-Mail: rrtownsend@ucsd.edu Ting Xu 105 St George St Toronto, Onta M5S 3E6 Canada E-Mail: tingxu.xu@rotman.utoronto.ca

Allocating Scarce Information - Holden, Richard T; Malani, Anup; Teh, Chris (National Bureau of Economic Research Working Paper Series, 2022)
Sender conveys scarce information to a number of receivers to maximize the sum of receiver payoffs. Each receiver’s payoff depends on the state of the world and an action she takes. The optimal action is state contingent. Under mild regularity conditions, we show that the payoff of each receiver is convex in the amount of information she receives. Thus, it is optimal for Sender to target information to a single receiver. We then study four extensions in which interior information allocations are optimal.
Author contact info: Richard T. Holden University of New South Wales Room 470B Sydney, NSW, 2052, AUSTRALIA Australia Tel: +61 2 9385 4700 Fax: +1 773 409 5383 E-Mail: richard.holden@unsw.edu.au Anup Malani University of Chicago Law School 1111 E. 60th Street Chicago, IL 60637 Tel: 773/702-9602 E-Mail: amalani@uchicago.edu Chris Teh University of New South Wales Sydney, NSW 2052 Australia E-Mail: chris.teh@unsw.edu.au

Economic Geography and the Efficiency of Environmental Regulation - Hollingsworth, Alex; Jaworski, Taylor; Kitchens, Carl; Rudik, Ivan J (National Bureau of Economic Research Working Paper Series, 2022)
We develop a spatial equilibrium model to evaluate the efficiency and distributional impacts of the leading air quality regulation in the United States: the National Ambient Air Quality Standards (NAAQS). We link our economic model to an integrated assessment model for air pollutants which allows us to capture endogenous changes in emissions, amenities, labor, and production. Our results show that the NAAQS generate over $23 billion of annual welfare gains. This is roughly 80 percent of welfare gains of the second-best NAAQS design, but only 25 percent of the first-best emission pricing policy. The NAAQS benefits are concentrated in a small set of cities, impose substantial costs on manufacturing workers, improve amenities in counties in compliance with the NAAQS, and reduce emissions in compliance counties through general equilibrium channels. These findings highlight the importance of accounting for geographic reallocation and equilibrium responses when quantifying the effects of environmental regulation.
Author contact info: Alex Hollingsworth Department of Agricultural, Environmental, and Development Economics, Department of Economics, and the John Glenn College of Public Affairs The Ohio State University 2120 Fyffe Road Columbus, OH 43210 Tel: 812/855-6892 E-Mail: hollingsworth.126@osu.edu Taylor Jaworski Department of Economics University of Colorado at Boulder 256 UCB Boulder, CO 80309 E-Mail: Taylor.Jaworski@Colorado.edu Carl Kitchens Department of Economics Florida State University 239 Bellamy Building Tallahassee, FL 32306 Tel: 850-645-0940 E-Mail: ckitchens@fsu.edu Ivan Rudik Dyson School of Applied Economics and Management Cornell University 462 Warren Hall Ithaca, NY 14853 E-Mail: irudik@cornell.edu

The Influence of Cousin Order and Cousin Group Size on Educational Outcomes - Barclay, Kieron; Conley, Dalton (National Bureau of Economic Research Working Paper Series, 2022)
Despite growing interest in the potential influence of grandparents on grandchild status attainment, research has not addressed whether the ordinal position or number of grandchildren affects outcomes. We apply sibling- and cousin-fixed effects analyses to Swedish population data to examine how cousin order and cousin group size influence grade point average (GPA) percentile rank at the end of compulsory school. We study cohorts born 1972-2003 (N=1,591,979). In cousin fixed effects analyses, second-born, fifth-born, and tenth or later born maternal cousins achieve GPA ranked scores 1.04, 2.17, and 4.97 percentile points lower than first-born cousins, respectively. Amongst paternal cousins the differences relative to the first-born cousin are 0.02, 0.46, and 1.86 percentile points low-er, respectively—suggesting the greater influence of the mother’s extended family. In further analyses we examine whether an arguably exogenous shock to cousin group size, a twin birth to an aunt or uncle, has any impact on GPA percentile rank. Instrumental variable analyses indicate that an increase in maternal cousin group size has a statistically significant negative effect on GPA rank, lowering GPA rank in percentile points by 0.27, but an increase in paternal cousin group size does not negatively affect GPA rank.
Author contact info: Kieron Barclay Stockholm University Sociologiska institutionen 106 91 Stockholm Sweden E-Mail: kieron.barclay@sociology.su.se Dalton Conley Department of Sociology Princeton University 153 Wallace Hall Princeton, NJ 08544 Tel: 609-258-8871 E-Mail: dconley@princeton.edu

Highly Powered Analysis Plans - Anderson, Michael L; Magruder, Jeremy (National Bureau of Economic Research Working Paper Series, 2022)
Formal analysis plans limit false discoveries by registering and multiplicity adjusting statistical tests. As each registered test reduces power on other tests, researchers prune hypotheses based on prior knowledge, often by combining related indicators into evenly-weighted indices. We propose two improvements to maximize learning within these types of analysis plans. First, we develop data-driven optimized indices that can yield more powerful tests than evenly-weighted indices. Second, we discuss organizing the logical structure of an analysis plan into a gated tree that directs type I error towards these high-powered tests. In simulations we show that researchers may prefer these "optimus gates" across a wide range of data-generating processes. We then assess our strategy using the community-driven development (CDD) application from Casey et al. (2012) and the Oregon Health Insurance Experiment from Finkelstein et al. (2012). We find substantial power gains in both applications, meaningfully changing the conclusions of Casey et al. (2012).
Author contact info: Michael L. Anderson Department of Agricultural and Resource Economics 207 Giannini Hall, MC 3310 University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-7628 Fax: 510/643-8911 E-Mail: mlanderson@berkeley.edu Jeremy Magruder Department of Agricultural and Resource Economics University of California at Berkeley 207 Giannini Hall Berkeley, CA 94720-3310 Tel: 510/643-8742 E-Mail: jmagruder@berkeley.edu

Energy Prices and Electric Vehicle Adoption - Bushnell, James B; Muehlegger, Erich; Rapson, David S (National Bureau of Economic Research Working Paper Series, 2022)
This paper presents evidence that gasoline prices have a larger effect on demand for electric vehicles (EVs) than electricity prices in California. We match a spatially-disaggregated panel dataset of monthly EV registration records to detailed records of gasoline and electricity prices in California from 2014-2017, and use these to estimate the effect of energy prices on EV demand. Two distinct empirical approaches (panel fixed-effects and a utility-border discontinuity) yield remarkably similar results: a given change in gasoline prices has roughly four to six times the effect on EV demand as a similar percentage change in electricity prices. We explore the implications for optimal EV subsidies, which promote externality reduction benefits and correct for consumer misoptimization stemming from the undervaluation of future electricity costs.
Author contact info: James B. Bushnell Department of Economics One Shields Ave. University of California, Davis Davis, CA 95616 Tel: 530/752-3129 E-Mail: jbbushnell@ucdavis.edu Erich Muehlegger University of California,Davis Economics Department One Shields Ave Davis, CA 95616 E-Mail: emuehlegger@ucdavis.edu David S. Rapson Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530-302-1024 Fax: 530-752-9382 E-Mail: dsrapson@ucdavis.edu

Presidential Address: Corporate Finance and Reality - Graham, John (National Bureau of Economic Research Working Paper Series, 2022)
This paper conducts surveys that document CFO perspectives on corporate planning, corporate investment, capital structure, payout, and the goal of the firm. Current policy choices are compared to CFO survey data from two decades prior, which allows me to identify decision-making themes that are common across policies and through time. These common elements of real-world corporate finance indicate that companies make decisions based on internal forecasts that are miscalibrated and thought to be reliable only two years ahead; use decision rules that are conservative, sticky, simple, and that attempt to market time; and, emphasize corporate objectives that increasingly focus on stakeholders and revenues. These themes can guide and discipline academic models and tests, with the aim of better explaining outcomes. A model of satisficing decision-making aligns with many of these practice-of-finance characteristics: optimization is difficult in a complex fast-changing world, so managers use simple rules to make incremental improvements and they stick with rules that have worked well enough in the past. Non-behavioral models with costly biases can also account for some of the themes. Implications and avenues for future research are discussed
Author contact info: John Graham Duke University Fuqua School of Business 100 Fuqua Drive Durham, NC 27708-0120 Tel: 919/660-7857 Fax: 919/660-8038 E-Mail: john.graham@duke.edu

Invisible Primes: Fintech Lending with Alternative Data - Di Maggio, Marco; Ratnadiwakara, Dimuthu; Carmichael, Don (National Bureau of Economic Research Working Paper Series, 2022)
We exploit anonymized administrative data provided by a major fintech platform to investigate whether using alternative data to assess borrowers' creditworthiness results in broader credit access. Comparing actual outcomes of the fintech platform’s model to counterfactual outcomes based on a “traditional model” used for regulatory reporting purposes, we find that the latter would result in a 70% higher probability of being rejected and higher interest rates for those approved. The borrowers most positively affected are the “invisible primes”--borrowers with low credit scores and short credit histories, but also a low propensity to default. We show that funding loans to these borrowers leads to better economic outcomes for the borrowers and higher returns for the fintech platform.
Author contact info: Marco Di Maggio Harvard Business School Baker Library 265 Soldiers Field Boston, MA 02163 Tel: 617/495-6152 E-Mail: mdimaggio@hbs.edu Dimuthu Ratnadiwakara E-Mail: dratnadiwakara2@lsu.edu Don Carmichael Upstart Operations Dept. P.O. Box 1503 San Carlos, CA 94070 united states E-Mail: don@upstart.com

Reducing Frictions in Healthcare Access: The ActionHealth NYC Experiment for Undocumented Immigrants - Gruber, Jonathan; Sabety, Adrienne; Sood, Rishi; Bae, Jin Yung (National Bureau of Economic Research Working Paper Series, 2022)
In 2016, New York City designed and implemented an intervention reducing frictions in accessing safety-net care: randomly making initial primary care appointments for 2,428 undocumented immigrants. We leverage a novel survey-administrative data linkage to show that the program resulted in a more efficient allocation of care. The program increased self-reported access to primary care, leading to a 21% fall in emergency department (ED) use. This effect was driven by high-risk individuals whose ED visits fell by 42% on average. Among those visiting sponsored clinics, chronic condition diagnoses and preventive screens increased, positively affecting long-run health.
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 Adrienne Sabety Department of Health Policy Stanford University Stanford, CA 94305 E-Mail: asabety@stanford.edu Rishi Sood New York City Department of Health and Mental Hygiene 42-09 28th Street Long Island City, NY 11101 E-Mail: rsood@health.nyc.gov Jin Yung Bae Department of Public Health Policy and Management School of Global Public Health E-Mail: jean.bae@nyu.edu

Stock Volatility and the War Puzzle - Cortes, Gustavo S; Vossmeyer, Angela; Weidenmier, Marc D (National Bureau of Economic Research Working Paper Series, 2022)
U.S. stock volatility is 33 percent lower during wartime and periods of conflict. This is true even for World Wars I and II, which would seemingly increase uncertainty. In a seminal paper, Schwert (1989) identified the “war puzzle” as one of the most surprising facts from two centuries of stock volatility data. We propose an explanation for the puzzle: the profits of firms become easier to forecast during wartime due to massive government spending. We test this hypothesis using newly-constructed data on more than 100 years of defense spending. The aggregate analysis finds that defense spending reduces stock volatility. The sector level regressions show that defense spending predicts lower stock volatility for firms that produce military goods. Finally, an event-study demonstrates that earnings forecasts of defense firms by equity analysts become significantly less disperse after 9/11 and the invasions of Afghanistan (2001) and Iraq (2003).
Author contact info: Gustavo S. Cortes Warrington College of Business University of Florida 306 Stuzin Hall, PO Box 117168 Gainesville, FL 32611 Tel: (352) 273-4966 E-Mail: gustavo.cortes@warrington.ufl.edu Angela Vossmeyer Robert Day School of Economics and Finance Claremont McKenna College 500 E. Ninth Street Claremont, CA 91711 Tel: 909/607-0722 E-Mail: Angela.Vossmeyer@cmc.edu Marc D. Weidenmier Argyros School of Business and Economics Chapman University One University Drive Orange, CA 92866 E-Mail: weidenmi@chapman.edu

The Effects of Legal Representation on Tenant Outcomes in Housing Court: Evidence from New York City's Universal Access Program - Cassidy, Michael T; Currie, Janet (National Bureau of Economic Research Working Paper Series, 2022)
Housing is one of the areas where it may be most critical for poor people to have access to legal representation in civil cases. We use the roll-out of New York City’s Universal Access to Counsel program (UA) to assess the effects of legal representation on tenant outcomes, using detailed address-level housing court data from 2016 to 2019. The program offers free legal representation in housing court to tenants with income at or below 200 percent of the federal poverty guideline. We find that tenants who gain lawyers are less likely to be subject to possessory judgments, face smaller monetary judgments, are less likely to have eviction warrants issued against them, and are less likely to be evicted. Lawyers have larger effects in poorer places and in those with larger shares of noncitizens. Our results support the idea that legal representation in civil procedures can have important positive impacts on the lives of poor people.
Author contact info: Michael T. Cassidy Center for Health and Wellbeing 185A Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08540 United States E-Mail: miketcassidy@princeton.edu Janet Currie Department of Economics Center for Health and Wellbeing 185A Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 Tel: 609-258-7393 E-Mail: jcurrie@princeton.edu

Consumption Heterogeneity and Monetary Policy in an Open Economy - Chen, Sihao; Devereux, Michael B; Shi, Kang; Xu, Jenny (National Bureau of Economic Research Working Paper Series, 2022)
We explore how consumption heterogeneity affects the international transmission mechanism of monetary shocks and the choice of optimal monetary policy in an open economy. Incorporating two types of agents (Ricardian versus Keynesian) into a standard open economy macro model, we find that there are sizeable ranges of household heterogeneity in which monetary policy become ineffective, but this depends sensitively on the interaction of aggregate demand and relative price effects. We derive the global optimal monetary policy with household heterogeneity under alternative pricing regimes. PPI targeting is still the optimal monetary policy under PCP and can restore the economy to the efficient equilibrium. Under LCP, however, the presence of consumption heterogeneity and currency misalignment implies that CPI inflation targeting is no longer optimal in most cases. Finally, we show that when fiscal instruments such as an import tax and export subsidy are introduced, both currency misalignment and consumption heterogeneity can be eliminated, and even under LCP, PPI targeting is the optimal monetary rule.
Author contact info: Sihao Chen Fudan University 600 Guoquan Road Shanghai 200433 China E-Mail: schenaf@connect.ust.hk Michael B. Devereux Department of Economics University of British Columbia 997-1873 East Mall Vancouver, BC V6T 1Z1 Tel: 604/822-2542 Fax: 604/822-5915 E-Mail: mbdevereux@gmail.com Kang Shi Department of Economics Chinese University of Hong Kong Shatin, New Territories Hong Kong E-Mail: kangshi@cuhk.edu.hk Juanyi (Jenny) Xu Department of Economics Hong Kong University of Science and Technology Clearwater Bay, Kowloon Hong Kong E-Mail: jennyxu@ust.hk

New Evidence on Sectoral Labor Productivity: Implications for Industrialization and Development - Herrendorf, Berthold; Rogerson, Richard; Valentinyi, Ákos (National Bureau of Economic Research Working Paper Series, 2022)
Moving labor from agriculture to manufacturing – “industrialization” – is often viewed as essential for the development of poor countries. We present new evidence on the channels through which industrialization can help poor countries close the productivity gap with rich countries. To achieve this, we leverage recent data releases by the Groningen Growth and Development Centre and build a new dataset of comparable labor productivity levels in agriculture and manufacturing for 64 mostly poor countries during 1990–2018. We find two key results: (i) cross-country labor productivity gaps in manufacturing are larger than in the aggregate and (ii) there is no tendency for manufacturing labor productivity to converge. While these results challenge the notion that expanding manufacturing employment is essential for the development of today’s poor countries, we also find that higher labor productivity growth in manufacturing is associated with higher labor productivity growth in the aggregate and in several key sectors.
Author contact info: Berthold Herrendorf E-Mail: N/A user is deceased Richard Rogerson Department of Economics JRR Building Room 292 Princeton University Princeton, NJ 08544 Tel: 609-258-4839 Fax: 609-258-5349 E-Mail: rdr@princeton.edu Ákos Valentinyi Economics, Arthur Lewis Building, 3rd floor University of Manchester Oxford Road Manchester, M13 9PL United Kingdom E-Mail: valentinyi.a@gmail.com

High-Dimensional Factor Models with an Application to Mutual Fund Characteristics - Lettau, Martin (National Bureau of Economic Research Working Paper Series, 2022)
This paper considers extensions of two-dimensional factor models to higher-dimensional data represented as tensors. I describe decompositions of tensors that generalize the standard matrix singular value decomposition and principal component analysis to higher dimensions. I estimate the model using a three-dimensional data set consisting of 25 characteristics of 1,342 mutual funds observed over 34 quarters. The tensor factor models reduce the data dimensionality by 97% while capturing 93% of the variation of the data. I relate higher-dimensional tensor models to standard two-dimensional models and show that the components of the model have clear economic interpretations.
Author contact info: Martin Lettau Haas School of Business University of California, Berkeley 545 Student Services Bldg. #1900 Berkeley, CA 94720-1900 Tel: 510/642-6349 Fax: 510/643-1412 E-Mail: lettau@haas.berkeley.edu

Personal Increasing Returns: Analytics and Applications - Mulligan, Casey B (National Bureau of Economic Research Working Paper Series, 2022)
The human capital investment model with endogenous labor supply is generalized to consumer and health behaviors while retaining the tractability of comparative-static analysis of a single first-order condition. Accounting for the endogenous specialization responses is essential to properly distinguish supply and demand factors and to understand how the magnitude of their effects vary across time and circumstances. Even signing effects of policy interventions can hinge on the existence and extent of personal increasing returns. Applications include the gender gap in earnings, the dynamics of substance abuse, effects of taxes on human capital, the tradeoff between product quality and quantity, and unintended consequences of energy regulation. Metrics are provided for assessing the extent of personal increasing returns.
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

Fueling Alternatives: Gas Station Choice and the Implications for Electric Charging - Dorsey, Jackson; Langer, Ashley; McRae, Shaun (National Bureau of Economic Research Working Paper Series, 2022)
This paper estimates an imperfect information discrete choice model of drivers’ refueling preferences and analyzes the implications of these preferences for electric vehicle (EV) adoption. Drivers respond four times more to stations’ long-run average prices than to current prices and value travel time at $27.54/hour. EV adopters with home charging receive $829 per vehicle in benefits from avoiding travel to gas stations, whereas refueling travel and waiting time costs increase by $9,169 for drivers without home charging. Increasing the charging speed of the existing network yields 4.7 times greater time savings than a proportional increase in the number of stations.
Author contact info: Jackson Dorsey 2225 Speedway, Austin, TX 78712 Department of Economics University of Texas at Austin Austin, TX 78712 United States Tel: (512) 471-3510 Fax: (512) 471-3510 E-Mail: jacksondorsey27@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 Shaun McRae ITAM, Centro de Investigación Económica Camino a Santa Teresa No. 930 Col. Héroes de Padierna Ciudad de México Mexico Tel: +52 1 55 7669 0976 E-Mail: shaun.mcrae@itam.mx

Export Expansion and Investment in Children’s Human Capital: Evidence from the U.S.-Vietnam Bilateral Trade Agreement - McCaig, Brian; Nguyen, Minh; Kaestner, Robert (National Bureau of Economic Research Working Paper Series, 2022)
We examine how export expansion induced by the U.S-Vietnam Bilateral Trade Agreement (BTA) affected migration, school enrollment, work and healthcare use of young children and adolescents in Vietnam. To do so, we exploit variation in tariff reductions across industries associated with the BTA and differences in industry employment shares across Vietnamese provinces prior to the policy change. We find that the BTA led to migration to the most affected provinces, particularly by adolescents (15 to 18) and young adults (19 to 29). The BTA also increased household expenditures, slightly decreased employment among nonmigrant adults and increased employment among migrant adults. Among adolescents, enrolment increased among non-migrants, but fell among migrants, with the opposite pattern for working. For children (7 to 14), enrolment did not change among non-migrants, but fell for migrants, who typically moved with their family. Conditional on being enrolled, education expenditures increased for both children and adolescents. We find evidence that healthcare utilization decreased for both children and adolescents.
Author contact info: Brian McCaig Department of Economics Wilfrid Laurier University 75 University Avenue West Waterloo, ON N2L 3C5 Canada E-Mail: bmccaig@wlu.ca Minh Nguyen Department of Economics Ball State University Muncie, IN 47306 United States E-Mail: mtnguyen@bsu.edu Robert Kaestner Harris School of Public Policy University of Chicago 1307 East 60th Street (Room 3057) Chicago, IL 60637 E-Mail: kaestner.robert@gmail.com

Progressivity of Pricing at US Public Universities - Cook, Emily E; Turner, Sarah (National Bureau of Economic Research Working Paper Series, 2022)
Substantial increases in public university tuition often raise concerns about college affordability. But assessment of the impacts on low- and moderate-income families requires consideration of whether net tuition—tuition less grant aid—has increased commensurately. This paper describes recent shifts in net tuition by family income and institution type and assesses the role of changes in state funding in generating these shifts. Using data reported by universities on net tuition paid by students from different family income levels, we find that public research universities have increasingly shifted to high-tuition, high-aid pricing. From 2012 to 2018, net tuition fell by far more than would have been predicted by the growth in state appropriations, while tuition levels continued to rise, albeit at a slower rate than in the prior years. The increased progressivity in pricing, particularly among research universities, cannot be explained by changes in state appropriations.
Author contact info: 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 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

Loss Aversion or Lack of Trust: Why Does Loss Framing Work to Encourage Preventative Health Behaviors? - Beam, Emily A; Masatlioglu, Yusufcan; Watson, Tara; Yang, Dean (National Bureau of Economic Research Working Paper Series, 2022)
We implemented a field experiment designed to increase participants’ willingness to visit a health clinic. We find differential responses to a $50 incentive framed as a loss versus framed as a gain. We find little support for the notion that loss aversion is responsible for the effectiveness of loss framing. Instead, it appears that loss framing promotes take-up by raising the perceived probability that the incentive will be provided as promised. The results suggest trust is an alternative pathway through which loss framing may affect behavior, and trust may be an important way to promote desirable health behaviors.
Author contact info: Emily A. Beam University of Vermont Department of Economics 233 Old Mill 94 University Place Burlington, VT 05403 E-Mail: emily.beam@uvm.edu Yusufcan Masatlioglu University of Maryland 7998 Regents Drive Symons Hall, Rm. 2200 College Park,, MD 20742 Tel: 3014051293 E-Mail: yusufcan@umd.edu Tara Watson Department of Economics Williams College 24 Hopkins Hall Drive Williamstown, MA 01267 Tel: 413/884-2517 Fax: 413/597-4045 E-Mail: tara.watson@williams.edu Dean Yang University of Michigan Department of Economics and Gerald R. Ford School of Public Policy 735 S. State Street, Room 3316 Ann Arbor, MI 48109 Tel: 734/764-6158 Fax: 734/763-9181 E-Mail: deanyang@umich.edu

Stock Market Stimulus - Greenwood, Robin; Laarits, Toomas; Wurgler, Jeffrey (National Bureau of Economic Research Working Paper Series, 2022)
We study the stock market effects of the arrival of the three rounds of “stimulus checks” to U.S. taxpayers and the single round of direct payments to Hong Kong citizens. The first two rounds of U.S. checks appear to have increased retail buying and share prices of retail-dominated portfolios. The Hong Kong payments increased overall turnover and share prices on the Hong Kong Stock Exchange. We cannot rule out that these price effects were permanent. The findings raise novel questions about the role of fiscal stimulus in the stock market.
Author contact info: Robin Greenwood Harvard Business School Baker Library 267 Soldiers Field Boston, MA 02163 Tel: 617/495-6979 Fax: 617/496-8443 E-Mail: rgreenwood@hbs.edu Toomas Laarits Stern School of Business New York University 44 West Fourth Street Suite 9-190 New York, NY 10012 Tel: 8579281743 E-Mail: tlaarits@stern.nyu.edu Jeffrey Wurgler Stern School of Business, Suite 9-190 New York University 44 West 4th Street New York, NY 10012 Tel: 212/998-0367 Fax: 212/995-4233 E-Mail: jwurgler@stern.nyu.edu

Consumption and Saving after Retirement - Christensen, Bent Jesper; Kallestrup-Lamb, Malene; Kennan, John (National Bureau of Economic Research Working Paper Series, 2022)
The paper analyzes consumption decisions of retired workers, using Danish register data. A major puzzle, which motivates much of the analysis below, is that wealth actually increases for a large fraction of the people in our data. One would expect that wealth accumulated before retirement would be used to augment consumption in later life, with the implication that wealth should decline over time. The risk of large out-of-pocket medical expenditures is negligible in Denmark, so although explanations associated with such expenditures might explain similar patterns in U.S. data, these explanations are not plausible for Denmark (and therefore also questionable for the U.S.). Our analysis instead attempts to explain wealth paths using a model that emphasizes fluctuations in the marginal utility of consumption. The results show that a latent state variable extension of the standard life-cycle consumption model is quite successful in explaining the curious observed wealth patterns after retirement for singles.
Author contact info: Bent Jesper Christensen Department of Economics and Business Economics Fuglesangs Allé 4 DK-8000 Aarhus C Denmark E-Mail: bjchristensen@econ.au.dk Malene Kallestrup-Lamb Aarhus University Department of Economics and Business Economics Fuglesangs Allé 4 DK-8000 Aarhus C Denmark E-Mail: mkallestrup@econ.au.dk John Kennan Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-5393 Fax: 608/263-3876 E-Mail: jkennan@ssc.wisc.edu

What Do the Data Tell Us About Inflation Expectations? - D’Acunto, Francesco; Malmendier, Ulrike; Weber, Michael (National Bureau of Economic Research Working Paper Series, 2022)
Inflation expectations are central to economics because they affect the effectiveness of fiscal and monetary policy as well as realized inflation. We survey the recent literature with a focus on the inflation expectations of households. We first review standard data sources and discuss their advantages and disadvantages. We then document that household inflation expectations are biased upwards, dispersed across individuals, and volatile in the time series. We also provide evidence of systematic differences by gender, income, education, and race. Turning to the underlying expectations formation process, we highlight the role of individuals' exposure to price signals in their daily lives, such as price changes in groceries, the role of lifetime experiences, and the role of cognition. We then discuss the literature that links inflation expectations to economic decisions at the individual level, including consumption-savings and financial decisions. We conclude with an outlook for future research.
Author contact info: Francesco D’Acunto McDonough School of Business Georgetown University Washington, DC 20057 E-Mail: francesco.dacunto@georgetown.edu Ulrike Malmendier Department of Economics 549 Evans Hall # 3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510-642-5038 E-Mail: ulrike@econ.berkeley.edu Michael Weber Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-1241 E-Mail: michael.weber@chicagobooth.edu

How Important are Minimum Wage Increases in Increasing the Wages of Minimum Wage Workers? - Clemens, Jeffrey; Strain, Michael R (National Bureau of Economic Research Working Paper Series, 2022)
Popular discussion commonly presumes an outsized role for minimum wage increases as a driver of wage increases for minimum wage workers. In this paper, we investigate the accuracy of this presumption using data from the earnings studies of the Current Population Survey (CPS). CPS wage and earnings data enable us to assess the fraction of minimum wage workers who receive a raise within 12 months of their initial appearance as a minimum wage worker. On average from 2010 to 2019, we find that roughly 75 percent of minimum wage workers who remain employed experience a wage increase within 12 months. This fraction is higher during the later years of the sample, when the labor market has been strong, than in the earlier years. The fraction of minimum wage workers receiving wage increases is moderately higher when states enact minimum wage increases than when they do not. We also find that the fraction of minimum wage workers receiving wage increases is correlated with several measures of labor market tightness. Finally, wage gains are quite commonly associated with industry and/or occupation switches. This highlights the importance of career progression for the growth of earnings among entry-level workers. The vast majority of the wage gains realized by minimum wage workers thus appear to be driven by career progression and increases in labor demand. Minimum wage increases play a modest role as a driver of earnings trajectories beyond shaping the initial, typically short-lived, minimum wage job itself.
Author contact info: Jeffrey Clemens Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-5713 E-Mail: jeffclemens@ucsd.edu Michael R. Strain American Enterprise Institute 1789 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: michael.strain@aei.org

Effects of the Expanded Child Tax Credit on Employment Outcomes: Evidence from Real-World Data from April to December 2021 - Ananat, Elizabeth; Glasner, Benjamin; Hamilton, Christal; Parolin, Zachary (National Bureau of Economic Research Working Paper Series, 2022)
Studies have established that the expanded Child Tax Credit (CTC), which provided monthly cash payments to most U.S. families with children from July to December 2021, substantially reduced poverty and food hardship. Other studies posit, however, that the CTC payments may generate negative employment effects that could offset its potential poverty-reduction effects. Scholars have simulated employment scenarios assuming various labor supply elasticities, but less work has empirically assessed how the monthly payments affected employment outcomes using real-world data. To evaluate employment effects, we apply a series of difference-in-differences analyses using data from the monthly Current Population Survey and the Census Pulse, both from April through December 2021. Across both samples and several model specifications, we find very small, inconsistently signed, and statistically insignificant impacts of the CTC both on employment in the prior week and on active participation in the labor force among adults living in households with children. Further, labor supply responses to the policy change do not differ for households for whom the CTC’s expansion eliminated a previous work incentive. Thus, our analyses of real-world data suggest that the expanded CTC did not have negative short-term employment effects that offset its documented reductions in poverty and hardship.
Author contact info: Elizabeth Ananat Barnard College Columbia University 3009 Broadway Office 1019 Milstein Building New York, NY 10027 E-Mail: eananat@barnard.edu Benjamin Glasner 1255 Amsterdam Ave. New York, NY 10027 USA E-Mail: bng2111@columbia.edu Christal Hamilton 1255 Amsterdam Ave. New York, NY 10027 USA E-Mail: cgh2139@columbia.edu Zachary Parolin E-Mail: zachary.parolin@columbia.edu

School Choice - Abdulkadiroglu, Atila; Andersson, Tommy (National Bureau of Economic Research Working Paper Series, 2022)
School districts in the US and around the world are increasingly moving away from traditional neighborhood school assignment, in which pupils attend closest schools to their homes. Instead, they allow families to choose from schools within district boundaries. This creates a market with parental demand over publicly-supplied school seats. More frequently than ever, this market for school seats is cleared via market design solutions grounded in recent advances in matching and mechanism design theory. The literature on school choice is reviewed with emphasis placed on the trade-offs among policy objectives and best practices in the design of admissions processes. It is concluded with a brief discussion about how data generated by assignment algorithms can be used to answer contemporary empirical questions about school effectiveness and policy interventions.
Author contact info: Atila Abdulkadiroglu Department of Economics Duke University 213 Social Sciences Building Durham, NC 27708 Tel: 919/660-1890 Fax: 919/684-8974 E-Mail: atila.abdulkadiroglu@duke.edu Tommy Andersson Lund University Department of Economics Sweden E-Mail: tommy.andersson@nek.lu.se

Portfolio Rebalancing with Realization Utility - Dai, Min; Qin, Cong; Wang, Neng (National Bureau of Economic Research Working Paper Series, 2022)
We develop a model where a realization-utility investor (Barberis and Xiong, 2009, 2012; Ingersoll and Jin, 2013) optimally targets her liquid-illiquid wealth ratio at a constant w∗. By saving in the risk-free asset (w∗ > 0), she makes smaller bets in the illiquid asset and realizes gains/losses more frequently. By leveraging (w∗ < 0), she makes bets larger than her equity and realizes gains/losses less frequently. For a discontinuous/jump-diffusion price process, the solution features four regions: loss-realization, gain-realization, and two disconnected (deep-loss and normal) holding regions. We generate a quantitatively significant non-monotonic propensity to realize losses consistent with evidence.
Author contact info: Min Dai The Hong Kong Polytechnic University Hung Hom, Kowloon Hong Kong E-Mail: mindai@polyu.edu.hk Cong Qin Center for Financial Engineering Soochow University Suzhou 215006 China E-Mail: congqin@suda.edu.cn Neng Wang Columbia Business School 3022 Broadway, Uris Hall 812 New York, NY 10027 Tel: 212/854-3869 Fax: 212/662-8474 E-Mail: nw2128@columbia.edu

Systemic Discrimination: Theory and Measurement - Bohren, J. Aislinn; Hull, Peter; Imas, Alex (National Bureau of Economic Research Working Paper Series, 2022)
Economics often defines and measures discrimination as disparities arising from the direct effect of group identity. We develop new tools to model and measure systemic discrimination, which captures how discriminatory decisions in other domains—past, future, or contemporaneous—contribute to disparities in a given decision. We show that systemic discrimination can be driven by disparate signaling technologies or differential opportunities for skill development. We then propose a new measure based on a decomposition of total discrimination into direct and systemic components, and show how it can be used to estimate systemic discrimination in both experimental and observational data. We illustrate these new tools in three applications, including a novel Iterated Audit experimental paradigm with real hiring managers. The applications also identify behavioral frictions that blunt the impact of individual-level interventions and perpetuate systemic discrimination, suggesting the need for systems-based policy responses to systemic discrimination.
Author contact info: J. Aislinn Bohren Department of Economics The Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 253-573-6233 E-Mail: abohren@gmail.com Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu 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

Globalization and Factor Income Taxation - Bachas, Pierre; Fisher-Post, Matthew H; Jensen, Anders; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
This paper builds and analyzes a new global macro-historical database of effective tax rates on labor and capital in 155 countries. Effective capital tax rates fell in developed countries between 1965 and 2018, but rose in developing countries since the mid-1990s. Event-studies and instrumental variable regressions show that a significant share of the rise in developing countries can be explained by trade openness, which increases the share of output produced in large corporations, where effective capital taxation is higher. In contrast to a commonly held view, globalization appears in many countries to have supported governments’ ability to tax capital.
Author contact info: Pierre Bachas The World Bank 1818 H Street N.W. Washington, DC 20433 E-Mail: pbachas@worldbank.org Matthew H. Fisher-Post 48 Boulevard Jourdan PARIS 75014 France E-Mail: mfp@psemail.eu Anders Jensen Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 Tel: 857/272-9833 E-Mail: anders_jensen@hks.harvard.edu Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

Inequality and Income Dynamics in Germany - Drechsel-Grau, Moritz; Peichl, Andreas; Schmieder, Johannes F; Schmid, Kai D; Walz, Hannes; Wolter, Stefanie (National Bureau of Economic Research Working Paper Series, 2022)
We provide a comprehensive analysis of income inequality and income dynamics for Germany over the last two decades. Combining personal income tax and social security data allows us – for the first time – to offer a complete picture of the distribution of annual earnings in Germany. We find that cross-sectional inequality rose until 2009 for men and women. After the Great Recession inequality continued to rise at a slower rate for men and fell slightly for women due to compression at the lower tail. We further document substantial gender differences in average earnings and inequality over the life-cycle. While for men earnings rise and inequality falls as they grow older, many women reduce working hours when starting a family such that average earnings fall and inequality increases. Men’s earnings changes are on average smaller than women’s but are substantially more affected by the business cycle. During the Great Recession, men’s earnings losses become magnified and gains are attenuated. Apart from recession years, earnings changes are significantly right-skewed reflecting the good overall state of the German labor market and increasing labor supply. In the second part of the paper, we study the distribution of total income including incomes of self-employed, business owners, and landlords. We find that total inequality increased significantly more than earnings inequality. Regarding income dynamics, entrepreneurs’ income changes are more dispersed, less skewed, less leptokurtic and less dependent on average past income than workers’ income changes. Finally, we find that top income earners have become less likely to fall out of the top 1 and 0.1 percent.
Author contact info: Moritz Drechsel-Grau University of Munich Schackstr. 4 Germany Munich 80539 Germany E-Mail: moritz.drechsel-grau@econ.lmu.de Andreas Peichl University of Munich ifo Center for Macroeconomics and Surveys Poschingerstrasse 5 81679 Munich Germany E-Mail: peichl@ifo.de Johannes F. Schmieder Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/299-9841 Fax: 617/353-4449 E-Mail: johannes@bu.edu Kai D. Schmid Heilbronn University of Applied Sciences Max-Planck-Straße 39 74081 Heilbronn Germany E-Mail: kdschmid@googlemail.com Hannes Walz Institute for Employment Research (IAB) Regensburger Str. 104 90478 Nuremberg Germany E-Mail: hannes.walz2@iab.de Stefanie Wolter Institute for Employment Research (IAB) Regensburger Str. 104 90478 Nuremberg Germany E-Mail: stefanie.wolter@iab.de

Economic Crises and Mental Health: Effects of the Great Recession on Older Americans - Cutler, David M; Sportiche, Noémie (National Bureau of Economic Research Working Paper Series, 2022)
We examine the effect of the Great Recession of 2007-2009 on the mental health of older adults, using longitudinal Health and Retirement Study data linked to area-level data on house prices. We use a variety of measures to capture mental health and rely on the very large cross-sectional variation in falling house prices to identify the impact of the Great Recession on those outcomes. We also account for people who moved in response to falling prices by fixing each person’s location immediately prior to the house price collapse. Our central finding is that the Great Recession had heterogeneous effects on health. While mental health was not affected for the average older adult, mental health declined among homeowners with few financial assets, who were therefore more vulnerable to falling house prices. Importantly, health impacts in this group differed by race and ethnicity: depression and functional limitations worsened among Black and other non-white homeowners and medication use increased among white homeowners. There were no measurable impacts for Hispanic homeowners. These results highlight the importance of examining heterogeneity across multiple dimensions when examining the health impacts of economic conditions.
Author contact info: David M. Cutler Department of Economics Harvard University 1875 Cambridge Street Cambridge, MA 02138 Tel: 617/496-5216 Fax: 617/496-8951 E-Mail: dcutler@harvard.edu Noémie Sportiche E-Mail: njs148@g.harvard.edu

Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock - Agte, Patrick; Bernhardt, Arielle; Field, Erica M; Pande, Rohini; Rigol, Natalia (National Bureau of Economic Research Working Paper Series, 2022)
How do poor entrepreneurs trade off investments in business enterprises versus children's human capital, and how do these choices influence intergenerational socio-economic mobility? To examine this, we exploit experimental variation in household income resulting from a one-time relaxation of household liquidity constraints (Field et al., 2013), and track schooling and business outcomes over the subsequent 11 years. On average, treatment households, who were made wealthier through the experiment, increase human capital investment such that their children are 35% more likely to attend college. However, schooling gains only accrue to children with literate parents, among whom college attendance nearly doubles. In contrast, treatment effects on investment among the illiterate accrue only on the business margin and are accompanied by adverse educational outcomes for children. As a result, treatment lowers relative educational mobility. In a forecasting exercise, we find that earnings gains for literate households are four times larger than the earnings gains for illiterate households, raising earnings inequality. Our findings highlight how parental investment choices can contribute to a growth in intergenerational earnings inequality despite reductions in urban poverty.
Author contact info: Patrick Agte Yale University Department of Economics 28 Hillhouse Avenue New Haven, CT 06511 E-Mail: patrick.agte@gmail.com Arielle Bernhardt Harvard University Department of Economics 1805 Cambridge Street Cambridge, MA 02138 Tel: (617) 495-2144 E-Mail: abernhardt@g.harvard.edu 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 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 Natalia Rigol Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617-495-5682 E-Mail: nrigol@hbs.edu

A Note on Temporary Supply Shocks with Aggregate Demand Inertia - Caballero, Ricardo J; Simsek, Alp (National Bureau of Economic Research Working Paper Series, 2022)
We study optimal monetary policy during temporary supply contractions when aggregate demand has inertia and the central bank is concerned about future constraints on expansionary policy. In this environment, it is optimal to run the economy hot until supply recovers. However, the policy does not remain loose throughout the low-supply phase. Overall, when the initial aggregate demand is low, the goal is to frontload the rate cuts to raise demand in anticipation of the recovery of supply. If inflation also has inertia, the central bank still overheats the economy during the low-supply phase but gradually cools it down over time.
Author contact info: Ricardo J. Caballero Department of Economics, E52-528 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-0489 Fax: 617/253-6915 E-Mail: caball@mit.edu Alp Simsek Yale School of Management Yale University Edward P. Evans Hall 165 Whitney Ave New Haven, CT 06511 E-Mail: alp.simsek@yale.edu

Improving Willingness-to-Pay Elicitation by Including a Benchmark Good - Dizon-Ross, Rebecca; Jayachandran, Seema (National Bureau of Economic Research Working Paper Series, 2022)
We propose and validate a simple way to augment the standard Becker-DeGroot-Marschak method that researchers use to elicit willingness to pay (WTP) for a good. The augmentation is to measure WTP for another good ("benchmark good"), one unrelated to both the good the researcher is interested in and the independent variables of interest, and to use WTP for the benchmark good as a control variable in analyses. We illustrate the method and how it can eliminate noise in measured WTP using data collected in Uganda.
Author contact info: Rebecca Dizon-Ross Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-3265 E-Mail: rdr@chicagobooth.edu Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu

Indirect Effects of Access to Finance - Cai, Jing; Szeidl, Adam (National Bureau of Economic Research Working Paper Series, 2022)
We created experimental variation across local markets in China in the share of firms having access to a new loan product, to measure the direct and indirect effects of access to finance. We find that: (1) Access to finance had a large positive direct effect on the performance of treated firms. (2) Access to finance had a similar-sized negative indirect effect on the performance of firms with treated competitors. The two effects offset in the aggregate and imply no detectable gains in producer surplus. (3) Access to finance had a positive direct effect on business practices, service quality, and consumer satisfaction, and a negative effect on price. None of these effects were offset by indirect effects, suggesting net gains in consumer surplus. (4) Two additional indirect effects were active: diffusion of borrowing to firms with treated peers, and diffusion of demand to firms with treated neighbors. (5) Combining several effects in a model-based evaluation, we estimate that the loan had a private return of 74%, most of which was offset by losses to competitors, and a social return of 60%, most of which was driven by gains to consumers.
Author contact info: Jing Cai Department of Agricultural & Resource Economics University of Maryland 2122 Symons Hall College Park, MD 20742 E-Mail: cai516@umd.edu Adam Szeidl Department of Economics Central European University Nador u. 11 Budapest, Hungary Tel: +361 327-2000 E-Mail: szeidla@ceu.edu

European Recessions and Native American Conflict - Del Angel, Marco; Hess, Gregory D; Weidenmier, Marc D (National Bureau of Economic Research Working Paper Series, 2022)
We investigate the extent to which conflicts between Native American tribes and U.S. Army troops were caused by poor economic conditions in Europe from 1869 to 1890. We hypothesize that contractions in economic activity pushed many Europeans to move to the western United States in search of better economic opportunity. The empirical analysis demonstrates that immigration, interacted with US railroad access, caused the probability of a Native American conflict to increase by approximately 46 percent.
Author contact info: Marco Del Angel 403 Verano PL Irvine, CA 92617 E-Mail: marcom3@uci.edu Gregory D. Hess IES Abroad 33 West Monroe St., Suite 230 Chicago, IL 60603 Tel: 909/607-3686 Fax: 909/621-8249 E-Mail: hessg@wabash.edu Marc D. Weidenmier Argyros School of Business and Economics Chapman University One University Drive Orange, CA 92866 E-Mail: weidenmi@chapman.edu

When Can Benefit Cost Analyses Ignore Secondary Markets? - Kotchen, Matthew; Levinson, Arik (National Bureau of Economic Research Working Paper Series, 2022)
We make four main contributions in this paper related to the theory and practice of benefit cost analysis (BCA). First, we show that most BCAs of policy interventions do not consider the welfare consequences in secondary markets, where goods or services can be complements or substitutes to those in the directly regulated markets. Second, we provide a general theoretical analysis for examining the sign of welfare effects in secondary markets, showing how the results depend on the welfare measure of interest and on whether the goods are complements or substitutes. In doing so, we conclude that the welfare effects in secondary markets will typically be negative in cases most relevant for policy analysis. Third, we develop a straightforward tool that BCA analysts can use to evaluate the potential magnitude of secondary market effects in particular applications. The tool itself highlights how secondary markets are likely to be relatively small in most circumstances. Finally, we illustrate use of the tool in different applications that provide further evidence that secondary market effects are likely to be small.
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 Arik Levinson Department of Economics ICC 571 Georgetown University 3700 O St., NW Washington, DC 20057 Tel: 202/687-5571 Fax: 202/687-6102 E-Mail: Arik.Levinson@georgetown.edu

Intergenerational Persistence in Child Mortality - Lu, Frances R; Vogl, Tom (National Bureau of Economic Research Working Paper Series, 2022)
We study the intergenerational persistence of inequality by estimating grandmother-mother associations in the loss of a child, using pooled data from 119 Demographic and Health Surveys in 44 developing countries. Compared with compatriots of the same age, women with at least one sibling who died in childhood face 39% higher odds of having experienced at least one own-child death, or 7 percentage points at age 49. Place fixed effects reduce estimated mortality persistence by 47%; socioeconomic covariates explain far less. Within countries over time, persistence falls with aggregate child mortality, so that mortality decline disproportionately benefits high-mortality lineages.
Author contact info: Frances Lu E-Mail: f1lu@ucsd.edu Tom Vogl Department of Economics University of California at San Diego 9500 Gilman Drive La Jolla, CA 92093 Tel: 858/534-2230 E-Mail: tvogl@ucsd.edu

Do Higher-Priced Hospitals Deliver Higher-Quality Care? - Cooper, Zack; Doyle, Joseph J, Jr.; Graves, John A; Gruber, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
Hospitals in the US compete on price and quality. There are fears that because of general idiosyncrasies in the market for health care services, competition between hospitals will not generate efficient prices. These concerns have led to widespread calls for price regulation in the $1.3 trillion hospital sector. A clear prediction from the growing literature on hospital insurer bargaining is that more appealing hospitals should be able to negotiate higher prices. Following this prediction, we introduce a simple test of the extent to which the market for hospital care in the US is functioning: analyzing whether high priced hospitals have higher quality, controlling for patient selection. We find that being admitted to a hospital with two standard deviations higher prices raises spending on patients by 53% and lowers their mortality by 1 percentage point (37%). However, the relationship between higher prices and lower mortality is only present at hospitals in less concentrated markets. Receiving care from expensive hospitals in concentrated markets increases spending but has no detectable effect on mortality.
Author contact info: Zack Cooper Yale School of Public Health and the Department of Economics Yale University 85 Trumbull Street New Haven, CT 06520 E-Mail: zack.cooper@yale.edu Joseph J. Doyle Jr. MIT Sloan School of Management 100 Main Street, E62-516 Cambridge, MA 02142 Tel: 617/452-3761 Fax: 617/258-6855 E-Mail: jjdoyle@mit.edu John A. Graves Vanderbilt University 2525 West End Ave. Suite 1200 Nashville, TN 37203 Tel: 6179352824 E-Mail: john.graves@vanderbilt.edu Jonathan Gruber Department of Economics, E52-434 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8892 Fax: 617/253-1330 E-Mail: gruberj@mit.edu

Using Digitized Newspapers to Refine Historical Measures: The Case of the Boll Weevil - Ferrara, Andreas; Ha, Joung Yeob; Walsh, Randall (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows how to remove attenuation bias in regression analyses due to measurement error in historical data for a given variable of interest by using a secondary measure which can be easily generated from digitized newspapers. We provide three methods for using this secondary variable to deal with non-classical measurement error in a binary treatment: set identification, bias reduction via sample restriction, and a parametric bias correction. We demonstrate the usefulness of our methods by replicating two recent studies on the effect of the boll weevil. Relative to the initial analysis, our results yield markedly larger coefficient estimates.
Author contact info: Andreas Ferrara Department of Economics University of Pittsburgh 4906 Wesley W. Posvar Hall Pittsburgh, PA 15260 E-Mail: a.ferrara@pitt.edu Joung Yeob Ha Department of Economics University of Pittsburgh Pittsburgh, PA 15260 USA E-Mail: joh106@pitt.edu Randall Walsh Department of Economics University of Pittsburgh 4901 WW Posvar Hall 230 S. Bouquet St. Pittsburgh, PA 15260 Tel: 412/648-1737 Fax: 412/648-3011 E-Mail: walshr@pitt.edu

Collective Moral Hazard and the Interbank Market - Altinoglu, Levent; Stiglitz, Joseph E (National Bureau of Economic Research Working Paper Series, 2022)
The concentration of risk within the financial system leads to systemic instability. We propose a theory to explain the structure of the financial system and show how it alters the risk taking incentives of financial institutions when the government optimally intervenes during crises. By issuing interbank claims, risky institutions endogenously become too interconnected to fail. This concentrated structure enables institutions to share the risk of systemic crises in a privately optimal way, but leads to excessive risk taking even by peripheral institutions. Interconnectedness and excessive risk taking reinforce one another. Macroprudential regulation which limits the interconnectedness of risky institutions improves welfare.
Author contact info: Levent Altinoglu Federal Reserve Board of Governors Constitution Ave NW & 20th St NW Washington, DC 20551 E-Mail: levent.altinoglu@gmail.com Joseph E. Stiglitz 5th Floor, Kravis Hall Columbia University 665 West 130th St. New York, NY 10027 Tel: (929) 274-2912 Fax: (929) 349-5197 E-Mail: jes322@columbia.edu

The Wobbly Economy: Global Dynamics with Phase and State Transitions - Hirano, Tomohiro; Stiglitz, Joseph E (National Bureau of Economic Research Working Paper Series, 2022)
We analyze global dynamics in the standard life-cycle model with production, showing that there can be a plethora of rational expectations dynamics, including “wobbly macro-dynamics”. Depending on people’s beliefs, the macroeconomy can bounce around infinitely, without converging, without regular periodicity. The economy can be plagued by repeated periods of inefficiencies and unemployment. In phase transitions, the economy endogenously changes from a state with a unique momentary equilibrium into one with multiple equilibria, or vice versa. Phase transitions determine the patterns of dynamics. We identify all possible patterns of dynamics, providing a complete characterization of the parameter values under which each may occur, showing how a change in some key parameter (e.g. labor productivity) induces a “state transition,” an abrupt change in the set of feasible global dynamics: a boom can become unstable. Global dynamics exhibits strong hysteresis effects; a temporary positive productivity shock can have long run adverse effects.
Author contact info: Tomohiro Hirano Royal Holloway, University of London E-Mail: tomohih@gmail.com Joseph E. Stiglitz 5th Floor, Kravis Hall Columbia University 665 West 130th St. New York, NY 10027 Tel: (929) 274-2912 Fax: (929) 349-5197 E-Mail: jes322@columbia.edu

Spending Limits, Public Funding, and Election Outcomes - Broberg, Nikolaj; Pons, Vincent; Tricaud, Clemence (National Bureau of Economic Research Working Paper Series, 2022)
This paper investigates the effects of campaign finance rules on electoral outcomes. In French departmental and municipal elections, candidates competing in districts above 9,000 inhabitants face spending limits and are eligible for public reimbursement. Using an RDD around the population threshold, we find that these rules increase competitiveness and benefit the runner-up of the previous race as well as new candidates, in departmental elections, while leaving the polarization of results and winners’ representativeness and quality unaffected. Incumbents are less likely to get reelected because they are less likely to run and obtain a lower vote share, conditional on running. These results appear to be driven by the reimbursement of campaign expenditures, not spending limits. We do not find such effects in municipal elections, which we attribute to the use of a proportional list system instead of plurality voting.
Author contact info: Nikolaj Broberg Convento di San Domenico | Via delle Fontanelle, 19 Department of Economics and Migration Policy Centre San Domenico di Fiesole I-50014 Europe E-Mail: nikolaj.broberg@eui.eu Vincent Pons Harvard Business School Morgan Hall 289 Soldiers Field Boston, MA 02163 Tel: 617/495-9329 E-Mail: vpons@hbs.edu Clemence Tricaud 110 Westwood Plaza, Entrepreneurs Hall UCLA Anderson School of Management Global Economics and Management Area Los Angeles, CA 90005-1481 E-Mail: clemence.tricaud@anderson.ucla.edu

On the Dynamics of Human Behavior: The Past, Present, and Future of Culture, Conflict, and Cooperation - Nunn, Nathan (National Bureau of Economic Research Working Paper Series, 2022)
I provide a theoretically-guided discussion of the dynamics of human behavior, focusing on the importance of culture (socially-learned information) and tradition (transmission of culture across generations). Decision-making that relies on tradition can be an effective strategy and arises in equilibrium. While dynamically optimal, it generates static `mismatch.' When the world changes, since traits evolve slowly, they may not be beneficial in their new environment. I discuss how mismatch helps explain the world around us, presents special challenges and opportunities for policy, and provides important lessons for our future as a human species.
Author contact info: Nathan Nunn Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 2E8 Canada E-Mail: nathan.nunn@ubc.ca

Dynamics of Subjective Risk Premia - Nagel, Stefan; Xu, Zhengyang (National Bureau of Economic Research Working Paper Series, 2022)
We examine subjective risk premia implied by return expectations of individual investors and professionals for aggregate portfolios of stocks, bonds, currencies, and commodity futures. While in-sample predictive regressions with realized excess returns suggest that objective risk premia vary countercyclically with business cycle variables and aggregate asset valuation measures, subjective risk premia extracted from survey data do not comove much with these variables. This lack of cyclicality of subjective risk premia is a pervasive property that holds in expectations of different groups of market participants and in different asset classes. A similar lack of cyclicality appears in out-of-sample forecasts of excess returns, which suggests that investors’ learning of forecasting relationships in real time may explain much of the cyclicality gap. These findings cast doubt on models that explain time-varying objective risk premia inferred from in-sample regressions with countercyclical variation in perceived risk or risk aversion. We further find a link between subjective perceptions of risk and subjective risk premia, which points toward a positive risk-return tradeoff in subjective beliefs.
Author contact info: Stefan Nagel University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: stefan.nagel@chicagobooth.edu Zhengyang Xu City University of Hong Kong Department of Economics and Finance 9-221, 9/F, LAU, Tat Chee Avenue Kowloon Tong, Kowloon, Hong Kong SAR E-Mail: zhengyxu@cityu.edu.hk

Marijuana Legalization and Opioid Deaths - Mathur, Neil K; Ruhm, Christopher J (National Bureau of Economic Research Working Paper Series, 2022)
Over the last two decades there has been considerable movement at the state-level to legalize marijuana, initially for medical purposes and more recently for recreational consumption. Despite prior research, it is unclear how, if at all, these policies are related to rates of opioid-involved overdose deaths, which have trended rapidly upwards over time and represent a major public health problem. We provide two types of new information on this question. First, we replicate and extend upon previous investigations and show that the empirical results of those studies are frequently fragile and that, in most cases, the inclusion of more comprehensive controls, longer analysis periods and more correctly defined dependent variables results in less favorable estimates, often including predicted increases in opioid deaths. Second, we present new estimates from generalized differences-in-differences and event study models that incorporate more recent data and improvements developed in our replication and extension of early research. These results indicate that legal medical marijuana, particularly when available through retail dispensaries, is associated with higher opioid mortality. The results for recreational marijuana, while less reliable, also suggest that retail sales through dispensaries are associated with greater death rates relative to the counterfactual of no legal cannabis.
Author contact info: Neil K. Mathur E-Mail: nkm7da@virginia.edu Christopher J. Ruhm Frank Batten School of Leadership and Public Policy University of Virginia 235 McCormick Rd. P.O. Box 400893 Charlottesville, VA 22904-4893 E-Mail: ruhm@virginia.edu

Most-Favored Entry Clauses in Drug Patent Litigation Settlements as a Potential Reverse Payment - Drake, Keith M; McGuire, Thomas (National Bureau of Economic Research Working Paper Series, 2022)
Settlements of drug patent disputes that involve a potential payment from the brand to the generic signal a possible collusive profit split with a threat to competition, and have undergone intensive scrutiny in the literature on law and economics. A common feature of these brand-generic settlements, so-called “most-favored entry” (MFE) clauses, have not been investigated to the same extent. The expectation that brand drug companies make settlement decisions rationally implies that an otherwise unexplained brand payment above savings from expected future litigation costs derives from a delay in competition achieved by the settlement. This paper applies the condition of brand rationality to settlements with MFE clauses, with the added consideration that an MFE clause may affect two dates: the date of entry for the settling generic and the date of entry of third-party generic challengers. A brand payment from an MFE clause above future expected litigation costs implies delays in at least one and possibly two of these expected dates for competition. We find that MFE clauses can constitute a reverse payment. When a payment takes the form of an MFE clause, the pay-above-saved-litigation-cost criterion is, however, vulnerable to suggesting that a settlement is not anticompetitive, when in fact it is.
Author contact info: Keith M. Drake Greylock McKinnon Associates 35 S. Main Street Suite 306 Hanover, NH 03755 E-Mail: kdrake@gma-us.com Thomas McGuire 505 Tremont St. Apt 501 Boston, MA 02116 United States Tel: 617 462 1569 E-Mail: mcguire@hcp.med.harvard.edu

Does Welfare Prevent Crime? The Criminal Justice Outcomes of Youth Removed From SSI - Deshpande, Manasi; Mueller-Smith, Michael G (National Bureau of Economic Research Working Paper Series, 2022)
We estimate the effect of losing Supplemental Security Income (SSI) benefits at age 18 on criminal justice and employment outcomes over the next two decades. To estimate this effect, we use a regression discontinuity design in the likelihood of being reviewed for SSI eligibility at age 18 created by the 1996 welfare reform law. We evaluate this natural experiment with Social Security Administration data linked to records from the Criminal Justice Administrative Records System. We find that SSI removal increases the number of criminal charges by a statistically significant 20% over the next two decades. The increase in charges is concentrated in offenses for which income generation is a primary motivation (60% increase), especially theft, burglary, fraud/forgery, and prostitution. The effect of SSI removal on criminal justice involvement persists more than two decades later, even as the effect of removal on contemporaneous SSI receipt diminishes. In response to SSI removal, youth are twice as likely to be charged with an illicit income-generating offense than they are to maintain steady employment at $15,000/year in the labor market. As a result of these charges, the annual likelihood of incarceration increases by a statistically significant 60% in the two decades following SSI removal. The costs to taxpayers of enforcement and incarceration from SSI removal are so high that they nearly eliminate the savings to taxpayers from reduced SSI benefits.
Author contact info: Manasi Deshpande Department of Economics University of Chicago 1126 E 59th St. Chicago, IL 60637 E-Mail: mdeshpande@uchicago.edu Michael G. Mueller-Smith Department of Economics University of Michigan 365C Lorch Hall 611 Tappan Ave. Ann Arbor, MI 48109-1220 Tel: 410/218-3189 E-Mail: mgms@umich.edu

Business Cycles and Healthcare Employment - Aslim, Erkmen G; Chou, Shin-Yi; De, Kuhelika (National Bureau of Economic Research Working Paper Series, 2022)
Is healthcare employment recession proof? We examine the hypothesis that healthcare employment is stable across the business cycle. We explicitly distinguish between a negative aggregate demand and supply shock in studying how healthcare employment responds to recessions, and show that this response depends largely on the type of the exogenous shock triggering the recession. We find that aggregate healthcare employment responds procyclically during demand-induced recessions but remains stable during supply-induced recessions. Further, there is significant heterogeneity in the employment responses of the healthcare sub-sectors. While healthcare employment in most sub-sectors responds procyclically during recessions caused by both negative demand and supply shocks, that in nursing dominant sectors responds countercyclically. However, the procyclical response of sub-sectors and countercyclical response of nursing dominant sectors are both relatively weaker during recessions caused by a negative aggregate supply shock than a demand shock, thus balancing out and contributing to an overall null employment response of the aggregate healthcare sector during recessions caused by a supply shock. More generally, by isolating the recessionary impact of the negative aggregate demand shock from supply shock on healthcare employment, we provide new empirical evidence that healthcare employment in general is not recession proof.
Author contact info: Erkmen G. Aslim Grand Valley State University 3120 L. William Seidman Center 50 Front Avenue SW. Grand Rapids, MI 49504 E-Mail: aslime@gvsu.edu Shin-Yi Chou Department of Economics College of Business and Economics Lehigh University 621 Taylor Street Bethlehem, PA 18015-3117 Tel: 610/758-3444 Fax: NA E-Mail: syc2@lehigh.edu Kuhelika De Grand Valley State University 3072 L. William Seidman Center 50 Front Avenue SW Grand Rapids, MI 49504 E-Mail: dek@gvsu.edu

Grandfathering with Anticipation - Costello, Christopher; Grainger, Corbett A (National Bureau of Economic Research Working Paper Series, 2022)
Natural resources such as carbon, water, and fish are increasingly managed with markets that require an initial allocation of property rights. In practice these rights are typically grandfathered based on historical use, but rights could be allocated any number of ways. Taking the perspective of a currently unregulated firm, we ask how the anticipation of a future market affects extraction incentives, environmental quality, and welfare prior to the implementation of the market. We show that this anticipation has first-order welfare implications, seemingly contradicting the widely held belief that the allocation of rights has no aggregate welfare consequences. The most egregious case involves anticipation of a traditional grandfathering rule, which induces a race for allocation before the market goes into effect, causing over-extraction or over-emissions, even relative to the completely unregulated baseline. We derive an alternative allocation rule called "Reverse-Grandfathering" that still provides a free allocation of rights but reverses the marginal incentive to emit or extract. We show that this new approach, which relies on incentives due to anticipation, can replicate welfare-maximizing firm behavior, even in the complete absence of regulation. To illustrate the potential magnitude of anticipation effects, we develop and parameterize a structural model of a hypothetical market among nearly 5,000 large fishing firms on the high seas. Relative to traditional grandfathering and auctioning of rights, Reverse-Grandfathering substantially increases natural resource stocks and welfare.
Author contact info: Christopher Costello Bren School of Environmental Science & Management University of California, Santa Barbara Santa Barbara, CA 93106 Tel: 805/893-5802 Fax: 805/893-7612 E-Mail: costello@bren.ucsb.edu Corbett A. Grainger Department of Agricultural and Applied Economics University of Wisconsin, Madison Madison, WI 53706 http://www.aae.wisc.edu/cagrainger Tel: 608-262-3651 E-Mail: corbett.grainger@wisc.edu

Democratization, Elite Capture and Economic Development - Foster, Andrew D; Rosenzweig, Mark R (National Bureau of Economic Research Working Paper Series, 2022)
We show using a theoretical framework that embeds a voting model in a general-equilibrium model of a rural economy with two interest groups defined by land ownership that the effects of democratization—a shift from control of public resources by the landed elite to a democratic regime with universal suffrage—on the portfolio of public goods is heterogeneous, depending the population landless. In accord with the model and empirical findings from micro data on the differing material interests of the two land classes, we find, based on 30-year panel data describing the democratization of Indian villages, that democratization in villages with a larger landless population share shifted resources away from public irrigation, secondary schools, and electrification and towards programs that increase employment. When the landed farmers have a large population share, public resources were shifted towards irrigation, secondary schools and electrification and away from employment programs.
Author contact info: Andrew Foster Department of Economics and Community Health Brown University 64 Waterman Street Providence, RI 02912 Tel: 401/863-2537 E-Mail: afoster@brown.edu Mark Rosenzweig Department of Economics Yale University Box 208269 New Haven, CT 06520 Tel: 203/432-3588 E-Mail: mark.rosenzweig@yale.edu

Measuring Upward Mobility - Ray, Debraj; Genicot, Garance (National Bureau of Economic Research Working Paper Series, 2022)
We conceptualize and measure upward mobility over income or wealth. At the core of our exercise is the Growth Progressivity Axiom: transfers of instantaneous growth rates from relatively rich to poor individuals increases upward mobility. This axiom, along with mild auxiliary restrictions, identifies an “upward mobility kernel" with a single free parameter, in which mobility is linear in individual growth rates, with geometrically declining weights on baseline incomes. We extend this kernel to trajectories over intervals. The analysis delivers an upward mobility index that does not rely on panel data. That significantly expands our analytical scope to data-poor settings.
Author contact info: Debraj Ray Department of Economics New York University 19 West Fourth Street New York, NY 10012 Tel: 212/998-8906 Fax: 212/995-4186 E-Mail: debraj.ray@nyu.edu Garance Genicot Georgetown University Department of Economics 37th & O Streets, NW Washington, DC 20057 Tel: 202/687-7144 Fax: 202/687-6102 E-Mail: gg58@georgetown.edu

The Coming Rise in Residential Inflation - Bolhuis, Marijn A; Cramer, Judd N. L; Summers, Lawrence H (National Bureau of Economic Research Working Paper Series, 2022)
We study how the recent run-up in housing and rental prices affects the outlook for inflation in the United States. Housing held down overall inflation in 2021. Despite record growth in private market-based measures of home prices and rents, government measured residential services inflation was only four percent for the twelve months ending in January 2022. After explaining the mechanical cause for this divergence, we estimate that, if past relationships hold, the residential inflation components of the CPI and PCE are likely to move close to seven percent during 2022. These findings imply that housing will make a significant contribution to overall inflation in 2022, ranging from one percentage point for headline PCE to 2.6 percentage points for core CPI. We expect residential inflation to remain elevated in 2023.
Author contact info: Marijn A. Bolhuis International Monetary Fund E-Mail: mbolhuis@imf.org Judd N. L. Cramer Harvard University E-Mail: judd.cramer@gmail.com Lawrence H. Summers Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 Tel: 617/495-9322 Fax: 617/495-0436 E-Mail: lhs@harvard.edu

Asset Prices and Unemployment Fluctuations: A Resolution of the Unemployment Volatility Puzzle - Kehoe, Patrick J; Lopez, Pierlauro; Midrigan, Virgiliu; Pastorino, Elena (National Bureau of Economic Research Working Paper Series, 2022)
Recent work has demonstrated that existing solutions of the unemployment volatility puzzle are at odds with the procylicality of the opportunity cost of employment, the cyclicality of wages, and the volatility of risk-free rates. We propose a model of business cycles that is immune to these critiques by incorporating two key features. First, we allow for preferences that generate time-varying risk over the business cycle to account for observed fluctuations in asset prices. Second, we introduce human capital acquisition consistent with the evidence on how wages grow with experience in the labor market. Our model reproduces the observed fluctuations in unemployment because hiring a worker is a risky investment with long-duration returns. As in the data, the price of risk in our model sharply increases in recessions. The benefit from hiring new workers therefore greatly declines, leading to a large decrease in job vacancies and an increase in unemployment of the same magnitude as in the data. We show that our results extend to versions of the model that include physical capital, a life cycle for workers, and alternative preference structures common in the asset-pricing literature.
Author contact info: Patrick J. Kehoe Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: patrickjameskehoe@gmail.com Pierlauro Lopez Federal Reserve Bank of Cleveland Research Department 1455 East Sixth St Cleveland, OH 44114 E-Mail: pierlaurolopez@gmail.com Virgiliu Midrigan Department of Economics New York University 19 W. 4th St. New York, NY 10012 Tel: 212/992-8081 Fax: 212/995-4186 E-Mail: virgiliu.midrigan@nyu.edu Elena Pastorino Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/725-9935 E-Mail: epastori@stanford.edu

The Long-Run Labor Market Effects of the Canada-U.S. Free Trade Agreement - Kovak, Brian K; Morrow, Peter M (National Bureau of Economic Research Working Paper Series, 2022)
This paper assesses the long-run effects of the 1988 Canada-U.S. Free Trade Agreement (CUSFTA) on the Canadian labor market using matched longitudinal administrative data for the years 1984-2004. We simultaneously examine the labor market effects of increased export expansion and import competition, generally finding adverse effects of Canadian tariff cuts and favorable effects of U.S. cuts, though both effects are small. Workers initially employed in industries that experienced larger Canadian tariff concessions exhibit a heightened probability of layoffs at large firms, but little impact on long-run cumulative earnings. Lower earnings and years worked at the initial employer are offset by gains in other manufacturing industries, construction, and services. Canadian workers quickly transitioned out of industries facing import competition, with the majority of industry adjustment occurring among new entrants to the labor market.
Author contact info: Brian K. Kovak H. John Heinz III College Carnegie Mellon University 4800 Forbes Avenue, HBH 3012 Pittsburgh, PA 15213 Tel: 412/268-5223 Fax: 412/268-4487 E-Mail: bkovak@cmu.edu Peter M. Morrow Department of Economics University of Toronto 150 St. George St., Room 336 Toronto, Ontario M5S 3G7, Canada E-Mail: peter.morrow@utoronto.ca

The Effects of the Emeryville Fair Workweek Ordinance on the Daily Lives of Low-Wage Workers and their Families - Ananat, Elizabeth; Gassman-Pines, Anna; Fitz-Henley, John (National Bureau of Economic Research Working Paper Series, 2022)
Emeryville, CA’s Fair Workweek Ordinance (FWO) aimed to reduce service workers’ schedule unpredictability by requiring large retail and food service employers to provide advanced notice of schedules and to compensate workers for last-minute schedule changes. From a 1-in-6 sample of Emeryville retail and food service workers with young children (58 percent working in regulated businesses at baseline, the rest in the same industries in firms below the size cutoff for regulation), this study gathered daily reports of work schedule unpredictability and worker and family well-being over three waves before and after FWO implementation (N=6,059 observations). The FWO decreased working parents’ schedule unpredictability relative to those in similar jobs at unregulated establishments. The FWO also decreased parents’ days worked while increasing hours per work day, leaving total hours roughly unchanged. Finally, parent well-being improved, with significant declines in sleep difficulty.
Author contact info: Elizabeth Ananat Barnard College Columbia University 3009 Broadway Office 1019 Milstein Building New York, NY 10027 E-Mail: eananat@barnard.edu Anna Gassman-Pines Sanford School of Public Policy Duke University Box 90245 Durham, NC 27708 E-Mail: agassman.pines@duke.edu John Fitz-Henley II 20 Washington Road Julis Romo Rabinowitz Building Princeton, NJ 27510 E-Mail: fitzhenley@princeton.edu

Self-Interest in Public Service: Evidence from School Board Elections - Billings, Stephen B; Macartney, Hugh; Park, Geunyong; Singleton, John D (National Bureau of Economic Research Working Paper Series, 2022)
In this paper, we show that the election of a new school board member causes home values in their neighborhood to rise. This increase is identified using narrowly-decided contests and is driven by non-Democratic members, whose neighborhoods appreciate about 4% on average relative to those of losing candidates. We find that student test scores in the neighborhood public schools of non-Democratic winners also relatively increase, but this effect is driven by changing student composition, including via the manipulation of attendance zones, rather than improvements in school quality (as measured by test score value-added). Notably, we detect no differential changes when comparing neighborhood or scholastic outcomes between winning and losing Democratic school board candidates. These results suggest that partisan affiliation is correlated with private motivations for seeking public office.
Author contact info: Stephen B. Billings University of Colorado Department of Finance Leeds School of Business Boulder, CO 80309 E-Mail: stephen.billings@colorado.edu Hugh Macartney Duke University Department of Economics 239 Social Sciences Building Box 90097 Durham, NC 27708 Tel: 919/660-1866 Fax: 919/684-8974 E-Mail: hugh.macartney@icloud.com Geunyong Park Department of Strategy and Policy National University of Singapore 15 Kent Ridge Drive Singapore E-Mail: park.geunyong@nus.edu.sg John D. Singleton University of Rochester Department of Economics Harkness Hall Box 270156 Rochester, NY 14627 E-Mail: john.singleton@rochester.edu