Capital and Wages - Acemoglu, Daron (National Bureau of Economic Research Working Paper Series, 2024)
Does capital accumulation increase labor demand and wages? Neoclassical production functions, where capital and labor are q-complements, ensure that the answer is yes, so long as labor markets are competitive. This result critically depends on the assumption that capital accumulation does not change the technologies being developed and used. I adapt the theory of endogenous technological change to investigate this question when technology also responds to capital accumulation. I show that there are strong parallels between the relationship between capital and wages and existing results on the conditions under which equilibrium factor demands are upward-sloping (e.g., Acemoglu, 2007). Extending this framework, I provide intuitive conditions and simple examples where a greater capital stock leads to lower wages, because it triggers more automation. I then offer an endogenous growth model with a menu of technologies where equilibrium involves choices over both the extent of automation and the rate of growth of labor-augmenting productivity. In this framework, capital accumulation and technological change in the long run are associated with wage growth, but an increase in the saving rate increases the extent of automation, and at first reduces the wage rate and subsequently depresses its long-run growth rate.
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

The Mortality Effects of Healthcare Consolidation: Evidence from Emergency Department Closures - Chatterji, Pinka; Ho, Chun-Yu; Wu, Xue (National Bureau of Economic Research Working Paper Series, 2024)
We examine whether loss of emergency department services is associated with county-level mortality rates in rural areas over the period 2005-2018. We use a propensity-weighted difference-in-difference approach, comparing counties that lost emergency department services to counties that retained them during our period. In the full sample, we find no effects of emergency department closure on all-cause mortality; drug, alcohol, and suicide deaths; or AMI mortality. We find that closure is associated with increased drug-related deaths among white and younger-aged females, and in the Midwest and the West, as well as an increase in AMI mortality in the South and West.
Author contact info: Pinka Chatterji State University of New York at Albany Economics Department 1400 Washington Avenue Albany, NY 12222 Tel: 518/442-4746 E-Mail: pchatterji@albany.edu Chun-Yu Ho Economics Department State University of New York at Albany 1400 Washington Avenue Albany, NY 12222 E-Mail: cho@albany.edu Xue Wu E-Mail: Xue.Wu@ahrq.hhs.gov

International Trade and Macroeconomic Dynamics with Sanctions - Ghironi, Fabio; Kim, Daisoon; Ozhan, G. Kemal (National Bureau of Economic Research Working Paper Series, 2024)
We study international trade and macroeconomic dynamics triggered by the imposition of sanctions. We begin with a tractable two-country model where Home and Foreign countries have comparative advantages in production of differentiated consumption goods and a commodity (e.g., gas), respectively. Home imposes sanctions on Foreign. Financial sanctions exclude a fraction of Foreign agents from the international bond market. Gas sanctions take the form of a ban on gas trade, equivalent to an appropriate price cap in our model. Differentiated goods trade sanctions exclude a fraction of Foreign and Home exporters from international trade. All sanctions lead to resource reallocation in both economies. Exchange rate movements reflect the direction of reallocation and the type of sanctions imposed rather than the success of the sanctions. Welfare analysis shows that gas sanctions are more costly for Home, while differentiated consumption goods trade sanctions are more costly for Foreign. A third country that refrains from joining the sanctions mitigates welfare losses in Foreign, but refraining from joining the sanctions is beneficial for the third country. These findings highlight the importance and the difficulty of international coordination when imposing sanctions.
Author contact info: Fabio Ghironi Department of Economics University of Washington Savery Hall, Box 353330 Seattle, WA 98195 Tel: 206/543-5795 Fax: 206/685-7477 E-Mail: fabio.ghironi.1@gmail.com Daisoon Kim Nelson Hall 4114, Box 8110 Department of Economics, Poole College of Management North Carolina State University Raleigh, NC 27695 E-Mail: dkim29@ncsu.edu Galip Kemal Ozhan International Monetary Fund 700 19th Street NW Washington, DC 20431 E-Mail: gozhan@gmail.com

The Role of Advertisers and Platforms in Monetizing Misinformation: Descriptive and Experimental Evidence - Ahmad, Wajeeha; Sen, Ananya; Eesley, Chuck; Brynjolfsson, Erik (National Bureau of Economic Research Working Paper Series, 2024)
The financial motivation to earn advertising revenue by spreading misinformation has been widely conjectured to be among the main reasons misinformation continues to be prevalent online. Research aimed at reducing the spread of misinformation has so far focused on user-level interventions with little emphasis on how the supply of misinformation can itself be countered. In this work, we show how online misinformation is largely financially sustained via advertising, examine how financing misinformation affects the advertisers and ad platforms involved and outline ways of reducing the financing of misinformation. First, we find that advertising on misinformation outlets is pervasive for companies across several industries and is amplified by digital ad platforms that automatically distribute companies’ ads across the web. Using an information provision survey experiment, we show that people decrease their demand for a company’s products or services upon learning about its role in monetizing misinformation via online ads. To shed light on why misinformation continues to be monetized despite the potential backlash for the advertisers involved, we survey decision-makers at companies. We find that most decision-makers are unaware of their companies’ ads appearing on misinformation websites but have a strong preference to avoid appearing on such websites. Moreover, those uncertain and unaware about their role in financing misinformation increase their demand for a platform-based solution to reduce monetizing misinformation upon learning about how platforms amplify ad placement on misinformation websites. We identify low-cost, scalable information-based interventions that digital platforms could implement to reduce the financial incentive to misinform and counter the supply of misinformation online.
Author contact info: Wajeeha Ahmad Department of Management Science and Engineering, Stanford University Stanford, CA 94305 United States E-Mail: wajeehaa@stanford.edu Ananya Sen Heinz College of Information Systems and Public Policy Carnegie Mellon University Pittsburgh, PA 15217 E-Mail: ananyase@andrew.cmu.edu Chuck Eesley Department of Management Science and Engineering Stanford University E-Mail: cee@stanford.edu Erik Brynjolfsson Stanford Digital Economy Laboratory 353 Jane Stanford Way, Office 136 Stanford, CA 94305 E-Mail: erik.brynjolfsson@gmail.com

Friends with Benefits: Social Capital and Household Financial Behavior - Cannon, Brad; Hirshleifer, David; Thornton, Joshua (National Bureau of Economic Research Working Paper Series, 2024)
Using friendship data from Facebook, we study the effects of three aspects of social capital on household financial behavior. We find that the most important measure of social capital in explaining stock market and saving participation is Economic Connectedness, defined as the fraction of one’s social network with high socioeconomic status. One standard-deviation greater Economic Connectedness is associated with 2.9% greater stock market participation and 5.0% greater saving participation. Compared to Cohesiveness or Civic Engagement, Economic Connectedness explains more than 6 times the variation in stock market participation and more than 4 times the variation in saving participation. Using data on nonlocal friendships, we provide evidence supporting a causal link between household financial behavior and the income of one's friends. Furthermore, we provide evidence that greater opportunities for social interaction with wealthy individuals is associated with increased stock market and saving participation.
Author contact info: Brad Cannon School of Management Binghamton, NY 13902 USA E-Mail: bcannon@binghamton.edu David Hirshleifer Marshall School of Business University of Southern California 3670 Trousdale Pkwy Los Angeles, CA 90089 Tel: 213-740-6515 E-Mail: hirshlei@marshall.usc.edu Joshua Thornton Hankamer School of Business Waco, TX 76798 USA E-Mail: joshua_thornton@baylor.edu

Optimal Urban Transportation Policy: Evidence from Chicago - Almagro, Milena; Barbieri, Felipe; Camilo Castillo, Juan; Hickok, Nathaniel G; Salz, Tobias (National Bureau of Economic Research Working Paper Series, 2024)
We characterize optimal urban transportation policies in the presence of congestion and environmental externalities and evaluate their welfare and distributional effects. We present a framework of a municipal government that implements different transportation equilibria through its choice of public transit policies—prices and frequencies—as well as road pricing. The government faces a budget constraint that introduces monopoly-like distortions. We apply this framework to Chicago, for which we construct a new dataset that comprehensively captures transportation choices. We find that road pricing alone leads to large welfare gains by reducing externalities, but at the expense of consumers (travelers), whose surplus falls even if road pricing revenues are fully rebated. The largest losses are borne by middle income consumers, who are most reliant on cars. We find that the optimal price of public transit is close to zero and goes along with a reduction in the frequency of buses and an increase in the frequency of trains. Combining these transit policies with road pricing eliminates budget constraints. This allows the government to implement higher transit frequencies and even lower prices, in which case consumer surplus increases after rebates.
Author contact info: Milena Almagro Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: Milena.almagro@chicagobooth.edu Felipe Barbieri E-Mail: kupf@sas.upenn.edu Juan Camilo Castillo Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 650/422-9875 E-Mail: jccast@upenn.edu Nathaniel Hickok E-Mail: nhickok@mit.edu Tobias Salz Department of Economics, E52-460 MIT Cambridge, MA 02139 Tel: 617/715-2266 E-Mail: tsalz@mit.edu

Finance in a Time of Disruptive Growth - Gârleanu, Nicolae B; Panageas, Stavros (National Bureau of Economic Research Working Paper Series, 2024)
We propose a unified theory of asset price determination encompassing both “conventional” and “alternative” asset classes (private equity, real estate, etc.). The model features disruption of old by young firms and skewness in the distribution of innovative rents among the young innovators. The relative size of asset classes, the dynamics of rich investors’ wealth, and the returns of the various asset classes are jointly determined in equilibrium. Besides explaining the observed patterns of returns across asset classes, we analyze the theoretical properties of the most widely used performance-evaluation measure for alternative investments. We also provide connections between the growth of alternative investments, the dispersion of returns across investors, and the turnover inside the ranks of wealthy individuals.
Author contact info: Nicolae B. Gârleanu Olin Business School Washington University in St. Louis 1 Brookings Drive St. Louis, MO 63130 E-Mail: garleanu@wustl.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

Venture Debt - Morse, Adair (National Bureau of Economic Research Working Paper Series, 2024)
The provision of venture debt financing to growth-oriented startups which are backed by venture capital (VC) equity has been a bit of a puzzle given the lack of positive cash flows or traditional collateral of such startups. This short paper lays out the hurdles for debt to overcome to be a viable source of finance and casts the three types of venture debt – patent loans, venture leverage, and bridge loans – as solutions to such hurdles, casting the literature in terms of financial innovation. Finally, the paper addresses the risks implied by venture debt and discusses whether the demise of Silicon Valley Bank speaks to whether innovation ecosystem risk transmutes to the financial system through debt and the extent to which innovation ecosystem risk remains unstudied.
Author contact info: Adair Morse 5319 42nd Pl NW Washington, DC 20015 E-Mail: morse@haas.berkeley.edu

The Distributional Effects of Asset Returns - Fernández-Villaverde, Jesús; Levintal, Oren (National Bureau of Economic Research Working Paper Series, 2024)
We study the distributional effects of asset returns using a heterogeneous-agent model estimated to match the joint distribution of wealth and returns. In the model, endogenous portfolio decisions play a key role through their impact on households' wealth accumulation. We find substantial welfare effects of changes in asset returns. A permanent decline of one percentage point in expected returns increases the consumption share of the top 10% by 6% permanently. Our findings suggest that lower returns increase inequality, which contradicts Piketty's (2014) r-g formula. To resolve this contradiction, we derive a generalized formula that includes the consumption/wealth ratio and which is consistent with our empirical and theoretical findings. Nonetheless, wealth inequality within the Pareto tail is fairly insensitive to asset returns. Instead, inequality between the Pareto tail and the lower range of the distribution responds strongly to asset returns through their differential effects on active savings relative to wealth. Simulations suggest that asset price dynamics can explain the main variations in U.S. top wealth shares since the 1960s.
Author contact info: Jesús Fernández-Villaverde Department of Economics University of Pennsylvania The Ronald O. Perelman Center for Political Science and Economics 133 South 36th Street Suite 150 Philadelphia, PA 19104 E-Mail: jesusfv@econ.upenn.edu Oren Levintal Tiomkin School of Economics Reichman University P.O.Box 167. Herzliya, 4610101 Israel E-Mail: oren.levintal@runi.ac.il

Genetic Risk for Alzheimer’s Disease and Related Dementias: Cognition, Economic Behavior, and Clinically Actionable Information - Jeong, Yeongmi; Papageorge, Nicholas W; Skira, Meghan; Thom, Kevin (National Bureau of Economic Research Working Paper Series, 2024)
Genetic factors play a major role in the development of Alzheimer’s disease and related dementias (ADRD). Observable genetic factors could impact household planning and medical care if they contain actionable information, meaning that they i) are associated with significant harms, ii) reflect risks for which individuals are not already prepared, and iii) are informative above and beyond current knowledge or expectations. We examine these properties for existing genetic measures related to ADRD in the Health and Retirement Study (HRS). We replicate existing relationships between genetic factors and cognitive health. We also show that higher genetic risk is associated with worse economic outcomes on several dimensions including work, income, and wealth. Surprisingly, individuals at higher risk are less likely to engage in planning activities that could mitigate the consequences of cognitive decline (e.g. assigning durable power of attorney). In predictive exercises, existing genetic indices provide clinically valuable and policy-relevant information on the development of severe adverse cognitive outcomes in the future.
Author contact info: Yeongmi Jeong Department of Sociology Purdue University West Lafayette, IN 47905 USA Tel: 7624002981 E-Mail: jeong212@purdue.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 Meghan Skira Department of Economics Terry College of Business University of Georgia Athens, GA 30602 E-Mail: skira@uga.edu Kevin Thom Department of Economics University of Wisconsin-Milwaukee E-Mail: kthom.work@gmail.com

Tax Policy and Investment in a Global Economy - Chodorow-Reich, Gabriel; Smith, Matthew; Zidar, Owen M; Zwick, Eric (National Bureau of Economic Research Working Paper Series, 2024)
We evaluate the 2017 Tax Cuts and Jobs Act. Combining reduced-form estimates from tax data with a global investment model, we estimate responses, identify parameters, and conduct counterfactuals. Domestic investment of firms with the mean tax change increases 20% versus a no-change baseline. Due to novel foreign incentives, foreign capital of U.S. multinationals rises substantially. These incentives also boost domestic investment, indicating complementarity between domestic and foreign capital. In the model, the long-run effect on domestic capital in general equilibrium is 7% and the tax revenue feedback from growth offsets only 2p.p. of the direct cost of 41% of pre-TCJA corporate revenue.
Author contact info: Gabriel Chodorow-Reich Department of Economics Harvard University 1805 Littauer Center Cambridge, MA 02138 Tel: 617/359-2698 E-Mail: chodorowreich@fas.harvard.edu Matthew Smith Office of Tax Analysis U.S. Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, D.C. 20220 E-Mail: matthew.smith@treasury.gov Owen M. Zidar Department of Economics & School of International and Public Affairs Princeton University 237 Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: ozidar@princeton.edu Eric Zwick Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 239/822-8942 E-Mail: ericzwick@gmail.com

Do For-Profit Hospitals Cream-Skim Patients? Evidence from Inpatient Psychiatric Care in California - Lee, Donghoon; Basu, Anirban; Dugan, Jerome A; Karaca-Mandic, Pinar (National Bureau of Economic Research Working Paper Series, 2024)
The paper examines whether, among inpatient psychiatric admissions in California, for-profit (FP) hospitals engage in cream skimming, i.e., choosing patients for some characteristic(s) other than their need for care, which enhances the profitability of the provider. We propose a novel approach to identify cream skimming using cost outcomes. Naïve treatment effect estimates of hospital ownership type consist of the impact of differential patient case mix (selection) and hospital cost containment strategies (execution). In contrast, an instrumental variable (IV) approach can control for case mix and establish the causal effects of ownership type due to its execution. We interpret the difference in naïve and IV treatment effects to be driven by FP hospitals’ selection (cream skimming) based on unobserved patient case mix. We find that FP hospitals are more likely to treat high-cost patients than not-for-profit (NFP) hospitals, showing no evidence that FP hospitals engage in cream skimming. Our results may alleviate concerns surrounding the recent proliferation of FP psychiatric hospitals with regards to cream skimming.
Author contact info: Donghoon Lee Department of Health Policy and Management Korea University 145 Anam-ro, Seongbuk-gu Seoul 02841 E-Mail: dhoonlee@korea.ac.kr Anirban Basu The CHOICE Institute Departments of Pharmacy, Health Services, and Economics University of Washington, Seattle 1959 NE Pacific St., Box - 357660 Seattle, WA 98195 Tel: 206/616-2986 Fax: 206/543-3964 E-Mail: basua@uw.edu Jerome A. Dugan Department of Health Systems and Population Health University of Washington 3980 15th Ave NE, Box 351621 Seattle, WA 98195 E-Mail: jad19@uw.edu Pinar Karaca-Mandic Carlson School of Management University of Minnesota 321 19th Avenue South Room 3-287 Minneapolis, MN 55455 Tel: (612)-624-8953 E-Mail: pkmandic@umn.edu

The IPCC Shared Socioeconomic Pathways (SSPs): Explained, Evaluated, Replaced - Welch, Ivo (National Bureau of Economic Research Working Paper Series, 2024)
Shared socioeconomic pathways (SSPs) are perhaps the most influential economic policy analyses today. My paper evaluates their development, natural associations, logical consequences, and economic identification. All five SSP baseline scenarios are predicting scenarios that historical time-series analysis would consider empirically highly implausible. This alternative — econometric time-series analysis based on worldwide IPAT components — suggests alternative emission scenarios, mapping into expected radiative forcing of about RCP 6.5, with a reasonable plausibility range from RCP 4.5 to RCP 7.0.
Author contact info: Ivo Welch Anderson School at UCLA (C519) 110 Westwood Place (951481) Los Angeles, CA 90095-1482 E-Mail: ivo.welch@anderson.ucla.edu

Diversity and Discrimination in the Classroom - Anderberg, Dan; Dahl, Gordon B; Felfe, Cristina; Rainer, Helmut; Siedler, Thomas (National Bureau of Economic Research Working Paper Series, 2024)
What makes diversity unifying in some settings but divisive in others? We examine how the mixing of ethnic groups in German schools affects intergroup cooperation and trust. We leverage the quasi-random assignment of students to classrooms within schools to obtain variation in the type of diversity that prevails in a peer group. We combine this with a large-scale, incentivized lab-in-field-experiment based on the investment game, allowing us to assess the in-group bias of native German students in their interactions with fellow natives (in-group) versus immigrants (out-group). We find in-group bias peaks in culturally polarized classrooms, where the native and immigrant groups are both large, but have different religious or language backgrounds. In contrast, in classrooms characterized by non-cultural polarization, fractionalization, or a native supermajority, there are significantly lower levels of own-group favoritism. In terms of mechanisms, we find empirical evidence that culturally polarized classrooms foster negative stereotypes about immigrants' trustworthiness and amplify taste-based discrimination, both of which are costly and lead to lower payouts. In contrast, accurate statistical discrimination is ruled out by design in our experiment. These findings suggest that extra efforts are needed to counteract low levels of inclusivity and trust in culturally polarized environments.
Author contact info: Dan Anderberg E-Mail: Dan.Anderberg@rhul.ac.uk Gordon B. Dahl Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093-0508 Tel: 858-822-0644 E-Mail: gdahl@ucsd.edu Cristina Felfe Department of Economics University of Konstanz 78464 Konstanz Germany E-Mail: christina.felfe@uni-konstanz.de Helmut Rainer University of Munich Ludwigstrasse 28 80539 Munich Germany E-Mail: rainer@econ.lmu.de Thomas Siedler Department of Economics Universität Potsdam and Berlin School of Economics August-Bebel-Straße 89 14482 Potsdam E-Mail: thomas.siedler@uni-potsdam.de

The Secular Decline of Bank Balance Sheet Lending - Buchak, Greg; Matvos, Gregor; Piskorski, Tomasz; Seru, Amit (National Bureau of Economic Research Working Paper Series, 2024)
The traditional model of bank-led financial intermediation, where banks issue demandable deposits to savers and make informationally sensitive loans to borrowers, has seen a dramatic decline since 1970s. Instead, private credit is increasingly intermediated through arms-length transactions, such as securitization. This paper documents these trends, explores their causes, and discusses their implications for the financial system and regulation. We document that the balance sheet share of overall private lending has declined from 60% in 1970 to 35% in 2023, while the deposit share of savings has declined from 22% to 13%. Additionally, the share of loans as a percentage of bank assets has fallen from 70% to 55%. We develop a structural model to explore whether technological improvements in securitization, shifts in saver preferences away from deposits, and changes in implicit subsidies and costs of bank activities can explain these shifts. Declines in securitization cost account for changes in aggregate lending quantities. Savers, rather than borrowers, are the main drivers of bank balance sheet size. Implicit banks’ costs and subsidies explain shifting bank balance sheet composition. Together, these forces explain the fall in the overall share of informationally sensitive bank lending in credit intermediation. We conclude by examining how these shifts impact the financial sector’s sensitivity to macroprudential regulation. While raising capital requirements or liquidity requirements decreases lending in both early (1960s) and recent (2020’s) scenarios, the effect is less pronounced in the later period due to the reduced role of bank balance sheets in credit intermediation. The substitution of bank balance sheet loans with debt securities in response to these policies explains why we observe only a fairly modest decline in aggregate lending despite a large contraction of bank balance sheet lending. Overall, we find that the intermediation sector has undergone significant transformation, with implications for macroprudential policy and financial regulation.
Author contact info: Greg Buchak Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305b E-Mail: buchak@stanford.edu Gregor Matvos Kellogg School of Management Northwestern University 2211 Campus Drive Global Hub 4361 Evanston IL, 60208 E-Mail: gregor.matvos@kellogg.northwestern.edu Tomasz Piskorski Columbia Business School 3022 Broadway Uris Hall 810 New York, NY 10027 Tel: 212/854-4655 E-Mail: tp2252@columbia.edu Amit Seru Stanford Graduate School of Business Stanford University 655 Knight Way Tel: 650/736-0223 E-Mail: aseru@stanford.edu

From Dominant to Producer Currency Pricing: Dynamics of Chilean Exports - De Gregorio, José; García, Pablo; Luttini, Emiliano E; Rojas, Marco (National Bureau of Economic Research Working Paper Series, 2024)
We revisit a central question for international macroeconomics: the response of export prices and quantities to movements in the exchange rate (ER). We use granular export data for Chile and study how the effects of ER movements vary over time with the currency of invoicing and the destination of exports. For prices, we find that the short-run effects of bilateral ER movements vanish when controlling for U.S. dollar ER, which supports dominant currency pricing. However, over longer horizons a more significant role is played by bilateral ER movements, in line with the predictions of producer currency pricing. These dynamics do not depend on the invoicing currency. The results we find for quantities support the view that bilateral exchange rate movements contribute to macroeconomic adjustment through export volumes over the medium term.
Author contact info: José De Gregorio School of Economics and Business Universidad de Chile Diagonal Paraguay 257 Santiago Chile Tel: +569 98723155 E-Mail: jdegregorio@fen.uchile.cl Pablo García Business School Universidad Adolfo Ibáñez Diagonal las Torres 2640 Peñalolén Chile Tel: +56977687533 E-Mail: pgarcia.s@uai.cl Emiliano E. Luttini World Bank 1818H Street NW, MC2-605 Washington, DC 20006 United States E-Mail: eluttini@worldbank.org Marco Rojas Research Department Banco Central de Chile Agustinas 1180 Santiago Chile E-Mail: mrojaso@bcentral.cl

Sectoral Debt and Global Dollar Cycles in Developing Economies - Han, Bada; Ahmed, Rashad; Aizenman, Joshua; Jinjarak, Yothin (National Bureau of Economic Research Working Paper Series, 2024)
We explore the role of sectoral debt dynamics in shaping business cycles in a sample of 52 Emerging Market Economies (EMEs) and Frontier Market Economies (FMEs) from 2005 to 2021. Higher household debt levels and growth are associated with significantly slower GDP growth in more developed EMEs but not in less developed EMEs and FMEs. We also examine the relationship between US dollar cycles, sectoral debt levels and growth, and economic activity. Among developed EMEs, higher expected household debt growth magnifies the impact of US dollar fluctuations on economic activity, with significant but less persistent effects on consumption and more persistent effects on investment. Our empirical findings highlight the important role of household debt dynamics in relatively developed EMEs.
Author contact info: Bada Han 700 19th St NW, Washington DC, DC 20431 US E-Mail: bhan@imf.org Rashad Ahmed Office of the Comptroller of the Currency U.S. Department of the Treasury E-Mail: rashad.ahmed@occ.treas.gov 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

Long-Range Forecasts As Climate Adaptation: Experimental Evidence From Developing-Country Agriculture - Burlig, Fiona; Jina, Amir; Kelley, Erin M; Lane, Gregory V; Sahai, Harshil (National Bureau of Economic Research Working Paper Series, 2024)
Climate change increases weather variability, exacerbating agricultural risk in poor countries. Risk-averse farmers are unable to tailor their planting decisions to the coming season, and underinvest in profitable inputs. Accurate, long-range forecasts enable farmers to optimize for the season ahead. We experimentally evaluate monsoon onset forecasts in India, randomizing 250 villages into control; a forecast group receiving information well in advance of onset; and a benchmark index insurance group. Forecast farmers update their beliefs and their behavior: farmers who receive “bad news” relative to their priors substantially reduce land under cultivation and certain input expenditures, while those receiving “good news” significantly increase input expenditures. The forecast also impacts crop choice, as farmers tailor their investments. These investment changes meaningfully alter ex post outcomes. In contrast, insurance, which provides no information, increases investments but does not change crops. Our results demonstrate that forecasts are a promising tool for climate adaptation
Author contact info: Fiona Burlig Harris School of Public Policy University of Chicago 1307 East 60th Street Chicago, IL 60637 Tel: 650/283-2931 E-Mail: burlig@uchicago.edu Amir Jina Harris School of Public Policy University of Chicago 1155 East 60th Street Chicago, IL 60637 E-Mail: amirjina@uchicago.edu Erin M. Kelley World Bank E-Mail: erinmkelley@worldbank.org Gregory Lane Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: laneg@uchicago.edu Harshil Sahai Department of Economics 5757 S. University Ave. Chicago, IL 60637 USA E-Mail: harshil@uchicago.edu

The Slanted-L Phillips Curve - Benigno, Pierpaolo; Eggertsson, Gauti B (National Bureau of Economic Research Working Paper Series, 2024)
A slanted-L curve is well-suited to represent the non-linearity of the celebrated Phillips curve. We show this using cross-country data of major industrialized economies since 2009, including the inflationary surge of the 2020s. At high unemployment rates, an increase in demand reduces unemployment without creating strong inflationary pressures. Meanwhile, supply shocks have a muted effect. At sufficiently low unemployment, there is a labor shortage, so that the economy is at full capacity. Then, higher demand is inflationary, and supply shocks are amplified. We derive a model of a slanted-L curve.
Author contact info: Pierpaolo Benigno Dipartiment of Economics University of Bern 3003 Bern Switzerland E-Mail: pierpaolo.benigno@unibe.ch Gauti B. Eggertsson Department of Economics Brown University 64 Waterman Street Providence, RI 02912 Tel: 401/863-2145 E-Mail: gauti_eggertsson@brown.edu

Competitive Job Seekers: When Sharing Less Leaves Firms at a Loss - Chiplunkar, Gaurav; Kelley, Erin M; Lane, Gregory V (National Bureau of Economic Research Working Paper Series, 2024)
We study how job-seekers share information about jobs within their social network, and its implications for firms. We randomly increase the amount of competition for a job and find that job-seekers are: (i) less likely to share information about the job with their peers; and (ii) choose to selectively share it with fewer higher ability peers. This lowers the quality of applicants received by firms, subsequent hires made, and performance on the job — suggesting that firms who rely on social networks to disseminate job information may see lower quality applicants than expected for their most competitive positions. While randomly offering higher wages attracts better talent, it is not able to fully overcome these strategic disincentives in information sharing
Author contact info: Gaurav Chiplunkar 100, Darden Blvd. Charlottesville, VA 22905 USA E-Mail: chiplunkarg@darden.virginia.edu Erin M. Kelley World Bank E-Mail: erinmkelley@worldbank.org Gregory Lane Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: laneg@uchicago.edu

Do Information Frictions and Corruption Perceptions Kill Competition? A Field Experiment On Public Procurement in Uganda - Colonnelli, Emanuele; Loiacono, Francesco; Muhumuza, Edwin; Teso, Edoardo (National Bureau of Economic Research Working Paper Series, 2024)
We study whether information frictions and corruption perceptions deter firms from doing business with the government. We conduct two nationwide randomized controlled trials (RCTs) in collaboration with the national public procurement supervisory and anti-corruption agency in Uganda. The first RCT aims to increase firms’ information on available procurement opportunities, which is limited due to the lack of a centralized e- procurement system. We provide firms with direct and timely access to information about government tenders over a two-year period. The second RCT focuses on firms’ perceptions about the integrity of public entities, which we experimentally show are key drivers of firms’ participation in procurement. We provide firms with access to structured information on other firms’ perceptions and on anti-corruption audits. We find that increasing information on available procurement opportunities alone does not increase firm participation in public procurement. However, changing firms’ perceptions about the integrity of public entities increases firms’ total number of bids and total government contracts won. Based on our findings, our partner agency implemented several measures to further restore firms’ trust in public entities. Overall, our findings point to the limits of transparency reforms that aim to increase competition in public procurement without accounting for firms’ perceptions about government corruption and inefficiency.
Author contact info: Emanuele Colonnelli Booth School of Business University of Chicago 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: emanuele.colonnelli@chicagobooth.edu Francesco Loiacono E-Mail: loiaconf@ebrd.com Edwin Muhumuza E-Mail: emuhumuza8@gmail.com Edoardo Teso Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 857/250-1485 E-Mail: edoardo.teso@kellogg.northwestern.edu

Demand Shocks as Technology Shocks - Bai, Yan; Ríos-Rull, José-Víctor; Storesletten, Kjetil (National Bureau of Economic Research Working Paper Series, 2024)
We provide a macroeconomic theory where demand for goods has a productive role. A search friction prevents perfect matching between producers and potential customers. Larger demand induces more search, which in turn increases GDP and measured TFP. We embed the product-market friction in a standard neoclassical model and estimate it using Bayesian techniques. Business cycles are driven by preference shocks, true technology shocks, and investment-specific shocks. Preference shocks have qualitatively similar effects as true productivity shocks. These shocks account for a large share of the fluctuations in consumption, GDP, and measured TFP and can be identified using shopping time data.
Author contact info: Yan Bai Department of Economics University of Rochester 216 Harkness Hall Rochester, NY 14627 Tel: 585/275-4196 Fax: 585/256-2309 E-Mail: yanbai06@gmail.com José-Víctor Ríos-Rull The Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-7701 Fax: 215/573-2057 E-Mail: vr0j@upenn.edu Kjetil Storesletten Department of Economics University of Minnesota 4-141 Hanson Hall 1925 Fourth Street S Minneapolis, MN 55455 Tel: +1 (612) 987 5810 E-Mail: kjetil.storesletten@gmail.com

Climate Policy Reform Options in 2025 - Bistline, John; Clausing, Kimberly A; Mehrotra, Neil; Stock, James H; Wolfram, Catherine (National Bureau of Economic Research Working Paper Series, 2024)
With the expiration of many tax cuts and unmet climate targets, 2025 could be a crucial year for climate policy in the United States. Using an integrated model of energy supply and demand, this paper aims to assess climate policies that the U.S. federal government may consider in 2025 and to evaluate emissions reductions, fiscal costs and revenues, and household energy expenditures across a range of policy scenarios. Model results suggest that the emissions reductions of the Inflation Reduction Act are significantly augmented under scenarios that add a modest carbon fee or, to a lesser extent, that implement a clean electricity standard in the power sector. Second, net fiscal costs can be substantially reduced in scenarios that include a carbon fee, especially if fossil fuel exports are taxed. Third, expanding the IRA tax credits yields modest additional emissions reductions with higher fiscal costs. Finally, although none of the policy combinations across these scenarios achieve the U.S. target of a 50-52% economy-wide emissions reduction by 2030 from 2005 levels, the carbon fee and clean electricity standard scenarios achieve these levels between 2030 and 2035.
Author contact info: John Bistline E-Mail: jbistline@epri.com Kimberly A. Clausing UCLA School of Law 385 Charles E. Young Drive Los Angeles, CA 90095 E-Mail: clausing@law.ucla.edu Neil Mehrotra Research Department Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: neil.mehrotra@mpls.frb.org James H. Stock Department of Economics Harvard University Littauer Center M26 Cambridge, MA 02138 Tel: 617/496-0502 Fax: 617/495-7730 E-Mail: James_Stock@harvard.edu Catherine Wolfram Massachusetts Institute of Technology Sloan School of Management 100 Main St. Cambridge, MA 02142 E-Mail: cwolfram@mit.edu

Do Medical Treatments Work for Work? Evidence from Breast Cancer Patients - Daysal, N. Meltem; Evans, William N; Pedersen, Mikkel Hasse; Trandafir, Mircea (National Bureau of Economic Research Working Paper Series, 2024)
We investigate the effects of radiation therapy on the mortality and economic outcomes of breast cancer patients. We implement a 2SLS strategy within a difference-in-difference framework exploiting variation in treatment stemming from a medical guideline change in Denmark. Using administrative data, we reproduce results from an RCT showing the lifesaving benefits of radiotherapy. We then show therapy also has economic returns: ten years after diagnosis, treatment increases employment by 37% and earnings by 45%. Mortality and economic results are driven by results for more educated women, indicating that equalizing access to treatment may not be sufficient to reduce health inequalities.
Author contact info: N. Meltem Daysal Department of Economics and CEBI University of Copenhagen Øster Farimagsgade 5 1353 Copenhagen Denmark E-Mail: meltem.daysal@econ.ku.dk 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 Mikkel Hasse Pedersen Cortex park Vest 3 Odense 5230 Denmark E-Mail: mikkelpedersen@mail.com Mircea Trandafir Rockwool Foundation Research Unit Ny Kongensgade 6 Copenhagen DK-1472 Denmark E-Mail: mt@rff.dk

On the Effects of Monetary Policy Shocks on Income and Consumption Heterogeneity - Chang, Minsu; Schorfheide, Frank (National Bureau of Economic Research Working Paper Series, 2024)
In this paper we use the functional vector autoregression (VAR) framework of Chang, Chen, and Schorfheide (2024) to study the effects of monetary policy shocks (conventional and informational) on the cross-sectional distribution of U.S. earnings (from the Current Population Survey), consumption, and financial income (both from the Consumer Expenditure Survey). We find that a conventional expansionary monetary policy shock reduces earnings inequality, in large part by lifting individuals out of unemployment. There is a weakly positive effect on consumption inequality and no effect on financial income inequality, but credible bands are wide.
Author contact info: Minsu Chang Georgetown University Department of Economics 37th St NW & O St NW, ICC 553 Washington DC 20007 E-Mail: minsu.chang@georgetown.edu Frank Schorfheide University of Pennsylvania Department of Economics The Ronald O. Perelman Center for Political Science and Economics 133 South 36th Street Philadelphia, PA 19104-6297 Tel: 215/898-8486 Fax: 215/573-2057 E-Mail: schorf@ssc.upenn.edu

Early Childhood Intervention for the Poor: Long Term Outcomes - Andrew, Alison; Attanasio, Orazio; Augsburg, Britta; Cardona-Sosa, Lina; Day, Monimalika; Giannola, Michele; Grantham-McGregor, Sally; Jervis, Pamela; Meghir, Costas; Rubio-Codina, Marta (National Bureau of Economic Research Working Paper Series, 2024)
Early childhood interventions aim to promote skill acquisition and poverty reduction. While their short-term success is well established, research on longer-term effectiveness is scarce, particularly in LDCs. We present results of a randomized scalable intervention in India, that affected developmental outcomes in the short-term, including cognition (0.36 SD p=0.005), receptive language (0.26 SD p=0.03) and expressive language (0.21 SD p=0.03). After 4.5 years, when the children were on average 7.5 years old, IQ was no longer affected, but impacts persisted relative to the control group in numeracy (0.330 SD, p=0.007) and literacy (0.272 SD, p=0.064) driven by the most disadvantaged.
Author contact info: Alison Andrew Department of Economics Oxford University E-Mail: alison.andrew@economics.ox.ac.uk Orazio Attanasio Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: orazio.attanasio@yale.edu Britta Augsburg The Institute for Fiscal Studies 7 Ridgmount Street London WC1E 7AE E-Mail: britta_a@ifs.org.uk Lina Cardona-Sosa World Bank 1818 H St NW Washington, DC 20433 United States E-Mail: lcardonasosa@worldbank.org Monimalika Day School of Education Studies Dr. B.R Ambedkar University Delhi Lodhi Road Campus Aliganj, B.K Dutt Colony New Delhi, 110003 India E-Mail: monimalika@aud.ac.in Michele Giannola Department of Economics and Statistics University of Naples Federico II E-Mail: michele.giannola@unina.it Sally Grantham-McGregor University College London Gower Street London - WC1E 6BT E-Mail: sallymcgregor@yahoo.com Pamela Jervis Department of Industrial Engineering University of Chile Beauchef 851 Santiago, Chile E-Mail: pjervisr@uchile.cl Costas Meghir Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/432-3558 E-Mail: c.meghir@yale.edu Marta Rubio-Codina Inter-American Development Bank Social Protection and Health Division Washington, DC 20577 E-Mail: martarubio@iadb.org

Heterogeneity, Uncertainty and Learning: Semiparametric Identification and Estimation - Bunting, Jackson; Diegert, Paul; Maurel, Arnaud (National Bureau of Economic Research Working Paper Series, 2024)
We provide semiparametric identification results for a broad class of learning models in which continuous outcomes depend on three types of unobservables: i) known heterogeneity, ii) initially unknown heterogeneity that may be revealed over time, and iii) transitory uncertainty. We consider a common environment where the researcher only has access to a short panel on choices and realized outcomes. We establish identification of the outcome equation parameters and the distribution of the three types of unobservables, under the standard assumption that unknown heterogeneity and uncertainty are normally distributed. We also show that, absent known heterogeneity, the model is identified without making any distributional assumption. We then derive the asymptotic properties of a sieve MLE estimator for the model parameters, and devise a tractable profile likelihood based estimation procedure. Monte Carlo simulation results indicate that our estimator exhibits good finite-sample properties.
Author contact info: Jackson Bunting Department of Economics Texas A&M University E-Mail: jbunting@tamu.edu Paul Diegert Toulouse School of Economics 1, Esplanade de l'Université 31080 Toulouse Cedex 06 France E-Mail: paul.diegert@tse-fr.eu 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

The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly - Bolhuis, Marijn A; Cramer, Judd N. L; Schulz, Karl Oskar; Summers, Lawrence H (National Bureau of Economic Research Working Paper Series, 2024)
Unemployment is low and inflation is falling, but consumer sentiment remains depressed. This has confounded economists, who historically rely on these two variables to gauge how consumers feel about the economy. We propose that borrowing costs, which have grown at rates they had not reached in decades, do much to explain this gap. The cost of money is not currently included in traditional price indexes, indicating a disconnect between the measures favored by economists and the effective costs borne by consumers. We show that the lows in US consumer sentiment that cannot be explained by unemployment and official inflation are strongly correlated with borrowing costs and consumer credit supply. Concerns over borrowing costs, which have historically tracked the cost of money, are at their highest levels since the Volcker-era. We then develop alternative measures of inflation that include borrowing costs and can account for almost three quarters of the gap in US consumer sentiment in 2023. Global evidence shows that consumer sentiment gaps across countries are also strongly correlated with changes in interest rates. Proposed U.S.-specific factors do not find much supportive evidence abroad.
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 Karl Oskar Schulz E-Mail: karloskarschulz@college.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

English Language Requirement and Educational Inequality: Evidence from 16 Million College Applicants in China - Li, Hongbin; Meng, Lingsheng; Mu, Kai; Wang, Shaoda (National Bureau of Economic Research Working Paper Series, 2024)
This paper studies the unintended effect of English language requirement on educational inequality by investigating how the staggered rollout of English listening tests in China’s high-stakes National College Entrance Exam (NCEE) affected the rural-urban gap in college access. Leveraging administrative data covering the universe of NCEE participants between 1999 and 2003, we find that the introduction of English listening tests significantly lowered rural students’ exam score percentile ranks relative to their urban counterparts, resulting in a 30% increase in the rural-urban gap in college access. Our back-of-the-envelope calculations suggest that, as a result of this policy change, more than 54,000 rural students lost college seats to their urban peers between 1999 and 2003, and another 11,000 rural students who elite colleges could have admitted ended up in non-elite colleges, causing them significant future income losses.
Author contact info: Hongbin Li Stanford Institute for Economic Policy Research 366 Galvez St Stanford Stanford, CA 94305 Tel: 6506957076 E-Mail: lihongbinsem@gmail.com Lingsheng Meng E-Mail: lmeng@stanford.edu Kai Mu E-Mail: kaimu@connect.hku.hk Shaoda Wang Harris School of Public Policy University of Chicago 1307 E. 60th Street office 2055 Chciago, IL 60637 Tel: 773-236-9614 E-Mail: shaoda@uchicago.edu

ChatGPT and Corporate Policies - Jha, Manish; Qian, Jialin; Weber, Michael; Yang, Baozhong (National Bureau of Economic Research Working Paper Series, 2024)
We create a firm-level ChatGPT investment score, based on conference calls, that measures managers' anticipated changes in capital expenditures. We validate the score with interpretable textual content and its strong correlation with CFO survey responses. The investment score predicts future capital expenditure for up to nine quarters, controlling for Tobin's q and other determinants, implying the investment score provides incremental information about firms' future investment opportunities. The investment score also separately forecasts future total, intangible, and R&D investments. High-investment-score firms experience significant negative future abnormal returns. We demonstrate ChatGPT's applicability to measure other policies, such as dividends and employment.
Author contact info: Manish Jha Georgia State University 35 Broad Street, Suite 1241 Atlanta, GA 30303 E-Mail: mjha@gsu.edu Jialin Qian E-Mail: jqian5@gsu.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 Baozhong Yang J. Mack Robinson College of Business 35 Broad Street, Suite 1243 Atlanta, GA 30303 Tel: 4044137350 E-Mail: bzyang@gsu.edu

The Long-term Effects of Inflation on Inflation Expectations - Braggion, Fabio; von Meyerinck, Felix; Schaub, Nic; Weber, Michael (National Bureau of Economic Research Working Paper Series, 2024)
We study the long-term effects of inflation surges on inflation expectations. German households living in areas with higher local inflation during the hyperinflation of the 1920s expect higher inflation today, after partialling out determinants of historical inflation and current inflation expectations . Our evidence points towards transmission of inflation experiences from parents to children and through collective memory. Differential historical inflation also modulates the updating of expectations to current inflation, the response to economic policies affecting inflation, and financial decisions. We obtain similar results for Polish households residing in formerly German areas. Overall, our findings are consistent with inflationary shocks having a long-lasting impact on attitudes towards inflation.
Author contact info: Fabio Braggion Finance Department Tilburg University Room K 917 P.O. Box 90153 5000 LE, Tilburg The Netherlands E-Mail: F.Braggion@uvt.nl Felix von Meyerinck Plattenstrasse 14 Zurich 8032 Switzerland E-Mail: felix.vonmeyerinck@bf.uzh.ch Nic Schaub Campus Vallendar Burgplatz 2 D-56179 Vallendar Germany E-Mail: nic.schaub@whu.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

On Digital Currencies - Uhlig, Harald (National Bureau of Economic Research Working Paper Series, 2024)
I discuss private and central-bank-issued digital currencies, summarizing my prior research. I argue that prices of private digital currencies such as bitcoin follow random walks or, more generally, risk-adjusted martingales. For central bank digital currencies, I argue that they enhance the “CBDC trilemma” facing a central bank: out of the three objectives, price stability, efficiency, and monetary trust, it can achieve at most two.
Author contact info: Harald Uhlig Dept. of Economics University of Chicago 1126 E 59th Street Chicago, IL 60637 Tel: 773/702-3702 Fax: 773/702-8490 E-Mail: huhlig@uchicago.edu

How Do Voters Respond to Welfare Vis-a-Vis Public Good Programs? Theory and Evidence of Political Clientelism - Bardhan, Pranab; Mitra, Sandip; Mookherjee, Dilip; Nath, Anusha (National Bureau of Economic Research Working Paper Series, 2024)
Using rural household survey data from West Bengal, we find that voters respond positively to excludable government welfare benefits but not to local public good programs, while reporting having benefited from both. Consistent with these voting patterns, shocks to electoral competition induced by exogenous redistricting of villages resulted in upper-tier governments manipulating allocations across local governments only for excludable benefit programs. Using a hierarchical budgeting model, we argue these results provide credible evidence of the presence of clientelism rather than programmatic politics.
Author contact info: Pranab Bardhan Department of Economics University of California, Berkeley Berkeley, CA 94720 E-Mail: bardhan@econ.berkeley.edu Sandip Mitra Sandip Mitra Sampling and Official Statistics Unit Indian Statistical Institute, 203 BT Road Kolkata 700108 India E-Mail: sandipisi@gmail.com Dilip Mookherjee Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4392 Fax: 617/353-4143 E-Mail: dilipm@bu.edu Anusha Nath Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: Anusha.Nath@mpls.frb.org

Declining Clientelism of Welfare Benefits? Targeting and Political Competition based Evidence from an Indian state - Maitra, Pushkar; Mitra, Sandip; Mookherjee, Dilip; Visaria, Sujata (National Bureau of Economic Research Working Paper Series, 2024)
It has been argued that since 2014, under the BJP-led central government, welfare benefits in India have become better targeted and less prone to clientelistic control by state and local governments. Arguably this has helped to increase the vote share of the BJP vis-a-vis regional parties. We test these hypotheses using longitudinal data from 3500 rural households in the state of West Bengal. We fail to find evidence that the new “central” programs introduced after 2014 were better targeted than traditional “state” programs, or that the targeting of state programs improved after 2014. Households receiving the new “central” benefits introduced since 2014 were more likely to switch their political support to the BJP. However, changes in the scale, composition or targeting of these programs, in clientelistic effectiveness of traditional state programs or in household incomes, fail to account for the large observed increase in the voters' support for the BJP. Non-Hindus, especially recent immigrant non-Hindus, were much less likely to switch support to the BJP, even after controlling for benefits received and changes in household incomes. Our results suggest that ideology and identity politics were more important factors explaining the rising popularity of the BJP.
Author contact info: Pushkar Maitra Monash University Department of Economics Clayton Campus, VIC 3800 Australia E-Mail: Pushkar.Maitra@monash.edu Sandip Mitra Sandip Mitra Sampling and Official Statistics Unit Indian Statistical Institute, 203 BT Road Kolkata 700108 India E-Mail: sandipisi@gmail.com Dilip Mookherjee Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4392 Fax: 617/353-4143 E-Mail: dilipm@bu.edu Sujata Visaria Bayes Business School City University of London 106 Bunhill Row London EC1Y 8TZ United Kingdom E-Mail: sujata.visaria@city.ac.uk

Content Moderation with Opaque Policies - Kominers, Scott Duke; Shapiro, Jesse M (National Bureau of Economic Research Working Paper Series, 2024)
A sender sends a signal about a state to a receiver who takes an action that determines a payoff. A moderator can block some or all of the sender's signal before it reaches the receiver. When the moderator's policy is transparent to the receiver, the moderator can improve the payoff by blocking false or harmful signals. When the moderator's policy is opaque, however, the receiver may not trust the moderator. In that case, the moderator can guarantee an improved outcome only by blocking signals that enable harmful acts. Blocking signals that encourage false beliefs can be counterproductive.
Author contact info: Scott Duke Kominers Harvard Business School & Department of Economics Rock Center 219 Soldiers Field Boston, MA 02163 E-Mail: kominers@fas.harvard.edu Jesse M. Shapiro Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617-444-9571 E-Mail: jesse_shapiro@fas.harvard.edu

Information-Based Pricing in Specialized Lending - Blickle, Kristian; He, Zhiguo; Huang, Jing; Parlatore, Cecilia (National Bureau of Economic Research Working Paper Series, 2024)
We study specialized lending in a credit market competition model with private information. Two banks, equipped with similar data processing systems, possess “general” signals regarding the borrower’s quality. However, the specialized bank gains an additional advantage through further interactions with the borrower, allowing it to access “specialized” signals. In equilibrium, both lenders use general signals to screen loan applications, and the specialized lender prices the loan based on its specialized signal conditional on making a loan. This private-information-based pricing helps deliver the empirical regularity that loans made by specialized lenders have lower rates (i.e., lower winning bids) and better ex-post performance (i.e., lower non-performing loans). We show the robustness of our equilibrium characterization under a generalized information structure, endogenize the specialized lending through information acquisition, and discuss its various economic implications.
Author contact info: Kristian Blickle Federal Reserve Bank of New York 33 Liberty St New York City, New 10045 E-Mail: kristian.blickle@ny.frb.org Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Jing Huang Mays Business School Texas A&M University College Station, Texa 77843 United States Tel: 9196272392 E-Mail: jhuang@mays.tamu.edu 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

Gender Differences in Negotiations and Labor Market Outcomes: Evidence from an Information Intervention with College Students - Cortés, Patricia; French, Jacob; Pan, Jessica; Zafar, Basit (National Bureau of Economic Research Working Paper Series, 2024)
We assess the role of information gaps in understanding gender differences in negotiation behavior by conducting a randomized information experiment on the 2018 to 2020 graduating cohorts of undergraduate business majors from Boston University. Prior to starting their job search, treated students were provided with objective information about the gender gap in negotiation among their peers along with the earnings changes conditional on negotiating. We find sizable immediate effects on negotiation intentions that persist to actual negotiation behavior, particularly for men. While the treatment affects women's negotiation behavior through belief-updating, the effects on men's behavior are primarily through increased salience of the information. Further, we find some evidence that gender-specific treatment spillovers likely contribute to the smaller average treatment effects on behavior for women. Overall, our findings suggest that such information interventions can help to nudge women who have potentially large financial returns to negotiation to realize these gains.
Author contact info: Patricia Cortés Questrom School of Business Boston University 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/353-3646 E-Mail: pcortes@bu.edu Jacob French New York University E-Mail: jff305@nyu.edu Jessica Pan Department of Economics National University of Singapore 1 Arts Link Singapore E-Mail: jesspan@nus.edu.sg Basit Zafar Department of Economics University of Michigan 611 Tappan Street Ann Arbor, Michigan 48109 E-Mail: basitak@gmail.com

Taxing Top Wealth: Migration Responses and their Aggregate Economic Implications - Jakobsen, Katrine; Kleven, Henrik; Kolsrud, Jonas; Landais, Camille; Muñoz, Mathilde (National Bureau of Economic Research Working Paper Series, 2024)
Using administrative data on wealth, firm ownership structure, and migration in Sweden and Denmark, we document international migration patterns among the very wealthy, their impact on the economy, and how they respond to wealth taxation. We show that more than 20% of taxpayers liable to pay wealth tax are business-owners, and that the employment, investments, and value-added of these businesses are negatively affected when their owner migrates out of the country. Exploiting three large reforms, we then isolate the causal effect of wealth taxation on the international location choices of the wealthy. We find significant effects on out-migration flows from increases in the effective wealth tax. But, we also document that the overall level of these migration flows is remarkably small, with annual net-migration rates below .01%. As a result, we find that the aggregate economic effects of tax-induced migration are modest in Scandinavia: a one percentage point increase in the average wealth tax rate on the top 2% decreases the stock of wealthy taxpayers by at most 2% in the long run, and lead to a reduction of at most .03% in aggregate employment and at most .1% in aggregate value- added. Hence, our results suggest that trickle-down effects of tax-induced migration by the wealthy do exist, but that they are quantitatively small.
Author contact info: Katrine Jakobsen Department of Economics University of Copenhagen DK-1353 Copenhagen E-Mail: kaj@copenhageneconomics.com Henrik Kleven Department of Economics Princeton University 238 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 609/986-6890 E-Mail: kleven@princeton.edu Jonas Kolsrud Department of Economics and Statistics Linnaeus University 351 95 Växjö Sweden E-Mail: jonas.kolsrud@lnu.se Camille Landais Department of Economics London School of Economics Houghton Street London WC2A 2AE United Kingdom E-Mail: c.landais@lse.ac.uk Mathilde Muñoz Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: mathildemunoz@berkeley.edu

Smooth Diagnostic Expectations - Bianchi, Francesco; Ilut, Cosmin L; Saijo, Hikaru (National Bureau of Economic Research Working Paper Series, 2024)
We introduce “smooth diagnosticity.” Under smooth diagnosticity, agents over-react to new information defined as the difference between the current information set and a previous information set. Since new information typically changes not just the conditional mean, but also the conditional uncertainty, changes in uncertainty surrounding current and past beliefs affect the severity of the Diagnostic Expectations (DE) distortion. Smooth DE nests the baseline DE of Bordalo et al. (2018) and implies a joint and parsimonious micro-foundation for various properties of survey data: (1) over-reaction of conditional mean to news, (2) stronger over-reaction for weaker signals and longer forecast horizons, and (3) over-confidence in subjective uncertainty. We embed Smooth DE in an analytical RBC model. The model accounts for over-reaction and over-confidence in surveys, as well as three salient properties of the business cycle: (1) asymmetry, (2) countercyclical micro volatility, and (3) countercyclical macro volatility.
Author contact info: Francesco Bianchi Johns Hopkins University Department of Economics 3400 N. Charles Street 544E Wyman Bldg. Baltimore, Maryland 21218 E-Mail: francesco.bianchi@jhu.edu 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 Hikaru Saijo University of California at Santa Cruz Economics Department 401 Engineering 2 Building 1156 High Street Santa Cruz, CA 95064 E-Mail: hsaijo@ucsc.edu

The Essential Role of Altruism in Medical Decision Making - Gertler, Paul; Kwan, Ada (National Bureau of Economic Research Working Paper Series, 2024)
Patients rely on medical care providers to act in their best interests because providers understand disease pathology and appropriate treatment much better than patients. Providers, however, not only give advice (diagnose) but also deliver (sell) treatments based on that advice. This creates a moral hazard dilemma where provider financial interests can diverge from patient interests, especially when providers are motivated more by profits than by altruism. We investigate how profit motivated versus altruistic preferences influence medical care decision making in the context of malaria in Kenya. We measured the appropriateness of care using data from an audit study that employed standardized patients (SP) who were trained to present as real patients the identical clinical case scenario to providers. The SPs were confirmed to be malaria negative before and after field work with a very reliable and sensitive blood test at a high-quality laboratory. We measured provider preferences using a lab in the field, real stakes, modified version of the dictator game. We find that more profit-motivated providers report higher rates of false-positive malaria test results than do more altruistic providers. Specifically, purely profit motivated providers report 30 percentage points more positives than providers who are altruistically motivated, and providers likely knew that the positive results that they reported to their patients were false. We also find that more profit motivated providers sold more unnecessary antimalarial drugs than did more altruistic providers. Based on mediation analysis, more profit-oriented providers sold more drugs not only because they knowingly reported more false positives, but also because they promoted drugs sales more conditional on a positive test result. Thus, profit motivated providers seem to have misrepresented test results to sell more unnecessary malaria-related drugs.
Author contact info: Paul Gertler Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-1418 E-Mail: gertler@haas.berkeley.edu Ada Kwan University of California, San Francisco 605 Lyon St., Apt. 3 San Francisco, Cali 94117 United States Tel: 4157676785 Fax: ada.kwan@ucsf.edu E-Mail: ada.kwan@ucsf.edu

Trade War and Peace: U.S.-China Trade and Tariff Risk from 2015–2050 - Alessandria, George A; Khan, Shafaat Y; Khederlarian, Armen; Ruhl, Kim J; Steinberg, Joseph B (National Bureau of Economic Research Working Paper Series, 2024)
We use the dynamics of U.S. imports across goods in the period around the U.S.-China trade war with a model of exporter dynamics to estimate the dynamic path of the probability of transiting between Normal Trade Relations and a trade war state. We find (i) there was no increase in the likelihood of a trade war before 2018; (ii) the trade war was initially expected to end quickly, but its expected duration grew substantially after 2020; and (iii) the trade war reduced the likelihood that China would face Non-Normal Trade Relations tariffs in the future. Our findings imply that the expected mean future U.S. tariff on China rose more under President Biden than under President Trump. We also show that the trade response to the trade war is similar to the response to the 1980 liberalization that initially granted China access to U.S. markets at NTR terms and was expected to be quickly reversed.
Author contact info: George A. Alessandria Department of Economics University of Rochester Harkness 204 Rochester, NY 14627 Tel: 585/275-3096 E-Mail: george.alessandria@rochester.edu Shafaat Y. Khan Department of Economics Syracuse University Syracuse, NY USA E-Mail: shafaatyar.k@gmail.com Armen Khederlarian Hunter College CUNY Department of Economics 695 Park Ave, HW1535 New York, NY 10065 E-Mail: armen.khederlarian@hunter.cuny.edu Kim J. Ruhl Department of Economics University of Wisconsin-Madison 7444 Social Science Building 1180 Observatory Drive Madison, WI 53706 E-Mail: ruhl2@wisc.edu Joseph B. Steinberg University of Toronto Department of Economics 150 St George Street Toronto, Ontario M5S 3G7 Canada E-Mail: joseph.steinberg@utoronto.ca

A Cognitive Foundation for Perceiving Uncertainty - Bohren, J. Aislinn; Hascher, Josh; Imas, Alex; Ungeheuer, Michael; Weber, Martin (National Bureau of Economic Research Working Paper Series, 2024)
We propose a framework where perceptions of uncertainty are driven by the interaction between cognitive constraints and the way that people learn about it—whether information is presented sequentially or simultaneously. People can learn about uncertainty by observing the distribution of outcomes all at once (e.g., seeing a stock return distribution) or sampling outcomes from the relevant distribution sequentially (e.g., experiencing a series of stock returns). Limited attention leads to the overweighting of unlikely but salient events—the dominant force when learning from simultaneous information—whereas imperfect recall leads to the underweighting of such events—the dominant force when learning sequentially. A series of studies show that, when learning from simultaneous information, people are overoptimistic about and are attracted to assets that mostly underperform, but sporadically exhibit large outperformance. However, they overwhelmingly select more consistently outperforming assets when learning the same information sequentially, and this is reflected in beliefs. The entire 40-percentage point preference reversal appears to be driven by limited attention and memory; manipulating these factors completely eliminates the effect of the learning environment on choices and beliefs, and can even reverse it.
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 Josh Hascher E-Mail: Josh.Hascher@chicagobooth.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 Michael Ungeheuer Department of Finance Aalto University School of Business P.O.Box 21210 Aalto 00076 Finland E-Mail: michael.ungeheuer@aalto.fi Martin Weber Lehrstuhl fur Allgemeine Finanzwirtschaft, insbes. Bankbetriebslehre Universitaet Mannheim 68131 Mannheim, GERMANY E-Mail: weber@bank.BWL.uni-mannheim.de

Understanding the Demand-Side of an Illegal Market: Prohibition of Menthol Cigarettes - Kenkel, Donald S; Mathios, Alan D; Phillips, Grace N; Suryanarayana, Revathy; Wang, Hua; Zeng, Sen (National Bureau of Economic Research Working Paper Series, 2024)
The Food and Drug Administration has proposed to prohibit menthol cigarettes, which are smoked by almost 19 million people in the U.S. Illegal markets for menthol cigarettes could not only blunt the prohibition’s intended consequence to reduce smoking but could also lead to unintended consequences. We use data from a discrete choice experiment to estimate a mixed logit model which predicts that the prohibition of menthol cigarettes would substantially increase the fraction of menthol smokers who attempt to quit. However, our model also predicts a substantial potential consumer demand for illegal menthol cigarettes. Depending on the impact of illegality on product prices, our model predicts the potential demand-side of an illegal market for menthol cigarettes could be 59-92 percent the size of the status quo market if menthol e-cigarettes are legal, and 69-100 percent the size of the status quo market if menthol e-cigarettes are also illegal. Our mixed logit model estimated in willingness to pay space implies that the mean WTP to avoid an illegal retail market is equivalent to a tax of $8.44 per pack. In our partial cost-benefit analysis, the opportunity costs of prohibition exceed the value of the reduction in mortality risks from secondhand smoke by $15.4 billion annually.
Author contact info: Donald S. Kenkel Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Rensselaer Hall Ithaca, NY 14853 E-Mail: dsk10@cornell.edu Alan D. Mathios Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Renssellaer Hall Ithaca NY 14853 E-Mail: adm5@cornell.edu Grace N. Phillips E-Mail: gnphllp2@memphis.edu Revathy Suryanarayana Jeb E. Brooks School of Public Policy Cornell University Martha Van Renssellaer Hall Ithaca NY 14853 E-Mail: rs2452@cornell.edu Hua Wang Jeb E. Brooks School of Public Policy MVR Hall Cornell University Ithaca NY 14853 E-Mail: hw227@cornell.edu Sen Zeng Department of Economics Cornell University Ithaca, NY 14853 United States E-Mail: sz626@cornell.edu

Misallocation and Asset Prices - Dou, Winston Wei; Ji, Yan; Tian, Di; Wang, Pengfei (National Bureau of Economic Research Working Paper Series, 2024)
We develop an endogenous growth model with heterogeneous firms facing financial frictions, where misallocation emerges explicitly as a crucial endogenous state variable and plays a significant role in driving economic growth through the valuation channel. The model illustrates that transient macroeconomic shocks affecting misallocation can yield persistent effects on aggregate growth. In equilibrium, slow-moving misallocation endogenously generates long-run uncertainty about economic growth by distorting innovation decisions. When agents hold recursive preferences, misallocation-driven low-frequency growth fluctuations result in substantial risk premia in capital markets and large losses in consumer welfare. Employing a misallocation measure motivated by the model, we substantiate our findings with empirical evidence showing that misallocation effectively captures low-frequency fluctuations in both aggregate growth and asset returns.
Author contact info: Winston Wei Dou The Wharton School University of Pennsylvania 2318 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/746-0005 E-Mail: wdou@wharton.upenn.edu Yan Ji Room 5005, Department of Finance Lee Shau Kee Business Building Clear Water Bay, Kowloon Hong Kong Tel: (852)23588298 E-Mail: jiy@ust.hk Di Tian Hong Kong University of Science and Technology Room 5074, Department of Finance Lee Shau Kee Business Building Clear Water Bay, Kowloon Hong Kong E-Mail: ditian@ust.hk Pengfei Wang HSBC Business School Peking University Shenzhen, Guan 518055 China E-Mail: pfwang@phbs.pku.edu.cn

Data, Privacy Laws and Firm Production: Evidence from the GDPR - Demirer, Mert; Jiménez Hernández, Diego J; Li, Dean; Peng, Sida (National Bureau of Economic Research Working Paper Series, 2024)
By regulating how firms collect, store, and use data, privacy laws may change the role of data in production and alter firm demand for information technology inputs. We study how firms respond to privacy laws in the context of the EU’s General Data Protection Regulation (GDPR) by using seven years of data from a large global cloud-computing provider. Our difference-in-difference estimates indicate that, in response to the GDPR, EU firms decreased data storage by 26% and data processing by 15% relative to comparable US firms, becoming less “data-intensive.” To estimate the costs of the GDPR for firms, we propose and estimate a production function where data and computation serve as inputs to the production of “information." We find that data and computation are strong complements in production and that firm responses are consistent with the GDPR, representing a 20% increase in the cost of data on average. Variation in the firm-level effects of the GDPR and industry-level exposure to data, however, drives significant heterogeneity in our estimates of the impact of the GDPR on production costs.
Author contact info: Mert Demirer MIT Sloan School of Management 100 Main St Cambridge, MA 02142 E-Mail: mdemirer@mit.edu Diego J. Jiménez Hernández 230 S LaSalle St Chicago, IL 60604 USA E-Mail: diego.j.jimenez.h@gmail.com Dean Li E-Mail: deanli@mit.edu Sida Peng 47 Brookline Street Chestnut Hill, MA 02467 United States Tel: 4342495434 E-Mail: sidpeng@microsoft.com

Climate Change, Population Growth, and Population Pressure - Henderson, J. Vernon; Jang, Bo Yeon; Storeygard, Adam; Weil, David N (National Bureau of Economic Research Working Paper Series, 2024)
We develop a novel method for assessing the effect of constraints imposed by spatially-fixed natural resources on aggregate economic output. We apply it to estimate and compare the projected effects of climate change and population growth over the course of the 21st century, by country and globally. We find that standard population growth projections imply larger reductions in income than even the most extreme widely-adopted climate change scenario (RCP8.5). Climate and population impacts are correlated across countries: climate change and population growth will have their most damaging effects in similar places. Relative to previous work on macro climate impacts, our approach has the advantages of being disciplined by a simple macro growth model that allows for adaptation and of assessing impacts via a large set of climate moments, not just annual average temperature and precipitation. Further, our estimated effects of climate are by construction independent of country-level factors such as institutions.
Author contact info: J. Vernon Henderson Centre for Economic Performance London School of Economics Houghton Street London UK WC2A2AE UK Tel: 0207 955 6180 E-Mail: J.V.Henderson@lse.ac.uk Bo Yeon Jang E-Mail: bo-yeon_jang@brown.edu Adam Storeygard Department of Economics Tufts University 177 College Avenue Medford, MA 02115 Tel: 617/627-6653 E-Mail: Adam.storeygard@tufts.edu David N. Weil Department of Economics Brown University Box B Providence, RI 02912 Tel: 401/863-1754 E-Mail: David_Weil@Brown.edu

Labor Migration, Capital Accumulation, and the Structure of Rural Labor Markets - Dinkelman, Taryn; Kumchulesi, Grace; Mariotti, Martine (National Bureau of Economic Research Working Paper Series, 2024)
Between 1967 and 1974, a bilateral treaty increased circular labor migration from Malawi to South Africa by 200%, bringing over 53 million USD in earnings into origin communities. A deadly migrant worker plane crash in 1974 ended these flows and led to migrant repatriation. We study how this shock affected local labor markets. In regions receiving more migrant capital after the crash, workers, particularly women, shifted from farming into non-farm work over thirty years. Investments in non-farm physical and human capital contribute to these sectoral changes. This natural experiment shows that temporary capital inflows can permanently reshape rural labor markets.
Author contact info: Taryn Dinkelman Department of Economics 3058 Jenkins Nanovic Halls University of Notre Dame South Bend, IN 46617 Tel: 574-631-2785 E-Mail: tdinkelm@nd.edu Grace Kumchulesi Malawi Planning Commission CHIEF M'MBELWA HOUSE 2ND FLOOR, CITY CENTRE PRIVATE BAG B316 Lilongwe 3 Malawi E-Mail: grace.kumchulesi@afidep.org Martine Mariotti Research School of Economics H W Arndt Building 25a Acton ACT 2601 Australia Tel: +61261253198 E-Mail: martine.mariotti@anu.edu.au

Technology Regulation Reconsidered: The Effects of Certificate of Need Policies on the Quantity and Quality of Diagnostic Imaging - Horwitz, Jill; Nichols, Austin; Colla, Carrie H; Cutler, David M (National Bureau of Economic Research Working Paper Series, 2024)
Estimates of the impact of Certificate of Need laws on medical care have been inconsistent, possibly because not all CON laws apply to all services. Using an original dataset identifying imaging-related CON laws, we estimate the effects of CON on CT and MRI, using regression discontinuities at state borders. Medicare beneficiaries in regulated states are slightly less likely to receive any image and considerably less likely to receive low-value imaging than beneficiaries in non-regulated states. High-value imaging is either unaffected or declines much less. Overall, CON reduces low value care and largely leaves high value care unaffected.
Author contact info: Jill Horwitz UCLA School of Law 385 Charles E Young Drive, East Los Angeles, CA 90095 E-Mail: horwitz@law.ucla.edu Austin Nichols Amazon 601 New Jersey Avenue NW Suite 900 Washington, DC 20001 E-Mail: austinnichols@gmail.com Carrie H. Colla The Dartmouth Institute for Health Policy and Clinical Practice Geisel School of Medicine 1 Medical Center Dr. Lebanon E-Mail: carrie.h.colla@dartmouth.edu 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

Invoice Currency Choice in Intra-Firm Trade: A Transaction-Level Analysis of Japanese Automobile Exports - Yoshimi, Taiyo; Yoshimoto, Uraku; Sato, Kiyotaka; Ito, Takatoshi; Shimizu, Junko; Yoshida, Yushi (National Bureau of Economic Research Working Paper Series, 2024)
This study empirically investigates how the invoice currency choice differs between intra-firm and arm’s-length exports. We also examine whether other firm- and product-level characteristics affect the choice of invoice currency. This study is the first to be granted access to highly disaggregated transaction-level trade data for Japan. Focusing on Japanese automobile exports to France, we demonstrate that the importer’s currency tends to be chosen in intra-firm export invoicing based on a panel logit estimation. Our empirical findings remain robust when different types of intra-firm export variables and other conventional explanatory variables are introduced, such as firm and product market share, exchange rate volatility, euro-invoiced imports, labor productivity, and research and development intensity. Given growing intra-firm trade and expanding global value chains, Japanese parent firms tend to invoice in the importers’ currency, assuming the foreign exchange risk that arises from intra-firm trade. Thus, exchange rate risk management is a significant consideration for Japanese parent firms.
Author contact info: Taiyo Yoshimi Chuo University, Faculty of Economics 742–1 Higashinakano, Hachioji-shi, Tokyo, 192-0393 Japan E-Mail: yoshimi@tamacc.chuo-u.ac.jp Uraku Yoshimoto Ministry of Finance, Policy Research Institute 3-1-1 Kasumigaseki Chiyoda-ku, Tokyo, 100-0013 Japan E-Mail: uraku.yoshimoto@gmail.com Kiyotaka Sato Yokohama National University Department of Economics, 79-3 Tokiwadai, Hodogaya-ku Yokohama, 240-8501, Kanagawa Japan E-Mail: sato@ynu.ac.jp Takatoshi Ito Columbia University School of International and Public Affairs Room 927 IAB (MC 3333) 420 West 118th Street New York, NY 10027 Tel: 212-854-6401 Fax: 212-749-1497 E-Mail: ti2164@columbia.edu Junko Shimizu Gakushuin University Faculty of Economics 1-5-1 Mejiro, Toshima-ku Tokyo, 171-8588, Japan E-Mail: Junko.Shimizu@gakushuin.ac.jp Yushi Yoshida Shiga University Faculty of Economics 1-1-1 Bamba, Hikone-shi, Shiga 522-8522 Japan E-Mail: yushi.yoshida@biwako.shiga-u.ac.jp

How Managers Can Use Purchaser Performance Information to Improve Procurement Efficiency - Celhay, Pablo A; Gertler, Paul; Olivares, Marcelo; Undurraga, Raimundo (National Bureau of Economic Research Working Paper Series, 2024)
We examine the effect of performance monitoring in public procurement through the lens of organizational culture in a principal-agent model where the manager (principal) and buyers (agents) may have different beliefs about how much the government values efficiency. We show that the effect of performance information not only increases efficiency but is greater when the buyer’s belief is stronger than the manager’s belief. We leverage a new e-procurement system in Chile to test these ideas by randomizing monthly reports on the purchasing performance of buyers and further whether the individual performance reports were disclosed to managers. We find that the reports generated sizable reductions in overspending — with savings reaching a 15% reduction or 0.1% of GDP — but only when individual performance was observable to managers. This is consistent with extrinsic motivation rather than intrinsic motivation driving buyer behavior. Consistent with the theoretical model, we also find that the gain in efficiency is concentrated in procurement units where buyer belief that the government cares about efficiency is stronger than manager belief. Our results highlight the key role played by organizational culture in mediating the impact of purchasing performance information on preventing the misuse of public resources.
Author contact info: Pablo A. Celhay School of Government and Economics Institute Pontificia Universidad Católica de Chile Avda. Vicuña Mackenna 4860 Macul, Santiago Chile E-Mail: pacelhay@uc.cl Paul Gertler Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-1418 E-Mail: gertler@haas.berkeley.edu Marcelo Olivares Universidad de Chile Industrial Engineering Department E-Mail: molivares@uchile.cl Raimundo Undurraga Department of Industrial Engineering and Center for Applied Economics University of Chile Beauchef 851, Santiago Chile E-Mail: undurraga.raimundo@gmail.com

Applying AI to Rebuild Middle Class Jobs - Autor, David (National Bureau of Economic Research Working Paper Series, 2024)
While the utopian vision of the current Information Age was that computerization would flatten economic hierarchies by democratizing information, the opposite has occurred. Information, it turns out, is merely an input into a more consequential economic function, decision-making, which is the province of elite experts. The unique opportunity that AI offers to the labor market is to extend the relevance, reach, and value of human expertise. Because of AI’s capacity to weave information and rules with acquired experience to support decision-making, it can be applied to enable a larger set of workers possessing complementary knowledge to perform some of the higher-stakes decision-making tasks that are currently arrogated to elite experts, e.g., medical care to doctors, document production to lawyers, software coding to computer engineers, and undergraduate education to professors. My thesis is not a forecast but an argument about what is possible: AI, if used well, can assist with restoring the middle-skill, middle-class heart of the US labor market that has been hollowed out by automation and globalization.
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

Out-group Penalties in Refugee Assistance: A Survey Experiment - Cattaneo, Cristina; Grieco, Daniela; Lacetera, Nicola; Macis, Mario (National Bureau of Economic Research Working Paper Series, 2024)
We study out-group biases in attitudes toward refugees, and the effect of European Union (EU) immigration policies on these views, using an online survey experiment including 4,087 Italian participants. We assess attitudes using donations to a randomly assigned group: Italian victims of violence or refugees fleeing wars in Ukraine or African countries. We also employ a novel measure, the share donated in cash. While donations indicated less support for African and Ukrainian refugees compared to Italian victims, the cash measure revealed a stronger prejudice against distant out-groups, with participants giving African refugees a smaller proportion of cash donations. This result was mainly driven by individuals with right-leaning political views. Providing information about immigration policy reforms that give the EU a more substantial role in receiving and allocating refugees had no impact. Textual analysis supports these findings.
Author contact info: Cristina Cattaneo Via Bergognone 34 20144 Milano Tel: Italy E-Mail: cristina.cattaneo@cmcc.it Daniela Grieco Università degli Studi di Milano Via Festa del Perdono, 7 20122 Milano MI Italy E-Mail: daniela.grieco@unimi.it 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

Tariff Rate Uncertainty and the Structure of Supply Chains - Heise, Sebastian; Pierce, Justin R; Schaur, Georg; Schott, Peter K (National Bureau of Economic Research Working Paper Series, 2024)
We show that reducing the probability of a trade war promotes long-term importer-exporter relationships that ensure provision of high-quality inputs via incentive premia. Empirically, we introduce a method for distinguishing between these Japanese versus spot-market (i.e., American) relationships in customs data, show that their use varies intuitively across trading partners and products, and find that Japanese importing from China increases after a reduction in the possibility of a trade war. Extending the standard general equilibrium trade model to encompass potential trade wars and relational contracts, we estimate that eliminating Japanese procurement reduces welfare about a third as much as moving to autarky.
Author contact info: Sebastian Heise Federal Reserve Bank of New York Research and Statistics Group 33 Liberty Street New York, NY 10045 Tel: 2127208208 E-Mail: sebastian.heise@ny.frb.org Justin R. Pierce Federal Reserve Board 20th and C Street NW Washington, DC 20551 Tel: 202-452-2980 Fax: 202-736-1937 E-Mail: justin.r.pierce@frb.gov Georg Schaur University of Tennessee Department of Economics 519 Stokely Management Center Knoxville TN 37996 E-Mail: gschaur@utk.edu Peter K. Schott Yale School of Management 165 Whitney Avenue New Haven, CT 06511 Tel: 203/436-4260 Fax: 203/432-6974 E-Mail: peter.schott@yale.edu

Monetary Policy Wedges and the Long-term Liabilities of Households and Firms - van Binsbergen, Jules H; Grotteria, Marco (National Bureau of Economic Research Working Paper Series, 2024)
We examine the transmission of monetary policy shocks to the long-duration liabilities of households and firms using high-frequency variation in 10-year swap rates around FOMC announcements. We find that four weeks after the announcement mortgage rates move one-for-one with 10-year swap rates, leaving little explanatory power for mortgage concentration, bank market power, or credit risk. Variation in credit risk does materially affect monetary policy transmission to corporate bonds. Expected future short rates and term premia play a significant role in driving both mortgage rates and corporate bond yields, which explains the Federal Reserve’s increased focus on these quantities.
Author contact info: Jules H. van Binsbergen The Wharton School University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 E-Mail: julesv@wharton.upenn.edu Marco Grotteria London Business School Regent's Park London NW1 4SA United Kingdom E-Mail: mgrotteria@london.edu

The Government Patent Register: A New Resource for Measuring U.S. Government-Funded Patenting - Gross, Daniel P; Sampat, Bhaven N (National Bureau of Economic Research Working Paper Series, 2024)
We introduce new historical administrative data identifying U.S. government-funded patents since the early twentieth century. In addition to the funding agency, the data report whether the government has title to the patent (“title” patents) or funded a patent assigned to a private organization (“license” patents). The data include a large number of “license” patents that cannot be linked to government funding from patent text or other sources. Combining the historical data with modern administrative sources, we present a public, consolidated data series measuring U.S. government-funded patents—including funding agencies—through 2020, and we provide code to extend this series in the future. We use the data to document long-run patterns in U.S. government-funded patents and federal patent policy, propose ways in which these data can be used in future research, and discuss limitations of the data.
Author contact info: Daniel P. Gross Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 E-Mail: daniel.gross@duke.edu Bhaven N. Sampat Arizona State University Consortium for Science, Policy, and Outcomes 1800 I Street NW, Suite 300 Washington, DC 20006 E-Mail: bhaven.sampat@asu.edu

Discrete Choice, Complete Markets, and Equilibrium - Mongey, Simon; Waugh, Michael E (National Bureau of Economic Research Working Paper Series, 2024)
This paper characterizes the allocations that emerge in general equilibrium economies populated by households with preferences of the additive random utility type that make discrete consumption, employment or spatial decisions. We start with a complete markets economy where households can trade claims contingent upon the realizations of their preference shocks. We (i) establish a first and second welfare theorem, (ii) illustrate that in the absence of ex-ante trade, discrete choice economies are generically inefficient, (iii) show that complete markets are not necessary and a much smaller set of securities decentralizes the efficient allocation. We illustrate the relevance of these results in several canonical settings and for measuring how welfare changes in response to changes in prices.
Author contact info: Simon Mongey Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: simonmongey@gmail.com Michael E. Waugh Federal Reserve Bank of Minneapolis 90 Hennepin Ave Minneapolis, MN 55401 E-Mail: michael.e.waugh@gmail.com

Behavioral Responses to Wealth Taxation: Evidence from Colombia - Londoño-Vélez, Juliana; Avila-Mahecha, Javier (National Bureau of Economic Research Working Paper Series, 2024)
We study behavioral responses to personal wealth taxes in Colombia. We utilize tax microdata from 1993 to 2016 linked with the leaked Panama Papers to investigate offshoring to the country’s key tax havens. We leverage variation from discrete jumps in tax liability and four major reforms to the wealth tax system, including changes in tax rates and duration, using bunching and difference-in-difference techniques. We find compelling evidence that taxpayers instantly reduce the wealth they declare in response to a wealth tax. Moreover, these effects can persist for years even after the wealth tax is no longer in place, providing the first evidence of a hysteresis effect for a temporary tax policy. The response is driven by misreporting items that authorities cannot cross-verify, such as overstating debt and understating non-third-party-reported business assets. Additionally, the wealthiest taxpayers respond to wealth tax increases by hiding assets in hard-to-track entities in tax havens.
Author contact info: Juliana Londoño-Vélez Department of Economics University of California, Los Angeles Bunche Hall 8283 Los Angeles, CA 90095 E-Mail: j.londonovelez@econ.ucla.edu Javier Avila-Mahecha Dirección de Impuestos y Aduanas Nacionales (DIAN) Carrera 8 # 6C-38 Edificio San Agustín Bogotá, Colombia E-Mail: javilam@dian.gov.co

What Drives U.S. Import Price Inflation? - Amiti, Mary; Itskhoki, Oleg; Weinstein, David (National Bureau of Economic Research Working Paper Series, 2024)
Inflation has risen sharply in many countries since the COVID-19 outbreak. Economists have debated the underlying causes. In this paper, we examine the drivers of the global import price inflation, which peaked at approximately 11 percent a year. We find that a common global component closely tracks movements in aggregate U.S. import prices until late 2022. Afterward, idiosyncratic U.S. demand shocks started to dominate.
Author contact info: Mary Amiti Research Department Federal Reserve Bank of New York 33 Liberty St New York, NY 10045 E-Mail: mary.amiti@gmail.com Oleg Itskhoki Department of Economics University of California, Los Angeles Bunche Hall, 315 Portola Plaza Los Angeles, CA 90095-1477 Tel: 609/216-4489 E-Mail: itskhoki@econ.ucla.edu David Weinstein Columbia University Department of Economics 420 W. 118th Street MC 3308 New York, NY 10027 Tel: 212/854-6880 Fax: 212/854-8059 E-Mail: dew35@columbia.edu

Making a Song and Dance About It: The Effectiveness of Teaching Children Vocabulary with Animated Music Videos - Kalil, Ariel; Mayer, Susan; Oreopoulos, Philip; Shah, Rohen (National Bureau of Economic Research Working Paper Series, 2024)
Programs that engage young children in movement and song to help them learn are popular but experimental evidence on their impact is sparse. We use an RCT to evaluate the effectiveness of Big Word Club (BWC), a classroom program that uses music and dance videos for 3-5 minutes per day to increase vocabulary. We conducted a field experiment with 818 preschool and kindergarten students in 47 schools in three U.S. states. We find that treated students scored higher on a test of words targeted by the program (0.30 SD) after four months of use and this effect persisted for two months.
Author contact info: Ariel Kalil Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: akalil@uchicago.edu Susan Mayer Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: smayer@uchicago.edu Philip Oreopoulos Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 E-Mail: philip.oreopoulos@utoronto.ca Rohen Shah The University of Chicago Harris School of Public Policy 1307 E. 60th St Chicago, IL 60637 United States Tel: 734-578-5684 E-Mail: shahr@uchicago.edu

Climate Polarization and Green Investment - Anderson, Anders; Robinson, David T (National Bureau of Economic Research Working Paper Series, 2024)
We build a nationally representative sample of retirement savers in Sweden to study how asymmetric updating of beliefs about climate change affects investment decisions. After the intense heat wave of 2018, respondents in regions dominated by a right-wing, anti-climate party grow less concerned about climate change, while respondents outside these regions grow more concerned. Those growing more concerned rebalance their retirement portfolios toward climate-friendly mutual funds; those growing less concerned rebalance out of these funds, but to a smaller degree. Financial sophistication and inertia interacts with political polarization in driving these effects.
Author contact info: Anders Anderson Stockholm School of Economics Drottninggatan 98 Stockholm, Sweden E-Mail: Anders.Anderson@hhs.se David T. Robinson Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 Tel: 919/660-8023 Fax: 919/684-2818 E-Mail: davidr@duke.edu

Declining Responsiveness at the Establishment Level: Sources and Productivity Implications - Cooper, Russell; Haltiwanger, John C; Willis, Jonathan (National Bureau of Economic Research Working Paper Series, 2024)
This paper studies competing sources of declining dynamism. Evidence shows that an important component of this decline is accounted for by the reduction in the response of employment to shocks in US establishments. Using a plant level dynamic optimization problem as a framework for analysis, four potential reasons for this decline are studied: (i) a change in exogenous processes for profits, (ii) an increase in impatience, (iii) increased market power and (iv) increasing adjustment costs. We identify and quantity the contribution of each of these factors building on a simulated method of moments estimation of our structural model. Our results indicate that the reduction in responsiveness largely reflects increased costs of employment adjustment. Changes in market power, as captured by changes in the curvature of the revenue, function play a minimal role. But, in the presence of rising adjustment costs, measured sales-weighted markups using the recently popular indirect production approach rise substantially, along with rising dispersion and skewness of such measured markups.
Author contact info: Russell Cooper Department of Economics Villa La Fonte Via delle Fontanelle 18 I-50014 San Domenico di Fiesole (FI) ITALY Europe E-Mail: russellcoop@gmail.com 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 Jonathan Willis Federal Reserve Bank of Atlanta Research Department 1000 Peachtree Street, NE Atlanta, GA 30309 Tel: 8162001075 E-Mail: jon.willis@atl.frb.org

Exorbitant Privilege and the Sustainability of US Public Debt - Choi, Jason; Dang, Duong Q; Kirpalani, Rishabh; Perez, Diego J (National Bureau of Economic Research Working Paper Series, 2024)
We study the extent to which the perceived cost of losing the exorbitant privilege the US holds in global safe asset markets sustains the safety of its public debt. Our findings indicate that the loss of this special status in the event of a default significantly augments the debt capacity for the US. Debt levels would be up to 30% lower if the US did not have this special status. Most of this extra debt capacity arises from the loss of the convenience yield on US Treasuries, which makes debt more expensive following its loss and provides strong incentives to repay debt.
Author contact info: Jason Choi 212 Max Gluskin House 150 St. George Street Toronto, Onta Canada E-Mail: jasonhj.choi@utoronto.ca Duong Q. Dang E-Mail: dqdang@wisc.edu Rishabh Kirpalani Department of Economics University of Wisconsin-Madison Madison, WI 53706 E-Mail: rishabh.kirpalani@wisc.edu Diego J. Perez Department of Economics New York University 19 West 4th Street New York, NY 10012 Tel: 650/766-5042 E-Mail: diego.perez@nyu.edu

The Role of International Financial Integration in Monetary Policy Transmission - Wu, Jing Cynthia; Xie, Yinxi; Zhang, Ji (National Bureau of Economic Research Working Paper Series, 2024)
Motivated by empirical evidence, we propose an open-economy New Keynesian model with financial integration that allows financial intermediaries to hold foreign long-term bonds. We find financial integration features an amplification for a domestic monetary policy shock and a negative spillover for a foreign shock. These results hold for conventional and unconventional monetary policies. Among various aspects of financial integration, the bond duration plays a major role, and our results cannot be replicated by a standard model of perfect risk sharing between households. Finally, we observe an important interaction between financial integration and trade openness, and demonstrate trade alone does not have an economically meaningful impact on monetary policy transmission.
Author contact info: Jing Cynthia Wu Department of Economics 3060 Jenkins Nanovic Hall University of Notre Dame Notre Dame, IN 46556 E-Mail: j.cynthia.wu@gmail.com Yinxi Xie Bank of Canada 234 Wellington Street West Ottawa, ON K1A 0G9 Canada E-Mail: yinxi.xie.econ@gmail.com Ji Zhang Tsinghua University 43 Chengfu Road PBC School of Finance Haidian District, Beijing, 100083 China E-Mail: zhangji@pbcsf.tsinghua.edu.cn

The Role of Non-Pecuniary Considerations: Location Decisions of College Graduates from Low Income Backgrounds - Gong, Yifan; Stinebrickner, Todd R; Stinebrickner, Ralph; Yao, Yuxi (National Bureau of Economic Research Working Paper Series, 2024)
We examine the initial post-college geographic location decisions of students from hometowns in the Appalachian region that often lack substantial high-skilled job opportunities, focusing on the role of non-pecuniary considerations. Novel survey questions in the spirit of the contingent valuation approach allow us to measure the full non-pecuniary benefits of each relevant geographic location, in dollar equivalents. A new specification test is designed and implemented to provide evidence about the quality of these non-pecuniary measures. Supplementing perceived location choice probabilities and expectations about pecuniary factors with our new non-pecuniary measures allows us to estimate a stylized model of location choice and obtain a comprehensive understanding of the importance of pecuniary and non-pecuniary factors. We also combine the non-pecuniary measures with realized location and earnings outcomes to characterize inequality in overall welfare.
Author contact info: Yifan Gong Department of Economics College of Business University of Nebraska-Lincoln Lincoln, NE 68588 United States E-Mail: ygong5@unl.edu Todd R. Stinebrickner Department of Economics Western University London, On N6A 5C2 E-Mail: trstineb@uwo.ca Ralph Stinebrickner Berea College Berea, KY 40403 E-Mail: ralph_stinebrickner@berea.edu Yuxi Yao Department of Economics University of Nebraska Lincoln 1400 R St Lincoln, Nebr 68588 United States E-Mail: yyao10@unl.edu

Education Inequalities in Latin America and the Caribbean - Fernández, Raquel; Pagés, Carmen; Szekely, Miguel; Acevedo, Ivonne (National Bureau of Economic Research Working Paper Series, 2024)
Education is a crucial asset for a country’s economic prospects and for its inhabitants. In addition to its direct impact on growth via the accumulation of human capital, it is a critical ingredient in producing an informed citizenry, enhancing their ability to obtain and exert human and political rights and their facility to adapt to changing environments (generated by, e.g., technological or climatic change) among other benefits. In this paper, we study education inequality in LAC (both in quantity and quality), assess how it emerges and amplifies or dampens existing inequalities, and examine the interaction of education inequality with other forms of inequality, primarily income and labor market outcomes. Our analysis is based on primary data from multiple sources.
Author contact info: Raquel Fernández Department of Economics New York University 19 West 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8908 Fax: 212/995-4186 E-Mail: raquel.fernandez@nyu.edu Carmen Pagés Universitat Oberta de Catalunya E-Mail: cpagesserra@uoc.edu Miguel Szekely E-Mail: mszekely@prodigy.net.mx Ivonne Acevedo E-Mail: iacevedoj@gmail.com

The Unreasonable Effectiveness of Algorithms - Ludwig, Jens; Mullainathan, Sendhil; Rambachan, Ashesh (National Bureau of Economic Research Working Paper Series, 2024)
We calculate the social return on algorithmic interventions (specifically their Marginal Value of Public Funds) across multiple domains of interest to economists—regulation, criminal justice, medicine, and education. Though these algorithms are different, the results are similar and striking. Each one has an MVPF of infinity: not only does it produce large benefits, it provides a “free lunch.” We do not take these numbers to mean these interventions ought to be necessarily scaled, but rather that much more R&D should be devoted to developing and carefully evaluating algorithmic solutions to policy problems.
Author contact info: 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 Sendhil Mullainathan Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-2353 E-Mail: sendhil.mullainathan@gmail.com Ashesh Rambachan Department of Economics MIT Cambridge, MA E-Mail: asheshr@mit.edu

Credible Numbers: A Procedure for Reporting Statistical Precision in Parameter Estimates - Astier, Nicolas; Wolak, Frank A (National Bureau of Economic Research Working Paper Series, 2024)
Econometric software packages typically report a fixed number of decimal digits for coefficient estimates and their associated standard errors. This practice misses the opportunity to use rounding rules that convey statistical precision. Using insights from the testing statistical hypotheses of equivalence literature, we propose a methodology that only reports decimal digits in a parameter estimate that reject a hypothesis of statistical equivalence. Applying this methodology to all articles published in the American Economic Review between 2000 and 2022, we find that over 60% of the printed digits in coefficient estimates do not convey statistically meaningful information according to our definition of a significant digit. If one additional digit beyond the last significant digit is reported for each coefficient estimate, then approximately one-third of the printed digits in our sample would not be reported.
Author contact info: Nicolas Astier 48 Bd Jourdan Paris School of Economics Ecole des Ponts Paris 75014 France E-Mail: nicolas.astier@psemail.eu Frank A. Wolak Department of Economics Stanford University Stanford, CA 94305-6072 Tel: 650/723-3944 Fax: 650/725-5702 E-Mail: wolak@zia.stanford.edu

The Determinants of Declining Internal Migration - Olney, William W; Thompson, Owen (National Bureau of Economic Research Working Paper Series, 2024)
Internal migration in the United States has declined substantially over the past several decades, which has important implications for individual welfare, macroeconomic adjustments, and other key outcomes. This paper studies the determinants of internal migration and how they have changed over time. We use administrative data from the IRS covering the universe of bilateral moves between every Commuting Zone (CZ) in the country over a 23 year period. This data is linked to information on local wage levels and home prices, and we estimate bilateral migration determinants in rich regression specifications that contain CZ-pair fixed effects. Consistent with theoretical predictions, results show that migration is decreasing with origin wages and destination home prices, and is increasing with destination wages and origin home prices. We then examine the contributions of earnings and home prices to the noted overall decline in internal migration. These analyses show that wages on their own would have led to an increase in migration rates, primarily because migrants are increasingly responsive to high earnings levels in potential destination CZs. However, these wage effects have been more than offset by housing related factors, which have increasingly impeded internal mobility. In particular, migration has become much less responsive to housing prices in the origin CZ, such that many households that would have left in response to high home prices several decades ago now choose to stay.
Author contact info: William W. Olney Department of Economics Williams College 24 Hopkins Hall Dr Williamstown, ma 01267 E-Mail: wwo1@williams.edu Owen Thompson Department of Economics Williams College 24 Hopkins Hall Drive Williamstown, MA 01267 Tel: 413/597-2669 E-Mail: ot3@williams.edu

Experimental Estimates of College Coaching on Postsecondary Re-enrollment - Turner, Lesley J; Gurantz, Oded (National Bureau of Economic Research Working Paper Series, 2024)
College attendance has increased significantly over the last few decades, but dropout rates remain high, with fewer than half of all adults ultimately obtaining a postsecondary credential. This project investigates whether one-on-one college coaching improves college attendance and completion outcomes for former low- and middle-income income state aid recipients who attended college but left prior to earning a degree. We conducted a randomized control trial with approximately 8,000 former students in their early- to mid-20s. Half of participants assigned to the treatment group were offered the opportunity to receive coaching services from InsideTrack, with all communication done remotely via phone or video. Intent-to-treat analyses based on assignment to coaching shows no impacts on college enrollment and we can rule out effects larger than a two-percentage point (5%) increase in subsequent Fall enrollment.
Author contact info: Lesley J. Turner Harris School of Public Policy University of Chicago 1307 East 60th Street Chicago, IL 60637 Tel: 615/322-1389 E-Mail: ljturner@uchicago.edu Oded Gurantz School of Education University of Colorado Boulder, CO E-Mail: oded.gurantz@colorado.edu

Did Violence Against Asian-Americans Rise in 2020? Evidence from a Novel Approach to Measuring Potentially Racially-Motivated Attacks - Knorre, Aleksei; Van Tiem, Britte; Chalfin, Aaron (National Bureau of Economic Research Working Paper Series, 2024)
Did anti-Asian violence rise after the onset of the COVID-19 pandemic? Efforts to answer this question are compromised by the inherent difficulty of measuring racially-motivated crimes as well as concerns that reporting of racially-motivated hate crimes may have changed due to their increased salience during the pandemic. We pursue an alternative approach to studying whether anti-Asian violence rose after March 2020 that addresses each of these concerns. Using data from the FBI’s National Incident-Based Reporting System, we study inter-race violence occurring in public spaces. While public violence declined among all Americans after March 2020, the share of public violence directed at Asian-Americans by people who were previously unknown to them – or were acquaintances – rose more than it did for other Americans. While this relationship did not hold among an auxiliary sample of large US cities, the national evidence is consistent with a modest increase in racially- motivated violence directed towards Asian-Americans.
Author contact info: Alex Knorre E-Mail: a.v.knorre@gmail.com Britte Van Tiem E-Mail: bvantiem@sas.upenn.edu Aaron Chalfin Department of Criminology University of Pennsylvania 558 McNeil Building 3718 Locust Walk Philadelphia, PA 19104 E-Mail: achalfin@sas.upenn.edu

Competitive Effects of Charter Schools - Figlio, David N; Hart, Cassandra; Karbownik, Krzysztof (National Bureau of Economic Research Working Paper Series, 2024)
Using a rich dataset that merges student-level school records with birth records, and leveraging three alternative identification strategies, we explore how increase in access to charter schools in twelve districts in Florida affects students remaining in traditional public schools (TPS). We consistently find that competition stemming from the opening of new charter schools improves reading—but not math—performance and it also decreases absenteeism of students who remain in the TPS. Results are modest in magnitude.
Author contact info: David N. Figlio University of Rochester 220 Hutchinson Road Rochester, NY 14611 E-Mail: david.figlio@rochester.edu Cassandra Hart School of Education University of California, Davis One Shields Ave Davis, CA 95616 E-Mail: cmdhart@ucdavis.edu Krzysztof Karbownik Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 E-Mail: krzysztof.karbownik@emory.edu

The Consequences of Abuse, Neglect and Cyber-bullying on the Wellbeing of the Young - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2024)
Using cross-sectional data files for the United States we show that difficulties experienced in childhood - so-called Adverse Child Experiences (ACE)s - are strongly and significantly associated with mental health in adulthood. Our evidence is taken from eight Behavioral Risk Factor Surveillance System (BRFSS) surveys from 2009-2023 which contain a special supplement asking respondents to recall abuse in their childhood. We find that poor mental health is on the rise in the United States, particularly among young women. This upward trend among the young is also apparent from the National Health Interview Surveys 1997-2021, the Healthy Minds surveys of 2007-2023 and the Youth Risk Behavior Surveillance System (YRBSS) for high school students. We find ACEs are strongly correlated with poor mental health among both the young and older people and the effect is additive. The impact of living with a household member with poor mental health is large relative to other ACEs and is particularly pronounced among younger people. Being bullied, including electronically, is also strongly negatively associated with the wellbeing of high school students. Time spent in front of a screen has been rising over time for the young and has an independent negative impact on their mental health over and above bullying, one which is more pronounced for young 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

Event-Studies with a Continuous Treatment - Callaway, Brantly; Goodman-Bacon, Andrew; Sant'Anna, Pedro H. C (National Bureau of Economic Research Working Paper Series, 2024)
This paper considers methods for defining aggregate parameters of interest in a difference-in-differences design with a continuous and staggered treatment. It also discusses how aggregation choices often simplify estimation.
Author contact info: Brantly M. Callaway 1301 Cecil B. Moore Avenue Ritter Annex 867 Philadelphia, Pennsylvania 19122 E-Mail: bmcallaw@olemiss.edu Andrew Goodman-Bacon Opportunity and Inclusive Growth Institute Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: andrew@goodman-bacon.com Pedro H. C. Sant'Anna Department of Economics Emory University 1602 Fishburne Dr, Atlanta, GA 30322 E-Mail: pedro.santanna@emory.edu

Difference-in-differences with a Continuous Treatment - Callaway, Brantly; Goodman-Bacon, Andrew; Sant'Anna, Pedro H. C (National Bureau of Economic Research Working Paper Series, 2024)
This paper analyzes difference-in-differences designs with a continuous treatment. We show that treatment effect on the treated-type parameters can be identified under a generalized parallel trends assumption that is similar to the binary treatment setup. However, interpreting differences in these parameters across different values of the treatment can be particularly challenging due to selection bias that is not ruled out by the parallel trends assumption. We discuss alternative, typically stronger, assumptions that alleviate these challenges. We also provide a variety of treatment effect decomposition results, highlighting that parameters associated with popular linear two-way fixed-effect (TWFE) specifications can be hard to interpret, even when there are only two time periods. We introduce alternative estimation procedures that do not suffer from these TWFE drawbacks, and show in an application that they can lead to different conclusions.
Author contact info: Brantly M. Callaway 1301 Cecil B. Moore Avenue Ritter Annex 867 Philadelphia, Pennsylvania 19122 E-Mail: bmcallaw@olemiss.edu Andrew Goodman-Bacon Opportunity and Inclusive Growth Institute Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: andrew@goodman-bacon.com Pedro H. C. Sant'Anna Department of Economics Emory University 1602 Fishburne Dr, Atlanta, GA 30322 E-Mail: pedro.santanna@emory.edu

How Do Surrogates Make Treatment Decisions for Patients with Dementia? An Experimental Survey Study - Hersch Nicholas, Lauren; Langa, Kenneth M; Halpern, Scott D; Macis, Mario (National Bureau of Economic Research Working Paper Series, 2024)
Despite the growing need for surrogate decision-making for older adults, little is known about how surrogates make decisions and whether advance directives would change decision-making. We conducted a nationally representative experimental survey that cross-randomized cognitive impairment, gender, and characteristics of advance care planning among hospitalized older adults through a series of vignettes. Our study yielded three main findings: first, respondents were much less likely to recommend life-sustaining treatments for patients with dementia, especially after personal exposure. Second, respondents were more likely to ignore patient preferences for life-extending treatment when the patient had dementia, and choose unwanted life-extending treatments for patients without dementia. Third, in scenarios where the patient's wishes were unclear, respondents were more likely to choose treatments that matched their own preferences. These findings underscore the need for improved communication and decision-making processes for patients with cognitive impairment and highlight the importance of choosing a surrogate decision-maker with similar treatment preferences.
Author contact info: Lauren Hersch Nicholas University of Colorado School of Medicine 13080 E 19th Ave Aurora, CO 80045 E-Mail: lauren.h.nicholas@cuanschutz.edu Kenneth M. Langa E-Mail: klanga@umich.edu Scott D. Halpern E-Mail: shalpern@upenn.edu Mario Macis Johns Hopkins University Carey Business School 1717 Massachusetts Ave, Office 359 Washington, DC 20036 E-Mail: mmacis@jhu.edu

Whatever-It-Takes Policymaking during the Pandemic - Dominguez, Kathryn M.E.; Foschi, Andrea (National Bureau of Economic Research Working Paper Series, 2024)
Central banks across the globe introduced large-scale asset purchase programs to address the unprecedented circumstances experienced during the pandemic. Many of these programs were announced as open-ended to shock-and-awe market participants and restore confidence in financial markets. This paper examines whether these whatever-it-takes announcements had larger effects than announcements with explicit limits on scale. We use a narrative approach to categorize announcements made by twenty-two central banks, and event study, propensity-score-matching, and local projection methods to measure the short-term effects of policy announcements on exchange rates and sovereign bond yields. We find that on average a central bank's first whatever-it-takes announcement lowers 10-year bond yields by an additional 47 basis points relative to size-limited announcements, suggesting that communication of potential policy scale matters. Our results for yields hold for both advanced and emerging economies, while exchange rates go in opposing directions, muting their response when we group all countries together.
Author contact info: Kathryn M.E. Dominguez University of Michigan Department of Economics and Ford School Weill Hall 735 South State Street Ann Arbor, MI 48109 Tel: 734-764-9498 Fax: 734-763-9181 E-Mail: kathrynd@umich.edu Andrea Foschi University of Michigan Department of Economics Lorch Hall 611 Tappan Avenue Ann Arbor, MI 48109 USA E-Mail: afoschi@umich.edu

Evolution of Debt Financing toward Less-Regulated Financial Intermediaries in the United States - Erel, Isil; Inozemtsev, Eduard (National Bureau of Economic Research Working Paper Series, 2024)
Nonbank lenders have been playing an increasing role in supplying debt, especially after the Great Recession. How important are the distortions in the greater regulation of banks that differentially limit risk-taking across alternative providers of credit? How might the growing role of nonbanks in credit markets affect financial stability? This selective review addresses these questions and discusses how banks and nonbanks helped provide liquidity to the nonfinancial sector during the COVID-19 pandemic shock. We argue that tighter bank regulation has created incentives for nonbanks to increase their participation in credit markets, a trend that creates concerns about financial stability.
Author contact info: Isil Erel Fisher College of Business The Ohio State University 2100 Neil Avenue Columbus, OH 43210 Tel: 614/292-5174 E-Mail: erel@fisher.osu.edu Eduard Inozemtsev Level 11, 198 Berkeley Street The University of Melbourne Victoria 3010 Australia E-Mail: eduard.inozemtsev@unimelb.edu.au

Information-Constrained Coordination of Economic Behavior - Aridor, Guy; Azeredo da Silveira, Rava; Woodford, Michael (National Bureau of Economic Research Working Paper Series, 2024)
We analyze a coordination game with information-constrained players. The players' actions are based on a noisy compressed representation of the game's payoffs in a particular case, where the compressed representation is a latent state learned by a variational autoencoder (VAE). Our generalized VAE is optimized to trade off the average payoff obtained over a distribution of possible games against a measure of the congruence between the agent's internal model and the statistics of its environment. We apply our model to the coordination game in the experiment of Frydman and Nunnari (2023), and show that it offers an explanation for two salient features of the experimental evidence: both the relatively continuous variation in the players' action probabilities with changes in the game payoffs, and the dependence of the degree of stochasticity of players' choices on the range of game payoffs encountered on different trials. Our approach also provides an account of the way in which play should gradually adjust to a change in the distribution of game payoffs that are encountered, offering an explanation for the history-dependent play documented by Arifovic et al. (2013).
Author contact info: Guy Aridor E-Mail: garidor@gmail.com Rava Azeredo da Silveira Département de Physique Ecole Normale Supérieure 24 rue Lhomond 75005 Paris France E-Mail: rava@ens.fr Michael Woodford Department of Economics Columbia University 420 W. 118th Street New York, NY 10027 Tel: 212/854-1094 Fax: 212-854-8059 E-Mail: mw2230@columbia.edu

Campaigning Against Populism Emotions and Information in Real Election Campaigns - Cruz, Cesi; Labonne, Julien; Trebbi, Francesco (National Bureau of Economic Research Working Paper Series, 2024)
Populist politicians have leveraged direct connections with voters to win elections worldwide, often using emotional rather than policy appeals. Do these forms of campaigning work for programmatic politicians as well? We partner with a mainstream opposition political party to implement a field experiment during the 2019 Philippine Senatorial election to test the effectiveness of: (i) direct in-person appeals providing policy information; (ii) the addition of an activity designed to engender positive emotion. We show that direct engagement providing policy information increases vote share for the party, even in a clientelistic context. Additionally, while the emotional activity increases engagement with the campaign in the short term, the information-only treatment was more effective. Last, we present evidence that the treatments operated through learning and persuasion channels: treated voters were more likely to know the party, more certain about their knowledge, and gave higher ratings to the party’s quality and proposed policies.
Author contact info: Cesi Cruz University of California Los Angeles Department of Political Science Los Angeles, Cali United States E-Mail: cesi@ucla.edu Julien Labonne University of Oxford United Kingdom E-Mail: julien.labonne@bsg.ox.ac.uk Francesco Trebbi Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: ftrebbi@berkeley.edu

Difference-in-Differences in the Marketplace - Minton, Robert; Mulligan, Casey B (National Bureau of Economic Research Working Paper Series, 2024)
Price theory says that the most important effects of policy and technological change are often found beyond their first point of contact. This appears opposed to econometric methods that rule out spillovers of one person’s treatment on another’s outcomes. This paper uses the industry model from price theory to represent the statistical concepts of treatments and controls. When treated and control observations are in the same market, the controls are indirectly affected by the treatment. Moreover, even the effect of the treatment on the treated reveals only part of the consequence for the treated of treating the entire market, which is often the parameter of interest. Marshall’s Laws of Derived Demand provide a guide for empirical work: precise price-theoretic interpretations of the direct and spillover effects of a treatment, the quantitative relationships between them, and how they correspond to the scale and substitution effects emphasized in price theory.
Author contact info: Robert Minton Federal Reserve Board 2001 C St NW Office M-1703 Washington, DC 20037 E-Mail: robert.j.minton@frb.gov 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

Lives vs. Livelihoods: The Impact of the Great Recession on Mortality and Welfare - Finkelstein, Amy; Notowidigdo, Matthew J; Schilbach, Frank; Zhang, Jonathan (National Bureau of Economic Research Working Paper Series, 2024)
We leverage spatial variation in the severity of the Great Recession across the United States to examine its impact on mortality and to explore implications for the welfare consequences of recessions. We estimate that an increase in the unemployment rate of the magnitude of the Great Recession reduces the average, annual age-adjusted mortality rate by 2.3 percent, with effects persisting for at least 10 years. Mortality reductions appear across causes of death and are concentrated in the half of the population with a high school degree or less. We estimate similar percentage reductions in mortality at all ages, with declines in elderly mortality thus responsible for about three-quarters of the total mortality reduction. Recession-induced mortality declines are driven primarily by external effects of reduced aggregate economic activity on mortality, and recession-induced reductions in air pollution appear to be a quantitatively important mechanism. Incorporating our estimates of pro-cyclical mortality into a standard macroeconomics framework substantially reduces the welfare costs of recessions, particularly for people with less education, and at older ages where they may even be welfare-improving.
Author contact info: Amy Finkelstein Department of Economics, E52-442 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4149 Fax: 617/868-2742 E-Mail: afink@mit.edu Matthew J. Notowidigdo University of Chicago Booth School of Business 5807 S Woodlawn Ave Chicago, IL 60637 Tel: 773-834-6249 E-Mail: noto@chicagobooth.edu Frank Schilbach MIT Department of Economics, E52-560 The Morris and Sophie Chang Building 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/715-2969 Fax: 617/253-1330 E-Mail: fschilb@mit.edu Jonathan Zhang McMaster University Kenneth Taylor Hall, Room 441 1280 Main Street West Hamilton, ON, L8S 4M4 Canada E-Mail: jonathanzhang@mcmaster.ca

Immigration Enforcement and Public Safety - Gonçalves, Felipe M; Jácome, Elisa; Weisburst, Emily K (National Bureau of Economic Research Working Paper Series, 2024)
How does immigration enforcement affect public safety? Heightened enforcement could reduce crime by deterring and incapacitating immigrant offenders or, alternatively, increase crime by discouraging victims from reporting offenses. We study the U.S. Secure Communities program, which expanded interior enforcement against unauthorized immigrants. Using national survey data, we find that the program reduced the likelihood that Hispanic victims reported crimes to police and increased the victimization of Hispanics. Total reported crimes are unchanged, masking these opposing effects. We provide evidence that reduced Hispanic reporting is the key driver of increased victimization. Our findings underscore the importance of trust in institutions as a central determinant of public safety.
Author contact info: Felipe M. Gonçalves Department of Economics University of California, Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 E-Mail: fgoncalves@econ.ucla.edu Elisa Jácome Department of Economics Northwestern University Kellogg Global Hub 2211 Campus Drive Evanston, IL 60208 E-Mail: ejacome@northwestern.edu Emily K. Weisburst UCLA Luskin School of Public Affairs Department of Public Policy 337 Charles E Young Dr E Los Angeles, CA 90095 Tel: 860/335-8907 E-Mail: weisburst@ucla.edu

Does Defensive Gun Use Deter Crime? - Donohue, John J; Oktay, Alex; Zhang, Amy L; Benavides, Matthew (National Bureau of Economic Research Working Paper Series, 2024)
We study the opposing deterrent and enabling effects of guns carried by law-abiding citizens on violent crime, using the location of shooting ranges as an instrument. Our incident-level data based on admittedly imperfect data from the Gun Violence Archive suggests that defensive gun use (DGU) by crime victims may decrease the probability of their injury or death, while increasing the risk of death or injury by the criminal suspects. However, in the aggregate, higher numbers of defensive gun uses—which proxies for more gun carrying and use—are associated with higher numbers of violent crimes, injuries, and fatalities among victims and suspects alike. We hypothesize that this equilibrium effect arises because more guns being carried and used by citizens produce more incentive and opportunities for criminals to acquire guns, leading to a commensurate increase in the incidence and lethality of crime. In summary, our analysis supports the conclusion that the widespread carrying and use of guns is overall more likely to enable violent crimes than to deter them.
Author contact info: John J. Donohue Stanford Law School Crown Quadrangle 559 Nathan Abbott Way Stanford, CA 94305 Tel: 650/721-6339 E-Mail: donohue@law.stanford.edu Alex Oktay E-Mail: aoktay@law.stanford.edu Amy L. Zhang E-Mail: azhang@law.stanford.edu Matthew Benavides E-Mail: mbenavid@law.stanford.edu

Keeping Up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness - van Rooij, Maarten; Coibion, Olivier; Georgarakos, Dimitris; Candia, Bernardo; Gorodnichenko, Yuriy (National Bureau of Economic Research Working Paper Series, 2024)
How strong are peer effects on the beliefs and spending decisions of individuals? We use a randomized control study in which treated households are told about either average income or debt of individuals like them to assess how peer effects influence their beliefs and spending. The information treatments are successful at moving respondents’ beliefs about peers’ incomes and debt levels. We find that individuals with exogenously higher perceived relative income become more opposed to redistribution and increase the amount of time they spend socializing with peers. In addition, we find some evidence of reallocative “keeping up with the Joneses” on spending, as those who learn their peers earn more than they thought tend to reallocate their spending toward durable goods and away from non-durables. However, the quantitative magnitude of peer effects on spending is small in the months following the information experiment. Peer effects also matter for labor supply decisions and ex-post employment outcomes. Finally, believing that one earns more than peers causally leads to large positive effects on happiness, above and beyond effects coming from spending more time with peers, changing beliefs about redistribution, or changes in spending patterns.
Author contact info: Maarten van Rooij Dutch Central Bank P. O. Box 98 1000 AB Amsterdam The Netherlands E-Mail: M.C.J.van.Rooij@DNB.NL Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com Dimitris Georgarakos Sonnemannstrasse 20 (Main Building) 60314 Frankfurt am Main Europe Tel: +49 (0) 69 1344 4843 E-Mail: dimitris.georgarakos@ecb.int Bernardo Candia University of California, Berkeley E-Mail: bernardo_candia@berkeley.edu 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

Copyright Policy Options for Generative Artificial Intelligence - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2024)
New generative artificial intelligence (AI) models, including large language models and image generators, have created new challenges for copyright policy as such models may be trained on data that includes copy-protected content. This paper examines this issue from an economics perspective and analyses how different copyright regimes for generative AI will impact the quality of content generated as well as the quality of AI training. A key factor is whether generative AI models are small (with content providers capable of negotiations with AI providers) or large (where negotiations are prohibitive). For small AI models, it is found that giving original content providers copyright protection leads to superior social welfare outcomes compared to having no copyright protection. For large AI models, this comparison is ambiguous and depends on the level of potential harm to original content providers and the importance of content for AI training quality. However, it is demonstrated that an ex-post `fair use' type mechanism can lead to higher expected social welfare than traditional copyright regimes.
Author contact info: Joshua S. Gans Rotman School of Management University of Toronto 105 St. George Street Toronto ON M5S 3E6 Tel: 416/978-3243 E-Mail: joshua.gans@rotman.utoronto.ca

How Learning About Harms Impacts the Optimal Rate of Artificial Intelligence Adoption - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2024)
This paper examines recent proposals and research suggesting that AI adoption should be delayed until its potential harms are properly understood. It is shown that conclusions regarding the social optimality of delayed AI adoption are sensitive to assumptions regarding the process by which regulators learn about the salience of particular harms. When such learning is by doing -- based on the real-world adoption of AI -- this generally favours acceleration of AI adoption to surface and react to potential harms more quickly. This case is strengthened when AI adoption is potentially reversible. The paper examines how different conclusions regarding the optimality of accelerated or delayed AI adoption influence and are influenced by other policies that may moderate AI harm.
Author contact info: Joshua S. Gans Rotman School of Management University of Toronto 105 St. George Street Toronto ON M5S 3E6 Tel: 416/978-3243 E-Mail: joshua.gans@rotman.utoronto.ca

Gender Inequality in Latin America and the Caribbean - Berniell, Inés; Fernández, Raquel; Krutikova, Sonya (National Bureau of Economic Research Working Paper Series, 2024)
This paper examines gender inequality focusing on two critical spheres in which gender inequality is generated: education and work. Our objective is to provide a current snapshot of gender inequality across key indicators as well as a dynamic perspective that highlights successes and failures. We facilitate a cross-country comparison as well by grouping countries within Latin America by their level of economics development and drawing comparisons with countries outside the region. Finally, we reflect on differences in the ways that gender inequalities play out across different socio-economic groups, particularly those that highlight other sources of inequality.
Author contact info: Inés Berniell Calle 6 777, La Plata Universidad Nacional de la Plata Departamento de Economia Argentina E-Mail: miberniell@gmail.com Raquel Fernández Department of Economics New York University 19 West 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8908 Fax: 212/995-4186 E-Mail: raquel.fernandez@nyu.edu Sonya Krutikova Institute for Fiscal Studies 7 Ridgmount Street London WC1E 7AE United Kingdom E-Mail: sonya_k@ifs.org.uk

Effects of Childhood Cognitive and Behavioral Disabilities on Adult Economic Outcomes - Corman, Hope; Noonan, Kelly; Reichman, Nancy (National Bureau of Economic Research Working Paper Series, 2024)
Developmental disabilities are not rare among U.S. children and rates have been increasing in recent decades. The increases have been driven by cognitive and behavioral disorders. While some studies have investigated the effects of specific childhood conditions, particularly ADHD, on adult economic outcomes, none has considered the overall effects of cognitive and behavioral disabilities. We address this key gap by rigorously estimating effects of cognitive and behavioral impairments in childhood, which account for the bulk and increasing share of child disability cases in the U.S., on a set of salient adult economic outcomes. Using the National Longitudinal Survey of Youth 79 Child Supplement, we estimate the effects of low cognitive test scores and high behavior problem scores in childhood on receipt of disability benefits, educational attainment, employment, wages, and access to transportation and credit in adulthood, using household fixed effects models to control for potentially confounding factors that are unobserved. We find significant effects in the expected direction for both cognitive and behavioral childhood disabilities on all outcomes. The findings have important implications for well-being over the life course for a non-trivial share of the U.S. population and their families, government expenditures, and public policy.
Author contact info: Hope Corman National Bureau of Economic Research 39 Broadway Suite 1620 New York, NY 10006-3052 Tel: 609/895-5559 Fax: 609/896-5387 E-Mail: corman@rider.edu Kelly Noonan Department of Economics Princeton University 222 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 609-258-6721 E-Mail: knoonan@princeton.edu Nancy Reichman Rutgers University Robert Wood Johnson Medical School Department of Pediatrics Child Health Institute of New Jersey 89 French St., Room 3272 New Brunswick, NJ 08903 Tel: 732-235-7977 E-Mail: reichmne@rutgers.edu

Protective Behavior and Life Insurance - Hurwitz, Abigail; Mitchell, Olivia S; Sade, Orly (National Bureau of Economic Research Working Paper Series, 2024)
We study life insurance market responses to Covid-19 using unique national administrative data from Israel on purchases and cancellations of life insurance policies, and an internet survey of Americans’ life insurance choices, risk attitudes, Covid-19 perceptions, and vaccination behavior. We see no evidence that life insurance purchases or cancellations were consistent with adverse selection during the pandemic, while we do find advantageous selection. Moreover, life insurance policyholders were more likely to get vaccinated, thus taking ex-post preventive action reducing their pandemic risk. Such positive reactive behavior has not been previously reported in the life insurance setting.
Author contact info: Abigail Hurwitz Hebrew University of Jerusalem Environmental Economics and Management Jerusalem Israel Tel: +972545443281 E-Mail: abigail.hurwitz@mail.huji.ac.il Olivia S. Mitchell University of Pennsylvania The Wharton School 3620 Locust Walk, St 3000 SH-DH Philadelphia, PA 19104-6302 Tel: 215-898-0424 E-Mail: mitchelo@wharton.upenn.edu Orly Sade Hebrew University of Jerusalem Finance Department Mount Scopus 91905 Jerusalem Israel E-Mail: orlysade@huji.ac.il

CEO Compensation and Cash-Flow Shocks: Evidence from Changes in Environmental Regulations - Choi, Seungho; Levine, Ross; Park, Raphael Jonghyeon; Xu, Simon (National Bureau of Economic Research Working Paper Series, 2024)
This paper investigates how shocks to expected cash flows influence CEO incentive compensation. Exploiting changes in compliance with environmental regulations as shocks to expected future cash flows, we find that adverse shocks typically prompt corporate boards to recalibrate CEO compensation to reduce risk-taking incentives. However, this pattern is not uniform. Financially distressed firms exhibit milder reductions in compensation convexity, with some even increasing it, suggesting a “gambling for resurrection” strategy. Moreover, the strength of corporate governance influences shareholders’ capacity to align executive incentives with shareholder risk preferences following unanticipated changes in the stringency of environmental regulations.
Author contact info: Seungho Choi Department of Finance Hanyang University Seoul 04763 South Korea E-Mail: seunghochoi@hanyang.ac.kr Ross Levine Hoover Institution (HHMB 313) Stanford University 434 Galvez Mall Stanford, CA 94305-6010 Tel: 510-643-1419 E-Mail: rosslevine@stanford.edu Raphael Park E-Mail: jonghyeon.park@uts.edu.au Simon Xu 117 Western Avenue Boston, MA 02163 United States Tel: 5107015538 E-Mail: sxu@hbs.edu

Does Pension Automatic Enrollment Increase Debt? Evidence from a Large-Scale Natural Experiment - Beshears, John; Blakstad, Matthew; Choi, James J; Firth, Christopher; Gathergood, John; Laibson, David; Notley, Richard; Sheth, Jesal D; Sandbrook, Will; Stewart, Neil (National Bureau of Economic Research Working Paper Series, 2024)
Does automatic enrollment into retirement saving increase household debt? We study the randomized roll-out of automatic enrollment pensions to ~160,000 employers in the United Kingdom with 2-29 employees. We find that the additional savings generated through automatic enrollment are partially offset by increases in unsecured debt. Over the first 41 months after enrollment, each additional month increases the average automatically enrolled employee’s pension savings by £32-£38, unsecured debt (such as personal loans and bank overdrafts) by £7, the likelihood of having a mortgage by 0.05 percentage points, and mortgage balances by £118. Automatic enrollment causes loan defaults to fall and credit scores to rise modestly.
Author contact info: John Beshears Harvard Business School Baker Library 439 Soldiers Field Boston, MA 02163 E-Mail: jbeshears@hbs.edu Matthew Blakstad E-Mail: Matthew.Blakstad@nestcorporation.org.uk James J. Choi Yale School of Management 165 Whitney Avenue P.O. Box 208200 New Haven, CT 06520-8200 E-Mail: james.choi@yale.edu Christopher Firth E-Mail: Christopher.Firth@nottingham.ac.uk John Gathergood School of Economics Sir Clive Granger Building University Park Nottingham NG8 1AA United Kingdom Tel: +441158466447 Fax: +441159514159 E-Mail: john.gathergood@nottingham.ac.uk David Laibson Department of Economics Littauer M-12 Harvard University Cambridge, MA 02138 Tel: 617/496-3402 Fax: 617/495-8570 E-Mail: dlaibson@gmail.com Richard Notley E-Mail: Richard.Notley@nestcorporation.org.uk Jesal D. Sheth E-Mail: Jesal.Sheth3@nottingham.ac.uk Will Sandbrook E-Mail: will.sandbrook@nestcorporation.org.uk Neil Stewart Warwick Business School University of Warwick England E-Mail: neil.stewart@warwick.ac.uk.

Platform Information Provision and Consumer Search: A Field Experiment - Fang, Lu; Chen, Yanyou; Farronato, Chiara; Yuan, Zhe; Wang, Yitong (National Bureau of Economic Research Working Paper Series, 2024)
Despite substantial efforts to help consumers search in more intuitive ways, text search remains the predominant tool for product discovery online. In this paper, we explore the effects of visual and textual cues for search refinement on consumer search and purchasing behavior. We collaborate with one of the largest e-commerce platforms in China and study its roll out of a new search tool. When a customer searches for a general term (e.g., “headphones”), the tool suggests refined queries (e.g., “bluetooth headphones” or “noise-canceling headphones”) with the help of images and texts. The search tool was rolled out with a long-run experiment, which allows us to measure its short-run and long-run effects. We find that, although there was no immediate effect on orders or total expenditures, the search tool changed customers’ search and purchasing behavior in the long-run. Customers with access to the new tool eventually increased orders and expenditures compared to those in the control group, especially for non top-selling products. The purchase increase comes from more effective searches, rather than an increase in activity on the platform. We also find that the effect is not only driven by the direct value of suggested searches, but also by customers indirectly learning to perform more effective searches on their own.
Author contact info: Lu Fang Zhejiang University Hangzhou China E-Mail: fl_fanglu@zju.edu.cn Yanyou Chen University of Toronto Max Gluskin House 150 St. George Street Toronto, ON M5S 3G7 Canada Tel: 6478844080 E-Mail: yanyou.chen@utoronto.ca Chiara Farronato Harvard Business School Morgan Hall 427 Soldiers Field Boston, MA 02163 Tel: 617/495-6542 E-Mail: cfarronato@hbs.edu Zhe Yuan å æ¿å¤§ E-Mail: yyyuanzhe@zju.edu.cn Yitong Wang E-Mail: yitong_wang2019@outlook.com

The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory - Bai, Xiwen; Fernández-Villaverde, Jesús; Li, Yiliang; Zanetti, Francesco (National Bureau of Economic Research Working Paper Series, 2024)
We study the causal effects and policy implications of global supply chain disruptions. We construct a new index of supply chain disruptions from the mandatory automatic identification system data of container ships, developing a novel spatial clustering algorithm that determines real-time congestion from the position, speed, and heading of container ships in major ports around the globe. We develop a model with search frictions between producers and retailers that links spare productive capacity with congestion in the goods market and the responses of output and prices to supply chain shocks. The co-movements of output, prices, and spare capacity yield unique identifying restrictions for supply chain disturbances that allow us to study the causal effects of such disruptions. We document how supply chain shocks drove inflation during 2021 but that, in 2022, traditional demand and supply shocks also played an important role in explaining inflation. Finally, we show how monetary policy is more effective in taming inflation after a global supply chain shock than in regular circumstances.
Author contact info: Xiwen Bai 519B South Shunde Building Tsinghua University Beijing China E-Mail: xiwenbai@mail.tsinghua.edu.cn 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 Yiliang Li 10 Huixin Dongjie Chaoyang District Beijing 100029 China E-Mail: yiliang_li@uibe.edu.cn Francesco Zanetti University of Oxford Department of Economics E-Mail: francesco.zanetti@economics.ox.ac.uk

Optimal Trade Policy with International Technology Diffusion - Bai, Yan; Jin, Keyu; Lu, Dan; Wang, Hanxi (National Bureau of Economic Research Working Paper Series, 2024)
We study optimal dynamic trade policies in an Eaton-Kortum model with technology diffusion through trade. The process of innovation and diffusion is one in which new ideas are combined with insights from others. Trade thus affects technology by determining the distribution from which producers draw their insights. Our theory shows that optimal policies capture a dynamic motive for a country to alter global technology. These policies take into account selection effects, country endowments, and other alterations to trade patterns that affect the degree and quality of diffusion. We provide explicit formulas showing that a Home country would like to subsidize imports from places that improve the quality of learning at Home; or lower its export tax to another country if a) higher productivity in that country is good for the Home, and b) more exports to that country improve the quality of learning and, in turn, the country’s technology. We also calibrate the model using cross-country data and quantify dynamic trade policies and their attendant welfare implications.
Author contact info: Yan Bai Department of Economics University of Rochester 216 Harkness Hall Rochester, NY 14627 Tel: 585/275-4196 Fax: 585/256-2309 E-Mail: yanbai06@gmail.com Keyu Jin London School of Economics E-Mail: k.jin@lse.ac.uk Dan Lu Department of Economics 9/Fl., Esther Lee Building The Chinese University of Hong Kong E-Mail: danlyu@cuhk.edu.hk Hanxi Wang Department of Economics, The Chinese University of Hong Kong Hong Kong China E-Mail: wanghanxi@link.cuhk.edu.hk

Intra-Household Insurance and the Intergenerational Transmission of Income Risk - Agostinelli, Francesco; Ferraro, Domenico; Qiu, Xincheng; Sorrenti, Giuseppe (National Bureau of Economic Research Working Paper Series, 2024)
This paper studies the mechanisms and the extent to which parental wage risk passes through to children's skill development. Through a quantitative dynamic labor supply model in which two parents choose whether to work short or long hours or not work at all, time spent with children, and child-related expenditures, we find that income risk impacts skill accumulation, permanently lowering children's skill levels. To the extent that making up for cognitive skill losses during childhood is hard--as available evidence suggests--uninsurable income risk can negatively impact the labor market prospects of future generations.
Author contact info: Francesco Agostinelli University of Pennsylvania Perelman Center for Political Science and Economics 133 South 36th Street Philadelphia, PA 19104 E-Mail: fagostin@upenn.edu Domenico Ferraro 501 E Orange St. Arizona State University W. P. Carey School of Business Department of Economics Tempe, AZ 85281 United States E-Mail: domenico.ferraro@asu.edu Xincheng Qiu 501 E Orange St. Department of Economics, W. P. Carey School of Business Arizona State University Tempe, AZ 85287 United States Tel: 2154521510 E-Mail: xincheng.qiu@gmail.com Giuseppe Sorrenti University of Amsterdam Amsterdam School of Economics Roetersstraat 11 1018 WB Amsterdam The Netherlands E-Mail: g.sorrenti@uva.nl

Do Double Majors Face Less Risk? An Analysis of Human Capital Diversification - Hanks, Andrew S; Jiang, Shengjun; Qian, Xuechao; Wang, Bo; Weinberg, Bruce A (National Bureau of Economic Research Working Paper Series, 2024)
We study how human capital diversification, in the form of double majoring, affects the response of earnings to labor market shocks. Double majors experience substantial protection against earnings shocks, of 56%. This finding holds across different model specifications and data sets. Furthermore, the protection double majors experience is more pronounced when the two majors are more distantly related, highlighting the importance of diverse skill sets. Additional analyses demonstrate that double majors are more likely to work in jobs that require a diverse set of skills and knowledge and are less likely to work in occupations that are closely related to their majors.
Author contact info: Andrew S. Hanks Ohio State University 229A Ramseyer Hall 29 Woodruff Ave. Columbus, OH 43210 Tel: 6146881787 E-Mail: hanks.46@osu.edu Shengjun Jiang Wuhan University Economics and Management School 299 Bayi Road, Wuhan, Hubei P.R.China, 430072 E-Mail: sjjiang@whu.edu.cn Xuechao Qian Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 Tel: (614)795-6667 E-Mail: qian.211@buckeyemail.osu.edu Bo Wang School of Finance Nankai University 38 Tongyan Road, Jinnan District, Tianjin P.R.China Tel: +86 18581011773 E-Mail: wang.6207@buckeyemail.osu.edu Bruce A. Weinberg The Ohio State University Department of Economics 410 Arps Hall 1945 North High Street Columbus, OH 43210 Fax: 614/292-3906 E-Mail: weinberg.27@osu.edu

Non-Linear Inflation Dynamics in Menu Cost Economies - Blanco, Andres; Boar, Corina; Jones, Callum J; Midrigan, Virgiliu (National Bureau of Economic Research Working Paper Series, 2024)
Canonical menu cost models, when parameterized to match the micro-price data, cannot reproduce the extent to which the fraction of price changes increases with inflation. They also predict implausibly large menu costs and misallocation in the presence of strategic complementarities. We resolve these shortcomings by extending the multi-product menu cost model along two dimensions. First, the products sold by a firm are imperfect substitutes. Second, strategic complementarities are at the firm, not product level. In contrast to standard models, the fraction of price changes increases rapidly with the size of monetary shocks, so our model implies a non-linear Phillips curve.
Author contact info: Andrés Blanco 1000 Peachtree Street N.E. Atlanta, GA 30309 E-Mail: julioablanco84@gmail.com 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 Callum J. Jones Constitution Ave NW & 20th St NW Washington, DC 20551 USA E-Mail: jonescallum@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

Cash Transfers for Child Development: Experimental Evidence from India - Weaver, Jeffrey; Sukhtankar, Sandip; Niehaus, Paul; Muralidharan, Karthik (National Bureau of Economic Research Working Paper Series, 2024)
Despite significant economic growth, child development outcomes in India remain poor. Using a large-scale experiment in which randomly-selected mothers receive cash transfers for the first two years of their child's life, we examine the relationship between income and child development in the Indian state of Jharkhand. Treated mothers and children experienced large increases in nutritional intake, including increases in caloric consumption of 9.6-15.5%. However, child anthropometric indicators improved only in areas with low rates of open defecation. These results suggest that poor sanitation is a key explanatory factor for the poor translation of increases in income into child growth in India.
Author contact info: Jeffrey Weaver University of Southern California Department of Economics 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089 Tel: 2038878715 E-Mail: jeffrey.b.weaver@gmail.com Sandip Sukhtankar Department of Economics University of Virginia Charlottesville, VA 22904 E-Mail: srs8yk@virginia.edu Paul Niehaus Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-3190 Fax: 858/534-7040 E-Mail: pniehaus@ucsd.edu Karthik Muralidharan Department of Economics, 0508 University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093-0508 Tel: 858/534-2425 Fax: 858/534-7040 E-Mail: kamurali@ucsd.edu

Export-Platform FDI: Cannibalization or Complementarity? - Antràs, Pol; Fadeev, Evgenii; Fort, Teresa C; Tintelnot, Felix (National Bureau of Economic Research Working Paper Series, 2024)
We develop a model of export-platform foreign direct investment (FDI) in which final goods are produced only with labor and there are no fixed costs of exporting. We derive a simple condition that determines whether an MNE's plants are substitutes or complements. This condition is shaped by the relative size of (i) the cross-firm elasticity of demand the MNE faces for its goods and (ii) the within-firm elasticity of labor substitution across the MNE's plants. In two extensions of the model, we show that this complementarity is enhanced by firm-level (rather than plant-level) fixed costs of exporting and of sourcing inputs.
Author contact info: Pol Antràs Department of Economics Harvard University 1805 Cambridge Street Littauer Center 210 Cambridge, MA 02138 Tel: 617/495-1236 Fax: 617/495-8570 E-Mail: pantras@fas.harvard.edu Evgenii Fadeev Fuqua School of Business 100 Fuqua Drive Durham, NC 27708 E-Mail: evgenii.fadeev@duke.edu Teresa C. Fort Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 Tel: 603/646-8963 E-Mail: teresa.fort@tuck.dartmouth.edu Felix Tintelnot Kenneth C. Griffin Department of Economics University of Chicago 5757 South University Avenue Chicago, IL 60637 Tel: 773/702-5403 E-Mail: felix.tintelnot@gmail.com

Convenience Yields and Exchange Rate Puzzles - Jiang, Zhengyang; Krishnamurthy, Arvind; Lustig, Hanno; Sun, Jialu (National Bureau of Economic Research Working Paper Series, 2024)
We introduce safe asset demand for dollar-denominated bonds into a tractable incomplete-market model of exchange rates. The convenience yield on dollar bonds enters as a stochastic wedge in the Euler equations for exchange rate determination. This wedge reduces the pass-through from marginal utility shocks to exchange rate movements, resolving the exchange rate volatility puzzle. The wedge also exposes the dollar's exchange rate to convenience yield shocks, giving rise to exchange rate disconnect from macro fundamentals and a quantitatively important driver of currency risk premium. This endogenous exposure identifies a novel safe-asset-demand channel by which the Fed's QE impacts the dollar and long-term U.S. Treasury bond yields.
Author contact info: Zhengyang Jiang Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2848 E-Mail: zhengyang.jiang@kellogg.northwestern.edu Arvind Krishnamurthy Stanford Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: akris@stanford.edu Hanno Lustig Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hlustig@stanford.edu Jialu Sun Kellogg School of Management Tel: 6503347810 E-Mail: jialu.sun@kellogg.northwestern.edu

Power Flows: Transmission Lines, Allocative Efficiency, and Corporate Profits - Hausman, Catherine (National Bureau of Economic Research Working Paper Series, 2024)
Economists, energy experts, and policymakers have called for accelerating investment in the U.S. electricity transmission network. Additional transmission lines could better integrate markets, reducing the total cost of electricity generation. They could also allow for the better integration of renewable energy sources such as wind and solar, located in areas that traditionally did not have much generation capacity and that are far away from centers of demand. In this paper, I document the magnitude of static allocative inefficiencies induced by transmission congestion in two major U.S. electricity markets. I show that the allocative inefficiencies have risen over time, totaling more than $2 billion in 2022. Moreover, I document an important political economy dimension not yet explored in the literature: the magnitudes of gains and losses from this market integration at some individual firms is surprisingly large: four firms would have experienced a collective $1.6 billion drop in net revenues in 2022 had the market been integrated. I then tie some of these firms to reports of transmission hold-up in these markets. I argue that understanding firm-level gains and losses is just as important as understanding overall inefficiencies, particularly in an environment where incumbents may have the power to block new lines.
Author contact info: Catherine Hausman Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 Tel: 734/615-6951 E-Mail: chausman@umich.edu

Policy Responses to Tax Competition: An Introduction - Agrawal, David R; Poterba, James M; Zidar, Owen M (National Bureau of Economic Research Working Paper Series, 2024)
This paper catalogues policies that have been deployed by jurisdictions seeking to mitigate the effects of tax competition. There are many instruments in this policy arsenal, since the tax base associated with a particular tax instrument may be affected by multiple policy choices, including some such as capital controls and development incentives that are outside the traditional realm of tax policy. This paper describes sixteen instruments that both federal and sub-federal governments have adopted in an effort to limit tax competition. It classifies them into three groups: those that can be pursued unilaterally, those that require bilateral or multilateral agreement, and those that require action by an external actor such as an overarching government. It also discusses the set of economic responses that are relevant to the evaluation of these policies, and then summarizes new evidence on the impact of a subset of these policy instruments in the United States and several other nations.
Author contact info: David R. Agrawal University of Kentucky Martin School of Public Policy 433 Patterson Office Tower Lexington, KY 40506-0027 Tel: 859-257-8608 E-Mail: dragrawal@uky.edu James M. Poterba E-Mail: poterba@mit.edu Owen M. Zidar Department of Economics & School of International and Public Affairs Princeton University 237 Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: ozidar@princeton.edu

Customer Data Access and Fintech Entry: Early Evidence from Open Banking - Babina, Tania; Bahaj, Saleem A; Buchak, Greg; De Marco, Filippo; Foulis, Angus K; Gornall, Will; Mazzola, Francesco; Yu, Tong (National Bureau of Economic Research Working Paper Series, 2024)
Open banking (OB) empowers bank customers to share transaction data with fintechs and other banks. 49 countries have adopted OB policies. Consumer trust in fintechs predicts OB policy adoption and adoption spurs investment in fintechs. UK microdata shows that OB enables: i) consumers to access both financial advice and credit; ii) SMEs to establish new fintech lending relationships. In a calibrated model, OB universally improves welfare through entry and product improvements when used for advice. When used for credit, OB promotes entry and competition by reducing adverse selection, but higher prices for costlier or privacy-conscious consumers partially offset these benefits.
Author contact info: Tania Babina Columbia Business School Kravis Hall 742 665 W 130th St New York, NY 10027 E-Mail: tania.babina@gsb.columbia.edu Saleem A. Bahaj UCL Economics 30 Gordon Street London WC1H 0AN E-Mail: s.bahaj@ucl.ac.uk Greg Buchak Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305b E-Mail: buchak@stanford.edu Filippo De Marco Via Roentgen 1 Department of Finance E-Mail: filippo.demarco@unibocconi.it Angus K. Foulis Bank of England Threadneedle St London EC2R 8AH E-Mail: angus.foulis@bankofengland.co.uk Will Gornall Sauder School of Business, University of British Columbia 2053 Main Mall #877 Vancouver, BC V6T 1Z2 Canada E-Mail: will.gornall@sauder.ubc.ca Francesco Mazzola E-Mail: fmazzola@escp.eu Tong Yu Imperial College Business School London United Kingdom E-Mail: t.yu18@imperial.ac.uk

Energy Transitions in Regulated Markets - Gowrisankaran, Gautam; Langer, Ashley; Reguant, Mar (National Bureau of Economic Research Working Paper Series, 2024)
Natural gas has replaced coal as the dominant fuel for U.S. electricity generation. However, U.S. states that regulate electric utilities have retired coal more slowly than others. We build a structural model of rate-of-return regulation during an energy transition where utilities face tradeoffs between lowering costs and maintaining coal capacity. We find that the current regulatory structure retires only 45% as much coal capacity as a cost minimizer. A regulated utility facing a carbon tax does not lower carbon emissions immediately but retires coal similarly to the social planner. Alternative regulations with faster transitions clash with affordability and reliability goals.
Author contact info: Gautam Gowrisankaran Department of Economics Columbia University 420 West 118th St. Rm. 1026 IAB, MC 3308 New York, NY 10027 E-Mail: gautamg2@gmail.com Ashley Langer Department of Economics University of Arizona McClelland Hall 401 Tucson, AZ 85721 Tel: 520/621-0117 E-Mail: alanger@arizona.edu Mar Reguant Department of Economics Northwestern University 302 Donald P. Jacobs 2001 Sheridan Road Evanston, IL 60208 E-Mail: mar.reguant@northwestern.edu

Constructing Quarterly Chinese Time Series Usable for Macroeconomic Analysis - Chen, Kaiji; Higgins, Patrick C; Zha, Tao (National Bureau of Economic Research Working Paper Series, 2024)
During episodes such as the global financial crisis and the Covid-19 pandemic, China experienced notable fluctuations in its GDP growth and key expenditure components. To explore the primary sources of these fluctuations, we construct a comprehensive dataset of GDP and its components in both nominal and real terms at a quarterly frequency. Applying two SVAR models to this dataset, we uncover the principal drivers of China's economic fluctuations across different episodes. In particular, our findings underscore the distinct impacts of consumption-constrained shocks on household consumption and its various subcomponents throughout the Covid-19 pandemic.
Author contact info: Kaiji Chen Emory University 1602 Fishburne Drive 1602 Fishburne Dr. Atlanta, GA 30322-0001 United States Tel: 4047272944 E-Mail: kaiji.chen@emory.edu Patrick C. Higgins Federal Reserve Bank of Atlanta 1000 Peachtree Street, N.E. Atlanta, GA 30309-4470 E-Mail: patrick.higgins@atl.frb.org Tao Zha Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322-2240 E-Mail: tzha@emory.edu

The Economic Impact of Heritable Physical Traits: Hot Parents, Rich Kid? - Hamermesh, Daniel S; Zhang, Anwen (National Bureau of Economic Research Working Paper Series, 2024)
Since the mapping of the human genome in 2004, biologists have demonstrated genetic links to the expression of several income-enhancing physical traits. To illustrate how heredity produces intergenerational economic effects, this study uses one trait, beauty, to infer the extent to which parents’ physical characteristics transmit inequality across generations. Analyses of a large-scale longitudinal dataset in the U.S., and a much smaller dataset of Chinese parents and children, show that a one standard-deviation increase in parents’ looks is associated with a 0.4 standard-deviation increase in their child’s looks. A large data set of U.S. siblings shows a correlation of their beauty consistent with the same expression of their genetic similarity, as does a small sample of billionaire siblings. Coupling these estimates with parameter estimates from the literatures describing the impact of beauty on earnings and the intergenerational elasticity of income suggests that one standard-deviation difference in parents’ looks generates a 0.06 standard-deviation difference in their adult child’s earnings, which amounts to additional annual earnings in the U.S. of about $2300.
Author contact info: Daniel S. Hamermesh 333 West 57th Street, Apt. 706 New York, NY 10019 E-Mail: hamermes@eco.utexas.edu Anwen Zhang Adam Smith Business School 235F Main Building University Avenue Glasgow G12 8QQ United Kingdom E-Mail: Anwen.Zhang@Glasgow.ac.uk

Value Chain Microfinance - Casaburi, Lorenzo; Willis, Jack (National Bureau of Economic Research Working Paper Series, 2024)
We study the provision of financial services to small firms, consumers, and workers in developing countries as part of value chain relationships: value chain microfinance (VCMF). We first explore how VCMF can both overcome barriers to financial access – including asymmetric information, enforcement, and behavioral biases – and strengthen value chains, but also how it can introduce new challenges. We then review a recent empirical literature at the intersection of value chains and microfinance studying the demand for and effects of VCMF in credit, insurance, and savings markets. We conclude by highlighting promising directions for future work.
Author contact info: Lorenzo Casaburi University of Zurich, Department of Economics Schönberggasse 1, CH-8001, Zurich Switzerland Tel: 762961468 E-Mail: lorenzo.casaburi@econ.uzh.ch Jack Willis Department of Economics Columbia University 420 West 118th Street New York, NY 10027 Tel: 857/928-1494 E-Mail: jw3634@columbia.edu

The Predictive Power of the Term Spread and Financial Variables for Economic Activity across Countries - Chinn, Menzie D; Ferrara, Laurent (National Bureau of Economic Research Working Paper Series, 2024)
In recent years, there has been renewed interest in the moments of the yield curve (or alternatively, the term spread) as a predictor of future economic activity, defined as either recessions, or industrial production growth. In this paper, we re-examine the evidence for this predictor for the United States, other high-income countries, as well as selected emerging market economies (Brazil, India, China, South Africa and South Korea), over the 1995-2023 period. We examine the sensitivity of the results to the addition of financial variables that measure other dimensions of financial conditions both domestically and internationally. Specifically, we account for financial conditions indexes (Arrigoni, et al., 2022), the debt service ratio (Borio, et al., 2020), and foreign term spreads (Ahmed and Chinn, 2023). We find that foreign term spreads and the debt service ratio in many cases yield substantially better predictive power, in terms of in-sample fit using proportion of variance explained. Overall, the predictive power of the yield curve, as well as other financial variables, varies across countries, with particularly little explanatory power in emerging market economies.
Author contact info: Menzie D. Chinn Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-7397 Fax: 608/262-2033 E-Mail: mchinn@lafollette.wisc.edu Laurent Ferrara SKEMA Business School 5 Quai Marcel Dassault 92150 Suresnes France E-Mail: laurent.ferrara@skema.edu

The Effects of Immigration in a Developing Country: Brazil in the Age of Mass Migration - Escamilla-Guerrero, David; Papadia, Andrea; Zimran, Ariell (National Bureau of Economic Research Working Paper Series, 2024)
The effects of immigration are reasonably well understood in developed countries, but they are far more poorly understood in developing ones despite the importance of these countries as immigrant destinations. We address this shortcoming by studying the effects of immigration to Brazil during the Age of Mass Migration on its agricultural sector in 1920. This context benefits from the widely recognized value of historical perspective in studies of the effects of immigration. But unlike studies that focus on the United States to understand the effects of migration from poor to rich countries, our context is informative of developing countries' experience because Brazil in this period was unique among major migrant destinations as a low-income country with a large agricultural sector and weak institutions. Instrumenting for a municipality's immigrant share using the interaction of aggregate immigrant inflows and the expansion of Brazil's railway network, we find that a greater immigrant share in a municipality led to an increase in farm values. We show that the bulk of the effect of immigration can be explained by more intense cultivation of land, which we attribute to temporary immigrants exerting greater labor effort than natives. Finally, we find that it is unlikely that immigration's effect on agriculture slowed Brazil's structural transformation.
Author contact info: David Escamilla-Guerrero University of St Andrews School of Economics and Finance Castlecliffe The Scores St Andrews KY16 9AZ United Kingdom E-Mail: drescamillag@gmail.com Andrea Papadia Department of Economics and Related Studies University of York Alcuin D Block, Campus West York YO10 5DD United Kingdom E-Mail: andrea.papadia@york.ac.uk Ariell Zimran Department of Economics Vanderbilt University 2301 Vanderbilt Place Nashville, TN 37235 Tel: 615/322-1529 E-Mail: ariell.zimran@vanderbilt.edu

Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States - Autor, David; Beck, Anne; Dorn, David; Hanson, Gordon H (National Bureau of Economic Research Working Paper Series, 2024)
We study the economic and political consequences of the 2018-2019 trade war between the United States, China and other US trade partners at the detailed geographic level, exploiting measures of local exposure to US import tariffs, foreign retaliatory tariffs, and US compensation programs. The trade-war has not to date provided economic help to the US heartland: import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory US agricultural subsidies. Consistent with expressive views of politics, the tariff war appears nevertheless to have been a political success for the governing Republican party. Residents of regions more exposed to import tariffs became less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress. Foreign retaliatory tariffs only modestly weakened that support.
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 Anne Beck 1818 H Street NW Washington, DC 20433 E-Mail: abeck2@worldbank.org David Dorn University of Zurich Department of Economics Schoenberggasse 1 CH-8001 Zurich - Switzerland Tel: +34 914290551 Fax: +34 914291056 E-Mail: david.dorn@econ.uzh.ch Gordon H. Hanson Harvard Kennedy School Harvard University 79 John F. Kennedy St. Cambridge, MA 02138 E-Mail: gordon_hanson@hks.harvard.edu

Durables and Size-Dependence in the Marginal Propensity to Spend - Beraja, Martin; Zorzi, Nathan (National Bureau of Economic Research Working Paper Series, 2024)
Stimulus checks have become an increasingly important policy tool in recent U.S. recessions. How does the households' marginal propensity to spend (MPX) vary as checks become larger? To quantify this size-dependence in the MPX, we augment a canonical model of durable spending by introducing a smooth adjustment hazard. We discipline this hazard by matching a rich set of micro moments. We find that the MPX declines slowly with the size of checks. In contrast, the MPX is flatter in a purely state-dependent model of durables, and declines sharply in a two-asset model of non-durables. Finally, we embed our spending model into an open-economy heterogeneous-agent New-Keynesian model. In a typical recession, a large check of $2,000 increases output by 25 cents per dollar, compared to 37 cents for a $300 check. Large checks thus remain effective but extrapolating from the response out of small checks overestimates their impact.
Author contact info: Martin Beraja Department of Economics, E52-504 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-6022 E-Mail: martinberaja@gmail.com Nathan Zorzi 307 Rockefeller Center Dartmouth College Hanover, NH 03755 United States E-Mail: Nathan.G.Zorzi@dartmouth.edu

User Rights for Ocean Ecosystem Conservation - Libecap, Gary D (National Bureau of Economic Research Working Paper Series, 2024)
Non-target marine fish species and ocean ecosystems are increasingly valuable. Ongoing efforts to preserve them emphasize spatial controls on human entry and use via Marine Protected Areas (MPAs). They cover 7.6% of world oceans and aim for 30% by 2030 under the Convention for Biological Diversity (CBD) and International Union for Conservation of Nature (IUCN). MPAs are Pigouvian-style, polluter-pays, controls with rare direct compensation and uncertain projected fishery benefits. Under this policy design, they impose differential economic costs and benefits and likely are inequitable. Absent economic cost/benefit analysis at inauguration, they may be too large, extensive, and restrictive. In the empirical cases below, MPAs are controversial with political pushback, threatening long-term conservation. User rights and Coasean bargaining may avoid some of these outcomes.
Author contact info: Gary D. Libecap Distinguished Professor, Bren School of Environmental Science and Management Distinguished Professor of Economics University of California, Santa Barbara (Emeritus) 400 Daly Avenue Missoula, Montana 59801 Tel: 520-444-1695 E-Mail: glibecap@bren.ucsb.edu

Happiness Dynamics, Reference Dependence, and Motivated Beliefs in U.S. Presidential Elections - Kimball, Miles S; Raymond, Collin B; Zhou, Jiannan; Zhou, Junya; Ohtake, Fumio; Tsutsui, Yoshiro (National Bureau of Economic Research Working Paper Series, 2024)
Collecting and analyzing panel data over the last four U.S. presidential elections, we study the drivers of self-reported happiness. We relate our empirical findings to existing models of elation, reference dependence, and belief formation. In addition to corroborating previous findings in the literature (hedonic asymmetry/hedonic loss aversion, hedonic adaptation and motivated beliefs), we provide novel results that extend the literature in four dimensions. First, happiness responds to changes relative to both the political status quo (i.e., the incumbent presidential party) and the expected electoral outcome, providing support for two major hypotheses regarding reference point formation. Individuals exhibit hedonic loss aversion to deviations from expectations, but hedonic loss neutrality to changes from the status quo. Second, the speed of hedonic adaptation to deviations from the status quo is significantly slower than the speed of hedonic adaptation to surprises. Third, expectations affect happiness in a nonlinear way, consistent with Gul’s model of disappointment aversion, but contrary to other influential reference-dependent models. Fourth, both “objective” and motivated subjective beliefs matter for the happiness reactions, although subjective beliefs matter more.
Author contact info: Miles S. Kimball Economics Building University of Colorado Boulder 261 UCB #212 Boulder, CO 80302 Tel: 303/492-8295 Fax: 303/492-8960 E-Mail: miles.kimball@colorado.edu Collin B. Raymond Johnson School of Management Cornell University Ithaca, NY 14853-6201 E-Mail: collinbraymond@gmail.com Jiannan Zhou Shandong University 27 Shanda South Road Jinan, Shandong 250100 China E-Mail: jiannan.zhou@icloud.com Junya Zhou Naveen Jindal School of Management University of Texas at Dallas 800 W Campell Road Richardson, TX 75080 United States E-Mail: junya.zhou@utdallas.edu Fumio Ohtake Institute of Social and Economic Research, Osaka University. 6-1 Mihogaoka, Ibaraki City, Osaka 567, JAPAN Tel: fax 81-6-8782766 E-Mail: fumio.ohtake@gmail.com Yoshiro Tsutsui Kyoto Bunkyo University Senzoku-80 Makishimacho Uji, Kyoto 611-0041 JAPAN E-Mail: tsutsuiyoshiro@gmail.com

Diminishing Marginal Utility Revisited - Kimball, Miles S; Reck, Daniel; Zhang, Fudong; Ohtake, Fumio; Tsutsui, Yoshiro (National Bureau of Economic Research Working Paper Series, 2024)
How quickly does marginal utility fall with increasing consumption? It depends on the dimension along which we consider concavity of the utility function. This paper estimates the distribution of heterogeneous curvature parameters in individuals’ utility functions from hypothetical choice data, while accounting for survey response error. Types of curvature examined include relative risk aversion, intertemporal substitution, the reciprocal of the altruism elasticity, and a new measure of inequality aversion, which queries how much more a dollar means to a poor family than to a rich family. Median values of curvature parameters ranging from 0.6 to 13.2. Utility functions are most concave for situations involving altruism, followed by risk aversion, inequality aversion, and intertemporal substitution. Heterogeneity of curvature in the population also varies: altruism is the most heterogeneous, followed by risk aversion, the elasticity of intertemporal substitution, and inequality aversion. Nonetheless, curvature parameters are highly correlated (ρ > .8) over different elicitations within parameter type, and modestly correlated across dimensions in some cases, including inequality aversion and risk aversion (ρ ≈ 0.3), altruism and risk aversion (ρ ≈ 0.3), and altruism and inequality aversion (ρ ≈ 0.14).
Author contact info: Miles S. Kimball Economics Building University of Colorado Boulder 261 UCB #212 Boulder, CO 80302 Tel: 303/492-8295 Fax: 303/492-8960 E-Mail: miles.kimball@colorado.edu Daniel Reck University of Maryland Department of Economics Tydings Hall 7343 Preinkert Dr College Park, MD 20742 E-Mail: dreck@umd.edu Fudong Zhang Tsinghua University PBC School of Finance E-Mail: zhangfd@pbcsf.tsinghua.edu.cn Fumio Ohtake Institute of Social and Economic Research, Osaka University. 6-1 Mihogaoka, Ibaraki City, Osaka 567, JAPAN Tel: fax 81-6-8782766 E-Mail: fumio.ohtake@gmail.com Yoshiro Tsutsui Kyoto Bunkyo University Senzoku-80 Makishimacho Uji, Kyoto 611-0041 JAPAN E-Mail: tsutsuiyoshiro@gmail.com

Human Capital by Gender: a G20 and Selected Geographies Perspective - Fraumeni, Barbara M; Liu, Gang; Managi, Shunsuke (National Bureau of Economic Research Working Paper Series, 2024)
This paper aims to identify the sources of human capital growth for the observation period 1990-2020 by region, gender and various determinants. It is a preliminary version of a forthcoming Inclusive Wealth Report 2023 (UNESCO and Urban Institute of Kyushu University) report. It focuses on five important aggregates by gender: Asia, Africa, Latin America, G20, and the European Union to highlight differences. Human capital per capita does vary significantly across countries in each aggregate. Education and human capital is unevenly distributed among males and females, although both total and per capita human capital have grown over time in almost all countries. Attention must be paid to what has happened to the world's gender-disaggregated levels of education and human capital per capita over time. The future sustainability of nations and the well-being of individuals within nations depend on the continuation of historical progress.
Author contact info: Barbara M. Fraumeni Central University of Finance and Economics 770 Middle Road Dresden, ME 04342 E-Mail: Barbara_Fraumeni@hotmail.com Gang Liu Statistics Norway Akersveien 26 0177 Oslo Norway Tel: +47 40902618 E-Mail: Gang.Liu@ssb.no Shunsuke Managi Urban Institute Kyushu University 744 Motooka, Nishi-ku Fukuoka, 819-0395 Japan E-Mail: managi@doc.kyushu-u.ac.jp

Do Patients Value High-Quality Medical Care? Experimental Evidence from Malaria Diagnosis and Treatment - Lopez, Carolina; Sautmann, Anja; Schaner, Simone G (National Bureau of Economic Research Working Paper Series, 2024)
Can information about the value of diagnostic tests improve provider practice and help patients recognize higher quality of care? In a randomized experiment at public clinics in Mali, health providers and patients received tailored information about the importance of rapid diagnostic tests (RDTs) for malaria. The provider training increased provider reliance on RDTs, improving the match between a patient's malaria status and treatment with antimalarials by 15-30 percent. Nonetheless, patients were significantly less satisfied with the care they received, driven by those whose prior beliefs did not match their true malaria status. The patient information intervention did not affect treatment outcomes or patient satisfaction and reduced malaria testing. These findings are consistent with highly persistent patient beliefs that translate into low demand for diagnostic testing and limit patients' ability to recognize improved quality of care.
Author contact info: Carolina Lopez 1818 H Street NW Washington, DC 02138 United States Tel: 4016993383 E-Mail: carolina_lopez@worldbank.org Anja Sautmann 1818 H Street NW 400 Main Street Washington, DC 20433 USA E-Mail: asautmann@worldbank.org Simone G. Schaner Department of Economics and Center for Economic and Social Research University of Southern California 635 Downey Way Los Angeles, CA 90089 Tel: 213-821-6023 Fax: 213.821.2716 E-Mail: schaner@usc.edu

Employer-Based Short-Term Savings Accounts - Holmes Berk, Sarah; Beshears, John; Garg, Jay; Choi, James J; Laibson, David (National Bureau of Economic Research Working Paper Series, 2024)
We study the introduction of a choice architecture design intended to increase short-term savings among employees at five U.K. firms. Employees were offered the opportunity to opt into a payroll deduction program that auto-deposits funds from each paycheck into a short-term savings account from which withdrawals are possible at any time. We find that employees who opted into the program kept using it. Among employees whose accounts were created early enough to be observed over the first 12 months after their account activation and who did not separate from employment during this period, 96% still had a balance greater than £1 and 87% received an automatic payroll contribution in month 12. However, product take-up was very low: no more than 0.7% of eligible employees ever activated an account. Opt-in access to short-term savings programs does not elicit widespread participation.
Author contact info: Sarah Holmes Berk E-Mail: sholmes@nber.org John Beshears Harvard Business School Baker Library 439 Soldiers Field Boston, MA 02163 E-Mail: jbeshears@hbs.edu Jay Garg E-Mail: jgarg@college.harvard.edu James J. Choi Yale School of Management 165 Whitney Avenue P.O. Box 208200 New Haven, CT 06520-8200 E-Mail: james.choi@yale.edu David Laibson Department of Economics Littauer M-12 Harvard University Cambridge, MA 02138 Tel: 617/496-3402 Fax: 617/495-8570 E-Mail: dlaibson@gmail.com

Ends versus Means: Kantians, Utilitarians, and Moral Decisions - Bénabou, Roland; Falk, Armin; Henkel, Luca (National Bureau of Economic Research Working Paper Series, 2024)
Choosing what is morally right can be based on the consequences (ends) resulting from the decision – the Consequentialist view – or on the conformity of the means involved with some overarching notion of duty – the Deontological view. Using a series of experiments, we investigate the overall prevalence and the consistency of consequentialist and deontological decision-making, when these two moral principles come into conflict. Our design includes a real-stakes version of the classical trolley dilemma, four novel games that induce ends-versus-means tradeoffs, and a rule-following task. These six main games are supplemented with six classical self-versus-other choice tasks, allowing us to relate consequential/deontological behavior to standard measures of prosociality. Across the six main games, we find a sizeable prevalence (20 to 44%) of nonconsequentialist choices by subjects, but no evidence of stable individual preference types across situations. In particular, trolley behavior predicts no other ends-versus-means choices. Instead, which moral principle prevails appears to be context-dependent. In contrast, we find a substantial level of consistency across self-versus-other decisions, but individuals’ degree of prosociality is unrelated to how they choose in ends-versus-means tradeoffs.
Author contact info: Roland Bénabou Department of Economics & School of Public and International Affairs Princeton University Princeton, NJ 08544 Tel: 609/258-3672 Fax: 609/258-5533 E-Mail: rbenabou@princeton.edu Armin Falk Department of Economics University of Bonn Adenauerallee 24-42, 53113 Bonn E-Mail: armin.falk@uni-bonn.de Luca Henkel Kenneth C. Griffin Department of Economics The University of Chicago Chicago, IL 60637 E-Mail: luca.henkel@uchicago.edu

Import Constraints - Comin, Diego A; Johnson, Robert C; Jones, Callum J (National Bureau of Economic Research Working Paper Series, 2024)
During the recovery from the COVID-19 pandemic, international shipping and logistics capacity was strained, limiting the quantity of imports. We investigate the impact of an import constraint on inflation, following an increase in domestic demand. Whether the binding import constraint raises inflation depends on how it affects trade intermediation costs. If the binding constraint raises trade costs, then import price inflation also increases. In this case, however, foreign producer price inflation falls, and import quantities rise more for inputs than final goods. Both these model results appear counterfactual, which suggests that import constraints may not explain observed import price inflation.
Author contact info: Diego A. Comin Dartmouth College Economics Department 6106 Rockefeller Hall, Room 327 Hanover, NH 03755 Tel: (603) 646-2531 E-Mail: diego.comin@dartmouth.edu Robert C. Johnson University of Notre Dame Department of Economics 3060 Jenkins Nanovic Hall Notre Dame, IN 46556 Tel: 574-631-2785 E-Mail: rjohns24@nd.edu Callum J. Jones Constitution Ave NW & 20th St NW Washington, DC 20551 USA E-Mail: jonescallum@gmail.com

UI Benefit Generosity and Labor Supply from 2002-2020 - Bell, Alex; Hedin, TJ; Schnorr, Geoffrey C; von Wachter, Till M (National Bureau of Economic Research Working Paper Series, 2024)
This paper provides estimates of the effect of unemployment insurance benefits on labor supply outcomes over the business cycle using 20 years of administrative claims and earnings data from California. A regression kink design exploiting nonlinear benefit schedules provides experimental estimates of behavioral labor supply responses throughout the unemployment spell that are comparable over time. For a given unemployment duration, the behavioral effect of UI benefit levels on labor supply is unchanged over the business cycle from 2002 to 2019. However, due to increased coverage from extensions in benefit durations, the duration elasticity of UI benefits rises during recessions. The behavioral effect during the start of the COVID-19 pandemic is substantially lower at all weeks of the unemployment spell.
Author contact info: Alex Bell E-Mail: ambell@gmail.com TJ Hedin Department of Economics University of California, Los Angeles E-Mail: hedin@ucla.edu Geoffrey C. Schnorr California Policy Lab at UCLA California Employment Development Department USA E-Mail: gcschnorr@ucdavis.edu Till M. von Wachter Department of Economics University of California, Los Angeles 8283 Bunche Hall MC 147703 Los Angeles, CA 90095 Tel: 310-825-5665 Fax: 310-825-9528 E-Mail: tvwachter@econ.ucla.edu

Money Isn’t Everything: Estimating the Prestige Value of Winning Cutthroat Kitchen from Overbidding in Sabotage Auctions - Snyder, Meg; Bragen, Daniel; Rousu, Matthew; Snyder, Christopher M (National Bureau of Economic Research Working Paper Series, 2024)
We seek to estimate the prestige value of winning beyond monetary prizes in Cutthroat Kitchen, a cooking show in which dishes are judged in a series of elimination rounds, with the twist that action is periodically paused to auction sabotages against rivals. We estimate the distribution of contestants’ prestige values using a structural model of bidding by a contestant with rational expectations about sabotage effectiveness taken from the data. Our most conservative specification—allowing for risk aversion and bias in the beliefs about sabotage effectiveness—yields mean prestige values of nearly $10,000 for typical episodes and over $35,000 for tournaments.
Author contact info: Meg Snyder E-Mail: meg.snyder@yale.edu Daniel Bragen E-Mail: bragend@susqu.edu Matthew Rousu Sigmund Weis School of Business Susquehanna University 514 University Avenue Selinsgrove, PA 17870 USA E-Mail: rousu@susqu.edu Christopher M. Snyder Department of Economics Dartmouth College 301 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-0642 Fax: 603/646-2122 E-Mail: chris.snyder@dartmouth.edu

The Wandering Scholars: Understanding the Heterogeneity of University Commercialization - Lerner, Josh; Manley, Henry J; Stein, Carolyn; Williams, Heidi L (National Bureau of Economic Research Working Paper Series, 2024)
University-based scientific research has long been argued to be a central source of commercial innovation and economic growth. Yet at the same time, there have been long-held concerns that many university-based discoveries never realize their potential social benefits. Looking across universities, research and commercialization activities such as start-up formation vary tremendously – variation that could reflect the composition and orientation of faculty research, university-level factors such as patenting and licensing efforts, or broader place-based factors such as location in a technology cluster. We take a first step towards unpacking this heterogeneity in university commercialization by analyzing how the propensity of academic research to spill over to commercial innovation changes when academics move across universities. Our estimates suggest that at least 15–25% of geographic variation in commercial spillovers from university-based research is attributable to place-specific factors.
Author contact info: Josh Lerner Harvard Business School Rock Center 214 Soldiers Field Boston, MA 02163 Tel: 617/495-6065 Fax: 617/496-7357 E-Mail: jlerner@hbs.edu Henry Manley E-Mail: manleyh@nber.org Carolyn Stein 2220 Piedmont Avenue Berkeley, CA 94720 United States E-Mail: carolyn_stein@berkeley.edu Heidi L. Williams Department of Economics 6106 Rockefeller Center, Office 328 Dartmouth College Hanover, NH 03755 Tel: 617-669-0577 E-Mail: heidi.lie.williams@dartmouth.edu

Principal Component Analysis for Nonstationary Series - Hamilton, James D; Xi, Jin (National Bureau of Economic Research Working Paper Series, 2024)
This paper develops a procedure for uncovering the common cyclical factors that drive a mix of stationary and nonstationary variables. The method does not require knowing which variables are nonstationary or the nature of the nonstationarity. An application to the FRED-MD macroeconomic dataset demonstrates that the approach offers similar benefits to those of traditional principal component analysis with some added advantages.
Author contact info: James D. Hamilton Department of Economics, 0508 University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093-0508 Tel: 858/534-5986 Fax: 858/534-7040 E-Mail: jhamilton@ucsd.edu Jin Xi Dept of Economics 0508 University of California at San Diegop 9500 Gilman Drive La Jolla, CA 92093 US E-Mail: x5jin@ucsd.edu

Age at Immigrant Arrival and Career Mobility: Evidence from Vietnamese Refugee Migration and the Amerasian Homecoming Act - Pekkala Kerr, Sari; Kerr, William R; Smith, Kendall E (National Bureau of Economic Research Working Paper Series, 2024)
We study the long-run career mobility of young immigrants, mostly refugees, from Vietnam who moved to the United States during 1989-1995. This third and final migration wave of young Vietnamese immigrants was sparked by unexpected events that culminated in the Amerasian Homecoming Act. Characteristics of the wave also minimized selection effects regarding who migrated. Small differences in the age at arrival, specifically being 14-17 years old on entry compared to 18-21, resulted in substantial differences in future economic outcomes. Using Census Bureau data, we characterize the different career profiles of young vs. older immigrants, and we quantify explanatory factors like education, language fluency, and persistence from initial employers.
Author contact info: Sari Pekkala Kerr Wellesley College 106 Central Street Wellesley, MA 02481 E-Mail: skerr3@wellesley.edu William R. Kerr Harvard Business School Rock Center 212 Soldiers Field Boston, MA 02163 Tel: 617/496-7021 E-Mail: wkerr@hbs.edu Kendall E. Smith Regent's Park NW1 4SA London UK E-Mail: ksmith@london.edu

Deadlines Versus Continuous Incentives: Evidence from the Patent Office - Frakes, Michael D; Wasserman, Melissa F (National Bureau of Economic Research Working Paper Series, 2024)
A quota system with an associated deadline may retain the possibility of worker procrastination and related deadline behaviors. A performance appraisal system based on continuous temporal incentives, on the other hand, has the potential to alleviate deadline effects but may lose some of the quality-related benefits associated with the flexibility of a quota/deadline system. We explore these tradeoffs by observing patent examiner behavior and examination quality outcomes surrounding a 2011 reform at the U.S. Patent and Trademark Office that built on its bi-weekly quota system by adding a set of bonuses tied to daily examination-pendency measures. We find a substantial reduction in deadline effects and near complete temporal smoothing in examiner behavior in connection with the reform, leading to large reductions in average examination pendency while resulting in no corresponding reductions in the accuracy of examinations.
Author contact info: Michael D. Frakes Duke University School of Law 210 Science Drive Box 90362 Durham, NC 27708 Tel: 919-613-7185 E-Mail: Michael.frakes@law.duke.edu Melissa F. Wasserman University of Texas College of Law 727 E Dean Keeton Street Austin, TX 78705 E-Mail: mwasserman@law.utexas.edu

Regularization from Economic Constraints: A New Estimator for Marginal Emissions - Holland, Stephen P; Mansur, Erin T; Verdier, Valentin; Yates, Andrew J (National Bureau of Economic Research Working Paper Series, 2024)
Environmental policy is increasingly concerned with measuring emissions resulting from local changes to electricity consumption. These marginal emissions are challenging to measure because electricity grids encompass multiple locations and the information available to identify the effect of each location’s consumption on grid-wide emissions is limited. We formalize this as a high-dimensional aggregation problem: The effect of electricity consumption on emissions can be estimated precisely for each electricity generating unit (generator), but not precisely enough to obtain reliable estimates of marginal emissions by summing these effects across all generators in a grid. We study how two economic constraints can address this problem: electricity supply equals demand and an assumption of monotonicity. We show that these constraints can be used to formulate a ‘naturally regularized’ estimator, which implements an implicit penalization that does not need to be directly tuned. Under an additional assumption of sparsity, we show that our new estimator solves the high-dimensional aggregation problem, i.e., it is consistent for marginal emissions where the usual regression estimator would not be. We also develop an asymptotically valid method for inference to accompany our estimator. When applied to the U.S. electricity grid with 13 separate consumption regions, our method yields plausible patterns of marginal generation across fuel types and geographic location. Our estimates of region-level marginal emissions are precise, account for imports/exports between regions, and allow for all fuel types to potentially be on the margin.
Author contact info: Stephen P. Holland Bryan School of Business and Economics University of North Carolina, Greensboro P.O. Box 26165 Greensboro, NC 27402-6165 Tel: 336/334-4925 Fax: 336/334-4089 E-Mail: sphollan@uncg.edu Erin T. Mansur Dartmouth College 100 Tuck Hall Hanover, NH 03755 Tel: (603) 646-2398 Fax: (603) 646-0995 E-Mail: erin.mansur@dartmouth.edu Valentin Verdier Department of Economics University of North Carolina at Chapel Hill Chapel Hill, NC 27599 E-Mail: vverdier@email.unc.edu Andrew J. Yates Department of Economics and Curriculum for the Environment and Ecology University of North Carolina at Chapel Hill CB 3305 Chapel Hill, NC 27599 E-Mail: ajyates@email.unc.edu

What Do Shareholders Want? Consumer Welfare and the Objective of the Firm - Ericson, Keith Marzilli (National Bureau of Economic Research Working Paper Series, 2024)
Shareholders want a firm’s objective function to place some weight on consumer welfare, motivated by both self-interest and altruism. Firms have a unique technology for improving consumer welfare: lowering inefficient price markups. Optimal pricing formulas can account for shareholders’ marginal rate of substitution between profits and consumer welfare. Calibrations show shareholders should place non-trivial weights on consumers. A survey experiment with a representative sample shows how shareholders would vote on resolutions giving strategic guidance to firms. Only 7% would vote for pure profit maximization. The median individual is indifferent between $0.44 in profits or $1 in consumer surplus.
Author contact info: Keith Marzilli Ericson Boston University Questrom School of Business 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/353-4553 E-Mail: kericson@bu.edu

Cool cities: The value of urban trees - Han, Lu; Heblich, Stephan; Timmins, Christopher; Zylberberg, Yanos (National Bureau of Economic Research Working Paper Series, 2024)
This paper estimates the value of urban trees and shows their ability to moderate temperatures during heatwaves and reduce energy consumption. The empirical strategy exploits an ecological catastrophe—the Emerald Ash Borer infestation in Toronto—to isolate exogenous variation in neighborhood tree canopy changes and finds that a single tree adds 0.45% to property prices within a postal code; the hardest-hit areas lost 7 percentage points in tree canopy cover, resulting in a 7% property price decline. Trees significantly cool urban areas and save energy, but their total amenity value surpasses the value of these ecosystem services, highlighting their cost-effectiveness in combating urban heat island effects.
Author contact info: Lu Han Wisconsin School of Business 975 University Ave Madison, WI 53711 E-Mail: lu.han@wisc.edu Stephan Heblich Munk School of Global Affairs and Public Policy University of Toronto 1 Devonshire Place Toronto, ON M5S 3K7 E-Mail: stephan.heblich@utoronto.ca Christopher Timmins Real Estate and Urban Land Economics Wisconsin School of Business 4291 Grainger Hall 975 University Avenue Madison, WI 53706 Tel: 919-357-0473 E-Mail: ctimmins@wisc.edu Yanos Zylberberg 8 Woodland Road Bristol BS8 1TN UK E-Mail: yanos.zylberberg@bristol.ac.uk

Technology and the Global Economy - Eaton, Jonathan; Kortum, Samuel S (National Bureau of Economic Research Working Paper Series, 2024)
Author contact info: Jonathan Eaton E-Mail: N/A user is deceased Samuel S. Kortum Yale UniversityAB - Interpreting individual heterogeneity in terms of probability theory has proved powerful in connecting behaviour at the individual and aggregate levels. Returning to Ricardo's focus on comparative efficiency as a basis for international trade, much recent quantitative equilibrium modeling of the global economy builds on particular probabilistic assumptions about technology. We review these assumptions and how they deliver a unified framework underlying a wide range of static and dynamic equilibrium models.

The Gender Minority Gaps in Confidence and Self-Evaluation - Aksoy, Billur; Exley, Christine L; Kessler, Judd B (National Bureau of Economic Research Working Paper Series, 2024)
A rich literature explores gender differences between men and women, but an increasing share of the population identifies their gender in some other way. Analyzing data on roughly 10,000 students and 1,500 adults, we find that such gender minorities are less confident and provide less favorable self-evaluations than equally performing men on a math and science test. We find that these "gender minority gaps" are robust, are as large as—or larger than—gender gaps between men and women, and are domain specific. Administrative data reveals that our confidence and self-evaluation measures are highly predictive of academic performance.
Author contact info: Billur Aksoy Department of Economics Rensselaer Polytechnic Institute 3404 Russell Sage Laboratory 110 8th Street Troy, NY 12180 E-Mail: aksoyb3@rpi.edu Christine L. Exley Department of Economics University of Michigan Lorch Hall 365B 611 Tappan Ave Ann Arbor, MI 48109 E-Mail: clexley@gmail.com Judd B. Kessler The Wharton School University of Pennsylvania 320 Vance Hall Philadelphia, PA 19104 Tel: 215/898-7696 Fax: 215/898-7635 E-Mail: judd.kessler@wharton.upenn.edu

The Changing Nature of Pollution, Income, and Environmental Inequality in the United States - Colmer, Jonathan M; Qin, Suvy; Voorheis, John L; Walker, Reed (National Bureau of Economic Research Working Paper Series, 2024)
This paper uses administrative tax records linked to Census demographic data and high-resolution measures of fine small particulate (PM2.5) exposure to study the evolution of the Black-White pollution exposure gap over the past 40 years. In doing so, we focus on the various ways in which income may have contributed to these changes using a statistical decomposition. We decompose the overall change in the Black-White PM2.5 exposure gap into (1) components that stem from rank-preserving compression in the overall pollution distribution and (2) changes that stem from a reordering of Black and White households within the pollution distribution. We find a significant narrowing of the Black-White PM2.5 exposure gap over this time period that is overwhelmingly driven by rank-preserving changes rather than positional changes. However, the relative positions of Black and White households at the upper end of the pollution distribution have meaningfully shifted in the most recent years.
Author contact info: Jonathan M. Colmer E-Mail: j.colmer@virginia.edu Suvy Qin E-Mail: suvyq@berkeley.edu John L. Voorheis E-Mail: john.l.voorheis@census.gov Reed Walker Haas School of Business Department of Economics University of California Berkeley 2220 Piedmont Avenue Berkeley, CA 94720 Tel: 510/965-3298 E-Mail: rwalker@berkeley.edu

Quantifying the Social Value of a Universal COVID-19 Vaccine and Incentivizing Its Development - Glennerster, Rachel; Kelly, Thomas; McMahon, Claire T; Snyder, Christopher M (National Bureau of Economic Research Working Paper Series, 2024)
A booster of the COVID-19 vaccine targeting the prevailing Omicron variant did not become available in the United States until a year after the variant was first detected. This pattern of developing, testing, and distributing a variant-specific booster may become the default response to further waves of COVID-19 caused by new variants. An innovation with realistic scientific potential—a universal COVID-19 vaccine, effective against existing and future variants—could provide much more value by preempting new variants. Averaged across Monte Carlo simulations, we estimate the incremental value to the U.S. population of a universal COVID-19 vaccine to be $1.5–$2.6 trillion greater than variant-specific boosters (depending on how the arrival rate of variants is modeled). This social value eclipses the cost of an advance market commitment to incentivize the universal vaccine by several orders of magnitude.
Author contact info: Rachel Glennerster Saieh Hall for Economics, Office 432 University of Chicago 5757 S University Avenue Chicago, IL 60637 Tel: 773/705-1480 E-Mail: rglennerster@uchicago.edu Thomas Kelly E-Mail: thomas.kelly@1daysooner.org Claire T. McMahon E-Mail: clairemcmahon@uchicago.edu Christopher M. Snyder Department of Economics Dartmouth College 301 Rockefeller Hall Hanover, NH 03755 Tel: 603/646-0642 Fax: 603/646-2122 E-Mail: chris.snyder@dartmouth.edu

Do Earmarks Target Low-Income and Minority Communities? Evidence from US Drinking Water - Keiser, David A; Mazumder, Bhashkar; Molitor, David; Shapiro, Joseph S; Walker, Brant J (National Bureau of Economic Research Working Paper Series, 2024)
The quality and inequality of US drinking water investments have gained attention after recent environmental disasters in Flint, Michigan, and elsewhere. We compare the formula-based targeting of subsidized loans provided under the Safe Drinking Water Act with the targeting of congressional drinking water earmarks (“pork barrel” spending). Earmarks are often critiqued for potentially privileging wealthier and more politically connected communities. We find that earmarks target Black, Hispanic, and low-income communities, partly due to targeting water systems serving large populations. Earmark and loan targeting differ significantly across all the demographics we analyze. Compared to Safe Drinking Water Act loans, earmarks disproportionately target Hispanic communities but not Black or low-income communities.
Author contact info: David A. Keiser University of Massachusetts, Amherst Resource Economics Amherst, MA 01003 E-Mail: dkeiser@umass.edu Bhashkar Mazumder Federal Reserve Bank of Chicago 230 S. LaSalle Street Chicago, IL 60604 Tel: 312-322-8166 E-Mail: bhash.mazumder@gmail.com 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 Joseph S. Shapiro University of California, Berkeley #3310 Berkeley, CA 94720 E-Mail: joseph.shapiro@berkeley.edu Brant J. Walker University of California, Berkeley #3310 Berkeley, CA 94720 E-Mail: brantjwalker@berkeley.edu

The Anatomy of Concentration: New Evidence From a Unified Framework - Ahern, Kenneth R; Kong, Lei; Yan, Xinyan (National Bureau of Economic Research Working Paper Series, 2024)
Concentration is a single summary statistic driven by two opposing forces: the number of firms in a market and the evenness of their market shares. This paper introduces a generalized measure of concentration that allows researchers to vary the relative importance of each force. Using the generalized measure, we show that the widely-cited evidence of increasing industrial employment concentration is driven by the Herfindahl Index's over-weighting of evenness and under-weighting of firm counts. We propose an alternative, equally-weighted measure that has an equivalent economic meaning as the Herfindahl Index, but possesses superior statistical attributes in typical firm size distributions. Using this balanced measure, we find that employment concentration decreased from 1990 to 2020. Finally, decomposing aggregate diversity into meaningful geographic and industry subdivisions reveals that concentration within regional markets has fallen, while concentration between markets has risen.
Author contact info: Kenneth R. Ahern Marshall School of Business University of Southern California 3670 Trousdale Parkway, HOH 718 Los Angeles, CA 90089 Tel: 213/821-5583 E-Mail: kenneth.ahern@marshall.usc.edu Lei Kong Alston 233 The University of Alabama Tuscaloosa, AL 35487 E-Mail: lkong2@ua.edu Xinyan Yan E-Mail: xyan@usf.edu

Capital, Ideas, and the Costs of Financial Frictions - Ottonello, Pablo; Winberry, Thomas (National Bureau of Economic Research Working Paper Series, 2024)
We study the role of financial frictions in determining the allocation of investment and innovation. Empirically, we find that firms are investment-intensive when they have low net worth but become innovation-intensive as they accumulate more net worth. To interpret these findings, we develop an endogenous growth model with heterogeneous firms and financial frictions. In our model, low net worth firms are investment-intensive because their returns to capital are high. Financial frictions slow the rate at which firms exhaust the returns to capital and shift towards innovation. Calibrating to the US economy, we find that the resulting lower growth implies large GDP losses even though capital misallocation is small. In other words, financial markets effectively fund the implementation of existing ideas, but do not adequately fund the discovery of new ideas. If innovation has positive spillovers, a planner would not only raise innovation but also lower investment expenditures among constrained firms.
Author contact info: Pablo Ottonello Department of Economics University of Maryland Tydings Hall 7343 Preinkert Dr. College Park, MD 20742 E-Mail: ottonell@umd.edu Thomas Winberry University of Pennsylvania 2300 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 Tel: 215-898-7622 E-Mail: twinb@wharton.upenn.edu

Thick Market Externalities and the Persistence of the Opioid Epidemic - Cutler, David M; Donahoe, J. Travis (National Bureau of Economic Research Working Paper Series, 2024)
Opioid overdose death rates in the United States have risen continuously for over three decades, increasing 2,142 percent in total from 1990 to 2020. This is surprising. One might expect drug epidemics to be self-limiting, as policy and individual behavior reacts to observed deaths. We study why opioid deaths have risen so greatly and for so long. We consider three reasons for a prolonged epidemic: exogenous and continuing changes in demand or supply, and spillovers in demand for opioids across users, which we term “thick market externalities.” We show there is no evidence of sufficiently large exogenous changes in the demand or supply of opioids that could explain such a prolonged increase in death rates. We test for spillovers using county-level data on opioid deaths from 1991–2018 and opioid shipments from 2006–2009, combined with data on friendships and distance between counties. Estimating a model with addiction and spatial spillovers, we find large spillovers in opioid use and deaths across areas. A shock that increases opioid death rates by 1 in an index county causes 0.38 to 0.76 more deaths in other counties because of spillovers. Because opioids are addictive, this leads to even more deaths and spillovers in future years. In some specifications, these effects are large enough to generate a continuously increasing epidemic without any ongoing changes in demand or supply. We estimate spillovers explain 84 to 92 percent of opioid deaths from 1990 to 2018 and are the main reason deaths have increased for so long.
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 J. Travis Donahoe Department of Health Policy and Management University of Pittsburgh 130 De Soto St Pittsburgh, PA 15261 E-Mail: tdonahoe@pitt.edu

Stacked Difference-in-Differences - Wing, Coady; Freedman, Seth M; Hollingsworth, Alex (National Bureau of Economic Research Working Paper Series, 2024)
This paper introduces the concept of a "trimmed aggregate ATT," which is a weighted average of a set of group-time average treatment effect on the treated (ATT) parameters identified in a staggered adoption difference-in-differences (DID) design. The set of identified group-time ATTs that contribute to the aggregate is trimmed to achieve compositional balance across an event window, ensuring that comparisons of the aggregate parameter over event time reveal dynamic treatment effects and differential pre-trends rather than compositional changes. Taking the trimmed aggregate ATT as a target parameter, we investigate the performance of stacked DID estimators. We show that the most basic stacked estimator does not identify the target aggregate or any other average causal effect because it applies different implicit weights to treatment and control trends. The bias can be eliminated using corrective sample weights. We present a weighted stacked DID estimator, and show that it correctly identifies the target aggregate, providing justification for using the estimator in applied work.
Author contact info: Coady Wing Indiana University 1315 E 10th St Bloomington, IN 47405 E-Mail: cwing@indiana.edu Seth M. Freedman School of Public and Environmental Affairs 1315 E. 10th St. Bloomington, IN 47405 US E-Mail: freedmas@indiana.edu Alex Hollingsworth Department of Agricultural, Environmental, and Development Economics, Department of Economics, and the John Glenn College of Public Affairs The Ohio State University 2120 Fyffe Road Columbus, OH 43210 Tel: 812/855-6892 E-Mail: hollingsworth.126@osu.edu

Central Banks, Stock Markets, and the Real Economy - Caballero, Ricardo J; Simsek, Alp (National Bureau of Economic Research Working Paper Series, 2024)
This article summarizes empirical research on the interaction between monetary policy and asset markets, and reviews our previous theoretical work that captures these interactions. We present a concise model in which monetary policy impacts the aggregate asset price, which in turn influences economic activity with lags. In this context: (i) the central bank (the Fed, for short) stabilizes the aggregate asset price in response to financial shocks, using large-scale asset purchases if needed ("the Fed put"); (ii) when the Fed is constrained, negative financial shocks cause demand recessions, (iii) the Fed's response to aggregate demand shocks increases asset price volatility, but this volatility plays a useful macroeconomic stabilization role; (iv) the Fed's beliefs about the future aggregate demand and supply drive the aggregate asset price; (v) macroeconomic news influences the Fed's beliefs and asset prices; (vi) more precise news reduces output volatility but heightens asset market volatility; (vii) disagreements between the market and the Fed microfound monetary policy shocks, and generate a policy risk premium.
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

Tech-Driven Intermediation in the Originate-to-Distribute Model - He, Zhiguo; Jiang, Sheila; Xu, Douglas (National Bureau of Economic Research Working Paper Series, 2024)
This paper develops a general equilibrium model to examine the role of information technology when intermediaries facilitate the origination and distribution of assets given information asymmetry. Information technology measures the informativeness of asset-quality signals received by intermediaries, who purchase assets produced by originators and then resell them to uninformed investors. Allowing intermediaries to operate has a mixed social welfare effect: Uninformed intermediation can be welfare reducing when adverse selection is severe in the economy, while informed intermediation always improves social welfare.
Author contact info: Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Sheila Jiang Department of Finance and Real Estate Warrington College of Business University of Florida P.O. Box 117168 Gainesville, FL 32611 Tel: (352) 392-4668 E-Mail: Sheila.Jiang@warrington.ufl.edu Douglas Xu University of Florida Warrington College of Business 1454 Union Rd Stuzin Hall 315 Gainesville, FL 32611 Tel: 3123911257 E-Mail: douglas.xu@warrington.ufl.edu

Sorting under Risk Sharing and Complementarities - Chade, Hector; Lindenlaub, Ilse (National Bureau of Economic Research Working Paper Series, 2024)
How does the presence of risk sharing affect sorting patterns on productive attributes when there are complementarities among partners' skills in match output? We develop a matching model in which risk-averse agents, who differ in skills, match pairwise for productive purposes. Match output has stochastic returns and matched partners efficiently share this risk. We find that under plausible assumptions the risk-sharing benefit of marriage tends to push toward negative sorting on partners' skills. To obtain the prediction of positive skill sorting—a robust empirical feature of marriage markets—this force needs to be counteracted by sufficiently strong skill complementarities in match output. We provide a novel inequality that characterizes monotone (positive or negative) equilibrium sorting, balancing out skill complementarities and risk-sharing considerations in the right way. Several classes of primitives (utility and match output functions) render monotone sorting optimal. We then highlight a new implication of positive sorting on exogenous skills for matching patterns on endogenous differences in risk aversion: Positive sorting on skills translates into positive sorting on risk aversion—in line with the evidence from marriage markets.
Author contact info: Hector Chade Department of Economics Arizona State University PO Box 879801 Tempe, AZ 85287-9801 E-Mail: hector.chade@asu.edu Ilse Lindenlaub Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: ilse.lindenlaub@yale.edu

The Economics of Information in a World of Disinformation: A Survey Part 2: Direct Communication - Stiglitz, Joseph E; Kosenko, Andrew (National Bureau of Economic Research Working Paper Series, 2024)
The paper surveys the recent work on economics of information with endogenous information structures where individuals can directly communicate information with each other. We consider the theoretical work on cheap talk, Bayesian persuasion, and information design, and review the implications of information control and information abundance for mis and disinformation. The relationship between information and market power is particularly important when social media can amplify and maintain harmful fictions that lead to polarization and undermine not only markets, but democratic discourse. We review both the “rational” decision-making paradigm, as well as departures from it, such as cases where decision makers can choose what to know, can allocate their attention in different ways or have behavioral biases that influence their information processing. We note some important connections to legal and media studies and highlight key messages in nontechnical language.
Author contact info: 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 Andrew Kosenko Marist College School of Management 3399 North Road Poughkeepsie, NY 12601 E-Mail: ak2912@columbia.edu

The Economics of Information in a World of Disinformation: A Survey Part 1: Indirect Communication - Stiglitz, Joseph E; Kosenko, Andrew (National Bureau of Economic Research Working Paper Series, 2024)
We survey aspects of the intellectual development of the economics of information from the 1970s to today. We focus here on models where information is communicated indirectly through actions. Basic results, such as the failure of the fundamental theorems of welfare economics, the non-existence of competitive equilibrium, and the dependence of the nature of the equilibrium, when it exists, on both what information is available, and how information can be acquired, have been shown to be robust. Markets create asymmetries of information, even when initially none existed. While the earliest literature paid scarce attention to misinformation, subsequently it has been shown that governments can improve welfare, if disinformation is present, through fraud laws and disclosure requirements. Moreover, robust mechanism design enables agents and governments to better achieve their objectives, taking into account information asymmetries. On the other hand, market reforms that ignored their informational consequences may have lowered welfare. Surveying both theory and applications, we review the main insights of these literatures, and highlight key messages using nontechnical language.
Author contact info: 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 Andrew Kosenko Marist College School of Management 3399 North Road Poughkeepsie, NY 12601 E-Mail: ak2912@columbia.edu

Digital Information Provision and Behavior Change: Lessons from Six Experiments in East Africa - Fabregas, Raissa; Kremer, Michael; Lowes, Matthew; On, Robert; Zane, Giulia (National Bureau of Economic Research Working Paper Series, 2024)
Mobile phone-based informational programs are widely used worldwide, though there is little consensus on how effective they are at changing behavior. We present causal evidence on the effects of six agricultural information programs delivered through text messages in Kenya and Rwanda. The programs shared similar objectives but were implemented by three different organizations and varied in content, design, and target population. With administrative outcome data for tens of thousands of farmers across all experiments, we are sufficiently powered to detect small effects in real input purchase choices. Combining the results of all experiments through a meta-analysis, we find that the odds ratio for following the recommendations is 1.22 (95% CI: 1.16, 1.29). We cannot reject that impacts are similar across experiments and for two different agricultural inputs. There is little evidence of message fatigue, but the effects diminish over time. Providing more granular information, supplementing the texts with in-person calls, or varying the messages’ framing did not significantly increase impacts, but message repetition had modest positive effects. While the overall effect sizes are small, the low cost of text messages can make these programs cost-effective.
Author contact info: Raissa Fabregas E-Mail: rfabregas@utexas.edu Michael Kremer University of Chicago Department of Economics 1126 E. 59th St. Chicago, IL 60637 Tel: 773/702-6710 Fax: 773/702-8490 E-Mail: kremermr@uchicago.edu Matthew Lowes E-Mail: matt.lowes@oneacrefund.org Robert On E-Mail: robert@agency.fund Giulia Zane E-Mail: g.zane@cgiar.org

Using Satellite Imagery to Detect the Impacts of New Highways: An Application to India - Baragwanath Vogel, Kathryn; Hanson, Gordon H; Khandelwal, Amit; Liu, Chen; Park, Hogeun (National Bureau of Economic Research Working Paper Series, 2024)
This paper integrates daytime and nighttime satellite imagery into a spatial general-equilibrium model to evaluate the returns to investments in new motorways. Our approach has particular value in developing-country settings in which spatially granular economic data are scarce. To demonstrate our method, we use publicly available imagery to evaluate India’s road construction projects in the early 2000s. Estimating the model and evaluating welfare impacts only requires remotely-sensed data. We find that India’s road investments improved aggregate welfare, particularly for the largest and smallest urban markets. Most welfare gains accrued within Indian districts—the unit of analysis in conventional approaches—which demonstrates the benefits of using of high-resolution satellite imagery.
Author contact info: Kathryn Baragwanath Vogel University of California, San Diego 9500 Gilman Dr La Jolla, CA 92093 E-Mail: kbaragwa@ucsd.edu Gordon H. Hanson Harvard Kennedy School Harvard University 79 John F. Kennedy St. Cambridge, MA 02138 E-Mail: gordon_hanson@hks.harvard.edu Amit Khandelwal Yale University Economics Department, Jackson School 55 Hillhouse Avenue New Haven, CT 06511 E-Mail: amit.khandelwal@yale.edu Chen Liu National University of Singapore Department of Economics AS2 #0516, 1 Arts Link, Singapore 117570 E-Mail: ecsliuc@nus.edu.sg Hogeun Park The World Bank 701 18th street NW J6-601 Washington, DC 20433 Tel: 2024580002 E-Mail: hpark2@worldbank.org

Religious Conversion across Countries - Barro, Robert J; McCleary, Rachel M (National Bureau of Economic Research Working Paper Series, 2024)
In a rational-choice approach to religious conversion, the conversion rate depends on a person’s costs of switching religions and costs of having one’s religion deviate from the type viewed as ideal. The International Social Survey Programme (ISSP) waves for 1991, 1998, 2008, and 2018 allow for calculations of country-wide conversion rates based on religion adherence at the time of each survey and a retrospective question that gauges adherence when the respondent was raised. The analysis applies to 8 types of religion for 58 countries (125 total observations). The rate of conversion depends positively on measures of religious pluralism, negatively on official restrictions that inhibit conversion, negatively on a history of Communism, negatively on real per capita GDP, and positively on years of schooling. These empirical findings accord with predictions from the theoretical framework.
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 Rachel M. McCleary Department of Economics Littauer Center M-14 Harvard University Cambridge, MA 02138 E-Mail: rachel_mccleary@harvard.edu

The Impact of Comprehensive Student Support on Crime: Evidence from the Pathways to Education Program - Lavecchia, Adam M; Oreopoulos, Philip; Spencer, Noah (National Bureau of Economic Research Working Paper Series, 2024)
This study finds substantial reductions to criminal activity from the introduction of a comprehensive high school support program for disadvantaged youth living in the largest public housing project in Toronto. The program, called Pathways to Education, bundles supports such as regular coaching, tutoring, group activities, free public transportation tickets and bursaries for postsecondary education. In this paper, we use a difference-in-differences approach that compares students living in public housing communities where the program was offered to those living in communities where the program was not offered over time. We find that eligibility for Pathways reduces the likelihood of being charged with a crime by 32 percent at its Regent Park location. This effect is driven by a reduction in charges for breaking and entering, theft, mischief, other traffic offenses and Youth Criminal Justice Act offenses.
Author contact info: Adam M. Lavecchia Department of Economics McMaster University Kenneth Taylor Hall, Room 412 1280 Main Street West Hamilton, Ontario L8S 4M4 Canada E-Mail: laveccha@mcmaster.ca Philip Oreopoulos Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 E-Mail: philip.oreopoulos@utoronto.ca Noah Spencer Department of Economics University of Toronto 150 St. George Street Toronto, ON M5R 3G7 Canada E-Mail: noah.spencer@mail.utoronto.ca

The Puzzling Behavior of Spreads during Covid - Fourakis, Stelios S; Karabarbounis, Loukas (National Bureau of Economic Research Working Paper Series, 2024)
Advanced economies borrowed substantially during the Covid recession to fund their fiscal policy. The Covid recession differed from the Great Recession in that sovereign debt markets remained calm and spreads barely responded. We study the experience of Greece, the most extreme manifestation of the puzzling behavior of spreads during Covid. We develop a small open economy model with long-term debt and default, which we augment with official lenders, heterogeneous households and sectors, and Covid constraints on labor supply and consumption demand. The model is quantitatively consistent with the observed boom-bust cycle of Greece before Covid and salient observations on macro aggregates, government debt, and the sovereign spread during Covid. The spread is stable despite a rise in external borrowing during Covid, because lockdowns were perceived as transitory and the bailouts of the 2010s had tilted the composition of debt at the beginning of Covid away from defaultable private debt. The ECB's policy of purchasing debt in secondary markets during Covid did not stabilize spreads so much, but allowed the government to provide transfers that reduced inequality.
Author contact info: Stelios S. Fourakis 617 Wyman Park Building 3100 Wyman Park Drive Baltimore, MD 21211 United States Tel: 6083388053 E-Mail: sfourakis@jhu.edu Loukas Karabarbounis University of Minnesota Department of Economics Hanson Hall Minneapolis, MN 55455 Tel: 612-204-5498 E-Mail: loukas@umn.edu

Stated Preference Estimates of the Average Social Cost of Carbon - Ashenfarb, Matthew; Kotchen, Matthew (National Bureau of Economic Research Working Paper Series, 2024)
This paper provides stated preference (SP) estimates of the average social cost of carbon (ASCC) for use in evaluation of the benefits and costs of climate policy. Based on a U.S. nationally representative survey, we find an average individual willingness-to-pay (WTP) of $1,116 per year to keep global warming less than 2°C by 2100 compared to a business-as-usual temperature change. Combining the WTP estimate with population projections and assessments of the required emission reductions, we find a domestic ASCC of $8 per tonne of carbon dioxide (CO2). Applying a benefits transfer approach to infer WTP in other countries, we obtain an estimate of the global ASCC of $39 per tonne, with a 95-percent confidence interval of $32-$48. The estimate is insensitive to the discount rate, but it does vary with assumptions about the income elasticity of WTP and the rate of change in marginal abatement costs. Reasonable scenarios create a range of estimates between $12-$118 per tonne. We also examine the impact of distributional weighting based on the elasticity of the marginal utility of income, providing distributionally-weighted estimates of the global ASCC for use in all countries. We argue that a SP estimate of the ASCC is an useful complement to existing estimates of the marginal social cost of carbon (SCC) based on different valuation approaches.
Author contact info: Matthew Ashenfarb School of the Environment Yale University 195 Prospect Street New Haven, CT 06511 E-Mail: matthew.ashenfarb@yale.edu 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

Local Variation in Onsite Work during the Pandemic and its Aftermath - Abraham, Katharine G; Ashoori, Mohammad; Darzi, Aref; Gonzalez-Prieto, Nathalie; Haltiwanger, John C; Kabiri, Aliakbar; Ozbay, Erkut Y (National Bureau of Economic Research Working Paper Series, 2024)
Using longitudinal data on the location of mobile devices, we provide new evidence on the evolution of onsite work (OSW) over the course of the pandemic and its aftermath. We start with a large sample of individuals who, based on their mobile device activity, had a job at which they worked onsite in February 2020. We track the evolution of these individuals’ onsite work activity over the following thirteen to fourteen months, observing them in May 2020, August 2020, November 2020 and March/April 2021. Consistent with other evidence, we find a dramatic decline in OSW in May 2020 followed by a substantial rebound by the spring of 2021, albeit to a lower level than in February 2020. We document considerable cross-state, cross-city and cross-county variation in OSW. We also find, however, that the tract-level variation in OSW within states, cities and even counties far exceeds the variation across larger geographic areas. Observable characteristics such as industry, occupation, education and income account for much of the variation in OSW across large geographic areas since the pandemic. These same variables account for much of the enormous cross-tract variation in OSW that remains after controlling for state or county, but more than half of the cross-tract variation is accounted for by residual factors. These findings imply considerable heterogeneity in how the pandemic has affected where the resident populations of U.S. neighborhoods spend their days, a finding that has significant implications for businesses, workers, and policymakers.
Author contact info: Katharine G. Abraham Department of Economics and Joint Program in Survey Methodology University of Maryland 1218 LeFrak Hall College Park, MD 20742 Tel: 301/405-1004 E-Mail: kabraham@umd.edu Mohammad Ashoori E-Mail: mashoori@umd.edu Aref Darzi Center for Advanced Transportation Technology Laboratory University of Maryland College Park, Mary 20742 E-Mail: adarzi@umd.edu Nathalie Gonzalez-Prieto E-Mail: ngonzalezprieto@worldbank.org 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 Aliakbar Kabiri Center for Advanced Transportation Technology Laboratory University of Maryland College Park, MD 20742 E-Mail: kabiri@umd.edu Erkut Y. Ozbay Department of Economics University of Maryland College Park, MD 20742 E-Mail: ozbay@umd.edu

Is the Electricity Sector a Weak Link in Development? - Colmer, Jonathan M; Lagakos, David; Shu, Martin (National Bureau of Economic Research Working Paper Series, 2024)
This paper asks whether increasing productivity in the electricity sector can yield larger long-run GDP gains than suggested by electricity’s small share of aggregate economic activity. We answer this question using a dynamic multi-sector model in which electricity is a strong complement to other inputs in production. We parameterize the model using our own new measures of electricity-sector TFP across countries. The model predicts modest long-run GDP gains from improving electricity-sector TFP, contrary to the notion that electricity is a weak link. Parameterizations that make electricity a weak link mostly require the electricity sector to be counterfactually large or unproductive.
Author contact info: Jonathan M. Colmer E-Mail: j.colmer@virginia.edu David Lagakos Department of Economics Boston University 270 Bay State Road Boston, MA 02215 E-Mail: lagakos@bu.edu Martin Shu E-Mail: martinshu@cuhk.edu.cn

What Works and For Whom? Effectiveness and Efficiency of School Capital Investments Across The U.S. - Biasi, Barbara; Lafortune, Julien M; Schönholzer, David (National Bureau of Economic Research Working Paper Series, 2024)
This paper identifies which investments in school facilities help students and are valued by homeowners. Using novel data on school district bonds, test scores, and house prices for 29 U.S. states and a research design that exploits close elections with staggered timing, we show that increased school capital spending raises test scores and house prices on average. However, impacts differ vastly across types of funded projects. Spending on basic infrastructure (such as HVAC) or on the removal of pollutants raises test scores but not house prices; conversely, spending on athletic facilities raises house prices but not test scores. Socio-economically disadvantaged districts benefit more from capital outlays, even conditioning on project type and the existing capital stock. Our estimates suggest that closing the spending gap between high- and low-SES districts and targeting spending towards high-impact projects may close as much as 25% of the observed achievement gap between these districts.
Author contact info: Barbara Biasi Yale School of Management 165 Whitney Avenue New Haven, CT 06520 E-Mail: barbara.biasi@yale.edu Julien M. Lafortune 500 Washington St Suite 600 San Francisco, CA 94111 E-Mail: lafortune@ppic.org David Schönholzer Institute for International Economic Studies Stockholm University Frescativägen Stockholm Stockholm 11419 E-Mail: david.schonholzer@iies.su.se

A Scalable Approach to High-Impact Tutoring for Young Readers: Results of a Randomized Controlled Trial - Cortes, Kalena; Kortecamp, Karen; Loeb, Susanna; Robinson, Carly (National Bureau of Economic Research Working Paper Series, 2024)
This paper presents the results from a randomized controlled trial of Chapter One, an early elementary reading tutoring program that embeds part-time tutors into the classroom to provide short bursts of 1:1 instruction. Eligible kindergarten students were randomly assigned to receive supplementary tutoring during the 2021-22 school year (N=818). The study occurred in a large Southeastern district serving predominantly Black and Hispanic students. Students assigned to the program were over two times more likely to reach the program’s target reading level by the end of kindergarten (70% vs. 32%). The results were largely homogenous across student populations and extended to district-administered assessments. These findings provide promising evidence of an affordable and sustainable approach for delivering personalized reading tutoring at scale.
Author contact info: Kalena Cortes The Bush School Texas A&M University 4220 TAMU 2088 Allen Building College Station, TX 77843 E-Mail: kcortes@tamu.edu Karen Kortecamp 2136 G Street NW Washington, DC 20052 USA E-Mail: karenkor@gwu.edu Susanna Loeb Stanford Graduate School of Education 482 Galvez Mall Stanford, CA 94305 E-Mail: sloeb@stanford.edu Carly Robinson Stanford Graduate School of Education, 482 Galvez Mall Stanford, CA 94305 USA E-Mail: carly_robinson@stanford.edu

Bootstrap Diagnostics for Irregular Estimators - Andrews, Isaiah; Shapiro, Jesse M (National Bureau of Economic Research Working Paper Series, 2024)
Empirical researchers frequently rely on normal approximations in order to summarize and communicate uncertainty about their findings to their scientific audience. When such approximations are unreliable, they can lead the audience to make misguided decisions. We propose to measure the failure of the conventional normal approximation for a given estimator by the total variation distance between a bootstrap distribution and the normal distribution parameterized by the point estimate and standard error. For a wide class of decision problems and a class of uninformative priors, we show that a multiple of the total variation distance bounds the mistakes which result from relying on the conventional normal approximation. In a sample of recent empirical articles that use a bootstrap for inference, we find that the conventional normal approximation is often poor. We suggest and illustrate convenient alternative reports for such settings.
Author contact info: Isaiah Andrews Department of Economics MIT 50 Memorial Drive, E52-530 Cambridge, MA 02142 E-Mail: iandrews@mit.edu Jesse M. Shapiro Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617-444-9571 E-Mail: jesse_shapiro@fas.harvard.edu

Trade Barriers and Market Power: Evidence from Argentina's Discretionary Import Restrictions - Atkin, David; Blaum, Joaquin; Fajgelbaum, Pablo D; Ospital, Augusto (National Bureau of Economic Research Working Paper Series, 2024)
Countries are increasingly turning to non-tariff barriers that are hard to measure and often illegal under WTO rules. What are the impacts of these policies, and what do they reveal about market power in international trade? We study a comprehensive system of discretionary import licenses imposed by Argentina, where we observe the universe of transaction-level requests and approval decisions between 2013 and 2015. Approvals varied across firms and products in a manner consistent with the government's trade and investment objectives, and over time to safeguard the current account. Interacting these sources of variation to construct an instrument, we estimate that stricter restrictions increased the prices paid by importers, a result that runs counter to competitive price-setting behavior. Informed by a model and a classifier-Lasso, the price and quantity responses identify—for each combination of importer, narrow product, and origin—which side (importer or exporter) holds market power. We find that larger importers are more likely to hold market power, and those trading with richer countries are less likely to. The market-power distribution strongly shapes the effects of quantitative restrictions and the magnitude of optimal tariffs. Import prices rose by 4% as a result of Argentina's import restrictions, but would have risen by 13% (fallen by 8%) had all foreign firms (Argentinian firms) held market power.
Author contact info: David Atkin Department of Economics, E52-550 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 203/936-9367 E-Mail: atkin@mit.edu Joaquin Blaum 270 Bay State Road Boston, MA 02215 United States E-Mail: jblaum@gmail.com Pablo D. Fajgelbaum Department of Economics University of California, Los Angeles 8283 Bunche Hall Mail Stop: 147703 Los Angeles, CA 90095 E-Mail: pfajgelbaum@gmail.com Augusto Ospital Toulouse School of Economics 1 Esplanade de l'Université Toulouse 31080 France E-Mail: augusto.ospital@tse-fr.eu

The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies - Ganapati, Sharat (National Bureau of Economic Research Working Paper Series, 2024)
Nearly half of all transactions in the $5 trillion market for manufactured goods in the United States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of “superstar” firms - the largest one percent of wholesalers. Estimates based on detailed administrative data show that the rise of the largest firms was driven by an intuitive linkage between their sourcing of goods from abroad and an expansion of their domestic distribution network to reach more buyers. Both elements require scale economies and lead to increased wholesaler market shares and markups. Counterfactual analysis shows that despite increases in wholesaler market power and markups, scale has benefits. Buyers gain access to globally sourced varieties, nationwide distribution networks, and increased quality while wholesalers decrease their marginal costs.
Author contact info: Sharat Ganapati Georgetown University Edward B. Bunn, S.J. Intercultural Center 37th and O Streets, NW Washington, DC 20057 Tel: 202/687-3047 E-Mail: sg1390@georgetown.edu

Homeward Bound: How Migrants Seek Out Familiar Climates - Obolensky, Marguerite; Tabellini, Marco; Taylor, Charles (National Bureau of Economic Research Working Paper Series, 2024)
This paper introduces the concept of “climate matching” as a driver of migration and establishes several new results. First, we show that climate strongly predicts the spatial distribution of immigrants in the US, both historically (1880) and more recently (2015), whereby movers select destinations with climates similar to their place of origin. Second, we analyze historical flows of German, Norwegian, and domestic migrants in the US and document that climate sorting also holds within countries. Third, we exploit variation in the long-run change in average US climate from 1900 to 2019 and find that migration increased more between locations whose climate converged. Fourth, we verify that results are not driven by the persistence of ethnic networks or other confounders, and provide evidence for two complementary mechanisms: climate-specific human capital and climate as amenity. Fifth, we back out the value of climate similarity by: i) exploiting the Homestead Act, a historical policy that changed relative land prices; and, ii) examining the relationship between climate mismatch and mortality. Finally, we project how climate change shapes the geography of US population growth by altering migration patterns, both historically and into the 21st century.
Author contact info: Marguerite Obolensky E-Mail: m.obolensky@columbia.edu Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu Charles A. Taylor Harvard Kennedy School 79 John F Kennedy St, B-409 Cambridge, MA 02138 USA E-Mail: ctaylor@hks.harvard.edu

Fiscal Stimulus, Deposit Competition, and the Rise of Shadow Banking: Evidence from China - Acharya, Viral V; Jun, Qian; Su, Yang; Yang, Zhishu (National Bureau of Economic Research Working Paper Series, 2024)
The rise of shadow banking and attendant financial fragility in China can be traced to intensified deposit competition following the global financial crisis (GFC). Deposit competition intensified after the GFC because the GFC slowed down banks’ deposit growth from cross-border money inflows and simultaneously led to fiscal stimulus supported by banks’ credit expansion. Exploiting the fact that one big state-owned bank was particular affected by the GFC through these two channels, we document—by exploring small and medium-sized banks’ branch-level overlap with this big bank—that deposit competition increased banks’ reliance on shadow banking. In particular, exposed banks issued Wealth Management Products (WMPs)—short-maturity, off-balance-sheet substitutes for deposits—creating rollover risks for the issuers, as reflected by higher yields on new WMPs, higher borrowing rates in the interbank market, and lower stock-market performance during liquidity stress.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Qian Jun Fanhai International School of Finance Fudan University Shanghai, China E-Mail: qianj@fudan.edu.cn Yang Su Business School Chinese University of Hong Kong Hong Kong, China E-Mail: yangsu@cuhk.edu.hk 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

Uncertainty and Individual Discretion in Allocating Research Funds - Goldstein, Anna; Kearney, Michael (National Bureau of Economic Research Working Paper Series, 2024)
There is a long-standing tradition in public research funding agencies of distributing funds via peer review, which aggregates evaluations of proposed research ideas from a group of external experts. Despite complaints that this process is biased against novel ideas, there is poor understanding of an alternative system that may overcome this bias: the use of individual discretion. Here, we conduct the first quantitative study of how individual discretion affects a research funding portfolio. Using internal project selection data from the Advanced Research Projects Agency-Energy (ARPA-E), we describe how a portfolio of projects selected by individual discretion differs from a portfolio of projects selected by traditional peer review. We show that ARPA-E program directors tend to fund proposals with greater disagreement among experts, and they also appear to prefer proposals described in reviewer comments as “creative.” These choices do not result in a significant tradeoff with short-term project performance, and they enable ARPA-E to fund more uncertain and creative research ideas, which supports the agency’s mission of pursuing novel ideas for transformational energy technology.
Author contact info: Anna Goldstein E-Mail: apgoldst@gmail.com Michael Kearney E-Mail: mkearney@mit.edu

The Role of Friends in the Opioid Epidemic - Adamopoulou, Effrosyni; Greenwood, Jeremy; Guner, Nezih; Kopecky, Karen (National Bureau of Economic Research Working Paper Series, 2024)
The role of friends in the US opioid epidemic is examined. Using data from the National Longitudinal Survey of Adolescent Health (Add Health), adults aged 25-34 and their high school best friends are focused on. An instrumental variable technique is employed to estimate peer effects in opioid misuse. Severe injuries in the previous year are used as an instrument for opioid misuse in order to estimate the causal impact of someone misusing opioids on the probability that their best friends also misuse. The estimated peer effects are significant: Having a best friend with a reported serious injury in the previous year increases the probability of own opioid misuse by around 7 percentage points in a population where 17 percent ever misuses opioids. The effect is driven by individuals without a college degree and those who live in the same county as their best friends.
Author contact info: Effrosyni Adamopoulou ZEW L 7,1 68161 Mannheim Germany E-Mail: effrosyni.adamopoulou@zew.de 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

Intergenerational Mobility and Credit - Braxton, J. Carter; Chikhale, Nisha; Herkenhoff, Kyle F; Phillips, Gordon M (National Bureau of Economic Research Working Paper Series, 2024)
We combine the Decennial Census, credit reports, and administrative earnings to create the first panel dataset linking parent’s credit access to the labor market outcomes of children in the U.S. We find that a 10% increase in parent’s unused revolving credit during their children’s adolescence (13 to 18 years old) is associated with 0.28% to 0.37% greater labor earnings of their children during early adulthood (25 to 30 years old). Using these empirical elasticities, we estimate a dynastic, defaultable debt model to examine how the democratization of credit since the 1970s – modeled as both greater credit limits and more lenient bankruptcy – affected intergenerational mobility. Surprisingly, we find that the democratization of credit led to less intergenerational mobility and greater inequality. Two offsetting forces underlie this result: (1) greater credit limits raise mobility by facilitating borrowing and investment among low-income households; (2) however, more lenient bankruptcy policy lowers mobility since low-income households dissave, hit their constraints more often, and reduce investments in their children. Quantitatively, the democratization of credit is dominated by more lenient bankruptcy policy and so mobility declines between the 1970s and 2000s.
Author contact info: J. Carter Braxton University of Wisconsin E-Mail: j.carter.braxton@gmail.com Nisha Chikhale E-Mail: chikhale@wisc.edu Kyle F. Herkenhoff University of Minnesota Department of Economics 4-101 Hanson Hall 1925 Fourth Street South Minneapolis, MN 55455 Tel: 925/360-7623 E-Mail: kfh@umn.edu Gordon M. Phillips Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 E-Mail: gordon.m.phillips@gmail.com

Automation and Gender: Implications for Occupational Segregation and the Gender Skill Gap - Cortés, Patricia; Feng, Ying; Guida-Johnson, Nicolás; Pan, Jessica (National Bureau of Economic Research Working Paper Series, 2024)
We examine the differential effects of automation on the labor market and educational outcomes of women relative to men over the past four decades. Although women were disproportionately employed in occupations with a high risk of automation in 1980, they were more likely to shift to high-skill, high-wage occupations than men in over time. We provide a causal link by exploiting variation in local labor market exposure to automation attributable to historical differences in local industry structure. For a given change in the exposure to automation across commuting zones, women were more likely than men to shift out of routine task-intensive occupations to high-skill, high wage occupations over the subsequent decade. The net effect is that initially routine-intensive local labor markets experienced greater occupational gender integration. College attainment among younger workers, particularly women, also rose significantly more in areas more exposed to automation. We propose a model of occupational choice with endogenous skill investments, where social skills and routine tasks are q-complements, and women have a comparative advantage in social skills, to explain the observed patterns. Supporting the model mechanisms, areas with greater exposure to automation experienced a greater movement of women into occupations with high social skill (and high cognitive) requirements than men.
Author contact info: Patricia Cortés Questrom School of Business Boston University 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/353-3646 E-Mail: pcortes@bu.edu Ying Feng Department of Economics National University of Singapore 1 Arts Link Singapore 117570 E-Mail: ecsfy@nus.edu.sg Nicolás Guida-Johnson Department of Economics Pontificia Universidad Javeriana Bogotá, Colombia E-Mail: nguida@javeriana.edu.co Jessica Pan Department of Economics National University of Singapore 1 Arts Link Singapore E-Mail: jesspan@nus.edu.sg

Price Sensitivity and Information Barriers to the Take-up of Naloxone - Jacobson, Mireille; Powell, David (National Bureau of Economic Research Working Paper Series, 2024)
We conducted a field experiment that randomized advertisements, advertisement content, and prices across 2,204 counties in the United States to study the impacts on online purchases of naloxone, an opioid overdose reversal drug. Advertising increased website users but only impacted purchases when combined with a price reduction. Messages emphasizing the discreet nature of online sales had no additional impact on purchases. Comparing counties with advertisements featuring a highly discounted price to those featuring the full price, we estimate a price elasticity of demand for online naloxone of -1.3. Price is a significant barrier to online purchases of this life-saving medication
Author contact info: Mireille Jacobson The Leonard Davis School of Gerontology University of Southern California 3715 McClintock Ave Los Angeles, CA 90089-0191 E-Mail: mireillj@usc.edu David Powell RAND Corporation 1776 Main Street P.O. Box 2138 Santa Monica, CA 90407 Tel: 617-230-1592 E-Mail: dpowell@rand.org

Trust and Health Care-Seeking Behavior - Darden, Michael E; Macis, Mario (National Bureau of Economic Research Working Paper Series, 2024)
We present results from a nationally representative survey of American adults, guided by a simple theoretical model expressing health care-seeking behavior as a function of economic and behavioral fundamentals and highlighting the role of trust. We report several findings. First, we document a strong association between higher levels of trust in the health care system and reported care-seeking behavior, both retrospective and anticipated. This relationship holds across several care scenarios, from routine check-ups to vaccinations. Second, the impact of trust on health care utilization is similar in magnitude to that of factors such as income and education, long recognized as crucial in the existing literature. Third, the relationship between trust and care-seeking behavior appears to be mediated by key mechanisms from our theoretical framework, notably individuals’ beliefs about the system's effectiveness in managing their health and their personal disutility tied to medical visits. Fourth, we ask respondents about trust in specific health care system sectors, and we find important heterogeneity in the associations between trust and care-seeking behavior, notably between trust in the Centers for Disease Control and Prevention and the likelihood to receive flu and COVID-19 vaccinations. Finally, we find no differential relationship between trust and care-seeking for Black respondents, but we find important differences by age and political affiliation. Our findings hold significant implications for policy, particularly given that trust in medical and, more broadly, scientific expertise is increasingly difficult to establish.
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 Mario Macis Johns Hopkins University Carey Business School 1717 Massachusetts Ave, Office 359 Washington, DC 20036 E-Mail: mmacis@jhu.edu

Bankruptcy Exemption of Repo Markets: Too Much Today for Too Little Tomorrow? - Acharya, Viral V; Anshuman, V. Ravi; Viswanathan, S. Vish (National Bureau of Economic Research Working Paper Series, 2024)
We examine the desirability of granting “safe harbor” provisions to creditors of financial intermediaries in sale-and-repurchase (repo) contracts. Exemption from an automatic stay in bankruptcy enables financial intermediaries to raise greater liquidity and induces entry of intermediaries with higher leverage during normal times. This liquidity creation occurs, however, at the cost of ex-post inefficiency when there are adverse aggregate shocks to the fundamental quality of collateral underlying the contracts. When exempt from bankruptcy, creditors of highly leveraged financial intermediaries respond to such shocks by engaging in collateral liquidations. Financial arbitrage by less leveraged financial intermediaries equilibrates returns from acquiring collateral at fire-sale prices and returns from real-sector lending, inducing higher lending rates, a deterioration in endogenous asset quality, and in the extremis, a credit crunch for the real sector. Given this distributive externality, taming the leverage cycle by not granting safe harbors, i.e., requiring an automatic stay on repo contracts in bankruptcy, can be not only ex-post optimal, but also ex-ante optimal, especially for illiquid collateral with high exposure to aggregate risk.
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 V. Ravi Anshuman Bannerghatta Road Bangalore, Karnataka 560-076 INDIA India E-Mail: anshuman@iimb.ernet.in S. Vish Viswanathan Duke University Fuqua School of Business 100 Fuqua Drive Durham, NC 27708 E-Mail: viswanat@duke.edu

(Almost) 200 Years of News-Based Economic Sentiment - van Binsbergen, Jules H; Bryzgalova, Svetlana; Mukhopadhyay, Mayukh; Sharma, Varun (National Bureau of Economic Research Working Paper Series, 2024)
Using text from 200 million pages of 13,000 US local newspapers and machine learning methods, we construct a 170-year-long measure of economic sentiment at the country and state levels, that expands existing measures in both the time series (by more than a century) and the cross-section. Our measure predicts GDP (both nationally and locally), consumption, and employment growth, even after controlling for commonly-used predictors, as well as monetary policy decisions. Our measure is distinct from the information in expert forecasts and leads its consensus value. Interestingly, news coverage has become increasingly negative across all states in the past half-century.
Author contact info: Jules H. van Binsbergen The Wharton School University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 E-Mail: julesv@wharton.upenn.edu Svetlana Bryzgalova London Business School Regent's Park London NW1 4SA E-Mail: sbryzgalova@london.edu Mayukh Mukhopadhyay Sussex Place Regent's Park London Business School London NW1 4SA United Kingdom E-Mail: mmukhopadhyay@london.edu Varun Sharma E-Mail: vs12@iu.edu

The Mismeasurement of Work Time: Implications for Wage Discrimination and Inequality - Borjas, George J; Hamermesh, Daniel S (National Bureau of Economic Research Working Paper Series, 2024)
Comparing measures of work time in the recall CPS-ASEC data with contemporaneous measures reveals many logical inconsistencies and probable errors. About 8 percent of ASEC respondents report weeks worked last year that contradict their current work histories in the Basic monthly interviews; the error rate is over 50 percent among workers who move in and out of the workforce. Over 20 percent give contradictory information about whether they usually work a full-time weekly schedule. Part of the inconsistency arises because an increasing fraction of ASEC respondents (over 20 percent by 2018) consists of people whose record was fully imputed. The levels and trends of the errors differ by gender and race, and they affect measured wage differentials between 1978 to 2018. Adjusting for the errors and imputations, gender wage gaps among all workers narrowed by 4 log points more than is commonly reported, and residual wage inequality decreased by 6 log points more. In a very carefully defined sample of full-time year-round workers, gender and racial wage differentials narrowed slightly less than previously estimated using ASEC data, but much more than indicated by commonly used estimates from CPS Outgoing Rotation Groups.
Author contact info: George J. Borjas Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 Tel: 617/495-1393 Fax: 617/495-9532 E-Mail: gborjas@harvard.edu Daniel S. Hamermesh 333 West 57th Street, Apt. 706 New York, NY 10019 E-Mail: hamermes@eco.utexas.edu

Outsourcing Policy and Worker Outcomes: Causal Evidence from a Mexican Ban - Estefan, Alejandro; Gerhard, Roberto; Kaboski, Joseph P; Kondo, Illenin O; Qian, Wei (National Bureau of Economic Research Working Paper Series, 2024)
A weakening of labor protection policies is often invoked as one cause of observed monopsony power and the decline in labor's share of income, but little evidence exists on the causal impact of labor policies on wage markdowns. Using confidential Mexican economic census data from 1994 to 2019, we document a rising trend over this period in on-site outsourcing. Then, leveraging data from a manufacturing panel survey from 2013 to 2023 and a natural experiment featuring a ban on domestic outsourcing in 2021, we show that the ban drastically reduced outsourcing, increased wages, and reduced measured markdowns without lowering output or employment. Consistent with the presence of monopsony power, we observe large markdowns for the largest firms, with the decline in markdowns in response to the ban concentrated among high-markdown firms. However, we also find that the reform reduced capital investment and increased the probability of market exit.
Author contact info: Alejandro Estefan 1010 Jenkins Nanovic Halls University of Notre Dame Notre Dame, IN 46556 United States of America E-Mail: mestefan@nd.edu Roberto Gerhard E-Mail: roberto.gerhard@stps.gob.mx Joseph P. Kaboski Department of Economics University of Notre Dame 3039 Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-9906 E-Mail: jkaboski@nd.edu Illenin O. Kondo Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: kondo@illenin.com Wei Qian Haverford College 370 Lancaster Ave Chase Hall Haverford, PA 19041 E-Mail: wqian0901@gmail.com

Energy Hogs and Energy Angels: What Does Residential Electricity Usage Really Tell Us About Profligate Consumption? - Borenstein, Severin (National Bureau of Economic Research Working Paper Series, 2024)
Since the 1970s, high volumetric (per kilowatt-hour) electricity prices have been justified in many policy discussions as encouraging more efficient use of electricity and placing more of the cost burden on those who are less prudent in their use. The argument has been used in support of increasing-block electricity pricing, under which the price per kilowatt-hour rises as a household consumes more electricity per month. More recently, in California, opponents of a proposal to lower volumetric prices and replace the revenue through fixed monthly charges have suggested that the change would just benefit “energy hogs”. In this paper, I first investigate characteristics of households who are high electricity consumers and ask how effectively such pricing targets profligate residential electricity consumption. I then look more broadly at the energy usage individuals are responsible for in the economy, how other energy usage is priced, and the role that residential electricity use plays in the overall picture. Finally, I connect the discussion of profligate direct and indirect energy consumption with the negative externalities produced, which are typically the justification for such penalty pricing.
Author contact info: Severin Borenstein Haas School of Business University of California, Berkeley Berkeley, CA 94720-1900 Tel: 510/642-3689 E-Mail: severinborenstein@berkeley.edu

Refinancing Frictions, Mortgage Pricing and Redistribution - Berger, David W; Milbradt, Konstantin; Tourre, Fabrice; Vavra, Joseph S (National Bureau of Economic Research Working Paper Series, 2024)
There are large cross-sectional differences in how often US borrowers refinance mortgages. In this paper, we develop an equilibrium mortgage pricing model with heterogeneous borrowers and use it to show that equilibrium forces imply important cross-subsidies from borrowers who rarely refinance to those who refinance often. Mortgage reforms can potentially reduce these regressive cross-subsidies, but the equilibrium effects of these reforms can also have important distributional consequences. For example, many policies that lead to more frequent refinancing also increase equilibrium mortgage rates and thus reduce residential mortgage credit access for a large number of borrowers.
Author contact info: David W. Berger Department of Economics Duke University 419 Chapel Drive Social Science Building 231 Durham, NC 27708 Tel: 919/660-1853 E-Mail: david.berger@duke.edu Konstantin Milbradt Kellogg School of Management Northwestern University 2001 Sheridan Rd #401 Evanston, IL 60208 Tel: 847/491-8618 Fax: 847/491-5719 E-Mail: milbradt@northwestern.edu Fabrice Tourre Econ and Finance Department 55 Lexington Ave New York City, New 60610 United States E-Mail: fabrice.tourre@gmail.com Joseph S. Vavra Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-0959 E-Mail: joseph.vavra@chicagobooth.edu

Variation in State Response to Open Access: Constituent Characteristics - Libecap, Gary D (National Bureau of Economic Research Working Paper Series, 2024)
Open access, competitive exploitation can be incredibly damaging to valuable resources and the human populations that depend upon them. Even though wealth, resource rents and stocks are at stake, open access often seems to be ineffectively addressed across time and space. Institutions vary. Devising and assigning access and use rights of some type privately or within a group, recognized by the state, is the most straightforward way of confronting the problem. Alternatively, regulation can be implemented that involves limiting entry, assigning input and related capital controls, restricting exploitation times, and/or setting output restrictions. Across three settings, hard-rock minerals, oil and gas deposits, and fisheries, I outline institutional differences and provide hypotheses as to why they occur. The open-access problem is described and followed by discussion of the political economy of regulation. Variation in industry structure, resource characteristics and value, as well as heterogeneity of interests in combating open access determine outcomes. The cases are drawn from the US, but may be representative of general patterns.
Author contact info: Gary D. Libecap Distinguished Professor, Bren School of Environmental Science and Management Distinguished Professor of Economics University of California, Santa Barbara (Emeritus) 400 Daly Avenue Missoula, Montana 59801 Tel: 520-444-1695 E-Mail: glibecap@bren.ucsb.edu

Nonprofits and the Scope of Government: Theory and an Application to the Health Sector - Eggleston, Karen (National Bureau of Economic Research Working Paper Series, 2024)
Nonprofits supply many tax-financed services like healthcare and education. Yet nonprofits are absent from the canonical property rights theory of ownership. Extending the government “make or buy” decision to nonprofits and ex post frictions based on contracts as reference points suggests that contracting out to a nonprofit can be optimal when “mission” alignment credibly signals adherence to the spirit and not just the letter of the contract in unforeseen contingencies. The model sheds light on differential nonprofit presence across the spectrum of basic services, as illustrated by an application to the health sector.
Author contact info: Karen Eggleston Shorenstein Asia-Pacific Research Center Stanford University 616 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-9072 Fax: 650/723-6530 E-Mail: karene@stanford.edu

EXIM’s Exit: The Real Effects of Trade Financing by Export Credit Agencies - Kabir, Poorya; Matray, Adrien; Müller, Karsten; Xu, Chenzi (National Bureau of Economic Research Working Paper Series, 2024)
We study the role of export credit agencies—the predominant tool of industrial policy—on firm behavior by using the effective shutdown of the Export-Import Bank of the United States (EXIM) from 2015-2019 as a natural experiment. We show that firms that previously relied on EXIM support saw a 18% drop in global sales after the agency closed down, driven by a reduction in exports. Firms affected by the shutdown were unable to make up for the loss of trade financing, especially if they were financially constrained, and consequently laid off employees and curtailed investment. These negative effects were more pronounced for firms with higher export opportunities and higher ex-ante marginal revenue products of capital. Lower exports at the firm level aggregate up to lower total exports for industries most reliant on EXIM support. These findings suggest that government policies aimed at providing trade financing can boost exports and firm growth even in countries with well-developed financial markets without necessarily leading to a misallocation of resources.
Author contact info: Poorya Kabir E-Mail: bizpk@nus.edu.sg Adrien Matray Bendheim Center for Finance Princeton University 20 Washington Road Princeton, NJ 08540 Tel: 609/216-1591 E-Mail: amatray@princeton.edu Karsten Müller National University of Singapore 15 Kent Ridge Dr Singapore, 119245 E-Mail: kmueller@nus.edu.sg Chenzi Xu Graduate of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: chenzixu@stanford.edu

A Delegation Approach to Regulating Hiring Discrimination - Martellini, Paolo; Menzio, Guido (National Bureau of Economic Research Working Paper Series, 2024)
We approach the design of anti-discriminatory labor market regulation as a delegation problem. A private firm (the agent) is repeatedly faced with the opportunity of hiring one among several applicants to fill its vacancies. The firm is biased against applicants from some demographic group, and it is neutral towards applicants from some other group. Applicants differ not only with respect to their demographic characteristics, but also with respect to the idiosyncratic quality of their match with firm. A benevolent and unbiased labor market authority (the principal) enacts a hiring regulation (a direct-revelation mechanism without transfers) in order to reduce the impact of the firm's bias on its hiring behavior. The hiring regulation is constrained by the fact that the quality of the match between any particular applicant and the firm is privately observed by the firm. We characterize the optimal mechanism.
Author contact info: Paolo Martellini 1180 Observatory Drive William H. Sewell Social Science Building, Office 8442 Madison, Wisc 53706-1393 United States Tel: 2672100600 E-Mail: pa.martellini@gmail.com Guido Menzio Department of Economics New York University 19 West 4th Street, New York, NY 10012 E-Mail: gm1310@nyu.edu

Negative Weights are No Concern in Design-Based Specifications - Borusyak, Kirill; Hull, Peter (National Bureau of Economic Research Working Paper Series, 2024)
Recent work shows that popular partially-linear regression specifications can put negative weights on some treatment effects, potentially producing incorrectly-signed estimands. We counter by showing that negative weights are no problem in design-based specifications, in which low-dimensional controls span the conditional expectation of the treatment. Specifically, the estimands of such specifications are convex averages of causal effects with “ex-ante” weights that average the potentially negative “ex-post” weights across possible treatment realizations. This result extends to design-based instrumental variable estimands under a first-stage monotonicity condition, and applies to “formula” treatments and instruments such as shift-share instruments.
Author contact info: Kirill Borusyak Department of Agricultural and Resource Economics University of California, Berkeley 222 Giannini Hall Berkeley, CA 94720 Tel: 5106465784 E-Mail: k.borusyak@berkeley.edu Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu

The Rise of Factor Investing: "Passive" Security Design and Market Implications - Cong, Lin William; Huang, Shiyang; Xu, Douglas (National Bureau of Economic Research Working Paper Series, 2024)
We model financial innovations such as Exchange-Traded Funds, smart beta products, and many index-based vehicles as composite securities (CSs) that facilitate trading the common factors in assets' liquidation values. Through accessing a larger basket of assets in endogenously chosen proportions, CSs reduce investors' duplication of effort in trading multiple securities and attract more factor investors. We characterize analytically how competitive CS designers in equilibrium optimally select liquid underlying assets representative of the factors and find corroborating evidence in ETF data. CS trading entails investors' strategic and active decisions, consequently impounding more systematic information into prices. Their rise creates leads to greater informational efficiency, price variability, and co-movements in the underlying asset markets, as well as potentially heterogeneous effects on liquidity and asset-specific information acquisition/incorporation, depending on the importance of factors for asset value. The predictions explain and reconcile the rich (and often mixed) empirical observations about various types of CSs in the extant literature.
Author contact info: Lin William Cong SC Johnson College of Business Cornell University Sage Hall Ithaca, NY 14853 Tel: 607/255-7859 E-Mail: will.cong@cornell.edu Shiyang Huang The University of Hong Kong Pokfulam Road, Hong Kong E-Mail: huangsy@hku.hk Douglas Xu University of Florida Warrington College of Business 1454 Union Rd Stuzin Hall 315 Gainesville, FL 32611 Tel: 3123911257 E-Mail: douglas.xu@warrington.ufl.edu

Disentangling Various Explanations for the Declining Labor Share: Evidence from Millions of Firm Records - Harrison, Ann (National Bureau of Economic Research Working Paper Series, 2024)
This paper uses millions of records from a cross-country and time series database of both publicly listed and private companies to disentangle the role of technological change, market power, and globalization in driving a fall in the labor share. Labor shares are measured at the enterprise level as the share of total remuneration to workers in value-added. Technological change is measured using research and development expenditures or total factor productivity growth. Market power is measured using four firm and twenty firm concentration ratios and globalization is measured as export shares in total revenues. We also supplement the cross-country evidence with a more in depth look at China using its industrial census. The evidence suggests that between 1995 and 2019 the most important driver of falling labor shares was technological change. Greater market power (measured by firm concentration ratios) also contributed to lower labor shares, but the magnitudes are smaller. Finally, the evidence on globalization is mixed: trade shares are at times negatively associated with the labor share but in the case of China there is a strong positive relationship between exporting and labor shares at the enterprise level.
Author contact info: Ann Harrison Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: harrison@haas.berkeley.edu

Patient Costs and Physicians' Information - Dickstein, Michael J; Jeon, Jihye; Morales, Eduardo (National Bureau of Economic Research Working Paper Series, 2024)
Health insurance plans in the U.S. increasingly use price mechanisms to steer demand for prescription drugs. The effectiveness of these incentives, however, depends both on physicians' price sensitivity and their knowledge of patient prices. We develop a moment inequality model that allows researchers to identify agents' preferences without fully specifying their information. Applying this model to diabetes care, we find that physicians lack detailed price information and are more price-elastic than full-information models imply. We predict that providing physicians detailed information on prices at the point of prescribing can save patients 12-23% of their out-of-pocket costs for diabetes treatment.
Author contact info: Michael J. Dickstein New York University Stern School of Business Kaufman Management Center,7-78 44 West 4th Street New York, NY 10012 Tel: (212) 998-0479 E-Mail: michael.dickstein@nyu.edu Jihye Jeon Boston University Department of Economics 270 Bay State Road Boston, MA 02215 E-Mail: jjeon@bu.edu Eduardo Morales Department of Economics Princeton University 291 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 617/308-7662 E-Mail: ecmorale@princeton.edu

Haste or Waste? The Role of Presale in Residential Housing - Chen, Ziyang; Hu, Maggie Rong; Jin, Ginger Zhe; Zhou, Qiyao (National Bureau of Economic Research Working Paper Series, 2024)
This paper provides the first theory and evidence on the role of presale policies in the residential housing market. We start with constructing a novel dataset of unfinished projects, presale policies, and land auction outcomes across 270 major cities in China. We then identify 2,330 unfinished residential projects from 2010 to 2017 on a citizen complaint website run by the central government. We find that both presale criterion and postsale supervision of construction costs relate to a lower probability of unfinished projects. But only presale criterion relates negatively to the pace of new housing development, measured by developers' multitasking and land auction outcomes. A back-of-the-envelope calculation suggests that the average bundle of presale policies is inferior to the Pareto frontier in our sampled cities. Tightening the regulation on postsale supervision by 2 standard deviations may lead to a 58% reduction in the occurrence of unfinished projects, while keeping the pace of new housing development unchanged. Eliminating unfinished projects would entail a drastic increase in both presale criterion and postsale supervision, with slower housing development.
Author contact info: Ziyang Chen Division of Social Science Hong Kong University of Science and Technology Clear Water Bay, Kowloon Hong Kong E-Mail: zychenfr@gmail.com Maggie Rong Hu The Chinese University of Hong Kong Room 710, 7/F Cheng Yu Tung Building No.12, Chak Cheung Street Shatin, New Territories, Hong Kong China E-Mail: maggiehu@cuhk.edu.hk 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 Qiyao Zhou Department of Economics, University of Maryland College Park, Mary 20742 E-Mail: qiyaoz@umd.edu

Innovation Booms, Easy Financing, and Human Capital Accumulation - Hombert, Johan; Matray, Adrien (National Bureau of Economic Research Working Paper Series, 2023)
Innovation booms are often fueled by easy financing that allows new technology firms to pay high wages that attracts skilled labor. Using the late 1990s Information and Communication Technology (ICT) boom as a laboratory, we show that skilled labor joining this new sector experienced sizeable long-term earnings losses. We show these earnings patterns are explained by faster skill obsolescence rather than either worker selection or the overall bust in the ICT sector. During the boom, financing flowed more to firms whose workers would experience the largest productivity declines, amplifying the negative effect of labor reallocation on aggregate human capital accumulation.
Author contact info: Johan Hombert HEC Paris 1 rue de la Liberation 78351 Jouy en Josas France E-Mail: hombert@hec.fr Adrien Matray Bendheim Center for Finance Princeton University 20 Washington Road Princeton, NJ 08540 Tel: 609/216-1591 E-Mail: amatray@princeton.edu

Firms and Worker Health - Ahammer, Alexander; Packham, Analisa; Smith, Jonathan (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the role of firms in worker health care utilization. Using linked administrative data on Austrian workers from 1998-2018, we exploit mobility between firms to estimate how much a firm contributes to worker-level differences in utilization in a setting with non-employer provided universal health care. We find that firms are responsible for nearly 30 percent of the variation in across-worker health care expenditures. Effects are not driven by changes in geography or industry. We then estimate a measure of relative firm-specific utilization and explore existing correlates to help explain these effects.
Author contact info: Alexander Ahammer Department of Economics Johannes Kepler University Linz Altenberger Straße 69 Linz 4040 Austria E-Mail: Alexander.Ahammer@jku.at Analisa Packham Department of Economics Vanderbilt University 2301 Vanderbilt Place Nashville, TN 37235 E-Mail: analisa.packham@vanderbilt.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

Market Design for Surface Water - Ferguson, Billy A; Milgrom, Paul (National Bureau of Economic Research Working Paper Series, 2023)
Many proposed surface water transfers undergo a series of regulatory reviews designed to mitigate hydrological and economic externalities. While these reviews help limit externalities, they impose substantial transaction costs that also limit trade. To promote a well-functioning market for surface water in California, we describe how a new kind of water right and related regulatory practices can balance the trade-off between externalities and transaction costs, and how a Water Incentive Auction can incentivize a sufficient number of current rights holders to swap their old rights for the new ones. The Water Incentive Auction adapts lessons learned from the US government’s successful Broadcast Incentive Auction.
Author contact info: Billy A. Ferguson Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: billyf@stanford.edu Paul Milgrom Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 E-Mail: milgrom@stanford.edu

Financial Integration and Monetary Policy Coordination - Bianchi, Javier; Coulibaly, Louphou (National Bureau of Economic Research Working Paper Series, 2023)
Financial integration generates macroeconomic spillovers that may require international monetary policy coordination. We show that individual central banks may set nominal interest rates too low or too high relative to the cooperative outcome. We identify three sufficient statistics that determine whether the Nash equilibrium exhibits under-tightening or over-tightening: the output gap, sectoral differences in labor intensity, and the trade balance response to changes in nominal rates. Independently of the shocks hitting the economy, we find that under-tightening is possible during economic expansions or contractions. For large shocks, the gains from coordination can be substantial.
Author contact info: Javier Bianchi Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: javieribianchi@gmail.com Louphou Coulibaly Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 E-Mail: lcoulibaly@wisc.edu

What Drives the Exchange Rate? - Itskhoki, Oleg; Mukhin, Dmitry (National Bureau of Economic Research Working Paper Series, 2023)
We use a general open-economy wedge-accounting framework to characterize the set of shocks that can account for major exchange rate puzzles. Focusing on a near-autarky behavior of the economy, we show analytically that all standard macroeconomic shocks — including productivity, monetary, government spending, and markup shocks — are inconsistent with the broad properties of the macro exchange rate disconnect. News shocks about future macroeconomic fundamentals can generate plausible exchange rate properties. However, they show up prominently in contemporaneous asset prices, which violates the finance exchange rate disconnect. International shocks to trade costs, terms of trade and import demand, while potentially consistent with disconnect, do not robustly generate the empirical Backus-Smith, UIP and terms-of-trade properties. In contrast, the observed exchange rate behavior is consistent with risk-sharing (financial) shocks that arise from shifts in demand of foreign investors for home-currency assets, or vice versa.
Author contact info: Oleg Itskhoki Department of Economics University of California, Los Angeles Bunche Hall, 315 Portola Plaza Los Angeles, CA 90095-1477 Tel: 609/216-4489 E-Mail: itskhoki@econ.ucla.edu Dmitry Mukhin 32 Lincolns Inn Fields Room 1.24 Houghton Street WC2A 2AE London United Kingdom E-Mail: D.Mukhin@lse.ac.uk

The Informational Centrality of Banks - Foley-Fisher, Nathan; Gorton, Gary B; Verani, Stéphane (National Bureau of Economic Research Working Paper Series, 2023)
The equity and debt prices of large nonbank firms contain information about the future state of the banking system. In this sense, banks are informationally central. The amount of this information varies over time and over equity and debt. During a financial crisis banks are, by definition of a crisis, at risk of failure. Debt prices became about 50 percent more informative than equity prices about the future state of the banking system during the financial crisis of 2007-2009. This was partly due to investors’ fears that banks might not be able to refinance their debt.
Author contact info: Nathan Foley-Fisher Federal Reserve Board 20th Street and C St. NW Washington, DC 20551 US E-Mail: nathan.c.foley-fisher@frb.gov Gary B. Gorton Yale School of Management 135 Prospect Street P.O. Box 208200 New Haven, CT 06520-8200 Fax: 203/432-8931 E-Mail: Gary.Gorton@yale.edu Stéphane Verani Federal Reserve Board 20th Street and Constitution Avenue NW Washington, DC 20551 E-Mail: stephane.h.verani@frb.gov

Wellbeing, Expectations and Unemployment in Europe - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2023)
We find expectations are more sensitive to economic growth than traditional wellbeing metrics. We examine Eurobarometer micro data from 1973-2023 on movements in life satisfaction along with data from 1995-2022 on five expectations variables on and individual’s life and their financial and job situations plus their views on the economic and employment situation of their country in the year ahead. These expectations start to decline several months before the onset of downturns with especially large drops for the Great Recession and Covid. Annual GDP growth is positively associated with these expectations variables while it is uncorrelated with life satisfaction. The unemployment rate and the CPI reduce both. We analyze data for 29 European countries to predict changes in the unemployment rate 12 months ahead using individuals’ fears of unemployment in the presence of country and year fixed effects and lagged unemployment. We also use firms' expectations of future employment, which are also predictive of what happens to unemployment three months later. Using our preferred model specification, we present out-of-sample predictions that track actual movements in unemployment rates closely over a period in which there were two major recessions and unemployment shifted by a factor of two.
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

Migration Policy and the Supply of Foreign Physicians: Evidence from the Conrad 30 Waiver Program - Braga, Breno; Khanna, Gaurav; Turner, Sarah (National Bureau of Economic Research Working Paper Series, 2023)
In the United States, rural and low-income communities have difficulty attracting and retaining physicians, potentially adversely impacting health outcomes. With a limited supply of physicians completing medical school at US universities, foreign-born and educated physicians provide a potential source of supply in underserved areas. For international medical school graduates (IMGs) the terms of the commonly used J-1 visa require a return to the home country for two years following employment in medical residency. Our analysis examines the extent to which the Conrad 30 Visa Waiver impacts the supply of physicians at state and local levels, particularly in areas designated as medically underserved. Changes in the federal limit on the number of waivers per state, combined with variation in the state-level restrictions on eligible specialties, and geographies in which physicians can work, provide evidence on the role of visa restrictions in limiting the supply of doctors. Expansion of the cap on visa waivers increased the supply of IMGs, particularly in states that did not limit waiver recipients to primary care physicians or particular places of employment. There is little evidence of reductions in US-trained doctors in states where IMG increases were the largest, suggesting little evidence for crowding out.
Author contact info: Breno Braga Urban Institute 500 L'Enfant Plaza SW Washington, DC 20024 E-Mail: bbraga@urban.org 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 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

Universal Portfolio Shrinkage - Kelly, Bryan T; Malamud, Semyon; Pourmohammadi, Mohammad; Trojani, Fabio (National Bureau of Economic Research Working Paper Series, 2023)
We introduce a novel shrinkage methodology for building optimal portfolios in environments of high complexity, where the number of assets is comparable to or larger than the number of observations. Our universal portfolio shrinkage approximator (UPSA) is given in closed form, is easy to implement, and improves upon existing shrinkage methods. It exhibits an explicit two-fund separation, complementing the Markowitz portfolio with an optimal complexity correction. UPSA does not annihilate the low-variance principal components (PCs) of returns; instead, it optimally reweighs them and produces a stochastic discount factor that substantially improves on its feasible PC-sparse counterparts.
Author contact info: Bryan T. Kelly Yale School of Management 165 Whitney Ave. New Haven, CT 06511 Tel: 203-432-2221 E-Mail: bryan.kelly@yale.edu Semyon Malamud Swiss Finance Institute @ EPFL Quartier UNIL-Dorigny, Extranef 213 CH - 1015 Lausanne Switzerland E-Mail: semyon.malamud@epfl.ch Mohammad Pourmohammadi E-Mail: mohammad.pourmohammadi@unige.ch Fabio Trojani University of Geneva - Swiss Finance Institute E-Mail: fabio.trojani@alphacruncher.com

Valuing Technology Complementarities: Rooftop Solar and Energy Storage - Bollinger, Bryan; Darghouth, Naim; Gillingham, Kenneth; Gonzalez-Lira, Andres (National Bureau of Economic Research Working Paper Series, 2023)
Product complementarities can shape market patterns, influencing the demand for related products and their accessories. This study examines complementarities in the demand for rooftop solar and an accessory, battery energy storage. Using nationwide administrative data, we estimate a dynamic nested-logit model of solar and storage adoption. We quantify the demand complementarity between solar and storage, and find that if storage was not available, 20% of households who coadopt solar and storage would not adopt anything. We find that the demand for solar and storage bundles increases with power outages, with a larger effect in California.
Author contact info: Bryan Bollinger 40 W 4th St New York, NY 10012 E-Mail: bryan.bollinger@stern.nyu.edu Naim Darghouth E-Mail: ndarghouth@lbl.gov Kenneth Gillingham School of the Environment Yale University 195 Prospect Street New Haven, CT 06511 Tel: 203/436-5465 E-Mail: kenneth.gillingham@yale.edu Andres Gonzalez-Lira Santiago Chile E-Mail: andres.gonzalez-lira@yale.edu

Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia - Fenizia, Alessandra; Saggio, Raffaele (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the long-run economic impact of dismissing city councils infiltrated by organized crime. Applying a matched difference-in-differences design to the universe of Italian social security records, we find that city council dismissals (CCDs) increase employment, the number of firms, and industrial real estate prices. The effects are concentrated in Mafia-dominated sectors and in municipalities where fewer incumbents are re-elected. The dismissals generate large economic returns by weakening the Mafia and fostering trust in local institutions. The analysis suggests that CCDs represent an effective intervention for establishing legitimacy and spurring economic activity in areas dominated by organized crime.
Author contact info: Alessandra Fenizia Department of Economics 2115 G Street NW George Washington University Washington, DC 20052 E-Mail: afenizia@gwu.edu Raffaele Saggio Department of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 Tel: 604/822-1418 E-Mail: rsaggio@mail.ubc.ca

Asset Demand of U.S. Households - Gabaix, Xavier; Koijen, Ralph S. J; Mainardi, Federico; Oh, Sangmin; Yogo, Motohiro (National Bureau of Economic Research Working Paper Series, 2023)
We use novel monthly security-level data on U.S. household portfolio holdings, flows, and returns to analyze asset demand across an extensive range of asset classes, including both public and private assets. Our dataset covers a broad range of households across the wealth distribution, notably including 439 billionaires. This ensures representation of ultra-high-net-worth (UHNW) households that are typically not well covered in survey data. With these data, we study the portfolio rebalancing behavior of households and ask whether (and, if so, which) households play an important stabilizing role in financial markets. Our findings reveal a stark contrast: less affluent households sell U.S. equities amid market downturns, while UHNW households buy and contribute to stabilizing markets. This behavior is more pronounced among households who rebalance their portfolios more frequently. However, the sensitivity of flows to returns is generally quite small and as the trades of different wealth groups partly offset each other, the aggregate household sector plays a limited role to absorb financial fluctuations. To understand the contrasting trading behavior across households, we show that a household’s flows to U.S. equities are negatively correlated with its “active returns” (the difference between an investor’s return and the market return). However, the flows to U.S. equities of less affluent households are also positively correlated with broad market returns – perhaps due to shifts in risk aversion, sentiment, or perceived macroeconomic risk – leading this group of households to act pro-cyclically. Across all asset classes, three factors with intuitive economic interpretations explain 81% of all variation in portfolio rebalancing. Those factors bet on the long-term equity premium, the credit premium, and the premium on municipal bonds. In sum, our framework paints a quantitative picture of U.S. households’ assets and rebalancing marked by a great deal of insensitivity and inertia throughout the distribution, even for UHNW households. These new facts are useful for the calibration of macro-finance models with heterogeneous households and multiple risky asset classes.
Author contact info: Xavier Gabaix Department of Economics Harvard University Littauer Center 1805 Cambridge St Cambridge, MA 02138 E-Mail: xgabaix@fas.harvard.edu Ralph S. J. Koijen University of Chicago Booth School of Business 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: Ralph.koijen@chicagobooth.edu Federico Mainardi Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 USA E-Mail: fmainard@chicagobooth.edu Sangmin Oh University of Chicago Booth School of Business 5087 S Woodlawn Ave Chicago, IL 60637 E-Mail: sangmino@chicagobooth.edu Motohiro Yogo Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: myogo@princeton.edu

An IV Hazard Model of Loan Default with an Application to Subprime Mortgage Cohorts - Palmer, Christopher (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops a control-function methodology accounting for endogenous or mismeasured regressors in hazard models. I provide sufficient identifying assumptions and regularity conditions for the estimator to be consistent and asymptotically normal. Applying my estimator to the subprime mortgage crisis, I quantify what caused the foreclosure rate to triple across the 2003-2007 subprime cohorts. To identify the elasticity of default with respect to housing prices, I use various home-price instruments including historical variation in home-price cyclicality. Loose credit played a significant role in the crisis, but much of the increase in defaults across cohorts was caused by home-price declines unrelated to lending standards, with a 10% decline in home prices increasing subprime mortgage default rates by 50%.
Author contact info: Christopher Palmer MIT Sloan School of Management 100 Main Street, E62-639 Cambridge, MA 02142 Tel: 617/324-3901 E-Mail: cjpalmer@mit.edu

Population and Welfare: The Greatest Good for the Greatest Number - Adhami, Mohamad; Bils, Mark; Jones, Charles I; Klenow, Peter J (National Bureau of Economic Research Working Paper Series, 2023)
Economic growth is typically measured in per capita terms. But social welfare should arguably include the number of people as well as their standard of living. We decompose social welfare growth — measured in consumption-equivalent (CE) units — into contributions from rising population and rising per capita consumption. Because of diminishing marginal utility from consumption, population growth is scaled up by a value-of-life factor that exceeds one and empirically averages nearly 3 across countries since 1960. Population increases are therefore a major contributor, and CE welfare growth around the world averages more than 6% per year since 1960 as opposed to 2% per year for consumption growth. Countries such as Mexico and South Africa rise sharply in the growth rankings, whereas China, Germany, and Japan plummet. These results are robust to incorporating time use and fertility decisions using data from the U.S., Mexico, the Netherlands, Japan, South Africa, and South Korea. Falling parental utility from having fewer kids is roughly offset by increases in the “quality” of kids associated with rising time investment per child.
Author contact info: Mohamad Adhami Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 United States E-Mail: adhami@stanford.edu 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 Charles I. Jones Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305-4800 Tel: 650/725-9265 Fax: 650/725-0468 E-Mail: chad.jones@stanford.edu Peter J. Klenow Department of Economics 579 Jane Stanford Way Stanford University Stanford, CA 94305-6072 Tel: 650/725-8169 Fax: NA E-Mail: Klenow@Stanford.edu

Customer Discrimination in the Workplace: Evidence from Online Sales - Kelley, Erin M; Lane, Gregory V; Pecenco, Matthew; Rubin, Edward A (National Bureau of Economic Research Working Paper Series, 2023)
Many workers are evaluated on their ability to engage with customers. We measure the impact of gender-based customer discrimination on the productivity of online sales agents in Sub-Saharan Africa. Using a novel framework that randomly varies the gender of names presented to customers without changing worker behavior, we find the assignment of a female-sounding name leads to 50 percent fewer purchases. Customers also lag in responding, are less expressive, and avoid discussing purchases. We show similar results for customers around the world and across workers. Removing customer bias, we find women would be more productive than their male co-workers.
Author contact info: Erin M. Kelley World Bank E-Mail: erinmkelley@worldbank.org Gregory Lane Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: laneg@uchicago.edu Matthew Pecenco E-Mail: matthew_pecenco@brown.edu Edward A. Rubin Department of Economics University of Oregon 1415 Kincaid Street Eugene, OR 97405 E-Mail: edwardr@uoregon.edu

Girls’ Night In? Effects of the Kenyan COVID-19 Lockdown on Web Browsing - Giardili, Soledad; Jain, Sanjay; Miller, Amalia R; Ramdas, Kamalini; Sungu, Alp (National Bureau of Economic Research Working Paper Series, 2023)
We present the first objective evidence on how COVID-19 lockdowns affected internet browser usage in Africa, using detailed digital trace data on PC-based and mobile-based browsing patterns of 316 Kenyans who had access to a PC, covering the period before and during Kenya’s first national COVID-19 curfew that was declared on March 25, 2020. We find that total daily browser usage increased by 41 minutes, or 15 percent of average browsing time, after the curfew started. We find no significant differences in total browsing time during the curfew by gender or by residence in high-speed vs. low-speed broadband access areas. However, we do find gender differences in the content of browsing. Women’s time on YouTube and Netflix exceeded men’s from the start of our sample period, and the gender gap in Netflix browsing increased by 36 minutes daily, corresponding to almost twice the average daily Netflix time in the sample. Men’s browsing became less concentrated during the curfew, across both domains and topics, but women’s did not. The degree of overlap in browsing between men and women also increased, likely due to men visiting sites that were previously exclusively visited by women. Across the entire sample, browsing of Kenyan domains dropped significantly relative to that of non-Kenyan domains, indicating greater reliance on international content during this period of economic and social upheaval.
Author contact info: Soledad Giardili 31 Buccleuch Place Edinburgh EH8 9JT Scotland E-Mail: soledad.giardili@ed.ac.uk Sanjay Jain E-Mail: sanjay.jain@economics.ox.ac.uk Amalia R. Miller Department of Economics University of Virginia P. O. Box 400182 Charlottesville, VA 22904 Tel: 434/924-6750 Fax: 434/982-2904 E-Mail: armiller@virginia.edu Kamalini Ramdas London Business School A215 Sussex Place Regent's Park London NW11 8AA United Kingdom E-Mail: kramdas@london.edu Alp Sungu The Wharton School of the University of Pennsylvania E-Mail: alpsungu@upenn.edu

Lifetime Memories of Inflation: Evidence from Surveys and the Lab - Salle, Isabelle; Gorodnichenko, Yuriy; Coibion, Olivier (National Bureau of Economic Research Working Paper Series, 2023)
We study how individuals’ memories of inflation shape their expectations about future inflation using both surveys and laboratory experiments. Recalling having lived through prior disinflations has pronounced effects on how long-lived people expect the current inflation episode to last. Information treatments in which we show people prior disinflationary experiences similarly strongly reduce inflation expectations of individuals on average and are often recalled as inflation memories months later. We also show that when people try to forecast inflation in the lab, the inflation dynamics in the game can affect their beliefs much like the inflation experienced in real life. Methodologically, we compare and contrast surveys and lab experiments and discuss the pros and cons of each method, emphasizing the general consistency across the two methodologies.
Author contact info: Isabelle Salle University of Ottawa Department of Economics 120 University Ottawa ON K1N 6N5 Canada E-Mail: isalle@uottawa.ca Yuriy Gorodnichenko Department of Economics 530 Evans Hall #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/643-0720 Fax: 510/642-6615 E-Mail: ygorodni@econ.berkeley.edu Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com

The 2010 Census Confidentiality Protections Failed, Here's How and Why - Abowd, John M; Adams, Tamara; Ashmead, Robert; Darais, David; Dey, Sourya; Garfinkel, Simson L; Goldschlag, Nathan; Kifer, Daniel; Leclerc, Philip; Lew, Ethan; Moore, Scott; Rodríguez, Rolando A; et al. (National Bureau of Economic Research Working Paper Series, 2023)
Using only 34 published tables, we reconstruct five variables (census block, sex, age, race, and ethnicity) in the confidential 2010 Census person records. Using the 38-bin age variable tabulated at the census block level, at most 20.1% of reconstructed records can differ from their confidential source on even a single value for these five variables. Using only published data, an attacker can verify that all records in 70% of all census blocks (97 million people) are perfectly reconstructed. The tabular publications in Summary File 1 thus have prohibited disclosure risk similar to the unreleased confidential microdata. Reidentification studies confirm that an attacker can, within blocks with perfect reconstruction accuracy, correctly infer the actual census response on race and ethnicity for 3.4 million vulnerable population uniques (persons with nonmodal characteristics) with 95% accuracy, the same precision as the confidential data achieve and far greater than statistical baselines. The flaw in the 2010 Census framework was the assumption that aggregation prevented accurate microdata reconstruction, justifying weaker disclosure limitation methods than were applied to 2010 Census public microdata. The framework used for 2020 Census publications defends against attacks that are based on reconstruction, as we also demonstrate here. Finally, we show that alternatives to the 2020 Census Disclosure Avoidance System with similar accuracy (enhanced swapping) also fail to protect confidentiality, and those that partially defend against reconstruction attacks (incomplete suppression implementations) destroy the primary statutory use case: data for redistricting all legislatures in the country in compliance with the 1965 Voting Rights Act.
Author contact info: John M. Abowd Cornell University Tamara Adams US Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: tamara.s.adams@census.gov Robert Ashmead US Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: robert.d.ashmead@census.gov David Darais Galois, Inc. 901 N Stuart St, Ste 501 Arlington, VA 22203 E-Mail: darais@galois.com Sourya Dey Galois, Inc. 901 N Stuart St, Ste 501 Arlington, VA 22203 E-Mail: sourya@galois.com Simson L. Garfinkel BasisTech 1070 Broadway Somerville, MA 02144 E-Mail: simsong@acm.org Nathan Goldschlag Center for Economic Studies US Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: Nathan.Goldschlag@census.gov Daniel Kifer Department of Computer Science & Engineering Pennsylvania Sate University 333W Westgate Building University Park, PA 16802 E-Mail: duk17@psu.edu Philip Leclerc US Census Bureau 4600 Silver Hill Rd Washington, DC 20233 E-Mail: philip.leclerc@census.gov Ethan Lew Galois, Inc. 901 N Stuart St, Ste 501 Arlington, VA 22203 E-Mail: elew@galois.com Scott Moore Galois, Inc. 901 N Stuart St, Ste 501 Arlington, VA 22203 E-Mail: scott@galois.com Rolando A. Rodriguez US Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: rolando.a.rodriguez@census.gov Ramy N. Tadros Galois, Inc. 901 N Stuart St, Ste 501 Arlington, VA 22203 E-Mail: ramynagytadros@gmail.com Lars Vilhuber Labor Dynamics Institute 275 Ives Hall Cornell University Ithaca, NY 14853-3901 E-Mail: lars.vilhuber@cornell.edu

School Management Takeover, Leadership Change, and Personnel Policy - Duchini, Emma; Lavy, Victor; Machin, Stephen; Telhaj, Shqiponja (National Bureau of Economic Research Working Paper Series, 2023)
Low-performing, high-poverty, public schools notoriously struggle to attract and retain good teachers. This paper studies a setting where independent organizations, including charities and businesses, take over the management of under-performing schools, while funding remains public. Exploiting the staggered expansion of English Sponsor-led academies since the early 2000s, we show that the Sponsor-led takeover leads to substantial changes in the teaching body and the school personnel policy. The probability that the Sponsor appoints a new headteacher doubles upon the takeover, with the new headteacher being, on average, better paid, and more likely to come from outstanding schools. The takeover also induces teacher sorting, with older and lower-achieving teachers leaving the school, and new teachers joining the Sponsor-led school from outstanding schools. Lastly, Sponsors substantially restructure teachers’ rewarding scheme and abandon a pay scale entirely based on seniority, leading to a 10 percent increase in pay dispersion across equally experienced teachers.
Author contact info: Emma Duchini Department of Economics University of Essex Wivenhoe Park Colchester CO4 3SQ United Kingdom E-Mail: e.duchini@essex.ac.uk Victor Lavy Department of Economics University of Warwick Coventry, CV4 7AL United Kingdom Tel: 44(0) 24 7657 4158 E-Mail: v.lavy@warwick.ac.uk Stephen Machin Department of Economics and Centre for Economic Performance London School of Economics Houghton Street London WC2A 2AE United Kingdom E-Mail: s.j.machin@lse.ac.uk Shqiponja Telhaj Department of Economics University of Sussex and Centre for Economic Performance London School of Economics United Kingdom E-Mail: s.telhaj@lse.ac.uk

Long-run Impacts of Forced Labor Migration on Fertility Behaviors: Evidence from Colonial West Africa - Dupas, Pascaline; Falezan, Camille; Mabeu, Marie Christelle; Rossi, Pauline (National Bureau of Economic Research Working Paper Series, 2023)
Is the persistently high fertility in West Africa today rooted in the decades of forced labor migration under colonial rule? We study the case of Burkina Faso, considered the largest labor reservoir in West Africa by the French colonial authorities. Hundreds of thousands of young men were forcibly recruited and sent to work in neighboring colonies for multiple years. The practice started in the late 1910s and lasted until the late 1940s, when forced labor was replaced with voluntary wage employment. We digitize historical maps, combine data from multiple surveys, and exploit the historical, temporary partition of colonial Burkina Faso (and, more specifically, the historical land of the Mossi ethnic group) into three zones with different needs for labor to implement a spatial regression discontinuity design analysis. We find that, on the side where Mossi villages were more exposed to forced labor historically, there is more temporary male migration to Côte d'Ivoire up to today, and lower realized and desired fertility today. We show evidence suggesting that the inherited pattern of low-skill circular migration for adult men reduced the reliance on subsistence farming and the accompanying need for child labor. We can rule out women's empowerment or improvements in human and physical capital as pathways for the fertility decline. These findings contribute to the debate on the origins of family institutions and preferences, often mentioned to explain West Africa's exceptional fertility trends, showing that fertility choices respond to changes in modes of production.
Author contact info: Pascaline Dupas Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: pdupas@princeton.edu Camille Falezan E-Mail: cfalezan@mit.edu Marie Christelle Mabeu Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08540 E-Mail: cmabeu@princeton.edu Pauline Rossi E-Mail: Pauline.rossi@ensae.fr

The Intergenerational Health Effects of Forced Displacement: Japanese American Incarceration during WWII - Grossman, Daniel S; Khalil, Umair; Panza, Laura (National Bureau of Economic Research Working Paper Series, 2023)
We study the intergenerational health consequences of forced displacement and incarceration of Japanese Americans in the US during WWII. Incarcerated mothers had babies who were less healthy at birth. This decrease in health represents a shift in the entire birthweight distribution due to exposure to prison camps. Imprisoned individuals were less likely to have children with fathers of other ethnic groups but were more likely to receive prenatal care, invest in education, and participate in the labor market. To the extent human capital effects mitigate the full negative effects of incarceration on intergenerational health, our results are a lower bound.
Author contact info: Daniel S. Grossman Department of Economics West Virginia University Morgantown, WV 26506-6025 Tel: 304/293-7860 E-Mail: daniel.grossman@mail.wvu.edu Umair Khalil Department of Economics, Deakin University 221 Burwood Highway Burwood, VIC 3125 Australia E-Mail: khalil.umair@gmail.com Laura Panza Department of Economics University of Melbourne Melbourne, Australia E-Mail: laura.panza@unimelb.edu.au

How Rules and Compliance Impact Organizational Outcomes: Evidence from Delegation in Environmental Regulation - Fenske, James; Haseeb, Muhammad; Kala, Namrata (National Bureau of Economic Research Working Paper Series, 2023)
Formal rules within organizations are pervasive, but may be interpreted and implemented differently by actors within the organization, impacting organizational outcomes. We consider a delegation reform that changed formal rules within the environmental regulator in an Indian state, by giving decision rights to junior officers over certain types of application. Using novel data on firms' environmental permit applications and internal communications within the regulator, we study how the delegation of formal authority affects its actual allocation, the consequences for applicant firms, and the circumstances that lead senior officers to withhold this authority. The change in decision rights led to greater approval rates for applicant firms. However, only two thirds of applications that should have been delegated according to the rules were actually delegated. We show that senior officers chose to retain decision rights over more difficult applications, namely, applications with higher pollution potential. Furthermore, baseline disagreement with more subordinates' recommendations reduces delegation post-reform, and officers facing a higher backlog of applications are more likely to delegate. These results are consistent with a framework where the allocation of decision rights is determined by a knowledge hierarchy and where different senior officers face varying costs of delegation at different times.
Author contact info: James E. Fenske Department of Economics University of Warwick Gibbet Hill Road Coventry, CV4 7AL United Kingdom E-Mail: jamesfenske@gmail.com Muhammad Haseeb Priory Road Complex University of Bristol United Kingdom E-Mail: q.haseeb.ashraf@gmail.com Namrata Kala MIT Sloan School of Management 100 Main Street, E62-517 Cambridge, MA 02142 Tel: 203/500-4675 E-Mail: kala@mit.edu