International Trade, Noise Pollution, and Killer Whales - Taylor, M. Scott; Mayer, Fruzsina (National Bureau of Economic Research Working Paper Series, 2023)
Orcinus Orca is the world’s largest predator, and simultaneously a significant tourist asset and cultural icon for much of the Pacific Northwest. In the past two decades, the Southern Resident Killer whale (SRKW) population has declined by more than 25 percent, putting them at risk of extinction. The cause of this decline is hotly debated. This paper employs novel data, an innovative noise pollution model, and quasi-experimental methods borrowed from environmental economics to solve this puzzle. We find consistent evidence that vessel noise pollution from international shipping has lowered fertility and raised the mortality of the SRKW significantly. Had noise pollution remained at its pre-1998 levels, the SRKW population would be 30% larger. Noise pollution is a growing threat to marine mammals worldwide.
Author contact info: M. Scott Taylor Professor of Economics Department of Economics The University of Calgary 2500 University Drive, N.W. Calgary, AB T2N 1N4 Tel: 403/220-8912 Fax: 403/282-5262 E-Mail: m.scott.taylor1@gmail.com Fruzsina Mayer 2500 University drive NW Department of Economics Calgary, AB T2N 1N4 Canada E-Mail: fruzsina.mayer@ucalgary.ca

Do Municipal Bond Investors Pay a Convenience Premium to Avoid Taxes? - Fleckenstein, Matthias; Longstaff, Francis A (National Bureau of Economic Research Working Paper Series, 2023)
We study the valuation of state-issued tax-exempt municipal bonds and find that there are significant convenience premia in their prices. These premia parallel those identified in Treasury markets. We find evidence that these premia are tax related. Specifically, the premia are related to measures of tax and fiscal uncertainty, forecast flows into state municipal bond funds, and are directly linked to outmigration from high-tax to low-tax states and to other measures of tax aversion such as IRA and retirement plan contributions. These results suggest that investors are willing to pay a substantial premium to avoid taxes.
Author contact info: Matthias Fleckenstein University of Delaware Lerner College of Business and Economics 310 Purnell Hall Newark, DE 19716 E-Mail: mflecken@udel.edu Francis A. Longstaff UCLA Anderson Graduate School of Management 110 Westwood Plaza, Box 951481 Los Angeles, CA 90095-1481 Tel: 310/825-2218 Fax: 310/206-5455 E-Mail: francis.longstaff@anderson.ucla.edu

When Your Bootstraps Are Not Enough: How Demand and Supply Interact to Generate Learning in Settings of Extreme Poverty - Eble, Alex; Escueta, Maya (National Bureau of Economic Research Working Paper Series, 2023)
In settings of extreme poverty, how do demand and supply combine to produce child learning? In rural Gambia, caregivers with high aspirations for their children's future, measured before children start school, invest substantially more than others in children’s education. Despite this, essentially no children are literate or numerate three years later. When villages receive a highly impactful, teacher-focused supply-side intervention, however, children of high-aspirations caregivers are 25 percent more likely to achieve literacy and numeracy than others in the same village. We estimate patterns of substitutability and complementarity between demand and supply in generating learning that change with skill difficulty.
Author contact info: Alex Eble Department of Education Policy and Social Analysis Teachers College Columbia University 525 West 120th Street New York, NY 10027 E-Mail: eble@tc.columbia.edu Maya Escueta 100 Europa Drive Suite 315 Chapel Hill, NC 27517 E-Mail: maya.escueta@gmail.com

The Urban Wage Premium in Historical Perspective - Butts, Kyle; Jaworski, Taylor; Kitchens, Carl (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the urban wage premium in the United States from 1940 to 2010. Drawing on recent advances in the literature on selection on unobservables, we show how to control for heterogeneity in the characteristics of individuals that choose to live in cities to address endogenous sorting. Estimates from naive comparisons of individuals living in urban versus non-urban areas substantially overstate the urban wage premium. We find that the premium is highest in the middle of the twentieth century (about 12 percent in 1940 and 1950) relative to the early in twenty-first century (declining to a few percent by 2010). Overall, the urban wage premium is decreasing and sorting explains a larger fraction of the difference in urban versus non-urban earnings across our sample period.
Author contact info: Kyle Butts E-Mail: kyle.butts@colorado.edu Taylor Jaworski Department of Economics University of Colorado at Boulder 256 UCB Boulder, CO 80309 E-Mail: Taylor.Jaworski@Colorado.edu Carl Kitchens Department of Economics Florida State University 239 Bellamy Building Tallahassee, FL 32306 Tel: 850-645-0940 E-Mail: ckitchens@fsu.edu

Gold's Value as an Investment - Jermann, Urban (National Bureau of Economic Research Working Paper Series, 2023)
For investors, gold is an asset without a yield that is attractive in times of low and negative real interest rates. Gold also has an embedded put option because investors can sell it to those who value its use as jewelry or as a productive input. This paper presents an approach for pricing gold from investors' perspective. The model is based on no-arbitrage principles with minimal structural assumptions. There is no need to specify investor preferences. When fitted to match 10-year real US Treasury rates the model can replicate the salient fluctuations in the time series of gold prices since 2007. The model is also able to capture key patterns of CME Comex gold futures prices from about 1990 onwards. The model implies that the majority of the value of gold is due to its role as an investment asset.
Author contact info: Urban Jermann Finance Department The Wharton School of the University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/898-4184 Fax: 215/898-6200 E-Mail: jermann@wharton.upenn.edu

Is it the Message or the Messenger? Examining Movement in Immigration Beliefs - Afrouzi, Hassan; Arteaga, Carolina; Weisburst, Emily K (National Bureau of Economic Research Working Paper Series, 2023)
How do political leaders affect constituents’ beliefs? Is it rhetoric, leader identity, or the interaction of the two that matters? Using a large-scale experiment we decompose the relative importance of partisan messages vs leader sources, in the context of beliefs about immigration. Participants listen to anti-immigrant and pro-immigrant speeches from both Presidents Obama and Trump. These treatments are benchmarked to versions of the speeches recorded by an actor to control for message content, and to non-ideological presidential speeches to control for leader priming. Our findings show that political leader sources influence beliefs beyond the content of their messages in a special case: when leaders deliver unanticipated messages to individuals in their own party. This evidence supports the hypothesis that individuals will “follow their leader” to new policy positions.
Author contact info: Hassan Afrouzi Department of Economics Columbia University 420 W 118th Street New York, NY 10027 E-Mail: ha2475@columbia.edu Carolina Arteaga University of Toronto 150 St. George Street 300 Toronto, Ontario M5S3G7 Canada E-Mail: carolina.arteaga@utoronto.ca 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

Identification of Non-Additive Fixed Effects Models: Is the Return to Teacher Quality Homogeneous? - Hahn, Jinyong; Singleton, John D; Yildiz, Neşe (National Bureau of Economic Research Working Paper Series, 2023)
Panel or grouped data are often used to allow for unobserved individual heterogeneity in econometric models via fixed effects. In this paper, we discuss identification of a panel data model in which the unobserved heterogeneity both enters additively and interacts with treatment variables. We present identification and estimation methods for parameters of interest in this model under both strict and weak exogeneity assumptions. The key identification insight is that other periods' treatment variables are instruments for the unobserved fixed effects. We apply our proposed estimator to matched student-teacher data used to estimate value-added models of teacher quality. We show that the common assumption that the return to unobserved teacher quality is the same for all students is rejected by the data. We also present evidence that No Child Left Behind-era school accountability increased the effectiveness of teacher quality for lower performing students.
Author contact info: Jinyong Hahn University of California - Los Angeles Box 951477 Los Angeles, CA 90095-1477 E-Mail: hahn@econ.ucla.edu John D. Singleton University of Rochester Department of Economics Harkness Hall Box 270156 Rochester, NY 14627 E-Mail: john.singleton@rochester.edu Neşe Yildiz University of Rochester, Department of Economics 222 Harkness Hall Rochester, NY 14627 E-Mail: nese.yildiz@rochester.edu

Does Anger Drive Populism? - Ali, Omer; Desmet, Klaus; Wacziarg, Romain (National Bureau of Economic Research Working Paper Series, 2023)
We study whether anger fuels the rise of populism. Anger as an emotion tends to act as a call to action against individuals or groups that are blamed for negative situations, making it conducive to voting for populist politicians. Using a unique dataset tracking emotions for a large sample of respondents from 2008 to 2017, we explore the relationship between anger and the populist vote share across U.S. counties. More angry counties displayed stronger preferences for populist candidates during the 2016 presidential primaries and elections. However, once we control for other negative emotions and life satisfaction, anger no longer operates as a separate channel in driving the populist vote share. Instead, our results indicate that a more complex sense of malaise and gloom, rather than anger per se, drives the rise in populism.
Author contact info: Omer Ali 4506 Wesley W. Posvar Hall 230 South Bouquet Street Pittsburgh, PA 15260 US E-Mail: omer.ali@pitt.edu Klaus Desmet Department of Economics and Cox School of Business Southern Methodist University 3300 Dyer, Suite 301 Dallas, TX 75205 Tel: 214/768-2689 E-Mail: kdesmet@smu.edu Romain Wacziarg Anderson School of Management at UCLA C-510 Entrepreneurs Hall 110 Westwood Plaza Los Angeles, CA 90095-1481 Tel: 310 825 4507 E-Mail: wacziarg@anderson.ucla.edu

Anatomy of the Phillips Curve: Micro Evidence and Macro Implications - Gagliardone, Luca; Gertler, Mark; Lenzu, Simone; Tielens, Joris (National Bureau of Economic Research Working Paper Series, 2023)
We use a unique high-frequency micro-dataset to estimate the slope of the primitive form of the New Keynesian Phillips curve, which features marginal cost as the relevant real activity variable. Our dataset encompasses product-level prices, costs, and output within the Belgian manufacturing sector over twenty years, recorded at a quarterly frequency. Leveraging the richness of the data, we adopt a “bottom-up” approach that identifies the Phillips curve’s slope by estimating the primitive parameters that govern firms’ pricing behavior, including the degrees of price rigidity and strategic complementarities in price setting. Our estimates indicate a high slope for the marginal cost-based Phillips curve, which contrasts with the low estimates of the conventional unemployment or output gap-based formulations in the literature. We reconcile the difference by showing that, although the pass-through of marginal cost into inflation is substantial, the elasticity of marginal cost in relation to the output gap is low. Furthermore, through an examination of the transmission of oil shocks, we illustrate how the marginal cost-based Phillips curve offers a transparent means of capturing the impact of supply shocks on inflation.
Author contact info: Luca Gagliardone Dept of Economics New York University NY, NY 10017 New York City, NY 11211 United States Fax: luca.gagliardone@nyu.edu E-Mail: luca.gagliardone@nyu.edu Mark Gertler Department of Economics New York University 269 Mercer Street, 7th Floor New York, NY 10003 Tel: 212/998-8931 Fax: 212/995-4186 E-Mail: mark.gertler@nyu.edu Simone Lenzu 44 West Fourth Street Suite 9-79 New York, NY 10012 USA E-Mail: slenzu@stern.nyu.edu Joris Tielens Rue de Berlaimont 18 Brussels 10000 Belgium E-Mail: joris.tielens@nbb.be

The Welfare Economics of Reference Dependence - Reck, Daniel; Seibold, Arthur (National Bureau of Economic Research Working Paper Series, 2023)
Empirical evidence suggests that individuals often evaluate options relative to a reference point, especially seeking to avoid losses. We undertake the first welfare analysis under reference-dependent preferences. We characterize the welfare impact of changes in reference points and prices, decomposing these into direct and behavioral effects. The sign of direct and behavioral effects depends on the form of reference-dependent payoffs; which of these effects matter for welfare depends on whether reference dependence reflects a bias or a normative preference. We derive sufficient statistics formulas quantifying the social welfare effects of changes in reference points and prices in terms of estimable reduced-form parameters and normative judgments. We illustrate these findings with an empirical application to reference dependence exhibited in German workers' retirement decisions. We find positive social welfare effects of increasing the Normal Retirement Age, but ambiguous effects of financial incentives to postpone retirement.
Author contact info: Daniel Reck University of Maryland Department of Economics Tydings Hall 7343 Preinkert Dr College Park, MD 20742 E-Mail: dreck@umd.edu Arthur Seibold University of Mannheim L7, 3-5 Mannheim 68161 Germany E-Mail: seibold@uni-mannheim.de

Monetary Policy Transmission Through Online Banks - Erel, Isil; Liebersohn, Jack; Yannelis, Constantine; Earnest, Samuel (National Bureau of Economic Research Working Paper Series, 2023)
Financial technology has reshaped commercial banking. It has the potential to radically alter the transmission of monetary policy by lowering search costs and expanding bank markets. This paper studies the reaction of online banks to changes in federal fund rates. We find that these banks increase rates that they offer on deposits significantly more than traditional banks do. A 100 basis points increase in the federal fund rate leads to a 30 basis points larger increase in rates of online banks. Consistent with the rate movements, online bank deposits experience inflows, while traditional banks experience outflows during monetary tightening in 2022. The findings are consistent across banking markets of different competitiveness and demographics. Our findings shed new light on the role of online banks in interest rate pass-through and deposit channel of monetary policy.
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 Jack Liebersohn University of California Irvine E-Mail: cjlieber@uci.edu Constantine Yannelis Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 217/721-0587 E-Mail: constantine.yannelis@chicagobooth.edu Samuel Earnest E-Mail: Samuel.Earnest@chicagobooth.edu

The Impact of Lead Exposure on Fertility, Infant Mortality, and Infant Birth Outcomes - Clay, Karen; Hollingsworth, Alex; Severnini, Edson R (National Bureau of Economic Research Working Paper Series, 2023)
Lead exposure has detrimental effects on fertility, infants, children, and adults. Despite the success in removing lead from on-road gasoline, industrial and aviation emissions continue to pose a substantial global challenge. Other major sources of exposure include dust, soil resuspension, and consumption of contaminated water or food. Both animal studies and evidence from humans support claims of an adverse relationship between lead pollution and human health. Since lead exposure is not randomly assigned, quasi-experimental studies play a crucial role in this knowledge base. Among these studies, extensive research links elevated blood lead levels in children to academic and behavioral outcomes, but more limited attention has been given to lead’s impact on fertility, infant mortality, and infant health. This paper examines the existing quasi-experimental literature on lead and fertility, infant mortality, and infant birth outcomes, highlighting key results, methods, and implications for policymakers.
Author contact info: Karen Clay Heinz College Carnegie Mellon University 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412/268-4197 Fax: 412/268-7357 E-Mail: kclay@andrew.cmu.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 Edson R. Severnini H. John Heinz III College Carnegie Mellon University 4800 Forbes Ave #2114B Pittsburgh, PA 15213 Tel: 510/860-1808 E-Mail: ersevernini@gmail.com

Trade Integration, Industry Reallocation, and Welfare in Colombia - Alessandria, George A; Avila-Montealegre, Oscar I (National Bureau of Economic Research Working Paper Series, 2023)
We study empirically and theoretically the dynamic effects of the unilateral reduction in import tariffs undertaken by Colombia from 1989-1993, with a particular emphasis on the transition and including any anticipation effects. We develop an asymmetric two-country, multi-sector heterogeneous firm model with a dynamic exporting decision, input-output linkages, capital accumulation, and trade in financial assets. The model is calibrated to match Colombian exporter dynamics, sectoral trade openness, tariffs, imbalances, and input-output linkages in the late 1980s. We introduce an anticipated phased out reform into the model and relate the predicted path of sectoral and aggregate activity to the data. Our multi-sector dynamic exporting model predicts much larger gains from these reforms than models that abstract from exporter dynamics, sectoral heterogeneity, trade in financial assets, or capital accumulation. It also captures the key macroeconomic features in terms of a temporary expansion in growth featuring a large, but short-lived investment boom financed by international borrowing, more so when the reforms are expected to be short-lived.
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 Oscar I. Avila-Montealegre E-Mail: oscar.avila03@gmail.com

Transmission Impossible? Prospects for Decarbonizing the US Grid - Davis, Lucas W; Hausman, Catherine; Rose, Nancy L (National Bureau of Economic Research Working Paper Series, 2023)
Encouraged by the declining cost of grid-scale renewables, recent analyses conclude that the United States could reach net zero carbon dioxide emissions by 2050 at relatively low cost using currently available technologies. While the cost of renewable generation has declined dramatically, integrating these renewables would require a large expansion in transmission to deliver that power. Already there is growing evidence that the United States has insufficient transmission capacity, and current levels of annual investment are well below what would be required for a renewables-dominated system. We describe a variety of challenges that make it difficult to build new transmission and potential policy responses to mitigate them, as well as possible substitutes for some new transmission capacity.
Author contact info: Lucas W. Davis Haas School of Business University of California Berkeley, CA 94720-1900 E-Mail: ldavis@haas.berkeley.edu 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 Nancy L. Rose Department of Economics, E52-420 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617-253-8956 E-Mail: nrose@mit.edu

A Welfare Analysis of Tax Audits Across the Income Distribution - Boning, William C; Hendren, Nathaniel; Sprung-Keyser, Ben; Stuart, Ellen (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the returns to IRS audits of taxpayers across the income distribution. We find an additional $1 spent auditing taxpayers above the 90th income percentile yields more than $12 in revenue, while audits of below-median income taxpayers yield $5. We draw upon comprehensive internal accounting information and audit-level enforcement logs to quantify the average costs and revenues associated with each audit. We begin by estimating the average initial return to all audits of US taxpayers filing in 2010-2014. On average, $1 in audit spending raises $2.17 in initial revenue. Audits of high-income taxpayers are more costly, but the additional revenue raised more than offsets the costs. Audits of the 99-99.9th percentile have a 3.2:1 return; audits of the top 0.1% return 6.3:1. We then exploit the 40% audit reduction between tax years 2010 and 2014 to examine the returns to marginal audits. We find they exceed the returns to average audits. Revenues remain relatively unchanged but marginal costs fall below average costs due to economies of scale. Next, we use randomly selected audits to examine the impact of an initial audit on future revenue. This specific deterrence effect produces at least three times more revenue than the initial audit. Deterrence effects are relatively consistent across the income distribution. This results in the 12:1 return above the 90th percentile. We conclude by estimating the welfare consequences of audits using the MVPF framework and comparing audits to other revenue raising policies. We find that audits raise revenue at lower welfare cost.
Author contact info: William C. Boning Office of Tax Analysis Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, DC 20220 E-Mail: William.Boning@treasury.gov Nathaniel Hendren Massachusetts Institute of Technology 1534 Cambridge St #1 Cambridge, MA 02139 Tel: 773-344-8990 E-Mail: nhendren@mit.edu Ben Sprung-Keyser Harvard University Department of Economics Cambridge, MA 02138 E-Mail: bsprungkeyser@g.harvard.edu Ellen Stuart University of Sydney School of Economics Sydney NSW 2026 Australia E-Mail: ellen.stuart@sydney.edu.au

Who Benefits from a Smaller Honors Track? - Szlendak, Zachary; Mansfield, Richard K (National Bureau of Economic Research Working Paper Series, 2023)
Most U.S. high school courses separate classrooms into standard and honors tracks. This paper characterizes the efficiency and distributional impact of changing the share of students enrolling in honors classrooms. Using a sorting model where students choose tracks by course but schools influence the share choosing honors, we show that administrators’ optimal choices of honors track size require knowledge of treatment effect functions capturing the impact of alternative honors enrollment shares on different parts of the student predicted performance distribution. Using administrative data from North Carolina public high schools, we estimate these treatment effect functions by predicted performance quintile. Across various specifications, we find that smaller honors tracks (20%-30% of students) yield moderate performance gains for the top quintile (~.05-.07 test score SDs relative to no tracking) that decline monotonically across quintiles toward zero for the bottom quintile. However, expanding the honors share beyond 30-35% generates further (small) achievement increases only for the middle quintile, while reducing top quintile gains and causing substantial bottom quintile losses. Since many courses feature honors shares above 35% or do not track, we predict that enrolling ~25% of students in honors in each high school course would improve all quintiles’ statewide performance.
Author contact info: Zachary Szlendak Department of Economics University of Colorado Boulder Boulder, CO 80309 USA E-Mail: zachary.szlendak@colorado.edu Richard K. Mansfield Economics Building Room 206C University of Colorado-Boulder Boulder, CO 80309 E-Mail: richard.mansfield@colorado.edu

Return on Returns: Building Scientific Capacity in AIDS Endemic Countries - Fry, Caroline; Ganguli, Ina (National Bureau of Economic Research Working Paper Series, 2023)
We estimate spillovers from public funding for health research in the context of the NIH's Fogarty International Center's AIDS International Training and Research Program, which aims to strengthen scientific capacity in AIDS endemic countries by providing African researchers with training opportunities in the U.S. We use an event study difference-and-differences framework with information on scientists who participated in the program and the outcomes of African scientists working in the same scientific fields at their home institutions. Compared to control groups of similar scientists, our results show that scientists exposed to a returned trainee increase their publication output, particularly those with international coauthors. They also increase their grant funding and publish more HIV and WHO policy documents, showing that the Fogarty program impacted health policy related to the HIV/AIDS epidemic in African countries.
Author contact info: Caroline Fry Management and Industrial Relations Shidler College of Business University of Hawaiʻi at Mānoa 2404 Maile Way Honolulu, HI 96822 E-Mail: cvfry@hawaii.edu Ina Ganguli Department of Economics Crotty Hall 304 412 N. Pleasant Street University of Massachusetts Amherst Amherst, MA 01002 Tel: 413-545-6230 Fax: 413- 545-2921 E-Mail: iganguli@econs.umass.edu

Why Do Wages Grow Faster for Educated Workers? - Deming, David J (National Bureau of Economic Research Working Paper Series, 2023)
The U.S. college wage premium doubles over the life cycle, from 27 percent at age 25 to 60 percent at age 55. Using a panel survey of workers followed through age 60, I show that growth in the college wage premium is primarily explained by occupational sorting. Shortly after graduating, workers with college degrees shift into professional, nonroutine occupations with much greater returns to tenure. Nearly 90 percent of life cycle wage growth occurs within rather than between jobs. To understand these patterns, I develop a model of human capital investment where workers differ in learning ability and jobs vary in complexity. Faster learners complete more education and sort into complex jobs with greater returns to investment. College acts as a gateway to professional occupations, which offer more opportunity for wage growth through on-the-job learning.
Author contact info: David J. Deming Harvard Kennedy School Malcolm Wiener Center for Social Policy 79 JFK St Cambridge, MA 02138 Tel: 617/496-4702 E-Mail: david_deming@harvard.edu

How Does Data Access Shape Science? Evidence from the Impact of U.S. Census’s Research Data Centers on Economics Research - Nagaraj, Abhishek; Tranchero, Matteo (National Bureau of Economic Research Working Paper Series, 2023)
This study examines the impact of access to confidential administrative data on the rate, direction, and policy relevance of economics research. To study this question, we exploit the progressive geographic expansion of the U.S. Census Bureau’s Federal Statistical Research Data Centers (FSRDCs). FSRDCs boost data diffusion, help empirical researchers publish more articles in top outlets, and increase citation-weighted publications. Besides direct data usage, spillovers to non-adopters also drive this effect. Further, citations to exposed researchers in policy documents increase significantly. Our findings underscore the importance of data access for scientific progress and evidence-based policy formulation.
Author contact info: Abhishek Nagaraj Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: nagaraj@berkeley.edu Matteo Tranchero E-Mail: m.tranchero@berkeley.edu

Pricing Neighborhoods - Eshaghnia, Sadegh; Heckman, James J; Razavi, Goya (National Bureau of Economic Research Working Paper Series, 2023)
Education in Denmark is freely available. Despite near equal teacher salaries and per-pupil school expenditure across districts, there is substantial spatial heterogeneity in school quality as measured by teacher quality and student test scores. We argue that this is due to sorting of teachers and students across neighborhoods. We develop and apply multiple methods for identifying parental valuation of measured school quality in the presence of strong neighborhood sorting. There is strong concordance in the estimates across diverse methodologies. We estimate a willingness to pay of about 3% more for a house with average characteristics when test scores are one standard deviation above the mean. Controlling for selection into neighborhoods only slightly reduces our estimates. Given that school quality, as measured by monetary resources, is equalized across all neighborhoods, payments for school quality embodied in housing prices are in fact payments for peer, teacher, and neighborhood quality. This evidence challenges the appropriateness of the current emphasis in the literature on Tiebout-based models of neighborhood choice that stress sorting on parental income in order to finance the local public good of school quality. Rather, a model of neighborhood choice to select neighbor and peer quality is more appropriate. Our evidence is consistent with evidence that cash expenditures on classrooms have weak effects on child achievement.
Author contact info: Sadegh Eshaghnia Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: eshaghnia@uchicago.edu James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Goya Razavi University of Chicago Harris School of Public Policy 1307 E. 60th Street Chicago, IL 60637 E-Mail: razavi@uchicago.edu

Monetary Policy Operations: Theory, Evidence, and Tools for Quantitative Analysis - Lagos, Ricardo; Navarro, Gastón (National Bureau of Economic Research Working Paper Series, 2023)
We formulate a quantitative dynamic equilibrium theory of trade in the fed funds market, calibrate it to fit a comprehensive set of market-wide and micro-level cross-sectional observations, and use it to make two contributions to the operational side of monetary policy implementation. First, we produce global structural estimates of the aggregate demand for reserves—a crucial decision-making input for modern central banks. Second, we propose diagnostic tools to gauge the central bank’s ability to track a given fed funds target, and the heterogeneous incidence of policy actions on the shadow cost of funding across banks.
Author contact info: Ricardo Lagos Department of Economics New York University 19 West Fourth Street New York, NY 10012 Tel: 212/998-8937 E-Mail: ricardo.lagos@nyu.edu Gastón Navarro Federal Reserve Board Division of International Finance 20th St. and Constitution Ave. N.W. Washington, DC 20551 E-Mail: gaston.m.navarro@frb.gov

Optimal Public Transportation Networks: Evidence from the World's Largest Bus Rapid Transit System in Jakarta - Kreindler, Gabriel; Gaduh, Arya; Graff, Tilman; Hanna, Rema; Olken, Benjamin A (National Bureau of Economic Research Working Paper Series, 2023)
Designing public transport networks involves tradeoffs between extensive geographic coverage, frequent service on each route, and relying on interconnections as opposed to direct service. These choices, in turn, depend on individual preferences for waiting times, travel times, and transfers. We study these tradeoffs by examining the world's largest bus rapid transit system, in Jakarta, Indonesia, leveraging a large network expansion between 2016-2020. Using detailed ridership data and aggregate travel flows from smartphone data, we analyze how new direct connections, changes in bus travel time, and wait time reductions increase ridership and overall trips. We set up and estimate a transit network demand model with multi-dimensional travel costs, idiosyncratic heterogeneity induced by random wait times, and inattention, matching event-study moments from the route launches. Commuters in Jakarta are 2-4 times more sensitive to wait time compared to time on the bus, and inattentive to long routes. To study the implications for network design, we introduce a new framework to describe the set of optimal networks. Our results suggest that a less concentrated network would increase ridership and commuter welfare.
Author contact info: Gabriel Kreindler Department of Economics Harvard University 1805 Cambridge Street Cambridge, MA 02138 E-Mail: gkreindler@fas.harvard.edu Arya Gaduh Department of Economics University of Arkansas 402 Business Building Fayatteville, AR 72701 Tel: 479/575-8776 E-Mail: AGaduh@walton.uark.edu Tilman Graff Harvard University Economics Department Cambridge, MA 02138 E-Mail: tgraff@g.harvard.edu Rema Hanna Kennedy School of Government Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/496-1140 Fax: 617/496-5747 E-Mail: Rema_Hanna@hks.harvard.edu Benjamin A. Olken Department of Economics, E52-542 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/588-1437 Fax: 617/868-2742 E-Mail: bolken@mit.edu

Chat Over Coffee? Diffusion of Agronomic Practices and Market Spillovers in Rwanda - Duflo, Esther; Keniston, Daniel; Suri, Tavneet; Zipfel, Céline (National Bureau of Economic Research Working Paper Series, 2023)
Agricultural extension programs often train a few farmers and count on diffusion through social networks for the innovation to spread. However, if markets are imperfectly integrated, this may also inflict negative externalities. In a two-step experiment of an agronomy training program among Rwandan coffee farmers, we first randomize the concentration of trainees at the village level and then randomly select within each village. Knowledge increased, and yields were 6.7% higher for trained farmers. We find no evidence of social diffusion; instead, control households experienced negative spillovers in high treatment concentration areas, likely because of competition for a scarce input, fertilizer.
Author contact info: Esther Duflo Department of Economics, E52-544 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-7013 E-Mail: eduflo@mit.edu Daniel Keniston Louisiana State University Department of Economics 2325 Business Education Complex South 501 South Quad Drive Baton Rouge, LA 70803 E-Mail: dkeniston@lsu.edu Tavneet Suri MIT Sloan School of Management 100 Main Street, E62-517 Cambridge, MA 02142 Tel: 617/253-7159 Fax: 617/258-6855 E-Mail: tavneet@mit.edu Céline Zipfel Sveavägen 65 SE-113 83 Stockholm 11383 Sweden Tel: +46700399462 E-Mail: Celine.Zipfel@hhs.se

Understanding Trends in Chinese Skill Premiums, 2007-2018 - Hanushek, Eric A; Wang, Yuan; Zhang, Lei (National Bureau of Economic Research Working Paper Series, 2023)
The dramatic expansion of the education system and the transformation of the economy in China provide an opportunity to investigate how the labor market rewards skills. Between 2007 and 2018, the overall return to cognitive skills is virtually constant at 10%, whereas the college premium drops steeply by more than 20 percentage points. But, the regional differences in returns are significant and highlight the importance of differential demand factors. College returns are higher in more developed regions, but the declining trend is more pronounced. Returns to cognitive skills increase in more developed regions and decrease in less developed regions.
Author contact info: Eric A. Hanushek Hoover Institution Stanford University Stanford, CA 94305-6010 Tel: 650/736-0942 Fax: 650/723-1687 E-Mail: hanushek@stanford.edu Yuan Wang Department of Economics Yale University New Haven, CT 06511 US E-Mail: yuan.wang.yw875@yale.edu Lei Zhang 866 Yuhangtang Road Zheijang University School of Economics, Room 936 Hangzhou, Zhejiang 310058 P.R. China E-Mail: zlei89@gmail.com

The Spillover Effects of Top Income Inequality - Gottlieb, Joshua D; Hémous, David; Hicks, Jeffrey; Olsen, Morten G (National Bureau of Economic Research Working Paper Series, 2023)
Top income inequality in the United States has increased considerably within occupations. This phenomenon has led to a search for a common explanation. We instead develop a theory where increases in income inequality originating within a few occupations can "spill over" through consumption into others. We show theoretically that such spillovers occur when an occupation provides non-divisible services to consumers, with physicians our prime example. Examining local income inequality across U.S. regions, the data suggest that such spillovers exist for physicians, dentists, and real estate agents. Estimated spillovers for other occupations are consistent with the predictions of our theory.
Author contact info: Joshua D. Gottlieb University of Chicago Harris School of Public Policy 1307 E. 60th St. Chicago, IL 60637 E-Mail: jgottlieb@uchicago.edu David Hémous University of Zurich Schönberggasse 1 8001 Zürich, Switzerland E-Mail: david.hemous@econ.uzh.ch Jeffrey Hicks Department of Economics University of Toronto 150 St George Street Toronto,ON, M5S 3G7 Canada E-Mail: jeffhicks05@gmail.com Morten G. Olsen University of Copenhagen Department of Economics Øster Farimagsgade 5, DK-1353, Denmark E-Mail: mgo@econ.ku.dk

The Historical Impact of Coal on Cities - Clay, Karen; Lewis, Joshua A; Severnini, Edson R (National Bureau of Economic Research Working Paper Series, 2023)
Historically coal has offered both benefits and costs to urban areas. Benefits include coal’s role in fueling industry and thus employment. The primary costs are air pollution and its impact on human health. This paper starts by using a Rosen-Roback style model to examine how differences in local coal availability affect equilibrium city employment. Drawing on the model, the paper surveys papers that examine the net effects of coal on the growth in city population and air pollution on health. The paper then turns to papers that explicitly consider the trade-offs between production benefits and pollution disamenities across space and over time. The paper ends with a discussion of opportunities for future work on coal and cities in historical settings.
Author contact info: Karen Clay Heinz College Carnegie Mellon University 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412/268-4197 Fax: 412/268-7357 E-Mail: kclay@andrew.cmu.edu Joshua A. Lewis University of Montreal Département de sciences économiques 3150 rue Jean-Brillant Montréal, QC, H3T 1N8 E-Mail: joshua.lewis@umontreal.ca Edson R. Severnini H. John Heinz III College Carnegie Mellon University 4800 Forbes Ave #2114B Pittsburgh, PA 15213 Tel: 510/860-1808 E-Mail: ersevernini@gmail.com

Screen Now, Save Later? The Trade-Off between Administrative Ordeals and Fraud - Aman-Rana, Shan; Gingerich, Daniel W; Sukhtankar, Sandip (National Bureau of Economic Research Working Paper Series, 2023)
Screening requirements are common features of fraud and corruption mitigation efforts around the world. Yet imposing these requirements involves trade-offs between higher administrative costs, delayed benefits, and exclusion of genuine beneficiaries on one hand and lower fraud on the other. We examine these trade-offs in one of the largest economic relief programs in US history: the Paycheck Protection Program (PPP). Employing a database that includes nearly 11.5 million PPP loans, we assess the impact of screening by exploiting temporal variation in the documentation standards applied to loan applications for loans of different values. We find that screening significantly reduced the incidence and magnitude of various measures of loan irregularities that are indicative of fraud. Moreover, our analysis reveals that a subset of borrowers with a checkered history strategically reduced their loan application amounts in order to avoid being subjected to screening. Borrowers without a checkered history engaged in this behavior at a much lower rate, implying that the documentation requirement reduced fraud without imposing an undue administrative burden on legitimate firms. All told, our estimates imply that screening led to a reduction in losses due to fraud equal to at least $744 million.
Author contact info: Shan Aman-Rana Department of Economics University of Virginia 248 McCormick Rd Charlottesville, VA 22904-4182 Tel: 4349243177 E-Mail: sa8ey@virginia.edu Daniel W. Gingerich Department of Politics University of Virginia P.O. Box 400787 Charlottesville, VA 22904-4787 E-Mail: dwg4c@virginia.edu Sandip Sukhtankar Department of Economics University of Virginia Charlottesville, VA 22904 E-Mail: srs8yk@virginia.edu

Foreign Direct Investment, Global Value Chains, and Labor Rights: No Race-to-the-Bottom? - Im, Hyejoon; McLaren, John (National Bureau of Economic Research Working Paper Series, 2023)
In a stylized model of multinational firms choosing host locations for their global value chains, host-country governments choose the strength of collective-bargaining rights that allow their workers to receive a share of the resulting quasi-rents. Each government must trade off the direct benefit of stronger bargaining rights against both the effect of chasing multinationals away to rival countries and general-equilibrium effects of discouraging investment in the industry altogether. We find that an increase in globalization in the sense of lower transaction costs has no effect on equilibrium workers' rights, but adding more countries to the global trading system tends, in the limit, to weaken them. Thus, as a matter of theory, the effect of globalization on labor rights is ambiguous. Empirically, we find little evidence that globalization drives movements in labor rights in either direction.
Author contact info: Hyejoon Im School of Economics and Finance Yeungnam University Daehak-Ro 280 Kyungsan, 38541 S. Korea E-Mail: hi6w@yu.ac.kr John McLaren Department of Economics University of Virginia P.O. Box 400182 Charlottesville, VA 22904-4182 Tel: 434/924-3994 Fax: 434/982-2904 E-Mail: jmclaren@virginia.edu

Global Value Chains and Labor Standards: The Race-to-the-Bottom Problem. - Im, Hyejoon; McLaren, John (National Bureau of Economic Research Working Paper Series, 2023)
We ask how globalization affects a government's incentives to set labor standards for its workers. In a stylized equilibrium model of global value chains, we find two contrasting results. First, each country chooses stricter labor standards with globalization than it would under autarky, because labor standards are a normal good and the general increase in incomes from globalization increases demand for them. We call this the effect of `globalization in the large.' Second, if more countries join the world economy so that globalization increases at the margin, labor standards worsen (improve) at the margin if a country is competing with countries that are very similar to (different from) itself. We call this the effect of `globalization at the margin.' In equilibrium, labor standards are actually stricter than optimal because each country is able to pass some of the costs of its improved labor standards onto other countries (consumers of the final good, for example).
Author contact info: Hyejoon Im School of Economics and Finance Yeungnam University Daehak-Ro 280 Kyungsan, 38541 S. Korea E-Mail: hi6w@yu.ac.kr John McLaren Department of Economics University of Virginia P.O. Box 400182 Charlottesville, VA 22904-4182 Tel: 434/924-3994 Fax: 434/982-2904 E-Mail: jmclaren@virginia.edu

Fatal Errors: The Mortality Value of Accurate Weather Forecasts - Shrader, Jeffrey G; Bakkensen, Laura; Lemoine, Derek (National Bureau of Economic Research Working Paper Series, 2023)
We provide the first revealed preference estimates of the benefits of routine weather forecasts. The benefits come from how people use advance information to reduce mortality from heat and cold. Theoretically, more accurate forecasts reduce mortality if and only if mortality risk is convex in forecast errors. We test for such convexity using data on the universe of mortality events and weather forecasts for a twelve-year period in the U.S. Results show that erroneously mild forecasts increase mortality whereas erroneously extreme forecasts do not reduce mortality. Making forecasts 50% more accurate would save 2,200 lives per year. The public would be willing to pay $112 billion to make forecasts 50% more accurate over the remainder of the century, of which $22 billion reflects how forecasts facilitate adaptation to climate change.
Author contact info: Jeffrey G. Shrader 420 W 118th St. New York, NY 10027 E-Mail: jgs2103@columbia.edu Laura A. Bakkensen University of Arizona School of Government & Public Policy 315 Social Science P.O. Box 210027 Tucson, AZ 85721-0027 E-Mail: laurabakkensen@arizona.edu Derek Lemoine Department of Economics University of Arizona McClelland Hall 401EE Tucson, AZ 85721 Tel: 520/621-2164 E-Mail: dlemoine@email.arizona.edu

Avoiding Idiosyncratic Volatility: Flow Sensitivity to Individual Stock Returns - Di Maggio, Marco; Franzoni, Francesco; Kogan, Shimon; Xing, Ran (National Bureau of Economic Research Working Paper Series, 2023)
Despite positive and significant earnings announcement premia, we find that institutional investors reduce their exposure to stocks before earnings announcements. A novel result on the sensitivity of flows to individual stock returns provides a potential explanation. We show that extreme announcement returns for an individual holding lead to substantial outflows, controlling for overall performance, and they increase the probability of managers leaving the fund. Reducing the exposure to these stocks before the announcement mitigates the outflows. We build a model to describe and quantify this tradeoff. Overall, the paper identifies a new dimension of limits to arbitrage for institutions.
Author contact info: Marco Di Maggio Harvard Business School Baker Library 265 Soldiers Field Boston, MA 02163 Tel: 617/495-6152 E-Mail: mdimaggio@hbs.edu Francesco Franzoni Swiss Finance Institute Via G. Buffi 13 6904, Lugano - Switzerland Tel: +41 58 666 4117 Fax: +41 58 666 4734 E-Mail: francesco.franzoni@usi.ch Shimon Kogan Reichman University 8 Ha'universita Street Herzliya Israel E-Mail: skogan@wharton.upenn.edu Ran Xing E-Mail: xing.ran.ch@gmail.com

The Value of Student Debt Relief and the Role of Administrative Barriers: Evidence from the Teacher Loan Forgiveness Program - Jacob, Brian; Jones, Damon; Keys, Benjamin J (National Bureau of Economic Research Working Paper Series, 2023)
We explore how much borrowers value student debt relief, in the setting of the federal Teacher Loan Forgiveness (TLF) program, and further document whether information and eligibility for this program affect teacher employment decisions. The program cancels between $5,000 and $17,500 in debt for teachers who remain employed in a high-need school for five consecutive years. Using both quasi-experimental evidence and a randomized control trial, we find that neither eligibility nor a targeted information intervention result in changes in teacher employment decisions, despite the presence of sizable student loan balances in our sample. Information was found, however, to increase application and receipt rates for teachers who had already accrued the five years of eligibility. Additional evidence from contingent valuation surveys suggests that teachers do in general value possible debt relief. Incorporating qualitative evidence from focus groups, we conclude that take-up may be constrained by program complexity and administrative barriers that involve knowing which schools qualify, tracking employment records, having employers sign off, and coordinating with loan servicers.
Author contact info: Brian Jacob Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 Tel: 734-615-6994 Fax: NA E-Mail: bajacob@umich.edu Damon Jones Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 650/736-8571 E-Mail: damonjones@uchicago.edu Benjamin J. Keys Department of Real Estate The Wharton School University of Pennsylvania 432 Vance Hall 3733 Spruce Street Philadelphia, PA 19104 Tel: 215-746-1253 E-Mail: benkeys@wharton.upenn.edu

Globalization, Structural Change and International Comovement - Bonadio, Barthélémy; Huo, Zhen; Levchenko, Andrei A; Pandalai-Nayar, Nitya (National Bureau of Economic Research Working Paper Series, 2023)
We study the roles of globalization and structural change in the evolution of international GDP comovement among industrialized countries over the period 1978-2007. In recent decades, trade integration between advanced economies increased rapidly while average GDP correlations remained stable. We show that structural change – trend reallocation of economic activity towards services – plays an important part in resolving this apparent puzzle. Business cycle shocks in the service sector are less internationally correlated than in manufacturing, and thus structural change lowers GDP comovement by increasing the share of less correlated sectors in GDP. Globalization – trend reductions in trade costs – exerts two opposing effects on cross-border GDP comovement. On the one hand, greater trade linkages increase international transmission of shocks and therefore comovement. On the other, globalization induces structural change towards services because it reduces the relative price of traded goods, and services and goods are complements. We use a multi-country, multi-sector model of international production and trade to quantify these effects. The two opposing effects of globalization on comovement largely cancel each other out, limiting the net contribution of globalization to increasing international comovement over this period.
Author contact info: Barthélémy Bonadio NYUAD Office A5-1109 PO 129188 Abu Dhabi United Arab Emirates E-Mail: bbonadio@nyu.edu Zhen Huo Department of Economics Yale University New Haven, CT 06520 E-Mail: zhen.huo@yale.edu Andrei A. Levchenko Department of Economics University of Michigan 611 Tappan Street Ann Arbor, MI 48109 Tel: 734/764-3296 E-Mail: alev@umich.edu Nitya Pandalai-Nayar Department of Economics University of Texas at Austin 3.142 BRB, 2225 Speedway Austin, TX 78713 Tel: 503/616-1616 E-Mail: npnayar@utexas.edu

New Technologies and Jobs in Europe - Albanesi, Stefania; Dias da Silva, António; Jimeno, Juan F; Lamo, Ana; Wabitsch, Alena (National Bureau of Economic Research Working Paper Series, 2023)
We examine the link between labour market developments and new technologies such as artificial intelligence (AI) and software in 16 European countries over the period 2011- 2019. Using data for occupations at the 3-digit level in Europe, we find that on average employment shares have increased in occupations more exposed to AI. This is particularly the case for occupations with a relatively higher proportion of younger and skilled workers. This evidence is in line with the Skill Biased Technological Change theory. While there exists heterogeneity across countries, only very few countries show a decline in employment shares of occupations more exposed to AI-enabled automation. Country heterogeneity for this result seems to be linked to the pace of technology diffusion and education, but also to the level of product market regulation (competition) and employment protection laws. In contrast to the findings for employment, we find little evidence for a relationship between wages and potential exposures to new technologies.
Author contact info: Stefania Albanesi Miami Herbert Business School University of Miami 5250 University Drive Coral Gables, FL 33146 E-Mail: stefania.albanesi@gmail.com António Dias da Silva E-Mail: Antonio.Dias_Da_Silva@ecb.europa.eu Juan F. Jimeno E-Mail: jfjimenoserrano@gmail.com Ana Lamo Sonnemanstrasse 20 Frankfurt Germany E-Mail: ana.lamo@ecb.int Alena Wabitsch E-Mail: alena.wabitsch@economics.ox.ac.uk

Finance and Climate Resilience: Evidence from the long 1950s US Drought - Rajan, Raghuram; Ramcharan, Rodney (National Bureau of Economic Research Working Paper Series, 2023)
We study how the availability of credit shaped adaptation to the long 1950s US drought. We find that investment in irrigation increased substantially more in drought-exposed areas with access to bank finance. The spillover effects of farmers’ ability to adapt to the drought through financing, thus preserving agricultural livelihoods, also lead to the greater survival of retail and manufacturing businesses. Overall, areas with greater access to financing suffered significantly less population decline, both in the short- and long term. Thus, enhancing access to finance can enable communities to adapt to large adverse climatic shocks, and limit migration.
Author contact info: Raghuram Rajan Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-4437 Fax: 773/702-0458 E-Mail: raghuram.rajan@ChicagoBooth.edu Rodney Ramcharan University of Southern California E-Mail: rramchar@marshall.usc.edu

Global Liquidity: Drivers, Volatility and Toolkits - Goldberg, Linda S (National Bureau of Economic Research Working Paper Series, 2023)
Global liquidity refers to the volumes of financial flows – largely intermediated through global banks and non-bank financial institutions – that can move at relatively high frequencies across borders. The amplitude of responses to global conditions like risk sentiment, discussed in the context of the global financial cycle, depends on the characteristics and vulnerabilities of the institutions providing funding flows. Evidence from across empirical approaches and using granular data provides policy-relevant lessons. International spillovers of monetary policy and risk sentiment through global liquidity evolve in response to regulation, the characteristics of financial institutions, and actions of official institutions around liquidity provision. Strong prudential policies in the home countries of global banks and official facilities reduce funding strains during stress events. Country-specific policy challenges, summarized by the monetary and financial trilemmas, are partially alleviated. However, risk migration across types of financial intermediaries underscores the importance of advancing regulatory agendas related to non-bank financial institutions.
Author contact info: Linda S. Goldberg Federal Reserve Bank-New York 33 Liberty Street New York, NY 10045 Tel: 212/720-2836 Fax: 212/720-6831 E-Mail: linda.goldberg@ny.frb.org

The Benefits and Costs of Guest Worker Programs: Experimental Evidence from the India-UAE Migration Corridor - Naidu, Suresh; Nyarko, Yaw; Wang, Shing-Yi (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the individual returns to temporary migration programs using a randomized experiment with several thousand job seekers in India applying to guest worker jobs in the United Arab Emirates (UAE). Working with construction companies and the UAE Ministry of Labor, we randomized job offers to potential migrant workers at recruitment sites. We measured effects on labor market outcomes, well-being, social relationships, and work satisfaction, as well as on labor intermediation costs, assets and debt. We find that workers who received the randomized offer experienced 30% higher earnings, and those who take up the offer to migrate to the UAE doubled their compensation. However, they also paid substantial upfront costs to labor intermediaries, financed by additional debt, that reduced take-home pay by about 10%. Migrants also reported a significant fall in subjective well-being, driven by increases in physical pain, effort, and heat. There were no significant effects on loneliness or other dimensions of well-being. Our finding of negative effects on well-being is consistent with the large share of workers offered jobs who did not migrate to the UAE. Extrapolating using a linear marginal treatment effects framework to workers who decline the UAE job offer, we find large and positive pecuniary returns to migration, even including intermediary fees, but even larger non-pecuniary costs.
Author contact info: Suresh Naidu Columbia University 420 West 118th Street New York, NY 10027 Tel: 212/854-3213 E-Mail: sn2430@columbia.edu Yaw Nyarko Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8928 E-Mail: yaw.nyarko@nyu.edu Shing-Yi Wang The Wharton School University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/898-7652 Fax: 215/898-7635 E-Mail: was@wharton.upenn.edu

Gaming and Effort in Performance Pay - Bertuzzi, Luca; Eliason, Paul J; Heebsh, Benjamin; League, Riley J; McDevitt, Ryan C; Roberts, James W (National Bureau of Economic Research Working Paper Series, 2023)
Health insurers often tie payments to providers’ quality of care. Although payers do this to elicit more effort from providers, some providers may game the system by avoiding patients who would cause their quality scores to fall. We use annual variation in the criteria for Medicare’s Quality Incentive Program in dialysis to distinguish strategic patient dropping from higher-quality care. Patients who would reduce their facilities’ scores are 14.3–71.5% more likely to switch facilities, often to ones that suggest the move was involuntary, while under certain conditions facilities exert more effort to improve their scores by providing better care.
Author contact info: Luca Bertuzzi E-Mail: luca.bertuzzi@duke.edu Paul J. Eliason Department of Economics Brigham Young University 2147 WVB Provo, UT 84602 Tel: 801/422-5928 E-Mail: paul.eliason@byu.edu Benjamin Heebsh E-Mail: bheebsh.research@gmail.com Riley League E-Mail: rileague@nber.org Ryan C. McDevitt The Fuqua School of Business Duke University 100 Fuqua Drive Durham, NC 27708 E-Mail: ryan.mcdevitt@duke.edu James W. Roberts Duke University Department of Economics 213 Social Sciences Building Durham, NC 27708 Tel: 919/660-1822 E-Mail: j.roberts@duke.edu

Resting on Their Laureates? Research Productivity Among Winners of the Nobel Prize in Physiology or Medicine - Bhattacharya, Jay; Bollyky, Paul; Goldhaber-Fiebert, Jeremy D; Holom, Geir H; Packalen, Mikko; Studdert, David M (National Bureau of Economic Research Working Paper Series, 2023)
The Nobel Prize in Physiology or Medicine is the most prestigious and coveted award in medical research. Anecdotal evidence and related research suggest that receiving it may adversely affect research productivity. We compared the post-Nobel research output of laureates (prize years: 1950-2010) with their pre-Nobel output and with the output of a matched control group consisting of winners of the Lasker Award, another highly prestigious medical research prize. Pre-Nobel, laureates’ publications were more voluminous, highly cited, and novel than those of (future) Lasker winners. Post-Nobel, laureates’ productivity decreased sharply, eventually falling below that of Lasker winners on all three measures. These declines may reflect diversionary effects of the Prize, changed incentives, or intrinsically different career arcs for medical researchers who win the Nobel Prize.
Author contact info: Jay Bhattacharya 117 Encina Commons CHP/PCOR Stanford University Stanford, CA 94305-6019 Tel: 650/736-0404 Fax: 650/723-1919 E-Mail: jay@stanford.edu Paul Bollyky Stanford University School of Medicine 241 Beckman Building 300 Pasteur Dr. Stanford, CA 94305 E-Mail: pbollyky@stanford.edu Jeremy D. Goldhaber-Fiebert 117 Encina Commons CHP/PCOR Stanford University Stanford, CA 94305-6019 E-Mail: jeremygf@stanford.edu Geir Holom Department of Health Economics and Health Management Institute of Health and Society University of Oslo Oslo, Norway E-Mail: g.h.holom@gmail.com Mikko Packalen University of Waterloo Department of Economics 200 University Avenue West Waterloo, ON N2L 3G1 Canada E-Mail: packalen@uwaterloo.ca David M. Studdert 117 Encina Commons CHP/PCOR Stanford University Stanford, CA 94305-6019 E-Mail: studdert@stanford.edu

The Neoclassical Growth of China - Fernández-Villaverde, Jesús; Ohanian, Lee E; Yao, Wen (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies China's four-fold increase in per capita GDP relative to the U.S. between 1995 and 2019. First, we argue that China's growth pattern is very similar to that of several other East Asia economies that initially grew very quickly. Second, we show that a minimalist Ramsey-Cass-Koopmans model with a parsimonious TFP catch-up process can account for China's growth path and the growth paths of other East Asia economies at a similar stage of development. The growth paths of other East Asia economies and the model predictions suggest that China's growth will substantially slow, so much so that we find the U.S. growth rate will likely be higher than China's by 2043. We also find that China's income per capita will level off at roughly 44% of the U.S. level around 2100.
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 Lee E. Ohanian 8283 Bunche Hall UCLA, Department of Economics Box 951477 Los Angeles, CA 90095 Tel: 310/825-0979 Fax: 310/825-9528 E-Mail: ohanian@econ.ucla.edu Wen Yao Department of Economics School of Economics and Management Tsinghua University Beijing China E-Mail: yaow@sem.tsinghua.edu.cn

Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK - Akcigit, Ufuk; Chhina, Raman Singh; Cilasun, Seyit M; Miranda, Javier; Ocakverdi, Eren; Serrano-Velarde, Nicolas (National Bureau of Economic Research Working Paper Series, 2023)
Small and young businesses are essential for job creation, innovation, and economic growth. Even most of the superstar firms start their business life small and then grow over time. Small firms have less internal resources, which makes them more fragile and sensitive to macroeconomic conditions. This suggests the need for frequent and real-time monitoring of the small business sector’s health. Previously this was difficult due to a lack of appropriate data. This paper fills this important gap by developing a new Intuit QuickBooks Small Business Index that focuses on the smallest of small businesses with at most 9 workers in the US and the UK and at most 19 workers in Canada. The Index aggregates a sample of anonymous QuickBooks Online Payroll subscriber data (QBO Payroll sample) from 333,000 businesses in the US, 66,000 in Canada, and 25,000 in the UK. After comparing the QBO Payroll sample data to the official statistics, we remove the seasonal components and use a Flexible Least Squares method to calibrate the QBO Payroll sample data against official statistics. Finally, we use the estimated model and the QBO Payroll sample data to generate a near real-time index of economic activity. We show that the estimated model performs well both in-sample and out-of-sample. Additionally, we use this analysis for different regions and industries.
Author contact info: Ufuk Akcigit Department of Economics University of Chicago 1126 East 59th Street Saieh Hall, Office 403 Chicago, IL 60637 E-Mail: uakcigit@uchicago.edu Raman Singh Chhina University of Chicago Department of Economics 1126 E. 59th Street Chicago, IL 60637 E-Mail: rschhina@uchicago.edu Seyit M. Cilasun Department of Economics TED University Ziya Gokalp Cad., No.48 06420 Kolej Ankara TURKEY E-Mail: seyit.cilasun@tedu.edu.tr Javier Miranda Friedrich-Schiller University Kleine Märkerstraße 806108 Halle (Saale), Saxo D-06108 Germany Tel: +1(202)2551331 E-Mail: Javier.Miranda@iwh-halle.de Eren Ocakverdi E-Mail: erenocak@gmail.com Nicolas Serrano-Velarde Bocconi University Via Roentgen 1 20135 Milan Italy Tel: 00390258365851 E-Mail: nicolas.serranovelarde@unibocconi.it

Optimal Paternalism in a Population with Bounded Rationality: with Focus on Discrete Choice - Manski, Charles F; Sheshinski, Eytan (National Bureau of Economic Research Working Paper Series, 2023)
We consider a utilitarian planner with the power to design a discrete choice set for a population with bounded rationality. We find that optimal paternalism is subtle. The policy that most effectively constrains or influences choices depends on both the preference distribution and the choice probabilities measuring the extent to which persons behave suboptimally. We caution against implementation of paternalistic policies that optimize welfare using behavioral assumptions that lack credible foundation. In the absence of firm empirical understanding of behavior, such policies may do more harm than good. To develop these themes, we first consider the planning problem in abstraction. We next examine policy choice when individuals are boundedly rational in a specific way, this being that they measure utility with additive random error and maximize mismeasured rather than actual utility functions. A numerical example shows the subtlety of the planning problem. We then analyze binary treatment choice under uncertainty, supposing that a planner can mandate a particular treatment or can decentralize decision making, enabling variation in treatment. We apply the analysis to medical treatment, observing that clinical practice guidelines pose quasi-mandates for clinical care of patients.
Author contact info: Charles F. Manski Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208-2600 Tel: 847/491-8223 Fax: 847/491-7001 E-Mail: cfmanski@northwestern.edu Eytan Sheshinski Department of Economics The Hebrew University Jerusalem, ISRAEL E-Mail: mseytan@mscc.huji.ac.il

War Discourse and the Cross Section of Expected Stock Returns - Hirshleifer, David; Mai, Dat; Pukthuanthong, Kuntara (National Bureau of Economic Research Working Paper Series, 2023)
A war-related factor model derived from textual analysis of media news reports explains the cross section of expected stock returns. Using a semi-supervised topic model to extract discourse topics from 7,000,000 New York Times stories spanning 160 years, the war factor predicts the cross section of returns across test assets derived from both traditional and machine learning construction techniques, and spanning 138 anomalies. Our findings are consistent with assets that are good hedges for war risk receiving lower risk premia, or with assets that are more positively sensitive to war prospects being more overvalued. The return premium on the war factor is incremental to standard effects.
Author contact info: 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 Dat Mai Robert J. Trulaske, Sr. College of Business University of Missouri-Columbia E-Mail: datmai@mail.missouri.edu Kuntara Pukthuanthong Robert J. Trulaske, Sr. College of Business University of Missouri, Columbia E-Mail: pukthuanthongk@missouri.edu

A Theory of Price Caps on Non-Renewable Resources - Johnson, Simon; Rachel, Lukasz; Wolfram, Catherine (National Bureau of Economic Research Working Paper Series, 2023)
In December 2022, following Russia’s invasion of Ukraine, a G7-led coalition of countries imposed a $60 per barrel price cap on the sales of Russian oil that use western services. This paper provides a theoretical and quantitative analysis of this new tool. We build a tractable equilibrium model in which the financially constrained exporter of a non-renewable resource optimally exerts market power, and the price of the resource varies stochastically. An important insight from this framework is that the supply curve is inelastic and can even be downward sloping, rationalizing the patterns we observe in the data. Contrary to the fears that an introduction of the price cap will cause a damaging oil supply shock, the exporter may have strong incentives to increase extraction following the introduction of a binding price cap. In fact, when the producer is large and has market power, a price cap that applies to all or most sales significantly limits the degree to which market power is used in equilibrium and stabilizes world oil prices. But if the cap is poorly enforced, or if the sanctioned state has access to a non-compliant “shadow” fleet, the cap is less effective at stabilizing world prices.
Author contact info: Simon Johnson MIT Sloan School of Management 100 Main Street, E52-562 Cambridge, MA 02142 Tel: 617/290-9618 Fax: 617/253-2660 E-Mail: sjohnson@mit.edu Lukasz Rachel University College London 30 Gordon Street London, WC1H 0AX United Kingdom Tel: 07899810028 E-Mail: l.rachel@ucl.ac.uk Catherine Wolfram Massachusetts Institute of Technology Sloan School of Management 100 Main St. Cambridge, MA 02142 E-Mail: cwolfram@mit.edu

Ph.D. Publication Productivity: The Role of Gender and Race in Supervision in South Africa - Rossello, Giulia; Cowan, Robin; Mairesse, Jacques (National Bureau of Economic Research Working Paper Series, 2023)
We study whether student-advisor gender and race composition matters for publication productivity of Ph.D. students in South Africa. We consider all Ph.D. students in STEM graduating between 2000 and 2014, after the recent systematic introduction of doctoral programs in this country. We investigate the joint effects of gender and race for the whole sample and looking separately at the sub-samples of (1) white-white; (2) black-black; and (3) black-white student-advisor couples. We find significant productivity differences between male and female students. These disparities are more pronounced for female students working with male advisors when looking at the joint effects of gender and race for the white-white and black-black student-advisor pairs. We also explore whether publication productivity differences change significantly for students with a high, medium, or low “productivity-profile”. We find that female productivity gaps are U-shaped over the range of productivity. Female students working with male advisors have more persistent productivity gaps over the productivity distribution, while female students with a high (or low) “productivity-profile” studying with female advisors are as productive as male students with similar “productivity-profile” studying with male advisors.
Author contact info: Giulia Rossello Via Cosimo Ridolfi 10 Pisa 56124 Italy E-Mail: giulia.rossello@unipi.it Robin Cowan UNU-MERIT United Nations University 24 Boschstraat 6211 AX Maastricht the Netherlands E-Mail: cowan@merit.unu.edu Jacques Mairesse CREST (ParisTech-ENSAE) 5, Avenue Henri Le Chatelier 91120 PALAISEAU FRANCE Tel: 33-1-41-17-35-50 Fax: 33-1-41-17-76-34 E-Mail: mairesse@ensae.fr

Public Education and Intergenerational Housing Wealth Effects - Gilraine, Michael; Graham, James; Zheng, Angela (National Bureau of Economic Research Working Paper Series, 2023)
While rising house prices benefit existing homeowners, we document a new channel through which price shocks have intergenerational wealth effects. Using panel data from school zones within a large U.S. school district, we find that higher local house prices lead to improvements in local school quality, thereby increasing child human capital and future incomes. We quantify this housing wealth channel using an overlapping generations model with neighborhood choice, spatial equilibrium, and endogenous school quality. Housing market shocks in the model generate large intra- and intergenerational wealth effects, with the latter accounting for over half of total wealth effects.
Author contact info: Michael Gilraine Economics Department Simon Fraser University West Mall Centre 3602 8888 University Drive Burnaby, BC V5A 1S6 Canada Tel: 7787231579 E-Mail: mike.gilraine@nyu.edu James Graham Department of Economics University of Sydney Camperdown New South Wales 2006 Australia E-Mail: james.a.graham@sydney.edu Angela Zheng Department of Economics McMaster University Kenneth Taylor Hall 1280 Main St W Hamilton, Onta L8S 4E8 Canada E-Mail: zhenga17@mcmaster.ca

The Economic Determinants of Heat Pump Adoption - Davis, Lucas W (National Bureau of Economic Research Working Paper Series, 2023)
One concern with subsidies for low-carbon technologies is that they tend to go predominantly to high-income households. Previous research has shown, for example, that the top income quintile receives 60% of subsidies for rooftop solar and 90% of subsidies for electric vehicles. This paper finds that heat pumps are an important exception. Using newly available U.S. nationally representative data, the paper finds that there is remarkably little correlation between heat pump adoption and household income. Nationwide, 14% of U.S. households have a heat pump as their primary heating equipment, and adoption levels are essentially identical for all income levels ranging from the bottom of the income distribution (<$30,000 annually) to the top ($150,000+). Instead, the paper shows that heat pump adoption is strongly correlated with geography, climate, and electricity prices.
Author contact info: Lucas W. Davis Haas School of Business University of California Berkeley, CA 94720-1900 E-Mail: ldavis@haas.berkeley.edu

Why Does the Folk Theorem Do Not Seem to Work When It Is Mostly Needed? - Caro-Burnett, Johann; Galiani, Sebastian; Torrens, Gustavo (National Bureau of Economic Research Working Paper Series, 2023)
In International Relations the canonical model of inter-estate interactions is a one-shot security competition game. The model has the structure of a prisoners dilemma, which results in an equilibrium with two sources of inefficiency: excessive arming and possibly the destruction associated with open conflict. Standard arguments in game theory suggest that more cooperative outcomes should emerge given that states often engage in repeated interactions. Historical record, on the contrary, shows cycles of peace, arms races, and serious instances of open conflict. Long-lasting disarmed peace is rarely observed. The paper develops a unified model of conflict that reveals possible theoretical mechanisms to produce such historical outcomes.
Author contact info: Johann Caro-Burnett 1-5-1 Kagamiyama IDEC Higashi-hiroshima, Hiro 739-0046 Japan E-Mail: johanncb@hiroshima-u.ac.jp Sebastian Galiani Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 Tel: 301/405-3518 E-Mail: sgaliani@umd.edu Gustavo Torrens Department of Economics Indiana University Wylie Hall, 100 S Woodland Ave Bloomington, IN 47405-7104 Tel: (812)856-8131 E-Mail: gtorrens@indiana.edu

Pandemic-Era Changes to Medicaid Enrollment and Funding: Implications for Future Policy and Research - Dague, Laura; Ukert, Benjamin D (National Bureau of Economic Research Working Paper Series, 2023)
The COVID-19 related public health emergency led to federal legislation that changed the landscape of Medicaid coverage for low-income people in the United States. Beginning in 2020, policy responses led to a surge in Medicaid enrollment due to federal rules preventing Medicaid disenrollment, and total Medicaid enrollment increased more from January 2020-2023 than the net increase in insurance coverage from 2013-2017 following the Affordable Care Act’s implementation. As these policies come to an end, it is crucial to understand their implications for the future of Medicaid. This paper provides an overview of Medicaid’s enrollment, renewal and funding policies, highlighting how these policies changed during and immediately following the acute phases of the COVID-19 pandemic, describes enrollment increases and their composition, reviews literature relevant to the policy and its unwinding, and identifies key areas for research. By examining this unprecedented period of Medicaid policy, we can inform future policy decisions and optimize safety net programs to be effective in a broad set of circumstances.
Author contact info: Laura Dague Bush School of Government and Public Service Texas A&M University 4220 TAMU College Station, TX 77843 Tel: 979/845-6591 E-Mail: dague@tamu.edu Benjamin Ukert Department of Health Policy and Management Texas A&M University 212 Adriance Lab Rd College Station, TX 77843 E-Mail: bukert@tamu.edu

Techies and Firm Level Productivity - Harrigan, James; Reshef, Ariell; Toubal, Farid (National Bureau of Economic Research Working Paper Series, 2023)
We study the impact of techies—engineers and other technically trained workers—on firm-level productivity. We first report new facts on the role of techies in the firm by using French administrative data and unique surveys. Techies are STEM-skill intensive and are associated with innovation, as well as with technology adoption, management, and diffusion within firms. Using structural econometric methods, we estimate the causal effect of techies on firm-level Hicks-neutral productivity in both manufacturing and non-manufacturing industries. We find that techies raise firm-level productivity, and this effect goes beyond the employment of R&D workers, extending to ICT and other techies. In non-manufacturing firms, the impact of techies on productivity operates mostly through ICT and other techies, not R&D workers. Engineers have a greater effect on productivity than technicians.
Author contact info: James Harrigan Department of Economics University of Virginia P.O. Box 400182 Charlottesville, VA 22904-4182 Tel: 434-243-8354 Fax: 434-982-2904 E-Mail: james.harrigan@virginia.edu Ariell Reshef Université Paris 1 - Panthéon Sorbonne Maison des Sciences Economiques 106-112 Boulevard de l'Hopital 75647 Paris Cedex 13 France E-Mail: ariell.reshef@psemail.eu Farid Toubal University of Paris-Dauphine - PSL Place du Maréchal de Lattre de Tassigny 75775 Paris Cedex 16 France E-Mail: farid.toubal@dauphine.psl.eu

Community-Based Health Programs and Child Vaccinations: Evidence from Madagascar - Herrera-Almanza, Catalina; Rosales-Rueda, Maria (National Bureau of Economic Research Working Paper Series, 2023)
Vaccinations are a cost-effective tool to prevent child mortality and morbidity; however, their access and take-up remain low in developing countries. We analyze the effects on child vaccinations of a large-scale community-based health worker program that aimed to reach remote areas distant from public health facilities in Madagascar. We identify these effects using a triple-difference design that leverages the time and geographic variation in the program rollout and the geocoded household distance to the closest health facility. Our findings indicate that, on average, the program did not improve the vaccination uptake in treated areas; however, the community health workers component had an additional effect on children’s vaccinations in the most remote areas from the closest health facility. Despite this improvement, we find that mothers’ religious affiliation might constitute a barrier for the vaccination uptake of the most remote and vulnerable children.
Author contact info: Catalina Herrera-Almanza 427 Mumford Hall University of Illinois Urbana-Champaign, IL 61801 USA E-Mail: cataher@illinois.edu Maria Rosales-Rueda Department of Economics Rutgers University 360 Martin Luther King Jr. Newark, NJ 07102 E-Mail: maria.rosales@rutgers.edu

The 2021 Child Tax Credit, the Living Arrangements and Housing Affordability of Families with Low Incomes - Pilkauskas, Natasha V; Michelmore, Katherine; Kovski, Nicole (National Bureau of Economic Research Working Paper Series, 2023)
Access to safe and stable housing is important for child and adult wellbeing. Yet many low-income households face severe challenges in maintaining stable housing. In this paper we examine the impact of the 2021 temporary expansion to the Child Tax Credit (CTC) on the living arrangements and housing affordability of families with low incomes. We employ a parameterized difference-in-differences method and use national data from a sample of parents who are receiving, or recently received, Supplemental Nutrition Assistance Program benefits (N~20,500). We find that the monthly CTC is associated with a higher likelihood that parents reported a change in their living arrangements as well as reduced household size, an effect largely driven by fewer mothers living with a partner (and not a reduction in doubling up). We also find that the credit reduced parents’ likelihood of reporting potential moves due to difficulties affording rent/mortgages as well as the amount and incidence of back-owed rent/mortgages. We find some differences in effects by race and ethnicity and income. Our findings illustrate how the monthly credit allowed parents to gain residential independence from partners, reduce the number of people residing in their household, and reduce their past-due rent/mortgage.
Author contact info: Natasha Pilkauskas 735 S State St 48109-3091 Ann Arbor, MI 48109 E-Mail: npilkaus@umich.edu Katherine Michelmore Gerald R. Ford School of Public Policy University of Michigan 735 S State St Ann Arbor, MI 48109 E-Mail: kmichelm@umich.edu Nicole Kovski University of Michigan Gerald R. Ford School of Public Policy E-Mail: nkovski@umich.edu

Violent Discipline and Parental Behavior: Short- and Medium-term Effects of Virtual Parenting Support to Caregivers - Dinarte Diaz, Lelys I; Ravindran, Saravana; Shah, Manisha; Powers, Shawn M; Baker-Henningham, Helen (National Bureau of Economic Research Working Paper Series, 2023)
Approximately 75% of children aged 2 to 4 worldwide are regularly subjected to violent discipline across the globe. We study the impact of a virtually-delivered intervention on positive parenting practices in Jamaica. We find the intervention improves caregiver knowledge (0.52 SD) and attitudes around violence (0.2 SD) and leads to meaningful changes in caregiver disciplining behaviors, with a 0.12 SD reduction in violence against children. Treatment children also experience fewer emotional problems (0.17 SD). When we return nine months later, we also find reductions in caregiver depression (0.12 SD), anxiety (0.16 SD), and parental stress (0.16 SD) for treatment caregivers. The virtual delivery has important scalable policy implications which could help decrease violence against children across the globe.
Author contact info: Lelys I. Dinarte Diaz The World Bank Development Economics Research Group 1818 H Street NW Washington, DC 20433 E-Mail: ldinartediaz@worldbank.org Saravana Ravindran Lee Kuan Yew School of Public Policy National University of Singapore 469B Bukit Timah Road Level 2 #02-08 Li Ka Shing Building Singapore 259771 Singapore Tel: +65 6516 8360 E-Mail: saravana@nus.edu.sg Manisha Shah Goldman School of Public Policy University of California, Berkeley 2607 Hearst Ave, MC #7320 Berkeley, CA 94720-7320 Tel: (510) 642-5653 Fax: (510) 643-9657 E-Mail: ManishaShah@berkeley.edu Shawn M. Powers The World Bank Group 1818 H St. NW Washington, DC 20433 E-Mail: spowers1@worldbank.org Helen Baker-Henningham Bangor University School of Psychology Brigantia Building Bangor, Gwynedd Wales, LL57 2AS United Kingdom E-Mail: h.henningham@bangor.ac.uk

The Empirical Distribution of Firm Dynamics and Its Macro Implications - Jaimovich, Nir; Terry, Stephen J; Vincent, Nicolas (National Bureau of Economic Research Working Paper Series, 2023)
Heterogeneous firm models are ubiquitous in modern macroeconomics. We revisit a central feature of these models: the idiosyncratic shock process faced by firms. Using a large representative firm-level dataset, we document nonparametrically that the common assumption, a Gaussian AR(1) shock process, is at odds in important ways with observed fat-tailed firm dynamics. We embed these findings within a standard quantitative general equilibrium heterogeneous firm dynamics model and show that the nature of firm-level shocks has a sizable quantitative effect on the economy’s responsiveness to aggregate shifts.
Author contact info: Nir Jaimovich Department of Economics University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093 E-Mail: nijaimovich@ucsd.edu Stephen J. Terry Department of Economics University of Michigan 611 Tappan Avenue Ann Arbor, MI 48109 Tel: 757/754-3514 E-Mail: stephenjamesterry@gmail.com Nicolas Vincent HEC Montreal Institute of Applied Economics 3000, chemin de la Côte-Sainte-Catherine Montréal (Québec), H3T 2A7 Canada E-Mail: nicolas.vincent@hec.ca

Plugging Gaps in Payment Systems: Evidence from the Take-Up of New Medicare Billing Codes - Clemens, Jeffrey; Leganza, Jonathan M; Masucci, Alex (National Bureau of Economic Research Working Paper Series, 2023)
Over the last decade, the U.S. Medicare program has added new billing codes to enhance the financial rewards for Chronic Care Management and Transitional Care Management. We analyze the effects of introducing these new billing codes. First, we provide evidence on the adoption of the new codes by primary care physicians. We show that take-up of the new billing codes occurs gradually and exhibits substantial variation across space and across physician characteristics. Second, we provide evidence on how the new billing codes can both complement and substitute for the billing or provision of other services. We focus on two case studies. As a case of code substitution, we show that Transitional Care Management services partially crowd out traditional office visits following hospital discharges. As a case of code complementarity, we show that both Transitional Care Management and Chronic Care Management services predict increases in annual wellness visits. Overall, our analysis highlights how both new code take-up frictions and the impact of new code billing on existing code billing can be important for assessing the total costs and benefits of payment reforms.
Author contact info: Jeffrey Clemens Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-5713 E-Mail: jeffclemens@ucsd.edu Jonathan M. Leganza John E. Walker Department of Economics Wilbur O. and Ann Powers College of Business Clemson University Clemson, SC 29634 United States Tel: 317-445-2271 E-Mail: jleganz@clemson.edu Alex Masucci E-Mail: abmasucci@gmail.com

On the Allocation and Impacts of Managerial Training - Adhvaryu, Achyuta; Murathanoglu, Emir; Nyshadham, Anant (National Bureau of Economic Research Working Paper Series, 2023)
We study the allocation and productivity consequences of training production line supervisors in soft skills via a randomized controlled trial. Consistent with standard practice for training investments within firms, we asked middle managers -- who sit above supervisors in the hierarchy -- to nominate members of their supervisory team for training. Program access was randomized within these recommendation rankings. Highly recommended supervisors experienced no productivity gains; in contrast, less-recommended supervisors' productivity increased 12% relative to controls. This was not due to poor information or favoritism. Instead, consistent with the fact that supervisor turnover comes at a large effort cost to middle managers due to gaps in coverage and onboarding, middle managers prioritized retention over productivity impacts. Indeed, treated supervisors were 15% less likely to quit than controls; this gain was most pronounced for highly recommended supervisors. Misallocation of training can help explain the persistence of low managerial quality in firms.
Author contact info: Achyuta Adhvaryu School of Global Policy and Strategy University of California, San Diego La Jolla, CA 92093 Tel: 734/615-2327 E-Mail: aadhvaryu@ucsd.edu Emir Murathanoglu University of Michigan E-Mail: emirmur@umich.edu Anant Nyshadham Stephen M. Ross School of Business University of Michigan 701 Tappan Street Ann Arbor, MI 48109-1234 E-Mail: nyshadha@umich.edu

De-skilling: Evidence from Late Nineteenth Century American Manufacturing - Atack, Jeremy; Margo, Robert A; Rhode, Paul (National Bureau of Economic Research Working Paper Series, 2023)
The long-standing view in US economic history is the shift in manufacturing in the nineteenth century from the artisan shop to the mechanized factory led to “labor deskilling.” Craft workers were displaced by mix of semi-skilled operatives, unskilled workers, and a reduced force of mechanics to maintain the powered machines. Investigating the Department of Labor’s 1899 Hand and Machine Labor Study using causal inference statistical techniques, we show the adoption of inanimate power did indeed induce deskilling. While the effects were statistically significant, they accounted for only 7-15 percent of the deskilling observed in the sample. Broadening the scope of our inquiry, we find the increased division of labor as captured by the increase in scale of operations and the ratio of workers to tasks accounts for a larger fraction.
Author contact info: Jeremy Atack 6504 Hidden Hollow Trail Brentwood, TN 37027 United States Tel: 6159693366 E-Mail: jeremy.atack@vanderbilt.edu Robert A. Margo Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-6819 Fax: 617/343-8495 E-Mail: margora@bu.edu Paul Rhode Economics Department University of Michigan 205 Lorch Hall 611 Tappan St. Ann Arbor, MI 48109-1220 Tel: 734/647-5603 Fax: 734/764-2769 E-Mail: pwrhode@umich.edu

Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax - Garbinti, Bertrand; Goupille-Lebret, Jonathan; Muñoz, Mathilde; Stantcheva, Stefanie; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2023)
We study a French wealth tax reform that starkly reduced the information some taxpayers must report to the tax authority. Using a new dynamic bunching approach we estimate the average response to the reform, the share of compliers, and the local average treatment effect. The annual wealth growth rate of treated taxpayers falls by 0.5 percentage points after the reform. This decline is likely due to increased evasion, as suggested by the sharp responses in self-reported wealth but not in third-party-reported incomes. The wealth tax base becomes more elastic post reform, illustrating the key role of information policy choices for tax base elasticities.
Author contact info: Bertrand Garbinti CREST – IP Paris 5 avenue Henry Le Chatelier Palaiseau cedex 91764 France E-Mail: bertrand.garbinti@ensae.fr Jonathan Goupille-Lebret E-Mail: jonathan.goupille-lebret@ens-lyon.fr Mathilde Muñoz Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: mathildemunoz@berkeley.edu Stefanie Stantcheva Department of Economics Littauer Center 232 Harvard University Cambridge, MA 02138 Tel: 617-496-2614 E-Mail: sstantcheva@fas.harvard.edu Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

How the 1963 Equal Pay Act and 1964 Civil Rights Act Shaped the Gender Gap in Pay - Bailey, Martha J; Helgerman, Thomas E; Stuart, Bryan A (National Bureau of Economic Research Working Paper Series, 2023)
In the 1960s, two landmark statutes—the Equal Pay and Civil Rights Acts—targeted the long-standing practice of employment discrimination against U.S. women. For the next 15 years, the gender gap in median earnings among full-time, full-year workers changed little, leading many scholars to conclude the legislation was ineffectual. This paper revisits this conclusion using two research designs, which leverage (1) cross-state variation in pre-existing state equal pay laws and (2) variation in the 1960 gender gap across occupation-industry-state-group cells to capture differences in the legislation’s incidence. Both designs suggest that federal anti-discrimination legislation led to striking gains in women’s relative wages, which were concentrated among below-median wage earners. These wage gains offset pre-existing labor-market forces which worked to depress women’s relative pay growth, resulting in the apparent stability of the gender gap at the median and mean in the 1960s and 1970s. The data show little evidence of short-term changes in women’s employment but suggest that firms reduced their hiring and promotion of women in the medium to long term. The historical record points to the key role of the Equal Pay Act in driving these changes.
Author contact info: Martha J. Bailey University of California, Los Angeles Department of Economics Bunche Hall 315 Portola Plaza Los Angeles, CA 90095 E-Mail: marthabailey@ucla.edu Thomas E. Helgerman E-Mail: tehelg@umn.edu Bryan A. Stuart Federal Reserve Bank of Philadelphia Research Department 10 Independence Mall Philadelphia, PA 19106 USA E-Mail: bryan.stuart@phil.frb.org

The Confederate Diaspora - Bazzi, Samuel; Ferrara, Andreas; Fiszbein, Martin; Pearson, Thomas P; Testa, Patrick A (National Bureau of Economic Research Working Paper Series, 2023)
This paper shows how white migration out of the postbellum South diffused and entrenched Confederate culture across the United States at a critical juncture of westward expansion and postwar reconciliation. These migrants laid the groundwork for Confederate symbols and racial norms to become pervasive nationally in the early 20th century. Occupying positions of authority, former slaveholders played an outsized role in this process. Beyond memorializing the Confederacy, migrants exacerbated racial violence, boosted novel forms of exclusion, and compounded Black disadvantage outside the South. Moving West, former Confederates had larger effects in frontier communities lacking established culture and institutions. Over time, they continued to transmit norms to their children and non-Southern neighbors. The diaspora legacy persists over the long run, shaping racial inequities in labor, housing, and policing. Together, our findings offer a new perspective on migration, elite influence, and the interplay between culture and institutions in the nation-building process.
Author contact info: Samuel Bazzi University of California, San Diego School of Global Policy and Strategy 9500 Gilman Drive, 0519 La Jolla, CA 92093 E-Mail: sbazzi@ucsd.edu Andreas Ferrara Department of Economics University of Pittsburgh 4906 Wesley W. Posvar Hall Pittsburgh, PA 15260 E-Mail: a.ferrara@pitt.edu Martin Fiszbein Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4389 E-Mail: fiszbein@bu.edu Thomas P. Pearson Eggers Hall Department of Economics Syracuse, NY 13210 US E-Mail: tpears01@syr.edu Patrick A. Testa Department of Economics 6823 St Charles Ave Tilton Hall New Orleans, LA 70118 United States E-Mail: ptesta@tulane.edu

The Demand for Mobility: Evidence from an Experiment with Uber Riders - Christensen, Peter; Osman, Adam (National Bureau of Economic Research Working Paper Series, 2023)
Optimal transportation policies depend on demand elasticities that interact across modes and vary across the population, but understanding how and why these elasticities vary has been an empirical challenge. Using an experiment with Uber in Egypt, we randomly assign large price discounts for transport services over a 3 month period to examine: (1) the demand for ride-hailing services, (2) the demand for total mobility (km/week), and (3) its contributions to external costs (e.g. congestion). A 50% discount more than quadruples Uber usage and induces an increase of nearly 49% in total mobility. These effects are stronger for women, who are less mobile at baseline and perceive public transit as unsafe. Technology-induced reductions in the price of ride-hailing services could generate substantial benefits to users (4.3% of GDP) that would be accompanied by considerable increases in external costs (1% of GDP), with benefits accruing to the most affluent and costs being borne by the entire population.
Author contact info: Peter Christensen Agriculture and Consumer Economics University of Illinois at Urbana-Champaign 1301 W. Gregory Urbana, IL 61801 E-Mail: pchrist@illinois.edu Adam Osman Department of Economics University of Illinois at Urbana-Champaign 109 David Kinley Hall, 1407 W. Gregory Urbana, IL 61801 E-Mail: aosman@illinois.edu

Corporate Discount Rates - Gormsen, Niels Joachim; Huber, Kilian (National Bureau of Economic Research Working Paper Series, 2023)
Standard theory implies that the discount rates used by firms in investment decisions (i.e., their required returns to capital) determine investment and transmit financial shocks to the real economy. However, there exists little evidence on how firms’ discount rates change over time and affect investment. We construct a new global database based on manual entry from conference calls. We show that, on average, firms move their discount rates with the cost of capital, but the relation is far below the one-to-one mapping assumed by standard theory, with substantial heterogeneity across firms. This pattern leads to time-varying wedges between discount rates and the cost of capital. The average wedge has increased substantially over the last decades as the cost of capital has dropped. Future investment is negatively related to discount rate wedges. Moreover, the large and growing discount rate wedges can account for the puzzle of “missing investment” (relative to high asset prices) in recent decades. We find that beliefs about value creation combined with market power, as well as fluctuations in risk, explain changes in discount rate wedges over time.
Author contact info: Niels Joachim Gormsen Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: niels.gormsen@chicagobooth.edu Kilian Huber Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 E-Mail: kilianhuber@uchicago.edu

School Choice, Competition, and Aggregate School Quality - Gilraine, Michael; Petronijevic, Uros; Singleton, John D (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops and estimates an empirical framework that evaluates the impact of charter school choice on education quality in the aggregate. We estimate the model using student-level data from North Carolina. We find that North Carolina’s lifting of its statewide charter school cap raised the average public school's value-added by around 0.01 standard deviations (on the student test score distribution). We calculate the total human capital returns of the expansion at above $100,000 per charter school enrollee. We further show that competition drives the aggregate gains; test score impacts on students induced into charter schools by the policy are negative.
Author contact info: Michael Gilraine Economics Department Simon Fraser University West Mall Centre 3602 8888 University Drive Burnaby, BC V5A 1S6 Canada Tel: 7787231579 E-Mail: mike.gilraine@nyu.edu Uros Petronijevic York University Department of Economics Vari Hall 4700 Keele Street Toronto, ON M3J 1P3 CANADA E-Mail: upetroni@yorku.ca John D. Singleton University of Rochester Department of Economics Harkness Hall Box 270156 Rochester, NY 14627 E-Mail: john.singleton@rochester.edu

GDP and Temperature: Evidence on Cross-Country Response Heterogeneity - Berg, Kimberly A; Curtis, Chadwick C; Mark, Nelson (National Bureau of Economic Research Working Paper Series, 2023)
We use local projections to estimate the cross-country distribution of real GDP per capita growth impulse responses to global and idiosyncratic temperature shocks. Negative growth responses to global temperature at longer horizons are found for all Group of Seven countries while positive responses are found for seven of the nine poorest countries. Global temperature shocks have negative effects on growth for around half of the countries and seemingly anomalous positive effects for the other half. After controlling for latitude and average temperature, positive growth responses to global temperature shocks are more likely for countries that are poorer, have experienced slower growth, are less educated (lower high school attainment), less open to trade, and more authoritarian.
Author contact info: Kimberly A. Berg Department of Economics Miami University Oxford, OH 45056 E-Mail: bergka@miamioh.edu Chadwick C. Curtis Department of Economics University of Richmond Richmond, VA 23173 E-Mail: ccurtis2@richmond.edu Nelson Mark Department of Economics 3060 Jenkins-Nanovic Hall University of Notre Dame Notre Dame, IN 46556 Tel: 574/631-0518 Fax: 574/631-4783 E-Mail: nmark@nd.edu

Dynamic Programming on a Quantum Annealer: Solving the RBC Model - Fernández-Villaverde, Jesús; Hull, Isaiah J (National Bureau of Economic Research Working Paper Series, 2023)
We introduce a novel approach to solving dynamic programming problems, such as those in many economic models, on a quantum annealer, a specialized device that performs combinatorial optimization. Quantum annealers attempt to solve an NP-hard problem by starting in a quantum superposition of all states and generating candidate global solutions in milliseconds, irrespective of problem size. Using existing quantum hardware, we achieve an order-of-magnitude speed-up in solving the real business cycle model over benchmarks in the literature. We also provide a detailed introduction to quantum annealing and discuss its potential use for more challenging economic problems.
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 Isaiah J. Hull Department of Finance, BI Norwegian Business School Nydalsveien 37, 0484 Oslo, Norway E-Mail: hull.isaiah@gmail.com

Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition - Babina, Tania; Fedyk, Anastassia; He, Alex X; Hodson, James (National Bureau of Economic Research Working Paper Series, 2023)
We study the shifts in U.S. firms' workforce composition and organization associated with the use of AI technologies. To do so, we leverage a unique combination of worker resume and job postings datasets to measure firm-level AI investments and workforce composition variables, such as educational attainment, specialization, and hierarchy. We document that firms with higher initial shares of highly-educated workers and STEM workers invest more in AI. As firms invest in AI, they tend to transition to more educated workforces, with higher shares of workers with undergraduate and graduate degrees, and more specialization in STEM fields and IT skills. Furthermore, AI investments are associated with a flattening of the firms' hierarchical structure, with significant increases in the share of workers at the junior level and decreases in shares of workers in middle-management and senior roles. Overall, our results highlight that adoption of AI technologies is associated with significant reorganization of firms' workforces.
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 Anastassia Fedyk 545 Student Services Building #1900 Berkeley, CA 94720 E-Mail: fedyk@berkeley.edu Alex X. He 4411 Van Munching Hall Robert H. Smith School of Business University of Maryland College Park, MD 20742 E-Mail: axhe@umd.edu James Hodson AI for Good E-Mail: hodson@ai4good.org

Do Green Users Become Green Voters? - Comin, Diego A; Rode, Johannes (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the causal effect of the diffusion of solar photovoltaic (PV) systems on the fraction of Green Party votes in federal and state elections in Baden-Württemberg, Germany. Our estimates are based on instruments that induce exogenous variation in roof appropriateness to PV installation. We find that PV adoption had a strong positive effect on Green Party votes. The effect is connected to the direct engagement of households with the PV system and does not reflect reciprocity to economic gains from PV. Our estimates likely reveal changing attitudes towards environmentally friendly values after adopting PV produced by cognitive dissonance.
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 Johannes Rode TU Darmstadt Chair of International Economics Hochschulstraße 1 64289 Darmstadt Germany E-Mail: rode@vwl.tu-darmstadt.de

Anticipating Climate Change Across the United States - Bilal, Adrien; Rossi-Hansberg, Esteban (National Bureau of Economic Research Working Paper Series, 2023)
We evaluate how anticipation and adaptation shape the aggregate and local costs of climate change. We develop a dynamic spatial model of the U.S. economy and its 3,143 counties that features costly forward-looking migration and capital investment decisions. Recent methodological advances that leverage the `Master Equation' representation of the economy make the model tractable. We estimate the county-level impact of severe storms and heat waves over the 20th century on local income, population, and investment. The estimated impact of storms matches that of capital depreciation shocks in the model, while heat waves resemble combined amenity and productivity shocks. We then estimate migration and investment elasticities, as well as the structural damage functions, by matching these reduced-form results in our framework. Our findings show, first, that the impact of climate on capital depreciation magnifies the U.S. aggregate welfare costs of climate change twofold to nearly 5in 2023 under a business-as-usual warming scenario. Second, anticipation of future climate damages amplifies climate-induced worker and investment mobility, as workers and capitalists foresee the slow build-up of climate change. Third, migration reduces substantially the spatial variance in the welfare impact of climate change. Although both anticipation and migration are important for local impacts, their effect on aggregate U.S. losses from climate change is small.
Author contact info: Adrien Bilal Department of Economics Harvard University 1805 Cambridge Street Cambridge, MA 02138 E-Mail: adrienbilal@fas.harvard.edu Esteban Rossi-Hansberg The Kenneth C. Griffin Department of Economics University of Chicago 5757 S. University Avenue Chicago, IL 60637 Tel: (650) 714 2093 E-Mail: rossihansberg@uchicago.edu

Incentive Pay and Social Returns to Worker Effort in Public Programs: Evidence from the Weatherization Assistance Program - Christensen, Peter; Francisco, Paul; Myers, Erica (National Bureau of Economic Research Working Paper Series, 2023)
Aligning compensation with recipient outcomes has the potential to improve the efficiency of government programs. We perform a field experiment to evaluate the impact of performance bonuses on the returns to spending in a large low-income energy efficiency assistance program. We find that performance-based bonuses dramatically increased program natural gas savings by 24%. The bonuses generate $5.39-$14.53 in social benefits for every dollar invested and increase the social net benefits from home-level weatherization more than two-fold. Contractors performing at high quality at baseline respond disproportionately to the incentives, suggesting that gains in the program's cost-effectiveness result from more efficient allocation of worker effort across workers who differ in their marginal effort cost. We do not find evidence of learning within the two-year study period or of increased deficiencies among non-incentivized tasks.
Author contact info: Peter Christensen Agriculture and Consumer Economics University of Illinois at Urbana-Champaign 1301 W. Gregory Urbana, IL 61801 E-Mail: pchrist@illinois.edu Paul Francisco 2111 South Oak Street Suite 106, MC 699 Champaign, IL E-Mail: pwf@illinois.edu Erica Myers Department of Economics University of Calgary 414 Social Sciences Building 2500 University Drive NW Calgary, AB T2N 1N4 Canada E-Mail: erica.myers@ucalgary.ca

Putting Quantitative Models to the Test: An Application to Trump’s Trade War - Adão, Rodrigo; Costinot, Arnaud; Donaldson, Dave (National Bureau of Economic Research Working Paper Series, 2023)
The primary motivation behind quantitative modeling in international trade and many other fields is to shed light on the economic consequences of policy changes. To help assess and potentially strengthen the credibility of such quantitative predictions we introduce an IV-based goodness-of-fit measure that provides the basis for testing causal predictions in arbitrary general-equilibrium environments as well as for estimating the average misspecification in these predictions. As an illustration of how to use our IV-based goodness-of-fit measure in practice, we revisit the welfare consequences of Trump's trade war predicted by Fajgelbaum, Goldberg, Kennedy and Khandelwal (2020).
Author contact info: Rodrigo Adão Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: rodrigo.adao@chicagobooth.edu Arnaud Costinot Department of Economics, E52-534 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/324-1712 Fax: 617/253-1330 E-Mail: costinot@mit.edu Dave Donaldson Department of Economics, E52-554 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4790 Fax: 617/253-1330 E-Mail: ddonald@mit.edu

Green Tilts - Pastor, Lubos; Stambaugh, Robert F; Taylor, Lucian A (National Bureau of Economic Research Working Paper Series, 2023)
We estimate ﬁnancial institutions’ portfolio tilts that relate to stocks’ environmental, social, and governance (ESG) characteristics. In 2021, ESG-related tilts total 6% of the investment industry’s assets and average 22% of institutions’ total portfolio tilts. ESG tilts are larger for less-volatile stocks and for institutions with smaller size and greater active share, consistent with our theoretical predictions. Significant ESG tilts arise from the choice of stocks held and, especially, the weights on stocks held. The largest institutions tilt increasingly toward green stocks, while other institutions and households tilt increasingly brown. UNPRI signatories and European institutions tilt greener, banks browner.
Author contact info: Lubos Pastor University of Chicago Booth School of Business 5807 South Woodlawn Ave Chicago, IL 60637 Tel: 773/834-4080 Fax: NA E-Mail: lubos.pastor@chicagobooth.edu Robert F. Stambaugh Finance Department The Wharton School University of Pennsylvania Philadelphia, PA 19104-6367 Tel: 215/898-5734 Fax: 215/898-6200 E-Mail: stambaugh@wharton.upenn.edu Lucian A. Taylor Finance Department The Wharton School University of Pennsylvania 2300 Steinberg Hall - Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104-6367 E-Mail: luket@wharton.upenn.edu

The Changing Firm and Country Boundaries of US Manufacturers in Global Value Chains - Fort, Teresa C (National Bureau of Economic Research Working Paper Series, 2023)
This paper documents how US firms organize goods production across firm and country boundaries. Most US firms that perform physical transformation tasks in-house using foreign manufacturing plants in 2007 also own US manufacturing plants; moreover manufacturing comprises their main domestic activity. By contrast, “factoryless goods producers” outsource all physical transformation tasks to arm's-length contractors, focusing their in-house efforts on design and marketing. This distinct firm type is missing from standard analyses of manufacturing, growing in importance, and increasingly reliant on foreign suppliers. Physical transformation “within-the-firm” thus coincides with substantial physical transformation “within-the-country,” whereas its performance “outside-the-firm” often also implies “outside-the-country.” Despite these differences, factoryless goods producers and firms with foreign and domestic manufacturing plants both employ relatively high shares of US knowledge workers. These patterns call for new models and data to capture the potential for foreign production to support domestic innovation, which US firms leverage around the world.
Author contact info: 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

Supply, Demand, Institutions, and Firms: A Theory of Labor Market Sorting and the Wage Distribution - Haanwinckel, Daniel (National Bureau of Economic Research Working Paper Series, 2023)
This paper builds a general equilibrium framework with firm and worker heterogeneity, monopsony power, and task-based production to quantify the long-run effects of education, biased demand shocks, and minimum wage. I take it to Brazilian data for 1998 and 2012 and find that (i) supply and demand shocks increase sorting of high-wage workers to high-wage firms, (ii) increased entry of high-wage firms boosts the effect of rising schooling attainment on mean log wages by 25%, and (iii) the minimum wage reduces formal wage inequality but also causes wage loss for mid-productivity workers and disemployment for those at the very bottom.
Author contact info: Daniel Haanwinckel Department of Economics University of California, Los Angeles 8242 Bunche Hall Los Angeles, CA 90095 E-Mail: haanwinckel@econ.ucla.edu

Are Cryptos Different? Evidence from Retail Trading - Kogan, Shimon; Makarov, Igor; Niessner, Marina; Schoar, Antoinette (National Bureau of Economic Research Working Paper Series, 2023)
Trading in cryptocurrencies has grown rapidly over the last decade, primarily dominated by retail investors. Using a dataset of 200,000 retail traders from eToro, we show that they have a different model of the underlying price dynamics in cryptocurrencies relative to other assets. Retail traders in our sample are contrarian in stocks and gold, yet the same traders follow a momentum-like strategy in cryptocurrencies. Individual characteristics do not explain the differences in how people trade cryptocurrencies versus stocks, suggesting that our results are orthogonal to differences in investor composition or clientele effects. Furthermore, our findings are not explained by inattention, differences in fees, or preference for lotterylike stocks. We conjecture that retail investors hold a model of cryptocurrency prices, where price changes imply a change in the likelihood of future widespread adoption, which in turn pushes asset prices further in the same direction.
Author contact info: Shimon Kogan Reichman University 8 Ha'universita Street Herzliya Israel E-Mail: skogan@wharton.upenn.edu Igor Makarov London School of Economics Houghton Street London WC2A 2AE UK Tel: 44-0-20-7000-8265 Fax: 44-0-20-7000-8201 E-Mail: i.makarov@lse.ac.uk Marina Niessner Kelley Business School Indiana University 1309 E. 10th Street Bloomington, IN 47405 United States E-Mail: mniessne@iu.edu Antoinette Schoar MIT Sloan School of Management 100 Main Street, E62-638 Cambridge, MA 02142 Tel: 617/253-3763 Fax: 617/258-6855 E-Mail: aschoar@mit.edu

Cassatts in the Attic - Koffi, Marlène; Marx, Matt (National Bureau of Economic Research Working Paper Series, 2023)
We analyze more than 70 million scientific articles to characterize the gender dynamics of commercializing science. The double-digit gender gap we report is explained neither by the quality of the science nor its ex-ante commercial potential, and is widest among papers with female last authors (i.e., lab heads) when publishing high-quality science. Using Pitchbook database, we show that when authors self-commercialize scientific discoveries via new ventures, no gap appears, raising the question of whether incumbent firms are unaware of—or ignore—scientific contributions by women. A natural experiment based on the Obama administration’s staggered introduction of open-access requirements for federally-funded research reveals that although easier access to scientific articles might facilitate commercialization, this benefit accrues primarily to male authors. Articles written with more “boastful” language are commercialized more often, and female scientists generally boast less, but even when they do their discoveries are commercialized no more often. We also observe gender homophily between scientific authors and commercializing inventors, the majority of whom are male. We conclude with the potential welfare effects of the gender gap: the disparity is more pronounced for higher-quality discoveries, as indicated by academic and patent citations or by predicted probabilities of commercialization derived from deep-learning algorithms.
Author contact info: Marlène Koffi Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 Tel: 514/812-4744 E-Mail: marlene.koffi@utoronto.ca Matt Marx Cornell University 137 Reservoir Avenue Ithaca, NY 14853 Tel: 607/255-6598 E-Mail: mmarx@cornell.edu

Using Machine Learning to Construct Hedonic Price Indices - Cafarella, Michael; Ehrlich, Gabriel; Gao, Tian; Haltiwanger, John C; Shapiro, Matthew D; Zhao, Laura (National Bureau of Economic Research Working Paper Series, 2023)
This paper uses machine learning (ML) to estimate hedonic price indices at scale from item-level transaction and product characteristics. The procedure uses state-of-the-art approaches from hedonic econometrics and implements them with a neural network ML approach. Applying the methodology to Nielsen Retail Scanner data leads to a large hedonic adjustment to the Tornqvist index for food product groups: Cumulative food inflation over the period from 2007 through 2015 is reduced by half from 5.9% to 2.8% -- owing to quality adjustment. These results suggest that quality improvement via product turnover is important even in product groups that are not normally considered to feature rapid technological progress. The approach in the paper thus demonstrates the feasibility and importance of implementing hedonic adjustment at scale.
Author contact info: Michael Cafarella MIT CSAIL 32 Vassar St Cambridge, MA 02139 E-Mail: michjc@csail.mit.edu Gabriel Ehrlich Department of Economics University of Michigan 611 Tappan St Ann Arbor, MI 48109-1220 E-Mail: gehrlich@umich.edu Tian Gao Snowflake Inc. 929 108th Ave NE Suite 600 Bellevue, WA 98004 E-Mail: tian.gao@snowflake.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 Matthew D. Shapiro Department of Economics University of Michigan 611 Tappan St Ann Arbor, MI 48109-1220 Tel: 734/764-5419 Fax: 734 764-2769 E-Mail: shapiro@umich.edu Laura Zhao Bank of Canada 234 Wellington Street Ottawa, ON K1A 0G9 Canada Tel: 3435757827 E-Mail: YZhao@bank-banque-canada.ca

Do Gender-Neutral Job Ads Promote Diversity? Experimental Evidence from Latin America’s Tech Sector - Del Carpio, Lucia; Fujiwara, Thomas (National Bureau of Economic Research Working Paper Series, 2023)
Gendered-grammar languages like Spanish are spoken by 39% of the world’s population. In a field experiment in partnership with a Spanish-speaking online platform for technology positions, ads randomly selected to use gender-neutral language receive a larger share of female applicants for non-remote positions in fields where female participation is not too low, and similar numbers otherwise. In a separate survey experiment, gender-neutral language in ads increases interest and beliefs about the suitability for the position and the advertiser’s culture of inclusion, with effects that are similar in magnitude to stating the job is remote and larger than explicit diversity statements.
Author contact info: Lucia Del Carpio INSEAD 3022 Boulevard de Constance 77300 Fontainebleau France E-Mail: Lucia.delcarpio@insead.edu Thomas Fujiwara Department of Economics Princeton University 131 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 609/258-6993 Fax: 609/258-5974 E-Mail: fujiwara@princeton.edu

Laboratory Safety and Research Productivity - Galasso, Alberto; Luo, Hong; Zhu, Brooklynn (National Bureau of Economic Research Working Paper Series, 2023)
Are laboratory safety practices a tax on scientific productivity? We examine this question by exploiting the substantial increase in safety regulations at the University of California following the shocking death of a research assistant in 2008. Difference-in-differences analyses show that relative to “dry labs” that use theoretical and computational methods, the publication rates of “wet labs” that conduct experiments using chemical and biological substances did not change significantly after the shock. At the same time, we find that wet labs that used dangerous compounds more frequently before the shock reduced their reliance on flammable materials and unfamiliar hazardous compounds afterward, even though their overall research agenda does not appear to be affected. Our findings suggest that laboratory safety may shape the production of science, but they do not support the claim that safety practices impose a significant tax on research productivity.
Author contact info: Alberto Galasso Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 Tel: 905/569-4740 Fax: 905/569-4397 E-Mail: alberto.galasso@rotman.utoronto.ca Hong Luo Harvard University Morgan Hall 241 Soldiers Field Road Boston, MA 02163 E-Mail: hluo@hbs.edu Brooklynn Zhu E-Mail: brooklynn.zhu@bi.no

When Cryptomining Comes to Town: High Electricity-use Spillovers to the Local Economy - Benetton, Matteo; Compiani, Giovanni; Morse, Adair (National Bureau of Economic Research Working Paper Series, 2023)
Cryptomining, the clearing of cryptocurrency transactions, uses large quantities of electricity. We document that cryptominers' use of local electricity implies higher electricity prices for existing small businesses and households. Studying the electricity market in Upstate NY and using the Bitcoin price as an exogenous shifter of the part of the supply curve faced by the community, we estimate the electricity demand functions for small businesses and households. Based on our estimates, we calculate counterfactual electricity bills, finding that small businesses and households paid an extra $92 million and $204 million annually in Upstate NY because of increased electricity consumption from cryptominers. Local governments in Upstate NY realize more business taxes, but this only offsets a small portion of the costs from higher community electricity bills. Using data on China, where electricity prices are fixed, we find that rationing of electricity in cities with cryptomining entrants deteriorates wages and investments, consistent with crowding-out effects on the local economy. Our results point to a yet-unstudied negative spillover from technology processing to local communities, which would need to be considered against welfare benefits.
Author contact info: Matteo Benetton 1440 Montgomery Street San Francisco, CA 94133 E-Mail: benetton@berkeley.edu Giovanni Compiani University of Chicago Booth School of Business 5807 S. Woodlawn Ave Chicago, IL 60605 E-Mail: gio1compiani@gmail.com Adair Morse 5319 42nd Pl NW Washington, DC 20015 E-Mail: morse@haas.berkeley.edu

Misallocation in Firm Production: A Nonparametric Analysis Using Procurement Lotteries - Carrillo, Paul; Donaldson, Dave; Pomeranz, Dina; Singhal, Monica (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops new tools to study misallocation that do not require assumptions about the heterogeneity of firms’ technologies. We show how features of the distribution of marginal products can be identified from exogenous variation in firms’ input use and used both to test for misallocation and to quantify its resulting welfare losses. We apply this method to a setting with exogenous demand shocks from public procurement contracts for construction services in Ecuador. Our results reject the null of efficiency but our estimates of the resulting welfare losses from misallocation are small.
Author contact info: Paul Carrillo George Washington University 2115 G St. N.W. Suite 364 Washington, DC 20052 E-Mail: pcarrill@gwu.edu Dave Donaldson Department of Economics, E52-554 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-4790 Fax: 617/253-1330 E-Mail: ddonald@mit.edu Dina Pomeranz Department of Economics University of Zurich Schoenberggasse 1 8057 Zurich Switzerland E-Mail: dinadpomeranz@gmail.com Monica Singhal Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530/754-1545 E-Mail: msinghal@ucdavis.edu

Carbon Border Adjustments, Climate Clubs, and Subsidy Races When Climate Policies Vary - Clausing, Kimberly A; Wolfram, Catherine (National Bureau of Economic Research Working Paper Series, 2023)
Jurisdictions adopt heterogeneous climate policies that vary both in terms of ambition and in terms of policy approach, with some jurisdictions pricing carbon and others subsidizing clean production. We distinguish two types of policy spillovers associated with diverse policy approaches to climate change. First, when countries have different levels of climate ambition, free-riders will benefit at the expense of more committed countries. Second, when countries pursue different approaches, carbon-intensive producers within cost-imposing jurisdictions will be at a relative competitive disadvantage compared with producers in subsidizing jurisdictions. Carbon border adjustments and climate clubs are attempts to respond to these policy spillovers, but when countries have divergent policy approaches, one policy alone will not be able to address both types of spillovers. We also consider the policy dynamics that result from carbon border adjustments and climate clubs; both have the potential to encourage upward harmonization of climate policy, but they come with risks. Further, the pressures of international competition in the presence of divergent climate policy approaches may result in subsidy races, which come with their own potential risks and benefits.
Author contact info: Kimberly A. Clausing UCLA School of Law 385 Charles E. Young Drive Los Angeles, CA 90095 E-Mail: clausing@law.ucla.edu Catherine Wolfram Massachusetts Institute of Technology Sloan School of Management 100 Main St. Cambridge, MA 02142 E-Mail: cwolfram@mit.edu

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices - Ehrlich, Gabriel; Haltiwanger, John C; Jarmin, Ron S; Johnson, David; Olivares, Ed; Pardue, Luke W; Shapiro, Matthew D; Zhao, Laura (National Bureau of Economic Research Working Paper Series, 2023)
This paper explores alternative methods for adjusting price indices for quality change at scale. These methods can be applied to large-scale item-level transactions data that includes information on prices, quantities, and item attributes. The hedonic methods can take into account the changing valuations of both observable and unobservable characteristics in the presence of product turnover. The paper also considers demand-based approaches that take into account changing product quality from product turnover and changing appeal of continuing products. The paper provides evidence of substantial quality-adjustment in prices for a wide range of goods, including both high-tech consumer products and food products.
Author contact info: Gabriel Ehrlich Department of Economics University of Michigan 611 Tappan St Ann Arbor, MI 48109-1220 E-Mail: gehrlich@umich.edu 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 Ron S. Jarmin U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 Tel: 301.763.1858 E-Mail: ron.s.jarmin@census.gov David Johnson 500 Fifth Street, NW Washington, DC 20001 United States Tel: 5713296759 E-Mail: djohnson@nas.edu Ed Olivares Department of Economics University of Maryland College Park, MD 20742 E-Mail: edwardo@umd.edu Luke W. Pardue 2300 N St NW Ste 700 Washington, DC 20037 E-Mail: luke@econstrategygroup.org Matthew D. Shapiro Department of Economics University of Michigan 611 Tappan St Ann Arbor, MI 48109-1220 Tel: 734/764-5419 Fax: 734 764-2769 E-Mail: shapiro@umich.edu Laura Zhao Bank of Canada 234 Wellington Street Ottawa, ON K1A 0G9 Canada Tel: 3435757827 E-Mail: YZhao@bank-banque-canada.ca

Top Talent, Elite Colleges, and Migration: Evidence from the Indian Institutes of Technology - Choudhury, Prithwiraj; Ganguli, Ina; Gaulé, Patrick (National Bureau of Economic Research Working Paper Series, 2023)
We study migration in the right tail of the talent distribution using a novel dataset of Indian high school students taking the Joint Entrance Exam (JEE), a college entrance exam used for admission to the prestigious Indian Institutes of Technology (IIT). We find a high incidence of migration after students complete college: among the top 1,000 scorers on the exam, 36% have migrated abroad, rising to 62% for the top 100 scorers. We next document that students who attended the original “Top 5” Indian Institutes of Technology (IIT) were 5 percentage points more likely to migrate for graduate school compared to equally talented students who studied in other institutions. We explore two mechanisms for these patterns: signaling, for which we study migration after one university suddenly gained the IIT designation; and alumni networks, using information on the location of IIT alumni in U.S. computer science departments.
Author contact info: Prithwiraj Choudhury Morgan Hall 497 Harvard Business School E-Mail: pchoudhury@hbs.edu Ina Ganguli Department of Economics Crotty Hall 304 412 N. Pleasant Street University of Massachusetts Amherst Amherst, MA 01002 Tel: 413-545-6230 Fax: 413- 545-2921 E-Mail: iganguli@econs.umass.edu Patrick Gaulé University of Bristol E-Mail: patrickgaule@gmail.com

The Effect of Means-Tested Transfers on Work: Evidence from Quasi-Randomly Assigned SNAP Caseworkers - Cook, Jason B; East, Chloe N (National Bureau of Economic Research Working Paper Series, 2023)
We provide a comprehensive evaluation of the dynamic labor supply effects of the Supplemental Nutrition Assistance Program (SNAP) for a representative population using novel administrative data and an examiner design. We find no effects of SNAP receipt for the full sample of working-aged SNAP applicants. This is because the majority of working-aged applicants do not work before applying and experience no change in work if granted SNAP, consistent with this group facing barriers to work. The minority who work before applying appear to treat SNAP as insurance against negative shocks; they decrease work temporarily but work more in the longer-run.
Author contact info: Jason B. Cook University of Utah GARFF 3412 1731 E Campus Center Dr Salt Lake City, UT 84112 E-Mail: jason.cook@eccles.utah.edu Chloe N. East Department of Economics University of Colorado, Denver 1380 Lawrence Street Denver, CO 80217 Tel: 530/400-2312 E-Mail: chloe.east@ucdenver.edu

Creating and Connecting US and China Science: Chinese Diaspora and Returnee Researchers - Xie, Qingnan; Freeman, Richard B (National Bureau of Economic Research Working Paper Series, 2023)
The close connection between US and China in scientific research and education in the 2000s produced a large group of China-born researchers who work in the US (“diaspora”) and a larger group of China-born researchers who gained US-research experience and returned to do their research in China (“returnee”). Analyzing 2018 Scopus data on research papers, we estimate that diaspora researchers contributed to 27% of US addressed papers, and that returnee researchers contributed to 38% of China addressed papers. Both the number of papers with diaspora authors and the number of papers with returnee authors far exceeded the usual measure of US-China collaborative work, papers with both US and China addresses. In terms of quality or impact, papers with diaspora or returnee authors averaged more citations and had higher proportions of publication in high CiteScore journals than other US-addressed or China-addressed papers. Finally, papers with diaspora and/or returnee authors were at the center of the US-China coauthor network and major conduits of research findings between the countries in the network of scientific citations. The benefits of the US-China research connection notwithstanding, the link between the countries’ research began to fray from 2018 through the early 2020s, with potential deleterious effects on each country’s future research output and on global science writ large to which US and China are the two biggest contributors.
Author contact info: Qingnan Xie Center for Labor and a Just Economy Harvard Law School E-Mail: qingnanx@gmail.com Richard B. Freeman NBER 1050 Massachusetts Avenue Cambridge, MA 02138 Tel: 617/868-3900 Fax: 617/868-2742 E-Mail: freeman@nber.org

Using Limited Trial Evidence to Credibly Choose Treatment Dosage when Efficacy and Adverse Effects Weakly Increase with Dose - Manski, Charles F (National Bureau of Economic Research Working Paper Series, 2023)
In medical treatment and elsewhere, it has become standard to base treatment intensity (dosage) on evidence in randomized trials. Yet it has been rare to study how outcomes vary with dosage. In trials to obtain drug approval, the norm has been to specify some dose of a new drug and compare it with an established therapy or placebo. Design-based trial analysis views each trial arm as qualitatively different, but it may be highly credible to assume that efficacy and adverse effects (AEs) weakly increase with dosage. Optimization of patient care requires joint attention to both, as well as to treatment cost. This paper develops methodology to credibly use limited trial evidence to choose dosage when efficacy and AEs weakly increase with dose. I suppose that dosage is an integer choice t ∊ (0, 1, . . . , T), T being a specified maximum dose. I study dosage choice when trial evidence on outcomes is available for only K dose levels, where K < T + 1. Then the population distribution of dose response is partially rather than point identified. The identification region is a convex polygon determined by linear equalities and inequalities. I characterize clinical and public-health decision making using the minimax-regret criterion. A simple analytical solution exists when T = 2 and computation is tractable when T is larger.
Author contact info: Charles F. Manski Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208-2600 Tel: 847/491-8223 Fax: 847/491-7001 E-Mail: cfmanski@northwestern.edu

Money Matters: Broad Divisia Money and the Recovery of Nominal GDP from the COVID-19 Recession - Bordo, Michael D; Duca, John V (National Bureau of Economic Research Working Paper Series, 2023)
The rise of inflation in 2021 and 2022 surprised many macroeconomists who ignored the earlier surge in money growth because past instability in the demand for simple-sum monetary aggregates had made these aggregates unreliable indicators. We find that the demand for more theoretically-based divisia aggregates can be modeled and that their growth rates provide useful information for future nominal GDP growth. Unlike M2 and divisia-M2, whose velocities do not internalize shifts in liabilities across commercial and shadow banks, the velocities of broader Divisia monetary aggregates are more stable and can be reasonably empirically modeled in both the short run and the long run through the Covid-19 pandemic and to date. In the long run, these velocities depend on regulatory changes and mutual fund costs that affect the substitutability of money for other financial assets. In the short run, we control for swings in mortgage activity and use vaccination rates and an index of the stringency of government pandemic restrictions to control for the unusual effects of the pandemic. The velocity of broad Divisia money temporarily declines during crises like the Great and COVID Recessions, but later rebounds. In each recession monetary policy lowered short-term interest rates to zero and engaged in quantitative easing of about $4 Trillion. Nevertheless, broad money growth was more robust in the COVID Recession, likely reflecting that the banking system was less impaired and could promote rather than hinder multiple deposit creation. Partly as a result, our framework implies that nominal GDP growth and inflationary pressures rebounded much more quickly from the COVID Recession versus the Great Recession. We consider different scenarios for future Divisa money growth and the unwinding of the pandemic that have different implications for medium-term nominal GDP growth and inflationary pressures as monetary policy tightening seeks to restore low inflation.
Author contact info: Michael D. Bordo Department of Economics Rutgers University 75 Hamilton Street New Brunswick, NJ 08901 Tel: 732/822-7152 Fax: 732/932-7416 E-Mail: bordo@econ.rutgers.edu John V. Duca Rice Hall 10 N.Professor St. Oberlin, Ohio 44074-1539 United States Tel: +1 469 318 8813 E-Mail: jduca@oberlin.edu

Information Acquisition and Rating Agencies - Cole, Harold L; Cooley, Thomas F (National Bureau of Economic Research Working Paper Series, 2023)
For decades credit rating agencies were viewed as trusted arbiters of creditworthiness and their ratings as important tools for managing risk. The common narrative is that the value of ratings was compromised by the evolution of the industry to a form where issuers pay for ratings. In this paper we consider both an investor-pays and an issuer-pays set-ups and show that if the investor-pays version can overcome the free-rider problem it is efficient, and otherwise leads to under-provision of information; while if the issuer-pays can force disclosure, it is efficient, but otherwise it leads to less revealing information because of the systematic distortion in revealed information along with over-investment in information. We show that in both these arrangements credit ratings have value in equilibrium and how reputation insures that, in equilibrium, ratings will reflect sound assessments of credit worthiness. We argue that regulatory reliance on ratings and the increasing importance of risk-weighted capital in prudential regulation have more likely contributed to distorted ratings than the matter of who pays for them.
Author contact info: Harold L. Cole Economics Department University of Pennsylvania 3718 Locust Walk 160 McNeil Building Philadelphia, PA 19104 Tel: 215-898-7788 E-Mail: colehl@sas.upenn.edu Thomas F. Cooley E-Mail: N/A user is deceased

Trade Wars, Nominal Rigidities and Monetary Policy - Auray, Stéphane; Devereux, Michael B; Eyquem, Aurélien (National Bureau of Economic Research Working Paper Series, 2023)
This paper shows that the outcome of trade wars for tariffs and welfare will be affected by the monetary policy regime. The key message is that trade policy interacts with monetary policy in a way that magnifies the welfare costs of discretionary monetary policy in an international setting. If countries follow monetary policies of flexible inflation targeting, trade wars are relatively mild, with low equilibrium tariffs and small welfare costs. Discretionary monetary policies imply much higher tariffs, high inflation rates, and substantially larger welfare costs. We quantify the effects of a global trade war among major economies using estimates of trade elasticities, economic size, net foreign assets and trade openness. We find large welfare benefits of an inflation targeting monetary policy for all countries.
Author contact info: Stéphane Auray CREST (UMR9194) - Ensai and Université du Littoral Côte d'Opale ENSAI Campus de Ker-Lann Rue Blaise Pascal BP 37203, 35172 BRUZ Cedex, France E-Mail: stephane.auray@ensai.fr Michael B. Devereux Department of Economics University of British Columbia 997-1873 East Mall Vancouver, BC V6T 1Z1 Tel: 604/822-2542 Fax: 604/822-5915 E-Mail: mbdevereux@gmail.com Aurélien Eyquem Univ Lausanne Internef CH-1015 Lausanne Switzerland Switzerland E-Mail: aurelien.eyquem@unil.ch

Cryptic Regulation of Crypto-Tokens - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2023)
This paper investigates the alignment of existing securities regulations with the emerging landscape of crypto-tokens and blockchain technology. By examining the features of these digital assets, including decentralization, consensus mechanisms, and programmability, we analyze how they interact with existing financial rules. We compare approaches to regulation across countries, considering potential impacts on innovation. Furthermore, we explore the issues that may arise with blockchain networks, such as payment efficiency and market safety. The study aims to contribute to discussions about balancing innovation within the blockchain sphere and ensuring investor protection and market security, underlining areas that may necessitate regulatory improvements.
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

Firm Inflation Uncertainty - Yotzov, Ivan; Anayi, Lena; Bloom, Nicholas; Bunn, Philip; Mizen, Paul; Öztürk, Özgen; Thwaites, Gregory (National Bureau of Economic Research Working Paper Series, 2023)
We introduce a new measure of own-price inflation uncertainty using firm-level data from a large and representative survey of UK businesses. Inflation uncertainty increased significantly from the start of 2021 and reached a peak in the second half of 2022, even as a similar measure of sales uncertainty declined. We also find large cross-sectional differences in inflation uncertainty, with uncertainty particularly elevated for smaller firms and those in the goods sector. Finally, we show that firms which are more uncertain about their own price expectations experience higher forecast errors 12 months later. These findings suggest that studying inflation uncertainty at the firm level may be an important new dimension to understanding firm performance.
Author contact info: Ivan Yotzov Threadneedle Street London EC2R 8AH United Kingdom E-Mail: Ivan.Yotzov@bankofengland.co.uk Lena Anayi Bank of England Threadneedle Street London EC2R 8AH United Kingdom E-Mail: lena.anayi@bankofengland.co.uk Nicholas Bloom Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/725-3266 Fax: 650/725-5702 E-Mail: nbloom@stanford.edu Philip Bunn Bank of England Threadneedle Street London EC2R 8AH United Kingdom E-Mail: Philip.Bunn@bankofengland.co.uk Paul Mizen School of Economics University of Nottingham University Park Nottingham NG7 2RD United Kingdom E-Mail: Paul.Mizen@nottingham.ac.uk Ozgen Ozturk 10 Manor Rd Manor Road Building Oxford OX1 3UQ United Kingdom E-Mail: ozgen.ozturk@economics.ox.ac.uk Gregory Thwaites Department of Economics University of Nottingham Nottingham NG7 2QX United Kingdom E-Mail: gregorythwaites@gmail.com

Accounting for the Duality of the Italian Economy - Fernández-Villaverde, Jesús; Laudati, Dario; Ohanian, Lee E; Quadrini, Vincenzo (National Bureau of Economic Research Working Paper Series, 2023)
After 162 years of political unification, Italy still displays large regional economic differences. In 2019, the per capita GDP of Lombardia was 39,700 euros, but Calabria's per capita GDP was only 17,300 euros. We build a two-region, two-sector model of the Italian economy to measure the wedges that could account for the differences in aggregate variables between the North and the South. We find that the largest driver of the regional disparity in per capita output is the difference in total factor productivity, followed by fiscal redistribution. These two factors, together, account for more than 70 percent of the output disparity between the North and the South.
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 Dario Laudati E-Mail: laudati@usc.edu Lee E. Ohanian 8283 Bunche Hall UCLA, Department of Economics Box 951477 Los Angeles, CA 90095 Tel: 310/825-0979 Fax: 310/825-9528 E-Mail: ohanian@econ.ucla.edu Vincenzo Quadrini Department of Finance and Business Economics Marshall School of Business University of Southern California 701 Exposition Boulevard Los Angeles, CA 90089 Tel: 213/740-6521 Fax: 213/740-6650 E-Mail: quadrini@usc.edu

The Debt-Inflation Channel of the German Hyperinflation - Brunnermeier, Markus K; Correia, Sergio A; Luck, Stephan; Verner, Emil; Zimmermann, Tom (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies how a large increase in the price level is transmitted to the real economy through firm balance sheets. Using newly digitized macro- and micro-level data from the German inflation of 1919-1923, we show that inflation led to a large reduction in real debt burdens and bankruptcies. Firms with higher nominal liabilities at the onset of inflation experienced a larger decline in interest expenses, a relative increase in their equity values, and higher employment during the inflation. The results are consistent with real effects of a debt-inflation channel that operates even when prices and wages are flexible.
Author contact info: Markus K. Brunnermeier Princeton University Department of Economics Bendheim Center for Finance Princeton, NJ 08544 Tel: 609/258-4050 Fax: 609/258-0771 E-Mail: markus@princeton.edu Sergio A. Correia Board of Governors of the Federal Reserve System Tel: 9198866776 E-Mail: sergio.correia@gmail.com Stephan Luck Federal Reserve Bank of New York 33 Liberty St New York, NY 10045 E-Mail: stephan.luck@ny.frb.org Emil Verner MIT Sloan School of Management 100 Main Street, E62-635 Cambridge, MA 02142-1347 Tel: 617/253-2933 E-Mail: everner@mit.edu Tom Zimmermann Universitaetsstr. 24 Cologne 50913 Germany E-Mail: tom.zimmermann@uni-koeln.de

Pareto Improving Fiscal and Monetary Policies: Samuelson in the New Keynesian Model - Aguiar, Mark A; Amador, Manuel; Arellano, Cristina (National Bureau of Economic Research Working Paper Series, 2023)
This paper explores the positive and normative consequences of government bond issuances in a New Keynesian model with heterogeneous agents, focusing on how the stock of government bonds affects the cross-sectional allocation of resources in the spirit of Samuelson (1958). We characterize the Pareto optimal levels of government bonds and the associated monetary policy adjustments that should accompany Pareto-improving bond issuances. The paper introduces a simple phase diagram to analyze the global equilibrium dynamics of inflation, interest rates, and labor earnings in response to changes in the stock of government debt. The framework also provides a tractable tool to explore the use of fiscal policy to escape the Effective Lower Bound (ELB) on nominal interest rates and the resolution of the “forward guidance puzzle.” A common theme throughout is that following the monetary policy guidance from the standard Ricardian framework leads to excess fluctuations in income and inflation.
Author contact info: Mark A. Aguiar Department of Economics Princeton University Fisher Hall Princeton, NJ 08544-1021 E-Mail: maguiar@princeton.edu Manuel Amador Department of Economics University of Minnesota 4-101 Hanson Hall 1925 Fourth Street South Minneapolis, MN 55455 Tel: 650/725-5257 E-Mail: amador.manuel@gmail.com Cristina Arellano Federal Reserve Bank of Minneapolis Research Department 90 Hennepin Avenue Minneapolis, MN 55401 Tel: (612) 204-5276 Fax: (612) 204-5515 E-Mail: arellano.cristina@gmail.com

Dollarization Dynamics - Caravello, Tomás E; Martinez-Bruera, Pedro; Werning, Iván (National Bureau of Economic Research Working Paper Series, 2023)
This study explores the consequences of dollarizing an economy with an initial dollar shortage. We show that the resulting transitional dynamics are tantamount to that of a “sudden stop”: consumption of tradable goods fall, the real exchange rate depreciates abruptly by a discrete drop in domestic prices and wages followed by a gradual appreciation from positive inflation. With nominal rigidities the economy first falls into a recession. This is true even if all prices and wages are allowed to adjust flexibly on impact. The subsequent recovery in activity always “overshoots” the steady state: the non-tradable sector transitions from the initial recession to a boom, then asymptotes to its steady state.
Author contact info: Tomás E. Caravello Department of Economics MIT 77 Massachusetts Ave Cambridge, MA 02139 E-Mail: tomasec@mit.edu Pedro Martinez-Bruera MIT Department of Economics 50 Memorial Drive Cambridge, MA 02142 United States E-Mail: pmbruera@mit.edu Iván Werning Department of Economics, E52-536 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/452-3662 Fax: 617/253-1330 E-Mail: iwerning@mit.edu

Unveiling Specialization Trends in Economics Research: A Large-Scale Study Using Natural Language Processing and Citation Analysis - Galiani, Sebastian; Gálvez, Ramiro H; Nachman, Ian (National Bureau of Economic Research Working Paper Series, 2023)
This article presents a comprehensive analysis of trends in the publication and citation of economics scholarly research, with a focus on specialization within fields of economics research (i.e., applied, applied theory, econometrics methods, and theory). We collected detailed data on 24,273 articles published from 1970 to 2016 in highly regarded general research economics journals. We then used state-of-the-art machine learning and natural language processing techniques to further enrich the collected data. Our findings reveal significant disparities in article content and citations across fields of economics research. The analysis indicates growing specialization trends in theory and econometric methods. In contrast, applied papers are covering a wider range of topics and receiving an increasing proportion of extramural citations over time. By 2016, applied ranked among the most or second most cited field by any other field of economics research. These patterns are consistent with applied papers becoming more multidisciplinary. Applied theory articles have also demonstrated a growing breadth of topics covered (similar to applied articles); however, this has not been accompanied by an increase in extramural citations or in the share of citations received from other fields of economics research (as observed with theory articles). This makes it challenging to determine their specialization status.
Author contact info: Sebastian Galiani Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 Tel: 301/405-3518 E-Mail: sgaliani@umd.edu Ramiro H. Gálvez Universidad Torcuato Di Tella Av. Figueroa Alcorta 7350, (C1428BIJ) Buenos Aires Argentina E-Mail: rgalvez@utdt.edu Ian Nachman E-Mail: ian_nachman@brown.edu

Exchange Controls As A Fiscal Instrument - Schmitt-Grohé, Stephanie; Uribe, Martín (National Bureau of Economic Research Working Paper Series, 2023)
About 20 percent of countries have in place dual, multiple, or parallel exchange rates. Exchange controls represent a form of distortionary commercial policy. We show that they can also deflate the real value of external public debt. We study an optimal taxation problem of a government with chronic fiscal deficits and two distortionary instruments, money creation and exchange controls. We calibrate the model to Argentina, which over the past decade has experienced significant exchange controls and persistent fiscal deficits. We show that exchange controls can generate sizable fiscal revenue. However, the optimal level of exchange controls is virtually zero. Financing the fiscal deficit with exchange controls is possible but entails large welfare losses.
Author contact info: Stephanie Schmitt-Grohé Department of Economics Columbia University 420 West 118th Street, MC 3308 New York, NY 10027 Tel: 212/854-8059 Fax: 212/854-4010 E-Mail: stephanie.schmittgrohe@columbia.edu Martín Uribe Department of Economics Columbia University International Affairs Building New York, NY 10027 Tel: 212 851 4008 Fax: 212 854 8059 E-Mail: martin.uribe@columbia.edu

Micro- and Macroeconomic Impacts of a Place-Based Industrial Policy - Atalay, Enghin; Hortaçsu, Ali; Runyun, Mustafa; Syverson, Chad; Ulu, Mehmet Fatih (National Bureau of Economic Research Working Paper Series, 2023)
We investigate the impact of a set of place-based subsidies introduced in Turkey in 2012. Using firm-level balance-sheet data along with data on the domestic production network, we first assess the policy’s direct and indirect impacts. We find an increase in economic activity in industry-province pairs that were the focus of the subsidy program, and positive spillovers to the suppliers and customers of subsidized firms. With the aid of a dynamic multi-region, multi-industry general equilibrium model, we then assess the program’s impacts. Based on the calibrated model we find that, in the long run, the subsidy program is modestly successful in reducing inequality between the relatively under-developed and more prosperous portions of the country. These modest longer-term effects are due to the ability of households to migrate in response to the subsidy program and to input-output linkages that traverse subsidy regions within Turkey.
Author contact info: Enghin Atalay Federal Reserve Bank of Philadelphia 10 N. Independence Mall West Philadelphia, PA 19106 E-Mail: atalayecon@gmail.com Ali Hortaçsu Kenneth C. Griffin Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-5841 E-Mail: hortacsu@uchicago.edu Mustafa Runyun Boston College Department of Economics 140 Commonwealth Avenue Chestnut Hill,, MA 02467 USA E-Mail: runyun.mustafa@gmail.com Chad Syverson University of Chicago Booth School of Business 5807 S. Woodlawn Ave. Chicago, IL 60637 Tel: 773/702-7815 Fax: 773/702-8490 E-Mail: chad.syverson@chicagobooth.edu Mehmet F. Ulu Rumelifeneri Yolu CASE 239, Sariyer Istanbul 34450 Turkey E-Mail: mehmetfatihulu@gmail.com

Chinese Insurance Markets: Developments and Prospects - Fang, Hanming; Xu, Xian (National Bureau of Economic Research Working Paper Series, 2023)
In this chapter, we review the development of the insurance industry in China, and provide a comprehensive discussion of its regulatory framework, major insurance segments, market structure, InsurTech, social insurance, and the challenges and prospects for the future development of the insurance market in China.
Author contact info: Hanming Fang Department of Economics Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street, Suite 150 Philadelphia, PA 19104 Tel: 215-898-7767 Fax: 215-573-2057 E-Mail: hanming.fang@econ.upenn.edu Xian Xu School of Economics Fudan University 600 Guoquan Road Shanghai China E-Mail: xianxu@fudan.edu.cn

PLUS or Minus? The Effect of Graduate School Loans on Access, Attainment, and Prices - Black, Sandra E; Turner, Lesley J; Denning, Jeffrey T (National Bureau of Economic Research Working Paper Series, 2023)
In 2006, the federal government effectively uncapped student borrowing for graduate programs with the introduction of the Graduate PLUS loan program. Access to additional federal loans increased graduate students’ borrowing and shifted the composition of their loans from private to federal debt. However, the increase in borrowing limits did not improve access to existing programs overall or for underrepresented groups. Nor did access to additional loan aid result in significant increase in constrained students’ persistence or degree receipt. We document that among programs in which a larger share of graduate students had exhausted their annual federal loan eligibility before the policy change—and thus were more exposed to the expansion in access to credit—federal borrowing and prices increased.
Author contact info: Sandra E. Black Department of Economics and School of International and Public Affairs Columbia University 1022 International Affairs Building 420 West 118th Street New York, NY 10027 E-Mail: sblack@columbia.edu 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 Jeffrey T. Denning 3050 Jenkins Nanovic Hall University of Notre Dame Notre Dame, IN 46556 Tel: 801/422-3182 E-Mail: jeffdenning@nd.edu

Evaluation and Learning in R&D Investment - Frankel, Alexander P; Krieger, Joshua L; Li, Danielle; Papanikolaou, Dimitris (National Bureau of Economic Research Working Paper Series, 2023)
We examine the role of spillover learning in shaping the value of exploratory versus incremental R&D. Using data from drug development, we show that novel drug candidates generate more knowledge spillovers than incremental ones. Despite being less likely to reach regulatory approval, they are more likely to inspire subsequent successful drugs. We introduce a model where firms are better able to evaluate the viability of incremental drugs, but where investing in novel drugs helps firms learn about future projects. Firms appear to put more value on evaluation versus learning, and those patterns are in-part driven by the appropriability of spillovers.
Author contact info: Alexander P. Frankel Stanford Graduate School of Business 518 Memorial Way Stanford, CA 94305 E-Mail: afrankel@chicagobooth.edu Joshua L. Krieger Harvard Business School Rock 213 Boston, MA 02163 Tel: 7818833737 E-Mail: jkrieger@hbs.edu Danielle Li MIT Sloan School of Management 100 Main St, E62-484 Cambridge, MA 02142 E-Mail: d_li@mit.edu Dimitris Papanikolaou Kellogg School of Management Northwestern University 2211 Campus Drive, Office 4319 Evanston, IL 60208 Tel: 847/491-7704 E-Mail: d-papanikolaou@kellogg.northwestern.edu

The Effect of Pre-Arraignment Legal Representation on Criminal Case Outcomes - Lacoe, Johanna; Fischer, Brett; Raphael, Steven (National Bureau of Economic Research Working Paper Series, 2023)
Low-income individuals arrested on criminal charges face disproportionately high rates of pretrial detention and conviction. We study a novel approach to addressing this inequity: providing low-income individuals with access to legal counsel immediately following their arrest. Focusing on a pilot program in a large urban county, we estimate the causal impact of early representation by a public defender on release and case outcomes, leveraging quasi-random variation in access to counsel pre-arraignment. Low-income individuals who met with a public defender shortly after arrest were 28 percentage points more likely to be released pretrial, and 36 percent more likely to see their cases dismissed, relative to otherwise similar individuals who would first meet with a public defender at their arraignment. These results suggest that providing timely access to legal representation could improve release and case outcomes for public defender clients.
Author contact info: Johanna Lacoe E-Mail: johanna.lacoe@berkeley.edu Brett Fischer California Policy Lab, University of California, Berkeley E-Mail: brett.fischer@berkeley.edu Steven Raphael Goldman School of Public Policy University of California at Berkeley 2607 Hearst Avenue Berkeley, CA 94720 Tel: 510/643-0536 Fax: 510/643-9657 E-Mail: stevenraphael@berkeley.edu

Coordination with Differential Time Preferences: Experimental Evidence - Agranov, Marina; Kim, Jeongbin; Yariv, Leeat (National Bureau of Economic Research Working Paper Series, 2023)
The experimental literature on repeated games has largely focused on settings where players discount the future identically. In applications, however, interactions often occur between players whose time preferences differ. We study experimentally the effects of discounting differentials in infinitely repeated coordination games. In our data, differential discount factors play two roles. First, they provide a coordination anchor: more impatient players get higher payoffs first. Introducing even small discounting differentials reduces coordination failures significantly. Second, with pronounced discounting differentials, intertemporal trades are prevalent: impatient players get higher payoffs for an initial phase and patient players get higher payoffs in perpetuity afterward.
Author contact info: Marina Agranov Division of Humanities and Social Sciences California Institute of Technology 228-77 Caltech Pasadena, CA 91125 Tel: 626/395-3559 E-Mail: magranov@hss.caltech.edu Jeongbin Kim Department Of Economics Florida State University P.O. 113 Collegiate Loop Tallahassee, FL 32306 E-Mail: jkim33@fsu.edu Leeat Yariv Department of Economics Princeton University Julis Romo Rabinowitz Princeton, NJ 08544 Tel: 609/258-4021 E-Mail: lyariv@princeton.edu

Trends in the School Lunch Program: Changes in Selection, Nutrition & Health - Bonomo, Therese; Schanzenbach, Diane Whitmore (National Bureau of Economic Research Working Paper Series, 2023)
There has been significant media attention on the issue of childhood obesity, leading policymakers to reform the National School Lunch Program (NSLP) to include stricter nutritional requirements. We use data on school lunch menus to document improvements in the nutritional quality of school meals between 1991 and 2010. We then evaluate how this change in nutritional content maps into obesity outcomes, using panel data on a nationally representative cohort of children, tracking them from kindergarten entry in fall 2010 through the end of fifth grade in spring 2016. We find little evidence that participation in the school lunch program leads to weight gain, as measured by changes in obesity, overweight, and BMI. These results suggest that improvements in the nutritional content of school lunches have been largely successful in reversing the previously negative relationship between school lunches and childhood obesity. Unrelated to school lunch participation, we find a strong relationship between mother’s obesity status and both the level and growth of children’s obesity, especially for girls and among high-SES families.
Author contact info: Therese Bonomo E-Mail: theresebonomo2027@u.northwestern.edu Diane Whitmore Schanzenbach Institute for Policy Research Northwestern University 2040 Sheridan Road Evanston, IL 60208 Tel: 847.491.8704 E-Mail: dws@northwestern.edu

On the Governance of Corrupt Exchange: How Citizens and Officials Build Social Ties to Reduce Corruption’s Transaction Costs - Lameke, Aimable Amani; Nkuku, Albert Malukisa; Sánchez de la Sierra, Raúl; Tanutama, Vincent; Titeca, Kristof (National Bureau of Economic Research Working Paper Series, 2023)
This article provides evidence from the Congo that social relationships with state officials can decrease one social cost of corruption, in the context of public transport. We first document that police stops can lead to long bribe negotiations. In response, some drivers and officers have built relationships, allowing the drivers to take actions to attract passengers and negotiate passenger prices without the risk of being stopped, simply paying an unofficial set toll fee to the officers. We then examine a field experiment that re-routes drivers in randomly selected days to lines on which they do not have such ties. Re-routing decreases the surplus from driving (revenue minus repairs and gas). We cross-randomize third-party protection of the driver against police stops using existing common practices. The reduction of the surplus from re-routing is entirely driven by re-routing days in which the driver does not have such protection, thus the effect of re-routing is explained by driver-police interactions. We cross-randomize the time horizon of re-routing. When they expect to be re-routed only one day, drivers accept lower passenger prices and obtain less passengers, which leads to lower surplus, consistent with them trying to avoid detection by the officers. When they expect to be re-routed various days, drivers spend time negotiating with the officers and pay large bribes, destroying the surplus further, but yielding new relationships and higher revenue within three days. The findings suggest that relationships with state officials can form fast to reduce the transaction costs of the corrupt transaction and that these can amount to a very large social cost.
Author contact info: Aimable Amani Lameke Marakuja Kivu Research Bukavu, South Kivu Democratic Republic of the Congo E-Mail: amanilamek@gmail.com Albert Malukisa Nkuku Universite Catholique du Congo Kinshasa Democratic Republic of the Congo E-Mail: albert.malukisa@ucc.ac.cd Raúl Sánchez de la Sierra Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: raul@uchicago.edu Vincent Tanutama E-Mail: vincent.tanutama@gmail.com Kristof Titeca University of Antwerp Institute of Development Policy Prinsstraat 13 2000 Antwerpen Belgium E-Mail: kristof.titeca@uantwerp.be

The Economics of Financial Stress - Sergeyev, Dmitriy; Lian, Chen; Gorodnichenko, Yuriy (National Bureau of Economic Research Working Paper Series, 2023)
We study the psychological costs of financial constraints and their economic consequences. Using a representative survey of U.S. households, we document the prevalence of financial stress in U.S. households and a strong relationship between financial stress and measures of financial constraints. We incorporate financial stress into an otherwise standard dynamic model of consumption and labor supply. We emphasize two key results. First, both financial stress itself and naivete about financial stress are important components of a psychology-based theory of the poverty trap. Sophisticates, instead, save extra to escape high-stress states because they understand that doing so alleviates the economic consequences of financial stress. Second, the financial stress channel dampens or reverses the counterfactual large negative wealth effect on labor earnings because relieving stress frees up cognitive resources for productive work. Financial stress also has macroeconomic implications on wealth inequality and fiscal multipliers.
Author contact info: Dmitriy Sergeyev Department of Economics Bocconi University Office 5-e1-02 Via Roentgen, 1 Milan, 20136 Italy E-Mail: dmitriy.sergeyev@gmail.com Chen Lian Department of Economics University of California, Berkeley Evans Hall Berkeley, CA 94720 E-Mail: chen_lian@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

Do You Even Crypto, Bro? Cryptocurrencies in Household Finance - Weber, Michael; Candia, Bernardo; Coibion, Olivier; Gorodnichenko, Yuriy (National Bureau of Economic Research Working Paper Series, 2023)
Using repeated large-scale surveys of U.S. households, we study the cryptocurrency investment decisions and motives of households relative to other financial assets. Cryptocurrency holders tend to be young, white, male and more libertarian relative to non-crypto holders. They expect much higher rates of returns for crypto and perceive it as relatively safer than do other households. They also view it as a better hedge against inflation. For those holding cryptocurrencies, changes in Bitcoin prices translate into their purchases of durable goods. Finally, exogenously-provided information about historical returns of cryptocurrencies leads individuals to increase their desired crypto holdings and makes them more likely to actually purchase cryptocurrency subsequently. We compare these views and behaviors to those of households toward other financial assets and argue that cryptocurrency is unique in many of these respects.
Author contact info: 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 Bernardo Candia University of California, Berkeley E-Mail: bernardo_candia@berkeley.edu Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com Yuriy Gorodnichenko Department of Economics 530 Evans Hall #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/643-0720 Fax: 510/642-6615 E-Mail: ygorodni@econ.berkeley.edu

Campaign Connections - Bazzi, Samuel; Labanca, Claudio (National Bureau of Economic Research Working Paper Series, 2023)
This paper explores the labor market returns to working for a victorious political campaign. Using unique administrative data from Brazil, we track the earnings and employment of campaign workers before and after close elections spanning nearly 20 years. We identify sizable returns to working for a winning campaign, especially in areas with a large informal sector and for workers connected to newly elected challengers. The returns are concentrated in the public sector, where connected hires are relatively more qualified. Our results suggest that campaign connections facilitate the hiring of capable but inexperienced workers in the public sector through relational contracting.
Author contact info: Samuel Bazzi University of California, San Diego School of Global Policy and Strategy 9500 Gilman Drive, 0519 La Jolla, CA 92093 E-Mail: sbazzi@ucsd.edu Claudio Labanca Monash University Department of Economics 900 Dandenong Road Caulfield East, VIC 3145 Australia E-Mail: claudio.labanca@monash.edu

Inequality and the Zero Lower Bound - Fernández-Villaverde, Jesús; Marbet, Joël; Nuño, Galo; Rachedi, Omar (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies how household inequality shapes the effects of the zero lower bound (ZLB) on nominal interest rates on aggregate dynamics. To do so, we consider a heterogeneous agent New Keynesian (HANK) model with an occasionally binding ZLB and solve for its fully non-linear stochastic equilibrium using a novel neural network algorithm. In this setting, changes in the monetary policy stance influence households' precautionary savings by altering the frequency of ZLB events. As a result, the model features monetary policy non-neutrality in the long run. The degree of long-run non-neutrality, i.e., by how much monetary policy shifts real rates in the ergodic distribution of the model, can be substantial when we combine low inflation targets and high levels of wealth inequality.
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 Joël Marbet AlcalÃ¡ 48 Madrid 28014 Spanien E-Mail: joel.marbet@bde.es Galo Nuño Bank of Spain and BIS Spain E-Mail: galonunobarrau@gmail.com Omar Rachedi Esade Business School Avinguda de la Torre Blanca, 59 Sant Cugat, Barcelona Spain E-Mail: omar.rachedi@yahoo.com

Effects of the Minimum Wage on the Nonprofit Sector - Meer, Jonathan; Tajali, Hedieh (National Bureau of Economic Research Working Paper Series, 2023)
The nonprofit sector’s ability to absorb increases in labor costs differs from the private sector in a number of ways. We analyze how nonprofits are affected by changes in the minimum wage utilizing data from the Bureau of Labor Statistics and the Internal Revenue Service, linked to state minimum wages. We examine changes in reported employment and volunteering, as well as other financial statements such as revenues and expenses. The results from both datasets show a negative impact on employment for states with large statutory minimum wage increases. We observe some evidence for a reduction in the number of nonprofit establishments, fundraising expenses, and revenues from contributions.
Author contact info: Jonathan Meer Department of Economics TAMU 4228 College Station, TX 77843 Tel: 979/845-2059 Fax: 979/847-8757 E-Mail: jmeer@econmail.tamu.edu Hedieh Tajali School of Economics, 30 Buccleuch Place United Kingdom E-Mail: hedieh.tajali@ed.ac.uk

Strategic Complementarities in a Dynamic Model of Technology Adoption: P2P Digital Payments - Alvarez, Fernando E; Argente, David; Lippi, Francesco; Méndez, Esteban; Van Patten, Diana (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops a dynamic model of technology adoption featuring strategic complementarities: the benefits of usage increase with the number of adopters. We study the diffusion of new means of payments, where such complementarities are pervasive. We show that complementarities give rise to multiple equilibria, suboptimal allocations, and study the planner’s problem. The model generates gradualism in adoption, as individuals optimally wait for others to adopt before doing so. We apply the theory to the adoption of SINPE, an electronic peer-to-peer (P2P) payment app developed by the Central Bank of Costa Rica. Transaction-level data on the use of SINPE and several administrative data sets on the network structure allow us to exploit plausibly exogenous variation and to document sizable complementarities. A calibrated version of the model shows that the optimal subsidy pushes the economy to universal adoption.
Author contact info: Fernando E. Alvarez University of Chicago Department of Economics 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-4412 Fax: 773/702-8490 E-Mail: f-alvarez1@uchicago.edu David Argente Yale University 165 Whitney Ave New Haven, CT 06511 E-Mail: david.argente@yale.edu Francesco Lippi Luiss University E-Mail: francescolippi@gmail.com Esteban Méndez Central Bank of Costa Rica San José Costa Rica E-Mail: mendezce@bccr.fi.cr Diana Van Patten Yale School of Management 165 Whitney Avenue New Haven, CT 06511 Tel: 310/902-5529 E-Mail: diana.vanpatten@yale.edu

The Macroeconomic Consequences of Exchange Rate Depreciations - Fukui, Masao; Nakamura, Emi; Steinsson, Jón (National Bureau of Economic Research Working Paper Series, 2023)
We study the consequences of “regime-induced” exchange rate depreciations by comparing outcomes for peggers versus floaters to the US dollar in response to a dollar depreciation. Pegger currencies depreciate relative to floater currencies and these depreciations are strongly expansionary. The boom is not associated with an increase in net exports, or a fall in nominal interest rates in the pegger countries. This suggests that expenditure switching and domestic monetary policy are not the main drivers of the boom. We develop a financially driven exchange rate (FDX) model in which multiple shocks originating in the financial sector drive exchange rates and households and firms can borrow in foreign currencies. Following a depreciation, UIP deviations lower the costs of borrowing from abroad and stimulate the economy, as in the data. The model is consistent with (unconditional) exchange rate disconnect and the Mussa facts, even though exchange rates have large effects on the economy.
Author contact info: Masao Fukui Boston University 400 Bostov, MA 02215 E-Mail: fukuimasao@gmail.com Emi Nakamura Department of Economics University of California, Berkeley 685 Evans Hall Berkeley, CA 94720 Tel: 510/643-2104 E-Mail: enakamura@berkeley.edu Jón Steinsson Department of Economics University of California, Berkeley 671 Evans Hall Berkeley, CA 94720 Tel: 510/642-3674 E-Mail: jsteinsson@berkeley.edu

Who Gains from Corporate Tax Cuts? - Cloyne, James; Kurt, Ezgi; Surico, Paolo (National Bureau of Economic Research Working Paper Series, 2023)
Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions on a novel measure of U.S. firm-specific tax shocks that combines changes in statutory tax rates faced by each firm with narrative identified legislated U.S. federal tax changes between 1950 and 2006.
Author contact info: James Cloyne Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 E-Mail: jcloyne@ucdavis.edu Ezgi Kurt Department of Economics Bentley University 175 Forest Street Waltham, MA 02452 E-Mail: ekurt@bentley.edu Paolo Surico London Business School Regent's Park NW1 4SA London (United Kingdom) Tel: 44-20-7601-4279 Fax: 44-20-7601-4610 E-Mail: psurico@london.edu

Child Health, Parental Well-Being, and the Social Safety Net - Adhvaryu, Achyuta; Daysal, N. Meltem; Gunnsteinsson, Snaebjorn; Molina, Teresa; Steingrimsdottir, Herdis (National Bureau of Economic Research Working Paper Series, 2023)
How do parents contend with threats to the health and survival of their children? Can the social safety net mitigate negative economic effects through transfers to affected families? We study these questions by combining the universe of cancer diagnoses among Danish children with register data for affected and matched unaffected families. Parental income declines substantially for 3-4 years following a child's cancer diagnosis. Fathers’ incomes recover fully, but mothers' incomes remain 3% lower 12 years after diagnosis. Using a policy reform that introduced variation in the generosity of targeted safety net transfers to affected families, we show that such transfers play a crucial role in smoothing income for these households and, importantly, do not generate work disincentive effects. The pattern of results is most consistent with the idea that parents’ preferences to personally provide care for their children during the critical years following a severe health shock drive changes in labor supply and income. Mental health and fertility effects are also observed but are likely not mediators for impacts on economic outcomes.
Author contact info: Achyuta Adhvaryu School of Global Policy and Strategy University of California, San Diego La Jolla, CA 92093 Tel: 734/615-2327 E-Mail: aadhvaryu@ucsd.edu N. Meltem Daysal Department of Economics and CEBI University of Copenhagen Øster Farimagsgade 5 1353 Copenhagen Denmark E-Mail: meltem.daysal@econ.ku.dk Snaebjorn Gunnsteinsson Juno Insurance Group, PBC. E-Mail: snaebjorng@gmail.com Teresa Molina University of Hawaii at Manoa Saunders Hall 515A 2424 Maile Way Honolulu, HI 96822 E-Mail: tmolina@hawaii.edu Herdis Steingrimsdottir Department of Economics, CBS Porcelænshaven 16 A, 2. fl., 2.83 2000 Frederiksberg, Denmark Denmark E-Mail: hs.eco@cbs.dk

Measurements, Determinants and Causes of Corruption: Lessons from China's Anti-Corruption Campaign - Fang, Hanming (National Bureau of Economic Research Working Paper Series, 2023)
Corruption is a widespread phenomenon in many developing and transitional economies. China is a country in profile both in the prevalence of corruption, and in its attempts to root out corruption. The recent anti-corruption campaign in China, which started in December of 2012 when President Xi Jinping took power, is unprecedented in its magnitude and time length. It has had lasting impact on the functioning of the Chinese bureaucracy, and on the behavior of firms and consumers. It also provides unusual amount of data to study the causes and consequences of corruption, which will have implications for other countries and economies. In this review I discuss the definition and measurement of corruption with a particular focus on the measurements that highlight the city-level heterogeneity of corruption in China, and present simple frameworks to understand the determinants of corruption by government officials and the causes and consequences of corruption and anti-corruption. I summarize the key findings regarding how the anti-corruption campaign affects the behavior of a host of decisions makers in the economy, including firms and bureaucrats, and on the resource allocation in general, and argue that the lessons from China's anti-corruption campaign are useful to other developing countries.
Author contact info: Hanming Fang Department of Economics Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street, Suite 150 Philadelphia, PA 19104 Tel: 215-898-7767 Fax: 215-573-2057 E-Mail: hanming.fang@econ.upenn.edu

When Do Cross-Sectional Asset Pricing Factors Span the Stochastic Discount Factor? - Kozak, Serhiy; Nagel, Stefan (National Bureau of Economic Research Working Paper Series, 2023)
When expected returns are linear in asset characteristics, the stochastic discount factor (SDF) that prices individual stocks can be represented as a factor model with GLS cross-sectional regression slope factors. Factors constructed heuristically by aggregating individual stocks into characteristics-based factor portfolios using sorting, characteristics-weighting, or OLS cross-sectional regression slopes do not span this SDF unless the covariance matrix of stock returns has a specific structure. These conditions are more likely satisfied when researchers use large numbers of characteristics simultaneously. Methods to hedge unpriced components of heuristic factor returns allow partial relaxation of these conditions. We also show the conditions that must hold for dimension reduction to a number of factors smaller than the number of characteristics to be possible without having to invert a large covariance matrix. Under these conditions, instrumented and projected principal components analysis methods can be implemented as simple PCA on characteristics-based portfolios.
Author contact info: Serhiy Kozak University of Maryland 7621 Mowatt Ln VMH 4453 College Park, MD 20742 E-Mail: sekozak@umd.edu Stefan Nagel University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 E-Mail: stefan.nagel@chicagobooth.edu

The Impact of the Prehistoric Out of Africa Migration on Cultural Diversity - Galor, Oded; Klemp, Marc; Wainstock, Daniel C (National Bureau of Economic Research Working Paper Series, 2023)
Evidence suggests that the prehistoric Out of Africa Migration has impacted the degree of intra-population genetic and phenotypic diversity across the globe. This paper provides the first evidence that this migration has shaped cultural diversity. Leveraging a folklore catalogue of 958 oral traditions across the world, we find that ethnic groups further away from East Africa along the migratory routes have lower folkloric diversity. This pattern is consistent with the compression of genetic, phenotypic, and phonemic traits along the Out of Africa migration routes, setting conditions for the emergence and proliferation of differential cultural diversity and economic development across the world.
Author contact info: Oded Galor Department of Economics Brown University Box B Providence, RI 02912 Tel: 401/863-2117 Fax: 401/863-1970 E-Mail: oded_galor@brown.edu Marc Klemp Økonomisk Institut University of Copenhagen Øster Farimagsgade 5, bygning 26 1353 København K E-Mail: marc.klemp@econ.ku.dk Daniel Crisóstomo Wainstock E-Mail: daniel_crisostomo_wainstock@brown.edu

The Evolution of Platform Gig Work, 2012-2021 - Garin, Andrew; Jackson, Emilie; Koustas, Dmitri K; Miller, Alicia (National Bureau of Economic Research Working Paper Series, 2023)
We document the dynamics of tax-based measures of work mediated by online platforms from 2012 through 2021. We present a measurement framework to account for high reporting thresholds on some information returns using returns from states with lower reporting thresholds to provide a more complete estimate of total platform work. Updating data through 2021 allows us to provide the most comprehensive estimates of the COVID-19 pandemic on tax filing behavior. We find that the number of workers receiving information returns not subject to the 1099-K gap increased dramatically during the pandemic, with least 5 million individuals receiving information returns from platform gig work by 2021, nearly all from transportation platforms. We present evidence that the availability of expanded unemployment insurance benefits resulted in many individuals who were platform workers in 2019 not reporting any self-employment income in 2020-2021. At the same time, other services done by platform gig workers increased dramatically by at least 3.1 million people between 2019 and 2021. Interestingly, the broader 1099-contract economy follows a different trend, declining during this period, suggesting the challenges for tax administration are largely concentrated among platform gig workers, at least through 2021.
Author contact info: Andrew Garin Heinz College Carnegie Mellon University 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 202/494-3361 E-Mail: agarin@andrew.cmu.edu Emilie Jackson Michigan State University 486 W. Circle Dr 25D Marshall-Adams Hall East Lansing, MI 48824 E-Mail: emiliej@msu.edu Dmitri K. Koustas Harris Public Policy, University of Chicago 1307 E. 60th St. Room 3055 Chicago, IL 60605 Tel: 872.444.6901 E-Mail: dkoustas@uchicago.edu Alicia Miller E-Mail: alicia.m.miller@irs.gov

Pharmaceutical Pricing and R&D as a Global Public Good - Frech, H. E, III; Pauly, Mark V; Comanor, William S; Martinez, Joseph R (National Bureau of Economic Research Working Paper Series, 2023)
In his Labor Day address, President Biden stated that the U.S. “has the highest drug prices in the world, and there is no reason for it.” For new branded drugs, the first part of that statement is supported by a recent RAND Report (Mulcahy et. al. 2021) which found U.S. average prices are 2.3 times those present in both the 32 OECD countries overall and in the UK separately. In this research, we consider the second part of that statement, and identify the economic factors that suggest some “reasons for it.” Viewing pharmaceutical markets through the lens of the theories of global public goods and alliances, as developed by Olson and Zeckhauser (1966), we explain the observed pricing differences along with their implications the for the global supply of innovative new drugs. Similar views were advanced in two U.S. government reports (CEA 2018, 2020), and also by Goldman and Lakdawala (2018). We develop these ideas further and implement them empirically. A commonly held theory presumes that drug companies in the U.S set prices for patented drugs at profit- maximizing levels that fund and incentivize substantial research and development efforts. In contrast, in the rest of the world (ROW), national authorities set prices minimally above marginal costs of production, allowing few revenues remaining to support R&D (CEA Report 2018; Blumenthal 2018; Hooper and Henderson 2022). The ROW countries are then considered to be fully free riding on U.S. research efforts. We examine this argument both theoretically and empirically, and find it wanting. We apply global public good theory to examine the pricing of branded drugs. To this end, we describe the optimal global contribution, as supported by the Lindahl pricing model, and show theoretically that existing independently determined contributions and thereby aggregate R&D levels are likely sub-optimal. Then we implement the model by calculating the contribution to the global public good as represented by short-term profits or quasi-rents received from sales of all branded drugs. These calculations are derived from pricing data contained in the RAND Report along with two market-based estimates of marginal costs. We find that, while ROW contributions are less than those found in the United States, they are more than minimal, and do not approach zero for most countries. When we regress these positive contributions on a country’s size of GDP along with various controls, we find that GDP size alone is a powerful determinant of national contributions. It remains economically and statistically significant without regard to the controls introduced. In addition, we estimate how large are the contributions of ROW countries to the global public good. We offer reasons why US pharmaceutical prices and contributions per capita are nevertheless higher than those found in all ROW countries. We also suggest actions aimed to promote R&D efforts that are closer to the global optimum.
Author contact info: H. E. Frech III Department of Economics University of California, Santa Barbara Santa Barbara, CA 93111 E-Mail: frech@econ.ucsb.edu Mark Pauly The Wharton School University of Pennsylvania Philadelphia, PA 19104 E-Mail: pauly@wharton.upenn.edu William S. Comanor Department of Health Policy and Management Fielding School of Public Health, UCLA Los Angeles, CA 90095 E-Mail: comanor@ucla.edu Joseph R. Martinez The Wharton School of the University of Pennsylvania Philadelphia, PA 19104 E-Mail: josma@wharton.upenn.edu

Policy Packages and Policy Space: Lessons from COVID-19 - Bergant, Katharina; Forbes, Kristin (National Bureau of Economic Research Working Paper Series, 2023)
This paper uses the onset of COVID-19 to examine how countries construct their policy packages in response to a severe negative shock. We use several new datasets to track the use of a large variety of policy tools: announced fiscal stimulus (both above- and below-the-line), monetary policy (through interest rates, asset purchases, liquidity support and swap lines), foreign currency intervention, adjustments to macroprudential regulations (including the countercyclical capital buffer) and changes in capital controls (on inflows and outflows). The results suggest that pre-existing policy space was usually more important than other country characteristics and the extent of “stress” (in economic, financial, and health measures) in determining how a country responded to COVID-19. The notable exception is for fiscal stimulus, for which existing policy space did not act as a significant constraint in advanced economies. This is a sharp contrast to results for earlier episodes—although advanced economies with higher debt levels may have been constrained in how they provided stimulus (with more below-the-line commitments). Moreover, the use of (and space available) for each policy tool usually did not affect a country’s use of other policies. This suggests that countries are not coordinating their tools optimally in an integrated framework, especially when policy space is limited for certain tools.
Author contact info: Katharina Bergant 700 19th St NW Research Department Washington, DC 20431 E-Mail: kbergant@imf.org Kristin Forbes MIT Sloan School of Management 100 Main Street, E62-416 Cambridge, MA 02142 Tel: 617/253-8996 Fax: 617/258-6855 E-Mail: kjforbes@mit.edu

Incidence and Outcomes of School Finance Litigation: 1968-2021 - Hanushek, Eric A; Joyce-Wirtz, Matthew (National Bureau of Economic Research Working Paper Series, 2023)
School finance court cases have proceeded one or more times in all but two states. Plaintiffs ask the courts to rule that the existing funding formula is unconstitutional under state constitutions, and the defendants call for continuation of the existing finance formula. By compiling and analyzing the universe of such cases, we can accurately describe the nature of the cases, the decisions made, and the long run impact on overall financing of schools. Defendants win a slight majority of decisions with, surprisingly, their victories coming most frequently in low spending states and in low achieving states. And, while plaintiff victories on average yield an immediate increase in funding, they have no influence on long run growth in school spending.
Author contact info: Eric A. Hanushek Hoover Institution Stanford University Stanford, CA 94305-6010 Tel: 650/736-0942 Fax: 650/723-1687 E-Mail: hanushek@stanford.edu Matthew Joyce-Wirtz Hoover Institution Stanford Univerity Stanford, CA 94305 USA E-Mail: mwirtz@stanford.edu

Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907 - Jaremski, Matthew S; Wheelock, David C (National Bureau of Economic Research Working Paper Series, 2023)
This paper provides quantitative evidence on interbank transmission of financial distress in the Panic of 1907 and ensuing recession. Originating in New York City, the panic led to payment suspensions and emergency currency issuance in many cities. Data on the universe of interbank connections show that i) suspension was more likely in cities whose banks had closer ties to banks at the center of the panic, ii) banks with such links were more likely to close in the panic and recession, and iii) banks responded to the panic by rearranging their correspondent relationships, with implications for network structure.
Author contact info: Matthew S. Jaremski Utah State University Department of Economics and Finance 3565 Old Main Hill Logan, UT 84322 E-Mail: matthew.jaremski@usu.edu David C. Wheelock Research Division Federal Reserve Bank of St. Louis P.O. Box 442 St. Louis, MO 63166-0442 Tel: (314) 444-8570 Fax: (314) 444-8731 E-Mail: david.c.wheelock@stls.frb.org

Reducing Bias Among Health Care Providers: Experimental Evidence From Tanzania, Burkina Faso, and Pakistan - Wagner, Zachary; Moucheraud, Corrina; Shah, Manisha; Wollum, Alexandra; Friedman, Willa H; Dow, William H (National Bureau of Economic Research Working Paper Series, 2023)
Bias among health care providers can lead to poor-quality care and poor health outcomes, and it can exacerbate disparities. We use a randomized controlled trial to evaluate an intervention to reduce family planning provider bias towards young women in 227 clinics in Tanzania, Burkina Faso, and Pakistan. The intervention educated providers about bias towards young women, facilitated communication about bias with other providers, and offered non-financial public awards to clinics with the least biased care. After 12 months, the intervention led to less-biased attitudes and beliefs among providers and more comprehensive counseling. Clients also perceived better treatment at intervention clinics compared to control clinics. Despite reductions in reported bias, we find mixed evidence regarding changes in method dispensing
Author contact info: Zachary Wagner RAND Corporation 1776 Main Street Santa Monica, CA 90401 E-Mail: zwagner@rand.org Corrina Moucheraud E-Mail: cmoucheraud@ucla.edu Manisha Shah Goldman School of Public Policy University of California, Berkeley 2607 Hearst Ave, MC #7320 Berkeley, CA 94720-7320 Tel: (510) 642-5653 Fax: (510) 643-9657 E-Mail: ManishaShah@berkeley.edu Alexandra Wollum E-Mail: awollum@ucla.edu Willa H. Friedman Department of Economics University of Houston 3623 Cullen Boulevard Room 204 Houston, TX 77204-5019 E-Mail: willa.friedman@gmail.com William H. Dow University of California, Berkeley School of Public Health 2121 Berkeley Way #5324 Berkeley, CA 94720-7360 Tel: 510/643-5439 Fax: 510/643-6981 E-Mail: wdow@berkeley.edu

What Drives Tax Policy? Political, Institutional and Economic Determinants of State Tax Policy - Robinson, Sarah; Tazhitdinova, Alisa (National Bureau of Economic Research Working Paper Series, 2023)
We collect detailed data on U.S. state personal income, corporate, sales, cigarette, gasoline, and alcohol taxes over the past 70 years to shed light on the determinants of state tax policies. We provide a comprehensive summary of how tax policy has changed over time, within and across states. We then use permutation analysis, variance decomposition, and machine learning techniques to show that the timing and magnitude of tax changes are not driven by economic needs, state politics, institutional rules, neighbor competition, or demographics. Altogether, these factors explain less than 20% of observed tax variation.
Author contact info: Sarah Robinson Robert Day School of Economics and Finance Claremont McKenna College 500 E Ninth St Claremont, CA 91711 E-Mail: sarah.robinson@claremontmckenna.edu Alisa Tazhitdinova Department of Economics University of California, Santa Barbara Santa Barbara, CA 93106 E-Mail: tazhitda@ucsb.edu

Economic Implications of the Climate Provisions of the Inflation Reduction Act - Bistline, John; Mehrotra, Neil; Wolfram, Catherine (National Bureau of Economic Research Working Paper Series, 2023)
The Inflation Reduction Act (IRA) represents the largest federal response to climate change to date. We highlight the key climate provisions and assess the Act's potential economic impacts. Substantially higher investments in clean energy and electric vehicles imply that fiscal costs may be larger than projected. However, even at the high end, IRA provisions remain cost-effective. IRA has large impacts on power sector investments and electricity prices, lowering retail electricity rates and resulting in negative prices in some wholesale markets. We find small quantitative macroeconomic effects including a small decline in headline inflation, but macroeconomic conditions–particularly higher interest rates and materials costs–may have substantial negative effects on clean energy investment. We show that the subsidy approach in IRA has expansionary supply-side effects relative to a carbon tax but, in a representative-agent dynamic model, is preferable to a carbon tax only in the presence of a strong learning-by-doing externality. We also discuss the economics of the industrial policy aspects of the act as well as the distributional impacts and the possible incidence of the different tax credits in IRA.
Author contact info: John Bistline E-Mail: jbistline@epri.com Neil Mehrotra Research Department Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: neil.mehrotra@mpls.frb.org Catherine Wolfram Massachusetts Institute of Technology Sloan School of Management 100 Main St. Cambridge, MA 02142 E-Mail: cwolfram@mit.edu

Does Combating Corruption Reduce Clientelism? - Bobonis, Gustavo J; Gertler, Paul; Gonzalez-Navarro, Marco; Nichter, Simeon (National Bureau of Economic Research Working Paper Series, 2023)
Does combating corruption reduce clientelism? We examine the impact of a prominent anti-corruption program on clientelism using a novel representative survey of rural Brazilians. Randomized audits reduce politicians’ provision of campaign handouts, decrease citizens’ demands for private goods, and reduce requests fulfilled by politicians. With regards to mechanisms, audits undermine clientelist relationships by reducing citizens’ interactions with politicians and their knowledge of incumbents. Furthermore, audits significantly deteriorate citizens’ perceptions of politician reciprocity in a hypothetical trust game. Results also offer novel insights into audits’ dynamic effects: they have more pronounced effects in the short run, especially during electoral periods.
Author contact info: Gustavo J. Bobonis 300 Roxton Road University of Toronto 150 St. George St., Room 304 Toronto, Onta M5S 3G7 Canada Tel: 4169465299 E-Mail: gustavo.bobonis@utoronto.ca Paul Gertler Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-1418 E-Mail: gertler@haas.berkeley.edu Marco Gonzalez-Navarro Department of Agricultural and Resource Economics University of California, Berkeley 207 Giannini Hall Berkeley, CA 94720-3310 E-Mail: marcog@berkeley.edu Simeon Nichter Political Science Department University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093 E-Mail: nichter@ucsd.edu

Universalism and Political Representation: Evidence from the Field - Enke, Benjamin; Fisman, Raymond; Mota Freitas, Luis; Sun, Steven (National Bureau of Economic Research Working Paper Series, 2023)
This paper provides field evidence on the link between morals and political behavior. We develop a theory-guided real-stakes measure of each U.S. district's values on the universalism-particularism continuum, which reflects the degree to which charitable giving decreases as a function of social distance. District universalism is strongly predictive of local Democratic vote shares, legislators' roll-call voting, and the moral content of Congressional speeches. These results hold in both across- and within-party analyses. Overall, spatial heterogeneity in universalism is a substantially stronger predictor of geographic variation in political outcomes than traditional economic variables such as income or education.
Author contact info: Benjamin Enke Department of Economics Harvard University Littauer M008 Cambridge, MA 02138 Tel: 617/496-5895 E-Mail: enke@fas.harvard.edu Raymond Fisman Department of Economics Boston University 270 Bay State Road, 304A Boston, MA 02215 Tel: 617-353-6821 E-Mail: rfisman@bu.edu Luis Mota Freitas University of Oxford Global Priorities Institute Trajan House Mill Street Oxford, OX2 0DJ United Kingdom E-Mail: luis.motafreitas@economics.ox.ac.uk Steven Sun Harvard Medical School 180 Longwood Avenue Boston, MA 02115 E-Mail: stevensun@college.harvard.edu

Informing Mothers about the Benefits of Conversing with Infants: Experimental Evidence from Ghana - Dupas, Pascaline; Falezan, Camille; Jayachandran, Seema; Walsh, Mark P (National Bureau of Economic Research Working Paper Series, 2023)
Despite the well-established importance of verbal engagement for infant language and cognitive development, many parents in low-income contexts do not converse with their infants regularly. We report on a randomized field experiment evaluating a low-cost intervention that aims to raise verbal engagement with infants by showing recent or expectant mothers a 3-minute informational video and giving them a themed wall calendar. Six to eight months later, mothers selected for the intervention report greater belief in the benefits of verbally engaging with infants, more frequent parent-infant conversations, and that their infants have more advanced language and cognitive skills. We measure positive but noisy effects on parental verbal inputs in a day-long recording and on surveyor-observed infant cognitive skills. The intervention could be delivered to expectant mothers through existing health clinics at very low marginal cost so could be a highly cost-effective early childhood development policy in low-income contexts.
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 Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu Mark P. Walsh E-Mail: mwalsh24@stanford.edu

Oil Prices, Monetary Policy and Inflation Surges - Gagliardone, Luca; Gertler, Mark (National Bureau of Economic Research Working Paper Series, 2023)
We develop a simple quantitative New Keynesian model aimed at accounting for the recent sudden and persistent rise in inflation, with emphasis on the role of oil shocks and accommodative monetary policy. The model features oil as a complementary good for households and as a complementary input for firms. It also allows for unemployment and real wage rigidity. We estimate the key parameters by matching model impulse responses to those from identified money and oil shocks in a structural VAR. We then show that our model does a good job of explaining unemployment and inflation since 2010, including the recent inflation surge that began in mid 2021. We show that mainly accounting for this surge was a combination oil price shocks and “easy” monetary policy, even after allowing for demand shocks and shocks to labor market tightness. Important for the quantitative impact of the oil price shock is a low elasticity of substitution between oil and labor, which we estimate to be the case.
Author contact info: Luca Gagliardone Dept of Economics New York University NY, NY 10017 New York City, NY 11211 United States Fax: luca.gagliardone@nyu.edu E-Mail: luca.gagliardone@nyu.edu Mark Gertler Department of Economics New York University 269 Mercer Street, 7th Floor New York, NY 10003 Tel: 212/998-8931 Fax: 212/995-4186 E-Mail: mark.gertler@nyu.edu

Children's Indirect Exposure to the U.S. Justice System: Evidence from Longitudinal Links between Survey and Administrative Data - Finlay, Keith; Mueller-Smith, Michael G; Street, Brittany (National Bureau of Economic Research Working Paper Series, 2023)
Children's indirect exposure to the justice system through biological parents or co-resident adults is both a marker of their own vulnerability and a measure of the justice system's expansive reach in society. Estimating the size of this population for the United States has historically been hampered by inadequate data resources, including the inability to (1) observe non-incarceration events, (2) follow children throughout their childhood, and (3) measure adult non-biological parent cohabitants. To overcome these challenges, we leverage billions of restricted administrative and survey records linked with Criminal Justice Administrative Records System data, and find substantially larger exposure rates than previously reported: prison - 9% of children born between 1999-2005, felony conviction - 18%, and any criminal charge - 39%. Charge exposure rates exceed 60% for Black, American Indian, and low-income children. While broader definitions reach a more expansive population, strong and consistently negative correlations with childhood well-being suggest these remain valuable predictors of vulnerability. Finally, we document substantial geographic variation in exposure, which we leverage in a movers design to estimate the effect of living in a high-exposure county during childhood. We find that children moving into high-exposure counties are more likely to experience post-move exposure events and exhibit significantly worse outcomes by age 26 on multiple dimensions (earnings, criminal activity, teen parenthood, mortality); impacts are strongest for those who moved at earlier ages.
Author contact info: Keith Finlay U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 United States Tel: 3017636056 E-Mail: keith.ferguson.finlay@census.gov Michael G. Mueller-Smith Department of Economics University of Michigan 365C Lorch Hall 611 Tappan Ave. Ann Arbor, MI 48109-1220 Tel: 410/218-3189 E-Mail: mgms@umich.edu Brittany Street University of Missouri Department of Economics 615 Locust Street Bldg Office E227 Columbia, MO 65201 U.S. E-Mail: streetb@missouri.edu

Trends in Special Education Identification During the COVID-19 Pandemic: Evidence from Michigan - Hopkins, Bryant G; Strunk, Katharine O; Imberman, Scott A; Truckenmiller, Adrea J; Guzman, Matthew; Fisher, Marisa H (National Bureau of Economic Research Working Paper Series, 2023)
We use data from Michigan and an interrupted time series (ITS) strategy to show how the COVID-19 pandemic impacted new special education classifications and discontinuations. We find a substantial decrease in K-5 classifications and discontinuations during the 2019-20 and 2020-21 school years. Classifications fell by 19 and 12 percent in these years, respectively, with smaller but still significant reductions in discontinuations. Districts with remote schooling and Black, Asian, and economically disadvantaged students saw larger decreases in classifications. While rates returned to trend in 2021-22, there was little “catch up” beyond that to make up for these delays, suggesting that as of that year many students had not yet gained access to services for which they may be eligible.
Author contact info: Bryant G. Hopkins Education Policy Innovation Collaborative Michigan State University 236 Erickson Hall 620 Farm Lane East Lansing, MI 48824 E-Mail: hopki213@msu.edu Katharine O. Strunk College of Education Michigan State University 238 Erickson Hall 620 Farm Lane East Lansing, MI 48824 E-Mail: kstrunk@msu.edu Scott A. Imberman Michigan State University 486 W. Circle Drive 110 Marshall-Adams Hall East Lansing, MI 48824-1038 E-Mail: imberman@msu.edu Adrea J. Truckenmiller Counseling, Educational Psychology, and Special Education Michigan State University 620 Farm Lane, Rm 340 East Lansing, MI 48824 United States E-Mail: atruck@msu.edu Matthew A. Guzman College of Education Michigan State University 620 Farm Lane East Lansing, Mich 48824 United States E-Mail: guzman27@msu.edu Marisa H. Fisher Counseling, Educational Psychology, and Special Education 620 Farm Lane, Rm 338 48824 East Lansing, MI 48824 United States E-Mail: fishermh@msu.edu

Climate Policy and the Economy: Evidence from Europe's Carbon Pricing Initiatives - Känzig, Diego R; Konradt, Maximilian (National Bureau of Economic Research Working Paper Series, 2023)
This paper investigates the impact of carbon pricing on the economy, with a focus on European carbon taxes and the carbon market. Our analysis reveals three key findings. First, while both policies have successfully reduced emissions, the economic costs of the European carbon market are larger than for national carbon taxes. Second, we explore four factors that explain this difference: fiscal policy and revenue recycling, pass-through and sectoral coverage, spillovers and leakage, and monetary policy. Our findings suggest that all four factors play a significant role. Third, we document substantial regional heterogeneity in the impacts of the carbon market, which crucially depend on the share of freely allocated emission permits and the degree of market concentration in the power sector.
Author contact info: Diego R. Känzig Department of Economics Northwestern University Kellogg Global Hub 2211 Campus Drive Evanston, IL 60208 E-Mail: dkaenzig@northwestern.edu Maximilian Konradt Chem. Eugène-Rigot 2 1201 Geneva Switzerland E-Mail: maximilian.konradt@graduateinstitute.ch

Whatever it Takes? The Impact of Conditional Policy Promises - Haddad, Valentin; Moreira, Alan; Muir, Tyler (National Bureau of Economic Research Working Paper Series, 2023)
At the announcement of a new policy, agents form a view of state-contingent policy actions and impact. We develop a method to estimate this state-contingent perception and implement it for many asset-purchase interventions worldwide. Expectations of larger support in bad states—“policy puts”—explain a large fraction of the announcements’ impact. For example, when the Fed introduced purchases of corporate bonds in March 2020, markets expected five times more price support had conditions worsened relative to the median scenario. Perceived promises of additional support in bad states persistently distort asset prices, risk, and the response to future announcements.
Author contact info: Valentin Haddad University of California, Los Angeles Anderson School of Management Office C4.19 110 Westwood Plaza Los Angeles, CA 90024 E-Mail: vhaddad@ad.ucla.edu Alan Moreira Simon Graduate School of Business University of Rochester Box 270100 Rochester, NY 14627 E-Mail: alan.moreira@simon.rochester.edu Tyler Muir University of California at Los Angeles Anderson School of Management 110 Westwood Plaza Los Angeles, CA 90024 Tel: 949.632.4190 E-Mail: tyler.muir@anderson.ucla.edu

The Economic Approach to Personality, Character and Virtue - Heckman, James J; Galaty, Bridget; Tian, Haihan (National Bureau of Economic Research Working Paper Series, 2023)
This chapter presents an economic approach to character and personality traits with an application to the study of virtue. Economists interpret psychological traits, including character traits and virtue, as strategies that shape responses to situations (actions) determined by underlying endowments, preferences, resources, as well as incentives to act in situations. Philosophers of virtue consider it to be a certain kind of practice in pursuit of a worthy goal. Psychologists consider it to be a trait or endowment and many adopt this point of view. Character traits and personality are not considered immutable in any field. They are shaped by genetics, parents, peers, and schools, as well as by habituation, imitation, and life experiences. We develop economic models to interpret and give empirical content to virtue ethics and suggest what the study of virtue ethics contributes to the study of society.
Author contact info: James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Bridget Galaty San Diego, CA 92122 E-Mail: bgalaty@ucsd.edu Haihan Tian Center for the Economics of Human Development The University of Chicago 1126 E. 59th Street Chicago, IL 60637 E-Mail: hhtian@uchicago.edu

How Informal Mentoring by Teachers, Counselors, and Coaches Supports Students’ Long-Run Academic Success - Kraft, Matthew A; Bolves, Alexander J; Hurd, Noelle M (National Bureau of Economic Research Working Paper Series, 2023)
We document a largely unrecognized pathway through which schools promote human capital development – by fostering informal mentoring relationships between students and teachers, counselors, and coaches. Using longitudinal data from a nationally representative sample of adolescents, we explore the nature and consequences of natural mentoring relationships by leveraging within-student variation in the timing of mentorship formation as well as differences in exposure among pairs of twins, best friends, and romantic partners. Results across difference-in-differences and pair fixed-effect specifications show consistent and meaningful positive effects on student attainment, with a conservative estimate of a 9.4 percentage point increase in college attendance. Effects are largest for students of lower socioeconomic status and robust to controls for individual characteristics and bounding exercises for selection on unobservables. Smaller class sizes and a school culture where students have a strong sense of belonging are important school-level predictors of having a K-12 natural mentor.
Author contact info: Matthew A. Kraft Brown University PO Box 1938 Providence, RI 02912 Tel: 401/863-3795 E-Mail: mkraft@brown.edu Alex Bolves E-Mail: alexander_bolves@g.harvard.edu Noelle M. Hurd E-Mail: nh3v@virginia.edu

Selection and Causal Effects in Voluntary Programs: Bundled Payments in Medicare - Gupta, Atul; Martinez, Joseph R; Navathe, Amol S (National Bureau of Economic Research Working Paper Series, 2023)
Voluntary participation is a central feature of reforms being tested across US healthcare. Allowing choice can enhance effects if participants sort on unobserved treatment gains. However, selection may also bias program evaluation, misleading policymakers. We study this trade-off in the case of a national reform to reduce spending on surgeries. We exploit variation due to idiosyncratic program rules to instrument for participation. We detect considerable treatment effect heterogeneity but no evidence for sorting on treatment gains. In contrast, there is substantial selection on untreated outcomes in an unexpected direction, leading the difference in differences estimator to understate the causal effect.
Author contact info: Atul Gupta Wharton Health Care Management 3641 Locust Walk, CPC 306 Philadelphia, PA 19104 Tel: 215/573-9075 E-Mail: atulgup@wharton.upenn.edu Joseph R. Martinez The Wharton School of the University of Pennsylvania Philadelphia, PA 19104 E-Mail: josma@wharton.upenn.edu Amol S. Navathe University of Pennsylvania 1108 Blockley Hall 423 Guardian Dr. Philadelphia, PA 19104 E-Mail: amol@wharton.upenn.edu

Stress Relief?: Funding Structures and Resilience to the Covid Shock - Forbes, Kristin; Friedrich, Christian; Reinhardt, Dennis (National Bureau of Economic Research Working Paper Series, 2023)
This paper explores the relationship between different funding structures—including the source, instrument, currency, and counterparty location of funding—and the extent of financial stress experienced in different countries and sectors during the sharp risk-off shock in early 2020 when Covid-19 spread globally. We measure financial stress using a new dataset on changes in credit default swap spreads for sovereigns, banks, and corporates. Then we use country-sector and country-sector-time panels to assess how different funding structures are related to financial stress. A higher share of funding from non-bank financial institutions (NBFIs) or in US dollars was correlated with significantly greater stress, while a higher share of funding in debt instruments (instead of loans) or cross-border (instead of domestically) was not significantly related to financial stress. The results suggest that macroprudential regulations should broaden their current focus to take into account exposures to NBFI and dollar funding, with less priority for regulations focused on residency (i.e., capital controls). After the sharp increase in financial stress in early 2020, policy responses targeting these structural vulnerabilities (i.e., US$ swap lines and focused on NBFIs) were more effective at mitigating stress related to these funding structures than policies supporting banks, even after controlling for macroeconomic policy responses.
Author contact info: Kristin Forbes MIT Sloan School of Management 100 Main Street, E62-416 Cambridge, MA 02142 Tel: 617/253-8996 Fax: 617/258-6855 E-Mail: kjforbes@mit.edu Christian Friedrich Bank of Canada 234 Laurier Avenue West Ottawa, Ontario, K1AOG9 Canada E-Mail: cfriedrich@bankofcanada.ca Dennis Reinhardt Bank of England Threadneedle Street London EC2R 8AH United Kingdom E-Mail: dennis.reinhardt@bankofengland.co.uk

Two-Sided Market Power in Firm-to-Firm Trade - Alviarez, Vanessa I; Fioretti, Michele; Kikkawa, Ken; Morlacco, Monica (National Bureau of Economic Research Working Paper Series, 2023)
We develop a quantitative theory of prices in firm-to-firm trade with bilateral negotiations and two-sided market power. Markups reflect oligopoly and oligopsony forces, with relative bargaining power as weight. Cost pass-through elasticities into import prices can be incomplete or complete, depending on the exporter's and importer's bargaining power and market shares. In U.S. import data, we find that U.S. importers have substantial market power and disproportionate leverage in price negotiations. The estimated model produces accurate predictions of the impact of Trump tariffs on pair-level prices. At the aggregate level, ignoring two-sided market power could exaggerate tariff pass-through by about 60%.
Author contact info: Vanessa I. Alviarez 1300 New York Ave NW Inter-American Development Bank Washington, Dist 20577 United States Tel: 2027630533 E-Mail: valviarezr@iadb.org Michele Fioretti Sciences Po Department of Economics 28 Rue des Saints-Pères 75007 Paris France Tel: +33766499432 E-Mail: michele.fioretti@sciencespo.fr Ken Kikkawa Sauder School of Business University of British Columbia 2053 Main Mall Vancouver, BC V6T 1Z2 Canada E-Mail: ken.kikkawa@sauder.ubc.ca Monica Morlacco Kaprielian Hall 3620 S Vermont Ave Los Angeles, Cali 90089 United States Tel: 2035005003 E-Mail: morlacco@usc.edu

Crisis Risk and Risk Management - Stulz, René M (National Bureau of Economic Research Working Paper Series, 2023)
This paper assesses the current state of knowledge about crisis risk and its implications for risk management. Better data that became available since the Global Financial Crisis (GFC) has improved our understanding of crisis risk. These data have been used to show that some types of crises become predictable when one accounts for interactions between risks. Specifically, a financial crisis is much more likely in the years following both high credit growth and high asset valuations. However, some other types of crises do not seem predictable. There is no evidence that the frequency of economic and financial crises is increasing. The existing data show that political crises make economic crises more likely, so that, as suggested by the concept of polycrisis, feedback between non-economic crises and economic crises can be important, but there is no comparable evidence for climate events. Strategies that increase firm operational and financial flexibility appear successful at reducing the adverse impact of crises on firms.
Author contact info: René M. Stulz The Ohio State University Fisher College of Business 806A Fisher Hall Columbus, OH 43210-1144 Tel: 614/292-1970 Fax: 614/292-2359 E-Mail: stulz@cob.osu.edu

Intergovernmental Grants and Policy Competition: Concepts, Institutions, and Evidence - Clemens, Jeffrey; Veuger, Stan (National Bureau of Economic Research Working Paper Series, 2023)
Our purpose is three-fold. First, we summarize some of the core insights from both classic and more recent papers in the literature on the role of intergovernmental grants in systems of fiscal federalism. Second, we provide an updated look at some of the key institutions through which intergovernmental transfers are implemented in the United States. Third, we consider the rich environment of the COVID-19 pandemic in which new additional intergovernmental transfers were deployed, and present empirical evidence on how they affected state-level corporate tax policy. We conclude by discussing productive directions for future research on the economics of fiscal federalism and the role of intergovernmental grants as policy instruments in federal systems.
Author contact info: Jeffrey Clemens Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-5713 E-Mail: jeffclemens@ucsd.edu Stan Veuger American Enterprise Institute 1789 Massachusetts Avenue Washington, DC 20036 E-Mail: stan.veuger@aei.org

Data Privacy and Algorithmic Inequality - Liu, Zhuang; Sockin, Michael; Xiong, Wei (National Bureau of Economic Research Working Paper Series, 2023)
This paper develops a foundation for a consumer's preference for data privacy by linking it to the desire to hide behavioral vulnerabilities. Data sharing with digital platforms enhances the matching efficiency for standard consumption goods, but also exposes individuals with self-control issues to temptation goods. This creates a new form of inequality in the digital era—algorithmic inequality. Although data privacy regulations provide consumers with the option to opt out of data sharing, these regulations cannot fully protect vulnerable consumers because of data-sharing externalities. The coordination problem among consumers may also lead to multiple equilibria with drastically different levels of data sharing by consumers. Our quantitative analysis further illustrates that although data is non-rival and beneficial to social welfare, it can also exacerbate algorithmic inequality.
Author contact info: Zhuang Liu E-Mail: liuz@hku.hk Michael Sockin Department of Finance UT Austin McCombs School of Business Austin, TX 78712 E-Mail: michael.sockin@mccombs.utexas.edu Wei Xiong Princeton University Department of Economics Bendheim Center for Finance Princeton, NJ 08450 Tel: 609/258-0282 Fax: 609/258-0771 E-Mail: wxiong@princeton.edu

Income Gains and the Geography of the US Home Ownership Boom, 1940 to 1960 - Collins, William J; Niemesh, Gregory (National Bureau of Economic Research Working Paper Series, 2023)
Income and home ownership both surged in the United States between 1940 and 1960. We use cross-place variation in changes in real income to assess the importance of income gains to the mid-century home ownership boom. OLS and IV estimates suggest that a large share of the overall increase in home ownership was attributable to wage gains that were both large on average and widely spread across workers. This research complements the literatures on how New Deal mortgage market innovations and the World War II and Korean War GI Bills promoted home ownership in this period.
Author contact info: William J. Collins Department of Economics Vanderbilt University VU Station B #351819 2301 Vanderbilt Place Nashville, TN 37235-1819 Tel: 615/322-3428 Fax: NA E-Mail: william.collins@vanderbilt.edu Gregory Niemesh Department of Economics Miami University 800 East High Street Oxford, OH 45056 Tel: 513/529-2150 E-Mail: niemesgt@miamioh.edu

ESG Spillovers - Li, Shangchen; Ruan, Hongxun; Titman, Sheridan; Xiang, Haotian (National Bureau of Economic Research Working Paper Series, 2023)
We study ESG and non-ESG mutual funds managed by overlapping teams. We find that non-ESG mutual funds include more high ESG stocks after the creation of an ESG sibling, and the high ESG stocks they select exhibit superior performance. The low ESG stocks selected by ESG funds also exhibit superior performance and despite being more constrained, the ESG funds outperform their non-ESG siblings. The latter result is consistent with fund families making choices that favor ESG funds. Specifically, ESG funds tend to trade illiquid stocks prior to their non-ESG siblings and get preferential IPO allocations.
Author contact info: Shangchen Li Peking University Guanghua School of Mangement No.5 Yiheyuan Road Haidian District Beijing China E-Mail: lishangchen@pku.edu.cn Hongxun Ruan Peking University Guanghua School of Management Finance Department Beijing China E-Mail: hongxunruan@gsm.pku.edu.cn Sheridan Titman Finance Department McCombs School of Business University of Texas at Austin Austin, TX 78712-1179 Tel: 512/232-2787 Fax: 512/471-5073 E-Mail: titman@mail.utexas.edu Haotian Xiang Peking University No.5 Yiheyuan Road Haidian District Beijing 100871 China E-Mail: xiang@gsm.pku.edu.cn

Debt Moratoria: Evidence from Student Loan Forbearance - Dinerstein, Michael; Yannelis, Constantine; Chen, Ching-Tse (National Bureau of Economic Research Working Paper Series, 2023)
We evaluate the effects of the 2020 student debt moratorium that paused payments for student loan borrowers. Using administrative credit panel data, we show that the payment pause led to a sharp drop in student loan payments and delinquencies for borrowers subject to the debt moratorium, as well as an increase in credit scores. We find a large stimulus effect, as borrowers substitute increased private debt for paused public debt. Comparing borrowers whose loans were frozen with borrowers whose loans were not frozen due to differences in whether the government owned the loans, we show that borrowers used the new liquidity to increase borrowing on credit cards, mortgages, and auto loans rather than avoid delinquencies. The effects are concentrated among borrowers without prior delinquencies, who saw no change in credit scores, and we see little effects following student loan forgiveness announcements. The results highlight an important complementarity between liquidity and credit, as liquidity increases the demand for credit even as the supply of credit is fixed.
Author contact info: Michael Dinerstein Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/795-2937 Fax: 773/702-8490 E-Mail: mdinerstein@uchicago.edu Constantine Yannelis Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 217/721-0587 E-Mail: constantine.yannelis@chicagobooth.edu Ching-Tse Chen E-Mail: chingtse.chen@chicagobooth.edu

Central Bank Credibility and Fiscal Responsibility - Schreger, Jesse; Yared, Pierre; Zaratiegui, Emilio (National Bureau of Economic Research Working Paper Series, 2023)
We consider a New Keynesian model with strategic monetary and fiscal interactions. The fiscal authority maximizes social welfare. Monetary policy is delegated to a central bank with an anti-inflation bias that suffers from a lack of commitment. The impact of central bank hawkishness on debt issuance is non-monotonic because increased hawkishness reduces the benefit from fiscal stimulus while simultaneously increasing real debt capacity. Starting from high levels of hawkishness (dovishness), a marginal increase in the central bank's anti-inflation bias decreases (increases) debt issuance.
Author contact info: Jesse Schreger Columbia Business School 665 W 130th St Kravis Hall, 551 New York, NY 10027 Tel: 212-851-0171 Fax: 212-662-8474 E-Mail: jesse.schreger@columbia.edu Pierre Yared Columbia University Graduate School of Business 3022 Broadway, Uris Hall 823 New York, NY 10027 Tel: 212/854-9670 Fax: 212/662-8474 E-Mail: pyared@columbia.edu Emilio Zaratiegui 420 West 118th Street New York, NY 10027 United States E-Mail: emiliozaratiegui@gmail.com

Risk Sharing, Commitment Constraints and Self Help Groups - Attanasio, Orazio; Kochar, Anjini; Mahajan, Aprajit; Surendra, Vaishnavi (National Bureau of Economic Research Working Paper Series, 2023)
Evaluations of group savings and lending programs have largely focused on average impacts, rather than distributional impacts — finding modest effects on long-term economic well-being. In this paper, we exploit the randomized roll-out of a self-help group lending program in rural Bihar, India (Hoffmann et al., 2021) to demonstrate that well-functioning groups facilitate risk-sharing within rural communities. We find no impact of the program on risk-sharing, measured as a reduction in the variance of consumption growth, in the aggregate. However, the program significantly improves risk-sharing in regions where it had greater institutional capacity and was better implemented. Building on our theoretical framework, we provide evidence of a specific channel of impact: program quality and pre-existing scale improve the quality and functioning of groups, which in turn increase the insurance value of the program to communities.
Author contact info: Orazio Attanasio Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: orazio.attanasio@yale.edu Anjini Kochar E-Mail: anjinikochar@gmail.com Aprajit Mahajan Dept. of Agricultural & Resource Economics University of California, Berkeley 219 Giannini Hall Berkeley, CA 94720-3310 Tel: (510) 664-7163 E-Mail: aprajit@gmail.com Vaishnavi Surendra Berkeley E-Mail: vaishnavi.s@gmail.com

Firm Commitments - Bolton, Patrick; Kacperczyk, Marcin (National Bureau of Economic Research Working Paper Series, 2023)
A growing fraction of companies globally have made commitments to reduce their carbon emissions by a certain date. While the companies that make commitments subsequently reduce their emissions, the effect on overall emissions of companies (including those that do not commit) has been small; the companies that commit, and those that make the most ambitious commitments, tend to have lower emissions; firm commitments are less prevalent in countries where governments have made national commitments. Overall, the commitment movements have been successful in drawing the willing but have found greater resistance from the companies that most need to reduce their emissions.
Author contact info: Patrick Bolton Imperial College London, SW7 2AZ E-Mail: pb2208@columbia.edu Marcin Kacperczyk Imperial College Business School Tanaka Building South Kensington Campus London SW7 2AZ United Kingdom Tel: 212/998-0924 E-Mail: m.kacperczyk@imperial.ac.uk

A Model of Influencer Economy - Cong, Lin William; Li, Siguang (National Bureau of Economic Research Working Paper Series, 2023)
With the rise of social media and streaming platforms, firms and brand-owners increasingly depend on influencers to attract consumers, who care about both common product quality and consumer-influencer interaction. Sellers thus compete in both influencer and product markets. As outreach and distribution technologies improve, influencer payoffs and income inequality change non-monotonically. More powerful influencers sell better-quality products, but pluralism in style mitigates market concentration by effectively differentiating consumer experience. Influencer style dispersion substitutes horizontal product differentiation but serves as either complement (small dispersion) or substitute (large dispersion) to vertical product differentiation. The assortative matching between sellers and influencers remains under endogenous influence-building, with the maximal differentiation principle recovered in the limit of costless style acquisition. Meanwhile, influencers may under-invest in consumer outreach to avoid exacerbating price competition. Finally, while requiring balanced seller-influencer matching can encourage seller competition, uni-directional exclusivity can improve welfare for sufficiently differentiated products and uncrowded influencer markets.
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 Siguang Li Fintech Thrust, Society Hub Hong Kong University of Science and Technology Guangzhou campus NO. 1, Duxue Road, Dongchong Town, Guangzhou China E-Mail: siguangli.cornell@gmail.com

The Re-Emerging Suicide Crisis in the U.S.: Patterns, Causes and Solutions - Marcotte, Dave E; Hansen, Benjamin (National Bureau of Economic Research Working Paper Series, 2023)
The suicide rate in the United States has risen nearly 40 percent since 2000. This increase is puzzling because suicide rates had been falling for decades at the end of the 20th Century. In this paper, we review important facts about the changing rate of suicide. General trends miss the story of important differences across groups – suicide rates rose substantially among middle aged persons between 2005 and 2015 but have fallen since. Among young people, suicide rates began a rapid rise after 2010 that has not abated. We review empirical evidence to assess potential causes for recent changes in suicide rates. The economic hardship caused by the Great Recession played an important role in rising suicide among prime-aged Americans. We illustrate that the increase in the prevalence of depression among young people during the 2010s was so large it could explain nearly all the increase in suicide mortality among those under 25. Bullying victimization of LGBTQ youth could also account for part of the rise in suicide. The evidence that access to firearms or opioids are major drivers of recent suicide trends is less clear. We end by summarizing evidence on the most promising policies to reduce suicide mortality.
Author contact info: Dave Marcotte School of Public Affairs American University 4400 Massachusetts Avenue NW Washington, DC 20016 E-Mail: marcotte@american.edu Benjamin Hansen Department of Economics 1285 University of Oregon Eugene, OR 97403 Tel: 541/357-8395 E-Mail: bchansen@uoregon.edu

The Dual U.S. Labor Market Uncovered - Ahn, Hie Joo; Hobijn, Bart; Şahin, Ayşegül (National Bureau of Economic Research Working Paper Series, 2023)
Aggregate U.S. labor market dynamics are well approximated by a dual labor market supplemented with a third, predominantly, home-production segment. We uncover this structure by estimating a Hidden Markov Model, a machine-learning method. The different market segments are identified through (in-)equality constraints on labor market transition probabilities. This method yields time series of stocks and flows for the three segments for 1980-2021. Workers in the primary sector, who make up around 55 percent of the population, are almost always employed and rarely experience unemployment. The secondary sector, which constitutes 14 percent of the population, absorbs most of the short-run fluctuations, both at seasonal and business cycle frequencies. Workers in this segment experience six times higher turnover rates than those in the primary tier and are ten times more likely to be unemployed than their primary counterparts. The tertiary segment consists of workers who infrequently participate in the labor market but nevertheless experience unemployment when they try to enter the labor force. Our individual-level analysis shows that observable demographic characteristics only explain a small part of the cross-individual variation in segment membership. The combination of the aggregate and individual-level evidence we provide points to dualism in the U.S. labor market being an equilibrium division of labor, under labor market imperfections, that minimizes adjustment costs in response to predictable seasonal as well as unpredictable business cycle fluctuations.
Author contact info: Hie Joo Ahn Board of Governors of the Federal Reserve System 20th & C Street, NW. Washington, D.C. 20551 E-Mail: HieJoo.Ahn@frb.gov Bart Hobijn Federal Reserve Bank of Chicago 230 S. LaSalle St. Chicago, IL 60604 E-Mail: bart.hobijn@barthobijn.net Ayşegül Şahin Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 Tel: 512/471-3664 E-Mail: aysegul.sahin@austin.utexas.edu

Can Evidence-Based Information Shift Preferences Towards Trade Policy? - Alfaro, Laura; Chen, Maggie; Chor, Davin (National Bureau of Economic Research Working Paper Series, 2023)
We investigate whether and how evidence-based information—a concise statement of a research finding—can shape preferences for trade policies. Across survey experiments conducted over 2018-2022 on U.S. general population samples, information highlighting the link between trade and manufacturing job losses consistently raises expressed support for limits on trade. More strikingly, we find novel evidence of a backfire effect to information emphasizing the job gains in comparative advantage sectors or the price benefits from freer trade: exposure to such information induces protectionist policy choices, particularly among Republicans; this, in turn, further polarizes Republicans' and Democrats' preferences on trade policy, consistent with implications we derive from a model of prior-biased belief updating. Efforts to communicate the benefits of trade can thus have unintended consequences; averting these will require addressing prior beliefs and broadly-held concerns over the impact of trade on jobs and over trade with China.
Author contact info: Laura Alfaro Harvard Business School Morgan Hall 263 Soldiers Field Boston, MA 02163 Tel: 617/495-7981 Fax: 617/496-5985 E-Mail: lalfaro@hbs.edu Maggie Chen Dept. of Economics George Washington University 2115 G ST, NW, #367 Washington, DC 20052 Tel: 202-994-0192 E-Mail: xchen@gwu.edu Davin Chor Tuck School of Business Dartmouth College 100 Tuck Mall Hanover, NH 03755 Tel: 603/646-9835 E-Mail: davin.chor@dartmouth.edu

Administrative Burden and Procedural Denials: Experimental Evidence from SNAP - Giannella, Eric; Homonoff, Tatiana; Rino, Gwen; Somerville, Jason (National Bureau of Economic Research Working Paper Series, 2023)
Many government program applications result in procedural denials due to administrative burdens associated with applying. We identify the intake interview as a key barrier to take-up of the Supplemental Nutrition Assistance Program and study the effect of an alternative application process designed to reduce burdens. Using a field experiment involving 65,000 Los Angeles applicants, we find that access to flexible interviews initiated by the applicant increases approvals by six percentage points, doubles early approvals, and increases long-term participation by over two percentage points. Our findings highlight the importance of incorporating flexibility when designing program integrity policies to minimize procedural denials.
Author contact info: Eric Giannella Code for America 972 Mission St. San Francisco, CA 94103 E-Mail: eric@codeforamerica.org Tatiana Homonoff New York University Robert F. Wagner School of Public Service 295 Lafayette Street, 2nd Floor New York, NY 10012 Tel: 212/998-7443 E-Mail: tatiana.homonoff@nyu.edu Gwen Rino Code for America 972 Mission St. San Francisco, CA 94103 E-Mail: gwen@codeforamerica.org Jason Somerville 33 Liberty Street New York, NY 10045 E-Mail: jasonjsomerville@gmail.com

The Empire Project: Trade Policy in Interwar Canada - Lampe, Markus; O'Rourke, Kevin Hjortshøj; Reiter, Lorenz; Yotov, Yoto V (National Bureau of Economic Research Working Paper Series, 2023)
This paper uses a new dataset on the universe of Canadian imports and tariffs between 1924 and 1936, disaggregated into 1697 goods originating in 112 countries, to analyze the impact on Canadian imports of interwar Canadian trade policy, including the 1932 Ottawa trade agreements. Rather than use a dummy variable approach, we compute the impact of individual tariffs which varied substantially across goods, trade partners, and time. We develop a novel method of controlling for multilateral resistances in the context of a one-country dataset, and perform a variety of counterfactual exercises to determine the impact of tariffs on trade flows. The overall impact of post-1929 tariff shifts, including the 1932 agreements, was relatively small, reflecting the fact that Canadian trade policy was already highly protectionist: trade agreements can have heterogenous effects on participants because the shocks involved are different. Compared with a free trade counterfactual, the impact of the overall structure of protection on the level and composition of trade was large.
Author contact info: Markus Lampe Institute for Economic and Social History Vienna University of Economics and Business Welthandelsplatz 1 Geb. D4, 3. Stock 1020 Wien/Vienna Austria E-Mail: markus.lampe@wu.ac.at Kevin Hjortshøj O'Rourke NYU Abu Dhabi, Saadiyat Campus Social Science (A5), 1193 P.O. Box 129188 Abu Dhabi United Arab Emirates Tel: +971 2 628 7674 E-Mail: kevin.orourke@nyu.edu Lorenz Reiter E-Mail: lorenz.reiter@posteo.at Yoto V. Yotov School of Economics Drexel University Philadelphia, PA 19104 E-Mail: yotov@drexel.edu

Hukou and Guanxi: How Social Discrimination and Networks Impact Intrahousehold Allocations in China - Zhuge, Liqun; Lang, Kevin (National Bureau of Economic Research Working Paper Series, 2023)
Hukou, China’s household registration system, affects access to public services and signals the strength of a person’s local social network, guanxi. We use a collective model and data on household consumption and spouses’ hukou status to show that hukou plays a crucial role in determining within-family bargaining power. Wives who bring the family more lucrative hukou enjoy significantly higher bargaining power than other wives. Still, these wives have less bargaining power than their husbands. Large differences in preferences between husbands and wives, especially regarding alcohol, tobacco, and clothing, allow us to identify these disparities.
Author contact info: Liqun Zhuge E-Mail: zhuge@bu.edu Kevin Lang Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-5694 Fax: 617/353-4001 E-Mail: lang@bu.edu

Accounting for the Widening Mortality Gap Between Adult Americans with and without a BA - Case, Anne; Deaton, Angus (National Bureau of Economic Research Working Paper Series, 2023)
We examine mortality differences between Americans with and without a four-year college degree over the period 1992 to 2021. From 1992 to 2010, both groups saw falling mortality, but with greater improvements for the more educated; from 2010 to 2019, mortality fell for those with a BA and rose for those without; from 2019 to 2021, mortality rose for both groups, but more rapidly for the less educated. In consequence, the mortality gap between the two groups rose in all three periods, unevenly until 2010, faster between 2010 to 2019, and explosively during the pandemic. The overall period saw dramatic changes in patterns of mortality, but gaps rose consistently, not only in all-cause mortality, but in each of thirteen broad classifications of cause of death. Gaps increased for causes of death whose rates have risen in the last thirty years, whose rates have fallen in the last thirty years, and whose rates fell and then rose. Gaps rose for causes where rates were originally higher for those without a BA, and where rates were originally lower for those without a BA. Although mechanisms and stories are different for each cause of death, the widening gap is seen throughout.
Author contact info: Anne Case School of Public and International Affairs 215 Robertson Hall Princeton University Princeton, NJ 08544 Tel: 609/258-2177 Fax: 609/258-5974 E-Mail: accase@princeton.edu Angus Deaton School of Public and International Affairs 215 Robertson Hall Princeton University Princeton, NJ 08544-1013 Tel: 609/258-5967 Fax: 609/258-5974 E-Mail: deaton@princeton.edu

Cross-border Spillovers: How US Financial Conditions affect M&As Around the World - Bergant, Katharina; Mishra, Prachi; Rajan, Raghuram (National Bureau of Economic Research Working Paper Series, 2023)
We find that financial conditions in the core have significant spillover effects on cross-border mergers and acquisitions (M&As). On average, a 1 percentage point easing of the IMF US Financial Conditions Index is associated with approximately a 10% higher volume of cross-border M&As. The spillovers are stronger for countries with more liabilities denominated in foreign currency (or in US dollars). We find that the spillovers are driven by changes in US financial conditions, rather than changes in Euro Area conditions. Deals that happen when financial conditions in the US are tighter (and therefore acquisitions fewer) add more value for the acquirers, as reflected in higher acquirer excess stock returns around the announcement.
Author contact info: Katharina Bergant 700 19th St NW Research Department Washington, DC 20431 E-Mail: kbergant@imf.org Prachi Mishra IMF Research Department 700 19th Street NW Washington, DC 20431 E-Mail: pmishra@imf.org Raghuram Rajan Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-4437 Fax: 773/702-0458 E-Mail: raghuram.rajan@ChicagoBooth.edu

Immigration, Household Production, and Native Women's Labor Market Outcomes: A Survey of a Global Phenomenon - Cortés, Patricia (National Bureau of Economic Research Working Paper Series, 2023)
Most of the literature on how immigration affects the labor market focuses on the outcomes of natives in direct competition with immigrants. This paper reviews a growing literature on an alternative channel. Immigrants, particularly low-skilled women, are disproportionately represented in the household services sector, a global phenomenon that is seen to some extent in most regions. A simple time-use model suggests that by lowering the price of market-provided household services, immigrant workers allow high-skilled native women to reduce their unpaid household production and increase their participation in the labor market. I review existing evidence that the presence of foreign domestic workers has increased the labor supply of high-skilled native women, has helped narrow the gender earnings gap in high-paying powered occupations, and that these advances have not come at the cost of native women investing less time in their children or having lower birth rates. I discuss the policy implications of these results, as well as some ethical considerations.
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

The Aggregate Importance of Intermediate Input Substitutability - Peter, Alessandra; Ruane, Cian (National Bureau of Economic Research Working Paper Series, 2023)
We estimate long-run elasticities of substitution between intermediate inputs for Indian manufacturing plants. India's trade liberalization in the early 1990s provides an ideal natural policy experiment, with permanent and heterogeneous tariff reductions inducing changes in relative prices which we use for identification. We find a high degree of substitutability at the plant-level between 8 broad categories of material inputs, significantly above the Cobb-Douglas benchmark of 1. In contrast, we find elasticities less than 1 between energy, materials, and services as well as between value added and intermediates. We embed our elasticities in a general equilibrium model with a rich input-output structure to quantify their importance. Relative to a Cobb-Douglas benchmark, the aggregate gains from trade are 9% larger when intermediate inputs are substitutes, and come hand in hand with 40% more reallocation of labor across sectors. Furthermore, the aggregate gains from closing the India-U.S. TFP gap in any one sector are on average 29% larger with our estimated elasticities; losses from misallocation of intermediate inputs are more than 3 times larger.
Author contact info: Alessandra Peter Department of Economics New York University 19 W. 4th Street New York, NY 10012 Tel: 650/996-9474 E-Mail: alessandra.peter@nyu.edu Cian Ruane International Monetary Fund 700 19th St NW Washington, DC 20431 Tel: 2026643607 E-Mail: cianruane2@gmail.com

Central Bank Communication and House Price Expectations - Binder, Carola; Kuang, Pei; Tang, Li (National Bureau of Economic Research Working Paper Series, 2023)
We study how US consumers’ house price expectations respond to verbal and non-verbal communication about interest rate changes using several large online surveys. Verbal communication about interest rate hikes leads to little response of average house price expectations but large heterogeneity among household groups. Communication about rate hikes combined with a simple explanation of the mortgage rate channel causes large downward revisions to house price expectations. Consumers interpret heterogeneously Chair Powell’s voice tone and body language at the press conference which significantly influence their house price expectations. More negative evaluations are associated with larger upward revisions to house price expectations.
Author contact info: Carola Binder Department of Economics Haverford College 754 College Ave Apt 1 Haverford, PA 19041 Tel: 214/546-6285 E-Mail: cbinder1@haverford.edu Pei Kuang University House 116 Edgbaston Park Road University of Birmingham UK B15 2TY United Kingdom E-Mail: P.Kuang@bham.ac.uk Li Tang The Burroughs London NW4 4BT United Kingdom E-Mail: tonytang1994721@hotmail.com

Supplier Churn and Growth: A Micro-to-Macro Analysis - Baqaee, David; Burstein, Ariel; Duprez, Cédric; Farhi, Emmanuel (National Bureau of Economic Research Working Paper Series, 2023)
Although consumer surplus from new suppliers is widely recognized as a key driver of economic growth and trade, empirical evidence quantifying its magnitude is scarce. We use Belgian data to quantify this effect and study its consequences for production at both the micro- and macroeconomic level. We instrument for changes in supplier access and find that for every 1% of suppliers gained or lost, the marginal cost of downstream firms falls or rises by 0.3%. We show that, regardless of functional forms, this elasticity measures the area under the input demand curve above the price (consumer surplus) relative to expenditures. Our estimates can be used to calibrate love-of-variety and quality ladder models. We quantify the importance of supplier addition and separation for aggregate growth by developing a growth-accounting framework. We discipline our growth-accounting formulas using firm-level production network data and our microeconomic estimates. We find that supplier churn plausibly accounts for about half of aggregate productivity growth.
Author contact info: David Baqaee Department of Economics University of California, Los Angeles Bunche Hall Los Angeles, CA 90095 Tel: 323/499-8714 E-Mail: baqaee@econ.ucla.edu Ariel Burstein Department of Economics Bunche Hall 8365 Box 951477 UCLA Los Angeles, CA 90095-1477 Tel: 310/206-6732 Fax: 310/825-9528 E-Mail: arielb@econ.ucla.edu Cédric Duprez National Bank of Belgium Boulevard de Berlaimont, 14 1000 Brussels Belgium E-Mail: cedric.duprez@nbb.be Emmanuel Farhi Harvard University E-Mail: *NA user is deceased

Scalable Demand and Markups - Atalay, Enghin; Frost, Erika; Sorensen, Alan T; Sullivan, Christopher J; Zhu, Wanjia (National Bureau of Economic Research Working Paper Series, 2023)
We study changes in markups across 72 product markets from 2006 to 2018. A growing literature has documented a rise in markups over time using a production function approach; we instead employ the standard microeconomic method, which is to estimate demand and then invert firms’ first-order pricing conditions to infer their markups. To make the method scalable, we propose estimating nested logit demand models, using household panel data to automate the assignment of products to nests. Our results indicate an overall upward trend in markups between 2006 and 2018, with considerable heterogeneity across and within product markets. We find that changes in firms’ marginal costs and households’ price sensitivity are the primary drivers of markup increases, with changes in firm ownership playing a much smaller role.
Author contact info: Enghin Atalay Federal Reserve Bank of Philadelphia 10 N. Independence Mall West Philadelphia, PA 19106 E-Mail: atalayecon@gmail.com Erika Frost E-Mail: efrost2@wisc.edu Alan T. Sorensen Department of Economics University of Wisconsin-Madison 6454 W.H. Sewell Social Science Bldg 1180 Observatory Drive Madison, WI 53706 Tel: 608/263-3867 E-Mail: sorensen@ssc.wisc.edu Christopher J. Sullivan 1180 Observatory Drive Madison, WI 53706-1393 E-Mail: cjsullivan@wisc.edu Wanjia Zhu E-Mail: wzhu65@wisc.edu

Product Repositioning by Merging Firms - Atalay, Enghin; Sorensen, Alan T; Sullivan, Christopher J; Zhu, Wanjia (National Bureau of Economic Research Working Paper Series, 2023)
We examine merging firms' additions and removals of products for a sample of 66 mergers across a wide variety of consumer packaged goods markets. We find that mergers lead to a net reduction in the number of products offered by merging firms. Merging firms tend to both drop and add products at the periphery of their joint product portfolios, with the net effect of increasing within-firm product similarity. These results are consistent with theories of the firm that emphasize cost synergies among similar types of products or managerial core competencies linked to particular segments of the product market.
Author contact info: Enghin Atalay Federal Reserve Bank of Philadelphia 10 N. Independence Mall West Philadelphia, PA 19106 E-Mail: atalayecon@gmail.com Alan T. Sorensen Department of Economics University of Wisconsin-Madison 6454 W.H. Sewell Social Science Bldg 1180 Observatory Drive Madison, WI 53706 Tel: 608/263-3867 E-Mail: sorensen@ssc.wisc.edu Christopher J. Sullivan 1180 Observatory Drive Madison, WI 53706-1393 E-Mail: cjsullivan@wisc.edu Wanjia Zhu E-Mail: wzhu65@wisc.edu

The Effect of a Peer's Teen Pregnancy on Sexual Behavior - Anand, Priyanka; Kahn, Lisa B (National Bureau of Economic Research Working Paper Series, 2023)
In this paper, we examine whether a friend or older sibling's teen pregnancy impacts one's own sexual behavior. Employing an event study design, we find that those who observe a peer's teen pregnancy change their sexual behavior after the pregnancy ends to put themselves at lower risk of their own teen pregnancy; specifically, they are less likely to have unprotected sex and have fewer sexual partners in the months following the end of the teen pregnancy. We find that females are more likely to change their sexual behavior after the end of a peer's teen pregnancy compared to males, and the effects are primarily after observing a peer's teen pregnancy that results in a live birth. Our work suggests that education campaigns that provide a realistic portrayal of teen parenthood may be an effective tool for reducing behaviors that may result in teen pregnancy.
Author contact info: Priyanka Anand George Mason University Department of Health Administration and Policy 4400 University Drive, MS1J3 Fairfax, VA 22030 United States Tel: 703-993-4226 E-Mail: panand4@gmu.edu Lisa B. Kahn Department of Economics University of Rochester 280 Hutchison Rd P.O. Box 270156 Rochester, NY 14627 E-Mail: lisa.kahn@rochester.edu

Subjecting the ‘Average Joe’ to War Theatre Triggers Intimate Partner Violence - Cesur, Resul; Kibris, Arzu (National Bureau of Economic Research Working Paper Series, 2023)
This research is the first to identify the impact of armed conflict exposure for the average male randomly drawn from the population on subsequent intimate partner violence (IPV). We exploit a population-level natural experiment in service location assignment of draftees under Turkey’s universal conscription system, inducting 90% of all draft-age men for 15-to-18 months, with nearly a quarter of them being deployed to the conflict zone during our analysis period, 1984-to-2011, in the southeast of the country to curb the Kurdistan Workers’ Party (PKK) insurgency. Purging any confounding influence of civilian exposure, the innovative design of our survey captures isolated exposure during military service. Results show that conflict zone deployment increases physical and psychological IPV perpetration from husband to wife. Probing the mechanisms, our analysis first renders the use of violence as an instrumental behavior in intrahousehold bargaining as an unlikely mechanism by eliminating labor market outcomes and economic- and social-controlling behaviors from the list of usual suspects. Moreover, we rule out the possibility of risky health habits exacerbating the unfavorable effects of combat. Then, we show compelling evidence that normalizing violence in everyday life, likely emerging as an expressive behavior when arguments escalate, is the primary mediating pathway.
Author contact info: Resul Cesur University of Connecticut School of Business 2100 Hillside Road Storrs, CT 06269 Tel: 860/486-6315 E-Mail: cesur@uconn.edu Arzu Kibris E-Mail: a.kibris@warwick.ac.uk

Swallow This: Childhood and Adolescent Exposure to Fast Food Restaurants, BMI, and Cognitive Ability - Abrahamsson, Sara Sofie; Bütikofer, Aline; Karbownik, Krzysztof (National Bureau of Economic Research Working Paper Series, 2023)
Using spatial and temporal variation in openings of fast food restaurants in Norway between 1980 and 2007, we study the effects of changes in the supply of high caloric nutrition on the health and cognitive ability of young adult males. Our results indicate that exposure to these establishments during childhood and adolescence increases BMI and has negative effects on cognition. Heterogeneity analysis does not reveal meaningful differences in the effects across groups, including for those with adverse prenatal health or high paternal BMI, an exception being that cognition is only affected by exposure at ages 0--12 and this effect is mediated by paternal education.
Author contact info: Sara Sofie Abrahamsson Postboks 222 Skøyen Oslo N-0213 Norway Tel: 004792232855 E-Mail: sofiesara.abrahamsson@fhi.no Aline Bütikofer Department of Economics Norwegian School of Economics Hellev. 30, N-5035 Bergen Norway E-Mail: aline.buetikofer@nhh.no Krzysztof Karbownik Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 E-Mail: krzysztof.karbownik@emory.edu

Norderfriedrichskoog! Tax Havens, Tax Competition and the Introduction of a Minimum Tax Rate - Boning, William C; Klimsa, Drahomir; Slemrod, Joel; Ullmann, Robert (National Bureau of Economic Research Working Paper Series, 2023)
German municipalities levy local business taxes by choosing a tax rate to apply to local business income, where the tax base is defined uniformly at the national level. Before the federal government’s imposition of a minimum tax rate in 2004, some municipalities such as the tiny North Sea town of Norderfriedrichskoog chose to act as tax havens by setting a zero tax rate. We combine administrative microdata from firm tax returns with municipality-level information to study the choice to become a tax haven; the (reported and real) income tax havens attracted from other municipalities before and after the introduction of the minimum tax rate; and how the introduction of the minimum tax rate affected tax competition between municipalities. We find that income was shifted to tax haven municipalities both before and after the introduction of the minimum tax rate. The mandated increase in tax havens’ tax rates did not lead to rate increases (or decreases) among municipalities in general, or among tax haven municipalities’ geographical neighbors. Our results suggest that tax havens largely did not affect the business tax rates set by non-havens.
Author contact info: William C. Boning Office of Tax Analysis Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, DC 20220 E-Mail: William.Boning@treasury.gov Drahomir Klimsa Große Scharrnstraße 59 Frankfurt D-15230 Germany E-Mail: Klimsa@europa-uni.de Joel Slemrod University of Michigan 701 Tappan Street Room R5396 Ann Arbor, MI 48109-1234 Tel: 734/936-3914 Fax: 734-615-4323 E-Mail: jslemrod@umich.edu Robert Ullmann Universitaetsstr. 16 Augsburg 86159 Germany E-Mail: robert.ullmann@wiwi.uni-augsburg.de

Debt and Deficits: Fiscal Analysis with Stationary Ratios - Campbell, John Y; Gao, Can; Martin, Ian W.R. (National Bureau of Economic Research Working Paper Series, 2023)
We introduce a new measure of a government's fiscal position that exploits cointegrating relationships among fiscal variables and output. The measure is a loglinear combination of tax revenue, government spending and the market value of government debt that—unlike the debt-GDP ratio—is stationary in the US and the UK since World War II. Fiscal deterioration forecasts a long-run decline in spending rather than increased tax revenue or low returns for bondholders. Fiscal adjustment to tax and spending shocks occurs through mean-reversion in tax and spending growth, with a negligible contribution from debt returns.
Author contact info: John Y. Campbell Morton L. and Carole S. Olshan Professor of Economics Department of Economics Harvard University Littauer Center 213 Cambridge, MA 02138 Tel: 617/496-6448 Fax: 617/495-7730 E-Mail: john_campbell@harvard.edu Can Gao Dufourstrasse 50 St. Gallen 9000 Switzerland E-Mail: can.gao@unisg.ch Ian Martin Department of Finance London School of Economics Houghton Street London WC2A 2AE United Kingdom E-Mail: i.w.martin@lse.ac.uk

The Great Equalizer: Medicare and the Geography of Consumer Financial Strain - Goldsmith-Pinkham, Paul; Pinkovskiy, Maxim; Wallace, Jacob (National Bureau of Economic Research Working Paper Series, 2023)
We use a five percent sample of Americans’ credit bureau data, combined with a regression discontinuity approach, to estimate the effect of universal health insurance at age 65—when most Americans become eligible for Medicare—at the national, state, and local level. We find a 30 percent reduction in debt collections—and a two-thirds reduction in the geographic variation in collections—with limited effects on other financial outcomes. The areas that experienced larger reductions in collections debt at age 65 were concentrated in the Southern United States, and had higher shares of black residents, people with disabilities, and for-profit hospitals.
Author contact info: Paul Goldsmith-Pinkham Yale School of Management 165 Whitney Avenue New Haven, CT 06511 E-Mail: paulgp@gmail.com Maxim Pinkovskiy Federal Reserve Bank of New York 33 Liberty Street New York, NY 10045 E-Mail: maxim.pinkovskiy@ny.frb.org Jacob Wallace Yale School of Public Health Department of Health Policy and Management 60 College Street New Haven, CT 06520 E-Mail: jacob.wallace@yale.edu

Generative AI and Firm Values - Eisfeldt, Andrea L; Schubert, Gregor; Zhang, Miao Ben (National Bureau of Economic Research Working Paper Series, 2023)
What are the effects of recent advances in Generative AI on the value of firms? Our study offers a quantitative answer to this question for U.S. publicly traded companies based on the exposures of their workforce to Generative AI. Our novel firm-level measure of workforce exposure to Generative AI is validated by data from earnings calls, and has intuitive relationships with firm and industry-level characteristics. Using Artificial Minus Human portfolios that are long firms with higher exposures and short firms with lower exposures, we show that higher-exposure firms earned excess returns that are 0.4% higher on a daily basis than returns of firms with lower exposures following the release of ChatGPT. Although this release was generally received by investors as good news for more exposed firms, there is wide variation across and within industries, consistent with the substantive disruptive potential of Generative AI technologies.
Author contact info: Andrea L. Eisfeldt Anderson School of Management University of California at Los Angeles 110 Westwood Plaza Suite C4.10 Los Angeles, CA 90095 E-Mail: andrea.eisfeldt@anderson.ucla.edu Gregor Schubert E-Mail: gregor.schubert@anderson.ucla.edu Miao Ben Zhang University of Southern California 701 Exposition Blvd HOH-722 Los Angeles, CA 90089 Tel: 2138219887 E-Mail: miao.zhang@marshall.usc.edu

The Unequal Economic Consequences of Carbon Pricing - Känzig, Diego R (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the economic impacts of carbon pricing. Exploiting institutional features of the European carbon market and high-frequency data, I document that a tighter carbon pricing regime leads to higher energy prices, lower emissions and more green innovation. This comes at the cost of a fall in economic activity, which is borne unequally across society: poorer households lower their consumption significantly while richer households are less affected. The poor are more exposed because of their higher energy share and, importantly, also experience a larger fall in income. Targeted fiscal policy can help alleviate these costs while maintaining emission reductions.
Author contact info: Diego R. Känzig Department of Economics Northwestern University Kellogg Global Hub 2211 Campus Drive Evanston, IL 60208 E-Mail: dkaenzig@northwestern.edu

The Incidence of the Affordable Care Act’s Dependent Coverage Mandate - Glied, Sherry A; Ko, Hansoo (National Bureau of Economic Research Working Paper Series, 2023)
Economic theory and empirical studies conclude that the cost of voluntary employer-sponsored health insurance falls on employees. However, the distribution of incidence and the mechanism through which incidence occurs have not been well-established. We provide new evidence about incidence by examining the dependent coverage mandate in the ACA, which requires group insurance to allow adult children to age 26 to remain on their parents’ policies. We establish that the incidence of the mandate fell on covered employees as a group. We then consider three situations in which the benefits of this new coverage to an employee differ from the costs to an employer. First, we compare incidence where the young adult dependent is the youngest child in the family to the situation where the child is not the youngest (so the family could add a dependent to existing family coverage). We find that incidence falls mainly on households where the newly-eligible child is the youngest in the household. Second, higher-income households face a lower tax price of coverage than do lower-income households. We find that the incidence of the mandate falls mainly on the highest income households. Finally, we find that the mandate leads to increased commuting time for parents of newly-eligible dependents.
Author contact info: Sherry A. Glied Robert F. Wagner Graduate School of Public Service New York University 295 Lafayette Street, 2nd Floor New York, NY 10012 Tel: 212-998-7527 Fax: 212-995-4161 E-Mail: sherry.glied@nyu.edu Hansoo Ko George Mason University Department of Health Administration & Policy 4400 University Drive Fairfax, VA 22030 E-Mail: hko20@gmu.edu

An Alternative to the Basic Causal Requirement for Liability under the Negligence Rule - Shavell, Steven (National Bureau of Economic Research Working Paper Series, 2023)
The primary causal requirement that must be met for a negligent party to be held liable for a harm is a demonstration that the harm would not have occurred if the party had not been negligent. Thus, for a speeding driver to be found liable for harm done in a car accident, it must be shown that the accident would not have happened if the driver had obeyed the speed limit. The main point made here is that this basic causal requirement may be difficult to satisfy and hence may interfere with the discouragement of negligence. Therefore, an alternative and usually easier-to-meet causal requirement is proposed—that the harm would not have occurred if the party not been engaged in his activity (if the driver had not been driving).
Author contact info: Steven Shavell Harvard Law School 1575 Massachusetts Avenue Hauser Hall 508 Cambridge, MA 02138 Tel: 617/495-3668 Fax: 617/496-2256 E-Mail: shavell@law.harvard.edu

Inflation and GDP Dynamics in Production Networks: A Sufficient Statistics Approach - Afrouzi, Hassan; Bhattarai, Saroj (National Bureau of Economic Research Working Paper Series, 2023)
We derive closed-form solutions and sufficient statistics for inflation and GDP dynamics in multi-sector New Keynesian economies with arbitrary input-output linkages. Analytically, we decompose how production linkages (1) amplify the persistence of inflation and GDP responses to monetary and sectoral shocks and (2) increase the pass-through of sectoral shocks to aggregate inflation. Quantitatively, we confirm the significant role of production networks in shock propagation, emphasizing the disproportionate effects of sectors with large input-output adjusted price stickiness: The three sectors with the highest contribution to the persistence of aggregate inflation have consumption shares of around zero but explain 16% of monetary non-neutrality.
Author contact info: Hassan Afrouzi Department of Economics Columbia University 420 W 118th Street New York, NY 10027 E-Mail: ha2475@columbia.edu Saroj Bhattarai University of Texas at Austin Department of Economics 2225 Speedway, Stop C3100 Austin, TX 78712-1690 E-Mail: saroj.bhattarai@austin.utexas.edu

The People and the Experts - Nordhaus, William D; Rivers, Douglas (National Bureau of Economic Research Working Paper Series, 2023)
Are speculators driving up oil prices? Should we raise energy prices to slow global warming? The present study takes a small number of such questions and compares the views of economic experts with those of the public. This comparison uses a panel of more than 2000 respondents from YouGov with the views of the panel of experts from the Initiative on Global Markets at the Chicago Booth School. We found that most of the US population is at best modestly informed about major economic questions and policies. The low level of knowledge is generally associated with the intrusion of ideological, political, and religious views that challenge or deny the current economic consensus. The intruding factors are highly heterogeneous across questions and sub-populations and are much more diverse than the narrowness of public political discourse would suggest. Many of these findings have been established for scientific subjects, but they appear to be equally important for economic views.
Author contact info: William D. Nordhaus Yale University, Department of Economics 87 Trumbull Street Box 208264 New Haven, CT 06520-8264 Tel: 203/432-3598 Fax: 203/432-5779 E-Mail: william.nordhaus@yale.edu Douglas Rivers E-Mail: rivers@stanford.edu

Financial Crises and the Global Supply Network: Evidence from Multinational Enterprises - Basco, Sergi; Felice, Giulia; Merlevede, Bruno; Mestieri, Martí (National Bureau of Economic Research Working Paper Series, 2023)
This paper empirically examines the effects of financial crises on the organization of production of multinational enterprises. We construct a panel of European multinational networks from 2003 through 2015. We use as a financial shock the increase in risk premia between August 2007 and July 2012 and build a multinational-specific shock based on the network structure before the shock. Multinationals facing a larger financial shock perform worse in terms of revenue, employment, and growth in the number of affiliates. Lower growth in the number of affiliates operates through a negative effect on domestic and foreign affiliates, and is concentrated in affiliates in a vertical relationship with the parent. These effects built up slowly over time. Negative effects are driven by multinationals with initially more leveraged parents, who reduce relatively more the number of foreign affiliates. These findings lend support to the hypothesis of financial frictions shaping multinational activity.
Author contact info: Sergi Basco Universitat Barcelona Dept. of Economics Avda Diagonal, 696 Spain E-Mail: sergi.basco@gmail.com Giulia Felice Politecnino di Milano Piazza Leonardo da Vinci, 32 Italy E-Mail: giulfelice@gmail.com Bruno Merlevede Ghent University Universiteitstraat 4 Ghent Belgium E-Mail: Bruno.Merlevede@UGent.be Martí Mestieri Federal Reserve Bank of Chicago 230 South LaSalle Street Chicago, Illi 60604 E-Mail: marti.mestieri@gmail.com

Diversity, Equity, and Inclusion - Edmans, Alex; Flammer, Caroline; Glossner, Simon (National Bureau of Economic Research Working Paper Series, 2023)
This paper measures diversity, equity, and inclusion (DEI) using proprietary data on survey responses used to compile the Best Companies to Work For list. We identify 13 of the 58 questions as being related to DEI, and aggregate the responses to form our DEI measure. This variable has low correlation with gender and ethnic diversity in the boardroom, in senior management, and within the workforce, suggesting that DEI captures additional dimensions missing from traditional measures of demographic diversity. DEI is also unrelated to general workplace policies and practices, suggesting that DEI cannot be improved by generic initiatives. However, DEI is higher in small growth firms and firms with high financial strength. DEI is associated with higher future accounting performance across a range of measures, higher future earnings surprises, and higher valuation ratios, but demographic diversity is not. DEI perceptions among professional workers, such as R&D employees, are significantly correlated with the number and quality of patents. However, DEI exhibits no link with future stock returns.
Author contact info: Alex Edmans London Business School Regent's Park London NW1 4SA UK Tel: (020) 7000 8258 E-Mail: aedmans@london.edu Caroline Flammer School of International and Public Affairs and Columbia Climate School Columbia University 420 West 118th Street, Office 1429 New York, NY 10026 E-Mail: caroline.flammer@columbia.edu Simon Glossner Federal Reserve Board of Governors 20th & Constitution Ave NW Washington, DC 20551 E-Mail: simon.glossner@frb.gov

Learning, Diversity and Adaptation in Changing Environments: The Role of Weak Links - Acemoglu, Daron; Ozdaglar, Asuman; Pattathil, Sarath (National Bureau of Economic Research Working Paper Series, 2023)
Adaptation to dynamic conditions requires a certain degree of diversity. If all agents take the best current action, learning that the underlying state has changed and behavior should adapt will be slower. Diversity is harder to maintain when there is fast communication between agents, because they tend to find out and pursue the best action rapidly. We explore these issues using a model of (Bayesian) learning over a social network. Agents learn rapidly from and may also have incentives to coordinate with others to whom they are connected via strong links. We show, however, that when the underlying environment changes sufficiently rapidly, any network consisting of just strong links will do only a little better than random choice in the long run. In contrast, networks combining strong and weak links, whereby the latter type of links transmit information only slowly, can achieve much higher long-run average payoffs. The best social networks are those that combine a large fraction of agents into a strongly-connected component, while still maintaining a sufficient number of smaller communities that make diverse choices and communicate with this component via weak links.
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 Asuman Ozdaglar Department of Electrical Engineering and Computer Science Massachusetts Institute of Technology 77 Massachusetts Ave, E40-130 Cambridge, MA 02139 E-Mail: asuman@mit.edu Sarath Pattathil Department of Electrical Engineering and Computer Science, Room 32D-640 Massachusetts Institute of Technology 77 Massachusetts Ave. Cambridge, MA 02139-4307 E-Mail: sarathp@mit.edu

The Labor Market Effects of Occupational Licensing in the Public Sector - Kleiner, Morris M; Wang, Wenchen (National Bureau of Economic Research Working Paper Series, 2023)
In the U.S., occupational licensing is more prevalent in the public sector than in the private sector, but the influence of occupational regulation for public sector workers has not been analyzed in detail. Our study initially examines the probability of a licensed worker selecting into the public sector. Using the probability as a control for these individuals’ risk aversion, we next examine how licensing impacts key labor market outcomes, such as wages, hours worked, and employment in the public sector. Our results show that having an occupational license increases the likelihood of working in the public sector. After adjusting for the selection bias of choosing into the public sector, we find that being in a licensed occupation in the public sector raises wages by about 6% and increases hours worked, but reduces employment, even when controlling for other labor market institutions that also are more prevalent in the public sector such as unionization. Overall, our estimates suggest that the social welfare effects of licensing in the public sector are like those for the whole sample, and they generally result in a welfare loss in the public sector.
Author contact info: Morris M. Kleiner University of Minnesota Humphrey School of Public Affairs 260 Humphrey Center 301 19th Street South Minneapolis, MN 55455 Tel: 612/625-2089 Fax: 612/625-6351 E-Mail: kleiner@umn.edu Wenchen Wang 820 Emerald Street SE Humphrey School of Public Affairs Saint Paul, MN 55114 United States Tel: 6125940331 E-Mail: wang6054@umn.edu

The Gender Well-being Gap - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2023)
Given recent controversies about the existence of a gender wellbeing gap we revisit the issue estimating gender differences across 55 subjective well-being metrics – 37 positive affect and 18 negative affect – contained in 8 cross-country surveys from 167 countries across the world, two US surveys covering multiple years and a survey for Canada. We find women score more highly than men on all negative affect measures and lower than men on all but three positive affect metrics, confirming a gender wellbeing gap. The gap is apparent across countries and time and is robust to the inclusion of exogenous covariates (age, age squared, time and location fixed effects). It is also robust to conditioning on a wider set of potentially endogenous variables. However, when one examines the three ‘global’ wellbeing metrics - happiness, life satisfaction and Cantril’s Ladder - women are either similar to or ‘happier’ than men. This finding is insensitive to which controls are included and varies little over time. The difference does not seem to arise from measurement or seasonality as the variables are taken from the same surveys and frequently measured in the same way. The concern here though is that this is inconsistent with objective data where men have lower life expectancy and are more likely to die from suicide, drug overdoses and other diseases. This is the true paradox – morbidity doesn’t match mortality by gender. Women say they are less cheerful and calm, more depressed, and lonely, but happier and more satisfied with their lives, than men.
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

Inflation Strikes Back: The Role of Import Competition and the Labor Market - Amiti, Mary; Heise, Sebastian; Karahan, Fatih; Şahin, Ayşegül (National Bureau of Economic Research Working Paper Series, 2023)
U.S. inflation has recently surged, with inflation reaching its highest readings since the early 1980s. We examine the drivers of this rise in inflation, focusing on supply chain disruptions, labor supply constraints, and their interaction. Using a calibrated two-sector New Keynesian DSGE model with multiple factors of production, foreign competition, and endogenous markups, we find that supply chain disruptions combined with a rise in the disutility of work raised inflation by about 2 percentage points in the 2021-22 period. We show that the combined shock increased price inflation in the model by 0.6 percentage point more than it would have risen if the shocks had hit separately. This amplification arises because the joint shock to labor and imported input prices makes substituting between labor and intermediates less effective for domestic firms. Moreover, the simultaneous foreign competition shock allows domestic producers to increase their pass-through into prices without losing market share. We then show that the benefit of aggressive monetary policy in the model depends on the source of the rise in inflation. If the rise in inflation is demand-driven, then aggressive monetary tightening can contain inflation without a recession later. In contrast, aggressive policy can have a large negative effect on the labor market when inflation is driven by supply chain and labor market disruptions. We use aggregate and industry-level data on producer prices, wages, and input prices to provide corroborating evidence for the key amplification channels in the model.
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 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 Fatih Karahan Amazon.com 296 Harlingen Rd Belle Mead, NJ 08502 E-Mail: yfkarahan@gmail.com Ayşegül Şahin Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 Tel: 512/471-3664 E-Mail: aysegul.sahin@austin.utexas.edu

Toward an Understanding of Tax Amnesties: Theory and Evidence from a Natural Field Experiment - Gil, Patricia; Holz, Justin E; List, John A; Simon, Andrew; Zentner, Alejandro (National Bureau of Economic Research Working Paper Series, 2023)
In modern economies, when debt and trust issues arise, a partial forgiveness policy is often the solution to induce payment and increase disclosure. For their part, governments around the globe continue to use tax amnesties as a strategy to allow debtors to make amends for past misdeeds in exchange for partial debt forgiveness. While ubiquitous, much remains unknown about the basic facts of how well amnesties work, for whom, and why. We present a simple theoretical construct that provides both economic clarity into tax amnesties as well as insights into the necessary behavioral parameters that one must estimate to understand the consequences of tax amnesties. We partner with the Dominican Republic Tax Authorities to design a natural field experiment that is linked to the theory to estimate key causal mechanisms. Empirical results from our field experiment, which covers 125,452 taxpayers who collectively owe $5.2 billion (5.5% of GDP) in known debt, highlight the import of deterrence laws, beliefs about future amnesties, and tax morale for debt payment and increased disclosure. Importantly, we find large short run effects: our most effective treatment (deterrence) increased payments of known debt by 25% and hidden debt by 48%. Further, we find no evidence of our intervention backfiring on subsequent tax payments.
Author contact info: Patricia Gil E-Mail: pagil@dgii.gov.do Justin E. Holz University of Chicago Department of Economics Chicago, IL 60637 E-Mail: justinholz@uchicago.edu John A. List Department of Economics University of Chicago 1126 East 59th Chicago, IL 60637 Tel: 301/405-1288 Fax: 301/314-9091 E-Mail: jlist@uchicago.edu Andrew Simon University of Chicago, Department of Economics 1126 E. 59th St Chicago, IL 60637 United States E-Mail: andrewsimon@uchicago.edu Alejandro Zentner Naveen Jindal School of Management University of Texas at Dallas 800 W Campbell Rd. Richardson, TX 75080 E-Mail: azentner@utdallas.edu

Information Flows, Organizational Structure, and Corporate Governance - Malenko, Nadya (National Bureau of Economic Research Working Paper Series, 2023)
This survey provides an overview of theoretical and empirical research on information flows in corporations. It highlights key frictions preventing effective information flows and discusses how organizational structure and corporate governance can alleviate these frictions, focusing on three broad topics: 1) organizational design, such as the choice between centralized and decentralized decision-making; 2) composition and decision-making process of the board of directors; and 3) communication among shareholders and between shareholders and management in the context of shareholder activism. The goal of the survey is to draw connections between theoretical and empirical work and point out directions for future research.
Author contact info: Nadya Malenko 140 Commonwealth Avenue Carroll School of Management Boston College Chestnut Hill, MA 02467 E-Mail: malenko@bc.edu

Building Resilient Education Systems: Evidence from Large-Scale Randomized Trials in Five Countries - Angrist, Noam; Ainomugisha, Micheal; Bathena, Sai Pramod; Bergman, Peter; Crossley, Colin; Cullen, Claire; Letsomo, Thato; Matsheng, Moitshepi; Marlon Panti, Rene; Sabarwal, Shwetlena; Sullivan, Tim (National Bureau of Economic Research Working Paper Series, 2023)
Education systems need to withstand frequent shocks, including conflict, disease, natural disasters, and climate events, all of which routinely close schools. During these emergencies, alternative models are needed to deliver education. However, rigorous evaluation of effective educational approaches in these settings is challenging and rare, especially across multiple countries. We present results from large-scale randomized trials evaluating the provision of education in emergency settings across five countries: India, Kenya, Nepal, Philippines, and Uganda. We test multiple scalable models of remote instruction for primary school children during COVID-19, which disrupted education for over 1 billion schoolchildren worldwide. Despite heterogeneous contexts, results show that the effectiveness of phone call tutorials can scale across contexts. We find consistently large and robust effect sizes on learning, with average effects of 0.30-0.35 standard deviations. These effects are highly cost-effective, delivering up to four years of high-quality instruction per $100 spent, ranking in the top percentile of education programs and policies. In a subset of trials, we randomized whether the intervention was provided by NGO instructors or government teachers. Results show similar effects, indicating scalability within government systems. These results reveal it is possible to strengthen the resilience of education systems, enabling education provision amidst disruptions, and to deliver cost-effective learning gains across contexts and with governments.
Author contact info: Noam Angrist University of Oxford 120 Walton St Oxford OX2 6GG United Kingdom E-Mail: noam.angrist@bsg.ox.ac.uk Micheal Ainomugisha Building Tomorrow E-Mail: micheal.ainomugisha@buildingtomorrow.org Sai Pramod Bathena E-Mail: saipramod.bathena@alokit.org Peter Bergman Department of Economics University of Texas at Austin 116 Inner Campus Drive Austin, TX 78712 E-Mail: peterbergman@utexas.edu Colin Crossley E-Mail: ccrossley@youth-impact.org Claire Cullen Oxford University E-Mail: ccullen@youth-impact.org Thato Letsomo E-Mail: tletsomo@youth-impact.org Moitshepi Matsheng Youth Impact E-Mail: mmatsheng@youth-impact.org Rene Marlon Panti E-Mail: rmpanti@poverty-action.org Shwetlena Sabarwal World Bank Washington DC E-Mail: ssabarwal@worldbank.org Tim Sullivan E-Mail: tim.sullivan@newglobe.education

Monetary Policy without Commitment - Afrouzi, Hassan; Halac, Marina; Rogoff, Kenneth S; Yared, Pierre (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the implications of central bank credibility for long-run inflation and inflation dynamics. We introduce central bank lack of commitment into a standard non-linear New Keynesian economy with sticky-price monopolistically competitive firms. Inflation is driven by the interaction of lack of commitment and the economic environment. We show that long-run inflation increases following an unanticipated permanent increase in the labor wedge or decrease in the elasticity of substitution across varieties. In the transition, inflation overshoots and then gradually declines. Quantitatively, the inflation response is large, as is the welfare loss from lack of commitment relative to inflation targeting.
Author contact info: Hassan Afrouzi Department of Economics Columbia University 420 W 118th Street New York, NY 10027 E-Mail: ha2475@columbia.edu Marina Halac Yale University Department of Economics 30 Hillhouse Avenue, Room 22B New Haven, CT 06511 E-Mail: marina.halac@yale.edu Kenneth S. Rogoff Maurits C. Boas Professor of International Economics Economics Department Harvard University Littauer Center 216 Cambridge, MA 02138-3001 Tel: 617-495-4022 Fax: 617/495-7730 E-Mail: krogoff@harvard.edu Pierre Yared Columbia University Graduate School of Business 3022 Broadway, Uris Hall 823 New York, NY 10027 Tel: 212/854-9670 Fax: 212/662-8474 E-Mail: pyared@columbia.edu

Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results - Suárez Serrato, Juan Carlos; Zidar, Owen M (National Bureau of Economic Research Working Paper Series, 2023)
This paper estimates the incidence of state corporate taxes using new data and methods for estimating the effects on profits. We extend Suarez Serrato and Zidar (2016) by developing two new identification approaches that use the effects of business taxes on the labor demand of incumbent firms and local productivity to identify profit effects. We estimate these reduced-form effects using data from Census, show how reduced-form moments identify incidence and parameters, and provide incidence estimates using a variety of reduced-form approaches as well as a structural model. Across these approaches, we find that owners bear a substantial portion of incidence. Our central estimate is that firm owners bear half of the incidence, while workers and landowners bear 35-40 percent and 10-15 percent, respectively.
Author contact info: Juan Carlos Suárez Serrato Knight Management Center Stanford University 655 Knight Way Stanford, CA 94305-7298 E-Mail: jc@jcsuarez.com 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

Work Hours Mismatch - Lachowska, Marta; Mas, Alexandre; Saggio, Raffaele; Woodbury, Stephen A (National Bureau of Economic Research Working Paper Series, 2023)
This paper uses a revealed preference approach applied to administrative data from Washington to document and characterize work-hour constraints. Workers have limited discretion over hours at a given employer, and there is substantial mismatch between workers who prefer long hours and employers that provide short hours. Voluntary job transitions suggest that the ratio of the marginal rate of substitution of earnings for hours (MRS) to the wage rate is on the order of 0.5-0.6 for prime-age workers. The average absolute deviation between observed hours and optimal hours is about 15%, and constraints on hours are particularly acute among low-wage workers. On average, observed hours tend to be less than preferred levels, and workers would require a 12% higher wage with their current employer to be as well off as they would be after moving to an employer offering ideal hours. These findings suggest that hours constraints are an equilibrium feature of the labor market because long-hour jobs are costly to employers, and that employers offer high-wage/long-hour packages to increase their overall value of employment.
Author contact info: Marta Lachowska W.E. Upjohn Institute for Employment Research 300 S. Westnedge Avenue Kalamazoo, MI 49007 Tel: 269-385-0432 Fax: 269-343-3308 E-Mail: marta@upjohn.org Alexandre Mas University of California, Berkeley Haas School of Business 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: amas@berkeley.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 Stephen A. Woodbury Department of Economics Michigan State University 486 West Circle Drive, Room 110 East Lansing, MI 48824 E-Mail: woodbur2@msu.edu

War Discourse and Disaster Premia: 160 Years of Evidence from Stock and Bond Markets - Hirshleifer, David; Mai, Dat Y; Pukthuanthong, Kuntara (National Bureau of Economic Research Working Paper Series, 2023)
Using a semi-supervised topic model on 7,000,000 New York Times articles spanning 160 years, we test whether topics of media discourse predict future stock market excess returns to test rational and behavioral hypotheses about market valuation of disaster risk. Media discourse data address the challenge of sample size even when disasters are rare. Our methodology avoids look-ahead bias and addresses semantic shifts. Our discourse topics positively predict market excess returns, with War having an out-of-sample R² of 1.35%. We call this effect the war return premium. The war return premium has increased in more recent time periods.
Author contact info: 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 Dat Mai Robert J. Trulaske, Sr. College of Business University of Missouri-Columbia E-Mail: datmai@mail.missouri.edu Kuntara Pukthuanthong Robert J. Trulaske, Sr. College of Business University of Missouri, Columbia E-Mail: pukthuanthongk@missouri.edu

Randomized Regulation: The Impact of Minimum Quality Standards on Health Markets - Bedoya, Guadalupe; Das, Jishnu; Dolinger, Amy (National Bureau of Economic Research Working Paper Series, 2023)
We report results from the first randomization of a regulatory reform in the health sector. The reform established minimum quality standards for patient safety, an issue that has become increasingly salient following the Ebola and COVID-19 epidemics. In our experiment, all 1348 health facilities in three Kenyan counties were classifi ed into 273 markets, and the markets were then randomly allocated to treatment and control groups. Government inspectors visited health facilities and, depending on the results of their inspection, recommended closure or a timeline for improvements. The intervention increased compliance with patient safety measures in both public and private facilities (more so in the latter) and reallocated patients from private to public facilities without increasing out-of-pocket payments or decreasing facility use. In treated markets, improvements were equally marked throughout the quality distribution, consistent with a simple model of vertical differentiation in oligopolies. Our paper thus establishes the use of experimental techniques to study regulatory reforms and, in doing so, shows that minimum standards can improve quality across the board without adversely affecting utilization.
Author contact info: Guadalupe Bedoya Development Impact Evaluation, DIME The World Bank 1818 H Street N.W. Washington, DC 20433 E-Mail: gbedoya@worldbank.org Jishnu Das McCourt School of Public Policy Georgetown University 37th & O Street NW Washington, DC 20057 Tel: 202/687-0433 E-Mail: jishnu.das@georgetown.edu Amy Dolinger The World Bank 1818 H Street, NW Washington, DC 20433 United States E-Mail: adolinger@worldbank.org

The Rise of E-Wallets and Buy-Now-Pay-Later: Payment Competition, Credit Expansion, and Consumer Behavior - Bian, Wenlong; Cong, Lin William; Ji, Yang (National Bureau of Economic Research Working Paper Series, 2023)
The past decade has witnessed a phenomenal rise of digital wallets, and the COVID-19 pandemic further accelerated their adoption globally. Such e-wallets provide not only a conduit to external bank accounts but also internal payment options, including the ever-popular Buy-Now-Pay-Later (BNPL). We examine, for the first time, e-wallet transactions matched with merchant and consumer information from a world-leading provider based in China, with over 1 billion users globally and a business model that other e-wallet providers quickly converge to. We document that internal payment options, especially BNPL, dominate both online and on-site transactions. BNPL has greatly expanded credit access on the extensive margin through its adoption in two-sided payment markets. While BNPL crowds out other e-wallet payment options, it expands FinTech credit to underserved consumers. Exploiting a randomized experiment, we also find that e-wallet credit through BNPL substantially boosts consumer spending. Nevertheless, users, especially those relying on e-wallets as their sole credit source, carefully moderate borrowing when incurring interest charges. The insights likely prove informative for economies transitioning from cash-heavy to cashless societies where digital payments and FinTech credit see the largest growth and market potential.
Author contact info: Wenlong Bian Sungkyunkwan University 25-2 Sungkyunkwanro Myeongnyun 3(Sam)Ga-dong Jongno-gu, Seoul 03063 South Korea E-Mail: brian123@skku.edu 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 Yang Ji Room 516, Business School, Gongchang Road No.66, Guangming District, Shenzhen China, Guan ä¸å½ E-Mail: jiyangpku@163.com

Learning, Sophistication, and the Returns to Advertising: Implications for Differences in Firm Performance - Tadelis, Steven; Hooton, Christopher; Manjeer, Utsav; Deisenroth, Daniel; Wernerfelt, Nils; Dadson, Nick; Greenbaum, Lindsay (National Bureau of Economic Research Working Paper Series, 2023)
Why do establishments exhibit wide variation in their productivity and profitability? Can variation in returns to advertising help answer this question? We present results from a large field experiment on Facebook and Instagram that documents variance in advertisers’ ability to generate returns to advertising. We focus on campaigns aimed at boosting sales and tie advertising expenses to revenues for each advertiser. We find that spending on advertising led to significant increases in revenues, number of purchases, number of purchasers, and number of conversions. The heterogeneity in these results by expenditure, age, and engagement documents patterns consistent with learning by doing and variance in how sophisticated advertisers are. Advertisers who engage in more learning activities and more sophisticated data collection exhibit the highest returns and are more likely to continue their activities over time, suggesting that differences in advertising effectiveness may account for some of the variance in productivity across firms.
Author contact info: Steven Tadelis Haas School of Business University of California, Berkeley 545 Student Services Building Berkeley, CA 94720 Tel: 510/643-0546 E-Mail: stadelis@haas.berkeley.edu Christopher A. Hooton Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: chooton@gwu.edu Utsav Manjeer Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: utsavmanjeer@meta.com Daniel Deisenroth Meta Platforms 1 Hacker Way Menlo Park, CA 94025 E-Mail: dbdeisenroth@meta.com Nils Wernerfelt Kellogg School of Management 2211 Campus Drive Evanston, IL 60208 E-Mail: nils.wernerfelt@gmail.com Nick Dadson Analysis Group 1190 avenue des Canadiens-de-Montréal Tour Deloitte, Suite 1500 Montreal, Quebec H3B 0G7 Canada E-Mail: nick.dadson@analysisgroup.com Lindsay Greenbaum Analysis Group 151 West 42nd Street 23rd Floor New York, NY 10036 E-Mail: lindsay.greenbaum@analysisgroup.com

Mortality Differentials, the Racial and Ethnic Retirement Wealth Gap, and the Great Pandemic - Wolff, Edward N (National Bureau of Economic Research Working Paper Series, 2023)
Using the Survey of Consumer Finances, I find that the Black/white gap in standard net worth widened from 1989 to 2019 but narrowed between Hispanics and (non-Hispanic) whites. When the definition of wealth is expanded to incorporate Social Security and defined benefit pension wealth (both the discounted sum of future benefits), the wealth gap is sharply reduced, especially for the ratio of median wealth. The Black/white and Hispanic/white disparity in Social Security wealth lessened considerably over 1989-2019. In contrast, the Black/white ratio of mean augmented wealth showed no change, though the ratio of median augmented wealth progressed. The Hispanic/white ratio of both mean and median augmented wealth advanced as well. The COVID-19 Pandemic struck in 2020 and hit the minority community much harder than whites in terms of mortality rates. Besides claiming over a million lives overall, it lopped off 4.7 percent of Social Security wealth among whites, 11.5 percent among Blacks, and 13.1 percent among Hispanics. As a result, while mean augmented wealth dipped only 1.2 percent among whites, it fell 6.7 percent among Black households and 7.3 percent among Hispanics. The effect was even stronger on median values – declines of a 2.6, 9.3 and 12.1 percent, respectively.
Author contact info: Edward N. Wolff Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8917 Fax: 212/995-4186 E-Mail: edward.wolff@nyu.edu

Estimating a Theoretically Consistent Human Capital Production Function With an Application to Head Start - Kaestner, Robert; Faundez, Luis F (National Bureau of Economic Research Working Paper Series, 2023)
This article describes a conceptual and empirical approach for estimating a human capital production function of child development that incorporates mother- or child-fixed effects. The use of mother- or child-fixed effects is common in this applied economics literature, but its application is often inconsistent with human capital theory. We outline the problem and demonstrate its empirical importance with an analysis of the effect of Head Start and preschool on child and adult outcomes. The empirical specification we develop has broad implications for a variety of applied microeconomic analyses beyond our specific application Results of our analysis indicate that attending Head Start or preschool had no economically or statistically significant effect on child or adult outcomes.
Author contact info: Robert Kaestner Harris School of Public Policy University of Chicago 1307 East 60th Street (Room 3057) Chicago, IL 60637 E-Mail: kaestner.robert@gmail.com Luis F. Faundez 2763-2719 Bancroft Way R239 Law Building (North Addition) Berkeley, CA 94720 E-Mail: luisfaundez.phd@gmail.com

A Simple Model of a Central Bank Digital Currency - Mishra, Bineet; Prasad, Eswar S (National Bureau of Economic Research Working Paper Series, 2023)
We develop a general equilibrium model that highlights the trade-offs between physical and digital forms of retail central bank money. The key differences between cash and central bank digital currency (CBDC) include transaction efficiency, possibilities for tax evasion, and, potentially, nominal rates of return. We establish conditions under which cash and CBDC can co-exist and show how government policies can influence relative holdings of cash, CBDC, and other assets. We illustrate how a CBDC can facilitate negative nominal interest rates and helicopter drops, and also how a CBDC can be structured to prevent capital flight from other assets.
Author contact info: Bineet Mishra Department of Economics, Uris Hall Cornell University Ithaca, NY 14853 USA E-Mail: bm596@cornell.edu Eswar S. Prasad Dyson School of Applied Economics and Management Cornell University 301A Warren Hall Ithaca, NY 14853 Tel: 607/255-5687 Fax: 607/255-9984 E-Mail: eswar.prasad@cornell.edu

It’s Baaack: The Surge in Inflation in the 2020s and the Return of the Non-Linear Phillips Curve - Benigno, Pierpaolo; Eggertsson, Gauti B (National Bureau of Economic Research Working Paper Series, 2023)
This paper proposes a non-linear New Keynesian Phillips curve (Inv-L NK Phillips Curve) to explain the surge of inflation in the 2020s. Economic slack is measured as firms' job vacancies over the number of unemployed workers. After showing empirical evidence of statistically significant nonlinearities, we propose a New Keynesian model with search and matching frictions, complemented by a form of wage rigidity, in the spirit of Phillips (1958), that generates strong nonlinearities. Policy implications include the thesis that appropriate monetary policy can bring inflation down without a significant recession and that the recent inflationary surge was mostly generated by a labor shortage -- i.e. an exceptionally tight labor market.
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

Minimum Wage Effects Within Census Based Statistical Areas: A Matched Pair Cross-Border Analysis - Taylor, Garrett C; West, James E (National Bureau of Economic Research Working Paper Series, 2023)
Using monthly data from major U.S. metropolitan areas that span state borders, we estimate the elasticity of employment with respect to the minimum wage using a difference-in-differences design with continuous treatment in two-digit industries of 71 (Arts, Entertainment and Recreation) and 72 (Accommodation and Food Services). In specifications that control for differences in state sales, personal and corporate income tax rates, we find negative average causal response on the treated (ACRT) in six-digit industries where we expect large numbers of young, entry-level employees, but positive correlations in other industries. Our results illustrate important heterogeneities in minimum wage effects in urban versus rural areas.
Author contact info: Garrett C. Taylor Department of Economics Baylor University One Bear Place #98003 Waco, TX 76798 E-Mail: Garrett_Taylor1@baylor.edu James E. West Department of Economics Baylor University One Bear Place #98003 Waco, TX 76798 Tel: 254/710-6126 E-Mail: j_west@baylor.edu

Efficiency in Household Decision Making: Evidence from the Retirement Savings of U.S. Couples - Choukhmane, Taha; Goodman, Lucas; O'Dea, Cormac (National Bureau of Economic Research Working Paper Series, 2023)
Pareto Efficiency is a core assumption of most models of household decision-making. We test this assumption using a new dataset covering the retirement saving contributions of over a million U.S. individuals. While a vast literature has failed to reject household efficiency in developed countries, we find evidence of widespread inefficiency in our setting: retirement contributions are not allocated to the account of the spouse with the highest employer match rate. This lack of coordination cannot be explained by inertia, auto-enrollment, or simple heuristics. Instead, we find that indicators of weaker marital commitment correlate with the incidence of inefficient allocations.
Author contact info: Taha Choukhmane MIT Sloan School of Management 100 Main Street Cambridge, MA 02142 Tel: 203/823-8346 E-Mail: tahac@mit.edu Lucas Goodman Office of Tax Analysis Department of Treasury 1500 Pennsylvania Avenue NW Washington, DC 20220 E-Mail: Lucas.Goodman@treasury.gov Cormac O'Dea Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/432-7572 E-Mail: cormac.odea@yale.edu

Nonlinear Budget Set Regressions for the Random Utility Model - Blomquist, Sören; Kumar, Anil; Liang, Che-Yuan; Newey, Whitney (National Bureau of Economic Research Working Paper Series, 2023)
This paper is about the nonparametric regression of a choice variable on a nonlinear budget set under utility maximization with general heterogeneity, i.e. in the random utility model (RUM). We show that utility maximization and convex budget sets make this regression three dimensional with a more parsimonious specification than previously derived. We show that nonconvexities in the budget set will have little effect on these results in important cases. We characterize all the restrictions of utility maximization on the budget set regression and show how to check these restrictions in applications. We formulate budget set effects that can be identified by this regression and give automatic debiased machine learners of these effects. We consider use of control functions to allow for endogeneity. Throughout we take as the main example the effect of taxes on taxable income including accounting for productivity growth. In an application to Swedish data we find the taxable income elasticity of a change in the slope of each segment to be .52, that the regression satisfies the restrictions of utility maximization at the values chosen for over 95% of observations, and that a productivity growth rate we estimate is close to other estimates.
Author contact info: Sören Blomquist Nationalekonomiska Institutionen Uppsala Universitet Box 513 751 20 UPPSALA, Sweden Sweden E-Mail: soren.blomquist@nek.uu.se Anil Kumar S224 PBB Tippie College of Business Department of Economics Iowa City, IA 52242 USA Tel: 214-284-4062 E-Mail: anilramdeep@gmail.com Che-Yuan Liang Department of Economics Box 513, 751 20 Uppsala Sweden E-Mail: che-yuan.liang@nek.uu.se Whitney Newey Department of Economics, E52-424 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-6420 Fax: 617/253-1330 E-Mail: wnewey@mit.edu

How Many Americans Work Remotely? A Survey of Surveys and Their Measurement Issues - Brynjolfsson, Erik; Horton, John J; Makridis, Christos; Mas, Alexandre; Ozimek, Adam; Rock, Daniel; TuYe, Hong-Yi (National Bureau of Economic Research Working Paper Series, 2023)
Remote work surged during the Covid pandemic but there is disagreement about the extent of the change. To address this question, we field a new, nationally-representative survey: the Remote Life Survey (RLS). We find that in October 2020, 31.6 percent of the continuously employed workforce always worked from home (WFH) and 21.9 percent sometimes or rarely WFH, totaling 53.5 percent. We compare our results with alternative measurement approaches, with a focus on government surveys and provide estimates on the impact of four factors: (a) differences among mail versus web-based survey respondents, (b) differences in the inclusion of self-employed workers, (c) the industry mix of the sample, and (d) the exclusion of people who were already remote pre-pandemic. We find that the last explanation (d) explains the bulk of the difference in estimates between the Current Population Survey (CPS) and other measures of remote work. Policymakers and researchers who turn to the BLS-CPS data series for an estimate of remote work prevalence in the American economy should note that it might be underestimating WFH levels by up to 25 percentage points. Under our preferred estimates, we find that about half of the U.S. workforce worked remotely at least one day each week as of December 2020.
Author contact info: Erik Brynjolfsson Stanford Digital Economy Laboratory 353 Jane Stanford Way, Office 136 Stanford, CA 94305 E-Mail: erik.brynjolfsson@gmail.com John J. Horton Massachusetts Institute of Technology Sloan School of Management 100 Main St Cambridge, MA 02142 E-Mail: john.joseph.horton@gmail.com Christos Makridis Stanford University Digital Economy Lab Stanford, CA 94305-4121 E-Mail: cmakridi@stanford.edu Alexandre Mas University of California, Berkeley Haas School of Business 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: amas@berkeley.edu Adam Ozimek Upwork E-Mail: adam@eig.org Daniel Rock Wharton School University of Pennsylvania 3730 Walnut Street Philadelphia, PA 19104 E-Mail: rockdi@wharton.upenn.edu Hong-Yi TuYe MIT Sloan School of Management 100 Main St Office 443 Cambridge, MA 02142 Tel: 8053773328 E-Mail: hytuye@mit.edu

Managers and Productivity in Retail - Metcalfe, Robert D; Sollaci, Alexandre B; Syverson, Chad (National Bureau of Economic Research Working Paper Series, 2023)
Across many sectors, research has established that management explains a notable portion of productivity differences across organizations. A remaining question, however, is whether it is managers themselves or firm-wide management practices that matter. We shed light on this question by analyzing store-level data from two multibillion-dollar retail companies. In this setting, managers move between stores but management practices are set by firm policy and largely fixed, allowing us to hone in on managers’ personal roles in determining store performance. We find: (i) managers affect and explain a large share of the variance of store-level productivity; (ii) negative assortative matching between managers and stores, which may reflect both firms’ decisions and a selection-driven bias that we characterize and argue might apply in other settings using movers designs; (iii) managers who move do so on average from less productive to more productive stores; (iv) female managers are less likely to move stores than male managers; (v) manager quality is generally hard to explain with the observables in our data, but is correlated with the ratio of full-time to part-time workers; (vi) managers who obtain high labor productivity also tend to obtain high energy productivity, revealing some breadth in managers’ skills applicability; (vii) high-performing managers in stable growth times are also high-performing during turbulent times; and (viii) exogenous productivity shocks improve the quality of initially low quality managers, suggesting managers can learn. We explain implications of these findings for productivity research.
Author contact info: Robert D. Metcalfe Department of Economics University of Southern California Los Angeles, CA 90007 E-Mail: robert.metcalfe@usc.edu Alexandre B. Sollaci International Monetary Fund 700 19th St NW Washington, DC 20431 E-Mail: abalduinosollaci@imf.org Chad Syverson University of Chicago Booth School of Business 5807 S. Woodlawn Ave. Chicago, IL 60637 Tel: 773/702-7815 Fax: 773/702-8490 E-Mail: chad.syverson@chicagobooth.edu

The Effects of Minimum Wages on (Almost) Everything? A Review of Recent Evidence on Health and Related Behaviors - Neumark, David (National Bureau of Economic Research Working Paper Series, 2023)
The effects of minimum wages on employment, wages, earnings, and incomes, have been studied and debated for decades. In recent years, however, researchers have turned to the effects on a multitude of other behaviors and outcomes – largely related to health. I review and assess the large and growing body of evidence on minimum wage effects on a wide variety of health outcomes and health-related behaviors. The evidence, even focusing on the more-compelling studies, is decidedly mixed. The evidence on physical health points in conflicting directions, and may lean towards adverse effects, possibly a reflection, in part, of the conflicting influences of minimum wages on factors that can affect health (related to how higher income is spent). In particular, research on the effects of minimum wages on diet and obesity sometimes points to beneficial effects, while other evidence indicates that higher minimum wages increase smoking and drinking and reduce exercise (and possibly hygiene). In contrast, there is rather strong evidence that higher minimum wages reduce suicides, partly consistent with the evidence of effects on other measures of mental health/depression being either positive or mixed. Overall, policy conclusions that minimum wages improve health are unwarranted or at least premature. Moreover, this research literature would benefit from more rigorous evidence, borrowing from the longer-running research on the labor market impacts of minimum wages.
Author contact info: David Neumark Department of Economics University of California, Irvine 3151 Social Science Plaza Irvine, CA 92697 Tel: 949-824-8496 Fax: 949/824-2182 E-Mail: dneumark@uci.edu