Why Does Right-to-Carry Cause Violent Crime to Increase? - Donohue, John J; Cai, Samuel V; Bondy, Matthew V; Cook, Philip J (National Bureau of Economic Research Working Paper Series, 2022)
While the recent state panel data literature has broadly concluded that “right-to-carry” (RTC) concealed handgun regimes increase violent crime, there is little empirical evidence on the precise mechanisms that drive this increase. Using data from 217 US cities, we find that the effect of RTC on violent crime is concentrated to large urban centers. In cities with an average population of over 250,000 between 1979 and 2019, we find that the introduction of RTC increases violent crime by 20 percent. We then present novel estimates that RTC increases gun theft by 50 percent and lowers violent crime clearance rates by 9 percent in these large cities. Leveraging city-level heterogeneity in RTC-induced violent crime effects, we demonstrate that these two mechanisms explain a substantial portion of the RTC-induced increase in violent crime.
Author contact info: John J. Donohue Stanford Law School Crown Quadrangle 559 Nathan Abbott Way Stanford, CA 94305 Tel: 650/721-6339 E-Mail: donohue@law.stanford.edu Samuel V. Cai E-Mail: sam.cai@yale.edu Matthew V. Bondy E-Mail: matthew.bondy@yale.edu Philip J. Cook Professor Emeritus of Economics Sanford School of Public Policy Duke University PO Box 90312 Durham, NC 27708 Tel: 919 613 7360 Fax: 919/681-8288 E-Mail: pcook@duke.edu

Mechanism Design Approaches to Blockchain Consensus - Gans, Joshua S; Holden, Richard T (National Bureau of Economic Research Working Paper Series, 2022)
Blockchain consensus is a state whereby each node in a network agrees on the current state of the blockchain. Existing protocols achieve consensus via a contest or voting procedure to select one node as a dictator to propose new blocks. However, this procedure can still lead to potential attacks that make consensus harder to achieve or lead to coordination issues if multiple, competing chains (i.e., forks) are created with the potential that an untruthful fork might be selected. We explore the potential for mechanisms to be used to achieve consensus that are triggered when there is a dispute impeding consensus. Using the feature that nodes stake tokens in proof of stake (POS) protocols, we construct revelation mechanisms in which the unique (subgame perfect) equilibrium involves validating nodes propose truthful blocks using only the information that exists amongst all nodes. We construct operationally and computationally simple mechanisms under both Byzantine Fault Tolerance and a Longest Chain Rule, and discuss their robustness to attacks. Our perspective is that the use of simple mechanisms is an unexplored area of blockchain consensus and has the potential to mitigate known trade-offs and enhance scalability.
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 Richard T. Holden University of New South Wales Room 470B Sydney, NSW, 2052, AUSTRALIA Australia Tel: +61 2 9385 4700 Fax: +1 773 409 5383 E-Mail: richard.holden@unsw.edu.au

Globalization, Trade Imbalances and Inequality - Dix-Carneiro, Rafael; Traiberman, Sharon (National Bureau of Economic Research Working Paper Series, 2022)
We investigate the role of trade imbalances for the distributional consequences of globalization. We do so through the lens of a quantitative, general equilibrium, multi-country, multi-sector model of trade with four key ingredients: (a) workers with different levels of skills are organized into separate representative households; (b) endogenous trade imbalances arise from households' consumption and saving decisions; (c) production exhibits capital-skill complementarity; (d) labor market frictions across sectors and non-employment. We conduct a series of counterfactual experiments that illustrate the quantitative importance of both trade imbalances and capital-skill complementarity for the dynamics of the skill premium. We show that modelling trade imbalances can lead to stark differences between short- and long-run consequences of globalization shocks for the skill premium.
Author contact info: Rafael Dix-Carneiro Department of Economics Duke University 210A Social Sciences Building Durham, NC 27708 E-Mail: rafael.dix.carneiro@duke.edu Sharon Traiberman Department of Economics New York University 19 West 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8900 E-Mail: sharon.traiberman@gmail.com

Aggregate Lapsation Risk - Koijen, Ralph S. J; Lee, Hae Kang; Van Nieuwerburgh, Stijn (National Bureau of Economic Research Working Paper Series, 2022)
We study aggregate lapsation risk in the life insurance sector. We construct two lapsation risk factors that explain a large fraction of the common variation in lapse rates of the 30 largest life insurance companies. The first is a cyclical factor that is positively correlated with credit spreads and unemployment, while the second factor is a trend factor that correlates with the level of interest rates. Using a novel policy-level database from a large life insurer, we examine the heterogeneity in risk factor exposures based on policy and policyholder characteristics. Young policyholders with higher health risk in low-income areas are more likely to lapse their policies during economic downturns. We explore the implications for hedging and valuation of life insurance contracts. Ignoring aggregate lapsation risk results in mispricing of life insurance policies. The calibrated model points to overpricing on average. In the cross-section, young, low-income, and high-health risk households face higher effective mark-ups than the old, high-income, and healthy.
Author contact info: Ralph S. J. Koijen University of Chicago Booth School of Business 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: Ralph.koijen@chicagobooth.edu Hae Kang Lee 1014 Greene St Darla Moore School of Business Columbia, SC 29208 Tel: 803-777-5960 E-Mail: haekang.lee@moore.sc.edu Stijn Van Nieuwerburgh Columbia University Graduate School of Business Kravis Hall, office 796 665 West 130th Street New York, NY 10027 E-Mail: svnieuwe@gsb.columbia.edu

The Effect of Labor Market Liberalization on Political Behavior and Free Market Norms - Abramitzky, Ran; Ben-Porath, Netanel; Lahad, Shahar; Lavy, Victor; Palgi, Michal (National Bureau of Economic Research Working Paper Series, 2022)
We study the effects of labor market liberalization on political behavior and attitudes towards free-market capitalism and socialism, exploiting a reform whereby the Israeli socialist communities called kibbutzim shifted from equal sharing to market-based wages. Our identification strategy relies on this reform's sharp and staggered implementation in different kibbutzim. We first examine changes in behavior associated with this labor market liberalization and document that the reform led to a shift in electoral voting patterns, resulting in decreased support for left-wing political parties and increased support for the center and right parties in national elections. Using annual survey data on attitudes over 25 years, we show that the reform led to increased support for free-market policies such as full privatization and differential wages. Moreover, it decreased support for socialist policies such as the joint ownership of production means. Yet, the reform increased support for the safety net to support weak members through mutual guarantee. These effects appear to be driven by an increase in living standards and work ethics that resulted from the reform. We conclude that introducing market-based wages led to a shift in attitudes towards a market economy with compassion, revealing a change in members’ support from their traditional democratic socialist model to a social democratic model.
Author contact info: Ran Abramitzky Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-9276 Fax: 650/725-5702 E-Mail: ranabr@stanford.edu Netanel Ben Porath E-Mail: netanelben-porath2028@u.northwestern.edu Shahar Lahad Mount Scopus Jerusalem Israel, Sele 93704 Israel E-Mail: shahar.lahad@mail.huji.ac.il Victor Lavy Department of Economics University of Warwick Coventry, CV4 7AL United Kingdom Tel: 44(0) 24 7657 4158 E-Mail: v.lavy@warwick.ac.uk Michal Palgi The Institute for Research of the Kibbutz and the Cooperative Idea The University of Haifa Haifa, 3498838 Israel E-Mail: palgi@research.haifa.ac.il

Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies - Aggarwal, Rishabh; Auclert, Adrien; Rognlie, Matthew; Straub, Ludwig (National Bureau of Economic Research Working Paper Series, 2022)
We study the effects of debt-financed fiscal transfers in a general equilibrium, heterogeneous-agent model of the world economy. In the long run, increases in government debt anywhere raise the world interest rate and increase private wealth everywhere. In the short run, a country with a larger-than-average fiscal deficit experiences both a large increase in private savings (“excess savings”) and a small but persistent current account deficit (a slow-motion “twin deficit”). These patterns are consistent with the evolution of the world’s balance of payments since the beginning of the Covid pandemic.
Author contact info: Rishabh Aggarwal E-Mail: arishabh@stanford.edu Adrien Auclert Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: aauclert@stanford.edu Matthew Rognlie Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8215 E-Mail: matthew.rognlie@northwestern.edu Ludwig Straub Department of Economics Harvard University Littauer Center Cambridge, MA 02138 E-Mail: ludwigstraub@g.harvard.edu

Labor Supply and the Pension-Contribution Link - French, Eric; Lindner, Attila S; O'Dea, Cormac; Zawisza, Tom A (National Bureau of Economic Research Working Paper Series, 2022)
We estimate the impact of public pension systems on labor supply far from the normal retirement age by exploiting Poland's switch from a Defined Benefit to a Notional Defined Contribution scheme for men born after 1948. Using the universe of taxpayers and this sharp cohort-based discontinuity in the link between current contributions and future benefits, we estimate an employment elasticity with respect to the return to work of 0.44 for ages 51-54. We estimate a lifecycle model that matches these results. The model implies that the change in the contribution-benefit link from the reform increases employment among those in their 30s but decreases it at older ages, reducing overall labor supply across the lifecycle by 2 months.
Author contact info: Eric French Faculty of Economics, University of Cambridge Austin Robinson Building Sidgwick Avenue Cambridge, CB3 9DD, UK United Kingdom Tel: +44 7582496247 E-Mail: Eric.French.econ@gmail.com Attila S. Lindner Department of Economics University College London 30 Gordon Street London WC1H 0AX United Kingdom E-Mail: a.lindner@ucl.ac.uk 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 Tom A. Zawisza Department of Economics University College London 30 Gordon Street WC1H 0AX United Kingdom E-Mail: tazawisza@gmail.com

The Political Polarization of Corporate America - Fos, Vyacheslav; Kempf, Elisabeth; Tsoutsoura, Margarita (National Bureau of Economic Research Working Paper Series, 2022)
Executive teams in U.S. firms are becoming increasingly partisan. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2020. The new fact is explained by both an increasing share of Republican executives and increased assortative matching by executives on political affiliation. Executives who are misaligned with the political majority of their team are more likely to leave the firm, especially in recent years, and their company's stock price responds negatively to the announcement of their departure. Combined, our findings indicate that the increasing political polarization of corporate America may not be in the financial interest of shareholders.
Author contact info: Vyacheslav Fos Carroll School of Management Boston College 140 Commonwealth Avenue Fulton Hall 330 Chestnut Hill, MA 02467 E-Mail: vyacheslav.fos@bc.edu Elisabeth Kempf Harvard Business School Baker Library 251 Boston, MA 02163 Tel: (617) 495-6261 E-Mail: ekempf@hbs.edu Margarita Tsoutsoura Olin Business School Washington University in St. Louis 1 Snow Way Dr St. Louis, MO 63130 E-Mail: tsoutsoura@wustl.edu

Politics At Work - Colonnelli, Emanuele; Pinho Neto, Valdemar; Teso, Edoardo (National Bureau of Economic Research Working Paper Series, 2022)
We study how individual political views shape firm behavior and labor market outcomes using new micro-data from Brazil. We first show that business owners are considerably more likely to employ copartisan workers. This phenomenon is in part driven by the overlapping of political and social networks. Multiple tests—a survey, an event study, analyses of wage premia and promotions within the firm, and a field experiment—further highlight how business owners’ political preferences directly influence firms’ employment decisions. A channel of political discrimination appears more relevant than one of political quid-pro-quo between firms and politicians.
Author contact info: Emanuele Colonnelli Booth School of Business University of Chicago 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: emanuele.colonnelli@chicagobooth.edu Valdemar Pinho Neto FGV EPGE, Brazilian School of Economics and Finance Praia de Botafogo 190 Rio de Janeiro, RJ. 22250-900 Brazil E-Mail: valdemar.pinho@fgv.br Edoardo Teso Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 857/250-1485 E-Mail: edoardo.teso@kellogg.northwestern.edu

Uncharted Waters: Effects of Maritime Emission Regulation - Hansen-Lewis, Jamie; Marcus, Michelle M (National Bureau of Economic Research Working Paper Series, 2022)
Maritime shipping emits as much fine particulate matter as half of global road traffic. We are the first to measure the consequences of US maritime emissions standards on air quality, human health, racial exposure disparities, and behavior. The introduction of US maritime emissions control areas significantly decreased fine particulate matter, low birth weight, and infant mortality. Yet, only about half of the forecasted fine particulate matter abatement was achieved by the policy. We show evidence consistent with behavioral responses among ship operators, other polluters, and individuals that muted the policy’s impact, but were not incorporated in ex-ante models.
Author contact info: Jamie Hansen-Lewis Department of Agricultural and Resource Economics University of California Davis One Shields Ave Davis, CA 95616 E-Mail: jhansenlewis@ucdavis.edu Michelle M. Marcus Department of Economics Vanderbilt University 310 Calhoun Hall Nashville, TN 37240 Tel: 419/392-0361 E-Mail: michelle.marcus@vanderbilt.edu

Industrial Robots, Workers' Safety, and Health - Gihleb, Rania; Giuntella, Osea; Stella, Luca; Wang, Tianyi (National Bureau of Economic Research Working Paper Series, 2022)
This study explores the relationship between the adoption of industrial robots and workplace injuries. Using establishment-level data on injuries, we find that a one standard deviation increase in our commuting zone-level measure of robot exposure reduces work-related annual injury rates by approximately 1.2 cases per 100 workers. US commuting zones more exposed to robot penetration experience a significant increase in drug- or alcohol-related deaths and mental health problems. Employing longitudinal data from Germany, we exploit within-individual changes in robot exposure and document that a one standard deviation change in robot exposure led to a 4% decline in physical job intensity and a 5% decline in disability, but no evidence of significant effects on mental health and work and life satisfaction.
Author contact info: Rania Gihleb Department of Economics University of Pittsburgh 230 South Bouquet Street Pittsburgh, PA 15260 E-Mail: gihleb@pitt.edu Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Luca Stella Freie Universität Berlin E-Mail: luca.stella@fu-berlin.de Tianyi Wang University of Toronto Department of Economics Toronto, Ontario M5S 3G7 Canada E-Mail: tianyiwang.wang@utoronto.ca

Failing Just Fine: Assessing Careers of Venture Capital-backed Entrepreneurs Via a Non-Wage Measure - Amornsiripanitch, Natee; Gompers, Paul; Hu, George; Levinson, Will; Mukharlyamov, Vladimir (National Bureau of Economic Research Working Paper Series, 2022)
This paper proposes a non-pecuniary measure of career achievement, Seniority. Based on a database of over 5 million resumes, this metric exploits the variation in job titles and how long they take to attain. When non-monetary factors influence career choice, inference benefits from the use of non-wage measures, such as seniority. We apply it to study labor market outcomes of VC-backed entrepreneurs. Would-be founders experience accelerated career trajectories prior to founding, significantly outperforming graduates of same-tier colleges with similar first jobs. After exiting their start-ups, they obtain jobs about three years more senior than their right-before-founding peers. Even failed founders land jobs with higher seniority than those attained by their peers in the meantime.
Author contact info: Natee Amornsiripanitch 10 N Independence Mall W Philadelphia, PA 19106 United States Tel: 4047919992 E-Mail: natee.amornsiripanitch@phil.frb.org Paul Gompers Harvard Business School Baker Library 263 Soldiers Field Boston, MA 02163 Tel: 617/495-6297 Fax: 617/496-8443 E-Mail: pgompers@hbs.edu George Hu Department of Economics Harvard University Cambridge, MA 02138 E-Mail: george_hu@g.harvard.edu Will Levinson Duke University Fuqua School of Business E-Mail: will.levinson@duke.edu Vladimir Mukharlyamov McDonough School of Business Georgetown University 3700 O St NW Washington, DC 20057 E-Mail: vladimir.mukharlyamov@georgetown.edu

Labor Market Effects of Short-Cycle Higher Education Programs: Lessons from Colombia - Ferreyra, Maria Marta; Galindo, Camila; Urzúa, Sergio S (National Bureau of Economic Research Working Paper Series, 2022)
This paper estimates the heterogeneous labor market effects of enrolling in higher education short-cycle (SC) programs. Expanding access to these programs might affect the behavior of some students (compliers) in two margins: the expansion margin (students who would not have enrolled in higher education otherwise) and the diversion margin (students who would have enrolled in bachelor's programs otherwise). To quantify these responses, we exploit local exogenous variation in the supply of higher education institutions (HEIs) facing Colombian high school graduates in an empirical multinomial choice model with several instruments. According to our findings, the presence of at least one HEI specialized in SC programs in the vicinity of the student's high school municipality increases SC enrollment by 3.7-4.5 percentage points (40-50% of the SC enrollment rate). The diversion margin largely drives this effect. For female compliers, enrollment in SC programs increases formal employment relative to the next-best alternative. For male compliers, in contrast, it lowers formal employment and wages. These results should alert policymakers of the unexpected consequences of higher education expansionary policies.
Author contact info: Maria Marta Ferreyra The World Bank 1818 H St NW Washington, DC 20433 E-Mail: mferreyra@worldbank.org Camila Galindo Department of Economics Universidad de Los Andes E-Mail: camilagalindo@uniandes.edu.co Sergio S. Urzúa Department of Economics University of Maryland 3115J Tydings Hall College Park, MD 20742 Tel: 301-405-3266 E-Mail: urzua@econ.umd.edu

Prediction Machines, Insurance, and Protection: An Alternative Perspective on AI's Role in Production - Agrawal, Ajay K; Gans, Joshua S; Goldfarb, Avi (National Bureau of Economic Research Working Paper Series, 2022)
Recent advances in AI represent improvements in prediction. We examine how decision-making and risk management strategies change when prediction improves. The adoption of AI may cause substitution away from risk management activities used when rules are applied (rules require always taking the same action), instead allowing for decision-making (choosing actions based on the predicted state). We provide a formal model evaluating the impact of AI and how risk management, stakes, and inter-related tasks affect AI adoption. The broad conclusion is that AI adoption can be stymied by existing processes designed to address uncertainty. In particular, many processes are designed to enable coordinated decision-making among different actors in an organization. AI can make coordination even more challenging. However, when the cost of changing such processes falls, then the returns from AI adoption increase.
Author contact info: Ajay K. Agrawal Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 Tel: 416/946-0203 Fax: 416/978-5433 E-Mail: ajay.agrawal@rotman.utoronto.ca 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 Avi Goldfarb Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 Tel: 416/946-8604 Fax: 416/978-5433 E-Mail: agoldfarb@rotman.utoronto.ca

The Geography of Child Penalties and Gender Norms: A Pseudo-Event Study Approach - Kleven, Henrik (National Bureau of Economic Research Working Paper Series, 2022)
This paper develops a new approach to estimating child penalties in labor market outcomes based on cross-sectional data and pseudo-event studies around child birth. The approach is applied to US data and validated against the state-of-the-art panel data approach. Child penalties can be accurately estimated using cross-sectional data, which are widely available and offer more statistical power than typical panel datasets. The approach allows for providing granular evidence on child penalties over time, across geography, and across demographic and cultural groups. Child penalties vary enormously across space: the employment penalty ranges from 12% in the Dakotas to 38% in Utah, while the earnings penalty ranges from 21% in Vermont to 61% in Utah. To investigate if this variation is driven by differences in gender norms, an epidemiological study of movers within the US and immigrants from abroad is presented. The child penalty for US movers is strongly related to the child penalty in their state of birth, adjusting for selection in their state of residence. Parents born in high-penalty states (such as Utah or Idaho) have much larger child penalties than those born in low-penalty states (such as the Dakotas or Hawaii), conditional on where they live. Similarly, the child penalty for foreign immigrants is strongly related to the child penalty in their country of birth. Immigrants born in high-penalty countries (such as Bangladesh, Mexico, or Switzerland) have much larger child penalties than immigrants born in low-penalty countries (such as China, Cuba, or Portugal). Evidence on cultural assimilation is also presented.
Author contact info: Henrik Kleven Department of Economics Princeton University 238 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 609/986-6890 E-Mail: kleven@princeton.edu

Determinants of Health Insurance Enrollment and Health Expenditure in Ghana: An Empirical Analysis - Adjei-Mantey, Kwame; Horioka, Charles Yuji (National Bureau of Economic Research Working Paper Series, 2022)
This paper analyzes the determinants of health insurance enrollment and health expenditure in Ghana using micro data from wave 7 of the Ghana Living Standards Survey (GLSS 7) with emphasis on the role of risk preferences and the availability of health facilities in one’s own community. It is possible to analyze the determinants of health insurance enrollment in Ghana because its public health insurance system (the National Health Insurance Scheme or NHIS) is, in theory, mandatory, but is, in actual practice, voluntary, with only about 40% of the population enrolled in the scheme. Our empirical findings show that risk preferences have a significant impact on health insurance enrollment, with risk averse individuals being significantly more likely than other households to enroll in health insurance. Moreover, our findings also show that very poor households are significantly more likely to enroll in health insurance than other households, perhaps because they are exempt from paying premiums for health insurance. Finally, our findings also show that the availability of health facilities in one’s own community significantly decreases expenditures on health care.
Author contact info: Kwame Adjei-Mantey Department of Sustainable Energy and Resources University of Environment and Sustainable Development PMB Somanya, Eastern Region Ghana E-Mail: kadjei-mantey@uesd.edu.gh Charles Yuji Horioka Research Institute for Economics and Business Administration Kobe University 2-1, Rokkodai, Nada Kobe 657-8501 JAPAN Tel: +81-78-803-7270 Fax: +81-78-803-7059 E-Mail: horioka@rieb.kobe-u.ac.jp

The Quality of Lower-Track Education: Evidence from Britain - Clark, Damon (National Bureau of Economic Research Working Paper Series, 2022)
For much of the 20th century, British students were tracked into higher-track (for the "top" 20%) or lower-track (for the rest) secondary schools. Opponents of tracking contend that the lower-track schools in these systems will inevitably provide low-quality education. In this paper I examine this claim using a 1947 reform that increased the minimum school leaving age from 14 to 15. First, I show that over 95% of the students affected by the reform ("compliers") attended lower-track schools. Second, using new data, I show that for both men and women, the additional schooling induced by the reform had close to zero impact on a range of labor market outcomes including earnings. Third, I show that lower-track schools featured, among other things, large classes and a curriculum that promoted practical education. I conclude that my findings shed new light on the potential consequences of educational tracking.
Author contact info: Damon Clark Department of Economics University of California, Irvine Irvine, CA 92617 Tel: 949/824-2056 E-Mail: clarkd1@uci.edu

A Shot at Economic Prosperity: Long-term Effects of India’s Childhood Immunization Program on Earnings and Consumption Expenditure - Summan, Amit; Nandi, Arindam; Bloom, David E (National Bureau of Economic Research Working Paper Series, 2022)
Routine childhood vaccinations are among the most cost-effective child health interventions. In recent years, the broader benefits of vaccines, which include improved cognitive and schooling outcomes, have also been established. This paper evaluates the long-term economic benefits of India’s national program of childhood vaccinations, known as the Universal Immunization Programme (UIP). We combine individual-level data from the 68th round of the National Sample Survey of India (2011–2012) with district-wise data on the rollout of UIP from 1985 to1990. We employ age-district fixed effects regression models to compare the earnings and per capita household consumer spending of 21- to 26-year-old adults who were born in UIP-covered districts vis-à-vis non-UIP districts between 1985 and 1990. We find that exposure to UIP in infancy increases weekly wages by 13.8% (95% CI: 7.6% to 20.3%, p<0.01) and monthly per capita household consumption expenditure by 2.9% (95% CI: 0.7% to 5.0%, p<0.01). Program exposure also reduces the probability that an individual’s household relies on agriculture as the main source of income by 1.9% (95% CI: 0.0% to 3.5%, p<0.01). The findings are robust to several specifications including varying study duration and accounting for potential migration. The effects vary by sex, location, and caste group.
Author contact info: Amit Summan 962 Wayne Ave Suite 530 Silver Spring, MD 20910 USA E-Mail: summan@onehealthtrust.org Arindam Nandi The Population Council 1 Dag Hammarskjold Plaza New York, NY 10017 E-Mail: anandi@popcouncil.org David E. Bloom Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, Suite 1202 Boston, MA 02115 Tel: 617/432-0866 Fax: 617/432-6733 E-Mail: dbloom@hsph.harvard.edu

Preparing for the (Non-Existent?) Future of Work - Korinek, Anton; Juelfs, Megan (National Bureau of Economic Research Working Paper Series, 2022)
This paper considers the labor market and distributional implications of a scenario of ever-more-intelligent autonomous machines that substitute for human labor and drive down wages. We lay out three concerns arising from such a scenario and evaluate recent predictions and objections to these concerns. Then we analyze how a utilitarian social planner would allocate work and income if these concerns start to materialize. As the income produced by autonomous machines rises and the value of labor declines, a utilitarian planner finds it optimal to phase out work, beginning with workers who have low labor productivity and job satisfaction, since they have comparative advantage in enjoying leisure. This is in stark contrast to welfare systems that force individuals with low labor productivity to work. If there are significant wage declines, avoiding mass misery will require other ways of distributing income than labor markets, whether via sufficiently well-distributed capital ownership or via benefits. Recipients could still engage in work for its own sake if they enjoy work amenities such as structure, purpose and meaning. If work gives rise to positive externalities such as social connections or political stability, or if individuals undervalue the benefits of work because of internalities, then a social planner would incentivize work. However, in the long run, the planner might be able to achieve a higher level of social welfare by adopting alternative ways of providing these benefits.
Author contact info: Anton Korinek Department of Economics University of Virginia Monroe Hall 246 248 McCormick Rd Charlottesville, VA 22904 E-Mail: anton@korinek.com Megan Juelfs Office of Research Services Darden School of Business University of Virginia Charlottesville, VA 22906 E-Mail: JuelfsM@darden.virginia.edu

Age and the labor market for Hispanics in the United States - Lahey, Joanna; Mosquera, Roberto M (National Bureau of Economic Research Working Paper Series, 2022)
We explore the labor market for Hispanic high school graduates in the United States by age using information from the US Census, American Community Survey, Current Population Survey, and three laboratory experiments. We find, in general, that the differences in outcomes for Hispanic and non-Hispanic high school graduates do not change across the lifecycle. Moving to a laboratory setting, we provided participants with randomized resumes for a clerical position that are on average equivalent except for name and age (as indicated by date of high school graduation). In all three experiments, hypothetical applicants with Hispanic and non-Hispanic names were generally treated the same across the lifecycle by a student population, a population of human resources managers, and a more general population from mTurk. These results stand in contrast to earlier results that find strong differences by age in how resumes with Black and White names are treated.
Author contact info: Joanna Lahey The Bush School Texas A&M University Mailstop 4220 College Station, TX 77843 Tel: 979/458-3463 E-Mail: jlahey47@gmail.com Roberto M. Mosquera Department of Economics Universidad de las Americas De los Granados E12-41 Quito Ecuador Tel: 593998935183 E-Mail: roberto.mosquera@udla.edu.ec

Machine Learning Can Predict Shooting Victimization Well Enough to Help Prevent It - Heller, Sara B; Jakubowski, Benjamin; Jelveh, Zubin; Kapustin, Max (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows that shootings are predictable enough to be preventable. Using arrest and victimization records for almost 644,000 people from the Chicago Police Department, we train a machine learning model to predict the risk of being shot in the next 18 months. Out-of-sample accuracy is strikingly high: of the 500 people with the highest predicted risk, almost 13 percent are shot within 18 months, a rate 128 times higher than the average Chicagoan. A central concern is that algorithms may “bake in” bias found in police data, overestimating risk for people likelier to interact with police conditional on their behavior. We show that Black male victims more often have enough police contact to generate predictions. But those predictions are not, on average, inflated; the demographic composition of predicted and actual shooting victims is almost identical. There are legal, ethical, and practical barriers to using these predictions to target law enforcement. But using them to target social services could have enormous preventive benefits: predictive accuracy among the top 500 people justifies spending up to $134,400 per person for an intervention that could cut the probability of being shot by half.
Author contact info: Sara B. Heller University of Michigan Department of Economics 611 Tappan Street, Lorch Hall Room 238 Ann Arbor, MI 48109 E-Mail: sbheller@umich.edu Benjamin Jakubowski Courant Institute of Mathematical Sciences 251 Mercer St New York, NY 10012 E-Mail: benjamin.u.jakubowski@gmail.com Zubin Jelveh 4130 Campus Dr College of Information Studies Dept. of Criminology and Criminal Justice College Park, MD 20742 United States Tel: 6465529775 E-Mail: zjelveh@umd.edu Max Kapustin Department of Economics Brooks School of Public Policy Cornell University Martha Van Rensselaer Hall Ithaca, NY 14853 E-Mail: kapustin@cornell.edu

Getting to the Core: Inflation Risks Within and Across Asset Classes - Fang, Xiang; Liu, Yang; Roussanov, Nikolai (National Bureau of Economic Research Working Paper Series, 2022)
Do “real” assets protect against inflation? Core inflation betas of stocks are negative while energy betas are positive; currencies, commodities, and real estate also mostly hedge against energy inflation but not core. These hedging properties are reflected in the prices of inflation risks: only core inflation carries a negative risk premium, and its magnitude is consistent both within and across asset classes, uniquely among macroeconomic risk factors. While high core inflation tends to be followed by low real output, consumption, and dividend payouts, it impacts asset prices through both cash-flow and discount rate channels. The relative contribution of core and energy changes over time, helping explain the time-varying correlation between stock and bond returns. A two-sector New Keynesian model qualitatively accounts for these facts and implies that the changing stock-bond correlation can be attributed to the shifting importance of supply and demand shocks in driving energy inflation over time.
Author contact info: Xiang Fang Faculty of Business and Economics University of Hong Kong 818 KK Leung Building Pokfulam Hong Kong, China Tel: 85265836019 E-Mail: xiangf@hku.hk Yang Liu Faculty of Business and Economics University of Hong Kong Hong Kong E-Mail: yangliu5@hku.hk Nikolai Roussanov University of Pennsylvania 2400 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104-6367 Tel: 215/746-0004 Fax: 215/898-6200 E-Mail: nroussan@wharton.upenn.edu

Was Pandemic Fiscal Relief Effective Fiscal Stimulus? Evidence from Aid to State and Local Governments - Clemens, Jeffrey; Hoxie, Philip G; Veuger, Stan (National Bureau of Economic Research Working Paper Series, 2022)
We use an instrumental-variables estimator reliant on variation in congressional representation to analyze the effects of federal aid to state and local governments across all four major pieces of COVID-19 response legislation. Through September 2021, we estimate that the federal government allocated $855,000 for each state or local government job-year preserved. Our baseline confidence interval allows us to rule out estimates of less than $433,000. Our estimates of effects on aggregate income and output are centered on zero and imply modest if any spillover effects onto the broader economy. We discuss aspects of the pandemic context, which include the surprising resilience of state and local tax revenues as well as of broader macroeconomic conditions, that may underlie the small employment and stimulative impacts we estimate in comparison with previous research.
Author contact info: Jeffrey Clemens Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-5713 E-Mail: jeffclemens@ucsd.edu Philip G. Hoxie Department of Economics University of California San Diego 9500 Gilman Dr. #0508 La Jolla, CA 92093 E-Mail: phoxie@ucsd.edu Stan Veuger American Enterprise Institute 1789 Massachusetts Avenue Washington, DC 20036 E-Mail: stan.veuger@aei.org

Real-time Surveillance of Repression: Theory and Implementation - Andirin, Veli; Neggers, Yusuf; Shadmehr, Mehdi; Shapiro, Jesse M (National Bureau of Economic Research Working Paper Series, 2022)
We study a dynamic model of protest and mobilization, in which the international community may intervene to sanction certain actions by the regime. We find that sanctioning public acts of repression, such as beating or arrests of protesters, can encourage the regime to prevent protest through less public means, such as obstruction or harassment of organizers. We show how to circumvent this problem by inferring the regime’s efforts to prevent protest from the extent to which protest can be predicted in advance. We create a global, monthly index of protest prevention using a novel database of protest events that includes information on whether a protest was planned or anticipated in advance. We illustrate the value of the index by studying its evolution during the COVID-19 pandemic and other salient events. The international community can use the index to pressure regimes to permit protest.
Author contact info: Veli Andirin Department of Economics Yale University New Haven, CT 06511 USA E-Mail: velimurat.andirin@yale.edu Yusuf Neggers Gerald R. Ford School of Public Policy University of Michigan 735 S. State St. #4216 Ann Arbor, MI 48109 E-Mail: yneggers@umich.edu Mehdi Shadmehr Department of Public Policy University of North Carolina at Chapel Hill Abernethy Hall, 131 S Columbia St Chapel Hill, NC 27514 United States Tel: 3057475896 E-Mail: mshadmeh@gmail.com Jesse M. Shapiro Department of Economics Harvard University Littauer Center Cambridge, MA 02138 Tel: 617-444-9571 E-Mail: jesse_shapiro@fas.harvard.edu

Fighting Communism Supporting Collusion - Galiani, Sebastian; Paz y Miño, Jose Manuel; Torrens, Gustavo (National Bureau of Economic Research Working Paper Series, 2022)
We develop a simple model to explain why a powerful importer country like the United States may provide political support for international collusive agreements concerning certain imported commodities (e.g., coffee). We show that helping producer countries organize and enforce collusion might be an attractive instrument to advance important geopolitical goals; for example, to reduce the chances that the producer countries will align with a rival global power (e.g., the Soviet Union during the Cold War). Moreover, using this practice, the cost of collusion is shared with other importers (including allies). Thus, collusion might be a superior strategy to foreign aid (a priori a more direct and efficient instrument), which is riddled with free riding problems. The model sheds light on why the United States supported (or failed to support) international commodity agreements for coffee, sugar, and oil during and immediately after the Cold War period.
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 Jose Manuel Paz y Miño Department of Economics Universidad de Chile Diagonal Paraguay 257 Santiago de Chile Chile E-Mail: jpazm@fen.uchile.cl 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

The Fertility Consequences of Air Pollution in China - Gao, Xuwen; Song, Ran; Timmins, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
We incorporate pollution exposure into Becker’s “Quantity-Quality” (Q-Q) model of fertility and quantify how air pollution distorts individuals’ fertility behaviors in China. We document a robust pattern in which increased pollution over time negatively affects the fertility of ethnic Han people, who comprise approximately 92% of the Chinese population. These patterns are evident in both cross-sectional and panel data, when instrumenting for pollution using distant coal-fired plants upwind of cities or thermal inversions that trap pollution. Consistent with the stylized Q-Q model of fertility, we find that increased pollution drives up the parental expenditure per child, which increases the shadow price associated with the number of children and reduces fertility. Consistent with the model, we also find that the fertility choices of people who tend to have higher demand for child quality are significantly more sensitive to pollution changes. Pollution does not have a meaningful effect on the fertility of ethnic minorities, which can also be explained under the Q-Q framework.
Author contact info: Xuwen Gao School of Public Affairs Zhejiang University Xihu District Hangzhou City Zhejiang, 310058 P.R. China E-Mail: xwgao@zju.edu.cn Ran Song Yale-NUS College and Department of Economics National University of Singapore 16 #01-220 College Ave West Singapore, 138527 E-Mail: ran.song@yale-nus.edu.sg Christopher Timmins Real Estate and Urban Land Economics Wisconsin School of Business 4291 Grainger Hall 975 University Avenue Madison, WI 53706 Tel: 919-357-0473 E-Mail: ctimmins@wisc.edu

Public Pension Reforms and Retirement Decisions: Narrative Evidence and Aggregate Implications - Bi, Huixin; Zubairy, Sarah (National Bureau of Economic Research Working Paper Series, 2022)
We construct a database of public pension policy changes with motivation and implementation information for ten OECD countries. Structural pension reforms, motivated by long-run sustainability concerns, often come with prolonged phase-in periods. In response to pension retrenchments implemented immediately, people close to retirement stay in the work force longer. News about future pension retrenchments with implementation lags, however, is likely to lead this group to exit the labor market. This decline in the labor force participation rate is particularly strong for reforms with long lags, ones that introduce fundamental policy changes, and where citizens have lower trust in the government.
Author contact info: Huixin Bi Research Department Federal Reserve Bank of Kansas City 1 Memorial Drive Kansas City, MO E-Mail: Huixin.w.bi@gmail.com Sarah Zubairy Department of Economics Texas A&M University 4228 TAMU College Station, TX 77843 Tel: 979/845-7382 E-Mail: szubairy@tamu.edu

The Size and Census Coverage of the U.S. Homeless Population - Meyer, Bruce D; Wyse, Angela; Corinth, Kevin (National Bureau of Economic Research Working Paper Series, 2022)
Despite widespread concern about homelessness, fundamental questions about the size and characteristics of this hard to study population are unresolved, in large part because it is unclear whether existing data are sufficiently complete and reliable. We examine these questions as well as the coverage of new microdata sources that are designed to be nationally representative and will allow pathbreaking new analyses. We compare three restricted use data sources that have been largely unused to study homelessness to less detailed public data. In doing this triangulation of sources, we examine the completeness and accuracy of available data and improve our understanding of the size of the homeless population and its inclusion in the Census and household surveys. Specifically, we compare restricted data from the 2010 Census, American Community Survey (ACS), and Homeless Management Information System (HMIS) to HUD's public-use point-in-time (PIT) estimates and the Housing Inventory Count (HIC) at the national, city and county, and person level. We also develop a new approach to estimating the size of the sheltered homeless population using linked Census and HMIS shelter microdata. Our analyses suggest that on a given night there are about 600,000 people experiencing homelessness in the U.S., about one-third of whom are sleeping on the streets and two-thirds in shelters. More than 90 percent of those in shelters were counted in the Census, although many were classified as housed or in other group quarters, a result that stems largely from ambiguity in the definition of a homeless shelter. By establishing the broad coverage and reliability of the new data sources, this paper lays the foundation for pathbreaking future work on the characteristics, income, safety net participation, mortality, migration, geographic distribution, and housing status transitions of the U.S. homeless population.
Author contact info: Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu Angela Wyse University of Chicago 1307 E 60th Street Chicago, IL 60637 E-Mail: awyse@uchicago.edu Kevin Corinth American Enterprise Institute 1789 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: kcorinth@uchicago.edu

The Costs of Job Displacement over the Business Cycle and Its Sources: Evidence from Germany - Schmieder, Johannes F; von Wachter, Till M; Heining, Jörg (National Bureau of Economic Research Working Paper Series, 2022)
We document the sources behind the costs of job loss over the business cycle using administrative data from Germany. Losses in annual earnings after displacement are large, persistent, and highly cyclical, nearly doubling in size during downturns. A large part of the long-term earnings losses and their cyclicality is driven by declines in wages. Key to these long-lasting wage declines and their cyclicality are changes in employer characteristics, as displaced workers switch to lower-paying firms. Changes in characteristics of workers or displacing firms explain little of the cyclicality, though non-employment durations correlated with losses in employer effects play a role.
Author contact info: Johannes F. Schmieder Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/299-9841 Fax: 617/353-4449 E-Mail: johannes@bu.edu Till M. von Wachter Department of Economics University of California, Los Angeles 8283 Bunche Hall MC 147703 Los Angeles, CA 90095 Tel: 310-825-5665 Fax: 310-825-9528 E-Mail: tvwachter@econ.ucla.edu Jörg Heining Institute for Employment Research (IAB) E-Mail: Joerg.Heining@iab.de

Investing with the Government: A Field Experiment in China - Colonnelli, Emanuele; Li, Bo; Liu, Ernest (National Bureau of Economic Research Working Paper Series, 2022)
We study the demand for government participation in China’s venture capital and private equity market. We conduct a large-scale, non-deceptive field experiment in collaboration with the leading industry service provider, through which we survey both capital investors and the firms managing the invested capital by deploying it to high-growth entrepreneurs. Each respondent evaluates synthetic profiles of potential investment partners, whose characteristics we randomize, under the incentive that they will be introduced to real partners matching their preferences. Our main result is that the average firm dislikes investors with government ties. We show that such dislike is not present with government-owned firms, and this dislike is highest with best-performing firms. Additional results and surveys suggest political interference in decision-making is the leading mechanism why government capital is unattractive to private firms. We feed administrative microdata and our experimental surveys into a simple model of two-sided search to discuss the equilibrium effects of government participation. Overall, our findings point to the limits of a model of “state capitalism” that strongly relies on the complementarity between private firms and government capital to drive high-growth entrepreneurship and innovation.
Author contact info: Emanuele Colonnelli Booth School of Business University of Chicago 5807 S Woodlawn Ave Chicago, IL 60637 E-Mail: emanuele.colonnelli@chicagobooth.edu Bo Li Tsinghua University 43 Chengfu Rd Beijing, China 100083 E-Mail: lib@pbcsf.tsinghua.edu.cn Ernest Liu Department of Economics Princeton University 20 Washington Road Princeton, NJ 08540 E-Mail: ernestliu@princeton.edu

The Big Tech Lending Model - Liu, Lei; Lu, Guangli; Xiong, Wei (National Bureau of Economic Research Working Paper Series, 2022)
By comparing uncollateralized business loans made by a big tech lending program with conventional bank loans, we find that big tech loans tend to be smaller and have higher interest rates and that borrowers of big tech loans tend to repay far before maturity and borrow more frequently. These patterns remain for borrowers with access to bank credit. Our findings highlight the big tech lender’s roles in serving borrowers’ short-term liquidity rather than their long-term financing needs. Through this model, big tech lending facilitates credit to borrowers underserved by banks without experiencing more-severe adverse selection or incurring greater risks than banks (even during the COVID-19 crisis).
Author contact info: Lei Liu Chinese Academy of Social Sciences Institute of Economics Beijing China E-Mail: liu_lei@cass.org.cn Guangli Lu Zhiren Building 620-B Chinese University of Hong Kong - Shenzhen Long gang district Shen Zhen China Tel: (+86)18820958236 E-Mail: luguangli@cuhk.edu.cn 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

Is Our Fiscal System Discouraging Marriage? A New Look at the Marriage Tax - Ilin, Elias; Kotlikoff, Laurence J; Pitts, Melinda (National Bureau of Economic Research Working Paper Series, 2022)
We provide a new measure of the marriage tax – the percentage change in remaining lifetime (future) spending from marrying. (Equivalently, the increase in future net taxes divided by initial future spending.) We calculate this tax for young respondents to the 2016 Survey of Consumer Finance, impute the tax facing single young respondents to the 2018 American Community Survey (ACS), and study whether the tax alters the ACS respondents’ decisions to marry. We control for endogenous spousal selection by assuming clone marriage – marriage to oneself. Our clone-marriage tax is comprehensive, intertemporal, and actuarial. It includes all key federal and state tax and benefit programs, weighing the present value of extra net taxes along each marital survivor path by the path’s probability. The weighted average marriage tax – 2.69 percent – is very large, corresponding to a year or two of lost earnings for most singles. The range of clone-marriage tax rates – -74.4 percent to 45.8 percent – is equally remarkable. The average marriage tax rate is twice as high for the poor than for the rich and twice as high in some states than in others. Marriage taxation has a small overall impact on marrying, but a substantial impact for subgroups. Absent the tax, 13.7 percent more low-income, single females with children would marry annually and 7.5 percent more would be married by age 35. Our results are robust to assuming ACS singles marry higher- or lower-earning variants of themself and to adjusting for partial benefit takeup. Clearly, making each fiscal policies marriage neutral or using the federal income tax to annually adjust a couple’s total net tax burden to ensure it’s twice that of singles represent two ways to eliminate marriage taxation. An alternative, partial reform lies in adopting universal health insurance whose receipt is not income based. As we show, Medicaid and the ACA embed substantial marriage taxes.
Author contact info: Elias Ilin Federal Reserve Bank of Atlanta 1000 Peachtree St NE Atlanta, GA 30309 E-Mail: Elias.Ilin@atl.frb.org Laurence J. Kotlikoff Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4002 Fax: 617/353-4001 E-Mail: kotlikoff@gmail.com Melinda Pitts Federal Reserve Bank of Altanta 1000 Peachtree Street NE Atlanta, GA 30309-4470 E-Mail: melinda.pitts@atl.frb.org

Heterogeneous Returns to Active Labour Market Programs for Indigenous Populations - Feir, Donn. L; Foley, Kelly; Jones, Maggie E.C. (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the impact of active labour market programs for institutionally distinct Indigenous populations in Canada using administrative data on the universe of participants in the Aboriginal Skills and Employment Training Strategy (ASETS). Within Indigenous population groups, we compare labour market outcomes among individuals who participated in high- relative to low-intensity programs, where high-intensity programs were longer in duration. For Métis and non-Status First Nations groups, we find a large impact of high-intensity participation on earnings two years post-ASETS. The post-program earnings of Status First Nations individuals who participated in high-intensity programs were not statistically different from those in low-intensity programs. We argue that these differences are due to the unique institutional environments affecting different Indigenous populations.
Author contact info: Donn L. Feir Department of Economics University of Victoria PO Box 1700 STN CSC Victoria, BC V8W 2Y2 E-Mail: dfeir@uvic.ca Kelly Foley 808 Arts, 9 Campus Drive Economics University of Saskatchewan Saskatoon, Saskatchewan S7N 5A5 Canada Canada E-Mail: kelly.foley@usask.ca Maggie E.C. Jones Economics Department Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 Tel: 404-727-6364 E-Mail: maggie.ec.jones@gmail.com

Moral Universalism: Global Evidence - Cappelen, Alexander W; Enke, Benjamin; Tungodden, Bertil (National Bureau of Economic Research Working Paper Series, 2022)
This paper presents novel stylized facts about the global variation in universalism, leveraging nationally representative surveys across 60 countries (N=64,000). We find large variation in universalism within and across countries, which almost entirely reflects heterogeneity in people’s moral views regarding how to treat different types of relationships. Universalism is strongly predictive of political views, civic engagement, and the radius of trust, and varies with the economic, political and religious organization of societies. We provide tentative evidence that experience with democracy makes people more universalist. Overall, our results suggests that moral universalism shapes and is shaped by politico-economic outcomes across the globe.
Author contact info: Alexander W. Cappelen The Norwegian School of Economics Helleveien 30 5045 Bergen, Norway E-Mail: alexander.cappelen@nhh.no Benjamin Enke Department of Economics Harvard University Littauer M008 Cambridge, MA 02138 Tel: 617/496-5895 E-Mail: enke@fas.harvard.edu Bertil Tungodden Norwegian School of Economics Bergen, Norway E-Mail: Bertil.Tungodden@nhh.no

Estimating the Effect of Easements on Agricultural Production - Karwowski, Nicole (National Bureau of Economic Research Working Paper Series, 2022)
US crops face higher losses as growing season temperatures rise and destructive disasters become commonplace. The Natural Resources Conservation Service (NRCS) easement programs offer an adaptation strategy to improve agricultural resilience. Easements impact agricultural production directly by reducing planting on marginal land and indirectly by improving yields on surrounding cropland. I use national USDA data from the past three decades to build a county-level panel. I employ a regression model with two-way fixed effects to quantify how easement land share impacts yields, risk, as well as acres planted, failed, and prevented planted. A 100% increase in land share of wetland easements increases yields by 0.34%, 0.77% and 0.46% for corn, soybeans, and wheat. Easements improve yields by mitigating the effect of excess precipitation and extreme degree days. Wetland easements reduce soybean losses from excess moisture, heat, and disease by $3.59, $6.07 and $11.23 for each dollar of liability. I also find evidence of a spillage effect in which producers reduce soybean and wheat acreage but increase corn production. This work quantifies the ecosystem benefits of easement habitats and uncovers program externalities including yield spillovers and a spillage effect. My results have policy implications for future NRCS funding and targeting decisions.
Author contact info: Nicole Karwowski E-Mail: nkarwowski@wisc.edu

NIH Grant Expansion, Ancestral Diversity and Scientific Discovery in Genomics Research - Fu, Wei; Chou, Shin-Yi; Wang, Li-San (National Bureau of Economic Research Working Paper Series, 2022)
In the approaching era of genomic medicine, the underrepresentation of minority populations in human genetics and genomics research has raised growing concerns regarding the distributive justice in the translation of biomedical innovations into human health across populations. Quantitative assessment of public funding policy in addressing the missing diversity is imperative yet lacking. In this paper, we fill this gap by empirically answering two central questions in the context of Genome-Wide Association Studies (GWAS): whether improved funding opportunity facilitates minority health research, and how significant is the scientific value of funding science on underrepresented populations. Our identification draws on an exogenous NIH grant expansion under the American Reinvestment and Recovery Act of 2009, and exploits variations in the share of people with medical conditions among minorities relative to whites. Our main findings are threefold. First, the ARRA-NIH grant expansion contributes to an increase in the inclusion of minority ancestries in GWAS. It also facilitates the engagement of minority scientists in academic activities and promotes their role in scientific collaborations. The grant expansion fosters the discoveries of disease-associated genetic variants within minority populations. This quantitative evidence speaks to the role that public funding policy can play in advancing science.
Author contact info: Wei Fu E 485 Gray Street Department of Health Management and Systems Sciences University of Louisville Louisville, KY 40202 US E-Mail: wei.fu@louisville.edu Shin-Yi Chou Department of Economics College of Business and Economics Lehigh University 621 Taylor Street Bethlehem, PA 18015-3117 Tel: 610/758-3444 Fax: NA E-Mail: syc2@lehigh.edu Li-San Wang Penn Neurodegeneration Genomics Center Department of Pathology and Laboratory Medicine Perelman School of Medicine, University of Pennsylvania 3700 Hamilton Walk Philadelphia, PA 19104 E-Mail: lswang@pennmedicine.upenn.edu

Inefficient Automation - Beraja, Martin; Zorzi, Nathan (National Bureau of Economic Research Working Paper Series, 2022)
How should the government respond to automation? We study this question in a heterogeneous agent model that takes worker displacement seriously. We recognize that displaced workers face two frictions in practice: reallocation is slow and borrowing is limited. We first show that these frictions result in inefficient automation. Firms fail to internalize that displaced workers have a limited ability to smooth consumption while they reallocate. We then analyze a second best problem where the government can tax automation but lacks redistributive tools to fully overcome borrowing frictions. The equilibrium is (constrained) inefficient. The government finds it optimal to slow down automation on efficiency grounds, even when it has no preference for redistribution. Using a quantitative version of our model, we find that the optimal speed of automation is considerably lower than at the laissez-faire. The optimal policy improves aggregate efficiency and achieves welfare gains of 4%. Slowing down automation achieves important gains even when the government implements generous social insurance policies.
Author contact info: Martin Beraja Department of Economics, E52-504 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-6022 E-Mail: martinberaja@gmail.com Nathan Zorzi 307 Rockefeller Center Dartmouth College Hanover, NH 03755 United States E-Mail: Nathan.G.Zorzi@dartmouth.edu

Climate Change and Downstream Water Quality in Agricultural Production: The Case of Nutrient Runoff to the Gulf of Mexico - Elbakidze, Levan; Xu, Yuelu; Gassman, Philip W; Arnold, Jeffrey G; Yen, Haw (National Bureau of Economic Research Working Paper Series, 2022)
Nitrogen (N) fertilizer use in agricultural production is a significant determinant of surface water quality. As climate changes, agricultural producers are likely to adapt at extensive and intensive margins in terms of land and per acre input use, including fertilizers. These changes can affect downstream water quality. We investigate the effect of climate-driven productivity changes on water quality in the Gulf of Mexico using an integrated hydro-economic agricultural land use (IHEAL) model. Our results indicate that land and N use adaptation in agricultural production to climate change increases N delivery to the Gulf of Mexico by 0.4%-1.58% relative to the baseline scenario with no climate change.
Author contact info: Levan Elbakidze 4202 Agricultural Sciences Davis College of Agriculture, Natural Resources and Design West Virginia University Morgantown, WV 26506 USA E-Mail: levan.elbakidze@mail.wvu.edu Yuelu Xu 3214 Agricultural Science Building West Virginia University Morgantown, WV 26506 USA E-Mail: yuelu.xu@mail.wvu.edu Philip W. Gassman Center for Agricultural and Rural Development Iowa State University Ames, Iowa 50011 USA E-Mail: pwgassma@iastate.edu Jeffrey G. Arnold Grassland Soil and Water Research Laboratory Temple, Texa 76502 USA E-Mail: jeff.arnold@usda.gov Haw Yen School of Forestry & Wildlife Science Auburn, Alab 36849 USA E-Mail: haw.yen@gmail.com

Unemployment Insurance, Starting Salaries, and Jobs - Dahl, Gordon; Knepper, Matthew M (National Bureau of Economic Research Working Paper Series, 2022)
We study the labor market effects of permanent 23-50% reductions in unemployment insurance benefits available in seven states. Leveraging linked firm-establishment data, we find that establishments based in reform states experience 1.5-2.4% faster employment growth relative to the same firm's establishments in other states. Using a similar multi-state firm design, starting salaries are 1.8-7.2% lower in reform states and posted salaries for the same job fall by 1.4-5.5%. These labor supply shocks yield an average labor demand elasticity of -1.0. Our results reveal a substantial decline in match quality and worker bargaining power as UI benefits become less generous.
Author contact info: Gordon B. Dahl Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093-0508 Tel: 858-822-0644 E-Mail: gdahl@ucsd.edu Matthew M. Knepper Terry College of Business University of Georgia Athens, GA 30602 E-Mail: mknepper@uga.edu

Tax Knowledge and Tax Manipulation: A Unifying Model - Craig, Ashley C; Slemrod, Joel (National Bureau of Economic Research Working Paper Series, 2022)
We provide a unified analysis of taxation and taxpayer education when individuals have an incomplete understanding of a complex tax system. The analysis is independent of whether income is earned legitimately, or by avoiding or evading taxes. In this sense, learning about tax minimization strategies (tax manipulation) is similar to learning about the tax code. The government in our model balances a trade-off: A better understanding of the tax system potentially allows taxpayers to optimize more effectively, but also affects government revenue. Optimal taxpayer education and the optimal amount of redistribution can both be characterized ex post by aggregate sufficient statistics that do not require information about how biases or behavioral responses vary across the decision margins.
Author contact info: Ashley C. Craig Research School of Economics Room 2094 LF Crisp Building 26 Australian National University Canberra, ACT 2617 Australia Tel: 8576001569 E-Mail: ashley.craig@anu.edu.au 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

Strategic Investment under Uncertainty with First- and Second-mover Advantages - Dai, Min; Jiang, Zhaoli; Wang, Neng (National Bureau of Economic Research Working Paper Series, 2022)
We analyze firm entry in a duopoly real-option game. The interaction between first- and second-mover advantages gives rise to a unique Markov subgame-perfect symmetric equilibrium, featuring state-contingent pure and mixed strategies in multiple endogenously-determined regions. In addition to the standard option-value-of-waiting region, a second waiting region arises because of the second-mover advantage. For sufficiently high market demand, waiting preserves the second-mover advantage but forgoes profits. Two disconnected mixed-strategy regions where firms enter probabilistically surface. In one such region, Leader earns monopoly rents while Follower optimally waits. Finally, when the first-mover advantage dominates the second-mover advantage, firms enter using pure strategies.
Author contact info: Min Dai The Hong Kong Polytechnic University Hung Hom, Kowloon Hong Kong E-Mail: mindai@polyu.edu.hk Zhaoli Jiang The Hong Kong Polytechnic University Hung Hom, Kowloon Hong Kong E-Mail: zhaoli.jiang@polyu.edu.hk Neng Wang Columbia Business School 3022 Broadway, Uris Hall 812 New York, NY 10027 Tel: 212/854-3869 Fax: 212/662-8474 E-Mail: nw2128@columbia.edu

Four Facts about Human Capital - Deming, David J (National Bureau of Economic Research Working Paper Series, 2022)
This paper synthesizes what economists have learned about human capital since Becker (1962) into four stylized facts. First, human capital explains at least one-third of the variation in labor earnings within countries and at least half of the variation across countries. Second, human capital investments have high economic returns throughout childhood and young adulthood. Third, we know how to build foundational skills such as literacy and numeracy, and resources are often the main constraint. Fourth, higher-order skills such as problem-solving and teamwork are increasingly valuable, and the technology for producing these skills is not well-understood. We know that investment in education works and that skills matter for earnings, but we do not always know why.
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

Take-up of Social Benefits - Ko, Wonsik; Moffitt, Robert A (National Bureau of Economic Research Working Paper Series, 2022)
Take-up of a social benefit is usually defined as receiving a benefit for which an individual or household is eligible. The take-up rate is the fraction of those eligible for a program who participate and receive a benefit or service. We survey estimates of take-up of social benefits around the world, discuss alternative theories of reasons for incomplete take-up, and survey the empirical evidence on the importance of different factors. We find a wide range of take-up rates around the world which follow some general patterns but are not easily explained. Theories of incomplete take-up include those involving low monetary or utility gains, stigma of receipt, monetary and nonmonetary costs of program participation, imperfect information, administrative barriers, and mismeasurement. The types of individuals who do and do not take up a program is argued to be determined by the joint distribution of gains and losses across those types, which ones face the largest administrative burden of participation and largest information deficits, and face more program operator error. There is a large body of evidence showing the importance of benefit gain and earnings losses from take-up but a smaller body of evidence on other factors, which shows that administrative barriers and costs, lack of information, and stigma all appear to be important for different programs. While there are no easy solutions to the problem of incomplete take-up, policies to at least lessen the problem are argued to be available, although generally not without increased government expenditure.
Author contact info: Wonsik Ko Department of Economics Johns Hopkins University 3400 N. Charles St. Baltimore, MD 21218 USA E-Mail: wko5@jhu.edu Robert A. Moffitt Department of Economics Johns Hopkins University 3400 North Charles Street Baltimore, MD 21218 Tel: 410/516-7611 Fax: 410/516-7600 E-Mail: moffitt@jhu.edu

The Returns to Face-to-Face Interactions: Knowledge Spillovers in Silicon Valley - Atkin, David; Chen, M. Keith; Popov, Anton (National Bureau of Economic Research Working Paper Series, 2022)
The returns to face-to-face interactions are of central importance to understanding the determinants of agglomeration. However, the existing literature studying patterns of geographic proximity in patent citations or industrial co-location has struggled to disentangle the benefits of face-to-face interactions from other spatial spillovers. In this paper, we use highly granular smartphone geolocation data to measure face-to-face interactions (or meetings) between workers at different establishments in Silicon Valley. To study the degree to which knowledge flows result from such interactions, we explore the relationship between these meetings and the citations among the firms these workers belong to. As firms may organize meetings with those they wish to learn from, we isolate causal impacts of face-to-face meetings by instrumenting with the meetings between workers in adjacent firms that belong to unconnected industries. Our IV approach estimates substantial returns to face-to-face meetings with overidentification tests suggesting we are capturing the returns to serendipity that play a central role in the urban theories of Jane Jacobs.
Author contact info: David Atkin Department of Economics, E52-550 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 203/936-9367 E-Mail: atkin@mit.edu M. Keith Chen UCLA/Anderson School 110 Westwood Plaza Cornell Hall, Suite C513 Los Angeles, CA 90095 E-Mail: keith.chen@anderson.ucla.edu Anton Popov E-Mail: popov@mit.edu

Estimating Discrete Games with Many Firms and Many Decisions: An Application to Merger and Product Variety - Fan, Ying; Yang, Chenyu (National Bureau of Economic Research Working Paper Series, 2022)
This paper presents a new method for estimating discrete games based on bounds of conditional choice probabilities. The method does not require solving the game and is scalable to models with many firms and many discrete decisions. We apply the method to study merger effects on firm entry and product variety in the retail craft beer market in California. We simulate an acquisition of multiple craft breweries by a large brewery and find that the acquisition would induce firm entry and product entry by non-merging firms. However, these changes are insufficient to offset the negative welfare effects resulting from the higher prices and decreased product offerings by the merging firms.
Author contact info: Ying Fan Department of Economics University of Michigan 611 Tappan Street Ann Arbor, MI 48109 Tel: 734/763-3096 E-Mail: yingfan@umich.edu Chenyu Yang 3115E Tydings Hall, 7343 Preinkert Dr., University of Maryland College Park, MD 20742 E-Mail: chny.yang@gmail.com

Intangible Marketing Capital - Bronnenberg, Bart; Dubé, Jean-Pierre H; Syverson, Chad (National Bureau of Economic Research Working Paper Series, 2022)
We present several empirical facts about trends in marketing investment in the US. We also present estimates of the private value of brands to firms and aggregate intangible brand capital stocks created by these investments. These investments include the creation and maintenance of a brand name and all its corresponding brand elements (e.g., awareness, reputation, image, etc.), along with the investments in the labor force used to manage and oversee the branding. We then discuss the private benefits to firms from their advertising and the established academic wisdom for the striking magnitude of marketing outlays. Finally, we explore the welfare implications of investments in brand capital.
Author contact info: Bart Bronnenberg Tilburg University and CentER Warandelaan 2, Koopmans K-1003 5037 AB Tilburg The Netherlands Tel: +31 13 466 8939 E-Mail: bart.bronnenberg@uvt.nl Jean-Pierre H. Dubé University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-5377 Fax: 773/702-0458 E-Mail: jdube@chicagobooth.edu 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

Bottlenecks for Evidence Adoption - DellaVigna, Stefano; Kim, Woojin; Linos, Elizabeth (National Bureau of Economic Research Working Paper Series, 2022)
Governments increasingly use RCTs to test innovations before scale up. Yet, we know little about whether and how they incorporate the results of the experiments into policy-making. We follow up with 67 U.S. city departments which collectively ran 73 RCTs in collaboration with a national Nudge Unit. Compared to most contexts, the barriers to adoption are low. Yet, city departments adopt a nudge treatment in follow-on communication in 27% of cases. As potential determinants of adoption we consider (i) the strength of the evidence, as determined by the RCT itself, (ii) features of the organization, such as “organizational capacity” of the city and whether the city staff member working on the RCT has been retained, and (iii) the experimental design, such as whether the RCT was implemented as part of pre-existing communication. We find (i) a limited impact of strength of the evidence and (ii) some impact of city features, especially the retention of the original staff member. By far, the largest predictor of adoption is (iii) whether the communication was pre-existing, as opposed to a new communication. We consider two main interpretations of this finding: organizational inertia, in that changes to pre-existing communications are more naturally folded into year-to-year city processes, and costs, since new communications may require additional funding. We find the same pattern for electronic communications, with zero marginal costs, supporting the organizational inertia explanation. The pattern of results differs from the predictions of both experts and practitioners, who over-estimate the extent of evidence-based adoption. Our results underline the importance of considering the barriers to evidence adoption, beginning at the stage of experimental design and continuing after the RCT completion.
Author contact info: Stefano DellaVigna University of California, Berkeley Department of Economics 549 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/643-0715 Fax: 510/642-6615 E-Mail: sdellavi@econ.berkeley.edu Woojin Kim University of California, Berkeley Department of Economics 530 Evans Hall #3880 Berkeley, CA 94720-3880 E-Mail: woojin@berkeley.edu Elizabeth Linos Harvard Kennedy School Harvard University 79 John F. Kennedy St Cambridge, MA 02138 E-Mail: elizabeth_linos@hks.harvard.edu

Growing Apart: Declining Within- and Across-Locality Insurance in Rural China - Attanasio, Orazio; Meghir, Costas; Mommaerts, Corina; Zheng, Yu (National Bureau of Economic Research Working Paper Series, 2022)
We consider risk sharing in rural China during its rapid economic transformation from the late 1980s through the late 2000s. We document an erosion of consumption insurance against both household-level idiosyncratic and village-level aggregate income shocks, and show that this decline is related to observable economic changes: the shift out of agriculture, the decline of publicly owned Township-and-Village Enterprises, and increased migrant work. Further evidence suggests that as these changes took place at the village level, higher levels of government failed to offset these effects through the tax-and-transfer system, leaving households more exposed to both idiosyncratic and village-aggregate risk.
Author contact info: Orazio Attanasio Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: orazio.attanasio@yale.edu Costas Meghir Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 203/432-3558 E-Mail: c.meghir@yale.edu Corina Mommaerts Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/263-3213 E-Mail: cmommaerts@wisc.edu Yu Zheng School of Economics and Finance Queen Mary University of London Mile End, London E1 4NS Great Britain E-Mail: yu.zheng@qmul.ac.uk

Policy Diffusion and Polarization across U.S. States - DellaVigna, Stefano; Kim, Woojin (National Bureau of Economic Research Working Paper Series, 2022)
Economists have studied the impact of numerous state laws, from welfare rules to voting ID requirements. Yet for all this policy evaluation, what do we know about policy diffusion—how these policies spread from state to state? We present a series of facts based on a data set of over 700 U.S. state policies spanning the past 7 decades. First, considering the introduction of new laws, state capacity seems to have a small role, in that larger and richer states are only slightly more likely to innovate policy. Second, the diffusion of policies from 1950 to 2000 is best predicted by proximity: a state is more likely to adopt a policy if nearby states have already done so. Third, instead since 2000, political alignment outperforms geographic proximity in predicting diffusion. Fourth, the diffusion of COVID state policies, as opposed to vaccination mandates since the 1970s, follows similar patterns of political polarization. Models of learning and correlated preferences could account for these patterns, including the decreased role of geography over time, if ideas spread more easily and preference correlation has become more political than geographical. We document, however, a role for party control: similarity in state party control predicts policy adoption in the last two decades, even controlling for voter political preferences. We conclude that party polarization has emerged as a key factor recently for policy adoption. Finally, building on these results, we broadly classify the patterns of policy diffusion in a set of difference-in-differences papers.
Author contact info: Stefano DellaVigna University of California, Berkeley Department of Economics 549 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/643-0715 Fax: 510/642-6615 E-Mail: sdellavi@econ.berkeley.edu Woojin Kim University of California, Berkeley Department of Economics 530 Evans Hall #3880 Berkeley, CA 94720-3880 E-Mail: woojin@berkeley.edu

Health Care Centralization: The Health Impacts of Obstetric Unit Closures in the US - Fischer, Stefanie J; Royer, Heather; White, Corey D (National Bureau of Economic Research Working Paper Series, 2022)
Over the last few decades, health care services in the United States have become more geographically centralized. We study how the loss of hospital-based obstetric units in over 400 counties affect maternal and infant health via a difference-in-differences design. We find that closures lead mothers to experience a significant change in birth procedures such as inductions and C-sections. In contrast to concerns voiced in the public discourse, the effects on a range of maternal and infant health outcomes are negligible or slightly beneficial. While women travel farther to receive care, closures induce women to receive higher quality care.
Author contact info: Stefanie J. Fischer Monash University Department of Economics 900 Dandenong Rd, Building H Caulfield East VIC 3145 Victoria Australia Tel: +61 0475 585 061 E-Mail: stefanie.fischer@monash.edu Heather Royer Department of Economics University of California, Santa Barbara 2127 North Hall Santa Barbara, CA 93106 Tel: 805/893-3797 Fax: 805/893-8830 E-Mail: royer@econ.ucsb.edu Corey D. White Department of Economics Monash University Melbourne, VIC Australia E-Mail: corey.white@monash.edu

An Equilibrium Model of the Impact of Increased Public Investment in Early Childhood Education - Borowsky, Jonathan; Brown, Jessica H; Davis, Elizabeth E; Gibbs, Chloe; Herbst, Chris M; Sojourner, Aaron; Tekin, Erdal; Wiswall, Matthew J (National Bureau of Economic Research Working Paper Series, 2022)
Recent policy proposals call for significant new investments in early care and education (ECE). These policies are designed to reduce the burden of child care costs, support parental employment, and foster child development by increasing access to high-quality care, especially for children in lower-income families. In this paper, we propose and calibrate a model of supply and demand for different ECE service and teacher types to estimate equilibrium family expenditures, participation in ECE, maternal labor supply, teacher wages, market ECE prices, and program costs under different policy regimes. Under a policy of broadly expanded subsidies that limits family payments for ECE to no more than 7% of income among those up to 250% of national median income, we estimate that mothers’ employment would increase by six percentage points while full-time employment would increase by nearly 10 percentage points, with substantially larger increases among lower-income families. The policy would also induce a shift from informal care and parent-only care to center- and home-based providers, which are higher-quality on average, with larger shifts for lower-income families. Despite the increased use of formal care, family expenditures on ECE services would decrease throughout most of the income distribution. For example, families in the bottom three income quintiles would experience expenditure reductions of 76%, 68%, and 55%, respectively. Finally, teacher wages and market prices would increase to attract workers with higher levels of education. We also estimate the impact of a narrower subsidy expansion for families with an income up to 85% of national median income.
Author contact info: Jonathan Borowsky Department of Applied Economics 231 Ruttan Hall 1994 Buford Avenue St. Paul, MN 55108 USA E-Mail: borow080@umn.edu Jessica H. Brown Darla Moore School of Business University of South Carolina Columbia, SC 29208 E-Mail: Jessica.Brown@moore.sc.edu Elizabeth E. Davis Department of Applied Economics 316B Ruttan Hall 1994 Buford Ave St Paul, MN 55108-6040 USA E-Mail: edavis@umn.edu Chloe Gibbs Department of Economics University of Notre Dame 3057 Jenkins Nanovic Hall Notre Dame, IN 46556 Tel: 574.631.4963 E-Mail: chloe.gibbs@nd.edu Chris M. Herbst School of Public Affairs Arizona State University Mail Code 3720 411 N. Central Ave., Ste. 450 Phoenix, AZ 85004-0687 E-Mail: chris.herbst@asu.edu Aaron Sojourner 300 S. Westnedge Avenue Kalamazoo, Mich 49007 United States of America Tel: 269-343-5541 E-Mail: sojourner@upjohn.org Erdal Tekin School of Public Affairs American University 4400 Massachusetts Avenue NW Washington, DC 20016-8070 Tel: (202) 885-6361 E-Mail: tekin@american.edu Matthew J. Wiswall Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 E-Mail: matt.wiswall@gmail.com

Vaccination Policy, Delayed Care, and Health Expenditures - Aslim, Erkmen G; Fu, Wei; Liu, Chia-Lun; Tekin, Erdal (National Bureau of Economic Research Working Paper Series, 2022)
The COVID-19 pandemic has profoundly affected the United States healthcare system, resulting in major disruptions in the delivery of essential care and causing crippling financial losses that threaten the viability of millions of medical practices. There is little empirical evidence on the types of policies or innovations that are effective in shaping healthcare seeking behavior during a public health crisis. This paper evaluates the effect of COVID-19 vaccination on the individual propensity to delay or skip medical care. Our research design exploits the arguably exogenous variation in age-specific vaccine eligibility rollout across states and over time as an instrument for individual vaccination status. We find that receiving a COVID-19 vaccine reduces the likelihood of delaying care for any medical condition by 37 percent. Furthermore, our analysis reveals that children are significantly less likely to delay or skip healthcare as a result of their parents becoming vaccine eligible, indicating the presence of a positive health spillover within households that extends beyond protection against infection. We also find evidence to indicate that vaccination affects healthcare seeking behavior by easing concerns about contracting or spreading COVID-19. Our results highlight the important role that vaccines play in, not only protecting against coronavirus, but also safeguarding against the worsening of health due to delayed or foregone medical care. The decline in delayed or foregone care caused by vaccination is particularly strong among minorities and those with a low socioeconomic background, revealing an important role that vaccination efforts can play in narrowing inequities in health and healthcare. In supplementary analysis, we use novel data on debit and credit card spending to demonstrate that increased vaccine uptake has a positive, albeit statistically insignificant, effect on consumer healthcare spending in the short run. Taken together, our findings imply that advancements in vaccine development coupled with a regulatory process that accelerates the availability of vaccines to public in a safe manner can have the additional benefit of tackling unmet healthcare needs during a public health crisis.
Author contact info: Erkmen G. Aslim Grand Valley State University 3120 L. William Seidman Center 50 Front Avenue SW. Grand Rapids, MI 49504 E-Mail: aslime@gvsu.edu Wei Fu E 485 Gray Street Department of Health Management and Systems Sciences University of Louisville Louisville, KY 40202 US E-Mail: wei.fu@louisville.edu Chia-Lun Liu E-Mail: chialun35@gmail.com Erdal Tekin School of Public Affairs American University 4400 Massachusetts Avenue NW Washington, DC 20016-8070 Tel: (202) 885-6361 E-Mail: tekin@american.edu

Targeting Impact versus Deprivation - Haushofer, Johannes; Niehaus, Paul; Paramo, Carlos; Miguel, Edward; Walker, Michael W (National Bureau of Economic Research Working Paper Series, 2022)
Targeting is a core element of anti-poverty program design, with benefits typically targeted to those most “deprived” in some sense (e.g., consumption, wealth). A large literature in economics examines how to best identify these households feasibly at scale, usually via proxy means tests (PMTs). We ask a different question, namely, whether targeting the most deprived has the greatest social welfare benefit: in particular, are the most deprived those with the largest treatment effects or do the “poorest of the poor” sometimes lack the circumstances and complementary inputs or skills to take full advantage of assistance? We explore this potential trade-off in the context of an NGO cash transfer program in Kenya, utilizing recent advances in machine learning (ML) methods (specifically, generalized random forests) to learn PMTs that target both a) deprivation and b) high conditional average treatment effects across several policy-relevant outcomes. We find that targeting solely on the basis of deprivation is generally not attractive in a social welfare sense, even when the social planner's preferences are highly redistributive. We show that a planner using simpler prediction models, based on OLS or less sophisticated ML approaches, could reach divergent conclusions. We discuss implications for the design of real-world anti-poverty programs at scale.
Author contact info: Johannes Haushofer Department of Economics National University of Singapore 1 Arts Link AS2 #06-02 Singapore 117570 Singapore E-Mail: johannes.haushofer@nus.edu.sg Paul Niehaus Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-3190 Fax: 858/534-7040 E-Mail: pniehaus@ucsd.edu Carlos Paramo Berkeley United States E-Mail: carlos.paramo@berkeley.edu Edward Miguel Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 Tel: 510/642-7162 Fax: 510/642-6615 E-Mail: emiguel@econ.berkeley.edu Michael W. Walker University of California, Berkeley Center for Effective Global Action 251 Giannini Hall Berkeley, CA 94720 E-Mail: mwwalker@berkeley.edu

Adapting to Flood Risk: Evidence from a Panel of Global Cities - Gandhi, Sahil; Kahn, Matthew E; Kochhar, Rajat; Lall, Somik; Tandel, Vaidehi (National Bureau of Economic Research Working Paper Series, 2022)
Urban flooding poses danger to people and places. People can adapt to this risk by moving to safer areas or by investing in private self-protection. Places can offset some of the risk through urban planning and infrastructure investment. By constructing a global city data set that covers the years 2012 to 2018, we test several flood risk adaptation hypotheses. Population growth is lower in cities that suffer from more floods. Richer cities suffer fewer deaths from flood events. Over time, the death toll from floods is declining. Cities protected by dams experience faster population growth. Using lights at night to measure short run urban economic dynamics, we document that floods cause less damage to richer cities and cities with protective dams. Cities with more past experience with floods suffer less from flooding.
Author contact info: Sahil Gandhi E-Mail: sahil.gandhi@manchester.ac.uk Matthew E. Kahn Department of Economics University of Southern California 3620 South Vermont Ave. Kaprielian (KAP) Hall, 300 Los Angeles, CA 90089-0253 E-Mail: kahnme@usc.edu Rajat Kochhar Energy and Environment Lab University of Chicago E-Mail: rajatkoc@uchicago.edu Somik Lall Lead Economist and Head of Climate Team Office of the Chief Economist for Equitable Growth, Finance, and Institutions World Bank 1818 H ST NW Washington DC, 20433 E-Mail: Slall1@worldbank.org Vaidehi Tandel University of Manchester United Kingdom E-Mail: vaidehi.tandel@gmail.com

Measuring Human Capital - Abraham, Katharine G; Mallatt, Justine (National Bureau of Economic Research Working Paper Series, 2022)
There are many reasons to want measures of countries’ investments in human capital and especially their investments in formal education. We review the existing literature on the measurement of human capital. Broadly speaking, economists have proposed three approaches to the measurement of human capital—the indicator approach, the cost approach and the income approach. Studies employing the indicator approach have used single measures such as average years of schooling or created indexes of multiple measures as human capital proxies. The cost approach values human capital investments based on spending. The income approach values human capital investments by looking forward to the increment to expected future earnings they produce. The latter two approaches have the significant advantage of consistency with national income accounting practices and measures of other types of capital, but there are also challenges to their implementation. Measures based on the income approach typically yield far larger estimates of the value of human capital than measures based on the cost approach. We outline possible reasons for this discrepancy and show how changes in assumptions can reconcile estimates based on the two approaches.
Author contact info: Katharine G. Abraham Department of Economics and Joint Program in Survey Methodology University of Maryland 1218 LeFrak Hall College Park, MD 20742 Tel: 301/405-1004 E-Mail: kabraham@umd.edu Justine Mallatt Bureau of Economic Analysis 4600 Silver Hill Road Suitland, MD 20746 E-Mail: Justine.Mallatt@bea.gov

Historical Newspaper Data: A Researcher’s Guide and Toolkit - Beach, Brian; Hanlon, W. Walker (National Bureau of Economic Research Working Paper Series, 2022)
Digitized historical newspaper databases offer a valuable research tool. A rapidly expanding set of studies use these databases to address a wide range of topics. We review this literature and provide a toolkit for researchers interested in working with historical newspaper data. We provide a brief description of the evolution of historical newspapers, focusing on aspects that are likely to have implications for the design of empirical studies. We then review the main databases in use. We also discuss some key challenges in using these data, most importantly the fact that even the most extensive datasets contain only a selected sample of the universe of historical newspaper articles. We offer tools for evaluating the comprehensiveness of available newspaper datasets, show how to assess potential identification concerns, and suggest some solutions.
Author contact info: Brian Beach Department of Economics Vanderbilt University VU Station B, Box #351819 2301 Vanderbilt Place Nashville, TN 37235 E-Mail: brian.beach@vanderbilt.edu Walker Hanlon Department of Economics Northwestern University 2211 Campus Drive, 3rd floor Evanston, IL 60208 E-Mail: walker.hanlon@gmail.com

Temporary Layoffs, Loss-of-Recall and Cyclical Unemployment Dynamics - Gertler, Mark; Huckfeldt, Christopher K; Trigari, Antonella (National Bureau of Economic Research Working Paper Series, 2022)
We revisit the role of temporary layoffs in the business cycle, motivated by their unprecedented surge during the pandemic recession. We first measure the contribution of temporary layoffs to unemployment dynamics over the period 1979 to the present. While many have emphasized a stabilizing effect due to recall hiring, we quantify an important destabilizing effect due to “loss-of-recall”, whereby workers in temporary-layoff unemployment lose their job permanently and do so at higher rates in recessions. We then develop a quantitative model that allows for endogenous flows of workers across employment and both temporary-layoff and jobless unemployment. The model captures well pre-pandemic unemployment dynamics and shows how loss-of-recall enhances the recessionary contribution of temporary layoffs. We also show that with some modification the model can capture the pandemic recession. We then use our structural model to show that the Paycheck Protection Program generated significant employment gains. It did so in part by significantly reducing loss-of-recall.
Author contact info: 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 Christopher K. Huckfeldt International Finance Division Federal Reserve Board 20th & Constitution Ave., NW Washington, DC 20551 E-Mail: chris.huckfeldt@gmail.com Antonella Trigari Bocconi University Via Roentgen 1 20136 Milano Italy Tel: +39 02 58363040 Fax: +39 02 58363302 E-Mail: antonella.trigari@unibocconi.it

Cognitive Endurance as Human Capital - Brown, Christina L; Kaur, Supreet; Kingdon, Geeta; Schofield, Heather (National Bureau of Economic Research Working Paper Series, 2022)
Schooling may build human capital not only by teaching academic skills, but by expanding the capacity for cognition itself. We focus specifically on cognitive endurance: the ability to sustain effortful mental activity over a continuous stretch of time. As motivation, we document that globally and in the US, the poor exhibit cognitive fatigue more quickly than the rich across field settings; they also attend schools that offer fewer opportunities to practice thinking for continuous stretches. Using a field experiment with 1,600 Indian primary school students, we randomly increase the amount of time students spend in sustained cognitive activity during the school day—using either math problems (mimicking good schooling) or non-academic games (providing a pure test of our mechanism). Each approach markedly improves cognitive endurance: students show 22% less decline in performance over time when engaged in intellectual activities—listening comprehension, academic problems, or IQ tests. They also exhibit increased attentiveness in the classroom and score higher on psychological measures of sustained attention. Moreover, each treatment improves students’ school performance by 0.09 standard deviations. This indicates that the experience of effortful thinking itself—even when devoid of any subject content—increases the ability to accumulate traditional human capital. Finally, we complement these results with quasi-experimental variation indicating that an additional year of schooling improves cognitive endurance, but only in higher-quality schools. Our findings suggest that schooling disparities may further disadvantage poor children by hampering the development of a core mental capacity.
Author contact info: Christina L. Brown Becker Friedman Institute 1126 E. 59th Street Chicago, IL 60637 Tel: 4088358494 E-Mail: christinalbrown@gmail.com Supreet Kaur Department of Economics University of California, Berkeley Evans Hall Berkeley, CA 94720 E-Mail: supreet@berkeley.edu Geeta Kingdon UCL Institute of Education 20 Bedford Way London, WC1H 0AL United Kingdom E-Mail: g.kingdon@ucl.ac.uk Heather Schofield University of Pennsylvania Perelman School of Medicine and Wharton Business S Blockley Hall 11th floor 423 Guardian Drive Philadelphia, PA 19104 E-Mail: heather.schofield@gmail.com

A Monetary Policy Asset Pricing Model - Caballero, Ricardo J; Simsek, Alp (National Bureau of Economic Research Working Paper Series, 2022)
We propose a model where the central bank’s (“the Fed’s”) interpretation of macroeconomic needs drives aggregate asset prices. The Fed affects macroeconomic activity with a lag by altering aggregate asset prices. Its objective is to align future aggregate demand and supply (in expectation). We reverse engineer the aggregate asset price that implements the Fed’s objective (“pystar”) and derive several implications: (i) the Fed’s beliefs about future macroeconomic needs (aggregate demand and supply) drive aggregate asset prices, while standard financial forces determine relative asset prices; (ii) more precise news about future aggregate demand makes output less volatile but increases asset price volatility; (iii) with aggregate demand inertia, the Fed overshoots asset prices in response to current output gaps; (iv) inflation is negatively correlated with aggregate asset prices, regardless of its source (aggregate demand or supply); and (v) belief disagreements between the central bank and the market generate a policy risk premium and potential “behind-the-curve” asset price dynamics.
Author contact info: Ricardo J. Caballero Department of Economics, E52-528 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-0489 Fax: 617/253-6915 E-Mail: caball@mit.edu Alp Simsek Yale School of Management Yale University Edward P. Evans Hall 165 Whitney Ave New Haven, CT 06511 E-Mail: alp.simsek@yale.edu

Financing Infrastructure in the Shadow of Expropriation - Acharya, Viral V; Parlatore, Cecilia; Sundaresan, Suresh (National Bureau of Economic Research Working Paper Series, 2022)
We examine the optimal financing of infrastructure when governments have limited financial commitment and can expropriate rents from private sector firms that manage infrastructure. While private firms need incentives to implement projects well, governments need incentives to limit expropriation. This double moral hazard limits the willingness of outside investors to fund infrastructure projects. Optimal financing involves government guarantees to investors against project failure to incentivize the government to commit not to expropriate which improves private sector incentives and project quality. The model captures several other features prevalent in infrastructure financing such as government co-investment, tax subsidies, development rights, and cross-guarantees.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Cecilia Parlatore Stern School of Business New York University 44 West 4th Street New York, NY 10012 Tel: 212/998-0171 E-Mail: cps272@stern.nyu.edu Suresh Sundaresan Columbia Business School 3022 Broadway New York, NY 10027 E-Mail: ms122@columbia.edu

Discrete-Choice Models and Representative Consumer Theory - Dubé, Jean-Pierre H; Joo,; Kim, Kyeongbae (National Bureau of Economic Research Working Paper Series, 2022)
We establish the Hurwicz-Uzawa integrability of the broad class of discrete-choice additive random-utility models of individual consumer behavior with perfect substitutes (linear indifference) preferences and divisible goods. We derive the corresponding indirect utility function and then establish a representative consumer formulation for this entire class of models. The representative consumer is always normative, facilitating aggregate welfare analysis. These findings should be of interest to the literatures in macro, trade, industrial organization, labor and ideal price index measurement that use representative consumer models, such as CES and its variants. Our results generalize such representative consumer formulations to the broad, empirically-relevant class of models of behavior that are routinely used in the discrete-choice analysis of micro data, including specifications that do not suffer from the IIA property and that allow for heterogeneous consumer preferences and incomes. These flexible discrete-choice formulations also overcome many of the known limitations of CES and its variants for equilibrium prices and markups, trade liberalization effects and welfare analysis. We also discuss quasi-linear integrability in the case where products are indivisible.
Author contact info: Jean-Pierre H. Dubé University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-5377 Fax: 773/702-0458 E-Mail: jdube@chicagobooth.edu Joonhwi Joo University of Texas at Dallas 800 W. Campbell Rd. JSOM 13-326 Richardson, TX 75080 E-Mail: joonhwi.joo@utdallas.edu Kyeongbae Kim 209 Neungdong-ro, Gwangjin-gu Seoul 05006 South Korea E-Mail: kimkb@sejong.ac.kr

The Distributional Impacts of a VMT-Gas Tax Swap - Metcalf, Gilbert E (National Bureau of Economic Research Working Paper Series, 2022)
More stringent fuel economy standards and increased market penetration of electric vehicles (EVs) present challenges to federal policy makers who historically have relied on motor vehicle fuel excise taxes to fund highway projects. This paper considers the distributional implications of a federal tax swap where a new vehicle miles travelled (VMT) tax is used to finance a reduction in the federal excise tax on gasoline. Whether the tax shift is progressive (relative to the pivot point) or not depends on the sign of the income elasticity of demand for fuel intensity. If it is negative (higher-income households demand more fuel efficient cars), then the tax shift is progressive around the pivot point. Conversely, if it is positive, then the tax shift is regressive around the pivot point. Where the pivot point occurs and how progressive a shift occurs is an empirical matter. Using data from the 2017 National Household Travel Survey (NHTS), I find that the income elasticity of fuel intensity is negative and that this revenue-neutral tax swap to be mildly progressive for all household incomes below $200,000. This is driven, in part, by the fact that higher income households are more likely to drive hybrid and electric vehicles and to own newer vehicles which, due to increasingly stringent fuel economy standards, tend to be more fuel efficient. How the progressivity of a tax swap changes as fuel economy standards are raised and EV market penetration increases depends on who purchases EVs and more efficient vehicles. Federal policy will likely play a role in influencing the future distribution of EV ownership. In addition, I find the tax swap benefits rural drivers and has no appreciable differential impacts on Black and Hispanic households.
Author contact info: Gilbert E. Metcalf MIT Building E19-411 400 Main Street Cambridge, MA 02142 E-Mail: gilbert.metcalf@tufts.edu

Risk Pooling and Precautionary Saving in Village Economies - Fafchamps, Marcel; Shrinivas, Aditya (National Bureau of Economic Research Working Paper Series, 2022)
We propose a new method to test for efficient risk pooling that allows for intertemporal smoothing, non-homothetic consumption, and heterogeneous risk and time preferences. The method is composed of three steps. The first one allows for precautionary savings by the aggregate risk pooling group. The second utilizes the inverse Engel curve to estimate good-specific tests for efficient risk pooling. In the third step, we obtain consistent estimates of households' risk and time preferences using a full risk sharing model, and incorporate heterogeneous preferences in testing for risk pooling. We apply this method to panel data from Indian villages to generate a number of new insights. We find that food expenditures are better protected from aggregate shocks than non-food consumption, after accounting for non-homotheticity. Village-level consumption tracks aggregate village cash-in-hand, suggesting some form of coordinated precautionary savings. But there is considerable excess sensitivity to aggregate income, indicating a lack of full asset integration. We also find a large unexplained gap between the variation in measured consumption expenditures and cash-in-hand at the aggregate village level. Contrary to earlier findings, risk pooling in Indian villages no longer appears to take place more at the sub-caste level than at the village level.
Author contact info: Marcel Fafchamps Freeman Spogli Institute Stanford University 616 Jane Stanford Way Stanford, CA 94305 Tel: 650/497-4602 E-Mail: fafchamp@stanford.edu Aditya Shrinivas UC Santa Barbara Santa Barbara, CA 93106 USA E-Mail: adi9@ucsb.edu

Structural Change Within versus Across Firms: Evidence from the United States - Ding, Xiang; Fort, Teresa C; Redding, Stephen J; Schott, Peter K (National Bureau of Economic Research Working Paper Series, 2022)
We document the role of intangible capital in manufacturing firms' substantial contribution to non-manufacturing employment growth from 1977-2019. Exploiting data on firms' "auxiliary" establishments, we develop a novel measure of proprietary in-house knowledge and show that it is associated with increased growth and industry switching. We rationalize this reallocation in a model where firms combine physical and knowledge inputs as complements, and where producing the latter in-house confers a sector-neutral productivity advantage facilitating within-firm structural transformation. Consistent with the model, manufacturing firms with auxiliary employment pivot towards services in response to a plausibly exogenous decline in their physical input prices.
Author contact info: Xiang Ding 3700 O St NW Washington, DC 20057 E-Mail: xiang.ding@georgetown.edu Teresa C. Fort Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 Tel: 603/646-8963 E-Mail: teresa.fort@tuck.dartmouth.edu Stephen J. Redding Department of Economics & School of Public and International Affairs Princeton University Princeton, NJ 08544 Tel: 609/258-4016 Fax: 609/258-6419 E-Mail: reddings@princeton.edu Peter K. Schott Yale School of Management 165 Whitney Avenue New Haven, CT 06511 Tel: 203/436-4260 Fax: 203/432-6974 E-Mail: peter.schott@yale.edu

Accelerating Vaccine Innovation for Emerging Infectious Diseases via Parallel Discovery - Barberio, Joseph; Becraft, Jacob; Ben Chaouch, Zied; Bertsimas, Dimitris; Kitada, Tasuku; Li, Michael; Lo, Andrew W; Shi, Kevin; Xu, Qingyang (National Bureau of Economic Research Working Paper Series, 2022)
We analyze the financial performance of a hypothetical portfolio of 120 mRNA vaccine candidates in the preclinical stage targeting 11 emerging infectious diseases. We calibrate the simulation parameters with input from domain experts in mRNA technology and an extensive literature review. We find that the portfolio generates an average annualized return on investment of –6.0% per annum and a net present value of –$9.5 billion, despite the scientific advantages of mRNA technology and the financial benefits of diversification. Clinical trial costs account for 94% of the total investment, with manufacturing costs accounting for only 6%. Sensitivity analysis reveals that the most important factor determining financial performance is the price per dose, while the increased probability of success due to mRNA technology, adjusting the size of the portfolio, and the possibility of conducting human challenge trials do not significantly improve financial performance. These results underscore that if the goal is to create a sustainable business model and robust global vaccine ecosystem, continued collaboration between government agencies and the private sector is likely to be necessary.
Author contact info: Joseph Barberio Strand Therapeutics Cambridge, MA 02142 E-Mail: joseph.barberio@strandtx.com Jacob Becraft Strand Therapeutics Cambridge, MA 02142 E-Mail: jacob.becraft@strandtx.com Zied Ben Chaouch MIT Laboratory for Financial Engineering 1 Broadway (E70-1385n) Cambridge, MA 02142 USA E-Mail: ziedbc@mit.edu Dimitris Bertsimas MIT Sloan School of Management 100 Main Street, E62-560 Cambridge, MA 02142 E-Mail: dbertsim@mit.edu Tasuku Kitada Strand Therapeutics Cambridge, MA 02142 USA E-Mail: tasuku.kitada@strandtx.com Michael Lingzhi Li MIT Operations Research Center 77 Massachusetts Avenue, E40-103 Cambridge, MA 02139 USA E-Mail: mlli@mit.edu Andrew W. Lo MIT Sloan School of Management 100 Main Street, E62-618 Cambridge, MA 02142 Tel: 617/253-0920 Fax: 781/891-9783 E-Mail: alo-admin@mit.edu Kevin Shi Strand Therapeutics Cambridge, MA 02142 E-Mail: kevin.shi@strandtx.com Qingyang Xu MIT Laboratory for Financial Engineering 100 Main Street Cambridge, MA 02142 E-Mail: qxu94@mit.edu

The Impact of Minority Representation at Mortgage Lenders - Frame, W. Scott; Huang, Ruidi; Mayer, Erik J; Sunderam, Adi (National Bureau of Economic Research Working Paper Series, 2022)
We study links between the labor market for loan officers and access to mortgage credit. Using novel data matching the (near) universe of mortgage applications to loan officers, we find that minorities are significantly underrepresented among loan officers. Minority borrowers are less likely to complete mortgage applications, have completed applications approved, and to ultimately take-up a loan. These disparities are significantly reduced when minority borrowers work with minority loan officers. Minority borrowers working with minority loan officers also have lower default rates. Our results suggest that minority underrepresentation among loan officers has adverse effects on minority borrowers’ access to credit.
Author contact info: W. Scott Frame Federal Reserve Bank of Dallas E-Mail: no email available Ruidi Huang Southern Methodist University 6212 Bishop Blvd Dallas, TX 75275 Tel: 2147681132 E-Mail: ruidih@smu.edu Erik J. Mayer Wisconsin School of Business 975 University Ave Madison, WI 53706 United States E-Mail: erik.mayer@wisc.edu Adi Sunderam Harvard Business School Baker Library 359 Soldiers Field Boston, MA 02163 Tel: 617/495-6644 E-Mail: asunderam@hbs.edu

Nutrient Pollution and U.S. Agriculture: Causal Effects, Integrated Assessment, and Implications of Climate Change - Metaxoglou, Konstantinos; Smith, Aaron (National Bureau of Economic Research Working Paper Series, 2022)
We study the relationship between water nutrient pollution and U.S. agriculture using data between the early 1970s and late 2010s. We estimate a positive causal effect of corn acreage on nitrogen concentration in the country’s water bodies using alternative empirical approaches. We find that a 10% increase in corn acreage causes an increase in nitrogen concentration in water by at least 1% and show that the magnitude of the acreage effect increases with precipitation but not with extreme temperature. Based on the average streamflow of the Mississippi River at the Gulf of Mexico during this period and damages of about $16 per kilogram of nitrogen, this 1% increase in average nitrogen concentration implies an annual external cost of $800 million. We also report the results of additional integrated-assessment type of exercises aimed to inform policy makers, and we use recent climate models to project the implications of climate change on the magnitude of the estimated effects. We estimate that climate change will not materially change the relationship between corn acreage and nitrogen concentration in waterways
Author contact info: Konstantinos Metaxoglou Department of Economics Carleton University D891 Loeb, 1125 Colonel By Drive Ottawa, ON, K1S 5B6 Canada E-Mail: konstantinos.metaxoglou@carleton.ca Aaron Smith Dept.of Agricultural and Resource Economics One Shields Ave. University of California, Davis Davis, CA 95616 E-Mail: adsmith@ucdavis.edu

A National Estimate of Irrigation Canal Lining and Piping Water Conservation - Hrozencik, R. Aaron; Potter, Nicholas A; Wallander, Steven (National Bureau of Economic Research Working Paper Series, 2022)
Global climate change is already impacting water resources and, in many areas, reducing the amount of water available for drinking, sanitation, and agriculture. Water conservation can be a means to mitigate the economic damages associated with water scarcity, including scarcity arising from climate change. In the agricultural sector, most water conservation efforts have focused on farm-level irrigation efficiency. However, since over one-third of water applied for agricultural irrigation in the U.S. comes from off-farm supplies, improvements in delivery and conveyance efficiency also have the potential to significantly reduce water losses. This study utilizes survey data from irrigation water delivery organizations in the Western U.S. to estimate the impact of lining and piping conveyance infrastructure on conveyance losses. The average irrigation delivery organization reports a conveyance loss of 15 percent of the total water brought into their system in 2019. Using a control function estimation, this study finds that at the margin an increase of one percentage point in the share of conveyance infrastructure piped leads to an expected 0.16 percentage point reduction in conveyance losses. A simulated water-conservation supply curve based on these estimates shows that about 2.3 percent of total water brought into these systems could be recaptured at a private capital cost below $10,000 per acre foot.
Author contact info: R. Aaron Hrozencik USDA-ERS 4244 Holmes St. Kansas City, MO 64110 E-Mail: aaron.hrozencik@usda.gov Nicholas A. Potter 433 Manzano St NE Apt B Albuquerque, New 87108 E-Mail: nicholas.potter@usda.gov Steven Wallander U.S. Department of Agriculture Economic Research Service 355 E Street SW Washington, DC 20024 USA E-Mail: steve.wallander@usda.gov

Cover Crops, Drought, Yield and Risk: an Analysis of U.S. Soybean Production - Dong, Fengxia (National Bureau of Economic Research Working Paper Series, 2022)
Besides a variety of production and environmental benefits, cover cropping has been advocated as a mean to increase resilience to drought. We explored factors influencing farmer’s adoption of cover crops and examined the effects of cover crops on soybean yield and its risk using USDA’s 2018 ARMS Phase II Soybean Production Practices and Costs Report and Phase III Soybean Costs and Returns Report. Incorporating drought occurrence in current year and previous 5 years into our analysis, we find that previous occurrence of drought did not affect farmers’ adoption of cover crops and the effects of cover crops on yield and its risk are mixed. Under a drought condition, cover crops reduced soybean yield and increased yield variation; but in the meantime, they reduced the risk of crop failure, or made yield less negatively skewed. The insignificant effect of previous drought on cover crop adoption and the mixture of positive and negative effects of cover crops on yield and its risk imply that farmers are divided in their acceptance of cover crops as a mean to build resilience to drought.
Author contact info: Fengxia Dong Economic Research Service 805 Pennsylvania Avenue Kansas City, MO 64105 USA E-Mail: fengxia.dong@usda.gov

Weather, Climate, and Technology Adoption: An Application to Drought-Tolerant Corn in the United States - McFadden, Jonathan R; Smith, David J; Wallander, Steven (National Bureau of Economic Research Working Paper Series, 2022)
Crop farmers have few short-run options for reducing downside production risk from changes in drought frequency and intensity due to ongoing climate change. However, one recently available option is drought-tolerant (DT) varieties. We determine how recent drought exposure, drought risk, and other climatic features have influenced adoption of DT corn—a water-intensive crop of particular economic importance due to its large share of U.S. agricultural value. Our empirical analysis is motivated by a state-contingent economic framework that accommodates farmers' beliefs about future drought based on objective drought risk and exposure. Using a representative sample of U.S. farmers' fields, we implement a novel econometric method, spatial first differences, that can reduce concerns of omitted variables bias. We find that long-run temperatures and drought risk—rather than short-run drought exposure in recent prior years—led to increased adoption of DT corn varieties in 2016. Farmers are more likely to plant DT corn on highly erodible land and less likely to irrigate such varieties, consistent with the fact that the western Corn Belt was of major marketing focus during the early years of commercialization.
Author contact info: Jonathan R. McFadden 1400 Independence Ave. SW Room 5011 Washington, DC 20250 E-Mail: jonathan.mcfadden@usda.gov David J. Smith US Environmental Protection Agency National Center for Environmental Economics 1200 Pennsylvania Ave. NW Washington, DC 20460 USA E-Mail: smith.david@epa.gov Steven Wallander U.S. Department of Agriculture Economic Research Service 355 E Street SW Washington, DC 20024 USA E-Mail: steve.wallander@usda.gov

(Co-)Working in Close Proximity: Knowledge Spillovers and Social Interactions - Roche, Maria P; Oettl, Alexander; Catalini, Christian (National Bureau of Economic Research Working Paper Series, 2022)
We examine the influence of physical proximity on between-startup knowledge spillovers at one of the largest technology co-working hubs in the United States. Relying on the random assignment of office space to the hub's 251 startups, we find that proximity positively influences knowledge spillovers as proxied by the likelihood of adopting an upstream web technology already used by a peer startup. This effect is largest for startups within close proximity of each other and quickly decays: startups more than 20 meters apart on the same floor are indistinguishable from startups on different floors. The main driver of the effect appears to be social interactions. While startups in close proximity are most likely to participate in social co-working space events together, knowledge spillovers are greatest between startups that socialize but are dissimilar. Ultimately, startups that are embedded in environments that have neither too much nor too little diversity perform better, but only if they socialize.
Author contact info: Maria P. Roche Morgan Hall Soldiers Field Boston, MA 02163 E-Mail: mroche@hbs.edu Alexander Oettl Scheller College of Business Georgia Institute of Technology 800 West Peachtree Street NW Atlanta, GA 30308 Tel: 404/385-4570 E-Mail: alexander.oettl@scheller.gatech.edu Christian Catalini MIT Sloan School of Management 100 Main Street, E62-480 Cambridge, MA 02142 Tel: 617/253-6727 E-Mail: catalini@mit.edu

Globalization, Fertility and Marital Behavior in a Lowest-Low Fertility Setting - Giuntella, Osea; Rotunno, Lorenzo; Stella, Luca (National Bureau of Economic Research Working Paper Series, 2022)
Using longitudinal data from the German Socio-Economic Panel, we analyze the effects of exposure to globalization on the fertility and marital behavior in Germany, until recently a lowest-low fertility setting. We find that exposure to greater import competition from Eastern Europe led to worse labor market outcomes and lower fertility rates. In contrast, workers in industries that benefited from increased exports had better employment prospects and higher fertility. These effects are driven by low-educated, married men, and full-time workers and reflect changes in the likelihood of having any child (extensive margin). While there is evidence of some fertility postponement, we find significant effects on completed fertility. There is instead little evidence of any significant impact on marital behavior.
Author contact info: Osea Giuntella Department of Economics University of Pittsburgh Posvar Hall Pittsburgh, PA 15260 E-Mail: osea.giuntella@gmail.com Lorenzo Rotunno International Monetary Fund 700 19th Street NW Washington, D.C. 20431 E-Mail: lrotunno@imf.org Luca Stella Freie Universität Berlin E-Mail: luca.stella@fu-berlin.de

How Undervalued is the Covid-19 Vaccine? Evidence from Discrete Choice Experiments and VSL Benchmarks - Carlin, Patrick; Dixon, Brian E; Simon, Kosali I; Sullivan, Ryan; Wing, Coady (National Bureau of Economic Research Working Paper Series, 2022)
Two discrete choice experiments conducted early in the Covid-19 vaccination campaign show that people dramatically undervalue the Covid-19 vaccine, relative to benchmarks implied by the value of a statistical life (VSL). Our first experiment found that median willingness to pay (WTP) for initial vaccination is around $50, only 2 percent of the WTP implied by standard VSL calculations. Our second experiment found the median person was willing to accept (WTA) about $200 to delay the second dose, only 32 percent of the WTA implied by standard VSL calculations. While standard economic models imply that vaccines are undervalued because of their large externalities, we interpret the finding that WTP estimates are well below the VSL benchmarks as evidence that internalities play a substantial role. This evidence that people undervalue even the private benefits of vaccination suggests that there may be a role for government beyond conventional efforts to correct externalities.
Author contact info: Patrick Carlin 101 Hulbert Hall PO Box 646210 Pullman, WA 99164 E-Mail: patrick.carlin@wsu.edu Brian Dixon Indiana University Richard M. Fairbanks School of Public Health 1101 W. 10th St. Indianapolis, IN 46202 E-Mail: bedixon@regenstrief.org Kosali I. Simon O’Neill School of Public and Environmental Affairs Indiana University 1315 East Tenth Street Bloomington, IN 47405-1701 Tel: (812) 856-3850 E-Mail: simonkos@indiana.edu Ryan Sullivan Naval Postgraduate School 699 Dyer Road Monterey, CA 93943 E-Mail: rssulliv@nps.edu Coady Wing Indiana University 1315 E 10th St Bloomington, IN 47405 E-Mail: cwing@indiana.edu

Escaping Secular Stagnation with Unconventional Monetary Policy - Petersen, Luba; Rholes, Ryan (National Bureau of Economic Research Working Paper Series, 2022)
We design a new experimental framework to study policy interventions to combat secular stagnations and liquidity traps in an overlapping-generations environment where participants form expectations and make real economic decisions. We observe that participants can learn to coordinate on high inflation full-employment equilibria. Permanent deleveraging shocks induce pessimistic, backward-looking expectations and considerable consumption heterogeneity as the economies experience persistent deflation. We explore the ability of unconventional monetary policy to lead economies out of deflationary traps. Permanently increasing the central bank's inflation target is insufficient to generate inflationary expectations due to low central bank credibility. Negative interest rates stimulate spending and generate the necessary inflation for the economies to escape the zero lower bound. Negative interest rates are more potent than raising the inflation target at shifting consumption to the present.
Author contact info: Luba Petersen Department of Economics Simon Fraser University 8888 University Drive Burnaby, BC V5A 1S6 E-Mail: lubap@sfu.ca Ryan Rholes E-Mail: ryan.rholes@economics.ox.ac.uk

Comparing Past and Present Inflation - Bolhuis, Marijn A; Cramer, Judd N. L; Summers, Lawrence H (National Bureau of Economic Research Working Paper Series, 2022)
There have been important methodological changes in the Consumer Price Index (CPI) over time. These distort comparisons of inflation from different periods, which have become more prevalent as inflation has risen to 40-year highs. To better contextualize the current run-up in inflation, this paper constructs new historical series for CPI headline and core inflation that are more consistent with current practices and expenditure shares for the post-war period. Using these series, we find that current inflation levels are much closer to past inflation peaks than the official series would suggest. In particular, the rate of core CPI disinflation caused by Volcker-era policies is significantly lower when measured using today’s treatment of housing: only 5 percentage points of decline instead of 11 percentage points in the official CPI statistics. To return to 2 percent core CPI inflation today will thus require nearly the same amount of disinflation as achieved under Chairman Volcker.
Author contact info: Marijn A. Bolhuis International Monetary Fund E-Mail: mbolhuis@imf.org Judd N. L. Cramer Harvard University E-Mail: judd.cramer@gmail.com Lawrence H. Summers Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 Tel: 617/495-9322 Fax: 617/495-0436 E-Mail: lhs@harvard.edu

Factors Influencing the Choice of Pension Distribution at Retirement - Clark, Robert L; Mitchell, Olivia S (National Bureau of Economic Research Working Paper Series, 2022)
One of the most important financial decisions that pension participants make concerns how they access their pension assets when they terminate employment with their plan sponsor. Their choices depend both on own preferences and the options offered by their retirement plan. This paper examines both past and future pension withdrawal choices for those with defined benefit and defined contribution pensions, separately. Our data are drawn from a set of pension distribution questions we fielded in the Understanding American Study. Results show significant differences in distribution choices based on the type of retirement plan, with individuals covered by defined benefit plans significantly more likely to select annuities compared to similar employees covered by defined contribution plans. We also find differences in how higher annual income affects annuity choices based on coverage by DB plans. Individuals with lower levels of financial literacy and lower annual income have less knowledge of basic pension characteristics.
Author contact info: Robert L. Clark Poole College of Management Box 7229 North Carolina State University Raleigh, NC 27695 Tel: 919/515-4568 Fax: 919/515-6943 E-Mail: robert_clark@ncsu.edu Olivia S. Mitchell University of Pennsylvania The Wharton School 3620 Locust Walk, St 3000 SH-DH Philadelphia, PA 19104-6302 Tel: 215-898-0424 E-Mail: mitchelo@wharton.upenn.edu

The Race Between Tax Enforcement and Tax Planning: Evidence From a Natural Experiment in Chile - Bustos, Sebastián; Pomeranz, Dina; Suárez Serrato, Juan Carlos; Vila-Belda, José; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
Profit shifting by multinational corporations is thought to reduce tax revenue around the world. While transfer pricing regulations are meant to curtail profit shifting, there have been rising concerns that a sophisticated tax advisory industry can limit their effectiveness. This paper provides a comprehensive analysis of how firms and tax advisors respond to the introduction of standard regulations aimed at limiting profit shifting. Using administrative tax and customs data from Chile in difference-in-differences event-study designs, we find that the reform was ineffective in reducing multinationals' transfers to lower-tax countries and did not significantly raise tax payments. At the same time, interviews with tax advisors reveal a drastic increase in tax advisory services. The qualitative interviews also allow us to identify and then quantitatively confirm a common tax planning strategy in response to the reform. These results illustrate that when enforcement can be circumvented by sophisticated tax planning, it can benefit tax consultants at the expense of tax authorities and taxpayers.
Author contact info: Sebastián Bustos Center for International Development Harvard University 79 JFK Street Cambridge, Mass 02138 E-Mail: sebastian.bustos@gmail.com Dina Pomeranz Department of Economics University of Zurich Schoenberggasse 1 8057 Zurich Switzerland E-Mail: dinadpomeranz@gmail.com Juan Carlos Suárez Serrato Knight Management Center Stanford University 655 Knight Way Stanford, CA 94305-7298 E-Mail: jc@jcsuarez.com José Vila-Belda Department of Economics University of Fribourg Bd de Pérolles 90 CH - 1700 Fribourg E-Mail: vilabeldaj@gmail.com Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

Who Benefits from Meritocracy? - Moreira, Diana; Pérez, Santiago (National Bureau of Economic Research Working Paper Series, 2022)
Does screening applicants using exams help or hurt the chances of lower-SES candidates? Because individuals from lower socioeconomic backgrounds fare, on average, worse than those from richer backgrounds in standardized tests, a common concern with this "meritocratic" approach is that it might have a negative impact on the opportunities of lower-SES individuals. However, an alternative view is that, even if such applicants underperformed on exams, other (potentially more discretionary and less impersonal) selection criteria might put them at an even worse disadvantage. We investigate this question using evidence from the 1883 Pendleton Act, a landmark reform in American history which introduced competitive exams to select certain federal employees. Using newly assembled data on the socioeconomic backgrounds of government employees and a difference-in-differences strategy, we find that, although the reform increased the representation of "educated outsiders" (individuals with high education but limited connections), it reduced the share of lower-SES individuals. This decline was driven by a higher representation of the middle class, with little change in the representation of upper-class applicants. The drop in the representation of lower-SES workers was stronger among applicants from states with more unequal access to schooling as well as in offices that relied more heavily on connections prior to the reform. These findings suggest that, although using exams could help select more qualified candidates, these improvements can come with the cost of increased elitism.
Author contact info: Diana Moreira Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530/754-1553 E-Mail: dsmoreira@ucdavis.edu Santiago Pérez Department of Economics University of California at Davis One Shields Avenue Davis, CA 95616 E-Mail: seperez@ucdavis.edu

Mothers as Insurance: Family Spillovers in WIC - Bitler, Marianne; Currie, Janet; Hoynes, Hilary W; Ruffini, Krista J; Schulkind, Lisa; Willage, Barton (National Bureau of Economic Research Working Paper Series, 2022)
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is a widely used program. Previous research shows that WIC improves birth outcomes, but evidence about impacts on children and families is limited. We use a regression discontinuity leveraging an age five when children become ineligible for WIC and examine nutritional and laboratory outcomes for adults and children. We find little impact on children who aged out of the program. But among adult women caloric intake falls and food insecurity increases, suggesting that mothers protect children by consuming less themselves. We find no effect on others in the household.
Author contact info: Marianne Bitler Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 E-Mail: bitler@ucdavis.edu Janet Currie Department of Economics Center for Health and Wellbeing 185A Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 Tel: 609-258-7393 E-Mail: jcurrie@princeton.edu Hilary W. Hoynes Richard & Rhoda Goldman School of Public Policy University of California, Berkeley 2607 Hearst Avenue Berkeley, CA 94720-7320 Tel: (510) 642-1166 E-Mail: hoynes@berkeley.edu Krista J. Ruffini McCourt School of Public Policy Georgetown University 37th & O Street NW Old North #100 Washington, DC 20057 Tel: 6512695947 E-Mail: kr333@georgetown.edu Lisa Schulkind Department of Economics Belk College of Business University of North Carolina at Charlotte 9201 University City Blvd Charlotte, NC 28223 E-Mail: lschulki@uncc.edu Barton Willage Department of Economics University of Colorado, Denver 1380 Lawrence St #470 Denver, CO 80204 Tel: 812/599-1079 E-Mail: barton.willage@ucdenver.edu

Near-Rational Equilibria in Heterogeneous-Agent Models: A Verification Method - Kogan, Leonid; Mitra, Indrajit (National Bureau of Economic Research Working Paper Series, 2022)
We propose a general simulation-based procedure for estimating quality of approximate policies in heterogeneous-agent equilibrium models, which allows to verify that such approximate solutions describe a near-rational equilibrium. Our procedure endows agents with superior knowledge of the future path of the economy, while imposing a suitable penalty for such foresight. The relaxed problem is more tractable than the original, and results in an upper bound on agents’ welfare. Our method is general, straightforward to implement, and can be used in conjunction with various solution algorithms. We illustrate our approach in two applications: the incomplete-markets model of Krusell and Smith (1998) and the heterogeneous firm model of Khan and Thomas (2008).
Author contact info: Leonid Kogan MIT Sloan School of Management 100 Main Street, E62-636 Cambridge, MA 02142 Tel: 617/504-9728 Fax: 617/258-6855 E-Mail: lkogan@mit.edu Indrajit Mitra Federal Reserve Bank of Atlanta 1000 Peachtree Street N.E. Atlanta, GA 30309 USA Tel: 6179979467 E-Mail: indrajit.mitra@atl.frb.org

Opioid Use and Employment Outcomes: Evidence from the U.S. Military - Alpert, Abby E; Schwab, Steve; Ukert, Benjamin D (National Bureau of Economic Research Working Paper Series, 2022)
There is significant interest in understanding the labor market consequences of the opioid epidemic, but little is known about how opioid use impacts on-the-job productivity. We analyze the impact of opioid initiation in the emergency department (ED) on workforce outcomes in the Military using linked medical and administrative personnel data for active duty service members from 2008 to 2017. Exploiting quasi-random assignment of patients to physicians in the ED, we find that assignment to a high-intensity opioid prescribing physician increases the probability of long-term opioid use and leads to subsequent negative effects on work capacity, job performance, and productivity. We also analyze the mechanisms underlying these negative workforce outcomes. While opioid use does not negatively affect measures of physical job performance, we find large increases in behavioral problems which lead to disciplinary actions and job separation.
Author contact info: Abby E. Alpert The Wharton School University of Pennsylvania 3641 Locust Walk Philadelphia, PA 19104 Tel: 215/746-3174 E-Mail: alpertab@wharton.upenn.edu Stephen D. Schwab 1017 Water Oak Schertz, TX 78154 United States Tel: 2542589138 E-Mail: stephen.schwab@utsa.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

Cutting Out the Middleman: The Structure of Chains of Intermediation - Grant, Matthew; Startz, Meredith (National Bureau of Economic Research Working Paper Series, 2022)
Distribution of goods often involves multiple intermediaries engaged in sequential buying and reselling. Why do these chains of intermediation exist, and what are their implications for consumers? We show that multi-intermediary chains arise in response to internal economies of scale in trade costs. This suggests that chains will be longer on average in developing countries, and can account for empirical patterns in firm size and prices that we document using original data on imported consumer goods in Nigeria. While policy wisdom often calls for shortening chains, we show that this has ambiguous welfare implications. Equilibrium distribution structures are not generally efficient, and policies and technologies that lead to shorter chains will not necessarily benefit consumers, even when intermediaries hold market power. Instead, there is a fundamental trade-off: shorter chains have lower marginal cost but also fewer sellers, which can reduce competition, product availability, and access to retailers. We embed this insight in a quantifiable model of endogenous intermediation chains, which we calibrate for distribution of Chinese-made apparel in Nigeria, and describe changes in chain structure in response to counterfactual changes in regulation and e-commerce technologies. We find that cutting out middlemen has heterogeneous welfare impacts but may harm remote consumers.
Author contact info: Matthew Grant Dartmouth College E-Mail: Matthew.W.Grant@Dartmouth.edu Meredith Startz Department of Economics Dartmouth College Hanover, NH 03755 E-Mail: meredith.l.startz@dartmouth.edu

Contamination Bias in Linear Regressions - Goldsmith-Pinkham, Paul; Hull, Peter; Kolesár, Michal (National Bureau of Economic Research Working Paper Series, 2022)
We study regressions with multiple treatments and a set of controls that is flexible enough to purge omitted variable bias. We show that these regressions generally fail to estimate convex averages of heterogeneous treatment effects—instead, estimates of each treatment’s effect are contaminated by non-convex averages of the effects of other treatments. We discuss three estimation approaches that avoid such contamination bias, including the targeting of easiest-to-estimate weighted average effects. A re-analysis of nine empirical applications finds economically and statistically meaningful contamination bias in observational studies; contamination bias in experimental studies is more limited due to idiosyncratic effect heterogeneity.
Author contact info: Paul Goldsmith-Pinkham Yale School of Management 165 Whitney Avenue New Haven, CT 06511 E-Mail: paulgp@gmail.com Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu Michal Kolesár Department of Economics 278 Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544-1021 E-Mail: mkolesar@princeton.edu

Gender and Underrepresented Minority Differences in Research Funding - Cruz-Castro, Laura; Ginther, Donna K; Sanz-Menendez, Luis (National Bureau of Economic Research Working Paper Series, 2022)
This chapter reviews the data and literature on gender, race and ethnicity differences in research funding in the United States and Europe. The gender gap in research funding has closed at the National Science Foundation and National Institutes of Health in the United States and substantially narrowed in Europe. Underrepresented minorities are less likely to receive research funding that whites in the United States. We found that much of the literature was a series of informative independent studies where many of the potential explanations depended upon the context. Our examination of peer review also found contradictory evidence of its efficacy. The variety of countries, funders, and approaches to peer review make it difficult to make definitive conclusions in the face of contradictory evidence on the gender funding gap. We conclude that access to high-quality administrative data would allow for improved methodological approaches to understanding these differences in research funding.
Author contact info: Laura Cruz-Castro Institute of Public Goods and Policies (IPP) Consejo Superior de Investigaciones Cientificas (CSIC) Albasanz 26-28, 3D14, Madrid E-28037 Spain E-Mail: laura.cruz@csic.es Donna K. Ginther Department of Economics University of Kansas 333 Snow Hall 1460 Jayhawk Boulevard Lawrence, KS 66045 Tel: 785/864-3251 Fax: 785/864-5270 E-Mail: dginther@ku.edu Luis Sanz-Menendez Institute of Public Goods and Policies (IPP) Consejo Superior de Investigaciones Cientificas (CSIC) Albasanz 26-28, 3D13, Madrid E-28037 Spain E-Mail: luis.sanz@csic.es

Days of Work Over a Half Century: The Rise of the Four-day Week - Hamermesh, Daniel S; Biddle, Jeff (National Bureau of Economic Research Working Paper Series, 2022)
We examine patterns of work in the U.S. from 1973-2018 with the novel focus on days per week, using intermittent CPS samples and one ATUS sample. Among full-time workers the incidence of four-day work tripled during this period, with over 8 million more full-time workers on four-day weeks. The same growth occurred in the Netherlands, Germany, and South Korea. The rise was not due to changes in demographics or industrial structure. Four-day full-time work is more common among less educated, younger, and white non-Hispanic workers, among men, natives, and people with young children; and among police and firefighters, health-care workers, and in eating/drinking places. Based on an equilibrium model of its prevalence, we show that it results more from workers’ preferences and/or daily fixed costs of working than from employers' production costs. We verify the implication that the wage penalty for four-day work is greater where such work is more prevalent, and we show that the penalty has diminished over time.
Author contact info: Daniel S. Hamermesh 333 West 57th Street, Apt. 706 New York, NY 10019 E-Mail: hamermes@eco.utexas.edu Jeff Biddle Department of Economics Michigan State University East Lansing, MI 48824-1038 E-Mail: biddle@msu.edu

The Effects of Advanced Degrees on the Wage Rates, Hours, Earnings and Job Satisfaction of Women and Men - Altonji, Joseph G; Humphries, John Eric; Zhong, Ling (National Bureau of Economic Research Working Paper Series, 2022)
This paper uses a college-by-graduate degree fixed effects estimator to evaluate the returns to 19 different graduate degrees for men and women. We find substantial variation across degrees, and evidence that OLS overestimates the returns to degrees with high average earnings and underestimates the returns to degrees with low average earnings. Second, we decompose the impacts on earnings into effects on wage rates and effects on hours. For most degrees, the earnings gains come from increased wage rates, though hours play an important role in some degrees, such as medicine, especially for women. Third, we estimate the net present value and internal rate of return for each degree, which account for the time and monetary costs of degrees. We show annual earnings and hours worked while enrolled in graduate school vary a lot by gender and degree. Finally, we provide descriptive evidence that gains in overall job satisfaction and satisfaction with contribution to society vary substantially across degrees.
Author contact info: Josepth Altonji E-Mail: altonji@nber.org John Eric Humphries Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 Tel: 773/980-6575 E-Mail: johneric.humphries@yale.edu Ling Zhong Cheung Kong Graduate School of Business Oriental Plaza 3/F Tower E3, 1 East Chang An Ave Beijing 100738 China Tel: +1-4843264316 E-Mail: ling.zhong@yale.edu

Non-Covid Excess Deaths, 2020-21: Collateral Damage of Policy Choices? - Mulligan, Casey B; Arnott, Robert D (National Bureau of Economic Research Working Paper Series, 2022)
From April 2020 through at least the end of 2021, Americans died from non-Covid causes at an average annual rate 97,000 in excess of previous trends. Hypertension and heart disease deaths combined were elevated 32,000. Diabetes or obesity, drug-induced causes, and alcohol-induced causes were each elevated 12,000 to 15,000 above previous (upward) trends. Drug deaths especially followed an alarming trend, only to significantly exceed it during the pandemic to reach 108,000 for calendar year 2021. Homicide and motor-vehicle fatalities combined were elevated almost 10,000. Various other causes combined to add 18,000. While Covid deaths overwhelmingly afflict senior citizens, absolute numbers of non-Covid excess deaths are similar for each of the 18-44, 45-64, and over-65 age groups, with essentially no aggregate excess deaths of children. Mortality from all causes during the pandemic was elevated 26 percent for working-age adults (18-64), as compared to 18 percent for the elderly. Other data on drug addictions, non-fatal shootings, weight gain, and cancer screenings point to a historic, yet largely unacknowledged, health emergency.
Author contact info: Casey B. Mulligan University of Chicago Department of Economics 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-9017 Fax: 773/702-8490 E-Mail: c-mulligan@uchicago.edu Rob Arnott 620 Newport Center Dr # 900 Newport Beach CA 92660 E-Mail: arnott@rallc.com, tudisco@rallc.com

Maternal Mortality and Women’s Political Power - Bhalotra, Sonia R; Clarke, Damian; Gomes, Joseph F; Venkataramani, Atheendar (National Bureau of Economic Research Working Paper Series, 2022)
Millions of women continue to die during and soon after childbirth, even where the knowledge and resources to avoid this are available. We posit that raising the share of women in parliament can trigger action. Leveraging the timing of gender quota legislation across developing countries, we identify sharp sustained reductions of 8–12 percent in maternal mortality. Investigating mechanisms, we find that gender quotas lead to increases in percentage points of 5–8 in skilled birth attendance and 4–8 in prenatal care utilization, alongside a decline in fertility of 6–7 percent and an increase in the schooling of young women of about 0.5 years. The results are robust to numerous robustness checks. They suggest a new policy tool for tackling maternal mortality.
Author contact info: Sonia R. Bhalotra Department of Economics University of Warwick Coventry United Kingdom E-Mail: Sonia.Bhalotra@warwick.ac.uk Damian Clarke Department of Economics University of Chile Diagonal Paraguay 257 Santiago Chile E-Mail: dclarke@fen.uchile.cl Joseph F. Gomes Institute of Economic and Social Research (IRES) College L.H. Dupriez, 3 Place Montesquieu B-1348 L2.06.01 Louvain-la-Neuve Belgium E-Mail: joseph.gomes@uclouvain.be Atheendar Venkataramani Department of Medical Ethics and Health Policy University of Pennsylvania 423 Guardian Drive Philadelphia, PA 19104 E-Mail: atheenv@pennmedicine.upenn.edu

Microgiving with Digital Platforms - Jiang, Xiheng; Xing, Jianwei; Xu, Jintao; Zou, Eric (National Bureau of Economic Research Working Paper Series, 2022)
Microgiving, a new form of digital fundraising, operates by soliciting minuscule donation amounts that are typically not viable in traditional settings. This paper considers the scaling up of microgiving via platform integration, whereby small donations are bundled with high volume of economic activities that are naturally occurring on digital platforms. We evaluate a charity subscription program run by Alibaba, one of the world’s largest retail platforms, which allows sellers to pledge a tiny portion of a product’s revenue (2 cents per order at minimum) to charity, with donations made automatically as transactions take place. We document that, between 2018 and 2020, the program attracted more than 2 million Alibaba sellers and generated 1.2 billion yuan of charitable funds, representing one of China’s most successful online fundraisers. We pinpoint three forces that jointly create a self-fulfilling incentive for platform sellers to engage in microgiving: First, intense competition motivates sellers to link their products with charitable causes, even though the signaling value of the linkage is small; Second, due to low financial commitment, sellers rarely discontinue their giving once subscribed to the program, which ensures stable streams of charitable funds; Third, the program provides sellers with the joy of giving at a low cost, and this “warm glow” effect further reinforces participation. The success of the microgiving scheme hinges on features that are shared by many digital platforms, and its success is potentially applicable on a broader scale.
Author contact info: Xiheng Jiang World Harmony House Beijing 100176 China E-Mail: jiang.xiheng@cikd.org Jianwei Xing National School of Development Peking University No.5 Yiheyuan Road Beijing 100871 China E-Mail: jerryxing@nsd.pku.edu.cn Jintao Xu National School of Development Peking University No.5 Yiheyuan Road Beijing 100871 China E-Mail: xujt@pku.edu.cn Eric Zou Stephen M. Ross School Of Business University of Michigan 701 Tappan Ave Ann Arbor, MI 48109 E-Mail: ericzou@umich.edu

Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020 - Derenoncourt, Ellora; Kim, Chi Hyun; Kuhn, Moritz; Schularick, Moritz (National Bureau of Economic Research Working Paper Series, 2022)
The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped.
Author contact info: Ellora Derenoncourt Princeton University Industrial Relations Section Louis A. Simpson International Building Princeton, NJ 08544 E-Mail: ellora.derenoncourt@princeton.edu Chi Hyun Kim University of Bonn Department of Economics Adenauerallee 24-42 53113 Bonn Germany E-Mail: ckim@uni-bonn.de Moritz Kuhn University of Mannheim Department of Economics L 7, 3-5 68161 Mannheim Germany E-Mail: mokuhn@uni-mannheim.de Moritz Schularick Kiel Institute for the World Economy Kiellinie 66 24105 Kiel Germany E-Mail: moritz.schularick@ifw-kiel.de

Gender Pay Gap across Cultures - Burns, Natasha; Minnick, Kristina; Netter, Jeffry; Starks, Laura (National Bureau of Economic Research Working Paper Series, 2022)
We employ a cross-country sample to examine whether cultural differences help explain gender compensation variations across corporate executives. The results show that the cultural differences, which are embedded in societies from long prior to the compensation decisions, provide significant explanatory power to the observed gender gap in executive compensation. Using an Oaxaca-Blinder decomposition combined with variables that have previously been shown to be significant determinants of executive compensation, we find that adding cultural measures to the model increases the explanatory power from 44% to 95% of the gender compensation gap.
Author contact info: Natasha Burns Department of Finance Alvarez College of Business University of Texas at San Antonio San Antonio, TX 78249 USA E-Mail: natasha.burns@utsa.edu Kristina Minnick 175 Forest Street Waltham, MA 02452 USA E-Mail: kminnick@bentley.edu Jeffry Netter Department of Finance Terry College of Business University of Georgia Athens, GA 30602 USA E-Mail: jnetter@uga.edu Laura Starks McCombs School of Business University of Texas at Austin 2110 Speedway Austin, TX 78712 Tel: 512/471-5899 E-Mail: laura.starks@mccombs.utexas.edu

Dividend Taxes, Firm Growth, and the Allocation of Capital - Matray, Adrien (National Bureau of Economic Research Working Paper Series, 2022)
This paper investigates the 2013 three-fold increase in the French dividend tax rate. Using administrative data covering the universe of firms from 2008- 2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used this tax-induced increase in liquidity to accumulate more capital and labor, resulting in higher revenues. Heterogeneity analyses show that firms with high demand and returns to capital responded most, while no group of treated firms reduced their capital. Our results reject models in which higher dividend taxes increase the cost of capital and show that the tax-induced increase in liquidity relaxes financial constraints, which can reduce capital misallocation.
Author contact info: Adrien Matray Bendheim Center for Finance Princeton University 20 Washington Road Princeton, NJ 08540 Tel: 609/216-1591 E-Mail: amatray@princeton.edu

Right-to-Work Laws, Unionization, and Wage Setting - Fortin, Nicole; Lemieux, Thomas; Lloyd, Neil (National Bureau of Economic Research Working Paper Series, 2022)
This paper uses two complementary approaches to estimate the effect of right-to-work (RTW) laws on wages and unionization rates. The first approach uses an event study design to analyze the impact of the adoption of RTW laws in five U.S. states since 2011. The second approach relies on a differential exposure design that exploits the differential impact of RTW laws on industries with high unionization rates relative to industries with low unionization rates. Both approaches indicate that RTW laws lower wages and unionization rates. Under the assumption that RTW laws only affect wages by lowering the unionization rate, RTW can be used as an instrumental variable (IV) to estimate the causal effect of unions on wages. In our preferred specification based on the differential exposure design, the IV estimate of the effect of unions on wages is 0.35, which substantially exceeds the corresponding OLS estimate of 0.16. This large wage effect suggests that RTW may also directly affect wages due to a reduced union threat effect.
Author contact info: Nicole Fortin Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 Tel: 604/822-3222 E-Mail: nicole.fortin@ubc.ca Thomas Lemieux Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 E-Mail: thomas.lemieux@ubc.ca Neil Lloyd Department of Economics University of Warwick Coventry CV4 7AL United Kingdom E-Mail: neil_lloyd@outlook.com

The Effects of Alcohol Excise Tax Increases by Drinking Level and by Income Level - Saffer, Henry; Gehrsitz, Markus; Grossman, Michael (National Bureau of Economic Research Working Paper Series, 2022)
The alcohol industry argues that alcohol excise taxes do not reduce heavy drinking because of substitutions to lower-cost products and that these taxes disproportionately burden low-income drinkers. Alternatively, some economists have argued that increases in alcohol excise taxes reduce heavy alcohol consumption. Using data from the Nielsen Homescan we investigate the effects of a large excise tax increase that raised alcohol prices. The results show that heavy drinkers reduce purchases, and this reduction is no different than the reductions by other drinkers. The results also show that only low-income drinkers pay more for ethanol after the tax increase.
Author contact info: Henry Saffer NBER 39 Broadway, 16th Floor Suite 1620 New York, NY 10006-3052 E-Mail: hsaffer@gc.cuny.edu Markus Gehrsitz Department of Economics University of Strathclyde Strathclyde Business School Duncan Wing 199 Cathedral Street Glasgow G4 0QU UK Tel: 0141 548 3960 E-Mail: markus.gehrsitz@strath.ac.uk Michael Grossman National Bureau of Economic Research 39 Broadway, Suite 1620 New York, NY 10006-3052 E-Mail: mgrossman@gc.cuny.edu

Inflation Past, Present and Future: Fiscal Shocks, Fed Response, and Fiscal Limits - Cochrane, John H (National Bureau of Economic Research Working Paper Series, 2022)
Our current inflation stemmed from a fiscal shock. The Fed is slow to react. Why? Will the Fed's slow reaction spur more inflation? I write a simple model that encompasses the Fed's mild projections and its slow reaction, and traditional views that inflation will surge without swift rate rises. The key question is whether expectations are forward looking or backward looking. If expectations are forward looking, the Fed is right, and inflation will eventually fade without a period of high real interest rates. Price stickiness means inflation will persist past an initial shock. To reduce inflation, fiscal and monetary policy must be coordinated. Without fiscal contraction, an unpleasant arithmetic holds: The Fed can reduce inflation now, but only by increasing inflation later. If the Fed wishes to lower inflation durably via interest rate rises, those must come with fiscal support to pay higher costs on the debt and a windfall to bondholders. Coordinated fiscal, monetary and microeconomic reforms can, and have, swiftly eliminated inflation without the major recession of the early 1980s. Nonetheless, in the very long run, the central bank controls the price level.
Author contact info: John H. Cochrane Hoover Institution 434 Galvez Mall Stanford University Stanford, CA 94305-6010 Tel: 650 723 6708 E-Mail: john.cochrane@stanford.edu

Individual Earnings and Family Income: Dynamics and Distribution - Altonji, Joseph G; Hynsjö, Disa M; Vidangos, Ivan (National Bureau of Economic Research Working Paper Series, 2022)
We review research on the dynamics and distribution of individual earnings and family income. We start with univariate earnings models, which dominate the literature and are often used as the exogenous component of family income in structural models of saving. We present a version of the linear model that nests most of the specifications that have been used in the literature, and then discuss recent papers that stress nonnormal shocks, nonlinear and age-dependent processes, and heterogeneous model parameters. The recent work provides a much richer description of the nature of earnings volatility than the basic model. We then turn to models of individual earnings that are based on wages, employment, job mobility, and hours. These multivariate models permit measuring the sources of permanent differences in earnings and distinguishing among shocks that influence earnings through employment, job mobility, general productivity, or hours. Finally, we consider models of lifetime family income that integrate individual earnings, marriage (accounting for marital sorting), and earnings of a spouse (if present). We conclude by discussing directions for future work.
Author contact info: Josepth Altonji E-Mail: altonji@nber.org Disa M. Hynsjö E-Mail: N/A user is deceased Ivan Vidangos Federal Reserve Board Division of Research and Statistics 20th & C Street, NW Washington, DC 20551 E-Mail: Ivan.Vidangos@frb.gov

Expectations Data in Structural Microeconomic Models - Koşar, Gizem; O'Dea, Cormac (National Bureau of Economic Research Working Paper Series, 2022)
A growing literature uses now widely-available data on beliefs and expectations in the estimation of structural models. In this chapter, we review this literature, with an emphasis on models of individual and household behavior. We first show how expectations data have been used to relax strong assumptions about beliefs and outline how they can be used in estimation to substitute for, or as a complement to, data on choices. Next, we discuss the literature that uses different types of expectations data in the estimation of structural models. We conclude by noting directions for future research.
Author contact info: Gizem Koşar Microeconomic Studies Federal Reserve Bank of New York 33 Liberty Street New York, NY 10045 E-Mail: gizem.kosar@gmail.com 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

Center Pivot Irrigation Systems as a Form of Drought Risk Mitigation in Humid Regions - Cooley, Daniel J; Smith, Steven M (National Bureau of Economic Research Working Paper Series, 2022)
Irrigation in the Eastern US receives little attention compared to the West, but farmers in humid states of the US, traditionally reliant on rainfall, have more than tripled irrigation since 1978. We examine this trend in Illinois where there has been a nearly threefold increase in center pivot irrigation systems (CPIS) installations since 1988. Specifically, we analyze where and when CPIS installations occur and their benefits in terms of annual crop yield, irrigated acreage, crop selection, and reduction in drought-related insurance payouts. To do so, we create a novel data set derived from a deep learning model capable of automatically identifying the location of CPIS during drought years along with annual county level crop, weather, and insurance data. The results indicate CPIS installations in Illinois are significantly more common over alluvial aquifers after droughts. Additionally, counties with a higher presence of CPIS do not have higher average crop yields, a shift to more water intensive crops, or an expansion of cropland. However, in drought years CPIS presence does have a significant positive effect on corn yield and a significant negative effect on indemnity payments for both soybeans and corn. The results provide insights into an emerging trend of irrigation in humid regions, raising potential policy considerations for crop insurance and signaling a potential need to address water rights as demand increases.
Author contact info: Daniel J. Cooley 1500 Illinois Street Golden, CO 80401 US E-Mail: cooley@mines.edu Steven M. Smith Division of Economics and Business Colorado School of Mines Golden, CO 80401 E-Mail: ssmith1@mines.edu

Internal Disagreement and Disruptive Technologies - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2022)
This paper models the adoption by established firms of technologies that are internally disruptive in that different parts of an organization stand to lose or gain from adoption. When agents disagree with a decision they impose costs on the firm. The paper shows that any resistance to change this yields is necessarily accompanied by others aggrieved should change not occur. Thus, the firm cannot avoid disagreement costs regardless of whether they adopt the technology or not. In some cases, depending on their ability to impose costs, such firms may be more likely to adopt technologies as a result of internal disagreement.
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

A Theory of Visionary Disruption - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2022)
Exploitation of disruptive technologies often requires resource deployment that creates conflict if there are divergent beliefs regarding the efficacy of a new technology. This arises when a visionary agent has more optimistic beliefs about a technological opportunity. Exploration in the form of experiments can be persuasive when beliefs differ by mitigating disagreement and its costs. This paper examines experimental choice when experiments need to persuade as well as inform. It is shown that, due to resource constraints, persuasion factors more highly for entrepreneurial than incumbent firms. However, incumbent firms, despite being able to redeploy resources using authority, are constrained in adoption as exploration cannot mitigate the costs of disagreement
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

The Effects of Public Housing on Children: Evidence from Colombia - Camacho, Adriana; Duque, Valentina; Gilraine, Michael; Sanchez, Fabio (National Bureau of Economic Research Working Paper Series, 2022)
We analyze the effect of Colombia's ambitious "Free Housing" program on children's educational outcomes. The program was generous, giving free housing to beneficiaries in desirable areas. We evaluate the program by leveraging housing lotteries and linking applicants to their children. We find that public housing increases high school graduation by seven percentage points – a seventeen percent increase relative to the control mean – and boosts exit exam scores and college-going. Using a survey to explore mechanisms, lottery winners report better environmental conditions and shorter commute times. Their children also attend better schools and live in neighborhoods with less crime.
Author contact info: Adriana Camacho E-Mail: adcamach@uniandes.edu.co Valentina Duque American University Assistant Professor School of Public Affairs Washington DC United States E-Mail: vduque@american.edu 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 Fabio Sanchez University of Los Andes Department of Economics Calle 19A # 1 – 37E Bogota Colombia E-Mail: fasanche@uniandes.edu.co

The Rest of the World’s Dollar-Weighted Return on U.S. Treasurys - Jiang, Zhengyang; Krishnamurthy, Arvind; Lustig, Hanno (National Bureau of Economic Research Working Paper Series, 2022)
Since 1980, foreign investors have timed their purchases and sales of U.S. Treasurys to yield particularly low returns. Their annual “dollar-weighted” returns, measured by the internal rate of return on their purchases and sales of Treasury bonds, are over 3.26 percentage points (pp) lower than a buy-and-hold strategy over the same horizon. Their returns are 1.62 pp lower than the returns earned by domestic investors. We also explore the heterogeneity across foreign investors, and find that official investors and developing country investors underperform more than other foreign investors. Our results are consistent with theories in which foreign investors are price-inelastic buyers of safe dollar assets, and increase their demand for dollar assets in stress periods.
Author contact info: Zhengyang Jiang Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2848 E-Mail: zhengyang.jiang@kellogg.northwestern.edu Arvind Krishnamurthy Stanford Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: akris@stanford.edu Hanno Lustig Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hlustig@stanford.edu

Grads on the Go: Measuring College-Specific Labor Markets for Graduates - Conzelmann, Johnathan G; Hemelt, Steven W; Hershbein, Brad; Martin, Shawn M; Simon, Andrew; Stange, Kevin M (National Bureau of Economic Research Working Paper Series, 2022)
This paper introduces a new measure of the labor markets served by colleges and universities across the United States. About 50 percent of recent college graduates are living and working in the metro area nearest the institution they attended, with this figure climbing to 67 percent in-state. The geographic dispersion of alumni is more than twice as great for highly selective 4-year institutions as for 2-year institutions. However, more than one-quarter of 2-year institutions disperse alumni more diversely than the average public 4-year institution. In one application of these data, we find that the average strength of the labor market to which a college sends its graduates predicts college-specific intergenerational economic mobility. In a second application, we quantify the extent of “brain drain” across areas and illustrate the importance of considering migration patterns of college graduates when estimating the social return on public investment in higher education.
Author contact info: Johnathan G. Conzelmann Department of Public Policy 131 S. Columbia Street Abernethy Hall, Campus Box 3435 Chapel Hill, NC 27599 E-Mail: jconzelm@unc.edu Steven W. Hemelt Department of Public Policy University of North Carolina at Chapel Hill 131 S. Columbia Street Abernethy Hall, Campus Box 3435 Chapel Hill, NC 27599 E-Mail: hemelt@email.unc.edu Brad Hershbein W.E. Upjohn Institute for Employment Research 300 S. Westnedge Ave. Kalamazoo, MI 49007 E-Mail: hershbein@upjohn.org Shawn M. Martin E-Mail: shawnmm@umich.edu Andrew Simon University of Chicago, Department of Economics 1126 E. 59th St Chicago, IL 60637 United States E-Mail: andrewsimon@uchicago.edu Kevin M. Stange Gerald R. Ford School of Public Policy University of Michigan 5236 Weill Hall 735 South State Street Ann Arbor, MI 48109 Tel: 734/615-6990 E-Mail: kstange@umich.edu

Who Holds Sovereign Debt and Why It Matters - Fang, Xiang; Hardy, Bryan; Lewis, Karen K (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the impact of investor composition on the sovereign debt market. We construct a data set of sovereign debt holdings by foreign and domestic bank, non-bank private, and official investors for 95 countries over twenty years. Private non-bank investors absorb disproportionately more sovereign debt supply than other investors. Moreover, non-bank investor demand is most responsive to the yield. Counterfactual analysis of emerging market sovereigns shows a 10% increase in debt leads to a 6.7% increase in costs, but an out-sized 9% increase if non-bank investors are absent. We conclude that these sovereigns are vulnerable to losing non-bank investors.
Author contact info: Xiang Fang Faculty of Business and Economics University of Hong Kong 818 KK Leung Building Pokfulam Hong Kong, China Tel: 85265836019 E-Mail: xiangf@hku.hk Bryan Hardy Bank for International Settlements Centralbahnplatz 2 4051 Basel Switzerland E-Mail: bryan.hardy@bis.org Karen K. Lewis Department of Finance, Wharton School 2300 SHDH University of Pennsylvania Philadelphia, PA 19104-6367 Tel: 215/898-7637 Fax: 215/898-6200 E-Mail: lewisk@wharton.upenn.edu

Did the Tax Cuts and Jobs Act Reduce Profit Shifting by US Multinational Companies? - Garcia-Bernardo, Javier; Janský, Petr; Zucman, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
The 2017 Tax Cut and Jobs Act reduced the US corporate tax rate and introduced provisions to curb profit shifting. We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms’ profits after the reform. The share of profits booked abroad by US multinationals fell 3–5 percentage points, driven by repatriations of intellectual property to the US. The share of foreign profits booked in tax havens remained stable around 50% between 2015 and 2020. Changes in the global allocation of profits are small overall, but some firms responded strongly.
Author contact info: Javier Garcia-Bernardo Utrecht University The Netherlands E-Mail: javier.garcia.bernardo@gmail.com Petr Janský Institute of Economic Studies Faculty of Social Sciences Charles University Opletalova 1606/26 Prague 11000 Czechia E-Mail: petr.jansky@fsv.cuni.cz Gabriel Zucman Department of Economics University of California, Berkeley 530 Evans Hall, #3880 Berkeley, CA 94720 E-Mail: zucman@berkeley.edu

New Schools and New Classmates: The Disruption and Peer Group Effects of School Reassignment - Hill, Darryl V; Hughes, Rodney P; Lenard, Matthew A; Liebowitz, David D; Page, Lindsay C (National Bureau of Economic Research Working Paper Series, 2022)
Policy makers periodically consider using student assignment policies to improve educational outcomes by altering the socio-economic and academic skill composition of schools. We exploit the quasi-random reassignment of students across schools in the Wake County Public School System to estimate the academic and behavioral effects of being reassigned to a different school and, separately, of shifts in peer characteristics. We rule out all but substantively small effects of transitioning to a different school as a result of reassignment on test scores, course grades and chronic absenteeism. In contrast, increasing the achievement levels of students' peers improves students' math and ELA test scores but harms their ELA course grades. Test score benefits accrue primarily to students from higher-income families, though students with lower family income or lower prior performance still benefit. Our results suggest that student assignment policies that relocate students to avoid the over-concentration of lower-achieving students or those from lower-income families can accomplish equity goals (despite important caveats), although these reassignments may reduce achievement for students from higher- income backgrounds.
Author contact info: Darryl V. Hill Bill & Melinda Gates Foundation E-Mail: darryl.hill@gatesfoundation.org Rodney Hughes West Virginia University 501E Allen Hall 355 Oakland Street Morgantown, WV 26506-6122 E-Mail: rodney.hughes@mail.wvu.edu Matthew A. Lenard Harvard University 14 Appian Way, Larsen 501 Cambridge, MA 02138 Tel: 404-697-6299 E-Mail: mlenard@g.harvard.edu David D. Liebowitz 102S Lokey Education Building 5267 University of Oregon Eugene, OR 97403 E-Mail: daviddl@uoregon.edu Lindsay C. Page Annenberg Institute for School Reform Brown University Box 1985 Providence, RI 02912 Tel: 401.863.7990 E-Mail: Lindsay_page@brown.edu

Causal Inference During a Pandemic: Evidence on the Effectiveness of Nebulized Ibuprofen as an Unproven Treatment for COVID-19 in Argentina - Calonico, Sebastian; Di Tella, Rafael; Del Valle, Juan Cruz Lopez (National Bureau of Economic Research Working Paper Series, 2022)
Many medical decisions during the pandemic were made without the support of causal evidence obtained in clinical trials. We study the case of nebulized ibuprofen (NaIHS), a drug that was extensively used on COVID-19 patients in Argentina amidst wild claims about its effectiveness and without regulatory approval. We study data on 5,146 patients hospitalized in 11 health centers spread over 4 provinces, of which a total of 1,019 (19.8%) received the treatment. We find a large, negative and statistically significant correlation between NaIHS treatment and mortality using inverse probability weighting estimators. We consider several threats to identification, including the selection of “low” risks into NaIHS, spillovers affecting patients in the control group, and differences in the quality of care in centers that use NaIHS. While the negative correlation appears to be, broadly, robust, our results are best interpreted as emphasizing the benefits of running a randomized controlled trial and the challenges of incorporating information produced in other, less rigorous circumstances.
Author contact info: Sebastian Calónico Columbia University 722 West 168th Street 4th Floor New York, NY 10032 E-Mail: scalonico@gmail.com Rafael Di Tella Harvard Business School Soldiers Field Rd Boston, MA 02163 Tel: 617/495-6000 E-Mail: rditella@hbs.edu Juan Cruz Lopez del Valle Boston University Boston, MA 02215 E-Mail: jclopezdelvalle@gmail.com

Robbing Peter to Pay Paul? The Redistribution of Wealth Caused by Rent Control - Ahern, Kenneth R; Giacoletti, Marco (National Bureau of Economic Research Working Paper Series, 2022)
We use the price effects caused by the passage of rent control in St. Paul, Minnesota in 2021, to study the transfer of wealth across income groups. First, we find that rent control caused property values to fall by 6-7%, for an aggregate loss of $1.6 billion. A calibrated model of house prices under rent control attributes a third of these losses to indirect, negative externalities. Second, leveraging administrative parcel-level data, we find that the tenants who gained the most from rent control had higher incomes and were more likely to be white, while the owners who lost the most had lower incomes and were more likely to be minorities. For properties with high-income owners and low-income tenants, the transfer of wealth was close to zero. Thus, to the extent that rent control is intended to transfer wealth from high-income to low-income households, the realized impact of the law was the opposite of its intention.
Author contact info: Kenneth R. Ahern Marshall School of Business University of Southern California 3670 Trousdale Parkway, HOH 718 Los Angeles, CA 90089 Tel: 213/821-5583 E-Mail: kenneth.ahern@marshall.usc.edu Marco Giacoletti 3670 Trousdale Pkwy United States Los Angeles, Cali 90089 E-Mail: mgiacole@marshall.usc.edu

Decarbonization and Electrification in the Long Run - Holland, Stephen P; Mansur, Erin T; Yates, Andrew J (National Bureau of Economic Research Working Paper Series, 2022)
Decarbonization and electrification will require a transformed electricity grid. Our long-run model of entry and exit of generation and storage capacity captures crucial aspects of the electricity industry such as time-varying demand for electricity, intermittency of renewables, and intertemporal optimization of storage. We derive several theoretical possibilities that differ in surprising ways from short-run intuition: A carbon tax can increase electricity consumption; cheaper storage can decrease renewable capacity; cheaper renewables can increase carbon emissions; and an increase in electricity demand (e.g., electrification) can decrease emissions. We calibrate the model using 2019 hourly data on demand and renewable availability for thirteen regions covering the contiguous U.S. A carbon price of $150 or more essentially eliminates carbon emissions. Given a modest decarbonization goal, a renewable subsidy performs better than a nuclear subsidy, but this ranking is reversed for an ambitious decarbonization goal. Transmission expansion yields large emissions reductions if renewable costs fall sufficiently, but policies promoting storage are unlikely to yield significant benefits. Electrifying 100% of car miles traveled (thereby eliminating gasoline vehicle carbon emissions) increases electricity-sector carbon emissions by 23-27% if vehicles are charged at night, but could decrease electricity-sector carbon emissions if vehicles are charged during the day.
Author contact info: Stephen P. Holland Bryan School of Business and Economics University of North Carolina, Greensboro P.O. Box 26165 Greensboro, NC 27402-6165 Tel: 336/334-4925 Fax: 336/334-4089 E-Mail: sphollan@uncg.edu Erin T. Mansur Dartmouth College 100 Tuck Hall Hanover, NH 03755 Tel: (603) 646-2398 Fax: (603) 646-0995 E-Mail: erin.mansur@dartmouth.edu Andrew J. Yates Department of Economics and Curriculum for the Environment and Ecology University of North Carolina at Chapel Hill CB 3305 Chapel Hill, NC 27599 E-Mail: ajyates@email.unc.edu

Creating American Farmland: Governance Institutions and Investment in Agricultural Drainage - Edwards, Eric C; Thurman, Walter N (National Bureau of Economic Research Working Paper Series, 2022)
The U.S. Corn Belt, relatively flat and covered with thick glacial soils, is famously responsible for the bulk of U.S. corn production. Development of this central part of the continent came with remarkable technical progress—in seed varieties, mechanization, fertilization, and pest control. Little of this development could have occurred without decades of investment in farmland itself, through the methodical application of drainage. We trace the economic forces that drove wide-scale drainage in the eastern United States and present empirical evidence that a key institutional innovation, the drainage management district, facilitated investment. Today, over 50% of corn produced in the Corn Belt comes from counties with high natural soil wetness requiring artificial drainage. States in our sample adopted drainage district laws between 1857 and 1912, and we estimate artificial drainage facilitated by management districts across all eastern states increased the value of agricultural land in counties with high natural soil wetness by 20-37% ($16.8-18.7 billion in 2020 dollars). Although the broader implications of drainage were largely unforeseen at the time, the conversion led to the loss of more than half of the 215 million acres of wetlands estimated to have existed in the contiguous United States at colonization.
Author contact info: Eric C. Edwards 2116 Social Sciences and Humanities One Shields Avenue Davis, CA 95616 E-Mail: ecedwar@ucdavis.edu Walter N. Thurman North Carolina State University E-Mail: wally_thurman@ncsu.edu

Producer Beliefs and Conservation: The Impact of Perceived Water Scarcity on Irrigation Technology Adoption - Blumberg, Joey; Goemans, Chris; Manning, Dale (National Bureau of Economic Research Working Paper Series, 2022)
Agricultural producers make investment decisions based on beliefs about future returns. This article investigates how changes in beliefs about input availability affects the adoption of conservation practices. We develop a theoretical model to examine how a producer's beliefs about water shortages influence investment in more efficient irrigation technologies. We then use publicly available data on water rights and irrigated cropland to empirically identify the impact of changing beliefs about water availability on conservation decisions. We leverage a natural experiment in Colorado in which a period of severe drought and institutional change in the early 2000s led to an exogenous shock to expectations for some water right holders. We estimate that producers who experience unprecedented increases in the curtailment of their water right convert 11% more land to a more efficient irrigation technology on average. We also present evidence that adoption rates are driven more by changes in surface water availability than groundwater. This analysis provides useful insight into the role of beliefs in incentivizing adaptation to increasing water scarcity in irrigated agriculture.
Author contact info: Joey Blumberg E-Mail: joey.blumberg@colostate.edu Chris Goemans Colorado State University Nutrien Agricultural Sciences Building Fort Collins, Colo 80523-1172 United States E-Mail: cgoemans@rams.colostate.edu Dale Manning Colorado State University Nutrien Agricultural Sciences Building United States E-Mail: Dale.Manning@colostate.edu

The Political Effects of Immigration: Culture or Economics? - Alesina, Alberto; Tabellini, Marco (National Bureau of Economic Research Working Paper Series, 2022)
We review the growing literature on the political economy of immigration. First, we discuss the effects of immigration on a wide range of political and social outcomes. The existing evidence suggests that immigrants often, but not always, trigger backlash, increasing support for anti-immigrant parties and lowering preferences for redistribution and diversity among natives. Next, we unpack the channels behind the political effects of immigration, distinguishing between economic and non-economic forces. In examining the mechanisms, we highlight important mediating factors, such as misperceptions, the media, and the conditions under which inter-group contact occurs. We also outline promising avenues for future research.
Author contact info: Alberto F. Alesina E-Mail: N/A user is deceased Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu

The “College Gap” in Marriage and Children’s Family Structure - Kearney, Melissa Schettini (National Bureau of Economic Research Working Paper Series, 2022)
The share of children living in a two-parent family has declined sharply in the past 40 years, driven by a decline in marriage among parents without a four-year college degree. This paper presents a number of facts about these trends, drawing on US Census data, the Current Population Survey, the Survey of Income and Program Participation, and US vital statistics birth data. First, there is a large gap in the share of children living with married parents (or two parents) that favors the children of college-educated mothers, both overall and within race and ethnic groups. Second, the decline in the share of children living in married parent families primarily reflects an increase in non-marital childbearing, not a rise in divorce. Third, the widening college gap in children’s family structure corresponds to a widening college gap in marriage rates, both overall and within race and ethnic groups. The paper briefly discusses evidence suggesting a causal link between the eroding economic position of men without a four-year college degree and their declining marriage rates. Fourth, the rise in the share of children living with an unpartnered mother has happened despite a sizable decrease in births to teens, women in their 20s, and women with less than a high school degree. Fifth, the college gap in family structure has contributed to the widening college gap in household income, accentuating widening earnings inequality. These trends have the potential to exacerbate class gaps in children’s outcomes and undermine social mobility.
Author contact info: Melissa Schettini Kearney Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 Tel: 301/405-6202 E-Mail: kearney@umd.edu

Creative Destruction? Impact of E-Commerce on the Retail Sector - Chava, Sudheer; Oettl, Alexander; Singh, Manpreet; Zeng, Linghang (National Bureau of Economic Research Working Paper Series, 2022)
Using an administrative payroll dataset for 2.6 million retail workers, we find that the staggered rollout of a major e-commerce firm's fulfillment centers reduces traditional retail workers' income in geographically proximate counties by 2.4%. Wages of hourly workers, especially part-time hourly workers, decrease significantly, driven by a drop in the number of hours worked. We observe a U-shaped pattern in which both young and old workers experience a sharper decrease in wage income. Consequently, some workers experience an increase in credit card delinquency. Using data for 3.2 million stores, we find that sales (employment) at proximate stores decrease by 4% (2.1%). Exits, especially of young and small stores, increase, and entry decreases. In aggregate, the retail sector loses 938 jobs per county per quarter, and the transportation-warehousing sector (food services sector) gains 256 (143) jobs. Our results highlight how creative destruction led by e-commerce impacts local labor markets.
Author contact info: Sudheer Chava Scheller College of Business 800 West Peachtree Street NW Atlanta, GA 30308 E-Mail: sudheer.chava@scheller.gatech.edu Alexander Oettl Scheller College of Business Georgia Institute of Technology 800 West Peachtree Street NW Atlanta, GA 30308 Tel: 404/385-4570 E-Mail: alexander.oettl@scheller.gatech.edu Manpreet Singh Scheller College of Business 800 West Peachtree Street NW Atlanta, GA 30308 E-Mail: manpreet.singh@scheller.gatech.edu Linghang Zeng 231 Forest St Babson Park, MA 02457 E-Mail: lzeng@babson.edu

A Penny for Your Thoughts - Hanlon, W. Walker; Heblich, Stephan; Monte, Ferdinando; Schmitz, Martin B (National Bureau of Economic Research Working Paper Series, 2022)
How do communication costs affect the production of new ideas and inventions? To answer this question, we study the introduction of the Uniform Penny Post in Great Britain in 1840. This reform replaced the previous system of expensive distance-based postage fees with a uniform low rate of one penny for sending letters anywhere in the country. The result was a large spatially-varied reduction in the cost of communicating across locations. We study the impact of this reform on the production of scientific knowledge using citation links constructed from a leading academic journal, the Philosophical Transactions, and the impact on the development of new technology using patent data. Our results provide quantitative causal estimates showing how a fall in communication costs can increase the rate at which scientific knowledge is exchanged and new ideas and technologies are developed. This evidence lends direct empirical support to an extensive theoretical literature in economic growth and urban economics positing that more ideas can emerge from communication between individuals.
Author contact info: Walker Hanlon Department of Economics Northwestern University 2211 Campus Drive, 3rd floor Evanston, IL 60208 E-Mail: walker.hanlon@gmail.com Stephan Heblich Munk School of Global Affairs and Public Policy University of Toronto 1 Devonshire Place Toronto, ON M5S 3K7 E-Mail: stephan.heblich@utoronto.ca Ferdinando Monte McDonough School of Business Georgetown University 37th & O Street, NW Washington, DC 20057 E-Mail: ferdinando.monte@georgetown.edu Martin B. Schmitz Vanderbilt University Department of Economics VU Station B #351819 2301 Vanderbilt Place Nashville, TN 37235-1819 E-Mail: martin.schmitz@vanderbilt.edu

Boundary Discontinuity Methods and Policy Spillovers - Jardim, Ekaterina S; Long, Mark C; Plotnick, Robert; van Inwegen, Emma; Vigdor, Jacob L; Wething, Hilary (National Bureau of Economic Research Working Paper Series, 2022)
The boundary discontinuity method of causal inference may yield misleading results if a policy’s impacts do not stop at the border of the implementing jurisdiction. We use geographically precise longitudinal employment data documenting worker job-to-job mobility to study policy spillovers in the context of three local minimum wage increases. Estimated spillover impacts on wages and hours are statistically significant, geographically diffuse, and sufficient to create concern regarding interpretation of results even using not-immediately-adjacent regions as controls. Spillover effects appear less concerning with smaller interventions or those or adopted in a smaller jurisdiction.
Author contact info: Ekaterina S. Jardim Amazon.com, Inc. Seattle, WA E-Mail: ekaterinajardim@gmail.com Mark C. Long School of Public Policy University of California, Riverside Riverside, CA 98195 Tel: 206-543-3787 E-Mail: marklong@ucr.edu Robert Plotnick Daniel J. Evans School of Public Policy and Governance University of Washington Box 353055 Seattle, WA 98195 E-Mail: plotnick@uw.edu Emma Wiles Massachusetts Institute of Technology Sloan School of Management 100 Main St Cambridge, MA 02142 E-Mail: emmavani@mit.edu Jacob L. Vigdor Daniel J. Evans School of Public Policy and Governance University of Washington Box 353055 Seattle, WA 98195 Tel: 206/616-4436 Fax: 206/543-1096 E-Mail: jvigdor@uw.edu Hilary Wething School of Public Policy Pennsylvania State University Pond Laboratory, 322 University Park, PA 16802 E-Mail: hcw5108@psu.edu

The Labor Market Impacts of Technological Change: From Unbridled Enthusiasm to Qualified Optimism to Vast Uncertainty - Autor, David (National Bureau of Economic Research Working Paper Series, 2022)
This review considers the evolution of economic thinking on the relationship between digital technology and inequality across four decades, encompassing four related but intellectually distinct paradigms, which I refer to as the education race, the task polarization model, the automation-reinstatement race, and the era of Artificial Intelligence uncertainty. The nuance of economic understanding has improved across these epochs. Yet, traditional economic optimism about the beneficent effects of technology for productivity and welfare has eroded as understanding has advanced. Given this intellectual trajectory, it would be natural to forecast an even darker horizon ahead. I refrain from doing so because forecasting the “consequences” of technological change treats the future as a fate to be divined rather than an expedition to be undertaken. I conclude by discussing opportunities and challenges that we collectively face in shaping this future.
Author contact info: David Autor Department of Economics, E52-438 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-7698 Fax: 617/253-1330 E-Mail: dautor@mit.edu

The Endowment Effect and Collateralized Loans - Carney, Kevin; Kremer, Michael; Lin, Xinyue; Rao, Gautam (National Bureau of Economic Research Working Paper Series, 2022)
Collateral requirements play an important role in credit markets. This paper shows that the endowment effect—the phenomenon where owing a good increases one's valuation of it—inhibits demand for loans which use a borrower's existing assets as collateral. Using a field experiment in Kenya, we show that borrowers instead strongly prefer loans collateralized using the new durable assets being financed by the loans themselves. They are willing to pay 9% per month higher interest for such Same-Asset Collateralized Loans (SACLs) despite the endowed and new assets being randomized, and thus similarly valued before ownership. Our findings imply that assets which are difficult to use as collateral—which cannot be financed by SACLs—will be invested in less, even if the borrower has other collateral. We argue that borrowers' preference for SACLs is driven by naivete: they initially perceive that they have little to lose when offered a SACL, but subsequently come to develop an attachment to the new asset, resulting in high repayment effort. Consistent with this, borrowers underestimate their future attachment to an asset before owning it, and SACLs do not have higher default rates despite having higher demand. We derive the conditions under which offering consumers SACLs increases or conversely decreases borrower welfare.
Author contact info: Kevin Carney E-Mail: kecarney@umich.edu Michael Kremer University of Chicago Department of Economics 1126 E. 59th St. Chicago, IL 60637 Tel: 773/702-6710 Fax: 773/702-8490 E-Mail: kremermr@uchicago.edu Xinyue Lin E-Mail: xinyue_lin@g.harvard.edu Gautam Rao Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 857/998-4504 E-Mail: grao@berkeley.edu

Monetary-Based Asset Pricing: A Mixed-Frequency Structural Approach - Bianchi, Francesco; Ludvigson, Sydney C; Ma, Sai (National Bureau of Economic Research Working Paper Series, 2022)
We integrate a high-frequency monetary event study into a mixed-frequency macro-finance model and structural estimation. The model and estimation allow for jumps at Fed announcements in investor beliefs, providing granular detail on why markets react to central bank communications. We find that the reasons involve a mix of revisions in investor beliefs about the economic state and/or future regime change in the conduct of monetary policy, and subjective reassessments of financial market risk. However, the structural estimation also finds that much of the causal impact of monetary policy on markets occurs outside of tight windows around policy announcements.
Author contact info: Francesco Bianchi Johns Hopkins University Department of Economics 3400 N. Charles Street 544E Wyman Bldg. Baltimore, Maryland 21218 E-Mail: francesco.bianchi@jhu.edu Sydney C. Ludvigson Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10002 Tel: 212/998-8927 Fax: 212/995-4186 E-Mail: sydney.ludvigson@nyu.edu Sai Ma Federal Reserve Board, C Ave & 20th Street NW Washington, DC 20551 E-Mail: sai.ma@frb.gov

Idiosyncrasy as a Leading Indicator - Morck, Randall; Yeung, Bernard; Zhang, Lu Y (National Bureau of Economic Research Working Paper Series, 2022)
Disequilibrating macro shocks affect different firms' prospects differently, increasing idiosyncratic variation in forward-looking stock returns before affecting economic growth. Consistent with most such shocks from 1947 to 2020 enhancing productivity, increased idiosyncratic stock return variation forecasts next-quarter real GDP growth, industrial production growth, and consumption growth both in-sample and out-of-sample. These effects persist after controlling for other leading economic indicators.
Author contact info: Randall Morck Faculty of Business University of Alberta Edmonton, AB T6G 2R6 Tel: 780/492-5683 Fax: 780/492-3325 E-Mail: randall.morck@ualberta.ca Bernard Yeung National University of Singapore Mochtar Riady Building 15 Kent Ridge Drive BIZ 1, Level 6, #6-19 Singapore Tel: +65 6516 3075 Fax: +65 6779 1365 E-Mail: byeung@nus.edu.sg Lu Zhang Ted Rogers School of Management Toronto Metropolitan University Toronto Canada E-Mail: lu.zhang@ryerson.ca

The Crime Effect of Refugees - Akbulut-Yuksel, Mevlude; Mocan, Naci H; Tumen, Semih; Turan, Belgi (National Bureau of Economic Research Working Paper Series, 2022)
We analyze the impact on crime of 3.7 million refugees who entered and stayed in Turkey as a result of the civil war in Syria. Using a novel administrative data source on the flow of offense records to prosecutors’ offices in 81 provinces of the country each year, and utilizing the staggered movement of refugees across provinces over time, we estimate instrumental variables models that address potential endogeneity of the number of refugees and their location, and find that an increase in the number of refugees leads to more crime. We estimate that the influx of refugees between 2012 and 2016 generated additional 75,000 to 150,000 crimes per year, although it is not possible to identify the distribution of these crimes between refugees and natives. Additional analyses reveal that low-educated native population has a separate, but smaller, effect on crime. We also highlight the pitfalls of employing incorrect empirical procedures and using poor proxies of criminal activity which produce the wrong inference about the refugee-crime relationship. Our results underline the need to quickly strengthen the social safety systems, to take actions to dampen the impact on the labor market, and to provide support to the criminal justice system in order to mitigate the repercussions of massive influx of individuals into a country, and to counter the social and political backlash that typically emerges in the wake of such large-scale population movements.
Author contact info: Mevlude Akbulut-Yuksel Department of Economics Dalhousie University PO Box 15000 6214 University Avenue Halifax, Nova Scotia B3H 4R2 CANADA E-Mail: mevlude@dal.ca Naci H. Mocan Department of Economics Louisiana State University 2439 BEC Baton Rouge, LA 70803-6306 Tel: 225/578-4570 E-Mail: mocan@lsu.edu Semih Tumen Bellevue, WA United States E-Mail: semihtumen@gmail.com Belgi Turan Department of Economics TOBB University of Economics and Technology Sogutozu, Ankara TURKEY E-Mail: belgituran@etu.edu.tr

Agricultural Crises and Government Responses Between the World Wars in the Atlantic Trading Network - Fishback, Price V (National Bureau of Economic Research Working Paper Series, 2022)
The paper summarizes research on the heterogeneous experiences of actors in agriculture in Europe and the Americas between the First and Second World Wars. Following a period of increasing globalization of agricultural markets, the First World War sharply limited farming in the main combatant nations, which led to sharp increases in agricultural prices and farm incomes in countries outside the combat zones. During the 1920s the combatants experienced a return to normalcy, while farmers that experienced booms during the war went through hard times. During the Great Depression that followed, farm prices for most goods fell sharply and farm regions were flooded with unemployed workers. During both decades, most countries responded by raising tariffs and setting quotas on farm imports in an attempt to protect farmers, most often large farmers, against the drops in prices. After experimenting with aiding farmers through price guarantees in the 1920s, nearly every government in the 1930s regulated agriculture in some new way: by providing subsidies, setting minimum prices, purchasing surpluses, or limiting output. Often the regulations led to problems that led to new regulatory fixes while setting the precedents for the domestic farm programs that continue to protect farmers in the modern era.
Author contact info: Price V. Fishback Department of Economics University of Arizona Tucson, AZ 85721 Tel: 520/621-4421 Fax: 520/621-8450 E-Mail: pfishback@eller.arizona.edu

Urban Sprawl and Social Capital: Evidence from Indonesian Cities - Civelli, Andrea; Gaduh, Arya; Rothenberg, Alexander D; Wang, Yao (National Bureau of Economic Research Working Paper Series, 2022)
We use detailed data from Indonesian cities to study how variation in density within urban areas affects social capital. For identification, we instrument density with soil characteristics, and control for community averages of observed characteristics. Under plausible assumptions, these controls address sorting on observables and unobservables. We find that lower density increases trust in neighbors and community participation. We also find that lower density is associated with lower interethnic tolerance, but this relationship is explained by sorting. Heterogeneity analysis suggests that crime in dense areas undermines community trust and participation, intensifying the negative impact of density.
Author contact info: Andrea Civelli University of Arkansas Fayetteville, AR 72701 Tel: 479-575-6354 E-Mail: acivelli@uark.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 Alexander D. Rothenberg Syracuse University 426 Eggers Hall Syracuse, NY 13244-102 E-Mail: adrothen@syr.edu Yao Wang E-Mail: ywang119@syr.edu

Safety Nets and Social Welfare Expenditures in World Economic History - Fishback, Price V (National Bureau of Economic Research Working Paper Series, 2022)
The safety nets in high-income countries before 1900 and in low-income countries today were based on savings and aid from extended family, friends, charities, churches, and small amounts from local governments. Mutual societies and eventually insurance companies offered insurance against lost earnings from sickness, injury, death, and old age. Germany led the way in mandating that employers provide benefits. Since 1900 higher income nations have sharply increased public and private social welfare expenditures to well over 20 percent relative to GDP. A large share of this rise has come in increases in aid to the elderly and health care expenses, often in the form of contributory social insurance financed by payroll taxes on workers and employers. Meanwhile, noncontributory transfer programs for the poor have risen relatively little. In most countries, the employer’s share of payroll taxes are higher than the worker’s share. There are some major countries who have followed a path of reliance on private programs, which are largely financed by employers. Probably the most striking feature of social welfare programs world-wide is the very large variation in expenditures relative to GDP, in the categories of spending, and in the mix of taxation, private programs, and government programs.
Author contact info: Price V. Fishback Department of Economics University of Arizona Tucson, AZ 85721 Tel: 520/621-4421 Fax: 520/621-8450 E-Mail: pfishback@eller.arizona.edu

Markets, Governments, and the Institutional Structure of Social Welfare Expenditures in the United States and Sweden in the 20th Century - Fishback, Price V (National Bureau of Economic Research Working Paper Series, 2022)
Social welfare spending on health, welfare, and insurance against adverse outcomes expanded a great deal in all of the developed countries during the 20th century. The institutional structure of the spending varies with respect to the extent that governments or market institutions provide the services. Sweden and the United States are on opposite ends of this spectrum. After discussing the problems with adverse selection and moral hazard that bedevil private and public social welfare organizations, I compare the development of the social welfare institutions in the U.S. and Sweden in the 20th century.
Author contact info: Price V. Fishback Department of Economics University of Arizona Tucson, AZ 85721 Tel: 520/621-4421 Fax: 520/621-8450 E-Mail: pfishback@eller.arizona.edu

Bayesian Persuasion with Lie Detection - Ederer, Florian; Min, Weicheng (National Bureau of Economic Research Working Paper Series, 2022)
How does lie detection constrain the potential for one person to persuade another to change her action? We consider a model of Bayesian persuasion in which the Receiver can detect lies with positive probability. We show that the Sender lies more when the lie detection probability increases. As long as this probability is sufficiently small, the Sender’s and the Receiver’s equilibrium payoffs are unaffected by the presence of lie detection because the Sender simply compensates by lying more. However, when the lie detection probability is sufficiently high, the Sender’s equilibrium payoff decreases and the Receiver’s equilibrium payoff increases with the lie detection probability. We explore several extensions including partial commitment, general state and action spaces, and different detection technologies and show that our model’s main insights continue to hold.
Author contact info: Florian Ederer Questrom School of Business Boston University 595 Commonwealth Avenie Boston, MA 02215 E-Mail: florian.ederer@gmail.com Weicheng Min Department of Economics 28 Hillhouse Avenue New Haven, CT 06511 USA E-Mail: minweicheng1994@gmail.com

Reserve System Design for Allocation of Scarce Medical Resources in a Pandemic: Some Perspectives from the Field - Pathak, Parag A; Persad, Govind; Sönmez, Tayfun; Ünver, M. Utku (National Bureau of Economic Research Working Paper Series, 2022)
The Covid-19 pandemic has brought renewed attention to rationing guidelines for scarce medical resources. This paper describes the benefits of using a reserve system over a priority system in operationalizing compromises between certain ethical goals. In the last two years, more than a dozen states and local jurisdictions have adopted reserve systems in initial phases of vaccine distribution. We highlight several design issues arising in some of these implementations.
Author contact info: Parag A. Pathak Department of Economics, E52-426 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-7458 E-Mail: ppathak@mit.edu Govind Persad Office 455C, Frank H. Ricketson Law Bldg 2255 East Evans Ave. Denver, CO 80210 E-Mail: gpersad@law.du.edu Tayfun Sönmez Boston College Department of Economics 140 Comm. Ave. Chestnut Hill, MA 02467 E-Mail: tayfun.sonmez@bc.edu M. Utku Ünver Boston College Department of Economics 140 Commonwealth Avenue Chestnut Hill, MA 02467 Tel: 617-5522217 E-Mail: unver@bc.edu

Safeguarding Consumers Through Minimum Quality Standards: Milk Inspections and Urban Mortality, 1880-1910 - Anderson, D. Mark; Charles, Kerwin Kofi; McKelligott, Michael; Rees, Daniel I (National Bureau of Economic Research Working Paper Series, 2022)
We examine the effect of enforcing minimum quality standards (MQSs) on consumer health. In the late 1800s, the urban milk supply was regularly skimmed and diluted with water, but consumers could not easily determine its quality because dyes, caramel, and salt were added. To protect consumers, milk inspectors were tasked with enforcing a well-defined MQS. Using city-level data for the period 1880-1910, we find that milk inspections reduced mortality from waterborne and foodborne diseases by 12-19 percent. Ours is the first study to provide evidence that MQSs can improve consumer health when directly applied to an experience or credence good.
Author contact info: D. Mark Anderson Department of Agricultural Economics & Economics Montana State University P.O. Box 172920 Bozeman, MT 59717 Tel: 406/366-0921 E-Mail: dwight.anderson@montana.edu Kerwin Charles School of Management Yale University 165 Whitney Avenue New Haven, CT. 06511 Fax: NA E-Mail: kerwin.charles@yale.edu Michael McKelligott Harris School of Public Policy University of Chicago 1307 E 60th St Chicago, IL 60637 E-Mail: mckelligott.michael@gmail.com Daniel I. Rees Department of Economics Universidad Carlos III de Madrid Calle Madrid 126 28903 Getafe Spain E-Mail: Daniel.Rees@uc3m.es

Gender Differences in Response to Competitive Organization? Differences Across Fields from a Product Development Platform Field Experiment - Boudreau, Kevin; Kaushik, Nilam (National Bureau of Economic Research Working Paper Series, 2022)
Prior research, primarily based on lab experiments, suggests that females might be more averse to competition than males and could be more inclined towards collaboration, instead. Were these findings to generalize to adults across the workforce, there could be profound implications for organizational design and personnel management. We report on a field experiment in which 97,678 adults from a wide range of fields and ages were invited to join a product development opportunity. Individuals were randomly assigned to treatments framing the opportunity as either involving competitive or collaborative interactions with other participants. Among those outside of science, technology, engineering, and math fields (STEM), we find significant gender differences in willingness to participate under competition. Among those in STEM fields, we detect no statistical gender differences. These results and broader patterns documented in the study are consistent with significant heterogeneity in competitiveness across both men and women, with field and career sorting resulting in differences (in gender differences) across fields.
Author contact info: Kevin Boudreau D'Amore-McKim School of Business Northeastern University 360 Huntington Avenue Boston, MA 02115 Tel: 617/373-3241 E-Mail: k.boudreau@northeastern.edu Nilam Kaushik Bannerghatta Road, Bengaluru, India IIMB India E-Mail: nilam.kaushik@iimb.ac.in

Air Pollution and Student Performance in the U.S. - Gilraine, Michael; Zheng, Angela (National Bureau of Economic Research Working Paper Series, 2022)
We combine satellite-based pollution data and test scores from over 10,000 U.S. school districts to estimate the relationship between air pollution and test scores. To deal with potential endogeneity we instrument for air quality using (i) year-to-year coal production variation and (ii) a shift-share instrument that interacts fuel shares used for nearby power production with national growth rates. We find that each one-unit increase in particulate pollution reduces test scores by 0.02 standard deviations. Our findings indicate that declines in particulate pollution exposure raised test scores and reduced the black-white test score gap by 0.06 and 0.01 standard deviations, respectively.
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 Angela Zheng Department of Economics McMaster University Kenneth Taylor Hall 1280 Main St W Hamilton, Onta L8S 4E8 Canada E-Mail: zhenga17@mcmaster.ca

Real Effects of Supplying Safe Private Money - Xu, Chenzi; Yang, He (National Bureau of Economic Research Working Paper Series, 2022)
Privately issued money often bears devaluation risk that create monetary transaction frictions. We evaluate the real effects of supplying a new type of safe money in the historical context of the US in 1863. We instrument for the change in monetary frictions locally using regulatory capital requirements and measure the degree safe money access with a market access approach derived from general equilibrium trade theory. Lowering monetary transaction costs increased traded goods production and spurred structural transformation with more manufacturing output, employment, and urban population. The growth in manufacturing was driven by employment and inputs rather than capital investment.
Author contact info: Chenzi Xu Graduate of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: chenzixu@stanford.edu He Yang Harvard University 1805 Cambridge St Cambridge, MA 02138 E-Mail: heyang.um@gmail.com

Exorbitant Privilege Gained and Lost: Fiscal Implications - Chen, Zefeng; Jiang, Zhengyang; Lustig, Hanno; Van Nieuwerburgh, Stijn; Xiaolan, Mindy Z (National Bureau of Economic Research Working Paper Series, 2022)
We study three centuries of U.K. fiscal history. Before WW-I, when the U.K. dominated global bond markets, the U.K.’s government debt was not always fully backed by its future surpluses, even after accounting for the seigniorage revenue from convenience yields. As predicted by theories of safe asset determination, investors concentrate extra fiscal capacity in a single country, the global safe asset supplier, based on relative macro fundamentals, and its debt growth may temporarily outstrip what is warranted by its own macro fundamentals. After the relative deterioration in U.K. fundamentals, due to the run-up in debt during WW-I and WW-II, bond investors focused exclusively on the U.K’s own macro fundamentals. Since then the U.K. debt has been fully backed by surpluses.
Author contact info: Zefeng Chen Guanghua School of Management Peking University 5 Yiheyuan Road Beijing China E-Mail: zefengchen@gsm.pku.edu.cn Zhengyang Jiang Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-2848 E-Mail: zhengyang.jiang@kellogg.northwestern.edu Hanno Lustig Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hlustig@stanford.edu Stijn Van Nieuwerburgh Columbia University Graduate School of Business Kravis Hall, office 796 665 West 130th Street New York, NY 10027 E-Mail: svnieuwe@gsb.columbia.edu Mindy Z. Xiaolan University of Texas at Austin 2110 Speedway B6600 Austin, TX 78703 E-Mail: mindy.xiaolan@mccombs.utexas.edu

Voting on a Trade Agreement: Firm Networks and Attitudes Toward Openness - Méndez, Esteban; Van Patten, Diana (National Bureau of Economic Research Working Paper Series, 2022)
We exploit a natural experiment to study the extent to which popular attitudes toward trade are driven by economic fundamentals. In 2007, Costa Rica put a free trade agreement (FTA) to a national referendum. With a single question on the ballot, 59% of Costa Rican adult citizens cast a vote on whether they wanted an FTA with the United States to be ratified, or not. We merge disaggregated referendum results, which break new ground on anonymity-compatible voting data, with employer-employee, customs, and firm-to-firm transactions data, and data on household composition and expenditures. We document that a firm’s exposure to the FTA, directly and via input-output linkages, significantly influences the voting behavior of its employees. This effect dominates that of sector-level exposure and is greater for voters aligned with pro-FTA political candidates. We also show that citizens considered the expected decrease in consumer prices when exercising their vote. Overall, economic factors explain 6% of the variation in voting patterns which cannot be accounted for by non-economic factors such as political ideology, and played a pivotal role in this vote.
Author contact info: 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

Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil - Fonseca, Julia; Matray, Adrien (National Bureau of Economic Research Working Paper Series, 2022)
We study a financial inclusion policy targeting Brazilian cities with low bank branch coverage using data on the universe of employees from 2000–2014. The policy leads to bank entry and to similar increases in both deposits and lending. It also fosters entrepreneurship, employment, and wage growth, especially for cities initially in banking deserts. These gains are not shared equally and instead increase with workers’ education, implying a substantial increase in wage inequality. The changes in inequality are concentrated in cities where the initial supply of skilled workers is low, indicating that talent scarcity can drive how financial development affects inequality.
Author contact info: Julia Fonseca University of Illinois at Urbana-Champaign Gies College of Business 1206 S. Sixth Street Champaign, IL 61820 E-Mail: juliaf@illinois.edu Adrien Matray Bendheim Center for Finance Princeton University 20 Washington Road Princeton, NJ 08540 Tel: 609/216-1591 E-Mail: amatray@princeton.edu

The Supplemental Poverty Measure: A New Method for Measuring Poverty - Fitzgerald, John; Moffitt, Robert A (National Bureau of Economic Research Working Paper Series, 2022)
We propose a new measure of the rate of poverty we call the Supplemental Expenditure Poverty Measure (SEPM) based on expenditure in the Consumer Expenditure survey. It treats household expenditure as a measure of resources available to purchase the minimum bundle necessary to meet basic needs. Our measure differs from conventional income and consumption poverty in both concept and measurement and it has advantages relative to both. Poverty rates using our basic measure are very close in level and recent trend to those of the most preferred income-based poverty rate produced by the Census Bureau. But our SEPM poverty rate differs from the Census measure at different levels of the poverty line. For example, that the number of individuals living in either poor or “almost” poor households is 5 percentage points greater (about 16 million individuals) using our measure. We also construct an augmented measure that adds additional potential liquid resources. This “maximal resources” measure indicates that if disadvantaged households used up all their bank balances and maximized their credit card borrowing, 9.6 percent of the population (over 31 million individuals) would still be poor and unable to purchase the goods necessary for the basic needs of life.
Author contact info: John Fitzgerald Bowdoin College 9700 College Station Bowdoin College Brunswick, ME 04011 E-Mail: jfitzger@bowdoin.edu Robert A. Moffitt Department of Economics Johns Hopkins University 3400 North Charles Street Baltimore, MD 21218 Tel: 410/516-7611 Fax: 410/516-7600 E-Mail: moffitt@jhu.edu

Economic Integration and the Transmission of Democracy - Tabellini, Marco; Magistretti, Giacomo (National Bureau of Economic Research Working Paper Series, 2022)
In this paper, we study the effects of economic integration with democracies on individuals’ democratic values and on countries’ institutions. We combine survey data with country level measures of democracy from 1960 to 2015, and exploit improvements in air, relative to sea, transportation to derive a time-varying instrument for trade. We find that economic integration with democracies increases both citizens’ support for democracy and countries’ democracy scores. Instead, trade with non-democracies has no impact on either attitudes or institutions. The effects of trade with democracies are stronger when partners have a longer history of democracy, grow faster, spend more on public goods, and are culturally closer. They are also driven by imports, rather than exports, and by integration with partners that export higher quality goods and that account for a larger share of a country’s trade in institutionally intensive, cultural, and consumer goods as well as in goods that involve more face-to-face interactions and entail higher levels of bilateral trust. These patterns are consistent with trade in goods favoring the transmission of democracy by signaling the (actual or perceived) desirability of the latter. We examine alternative mechanisms, and conclude that none of them can, alone, explain our findings.
Author contact info: Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu Giacomo Magistretti 700 19th St NW Washington, DC 20431 E-Mail: gmagistretti@imf.org

Addressing Non-Financial Barriers to College Access and Success: Evidence and Policy Implications - Dynarski, Susan; Nurshatayeva, Aizat; Page, Lindsay C; Scott-Clayton, Judith (National Bureau of Economic Research Working Paper Series, 2022)
Non-financial barriers to college are an important possible explanation for socioeconomic, racial, gender, and other gaps in college access and success. A sizeable economic literature documents policy efforts to understand and address these barriers. We review this literature on non-financial interventions for improving college access and success ranging from discreet and narrowly defined interventions to comprehensive and multifaceted programs and systemic-level solutions.
Author contact info: Susan Dynarski Harvard University Graduate School of Education 13 Appian Way Cambridge, MA 02138 Fax: NA E-Mail: susan_dynarski@harvard.edu Aizat Nurshatayeva 164 Angell street Providence, RI 02906 United States E-Mail: aizat_nurshatayeva@brown.edu Lindsay C. Page Annenberg Institute for School Reform Brown University Box 1985 Providence, RI 02912 Tel: 401.863.7990 E-Mail: Lindsay_page@brown.edu Judith Scott-Clayton Teachers College Columbia University 525 W.120th Street, Box 174 New York, NY 10027 Tel: 212/678-3478 Fax: 212/678-3699 E-Mail: scott-clayton@tc.columbia.edu

Bargaining and International Reference Pricing in the Pharmaceutical Industry - Dubois, Pierre; Gandhi, Ashvin; Vasserman, Shoshana (National Bureau of Economic Research Working Paper Series, 2022)
The United States spends twice as much per person on pharmaceuticals as European countries, in large part because prices are much higher in the US. This fact has led policymakers to consider legislation for price controls. This paper assesses the effects of a US international reference pricing policy that would cap prices in US markets by those offered in reference countries. We estimate a structural model of demand and supply for pharmaceuticals in the US and reference countries like Canada where prices are set through a negotiation process between pharmaceutical companies and the government. We then simulate the counterfactual equilibrium under such international reference pricing rules, allowing firms to internalize the cross-country externalities introduced by these policies. We find that in general, these policies would result in much smaller price decreases in the US than price increases in reference countries. The magnitude of these effects depends on the number, size and market structure of references countries. We compare these policies with a direct bargaining on prices in the US.
Author contact info: Pierre Dubois Toulouse School of Economics 1 esplanade de l’Université 31080 Toulouse Cedex 06 France E-Mail: Pierre.Dubois@tse-fr.eu Ashvin Gandhi University of California at Los Angeles Anderson School of Management 110 Westwood Plaza Los Angeles, CA 90095 Tel: 310/206-5572 E-Mail: ashvin.gandhi@anderson.ucla.edu Shoshana Vasserman Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: svass@stanford.edu

Skill Heterogeneity and Aggregate Labor Market Dynamics - Grigsby, John R (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies aggregate labor market dynamics when workers have heterogeneous skills for tasks which are subject to non-uniform labor demand shocks. When workers have different skills, movements in aggregate wages partly reflect a reallocation of different workers across tasks and into employment. This ensures that there nearly always exists some combination of task-specific demand shocks that induce aggregate employment and wages to negatively comove even in a frictionless economy. Furthermore, such reallocations would be interpreted either as a labor wedge or as a shift in an aggregate labor supply curve in representative agent economies. Developing a method to estimate the multidimensional skill distribution, I show that a frictionless model with realistic heterogeneity can replicate the mean wage increase and employment collapse of the Great Recession. Reduced-form composition-adjustment methods recover positive co-movements between employment and wages in recent periods suggesting an increasing role for composition effects through time, which the model rationalizes through changes in the skill distribution and composition of sectoral shocks.
Author contact info: John R. Grigsby Department of Economics and School of Public and International Affairs Princeton University Princeton, NJ 08544 Tel: 540/319-1889 E-Mail: jg6005@princeton.edu

The Demand for Money, Near-Money, and Treasury Bonds - Krishnamurthy, Arvind; Li, Wenhao (National Bureau of Economic Research Working Paper Series, 2022)
Bank-created money, shadow-bank money, and Treasury bonds all satisfy investors' demand for a liquid transaction medium and safe store of value. We measure the quantity of these three forms of liquidity and their corresponding liquidity premium over a sample from 1934 to 2016. We empirically examine the links between these different assets, estimating the extent to which they are substitutes, and the amount of liquidity per unit delivered by each asset. Treasury bonds and bank deposits are imperfect substitutes, in contrast to the findings of perfect substitutes of Nagel (2016). This result is directly relevant to the monetary transmission mechanism running through shifts in asset supplies, such as quantitative easing policies. Our results on the imperfect substitutability of bank and shadow-bank money also inform analyses of the coexistence of the shadow-banking and regulated banking system. We construct a new broad monetary aggregate based on our estimates and show that it helps resolve the money-demand instability and missing-money puzzles of the monetary economics literature.
Author contact info: Arvind Krishnamurthy Stanford Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 E-Mail: akris@stanford.edu Wenhao Li University of Southern California Marshall School of Business Los Angeles, CA E-Mail: liwenhao@marshall.usc.edu

Small Campaign Donors - Bouton, Laurent; Cagé, Julia; Dewitte, Edgard; Pons, Vincent (National Bureau of Economic Research Working Paper Series, 2022)
We study the characteristics and behavior of small campaign donors and compare them to large donors by building a dataset including all the 340 million individual contributions reported to the U.S. Federal Election Commission between 2005 and 2020. Thanks to the reporting requirements of online fundraising platforms first used by Democrats (ActBlue) and now Republicans (WinRed), we observe contribution-level information on the vast majority of small donations. We first show that the number of small donors (donors who do not give more than $200 to any committee during a two-year electoral cycle) and their total contributions have been growing rapidly. Second, small donors include more women and more ethnic minorities than large donors, but their geographical distribution does not differ much. Third, using a saturated fixed effects model, we find that race closeness, candidate ideological extremeness, whether candidates and donors live in the same district or state, and whether they have the same ethnicity increase contributions, with lower effects for small donors. Finally, we show that campaign TV ads affect the number and size of contributions to congressional candidates, particularly for small donors, indicating that pull factors are relevant to explain their behavior.
Author contact info: Laurent Bouton Georgetown University Department of Economics 37th & O Streets, NW Washington,DC 20057 Tel: 202/687-6109 E-Mail: boutonllj@gmail.com Julia Cagé Sciences Po Paris 28 Rue des Saints-Pères 75007 Paris France E-Mail: julia.cage@sciencespo.fr Edgard Dewitte Manor Road Building 10 Manor Road OX13UQ United Kingdom E-Mail: edgard.dewitte@economics.ox.ac.uk Vincent Pons Harvard Business School Morgan Hall 289 Soldiers Field Boston, MA 02163 Tel: 617/495-9329 E-Mail: vpons@hbs.edu

Cognitive Behavior Therapy Reduces Crime and Violence over 10 Years: Experimental Evidence - Blattman, Christopher; Chaskel, Sebastian; Jamison, Julian C; Sheridan, Margaret (National Bureau of Economic Research Working Paper Series, 2022)
Several small, short-term, or non-experimental studies show that cognitive behavioral informed trainings reduce antisocial behaviors for 1–2 years. But there is no large-scale, long-term research on persistence. We follow 999 high-risk men in Liberia 10 years after randomization into: 8 weeks of low-cost therapy, $200 cash, both, or a control group. A decade later, men receiving therapy or therapy with cash were about half as likely as the control group to engage in various antisocial behaviors, including robbery, drug selling, and street fights—far exceeding expert predictions. Impacts are concentrated in the highest-risk men, and most robust from therapy with cash.
Author contact info: Christopher Blattman Harris School of Public Policy The University of Chicago 1307 E 60th St Chicago, IL 60637 E-Mail: blattman@gmail.com Sebastian Chaskel Instiglio New York, NY E-Mail: sebastian.chaskel@gmail.com Julian C. Jamison Department of Economics University of Exeter Business School Exeter EX4 4PU UK E-Mail: j.jamison@exeter.ac.uk Margaret Sheridan University of North Carolina Department of Psychology and Neuroscience 235 E. Cameron Avenue Chapel Hill, NC E-Mail: sheridan.margaret@unc.edu

Local Shocks and Internal Migration: The Disparate Effects of Robots and Chinese Imports in the US - Faber, Marius; Sarto, Andrés P; Tabellini, Marco (National Bureau of Economic Research Working Paper Series, 2022)
Migration is a key mechanism through which local labor markets adjust to economic shocks. In this paper, we analyze the migration response of American workers to two of the most important shocks that hit US manufacturing since the 1990s: Chinese import competition and the introduction of industrial robots. Exploiting plausibly exogenous variation in exposure across US local labor markets over time, we establish a new fact. Even though both shocks drastically reduced employment in the manufacturing sector, only robots led to a sizable decline in population size. We provide evidence that negative employment spillovers outside manufacturing, caused by robots but not by Chinese imports, can explain the different migration responses. We interpret our findings through the lens of a model that highlights two mechanisms: the cost savings that each shock provides and the degree of complementarity between directly and indirectly exposed industries.
Author contact info: Marius Faber E-Mail: marius.faber@snb.ch Andrés P. Sarto Stern School of Business 44 West 4th Street New York, NY 10012 E-Mail: asarto@stern.nyu.edu Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu

Does the Delivery of Primary Health Care Improve Birth Outcomes? Evidence from the Rollout of Community Health Centers - Kose, Esra; O'Keefe, Siobhan M; Rosales-Rueda, Maria (National Bureau of Economic Research Working Paper Series, 2022)
Community Health Centers (CHCs) deliver primary care to underserved populations by locating sliding-scale clinics in economically disadvantaged areas. We investigate how this policy affected infant health using the rollout of CHCs and a flexible event study framework with Vital Statistics natality data. We find that maternal access to CHCs improves infant health outcomes within seven years after their introduction. Treatment-on-the-treated estimates show a 25 to 42 gram increase in birth weight and a 9% to 16% reduction in the likelihood of low birth weight. These improvements in infant health can be explained by increased access to early prenatal care and reductions in maternal smoking.
Author contact info: Esra Kose University of California, Merced Department of Economics 5200 North Lake Rd. Merced, CA 95343 E-Mail: esrakose@ucmerced.edu Siobhan M. O'Keefe Department of Economics Davidson College Davidson, NC 28036 E-Mail: siokeefe@davidson.edu Maria Rosales-Rueda Department of Economics Rutgers University 360 Martin Luther King Jr. Newark, NJ 07102 E-Mail: maria.rosales@rutgers.edu

The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications - Weber, Michael; D’Acunto, Francesco; Gorodnichenko, Yuriy; Coibion, Olivier (National Bureau of Economic Research Working Paper Series, 2022)
Households’ and firms’ subjective inflation expectations play a central role in macroeconomic and intertemporal microeconomic models. We discuss how subjective inflation expectations are measured, the patterns they display, their determinants, and how they shape households’ and firms’ economic choices in the data and help us make sense of the observed heterogeneous reactions to business-cycle shocks and policy interventions. We conclude by highlighting the relevant open questions and why tackling them is important for academic research and policy making.
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 Francesco D’Acunto McDonough School of Business Georgetown University Washington, DC 20057 E-Mail: francesco.dacunto@georgetown.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 Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com

How Should We Measure Infrastructure? The Case of Highways and Streets - Kornfeld, Robert; Fraumeni, Barbara M (National Bureau of Economic Research Working Paper Series, 2022)
The recent debates on infrastructure spending have led to renewed interest in the measurement of infrastructure and its effects on growth and well-being. This paper updates estimates of one important type of infrastructure capital—highways and streets. We compare BEA’s capital measures with more readily understood physical measures of road and lane miles, road quality and usage, and other measures from Highway Statistics (HS) data from FHWA. We also use the HS data and related research to disaggregate investment in highways and streets into more detailed types, such as new construction, repair and resurfacing, and bridge work, and apply separate depreciation rates to each type to produce updated estimates of net wealth stocks and depreciation. Relative to published BEA estimates, constant-price depreciation is revised up by about $9–$12 billion annually in recent years, and constant-price net stocks are revised down by about 22 percent. For the period from 2007 forward, net stocks per capita are flat in the published BEA estimates but decline slightly in the revised estimates. In addition, we update Fraumeni’s (2007) estimates of productive stocks that are converted to wealth stocks to facilitate a comparison. These updated wealth estimates also show lower net stocks and higher depreciation than in the published BEA estimates. We hope this paper encourages discussion about how to measure infrastructure capital, particularly highways and streets, and its effects.
Author contact info: Robert Kornfeld Bureau of Economic Analysis 4600 Silver Hill Road Suitland, MD 20746 E-Mail: robert.kornfeld@bea.gov Barbara M. Fraumeni Central University of Finance and Economics 770 Middle Road Dresden, ME 04342 E-Mail: Barbara_Fraumeni@hotmail.com

Bargaining over Taxes and Entitlements in the Era of Unequal Growth - Azzimonti, Marina; Karpuska, Laura; Mihalache, Gabriel (National Bureau of Economic Research Working Paper Series, 2022)
Entitlement programs have become an increasing component of total government spending in the US over the last six decades. To some observers, this growth of the welfare state is excessive and unwarranted. To others, it is a welcome counter-acting force to the rapid increase in income inequality. Using a political-economy model where parties bargain over taxes and entitlements, we argue that such dynamics can be explained by two factors. The first one is that institutional features of policy determination, in particular budget rules, make the status quo levels of taxes and entitlements difficult to change. The second one is that the country experienced a process of “unequal growth,” where top earners became richer while the income levels of the bottom 50 percent remained stagnant. Richer agents would like the government to provide more public goods as the economy grows. Low-income earners are willing to support such policies only in exchange for an expansion of entitlement programs. Sustained bargaining power by a party that represents the latter, amid budget rules, results in a rising share of entitlements. We explain how parties can take advantage of budget rules to tilt the evolution of policy in their favor in a simple two-period model. We then calibrate an infinite horizon version of the model to the US, and show that it delivers dynamics consistent with the data. Through counter-factual experiments, we find that while entitlements programs are sub-optimally large, welfare outcomes are better than those under alternative budget rules and in scenarios without rules, making it explicit that the type of budget rule matters for both welfare and equity.
Author contact info: Marina Azzimonti Economics Department Stony Brook University 100 Nicolls Road Stony Brook, NY 11794 E-Mail: marina.azzimonti@gmail.com Laura Karpuska Insper Rua Quatá, 300 - Vila Olímpia - CEP: 04546-042 São Paulo/SP - Brasil Brazil Tel: (11) 4504-2400 E-Mail: laukarpuska@gmail.com Gabriel Mihalache 425 Arps Hall Department of Economics The Ohio State University Columbus, OH 43210 USA E-Mail: mihalache.2@osu.edu

The Welfare Implications of Carbon Price Certainty - Aldy, Joseph E; Armitage, Sarah C (National Bureau of Economic Research Working Paper Series, 2022)
Experiences in real-world pollution markets suggest that firms make persistent errors in forecasting allowance and credit prices that inform their investment decisions. The residual uncertainty characterizing allowance and credit trading means that pollution markets may fail to deliver cost-effective abatement. This contrasts with price-based policies under which firms make investments that equate marginal abatement cost to an emission tax. We incorporate the additional cost of forecast errors under quantity-based programs into a standard Weitzman-style prices versus quantities framework. We distinguish between individual firms’ uncertainty over competitors’ private information and systemic uncertainty over future cost shocks. We show that a welfare-maximizing regulator would favor price instruments in response to the prospect of firm-specific forecast errors under quantity instruments, ceteris paribus, and the relative benefit of price instruments increases with forecast error variance. We discuss the role of policy design, such as incorporating price collars, in mitigating cost-inefficiencies from price forecast errors.
Author contact info: Joseph E. Aldy Harvard Kennedy School Ofer 403, Mailbox 114 79 JFK Street Cambridge, MA 02138 Tel: 617/496-7213 E-Mail: joseph_aldy@hks.harvard.edu Sarah C. Armitage Boston University Questrom School of Business Rafik B. Hariri Building 595 Commonwealth Avenue Boston, MA 02215 E-Mail: armitage@bu.edu

The Macroeconomic Expectations of Firms - Candia, Bernardo; Coibion, Olivier; Gorodnichenko, Yuriy (National Bureau of Economic Research Working Paper Series, 2022)
Using surveys of firms around the world, we review existing evidence on how firms form their macroeconomic expectations. Several facts stand out. First, the mean inflation forecasts of firms often deviate significantly from those of professional forecasters and households. Second, disagreement about inflation among firms is large. Third, firms often change their short-run and long-run inflation expectations jointly and by similar amounts. Fourth, firms in economies with a history of low and stable inflation are inattentive to inflation and monetary policy, but this is less true in countries with more volatile environments. Fifth, firms form expectations about inflation and the real economy jointly, but the way in which they do can differ widely across countries. Finally, we show that conditioning on firms’ inflation expectations generates a stable Phillips curve relationship. We also review evidence showing that exogenous variation in the macroeconomic expectations of firms affects their decisions.
Author contact info: 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

Housing Demand and Remote Work - Mondragon, John A; Wieland, Johannes (National Bureau of Economic Research Working Paper Series, 2022)
What explains record U.S. house price growth since late 2019? We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period. Using variation in remote work exposure across U.S. metropolitan areas we estimate that an additional percentage point of remote work causes a 0.93 percent increase in house prices after controlling for negative spillovers from migration. This cross-sectional estimate combined with the aggregate shift to remote work implies that remote work raised aggregate U.S. house prices by 15.1 percent. Using a model of remote work and location choice we argue that this estimate is a lower bound on the aggregate effect. Our results imply a fundamentals-based explanation for the recent increases in housing costs over speculation or financial factors, and that the evolution of remote work is likely to have large effects on the future path of house prices and inflation.
Author contact info: John A. Mondragon Federal Reserve Bank of San Francisco 101 Market St San Francisco, CA 94105 E-Mail: john.mondragon@sf.frb.org Johannes Wieland Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 510/388-2785 E-Mail: jfwieland@ucsd.edu

Understanding of Trade - Stantcheva, Stefanie (National Bureau of Economic Research Working Paper Series, 2022)
This paper sheds new light on two questions: How do people perceive and understand trade and trade policy, and what shapes their support for different trade policies? Despite extensive research documenting the efficiency gains from trade and its distributional impacts on different groups of workers, firms, and consumers, we still need to uncover how people perceive these various effects of trade. Trade involves many trade-offs. When forming their views on trade policy, people have to balance their roles as consumers and workers, consider both personal and broader economic and societal impacts, and evaluate concerns of efficiency and equity. Which of these considerations matters most? Using new large-scale surveys and experiments, I highlight three main findings. First, while earlier work has established that consumer gains from trade are diffuse and job losses are concentrated, I directly show the impact of these two considerations on people’s views about trade. I find that perceived job risks matter more for policy views than perceived consumer gains. Second, beyond their own material self-interest, people care about the broader efficiency gains and adverse distributional consequences from trade. Support for free trade is best predicted by the belief that trade generates efficiency gains. Concerns about the adverse distributional consequences of trade do not necessarily reduce support for free trade: instead, they increase support for compensatory redistribution. These results also highlight the importance of compensatory redistribution as an indissociable part of trade policy in people’s minds. Third, personal exposure to trade shapes policy views in two ways: directly (through self-interest) and indirectly by changing people’s perceptions of trade’s broader efficiency and distributional implications.
Author contact info: Stefanie Stantcheva Department of Economics Littauer Center 232 Harvard University Cambridge, MA 02138 Tel: 617-496-2614 E-Mail: sstantcheva@fas.harvard.edu

Steering a Ship in Illiquid Waters: Active Management of Passive Funds - Koont, Naz; Ma, Yiming; Pastor, Lubos; Zeng, Yao (National Bureau of Economic Research Working Paper Series, 2022)
Exchange-traded funds (ETFs) are typically viewed as passive index trackers. In contrast, we show that corporate bond ETFs actively manage their portfolios, trading off index tracking against liquidity transformation. In our model, ETFs optimally choose creation and redemption baskets that include cash and only a subset of index assets, especially if those assets are illiquid. Our evidence supports the model. We find that ETFs dynamically adjust their baskets to correct portfolio imbalances while facilitating ETF arbitrage. Basket inclusion improves bond liquidity in general, but worsens it in periods of large imbalance between creations and redemptions, such as the COVID-19 crisis.
Author contact info: Naz Koont Columbia Business School E-Mail: nazkoont@gmail.com Yiming Ma Columbia University Columbia Business School E-Mail: ym2701@columbia.edu 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 Yao Zeng Wharton School University of Pennsylvania 2322 Steinberg-Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104 E-Mail: yaozeng@wharton.upenn.edu

Liquidity Traps, Prudential Policies, and International Spillovers - Bianchi, Javier; Coulibaly, Louphou (National Bureau of Economic Research Working Paper Series, 2022)
We investigate optimal monetary and macroprudential policies in an open economy with aggregate demand externalities and an occasionally binding zero lower bound constraint. The optimal policy balances output stabilization and capital flow management, potentially requiring lower or higher nominal interest rates. We show how international spillovers operate through the world real rate and call for macroprudential policies. Finally, we establish that a world economy with macroprudential policy welfare dominates a laissez-faire regime, in stark contrast with recent concerns.
Author contact info: Javier Bianchi Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: javieribianchi@gmail.com Louphou Coulibaly Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 E-Mail: lcoulibaly@wisc.edu

Price Theory for Incomplete Markets - Farhi, Emmanuel; Olivi, Alan; Werning, Iván (National Bureau of Economic Research Working Paper Series, 2022)
We provide a price theory for incomplete markets that extends the traditional Walrasian analysis. We derive formulas expressing the consumption response to current and future changes in interest rates and income. Our analysis provides a natural decomposition of these responses into substitution and income effects with structural interpretation, emphasizing statistics such as the marginal propensity to save and local measures of prudence in utility. We handle general uncertainty in a compact and intuitive manner by adjusting probability distributions: a risk-adjusted probability, commonly used in finance, and a novel prudence-adjusted probability, specifically useful for incomplete markets. Our formulas reveal various cross-restrictions implied by the theory on consumer behavior. Numerical explorations show that the new statistics we identify matter significantly to understand aggregate demand in incomplete markets, beyond the impact of heterogeneous marginal propensities to consume or binding borrowing constraints.
Author contact info: Emmanuel Farhi Harvard University E-Mail: *NA user is deceased Alan Olivi UCL E-Mail: a.olivi@ucl.ac.uk 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

The Link between Health and Working Longer: Disparities in Work Capacity - Berger, Benjamin; Lopez Garcia, Italo; Maestas, Nicole; Mullen, Kathleen J (National Bureau of Economic Research Working Paper Series, 2022)
Good health is important for employment at older ages. However, little is known about how health-related functional abilities interact with occupational demands to shape work capacity. Using new data, we quantify individuals’ functional abilities, combine that information with occupation-specific ability requirements, and create new measures of individuals’ potential occupations and earnings. We find that average functional abilities, potential occupations, and potential earnings decline only slightly with age, indicating that many Americans maintain work capacity into their late 60s. Gaps in work capacity by race/ethnicity and gender are small, suggesting health is not a major driver of observed earnings disparities. However, gaps in work capacity by education are large and increase with age, suggesting diminished prospects for working longer among those with less education. Although work capacity among Black respondents improves across cohorts, today’s middle-aged white Americans have lower work capacity than those now at retirement age, suggesting rising rates of work disability as these cohorts age.
Author contact info: Benjamin Berger John F. Kennedy School of Government 79 John F. Kennedy St Cambridge, MA 02138 Tel: 7176022420 E-Mail: benjamin_berger@hks.harvard.edu Italo Lopez Garcia Center for Economic and Social Research (CESR)- USC 635 Downey Way, VPD Los Angeles, CA 90089 United States Tel: 3109574873 E-Mail: italolop@usc.edu Nicole Maestas Department of Health Care Policy Harvard Medical School 180 Longwood Avenue Boston, MA 02115 Tel: 617/432-3455 E-Mail: maestas@hcp.med.harvard.edu Kathleen J. Mullen Department of Economics University of Oregon 1285 University of Oregon Eugene, OR 97403 E-Mail: kjmullen@uoregon.edu

Human Capital Growth - with Region and Gender in Perspective - Liu, Gang; Fraumeni, Barbara M; Managi, Shunsuke (National Bureau of Economic Research Working Paper Series, 2022)
Chapter 6 from the forthcoming Inclusive Wealth Report 2022 looks at human capital in greater detail, based on the latest human capital estimates from the Inclusive Wealth Report (IWR) project. In the chapter, which is repeated here, the growth of human capital and several of its constituent factors are broken down by gender and by region, and in some cases also by income, since apparently, human capital in the world is not evenly distributed across different regions or countries by income, or between educated males and females, although in almost all country cases total and per capita human capital have grown over time. The purpose is to identify the sources of human capital growth by region, gender, and various determining factors over the observed time period, 1990-2020.
Author contact info: Gang Liu Statistics Norway Akersveien 26 0177 Oslo Norway Tel: +47 40902618 E-Mail: Gang.Liu@ssb.no Barbara M. Fraumeni Central University of Finance and Economics 770 Middle Road Dresden, ME 04342 E-Mail: Barbara_Fraumeni@hotmail.com Shunsuke Managi Urban Institute Kyushu University 744 Motooka, Nishi-ku Fukuoka, 819-0395 Japan E-Mail: managi@doc.kyushu-u.ac.jp

The Secular Decline in Private Firm Leverage - Bellon, Aymeric; Dobridge, Christine L; Gilje, Erik P; Whitten, Andrew (National Bureau of Economic Research Working Paper Series, 2022)
Using firm-level administrative tax data, we document dramatic reductions in private leverage since the Global Financial Crisis, while leverage among public firms rose during this period. Changing firm characteristics are unable to account for this pattern. Younger and smaller private firms experience large declines in leverage. Reduced lever-age among private firms is correlated with lower investment. The decline in private firm leverage and investment is strongly related to plausibly exogenous increases in local area bank capital requirements. Our findings suggest that banks’ credit supply plays a prominent role in explaining the leverage pattern of private firms.
Author contact info: Aymeric Bellon UNC Kenan-Flagler Business School The University of North Carolina at Chapel Hill 300 Kenan Center Drive Chapel Hill, NC 27599 E-Mail: aymeric_bellon@kenan-flagler.unc.edu Christine L. Dobridge Federal Reserve Board E-Mail: christine.l.dobridge@frb.gov Erik P. Gilje The Wharton School University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/898-1198 E-Mail: erikgilje@yahoo.com Andrew Whitten Office of Tax Analysis Department of the Treasury Washington, DC 20220 E-Mail: andrew.whitten@treasury.gov

Noisy Global Value Chains - Bui, Ha; Huo, Zhen; Levchenko, Andrei A; Pandalai-Nayar, Nitya (National Bureau of Economic Research Working Paper Series, 2022)
We study international propagation of both fundamental and non-fundamental shocks in a global production network model with information frictions. Producers in a sector do not perfectly observe other country-sector fundamentals, and their production decisions depend on their beliefs about worldwide exogenous states as well as other producers’ behavior. In this environment, “noise” shocks – errors in the public signals about fundamentals – propagate internationally and generate aggregate fluctuations. Using a novel panel dataset containing the frequencies of country-industry-specific economic news reports by 11 leading newspapers in the G7 plus Spain, we show that greater news coverage is associated with both smaller GDP forecast errors, and less disagreement among forecasters. We use these empirical regularities to discipline the parameters governing the severity of information frictions. We find that noise shocks are a quantitatively important source of international fluctuations. Noise shocks propagate relatively more powerfully to the more distant parts of the network, while TFP shocks propagate less powerfully to the more distant sectors in the presence of informational frictions.
Author contact info: Ha Bui E-Mail: habuithu@utexas.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

Do Sell-Side Analysts Say “Buy” While Whispering “Sell”? - Hirshleifer, David; Shi, Yushui; Wu, Weili (National Bureau of Economic Research Working Paper Series, 2022)
We study here say-buy/whisper-sell behavior wherein analysts issue optimistic recommendations to attract retail investors while providing more accurate information to fund managers in private, sometimes resulting in fund managers selling the recommended stocks. We test whether fund managers return the favor using their votes for analysts in a Chinese “star analyst” competition. Managers are more likely to vote for analysts who exhibit greater “say-buy/whisper-sell” behavior toward these managers. This suggests that analysts reduce the accuracy of their public recommendations, thereby maintaining the value of their private advice to funds. Our findings help explain several empirical puzzles about analyst public recommendations.
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 Yushui Shi Monash University 6 Oxford Irvine, CA 92617 E-Mail: yushuis@uci.edu Weili Wu Central University of Finance and Economics, School of Finance Beijing China E-Mail: wlwu@cufe.edu.cn

Saving Effects of a Real-Life Imperfectly Implemented Net Wealth Tax: Evidence from Norwegian Micro Data - Alstadsæter, Annette; Bjørneby, Marie; Kopczuk, Wojciech; Markussen, Simen; Røed, Knut (National Bureau of Economic Research Working Paper Series, 2022)
Countries that implement wealth taxes make many practical compromises regarding relative treatment and approach to valuation of different categories of assets in order to ease assessment and liquidity difficulties with this form of taxation. Relying on Norwegian variation in tax and base rules, we illustrate the resulting complexity and evaluate the effect of taxation on saving and portfolio composition. Our results highlight sensitivity of the strength of response to the base definition.
Author contact info: Annette Alstadsæter School of Economics and Business Norwegian University of Life Sciences P.O. Box 5003, NO-1432 Ås Norway E-Mail: annette.alstadsater@nmbu.no Marie Bjørneby E-Mail: marie.bjorneby@nmbu.no Wojciech Kopczuk Columbia University 420 West 118th Street, Rm. 1022 IAB MC 3323 New York, NY 10027 Tel: 212/854-2519 Fax: 212/864-8059 E-Mail: wk2110@columbia.edu Simen Markussen Ragnar Frisch Centre for Economic Research Gaustadalléen 21, 0349 Oslo Norway E-Mail: simen.markussen@frisch.uio.no Knut Røed Ragnar Frisch Centre for Economic Research Gaustadalléen 21, 0349 Oslo Norway E-Mail: knut.roed@frisch.uio.no

Patterns of Time Use Among Older People - Ferranna, Maddalena; Sevilla, JP; Zucker, Leo; Bloom, David E (National Bureau of Economic Research Working Paper Series, 2022)
We analyze time use studies to describe how people allocate their time as they age, especially among paid work, unpaid work, leisure, and personal care. We emphasize differences in time allocation between older (i.e., those aged 65+) and younger people; between developed and developing countries; and by other demographic characteristics such as gender, marital status, health status, and educational attainment. We summarize related economic literature and crystallize a framework for thinking about key conceptual issues involving time allocation over the life cycle. We conclude by assessing the adequacy of global data resources in this area and by discussing some promising opportunities to fill salient gaps in the literature.
Author contact info: Maddalena Ferranna Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, 1202-B Boston, MA 02115 E-Mail: ferranna@usc.edu JP Sevilla Department of Global Health and Population Harvard T.H. Chan School of Public Health 665 Huntington Avenue Boston, Mass 02115 E-Mail: jsevilla@hsph.harvard.edu Leo Zucker Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, 1202-B Boston, MA 02115 E-Mail: leoz@iadb.org David E. Bloom Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, Suite 1202 Boston, MA 02115 Tel: 617/432-0866 Fax: 617/432-6733 E-Mail: dbloom@hsph.harvard.edu

The Case for Using the MVPF in Empirical Welfare Analysis - Hendren, Nathaniel; Sprung-Keyser, Ben (National Bureau of Economic Research Working Paper Series, 2022)
This paper outlines the case for using the Marginal Value of Public Funds (MVPF) in empirical welfare analysis. It compares the MVPF approach with more traditional welfare metrics such as the Cost-Benefit Ratio and the Net Social Benefits criterion. It outlines the advantages of the MVPF approach relative to these metrics. In building the case for the MVPF, this paper also addresses several misconceptions about the MVPF that appear in recent literature.
Author contact info: 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

GDPR and the Lost Generation of Innovative Apps - Janßen, Rebecca; Kesler, Reinhold; Kummer, Michael E; Waldfogel, Joel (National Bureau of Economic Research Working Paper Series, 2022)
Using data on 4.1 million apps at the Google Play Store from 2016 to 2019, we document that GDPR induced the exit of about a third of available apps; and in the quarters following implementation, entry of new apps fell by half. We estimate a structural model of demand and entry in the app market. Comparing long-run equilibria with and without GDPR, we find that GDPR reduces consumer surplus and aggregate app usage by about a third. Whatever the privacy benefits of GDPR, they come at substantial costs in foregone innovation.
Author contact info: Rebecca Janßen ZEW Mannheim L7 1 68161 Mannheim Germany E-Mail: rebecca.janssen@zew.de Reinhold Kesler University of Zurich Plattenstrasse 14 Zurich CH-8032 Switzerland E-Mail: reinhold.kesler@business.uzh.ch Michael E. Kummer EFRY 1.17 University of East Anglia Norwich NR47TJ United Kingdom Tel: +447908910874 E-Mail: M.Kummer@uea.ac.uk Joel Waldfogel Frederick R. Kappel Chair in Applied Economics 3-177 Carlson School of Management University of Minnesota 321 19th Avenue South Minneapolis, MN 55455 Tel: 612/626-7128 E-Mail: jwaldfog@umn.edu

Local Carbon Policy - Cruz, José-Luis; Rossi-Hansberg, Esteban (National Bureau of Economic Research Working Paper Series, 2022)
We study local carbon policy to address the consequences of climate change. Standard analysis suggests that the social cost of carbon determines optimal carbon policy. We start by using the spatial integrated assessment model in Cruz and Rossi-Hansberg (2021) to measure the local social monetary cost of CO² emissions: the Local Social Cost of Carbon (LSCC). Although the largest welfare costs from global warming are concentrated in the warmest parts of the developing world, adjusting for the local marginal utility of income implies that the LSCC peaks in warm and high-income regions like the southern parts of the U.S. and Europe, as well as Australia. We then proceed to study the effect of the actual carbon reduction pledges in the Paris Agreement and the progress they can make in implementing the expressed goal of keeping global temperature increases below 2°C. We find that although the distribution of pledges is roughly in line with the LSCC, their magnitude is largely insufficient to achieve its goals. The required carbon taxes necessary to keep temperatures below 2°C over the current century are an order of magnitude higher and involve large implicit inter-temporal transfers. Increasing the elasticity of substitution across energy sources is important to reduce the carbon taxes necessary to achieve warming goals.
Author contact info: José-Luis Cruz 33 Liberty St Office 4-117 New York City, NY 10045 United States Tel: 6098743366 E-Mail: jose-luis.cruz@ny.frb.org 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

Uncertainty Shocks, Capital Flows, and International Risk Spillovers - Akinci, Ozge; Kalemli-Özcan, Ṣebnem; Queralto, Albert (National Bureau of Economic Research Working Paper Series, 2022)
Foreign investors’ changing appetite for risk-taking have been shown to be a key determinant of the global financial cycle. Such fluctuations in risk sentiment also correlate with the dynamics of UIP premia, capital flows, and exchange rates. To understand how these risk sentiment changes transmit across borders, we propose a two-country macroeconomic framework. Our model features cross-border holdings of risky assets by U.S. financial intermediaries who operate under financial frictions, and who act as global intermediaries in that they take on foreign asset risk. In this setup, an exogenous increase in U.S.-specific uncertainty, modeled as higher volatility in U.S. assets, leads to higher risk premia in both countries. This occurs because higher uncertainty leads to deleveraging pressure on U.S. intermediaries, triggering higher global risk premia and lower global asset values. Moreover, when U.S. uncertainty rises, the exchange rate in the foreign country vis-à-vis the dollar depreciates, capital flows out of the foreign country, and the UIP premium increases in the foreign country and decreases in the U.S., as in the data.
Author contact info: Ozge Akinci Federal Reserve Bank of New York Research and Statistics Group International Research Function 33 Liberty Street New York, NY 10045 E-Mail: ozge.akinci@ny.frb.org Ṣebnem Kalemli-Özcan Department of Economics University of Maryland Tydings Hall 4118D College Park, MD 20742-7211 Tel: 301/405-3266 E-Mail: kalemli@econ.umd.edu Albert Queralto E-Mail: albert.queralto@frb.gov

State Dependent Government Spending Multipliers: Downward Nominal Wage Rigidity and Sources of Business Cycle Fluctuations - Jo, Yoon J; Zubairy, Sarah (National Bureau of Economic Research Working Paper Series, 2022)
We consider a New Keynesian model with downward nominal wage rigidity (DNWR) and show that government spending is much more effective in stimulating output in a low-inflation recession relative to a high-inflation recession. The government spending multiplier is large when DNWR binds, but the nature of recession matters due to the opposing response of inflation. In a demand-driven recession, inflation falls, preventing real wages from falling, leading to unemployment, while inflation rises in a supply-driven recession limiting the consequences of DNWR on employment. We document supporting empirical evidence, using both historical time series data and cross-sectional data from U.S. states.
Author contact info: Yoon Joo. Jo Department of Economics Texas A&M University 4228 TAMU College Station, TX 77843 E-Mail: yoonjo@tamu.edu Sarah Zubairy Department of Economics Texas A&M University 4228 TAMU College Station, TX 77843 Tel: 979/845-7382 E-Mail: szubairy@tamu.edu

Government Debt and Capital Accumulation in an Era of Low Interest Rates - Mankiw, N. Gregory (National Bureau of Economic Research Working Paper Series, 2022)
This essay discusses the reasons for and implications of the decline in real interest rates around the world over the past several decades. It suggests that the decline in interest rates is largely explicable from trends in saving, growth, and markups. In this environment, greater government debt is likely not problematic from a budgetary standpoint. But a Ponzi-like scheme of perpetual debt rollover might fail, and such a failure would make an already-bad state of the world even worse. In addition, even if a perpetual debt rollover succeeds, the increased debt could still crowd out capital, reducing labor productivity, real wages, and consumption.
Author contact info: N. Gregory Mankiw Department of Economics Littauer 223 Harvard University Cambridge, MA 02138 Tel: 617/495-4301 Fax: 617/495-7730 E-Mail: ngmankiw@fas.harvard.edu

Q-Monetary Transmission - Jeenas, Priit; Lagos, Ricardo (National Bureau of Economic Research Working Paper Series, 2022)
We study the effects of monetary-policy-induced changes in Tobin's q on corporate investment and capital structure. We develop a theory of the mechanism, provide empirical evidence, evaluate the ability of the quantitative theory to match the evidence, and quantify the relevance for monetary transmission to aggregate investment.
Author contact info: Priit Jeenas Ramon Trias Fargas, 25-27 Universitat Pompeu Fabra Department of Economics and Business Barcelona 08005 Spain Tel: +34644809164 E-Mail: priit.jeenas@upf.edu 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

Data and Markups: A Macro-Finance Perspective - Eeckhout, Jan; Veldkamp, Laura (National Bureau of Economic Research Working Paper Series, 2022)
What does market power look like in a data economy? Economists typically use markups to measure market power. However, we use a simple model to show how firms’ growing stocks of data can change markups, without changing their power to affect prices. Data’s effects depend on how markups are aggregated. Growing data can produce differences in markup measures that match empirical facts. Markup aggregation wedges can measure data stocks and offer a way to purge markups of data’s effects to reveal market power.
Author contact info: Jan Eeckhout Department of Economics Universitat Pompeu Fabra Trias Fargas 25 Barcelona 08005 Spain E-Mail: jan.eeckhout@upf.edu Laura Veldkamp Columbia Business School 725 Kravis Hall 665 W 130th St New York, NY 10027 Tel: 212/998-0527 Fax: 212/995-4218 E-Mail: lv2405@columbia.edu

Analyzing the Agenda of the U.K. Parliament Over the Long Run - Hanlon, W. Walker (National Bureau of Economic Research Working Paper Series, 2022)
This article develops a method for quantitatively tracking the agenda of the British Parliament—by which I mean the substantive topics on which Parliamentary debate was focused—from 1810-2005 using descriptions of 1.7 million Parliamentary debates from the Parliamentary Hansard. This provides a new tool for analyzing the evolution of the British political system across nearly two centuries. I describe and validate this new measure and then present an application that focuses on assessing the influence of the party in government on the Parliamentary agenda.
Author contact info: Walker Hanlon Department of Economics Northwestern University 2211 Campus Drive, 3rd floor Evanston, IL 60208 E-Mail: walker.hanlon@gmail.com

International Trade and the Environment: Three Remaining Empirical Challenges - Cherniwchan, Jevan M; Taylor, M. Scott (National Bureau of Economic Research Working Paper Series, 2022)
Considerable progress has been made in our understanding of the relationship between international trade and the environment since Gene Grossman and Alan Krueger published their now seminal working paper examining the potential environmental effects of the North American Free Trade Agreement in 1991. This review uses their original paper as a guide to highlight key developments along three main branches of research that all stem from their analysis: (i) the interaction between international trade, economic growth, and environmental outcomes, (ii) the role of environmental regulation in determining trade and investment flows, and (iii) estimating the relative magnitudes of the scale, composition, and technique effects induced by trade. It discusses key developments along each branch, with a particular focus on the empirical challenges that have impeded progress. It also highlights an area along each branch that is ripe for further study. These areas are termed the Three Remaining Challenges.
Author contact info: Jevan Cherniwchan Department of Economics Kenneth Taylor Hall (KTH), 442 McMaster University 1280 Main Street West Hamilton, ON L8S 4M4 Canada E-Mail: cherniwj@mcmaster.ca 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

Population, Productivity, and Sustainable Consumption - Pindyck, Robert S (National Bureau of Economic Research Working Paper Series, 2022)
How does the sustainable level of consumption depend on productivity growth and the size and growth rate of the population? What is the effect of uncertainty over these growth rates? I address these questions using a model in which productivity and population growth are stochastic, and social welfare allows for human lives to have (positive or negative) intrinsic value. I show how the maximum sustainable consumption-wealth ratio depends on expected rates of productivity and population growth, the volatility of those growth rates, and the extent to which welfare depends directly on the size of the population. For plausible parameter values, the sustainable consumption-wealth ratio is well below the optimal ratio that maximizes welfare. This raises a question: Given its cost, should sustainability be a social objective?
Author contact info: Robert S. Pindyck MIT Sloan School of Management 100 Main Street, E62-522 Cambridge, MA 02142 Tel: 617/253-6641 Fax: 617/258-6855 E-Mail: RPINDYCK@MIT.EDU

Top Income Inequality and Tax Policy - Delestre, Isaac; Kopczuk, Wojciech; Miller, Helen; Smith, Kate (National Bureau of Economic Research Working Paper Series, 2022)
The share of pre-tax income flowing to the top of the UK income distribution increased continually and substantially in the three decades leading up to the financial crisis, but has changed little since 2013. Using microdata sampled from UK tax records, we describe the nature of top incomes in the UK and how they are taxed. We show that wage income is the dominant source of pre-tax income, even for highest-income 0.1% of UK adults. But, ‘active’ business income – derived from self-employment or closely-held incorporated businesses – is considerably more important for the top 1% than for those with lower incomes. High-income wage earners work disproportionately in financial services. The high-income self-employed are predominately working in partnerships in professions such as accountancy and legal services. Overall, UK income taxes are progressive: average tax rates rise with income. Taxes on top incomes have been increased since 2010, with the result that the post-tax share of income flowing to the top has fallen. But average tax rates vary significantly within the top and depend on how income is received. Incomes from business ownership and investment are taxed at lower rates than employment income. We discuss options for reforming the taxation of top incomes.
Author contact info: Isaac Delestre IFS 7 Ridgmount Street London WC1E 7AE UK E-Mail: isaac.delestre@ifs.org.uk Wojciech Kopczuk Columbia University 420 West 118th Street, Rm. 1022 IAB MC 3323 New York, NY 10027 Tel: 212/854-2519 Fax: 212/864-8059 E-Mail: wk2110@columbia.edu Helen Miller IFS 7 Ridgmount Street London WC1E 7AE UK E-Mail: helen_m@ifs.org.uk Kate Smith IFS 7 Ridgmount Street London WC1E 7AE UK E-Mail: k.e.smith2@lse.ac.uk

Aligned with Whom? Direct and Social Goals for AI Systems - Korinek, Anton; Balwit, Avital (National Bureau of Economic Research Working Paper Series, 2022)
As artificial intelligence (AI) becomes more powerful and widespread, the AI alignment problem—how to ensure that AI systems pursue the goals that we want them to pursue—has garnered growing attention. This article distinguishes two types of alignment problems depending on whose goals we consider, and analyzes the different solutions necessitated by each. The direct alignment problem considers whether an AI system accomplishes the goals of the entity operating it. In contrast, the social alignment problem considers the effects of an AI system on larger groups or on society more broadly. In particular, it also considers whether the system imposes externalities on others. Whereas solutions to the direct alignment problem center around more robust implementation, social alignment problems typically arise because of conflicts between individual and group-level goals, elevating the importance of AI governance to mediate such conflicts. Addressing the social alignment problem requires both enforcing existing norms on their developers and operators and designing new norms that apply directly to AI systems.
Author contact info: Anton Korinek Department of Economics University of Virginia Monroe Hall 246 248 McCormick Rd Charlottesville, VA 22904 E-Mail: anton@korinek.com Avital Balwit Oxford University Future of Humanity Institute Trajan House Mill St Oxford OX2 0DJ United Kingdom E-Mail: avital.balwit@gmail.com

The Dynamic Impact of Market Integration: Evidence from Renewable Energy Expansion in Chile - Gonzales, Luis E; Ito, Koichiro; Reguant, Mar (National Bureau of Economic Research Working Paper Series, 2022)
Effective and economical expansion of renewable energy is one of the most urgent and important challenges of addressing climate change. However, many countries are facing a problem because existing network infrastructures (i.e., transmission networks) were not originally built to accommodate renewables, which creates disconnections between demand centers and renewable supply. In this paper, we study the static and dynamic impacts of market integration on renewable energy expansion. Our theory highlights that statically, market integration improves allocative efficiency by gains from trade, and dynamically, it incentivizes new entry of renewable power plants. Using two recent grid expansions in the Chilean electricity market, we empirically test our theoretical predictions and show that commonly-used event study estimation underestimates the dynamic benefits if renewable investments occur in anticipation of market integration. We build a structural model of power plant entry and show how to correct for such bias. We find that market integration resulted in price convergence across regions, increases in renewable generation, and decreases in generation cost and pollution emissions. Furthermore, a substantial amount of renewable entry would not have occurred in the absence of market integration. We show that ignoring this dynamic effect would substantially understate the benefits of transmission investments.
Author contact info: Luis E. Gonzales Pontificia Universidad Católica de Chile Centro Latinoamericano de Políticas Económicas y Sociales - CLAPES UC Avenida Libertador Bernardo O'Higgins 440, Piso 13. Santiago de Chile E-Mail: lwgonzal@uc.cl Koichiro Ito Harris School of Public Policy University of Chicago 1155 East 60th St Chicago, IL 60637 Tel: 415-735-5224 E-Mail: ito@uchicago.edu Mar Reguant Department of Economics Northwestern University 302 Donald P. Jacobs 2001 Sheridan Road Evanston, IL 60208 E-Mail: mar.reguant@northwestern.edu

Bunching and Taxing Multidimensional Skills - Boerma, Job; Tsyvinski, Aleh; Zimin, Alexander P (National Bureau of Economic Research Working Paper Series, 2022)
We characterize optimal policies in a multidimensional nonlinear taxation model with bunching. We develop an empirically relevant model with cognitive and manual skills, firm heterogeneity, and labor market sorting. The analysis of optimal policy is based on two main results. We first derive an optimality condition − a general ABC formula − that states that the entire schedule of benefits of taxes second order stochastically dominates the entire schedule of tax distortions. Second, we use Legendre transforms to represent our problem as a linear program. This linearization allows us to solve the model quantitatively and to precisely characterize the regions and patterns of bunching. At an optimum, 9.8 percent of workers is bunched both locally and nonlocally. We introduce two notions of bunching – blunt bunching and targeted bunching. Blunt bunching constitutes 30 percent of all bunching, occurs at the lowest regions of cognitive and manual skills, and lumps the allocations of these workers resulting in a significant distortion. Targeted bunching constitutes 70 percent of all bunching and recognizes the workers’ comparative advantage. The planner separates workers on their dominant skill and bunches them on their weaker skill, thus mitigating distortions along the dominant skill dimension. Tax wedges are particularly high for low skilled workers who are bluntly bunched and are also high along the dimension of comparative disadvantage for somewhat more skilled workers who are targetedly bunched.
Author contact info: Job Boerma University of Wisconsin-Madison Department of Economics 7432 Social Sciences Bldg 1180 Observatory Drive Madison, WI 53706 E-Mail: job.boerma@wisc.edu Aleh Tsyvinski Department of Economics Yale University Box 208268 New Haven, CT 06520-8268 E-Mail: a.tsyvinski@yale.edu Alexander P. Zimin MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: azimin@mit.edu

Weighted-Average Quantile Regression - Chetverikov, Denis; Liu, Yukun; Tsyvinski, Aleh (National Bureau of Economic Research Working Paper Series, 2022)
In this paper, we introduce the weighted-average quantile regression model. We argue that this model is of interest in many applied settings and develop an estimator for parameters of this model. We show that our estimator is √T-consistent and asymptotically normal with mean zero under weak conditions, where T is the sample size. We demonstrate the usefulness of our estimator in two empirical settings. First, we study the factor structures of the expected shortfalls of the industry portfolios. Second, we study inequality and social welfare dependence on individual characteristics.
Author contact info: Denis Chetverikov UCLA, Department of Economics 315 Portola Plaza Bunche Hall, Room 8283 Los Angeles, CA 90095-1477 E-Mail: chetverikov@econ.ucla.edu Yukun Liu Department of Finance Simon Business School University of Rochester Rochester, NY 14620 E-Mail: yliu229@simon.rochester.edu Aleh Tsyvinski Department of Economics Yale University Box 208268 New Haven, CT 06520-8268 E-Mail: a.tsyvinski@yale.edu

The Marginal Propensity to Consume in Heterogeneous Agent Models - Kaplan, Greg; Violante, Giovanni L (National Bureau of Economic Research Working Paper Series, 2022)
What model features and calibration strategies yield a large average marginal propensity to consume (MPC) in heterogeneous agent models? Through a systematic investigation of models with different preferences, dimensions of ex-ante heterogeneity, income processes and asset structure, we show that the most important factor is the share and type of hand-to-mouth households. One-asset models either feature a trade-off between a high average MPC and a realistic level of aggregate wealth, or generate an excessively polarized wealth distribution that vastly understates the wealth held by households in the middle of the distribution. Two-asset models that include both liquid and illiquid assets can resolve this tension with a large enough gap between liquid and illiquid returns. We discuss how such return differential can be justified from the perspective of theory and data.
Author contact info: Greg Kaplan Department of Economics University of Chicago 1126 E 59th St Chicago, IL 60637 E-Mail: gkaplan@uchicago.edu Giovanni L. Violante Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08540 E-Mail: violante@princeton.edu

Credibility and Explicit Inflation Targeting - King, Robert G; Lu, Yang K (National Bureau of Economic Research Working Paper Series, 2022)
In his 2004 inflation targeting manifesto, Marvin Goodfriend described US monetary policy as implicit inflation targeting and advocated explicit targeting. Summarizing the 1965-2000 US inflation experience, he highlighted the importance of evolving Fed credibility, which accords with our recent work using a quantitative New Keynesian model. We define credibility as policy consistency with a publicly announced framework and develop two lessons theoretically. First, under explicit targeting, no conflict arises between flexible inflation targeting and maintaining/accumulating credibility. Second, implicit targeting reduces the effectiveness of expectations management and stabilization policy, as well as opening the door to costly inflation scare episodes
Author contact info: Robert G. King Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-5941 E-Mail: rking@bu.edu Yang K. Lu Department of Economics Hong Kong University of Science and Technology Clearwater Bay, Kowloon Boston, MA 02215 United States Tel: 16173535941 E-Mail: yanglu@ust.hk

The Long-Run Effects of Psychotherapy on Depression, Beliefs, and Economic Outcomes - Bhat, Bhargav; de Quidt, Jonathan; Haushofer, Johannes; Patel, Vikram H; Rao, Gautam; Schilbach, Frank; Vautrey, Pierre-Luc P (National Bureau of Economic Research Working Paper Series, 2022)
We revisit two clinical trials that randomized depressed adults in India (n=775) to a brief course of psychotherapy or a control condition. Four to five years later, the treatment group was 11 percentage points less likely to be depressed than the control group. The more effective intervention averted 9 months of depression on average over five years and cost only $66 per recipient. Therapy changed people’s beliefs about themselves in three ways. First, it reduced their likelihood of seeing themselves as a failure or feeling bad about themselves. Second, when faced with a novel work opportunity, therapy reduced over-optimistic belief updating in response to feedback and thus reduced overconfidence. Third, it increased self-assessed levels of patience and altruism. Therapy did not increase levels of employment or consumption, possibly because of other constraints on employment in the largely female study sample.
Author contact info: Bhargav Bhat Sangath Porvorim, Goa India 403501 Jonathan de Quidt Institute for International Economic Studies Stockholm University 106 91 Stockholm Sweden E-Mail: jonathan.dequidt@iies.su.se Johannes Haushofer Department of Economics National University of Singapore 1 Arts Link AS2 #06-02 Singapore 117570 Singapore E-Mail: johannes.haushofer@nus.edu.sg Vikram H. Patel The Pershing Square Professor of Global Health Department of Global Health and Social Medicine Harvard Medical School E-Mail: vikram_patel@hms.harvard.edu Gautam Rao Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 857/998-4504 E-Mail: grao@berkeley.edu Frank Schilbach MIT Department of Economics, E52-560 The Morris and Sophie Chang Building 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/715-2969 Fax: 617/253-1330 E-Mail: fschilb@mit.edu Pierre-Luc P. Vautrey MIT Department of Economics Building E52-300 50 Memorial Drive Cambridge, MA 02142 E-Mail: no email available

The Consequences of Remote and Hybrid Instruction During the Pandemic - Goldhaber, Dan; Kane, Thomas J; McEachin, Andrew; Morton, Emily; Patterson, Tyler; Staiger, Douglas O (National Bureau of Economic Research Working Paper Series, 2022)
Using testing data from 2.1 million students in 10,000 schools in 49 states (plus D.C.), we investigate the role of remote and hybrid instruction in widening gaps in achievement by race and school poverty. We find that remote instruction was a primary driver of widening achievement gaps. Math gaps did not widen in areas that remained in-person (although there was some widening in reading gaps in those areas). We estimate that high-poverty districts that went remote in 2020-21 will need to spend nearly all of their federal aid on academic recovery to help students recover from pandemic-related achievement losses.
Author contact info: Dan Goldhaber Center for Education Data & Research University of Washington 3876 Bridge Way N Ste 201 Seattle, WA 98103 E-Mail: dgoldhab@uw.edu Thomas J. Kane Harvard Graduate School of Education Center for Education Policy Research 50 Church St., 4th Floor Cambridge, MA 02138 Tel: 617/496-4359 E-Mail: kaneto@gse.harvard.edu Andrew McEachin NWEA 121 NW Everett Street Portland, OR 97209 E-Mail: andrew.mceachin@nwea.org Emily Morton NWEA 121 NW Everett Street Portland, OR 97209 E-Mail: emily.morton@nwea.org Tyler Patterson Center for Education Policy Research 50 Church Street, 4th Floor Cambridge, MA 02138 E-Mail: tyler_patterson@gse.harvard.edu Douglas O. Staiger Dartmouth College Department of Economics HB6106, 301 Rockefeller Hall Hanover, NH 03755-3514 Tel: 603/646-2979 Fax: 603/646-2122 E-Mail: douglas.staiger@dartmouth.edu

Sanctions and the Exchange Rate - Itskhoki, Oleg; Mukhin, Dmitry (National Bureau of Economic Research Working Paper Series, 2022)
We show that the exchange rate may appreciate or depreciate depending on the specific mix of sanctions imposed, even if the underlying equilibrium allocation is the same. Sanctions that limit a country's imports tend to appreciate the country’s exchange rate, while sanctions that limit exports and/or freeze net foreign assets tend to depreciate it. Increased precautionary household demand for foreign currency is another force that depreciates the exchange rate, and it can be offset with domestic financial repression of foreign currency savings. The overall effect depends on the balance of currency demand and currency supply forces, where exports and official reserves contribute to currency supply and imports and foreign currency precautionary savings contribute to currency demand. Domestic economic downturn and government fiscal deficits are additional forces that affect the equilibrium exchange rate. The dynamic behavior of the ruble exchange rate following Russia's military invasion of Ukraine in February 2022 and the resulting sanctions is entirely consistent with the combined effects of these mechanisms.
Author contact info: Oleg Itskhoki Department of Economics University of California, Los Angeles Bunche Hall, 315 Portola Plaza Los Angeles, CA 90095-1477 Tel: 609/216-4489 E-Mail: itskhoki@econ.ucla.edu Dmitry Mukhin 32 Lincolns Inn Fields Room 1.24 Houghton Street WC2A 2AE London United Kingdom E-Mail: D.Mukhin@lse.ac.uk

Automatic Tax Filing: Simulating a Pre-Populated Form 1040 - Goodman, Lucas; Lim, Katherine; Sacerdote, Bruce; Whitten, Andrew (National Bureau of Economic Research Working Paper Series, 2022)
Each year Americans spend over 1.7 billion hours and $33 billion preparing individual tax returns, and these filing costs are regressive. To lower and redistribute the filing burden, researchers and policymakers have proposed having the IRS prepopulate tax returns for individuals. We evaluate this hypothetical policy using a large, nationally representative sample of returns filed for tax year 2019. Our baseline results indicate that between 66 and 75 million returns (42 to 48 percent of all returns) could be accurately pre-populated using only current-year information returns and the prior-year return. Accuracy rates decline with income and are higher for taxpayers who have fewer dependents or are unmarried. We also examine 2019 non-filers, finding that pre-populated returns tentatively indicate $8.2 billion in refunds due to 11 million (20 percent) of them.
Author contact info: Lucas Goodman Office of Tax Analysis Department of Treasury 1500 Pennsylvania Avenue NW Washington, DC 20220 E-Mail: Lucas.Goodman@treasury.gov Katherine Lim Minneapolis Federal Reserve Bank 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: katie.lim@mpls.frb.org Bruce Sacerdote 6106 Rockefeller Hall Department of Economics Dartmouth College Hanover, NH 03755-3514 Tel: 603/646-2121 Fax: 603/646-2122 E-Mail: Bruce.I.Sacerdote@dartmouth.edu Andrew Whitten Office of Tax Analysis Department of the Treasury Washington, DC 20220 E-Mail: andrew.whitten@treasury.gov

Measuring Valuation of Liquidity with Penalized Withdrawals - Coyne, David; Fadlon, Itzik; Porzio, Tommaso (National Bureau of Economic Research Working Paper Series, 2022)
We use penalized withdrawals from retirement savings accounts as a revealed-preference tool to document three findings on American households' valuation of liquidity. First, local supply of credit explains over 30 percent of the nationwide differences in the valuation of liquidity across labor markets. Second, locations severely affected by the Great Recession displayed large increases in the valuation of liquidity, with spillovers in local credit tightening accounting for three-thirds of the effect. Third, Black households rely more on self-insurance from penalized withdrawals, consistent with lower access to formal credit markets. Overall, our findings imply sizable welfare gains from richer policy targeting.
Author contact info: David Coyne 1500 Pennsylvania Ave NW, MT1222A Washington, DC 20220 E-Mail: david.coyne@treasury.gov Itzik Fadlon Department of Economics University of California, San Diego 9500 Gilman Drive, #0508 La Jolla, CA 92093 Tel: 212/810-9577 E-Mail: fadlon@ucsd.edu Tommaso Porzio Columbia Business School 3022 Broadway Uris Hall 824 New York, NY 10027 E-Mail: tommaso.porzio@columbia.edu

Cryptocurrencies and Decentralized Finance (DeFi) - Makarov, Igor; Schoar, Antoinette (National Bureau of Economic Research Working Paper Series, 2022)
The paper provides an overview of cryptocurrencies and decentralized finance. The discussion lays out potential benefits and challenges of the new system and presents a comparison to the traditional system of financial intermediation. Our analysis highlights that while the DeFi architecture might have the potential to reduce transaction costs, similar to the traditional financial system, there are several layers where rents can accumulate due to endogenous constraints to competition. We show that the permissionless and pseudonymous design of DeFi generates challenges for enforcing tax compliance, anti-money laundering laws, and preventing financial malfeasance. We highlight ways to regulate the DeFi system which would preserve a majority of benefits of the underlying blockchain architecture but support accountability and regulatory compliance.
Author contact info: 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 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

On Criteria for Evaluating Social Programs - García, Jorge Luis; Heckman, James J (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the economic foundations of some recently proposed criteria for evaluating the benefits of social programs. These criteria are appropriate for comparing a class of revenue-constant policies. They replace foundational principles of social opportunity costs with accounting conventions from the point of view of government bureaucrats. They do not address the question of social optimality associated with programs that expand or contract the government budget.
Author contact info: Jorge Luis García John E. Walker Department of Economics Clemson University 309-C Wilbur O. and Ann Powers Hall Clemson, SC 29634 Tel: 864/656-3481 E-Mail: jlgarci@clemson.edu James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu

A Tale of Two Networks: Common Ownership and Product Market Rivalry - Ederer, Florian; Pellegrino, Bruno (National Bureau of Economic Research Working Paper Series, 2022)
We study the welfare implications of the rise of common ownership in the United States from 1995 to 2021. We build a general equilibrium model with a hedonic demand system in which firms compete in a network game of oligopoly. Firms are connected through two large networks: the first reflects ownership overlap, the second product market rivalry. In our model, common ownership of competing firms induces unilateral incentives to soften competition and the magnitude of the common ownership effect depends on how much the two networks overlap. We estimate our model for the universe of U.S. public corporations using a combination of firm financials, investor holdings, and text-based product similarity data. We perform counterfactual calculations to evaluate how the efficiency and the distributional impact of common ownership have evolved over time. According to our estimates the welfare cost of common ownership, measured as the ratio of deadweight loss to total surplus, has increased about nine-fold between 1995 and 2021. Under various corporate governance models the deadweight loss of common ownership ranges between 3.5% and 13.2% of total surplus in 2021. The rise of common ownership has also resulted in a significant reallocation of surplus from consumers to producers.
Author contact info: Florian Ederer Questrom School of Business Boston University 595 Commonwealth Avenie Boston, MA 02215 E-Mail: florian.ederer@gmail.com Bruno Pellegrino Kravis Hall 665 W 130th St New York, NY 10027 United States Tel: 3122578888 E-Mail: bp2713@columbia.edu

Faith and Assimilation: Italian Immigrants in the US - Gagliarducci, Stefano; Tabellini, Marco (National Bureau of Economic Research Working Paper Series, 2022)
How do ethnic religious organizations influence immigrants’ assimilation in host societies? This paper offers the first systematic answer to this question by focusing on Italian Catholic churches in the US between 1890 and 1920, when four million Italians moved to America, and anti-Catholic sentiments were widespread. Relying on newly collected data on the presence of Italian Catholic churches across counties over time, we implement a difference-in-differences design. We find that Italian churches reduced the social assimilation of Italian immigrants, lowering intermarriage, residential integration, and naturalization rates. We provide evidence that stronger coordination within the Italian community and natives' backlash and negative stereotyping can explain these effects. Despite the negative effects on Italians' social assimilation, Italian churches had ambiguous effects on immigrants' economic outcomes, and increased children's literacy and ability to speak English.
Author contact info: Stefano Gagliarducci Tor Vergata University of Rome Via Columbia 2 00133 Rome Italy E-Mail: stefano.gagliarducci@uniroma2.it Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu

Complexity and Satisficing: Theory with Evidence from Chess - Salant, Yuval; Spenkuch, Jorg L (National Bureau of Economic Research Working Paper Series, 2022)
We develop a satisficing model of choice in which the available alternatives differ in their inherent complexity. We assume—and experimentally validate—that complexity leads to errors in the perception of alternatives’ values. The model yields sharp predictions about the effect of complexity on choice probabilities, some of which qualitatively contrast with those of maximization-based choice models. We confirm the predictions of the satisficing model—and thus reject maximization—in a novel data set with information on hundreds of millions of real-world chess moves by highly experienced players. These findings point to the importance of complexity and satisficing for decision making outside of the laboratory.
Author contact info: Yuval Salant Kellogg School of Management 2211 Campus Dr Evanston, IL 60208 USA E-Mail: y-salant@kellogg.northwestern.edu Jorg L. Spenkuch Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/467-0921 E-Mail: j-spenkuch@kellogg.northwestern.edu

Values as Luxury Goods and Political Polarization - Enke, Benjamin; Polborn, Mattias; Wu, Alex (National Bureau of Economic Research Working Paper Series, 2022)
This paper develops a theory of political behavior in which values are a luxury good: the relative weight that voters place on values rather than material considerations increases in income. This idea both generates new testable implications and ties together a broad set of empirical regularities about political polarization in the U.S. The model predicts (i) voters who are sufficiently rich to afford voting left; (ii) that more rich than poor people vote against their material interests; (iii) that Democrats are internally more fragmented than Republicans; and (iv) widely-discussed realignments: rich moral liberals who swing Democrat, and poor moral conservatives who swing Republican. Assuming that parties set policies by aggregating their supporters’ preferences, the model also predicts increasing social party polarization over time, such that poor moral conservatives swing Republican even though their relative incomes decreased. We relate these predictions to known stylized facts, and test our new predictions empirically.
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 Mattias Polborn Department of Economics Vanderbilt University Nashville, TN 37235 US Tel: 6158758113 E-Mail: polborn@gmail.com Alex A. Wu Baker Library 420 Soldiers Field Boston, MA 02163 E-Mail: alex_wu@fas.harvard.edu

The US COVID-19 Baby Bust and Rebound - Kearney, Melissa Schettini; Levine, Phillip B (National Bureau of Economic Research Working Paper Series, 2022)
We document the impact of the COVID-19 pandemic on births in the United States. First, using Vital Statistics birth data on the universe of US births, we show that the US pandemic initially was associated with a “baby bust” period, from August 2020 through February 2021. During these seven months, there were nearly 100,000 fewer births than predicted based on pre-existing birth trends and seasonality. Many of these missing births would have been conceived after the pandemic began in March of 2020, consistent with a behavioral fertility response to pandemic conditions. Other missing births would have been conceived before the onset of the pandemic. Some of these are attributable to reduced immigration of pregnant women and some to altered pregnancy outcomes for women who were pregnant during the early months of the pandemic. We further document a COVID birth rebound between March and September 2021, amounting to about 30,000 more births than predicted. Second, we document variation across US states in the size of the baby bust and rebound and investigate how that variation statistically relates to contextual factors. The bust was larger in states with larger increases in the unemployment rate, a larger reduction in household spending, and more COVID cases. The rebound was larger in states that experienced larger improvements in the labor market and household spending, consistent with a positive effect of economic conditions on birth rates, and smaller in places that had mask mandates, consistent with a dampening role of social anxiety about the ongoing pandemic.
Author contact info: Melissa Schettini Kearney Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 Tel: 301/405-6202 E-Mail: kearney@umd.edu Phillip B. Levine Department of Economics Wellesley College 106 Central Street Wellesley, MA 02481 Tel: 781/283-2162 Fax: 781/283-2177 E-Mail: plevine@wellesley.edu

Is the American Soft Power a Casualty of the Trade War? - Fan, Haichao; Hu, Yichuan; Tang, Lixin; Wei, Shang-Jin (National Bureau of Economic Research Working Paper Series, 2022)
The US trade war against China in 2018–2019 can either enhance or diminish the US soft power in China, depending on whether it is recognized as legitimate by Chinese citizens. We study how the viewership of US movies—an important element of the US soft power—is affected by the trade war, utilizing variations across Chinese cities in the exposure to the Trump tariffs. We find a significant reduction in US movie revenue in regions more exposed to the Trump tariffs, but no corresponding reduction in the consumption of non-US movies. This is corroborated by a decline in online search for US movies, US tourist destinations, and US branded sports shoes. The aversion to US movies appears to persist at least to 2021. The effect is somewhat milder for more affluent people.
Author contact info: Haichao Fan School of Economics Fudan University E-Mail: fan_haichao@fudan.edu.cn Yichuan Hu 1500 Siping Road Tongji University Shanghai China E-Mail: huyichuan175@gmail.com Lixin Tang West Huangpu Rd 601 Tianhe District, Guangzhou, Guangdong Province Guangzhou West Huangpu Rd 601, Tianhe District Guangzhou 510632 China Tel: 18512112472 E-Mail: lixintang.tang@gmail.com Shang-Jin Wei Columbia Business School Columbia University Kravis Building Room 552 665 West 130th Street New York, New 10027 E-Mail: shangjin.wei@columbia.edu

The Inverse Hyperbolic Sine Transformation and Retransformed Marginal Effects - Norton, Edward C (National Bureau of Economic Research Working Paper Series, 2022)
This paper shows how to calculate consistent marginal effects on the original scale of the outcome variable in Stata after estimating a linear regression with a dependent variable that has been transformed by the inverse hyperbolic sine function. The method uses a nonparametric retransformation of the error term and accounts for any scaling of the dependent variable. The inverse hyperbolic sine function is not invariant to scaling, which is known to shift marginal effects between those from an untransformed dependent variable to those of a log-transformed dependent variable.
Author contact info: Edward C. Norton Department of Health Management and Policy Department of Economics University of Michigan School of Public Health 1415 Washington Heights, M3108 SPHII Ann Arbor, MI 48109-2029 Tel: 734/615-5738 Fax: 734/764-4338 E-Mail: ecnorton@umich.edu

Generalized Separability and Integrability: Consumer Demand with a Price Aggregator - Fally, Thibault (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines demand systems where the demand for a good depends on other prices only through a common price aggregator (a scalar function of all prices). We refer to this property as ``generalized separability'' and provide the functional forms of demand that this property implies when demand is rational, i.e., derived from utility maximization. Generalized separability imposes restrictions on either income or price effects, and greater flexibility is obtained by adding indirect utility as an additional aggregator. We provide examples and applications which encompass a large variety of examples from the literature. In particular, generalized separability can be used in simple general-equilibrium models to obtain a more tractable framework and yet generate a wider range of effects of market size and productivity on firm size, entry, and prices.
Author contact info: Thibault Fally Department of Agricultural and Resource Economics University of California, Berkeley Giannini Hall, 207 Berkeley, CA 94720-3310 Tel: 720/237-6158 E-Mail: fally@berkeley.edu

AI Adoption in a Competitive Market - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2022)
Economists have often viewed the adoption of artificial intelligence (AI) as a standard process innovation where we expect that efficiency will drive adoption in competitive markets. This paper models AI based on recent advances in machine learning that allow firms to engage in better prediction. Using prediction of demand, it is demonstrated that AI adoption is a complement to variable inputs whose levels are directly altered by predictions and use is economised by them (that is, labour). It is shown that, in a competitive market, this increases the short-run elasticity of supply and may or may not increase average equilibrium prices. There are generically externalities in adoption with this reducing the profits of non-adoptees when variable inputs are important and increasing them otherwise. Thus, AI does not operate as a standard process innovation and its adoption may confer positive externalities on non-adopting firms. In the long-run, AI adoption is shown to generally lower prices and raise consumer surplus in competitive markets.
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

AI Adoption in a Monopoly Market - Gans, Joshua S (National Bureau of Economic Research Working Paper Series, 2022)
The adoption of artificial intelligence (AI) prediction of demand by a monopolist firm is examined. It is shown that, in the absence of AI prediction, firms face complex trade-offs in setting price and quantity ahead of demand that impact on the returns of AI adoption. Different industrial environments with differing flexibility of prices and/or quantity ex post, also impact on AI returns as does the time horizon of AI prediction. While AI has positive benefits for firms in terms of profitability, its impact on average price and quantity, as well as consumer welfare, is more nuanced and critically dependent on environmental characteristics.
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

Climate Regulatory Risk and Corporate Bonds - Seltzer, Lee H; Starks, Laura; Zhu, Qifei (National Bureau of Economic Research Working Paper Series, 2022)
Investor concerns about climate and other environmental regulatory risks suggest that these risks should affect corporate bond risk assessment and pricing. We test this hypothesis and find that firms with poor environmental profiles or high carbon footprints tend to have lower credit ratings and higher yield spreads, particularly when their facilities are located in states with stricter regulatory enforcement. Using the Paris Agreement as a shock to expected climate risk regulations, we provide evidence that climate regulatory risks causally affect bond credit ratings and yield spreads. Accordingly, the composition of institutional ownership also changes after the Agreement.
Author contact info: Lee H. Seltzer Federal Reserve Bank of New York 33 Liberty Street New York, NY 10045 E-Mail: Lee.Seltzer@ny.frb.org Laura Starks McCombs School of Business University of Texas at Austin 2110 Speedway Austin, TX 78712 Tel: 512/471-5899 E-Mail: laura.starks@mccombs.utexas.edu Qifei Zhu Nanyang Technological University E-Mail: qifei.zhu@ntu.edu.sg

Demand Analysis under Latent Choice Constraints - Agarwal, Nikhil; Somaini, Paulo J (National Bureau of Economic Research Working Paper Series, 2022)
Consumer choices are constrained in many markets due to either supply-side rationing or information frictions. Examples include matching markets for schools and colleges; entry-level labor markets; limited brand awareness and inattention in consumer markets; and selective admissions to healthcare services. Accounting for these choice constraints is essential for estimating consumer demand. We use a general random utility model for consumer preferences that allows for endogenous characteristics and a reduced-form choice-set formation rule that can be derived from models of the examples described above. The choice-sets can be arbitrarily correlated with preferences. We study non-parametric identification of this model, propose an estimator, and apply these methods to study admissions in the market for kidney dialysis in California. Our results establish identification of the model using two sets of instruments, one that only affects consumer preferences and the other that only affects choice sets. Moreover, these instruments are necessary for identification. We find that dialysis facilities are less likely to admit new patients when they have higher than normal caseload and that patients are more likely to travel further when nearby facilities have high caseloads. Finally, we estimate consumers' preferences and facilities' rationing rules using a Gibbs sampler.
Author contact info: Nikhil Agarwal Department of Economics, E52-440 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: agarwaln@mit.edu Paulo J. Somaini Stanford Graduate School of Business Knight Management Center 655 Knight Way E372D Stanford, CA 94305 E-Mail: soma@stanford.edu

Dangerous Prescribing and Healthcare Fragmentation: Evidence from Opioids - Ericson, Keith Marzilli; Sacarny, Adam; Zhou, R. Annetta (National Bureau of Economic Research Working Paper Series, 2022)
Fragmented healthcare received from many different physicians results in higher costs and lower quality, but does it contribute to dangerous opioid prescribing? The effect is theoretically ambiguous because fragmentation can trigger costly coordination failures but also permits greater specialization. We examine dangerous opioid prescribing, defined as receiving high dosages, long prescription durations, or harmfully interacting medications. Cross-sectionally, regions with higher fragmentation have lower levels of dangerous opioid prescribing. This relationship is associational and may result from unobserved patient-level confounders. Identifying the impact of healthcare fragmentation by examining patients who move across regions, we find a relatively precise null effect of fragmentation on dangerous opioid prescribing. These results cast doubt on the role of fragmentation in this phenomenon and highlight the potential role of other forces in driving it.
Author contact info: Keith Marzilli Ericson Boston University Questrom School of Business 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/353-4553 E-Mail: kericson@bu.edu Adam Sacarny Mailman School of Public Health Columbia University 722 West 168th Street New York, NY 10032 Tel: 914/715-0217 E-Mail: ajs2102@columbia.edu R. Annetta Zhou E-Mail: azhou@rand.org

Property Rights in Historical Political Economy: When do Wedges Wither? - Alston, Lee J; Mueller, Bernardo (National Bureau of Economic Research Working Paper Series, 2022)
Countries are not equally developed in large part because most countries face sets of property rights that do not foster growth despite the aggregate gains that would result from changing property rights. The difference in rents to society between the extant set of property rights and some seemingly better alternative we define as a “Demsetz” wedge. We explore the forces that sustain the status quo as well the forces that prompt property rights to change.
Author contact info: Lee J. Alston Department of Economics Wylie Hall Indiana University 100 South Woodlawn Avenue Bloomington, IN 47405 Tel: (812) 855 1021 Fax: (812) 855-3150 E-Mail: ljalston@iu.edu Bernardo Mueller Department of Economics University of Brasilia Brazil Tel: 55 61 98111-0349 E-Mail: bmueller@unb.br