Calling All Issuers: The Market for Debt Monitoring - Chen, Huaizhi; Cohen, Lauren; Liu, Weiling (National Bureau of Economic Research Working Paper Series, 2022)
95% of long-term municipal bonds have callable features, and yet we find new evidence of a substantial fraction of local governments exercising these valuable options sub-optimally, with significant delays – resulting in sizable losses. Using data from 2001 to 2018, we estimate that U.S. municipals lost over $26 billion from delayed refinancing, whereas the entire U.S. corporate sector, facing the same low interest-rate environment, lost only a comparatively modest $1.4 billion. We present evidence that these delays are related to gaps in localized debt monitoring. For instance, when a bond’s call unlocks in a month that is the fiscal year-end of a local government – a particularly busy time for finance departments – the decision to call is delayed significantly longer. A significantly longer delay also occurs when a municipality is faced with waves of calls all coming due at once. These effects are magnified in smaller municipalities, staffed with smaller finance departments. Moreover, the market for outside monitoring (e.g., underwriters), is a fractured one. It is characterized by extreme stickiness: 87% of a municipality’s bonds are issued with the same underwriter over our sample period. The usage of a less locally-focused underwriter is associated with significantly greater delays.
Author contact info: Huaizhi Chen University of Notre Dame 238 Mendoza College of Business Notre Dame, IN 46530 USA Tel: 2532092418 E-Mail: hchen11@nd.edu Lauren Cohen Harvard Business School Baker Library 279 Soldiers Field Boston, MA 02163 Tel: 617/495-3888 E-Mail: lcohen@hbs.edu Weiling Liu 414F Hayden Hall Northeastern University Boston, MA 02115 E-Mail: w.liu@northeastern.edu

Where Do My Tax Dollars Go? Tax Morale Effects of Perceived Government Spending - Giaccobasso, Matias; Nathan, Brad C; Perez-Truglia, Ricardo; Zentner, Alejandro (National Bureau of Economic Research Working Paper Series, 2022)
Do perceptions about how the government spends tax dollars affect the willingness to pay taxes? We designed a field experiment to test this hypothesis in a natural, high-stakes context and via revealed preferences. We measure how taxpayers perceive the government is using their tax dollars, such as the percentage of their property taxes that fund public schools. We find that, even though accurate information is available, taxpayers still have substantial misperceptions. We used an information provision experiment to induce exogenous shocks to these perceptions. Using administrative data on property tax appeals, we measure the causal effect of perceived government spending on the willingness to pay taxes. We find that perceptions about government spending have a significant effect on the probability of filing a tax appeal and in a manner that is consistent with a reciprocal motivation: individuals are more willing to pay taxes if they believe that the government services funded by those taxes will be of greater personal benefit to them. We discuss implications for the study of tax morale.
Author contact info: Matias Giaccobasso Arkadiankatu 7 00100, Helsinki, Finland Helsinki 00100 Finland E-Mail: matias.giaccobasso@vatt.fi Brad C. Nathan Naveen Jindal School of Management The University of Texas at Dallas 800 W Campbell Rd. Richardson, TX 75080 E-Mail: brad.nathan@utdallas.edu Ricardo Perez-Truglia Haas School of Business University of California, Berkeley 545 Student Services Building #1900 Berkeley, CA 94720-1900 Tel: 617/875-4437 E-Mail: ricardotruglia@berkeley.edu Alejandro Zentner Naveen Jindal School of Management University of Texas at Dallas 800 W Campbell Rd. Richardson, TX 75080 E-Mail: azentner@utdallas.edu

Ideas Have Consequences: The Impact of Law and Economics on American Justice - Ash, Elliott; Chen, Daniel L; Naidu, Suresh (National Bureau of Economic Research Working Paper Series, 2022)
This paper provides a quantitative analysis of the effects of the early law-and- economics movement on the U.S. judiciary. We focus on the Manne Economics Institute for Federal Judges, an intensive economics course that trained almost half of federal judges between 1976 and 1999. Using the universe of published opinions in U.S. Circuit Courts and 1 million District Court criminal sentencing decisions, we estimate the within-judge effect of Manne program attendance. Selection into attendance was limited—the program was popular across judges from all backgrounds, was regularly oversubscribed, and admitted judges on a first-come first-served basis—and results are robust to a variety of automatically selected covariates predicting the timing of attendance. We find that after attending economics training, participating judges use more economics language in their opinions, issue more conservative decisions in economics-related cases, rule against regulatory agencies more often, favor more lax enforcement in antitrust cases, and impose more/longer criminal sentences. The law-and- economics movement had policy consequences via its influence on U.S. federal judges.
Author contact info: Elliott Ash ETH Zurich IFW E47.1 Zurich 8044 Switzerland E-Mail: ashe@ethz.ch Daniel L. Chen Toulouse School of Economics, Institute for Advance Study, CNRS 1, Esplanade de l'Université 31080 Toulouse Cedex 06 Toulouse 31080 France E-Mail: daniel.li.chen@gmail.com Suresh Naidu Columbia University 420 West 118th Street New York, NY 10027 Tel: 212/854-3213 E-Mail: sn2430@columbia.edu

Causality and Econometrics - Heckman, James J; Pinto, Rodrigo (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the econometric causal model for policy analysis developed by the seminal ideas of Ragnar Frisch and Trygve Haavelmo. We compare the econometric causal model with two popular causal frameworks: Neyman-Holland causal model and the do-calculus. The Neyman-Holland causal model is based on the language of potential outcomes and was largely developed by statisticians. The do-calculus, developed by Judea Pearl and co-authors, relies on Directed Acyclic Graphs (DAGs) and is a popular causal framework in computer science. We make the case that economists who uncritically use these approximating frameworks often discard the substantial benefits of the econometric causal model to the detriment of more informative economic policy analyses. We illustrate the versatility and capabilities of the econometric framework using causal models that are frequently studied by economists.
Author contact info: James J. Heckman Center for the Economics of Human Development University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-0634 Fax: 773/702-8490 E-Mail: jjh@uchicago.edu Rodrigo Pinto Department of Economics University of California at Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 Tel: 2245958758 E-Mail: rodrig@econ.ucla.edu

Seeing the Future: A Better Way to Model and Test for Adaptive Developmental Plasticity - Malani, Anup; Rosenbaum, Stacy; Alberts, Susan C; Archie, Elizabeth A (National Bureau of Economic Research Working Paper Series, 2022)
Early life conditions can have profound effects on individual health, longevity, and biological fitness. Two classes of hypotheses are used to explain the evolutionary origins of these effects: developmental constraints (DC) hypotheses, which focus on the deleterious effects of low-quality early-life environments, and predictive adaptive response (PAR) models, which focus on organisms’ predictions about their adult environment, phenotypic adaptations based on that prediction, and the deleterious consequences of incorrect predictions. Despite their popularity, these ideas remain poorly defined. To remedy this, we provide mathematical definitions for DC, PARs, and related concepts, and develop statistical tests derived from these definitions. We use simulations to demonstrate that PARs are more readily detected by tests based on quadratic regressions than by tests based on more commonly used interaction regression models. We demonstrate that the poor performance of interaction models stems from two problems: first, they are mathematically incapable of detecting a central prediction of PAR, and second, they conceptually conflate PARs with DC. We conclude by providing recommendations for how researchers can make use of explicit definitions and properly-aligned visualizations and statistical tests to make progress in this important research area.
Author contact info: Anup Malani University of Chicago Law School 1111 E. 60th Street Chicago, IL 60637 Tel: 773/702-9602 E-Mail: amalani@uchicago.edu Stacy Rosenbaum University of Michigan Department of Anthropology 101 West Hall Ann Arbor, MI 48109 E-Mail: rosenbas@umich.edu Susan C. Alberts Duke University 130 Science Drive, Rm 137 Duke Box 90338 Durham, NC 27708 E-Mail: alberts@duke.edu Elizabeth A. Archie 179 Galvin Life Science Center University of Notre Dame Notre Dame, IN 46556 USA E-Mail: earchie@nd.edu

The Unemployment-Inflation Trade-off Revisited: The Phillips Curve in COVID Times - Crump, Richard K; Eusepi, Stefano; Giannoni, Marc; Şahin, Ayşegül (National Bureau of Economic Research Working Paper Series, 2022)
Using a New Keynesian Phillips curve, we document the rapid and persistent increase in the natural rate of unemployment, u*ₜ, in the aftermath of the pandemic and characterize its implications for inflation dynamics. While the bulk of the inflation surge is attributed to temporary supply factors, we also find an important role for current and expected negative unemployment gaps. Through the lens of the model, the 2022–2023 disinflation was driven by the expectation that the unemployment gap will close through a progressive decline in u*ₜ and a rise in the unemployment rate. This implies that convergence to long-run price stability depends critically on expectations about labor market tightness. Using a variety of cross-sectional data sources we provide corroborating evidence of unusually tight labor market conditions, consistent with our estimated rise in u*ₜ.
Author contact info: Richard K. Crump Macrofinance Studies Federal Reserve Bank of New York 33 Liberty Street New York, NY 10045 E-Mail: richard.crump@ny.frb.org Stefano Eusepi Department of Economics University of Texas at Austin E-Mail: eusepi73@yahoo.com Marc P. Giannoni 745 7th Avenue New York, NY 10019 United States Tel: 9179632328 E-Mail: mpgiannoni@gmail.com Ayşegül Şahin Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 Tel: 512/471-3664 E-Mail: aysegul.sahin@austin.utexas.edu

Has the Willingness to Work Fallen during the Covid Pandemic? - Faberman, R. Jason; Mueller, Andreas I; Şahin, Ayşegül (National Bureau of Economic Research Working Paper Series, 2022)
We examine the effect of the Covid pandemic on willingness to work along both the extensive and intensive margins of labor supply. Special survey questions in the Job Search Supplement of the Survey of Consumer Expectations (SCE) allow us to elicit information about individuals’ desired work hours for the 2013-2021 period. Using these questions, along with workers’ actual labor market participation, we construct a labor market underutilization measure, the Aggregate Hours Gap (AHG), following Faberman et al. (2020). The AHG captures changes in labor market underutilization for the full population along both the extensive and intensive margins using data on desired work hours as a measure of their potential labor supply. We find that the sharp increase in the AHG during the Covid pandemic essentially disappeared by the end of 2021. We also document a sharp decline in desired work hours during the pandemic that persists through the end of 2021 and is roughly double the drop in the labor force participation rate. Ignoring the decline in desired hours overstates the degree of underutilization by 2.5 percentage points (12.5%). Our findings suggest that, as of 2021Q4, the labor market is tighter than suggested by the unemployment rate and the adverse labor supply effect of the pandemic is more pronounced than implied by the labor force participation rate. These discrepancies underscore the importance of taking into account the intensive margin for both labor market underutilization and potential labor supply.
Author contact info: Jason Faberman Economic Research Department Federal Reserve Bank of Chicago 230 S. LaSalle St. Chicago, IL 60604 Tel: (312) 322-5274 Fax: (312) 322-2357 E-Mail: jfaberman@frbchi.org Andreas I. Mueller The University of Texas at Austin Department of Economics 2225 Speedway Austin, TX 78712 Tel: 512/232-3894 E-Mail: andimueller@utexas.edu Ayşegül Şahin Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 Tel: 512/471-3664 E-Mail: aysegul.sahin@austin.utexas.edu

What Determines Effectiveness of Renewable Energy Standards? General Equilibrium Analytical Model and Empirical Analysis - Fullerton, Don; Ta, Chi L (National Bureau of Economic Research Working Paper Series, 2022)
Our new analytical general equilibrium model is used to study effects of tightening state Renewable Portfolio Standards (RPS) on electricity price, CO2 emissions, fossil fuel electricity generation, and two kinds of renewable generation. We show how those outcomes depend on key state characteristics such as endowments of potential intermittent and non-intermittent (“dispatchable”) renewable sources and the degree of intermittency. Our three extensions investigate key assumptions. We prove theorems and derive empirical hypotheses about what state characteristics makes RPS programs more effective. Using U.S. state-level data from 1990 to 2015, we find the data are consistent with these hypotheses.
Author contact info: Don Fullerton Department of Finance University of Illinois 515 East Gregory Drive, BIF Box#30 (MC520) Champaign, IL 61820 E-Mail: dfullert@illinois.edu Chi L. Ta Department of Agricultural and Applied Economics Hutcheson Hall 312 250 Drillfield Drive BLACKSBURG, VA 24061 United States Tel: 2174178621 E-Mail: chita@vt.edu

Human Capital Reallocation Across Firms: Evidence from Idiosyncratic Shocks - Gilje, Erik P; Taillard, Jérôme P; Zeng, Linghang (National Bureau of Economic Research Working Paper Series, 2022)
We study human capital reallocation following firm-specific idiosyncratic shocks. Theory offers diverging predictions as to whether human capital gets reallocated to its most productive use following these shocks. To empirically test these predictions, we focus on relegation battles in the English Premier League. This setting offers well identified idiosyncratic shocks as well as both individual-level and firm-level productivity metrics. We find that human capital exits firms after a negative idiosyncratic shock. Specifically, we find that more productive players move to more productive clubs and maintain their long-term productivity. They get replaced with lower productivity players. Overall, our results show that in a setting with highly transferable skills, idiosyncratic shocks lead to a reallocation of human capital that moves an industry towards a better overall match between individual-level and firm-level productivity.
Author contact info: Erik P. Gilje The Wharton School University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/898-1198 E-Mail: erikgilje@yahoo.com Jérôme P. Taillard Babson College 323 Tomasso Hall Babson Park, MA 02457 United States E-Mail: jtaillard1@babson.edu Linghang Zeng 231 Forest St Babson Park, MA 02457 E-Mail: lzeng@babson.edu

Integrating Refugees by Addressing Labor Shortages? A Policy Evaluation - Foged, Mette; Kreuder, Janis; Peri, Giovanni (National Bureau of Economic Research Working Paper Series, 2022)
We evaluate the effect on newly arrived refugees' employment of a policy, introduced in Denmark in 2013, that matched refugees to occupations with local labor shortages after basic training for those jobs. Leveraging the staggered roll-out across municipalities, we find that the policy increased employment by 5-6 percentage points one year after arrival and 10 percentage points two years after. The policy was especially effective for male refugees and refugees with some secondary education. The findings suggest that this type of policy could alleviate long-term labor shortages and integrate low-skilled immigrants, while having minimal competition effects on natives.
Author contact info: Mette Foged Department of Economics Univertsity of Copenhagen Øster Farigmagsgade 5, building 26 1353 Copenhagen K Denmark E-Mail: Mette.Foged@econ.ku.dk Janis Kreuder Oster Farimagsgade 5 Building 26 Copenhagen, Denmark E-Mail: lfz844@econ.ku.dk Giovanni Peri Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530/752-3033 E-Mail: gperi@ucdavis.edu

A Solomonic Solution to Ownership Disputes: An Application to Blockchain Front-Running - Gans, Joshua S; Holden, Richard T (National Bureau of Economic Research Working Paper Series, 2022)
Blockchain front-running involves multiple agents, other than the legitimate agent, claiming a payment from performing a contract. It arises because of the public nature of blockchain transactions and potential network congestion. This paper notes that disputes over payments are similar to classic ownership disputes (such as King Solomon's dilemma). We propose a simultaneous report mechanism that resolves Solomon's dilemma (using only ordinal preference information) and also eliminates blockchain front-running. In each case, the mechanism relies on threats to remove ownership from all claimants and preferences from the legitimate claimant over allocations to other agents.
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

Gifted Children Programs’ Short and Long-Term Impact: Higher Education, Earnings, and the Knowledge-Economy - Lavy, Victor; Goldstein, Yoav (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the short-run and longer-term effects of gifted children’s programs (GCP). Using administrative data from Israel, we follow students who participated in a GCP, studying in separate gifted classes in high schools, and compare them to equally gifted students from localities where a GCP was not offered. Our results show that while GCP participation has tiny effects on high school academic achievement, it substantially influences university outcomes. This influence is manifested in the choice of field of study, a higher incidence of double majors, and an increased likelihood of pursuing advanced degrees. Interestingly, GCP participation does not affect earnings or employment in knowledge-based sectors, implying that gifted children do well in the labor market, regardless of participation in a GCP. Finally, participation in the GCP does not affect the likelihood of marriage or having children. Still, it positively affects the spouse’s “quality”, driven by marriages between GCP participants and their classmates. We discuss potential mechanisms by relating our findings to the literature in psychology about gifted children.
Author contact info: 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 Yoav Goldstein E-Mail: yoavg2@mail.tau.ac.il

Gaps Between Official and Excess Covid-19 Mortality Measures: The Effects of Institutional Quality and Vaccinations - Aizenman, Joshua; Cukierman, Alex; Jinjarak, Yothin; Nair-Desai, Sameer; Xin, Weining (National Bureau of Economic Research Working Paper Series, 2022)
We evaluate quartile rankings of countries during the Covid-19 pandemic using both official (confirmed) and excess mortality data. By December 2021, the quartile rankings of three-fifths of the countries differ when ranked by excess vs. official mortality. Countries that are ‘doing substantially better’ in the excess mortality are characterized by higher urban population shares; higher GDP/Capita; and higher scores on institutional and policy variables. We perform two regressions in which the ratio of Cumulative Excess to Official Covid-19 mortalities (E/O ratio) is regressed on covariates. In a narrow study, controlling for GDP/Capita and vaccination rates, by December 2021 the E/O ratio was smaller in countries with higher vaccination rates. In a broad study, adding institutional and policy variables, the E/O ratio was smaller in countries with higher degree of voice and accountability. The arrival of vaccines in 2021 and voice and accountability had a discernible association on the E/O ratio.
Author contact info: Joshua Aizenman Economics and SIR University of Southern California University Park Los Angeles, CA 90089-0043 Tel: 213-740-4066 E-Mail: aizenman@usc.edu Alex Cukierman Tel-Aviv University School of Economics Tel-Aviv 69978 ISRAEL E-Mail: alexcuk@tauex.tau.ac.il Yothin Jinjarak ERCD Asian Development Bank Mandaluyong City 1550 Metro Manila, Philippines E-Mail: yjinjarak@adb.org Sameer Nair-Desai University of Southern California 3620 S Vermont Ave Los Angeles, CA 90089 E-Mail: nairdesa@usc.edu Weining Xin International Monetary Fund 700 19th St NW Washington, DC 20431 Tel: 2024998408 E-Mail: WXin@imf.org

Exorbitant Privilege? Quantitative Easing and the Bond Market Subsidy of Prospective Fallen Angels - Acharya, Viral V; Banerjee, Ryan; Crosignani, Matteo; Eisert, Tim; Spigt, Renée (National Bureau of Economic Research Working Paper Series, 2022)
We document capital misallocation in the U.S. investment-grade (IG) corporate bond market, driven by quantitative easing (QE). Prospective fallen angels—risky firms just above the IG cutoff—enjoyed subsidized bond financing in 2009-19. This effect is driven by prolonged cumulative Fed purchases of securities inducing long-duration IG-focused investors to rebalance their portfolios towards higher-yielding IG bonds. The benefiting firms (i) exploited the sluggish downward adjustment of credit ratings after M&A to finance risky acquisitions with bond issuances, (ii) increased market share affecting competitors' employment and investment, but (iii) suffered severe downgrades at the onset of the pandemic.
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 Ryan Banerjee Monetary and Economic Department Bank for International Settlements Centralbahnplatz 2 CH-4002 Basel Switzerland E-Mail: ryan.banerjee@bis.org Matteo Crosignani New York Fed E-Mail: mcrosign@gmail.com Tim Eisert Portugal E-Mail: tim.eisert@novasbe.pt Renée Spigt Burgemeester Oudlaan 50 P.O. Box 1738 Rotterdam 3000 DR The Netherlands E-Mail: spigt@ese.eur.nl

Dampening General Equilibrium: Incomplete Information and Bounded Rationality - Angeletos, George-Marios; Lian, Chen (National Bureau of Economic Research Working Paper Series, 2022)
We review how realistic frictions in information and/or rationality arrest general equilibrium (GE) feedbacks. In one specification, we maintain rational expectations but remove common knowledge of aggregate shocks. In another, we replace rational expectations with Level-k Thinking or a smooth variant thereof. Two other approaches, heterogeneous priors and cognitive discounting, capture the same essence while offering a gain in tractability. Relative to the full-information rational-expectation (FIRE) benchmark, all these modifications amount to attenuation of GE effects, especially in the short run. This in turn translates to either under- or over-reaction in aggregate outcomes, depending on whether GE feedbacks are positive or negative in the first place. We review a few applications, with emphasis on monetary and fiscal policy. We finally discuss how the available evidence on expectations, along with other considerations, can help guide the choice among the various alternatives, as well as between them and FIRE.
Author contact info: George-Marios Angeletos Department of Economics, E52-530 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/452-3859 Fax: 617/253-1330 E-Mail: angeletos@northwestern.edu Chen Lian Department of Economics University of California, Berkeley Evans Hall Berkeley, CA 94720 E-Mail: chen_lian@berkeley.edu

What Gets Measured Gets Managed: Investment and the Cost of Capital - He, Zhiguo; Liao, Guanmin; Wang, Baolian (National Bureau of Economic Research Working Paper Series, 2022)
We study the impact of government-led incentive systems by examining a staggered reform in the Chinese state-owned enterprise (SOE) performance evaluation policy. To improve capital allocative efficiency, in 2010, regulators switched from using return on equity (ROE) to economic value added (EVA) when evaluating SOE performance. This EVA policy adopts a one-size-fits-all approach by stipulating a fixed cost of capital for virtually all SOEs, ignoring the potential heterogeneity of firm-specific costs of capital. We show that SOEs did respond to the performance evaluation reform by altering their investment decisions, more so when the actual borrowing rate was further away from the stipulated cost of capital. Our paper provides causal evidence that incentive schemes affect real investment and sheds new light on challenges faced by economic reforms in China.
Author contact info: Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Guanmin Liao School of Business Renmin University of China China E-Mail: liaoguanmin@rmbs.ruc.edu.cn Baolian Wang Warrington College of Business University of Florida 314 Stuzin Hall Gainesville, FL 32611 E-Mail: Baolian.Wang@warrington.ufl.edu

The Distribution of Crisis Credit: Effects on Firm Indebtedness and Aggregate Risk - Huneeus, Federico; Kaboski, Joseph P; Larrain, Mauricio; Schmukler, Sergio L; Vera, Mario (National Bureau of Economic Research Working Paper Series, 2022)
We study the distribution of credit during crisis times and its impact on leverage and risk at the firm and macroeconomic levels. We analyze a large-scale COVID-19 public credit guarantee program in Chile, using novel transaction-level credit data matched with tax data. We find that demand drives the increase in leverage, especially for riskier firms, but several factors keep aggregate risk small. Aggregate risk increases substantially when credit limits are relaxed, but reallocating the existing program credit toward riskier firms or raising the expected default increases risk much less. A quantitative model of firms and endogenous default confirms our empirics.
Author contact info: Federico Huneeus 419 Chapel Drive Box 90097 Economics Department Duke University Durham, NC 27708 United States Tel: 9196601800 E-Mail: federico.huneeus@duke.edu Joseph P. Kaboski Department of Economics University of Notre Dame 3039 Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-9906 E-Mail: jkaboski@nd.edu Mauricio Larrain Catholic University of Chile School of Management Avenida Vicuña Mackenna 4860 Santiago Chile E-Mail: mauriciolarraine@gmail.com Sergio L. Schmukler The World Bank MSN MC3-301 1818 H Street, N.W. Washington, DC 20433 Tel: 202-458-4167 Fax: 202-522-3518 E-Mail: Sschmukler@worldbank.org Mario Vera Av. Libertador Bernardo O'Higgins 1449 Santiago 834-0518 Chile E-Mail: mavera@cmfchile.cl

How Important are Investment Indivisibilities for Development? Experimental Evidence from Uganda - Kaboski, Joseph P; Lipscomb, Molly; Midrigan, Virgiliu; Pelnik, Carolyn (National Bureau of Economic Research Working Paper Series, 2022)
Theoretically, indivisible investments together with financial frictions can lower development, generate poverty traps, and lead agents to become risk-loving. Using experimental cash grants involving a choice between a safer, low payoff and a riskier, large payoff lottery, we find that 27 percent choose the riskier, larger lottery. Small grant winners invest in livestock and business inventory, while large grant winners invest in land, which exhibits high capital gains. Our quantitative model shows that the aggregate effects of financial deepening are sizable if the indivisible investment can be accumulated (e.g., capital) but not if it is in fixed supply (e.g., land).
Author contact info: Joseph P. Kaboski Department of Economics University of Notre Dame 3039 Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-9906 E-Mail: jkaboski@nd.edu Molly Lipscomb University of Virginia 235 McCormick Ave Charlottesville, VA 22904 Tel: (303)956-6682 E-Mail: molly.lipscomb@virginia.edu Virgiliu Midrigan Department of Economics New York University 19 W. 4th St. New York, NY 10012 Tel: 212/992-8081 Fax: 212/995-4186 E-Mail: virgiliu.midrigan@nyu.edu Carolyn Pelnik Tufts University Department of Economics 177 College Ave Medford, MA 02155 E-Mail: carolyn.pelnik@tufts.edu

The Economic Effects of the English Parliamentary Enclosures - Heldring, Leander; Robinson, James A; Vollmer, Sebastian (National Bureau of Economic Research Working Paper Series, 2022)
We use a dataset of the entire population of English Parliamentary enclosure acts between 1750 and 1830 to provide the first evidence of their impact. Parliamentary enclosure led to the systematic rationalization of traditional property rights. Exploiting a feature of the Parliamentary process that produced such legislation as a source of exogenous variation, we show that such enclosures were associated with significantly higher crop yields, but also higher land inequality. Our results are in line with a literature going back to Arthur Young and Karl Marx on the effects of Parliamentary enclosure on productivity and inequality. They do not support the argument that informal systems of governance, even in small, cohesive, and stable communities, were able to efficiently allocate commonly used and governed resources.
Author contact info: Leander Heldring Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: leander.heldring@kellogg.northwestern.edu James A. Robinson University of Chicago Harris School of Public Policy and Department of Political Science 1307 East 60th Street Chicago, Illinois 60637 Tel: 617/496-2839 Fax: 617/495-0438 E-Mail: jamesrobinson@uchicago.edu Sebastian Vollmer University of Goettingen Waldweg 26 37073 Göttingen, Germany Tel: +49551398170 E-Mail: svollmer@uni-goettingen.de

The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States - Atkeson, Andrew; Heathcote, Jonathan; Perri, Fabrizio (National Bureau of Economic Research Working Paper Series, 2022)
The U.S. net foreign asset position has declined sharply since 2007 and is currently negative 65 percent of U.S. GDP. This deterioration primarily reflects a U.S.-specific rise in corporate asset values that has inflated the value of U.S. equity liabilities to the rest of the world. To interpret these trends we develop an international macro finance model of flows, stocks, asset valuations, the current account, and the net foreign asset position. We find that the welfare impact of rising asset values for a representative U.S. household has been quite negative given extensive foreign ownership of U.S. corporate equity.
Author contact info: Andrew Atkeson Bunche Hall 9381 Department of Economics UCLA Box 951477 Los Angeles, CA 90095-1477 Tel: 866/312-9770 Fax: 310/825-9528 E-Mail: andy@atkeson.net Jonathan Heathcote Federal Reserve Bank of Minneapolis Research Department 90 Hennepin Ave. Minneapolis, MN 55401 Tel: (612) 204-6385 E-Mail: heathcote@minneapolisfed.org Fabrizio Perri Research Department Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis MN 55401 E-Mail: fperri@umn.edu

Patent Publication and Innovation - Hegde, Deepak; Herkenhoff, Kyle F; Zhu, Chenqi (National Bureau of Economic Research Working Paper Series, 2022)
How does the publication of patents affect innovation? We answer this question by exploiting a large-scale natural experiment—the passage of the American Inventor's Protection Act of 1999 (AIPA)—that accelerated the public disclosure of most U.S. patents by two years. We obtain causal estimates by comparing U.S. patents subject to the law change with “twin” European patents which were not. After AIPA's enactment, U.S. patents receive more and faster follow-on citations, indicating an increase in technology diffusion. Technological overlap increases between distant but related patents and decreases between highly similar patents, and patent applications are less likely to be abandoned post-AIPA, suggesting a reduction in duplicative R&D. Firms exposed to one standard deviation longer patent grant delays increased their R&D investment by 4% after AIPA. These findings are consistent with our theoretical framework in which AIPA provisions news shocks about related technologies to follow-on inventors and thus alters their innovation decisions.
Author contact info: Deepak Hegde Stern School of Business New York University 40 West Street Suite 722 New York, NY 10012 Tel: 212-998-0674 E-Mail: dhegde@stern.nyu.edu Kyle F. Herkenhoff University of Minnesota Department of Economics 4-101 Hanson Hall 1925 Fourth Street South Minneapolis, MN 55455 Tel: 925/360-7623 E-Mail: kfh@umn.edu Chenqi Zhu 4293 Pereira Dr Irvine,, CA 92697 E-Mail: chenqiz1@uci.edu

Procyclical Productivity in New Keynesian Models - Qiu, Zhesheng; Ríos-Rull, José-Víctor (National Bureau of Economic Research Working Paper Series, 2022)
We propose an easy-to-use search friction in the goods markets in medium-sized New Keynesian models. This friction allows increases in measured productivity in response to increases in expenditures via higher search effort from households. As a result markups can become procyclical and labor share countercyclical. Unlike in models that pose variable capital utilization and fixed costs to generate procyclical productivity, firms do not have to spend more to achieve it. We estimate the model matching impulse responses with Bayesian techniques and show superior performance of models with search frictions relative to the state of the art alternative models in the literature. Our estimates also display low fixed costs of production and lower Frisch elasticities.
Author contact info: Zhesheng Qiu Department of Economics and Finance City University of Hong Kong 9/F, Lau Ming Wai Academic Building (AC3) 83 Tat Chee Avenue, Kowloon Tong, Kowloon Hong Kong China E-Mail: zheshqiu@cityu.edu.hk José-Víctor Ríos-Rull The Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-7701 Fax: 215/573-2057 E-Mail: vr0j@upenn.edu

Statistical Uncertainty in the Ranking of Journals and Universities - Mogstad, Magne; Romano, Joseph P; Shaikh, Azeem; Wilhelm, Daniel (National Bureau of Economic Research Working Paper Series, 2022)
Economists are obsessed with rankings of institutions, journals, or scholars according to the value of some feature of interest. These rankings are invariably computed using estimates rather than the true values of such features. As a result, there may be considerable uncertainty concerning the ranks. In this paper, we consider the problem of accounting for such uncertainty by constructing confidence sets for the ranks. We consider both the problem of constructing marginal confidence sets for the rank of, say, a particular journal as well as simultaneous confidence sets for the ranks of all journals. We apply these confidence sets to draw inferences about uncertainty in the ranking of economics journals and universities by impact factors.
Author contact info: Magne Mogstad Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-3877 E-Mail: magne.mogstad@gmail.com Joseph P. Romano Department of Statistics Stanford University Sequoia Hall 390 Jane Stanford Way Stanford, CA 94305 E-Mail: romano@stanford.edu Azeem Shaikh Department of Economics University of Chicago 1126 E. 59th Street Chicago IL 60637 E-Mail: amshaikh@uchicago.edu Daniel Wilhelm Department of Economics University College London Gower Street London WC1E 6BT United Kingdom E-Mail: d.wilhelm@ucl.ac.uk

Could Machine Learning be a General Purpose Technology? A Comparison of Emerging Technologies Using Data from Online Job Postings - Goldfarb, Avi; Taska, Bledi; Teodoridis, Florenta (National Bureau of Economic Research Working Paper Series, 2022)
General purpose technologies (GPTs) push out the production possibility frontier and are of strategic importance to managers and policymakers. While theoretical models that explain the characteristics, benefits, and approaches to create and capture value from GPTs have advanced significantly, empirical methods to identify GPTs are lagging. The handful of available attempts are typically context specific and rely on hindsight. For managers deciding on technology strategy, it means that the classification, when available, comes too late. We propose a more universal approach of assessing the GPT likelihood of emerging technologies using data from online job postings. We benchmark our approach against prevailing empirical GPT methods that exploit patent data and provide an application on a set of emerging technologies. Our application exercise suggests that a cluster of technologies comprised of machine learning and related data science technologies is relatively likely to be GPT.
Author contact info: 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 Bledi Taska E-Mail: bt540@nyu.edu Florenta Teodoridis University of Southern California Marshall School of Business 701 Exposition Blvd, HOH 503 Los Angeles, CA 90089 E-Mail: florenta.teodoridis@marshall.usc.edu

Electoral Turnovers - Marx, Benjamin; Pons, Vincent; Rollet, Vincent (National Bureau of Economic Research Working Paper Series, 2022)
In most national elections, voters face a key choice between continuity and change. Electoral turnovers occur when the incumbent candidate or party fails to win reelection. To understand how turnovers affect national outcomes, we study all presidential and parliamentary elections held globally between 1946 and 2018. We document the prevalence of turnovers over time and estimate their effects on economic performance, human development, and the quality of democracy. Using a close-elections regression discontinuity design across countries, we show that turnovers improve country performance, especially in settings with weaker constraints on the executive. To explain these positive effects, we explore how electoral turnovers shape policy decisions, affect leader characteristics, reduce perceived corruption, and foster accountability.
Author contact info: Benjamin Marx Boston University Department of Economics 270 Bay State Road Boston, MA 02115 E-Mail: bmarx@bu.edu Vincent Pons Harvard Business School Morgan Hall 289 Soldiers Field Boston, MA 02163 Tel: 617/495-9329 E-Mail: vpons@hbs.edu Vincent Rollet MIT Department of Economics 77 Massachusetts Avenue, Bldg E52-300 Cambridge, MA 02139 United States E-Mail: vrollet@mit.edu

Is There a VA Advantage? Evidence from Dually Eligible Veterans - Chan, David C, Jr; Card, David; Taylor, Lowell (National Bureau of Economic Research Working Paper Series, 2022)
We study public vs. private provision of health care for veterans aged 65 and older who may receive care provided by the US Department of Veterans Affairs (VA) and in private hospitals financed by Medicare. Utilizing the ambulance design of Doyle et al. (2015), we find that the VA reduces 28-day mortality by 46% (4.5 percentage points) and that these survival gains are persistent. The VA also reduces 28-day spending by 21% and delivers strikingly different reported services relative to private hospitals. We find suggestive evidence of complementarities between continuity of care, health IT, and integrated care.
Author contact info: David C. Chan Jr Department of Health Policy 117 Encina Commons Stanford, CA 94305 Tel: 650/725-9582 E-Mail: david.c.chan@stanford.edu David Card Department of Economics 549 Evans Hall, #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/642-5222 Fax: 510/643-7042 E-Mail: card@econ.berkeley.edu Lowell Taylor Carnegie Mellon University H. John Heinz III College 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412/268-3278 E-Mail: lt20@andrew.cmu.edu

The Downward Spiral - Greenwood, Jeremy; Guner, Nezih; Kopecky, Karen A (National Bureau of Economic Research Working Paper Series, 2022)
There have been more than 500,000 opioid overdose deaths since 2000. To analyze the opioid epidemic, a model is constructed where individuals choose whether to use opioids recreationally, knowing the probabilities of addiction and dying. These odds are functions of recreational opioid usage. Markov chains are estimated from the US data for the college and non-college educated that summarize the transitions into and out of opioid addiction as well as to a deadly overdose. The structural model is constructed to match the estimated Markov chains. The epidemic’s drivers and the impact of medical interventions are examined.
Author contact info: Jeremy Greenwood University of Pennsylvania Nezih Guner CEMFI Calle Casado del Alisal, 5 28014 Madrid Spain E-Mail: ngunermail@gmail.com Karen Kopecky Federal Reserve Bank of Cleveland 1455 E 6th St Cleveland, OH 44114 E-Mail: karen.kopecky@clev.frb.org

The World Uncertainty Index - Ahir, Hites; Bloom, Nicholas; Furceri, Davide (National Bureau of Economic Research Working Paper Series, 2022)
We construct the World Uncertainty Index (WUI) for an unbalanced panel of 143 individual countries on a quarterly basis from 1952. This is the frequency of the word “uncertainty” in the quarterly Economist Intelligence Unit country reports. Globally, the Index spikes around major events like the Gulf War, the Euro debt crisis, the Brexit vote and the COVID pandemic. The level of uncertainty is higher in developing countries but is more synchronized across advanced economies with their tighter trade and financial linkages. In a panel vector autoregressive setting we find that innovations in the WUI foreshadow significant declines in output. This effect is larger and more persistent in countries with lower institutional quality, and in sectors with greater financial constraints.
Author contact info: Hites Ahir E-Mail: hahir@imf.org Nicholas Bloom Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/725-3266 Fax: 650/725-5702 E-Mail: nbloom@stanford.edu Davide Furceri International Monetary Fund 700 19th Street N.W. Washington, DC 20431 E-Mail: dfurceri@imf.org

The Federal Funds Market, Pre- and Post-2008 - Swanson, Eric T (National Bureau of Economic Research Working Paper Series, 2022)
This chapter provides an overview of the federal funds market and how the equilibrium federal fund rate is determined. I devote particular attention to comparing and contrasting the federal funds market before and after 2008, since there were several dramatic changes around that time that completely changed the market and the way in which the equilibrium federal funds rate is determined. The size of this structural break is arguably as large and important as the period of reserves targeting under Fed Chairman Paul Volcker from 1979–82. Finally, I discuss the relationship between the federal funds rate and other short-term interest rates in the U.S. and the outlook for the federal funds market going forward.
Author contact info: Eric T. Swanson Department of Economics University of California at Irvine 3151 Social Science Plaza Irvine, CA 92697-5100 Tel: 949/824-8305 E-Mail: eric.swanson@uci.edu

The Great Gatsby Curve - Durlauf, Steven N; Kourtellos, Andros; Tan, Chih Ming (National Bureau of Economic Research Working Paper Series, 2022)
This paper provides a synthesis of theoretical and empirical work on the Great Gatsby Curve, the positive empirical relationship between cross-section income inequality and persistence of income across generations. We present statistical models of income dynamics that mechanically give rise to the relationship between inequality and mobility. Five distinct classes of theories, including models on family investments, skills, social influences, political economy, and aspirations are developed, each providing a behavioral mechanism to explain the relationship. Finally, we review empirical studies that provide evidence of the curve for a range of contexts and socioeconomic outcomes as well as explore evidence on mechanisms.
Author contact info: Steven N. Durlauf University of Chicago Harris School of Public Policy 1307 E. 60th Street Chicago, IL 60637 E-Mail: durlauf@gmail.com Andros Kourtellos Department of Economics University of Cyprus P.O. Box 20537 CY-1678 Nicosia CYPRUS Tel: +357-22893713 Fax: +357-22892058 E-Mail: andros@ucy.ac.cy Chih Ming Tan Department of Economics Nistler College of Business and Public Administration University of North Dakota Nistler Hall Room 330P 3125 University Ave, Stop 8369 Grand Forks, ND 58202-8369 E-Mail: chihmingtan@gmail.com

Intergenerational Mobility - Cholli, Neil A; Durlauf, Steven N (National Bureau of Economic Research Working Paper Series, 2022)
This essay reviews the theory and empirics of intergenerational mobility. Our review draws on models and empirical analyses of classic and more recent work from both economics and sociology. We summarize models and the surrounding empirical evidence of two key sets of mechanisms: family factors (income, education, credit constraints, household composition, and genes) and social factors (schools, neighborhood sorting, racial segregation, and peer and role model effects). We then discuss and evaluate current methods used to measure intergenerational mobility, including linear regressions and Markov chains. Theoretical models imply nonlinear relationships between parent and child status that are often ignored in practice and offer potentially different interpretations of the evidence of heterogeneity in mobility across locations, groups, and time. We conclude that the next generation of studies would benefit from a closer integration of theory with empirics.
Author contact info: Neil A. Cholli 109 Tower Rd. Ithaca, NY 14853 E-Mail: nac85@cornell.edu Steven N. Durlauf University of Chicago Harris School of Public Policy 1307 E. 60th Street Chicago, IL 60637 E-Mail: durlauf@gmail.com

Group Corruption via Sequential Bargaining in a Hierarchical Organization - Kung, Fan-chin; Wang, Ping; Wen, Quan (National Bureau of Economic Research Working Paper Series, 2022)
We develop a framework of group corruption via back-door negotiations between an outside initiator and an authority of decision-makers in a hierarchical organization. We examine the role played by the architecture of a multi-tier authority and determine under such a structure how bargaining proceeds, in what order, and when it breaks down. We verify that equilibrium bargaining sequence proceeds as a chain through decision-making agents, regardless of the hierarchy of the organization. We prove the existence of a compromised equilibrium, where the decision of the authority is compromised, and establish sufficient conditions under which the most natural bottom-up bargaining configuration arises in equilibrium where a proposer negotiates with an immediately higher ranked respondent, starting with the initiator bargaining with the lowest ranked decision-maker in the organization. We then show the circumstances under which a top-down or a non-monotonic equilibrium configuration may emerge, and those under which the deal may break down. This enables us to capture a rich array of group corruptive configurations as observed. We conclude by investigating the extension to multi-tier authorities with multiple agents of the same rank in each tier, such as in a tree hierarchy.
Author contact info: Fan-chin Kung Department of Economics East Carolina University Greenville, NC 27858 USA E-Mail: kungf@ecu.edu Ping Wang Department of Economics Washington University in St. Louis Campus Box 1208 One Brookings Drive St. Louis, MO 63130-4899 Tel: 314/935-5632 Fax: 314/935-4156 E-Mail: pingwang@wustl.edu Quan Wen Department of Economics University of Washington Seattle, WA 98195 USA E-Mail: wenq2@uw.edu

Conditional Cash Transfers for Education - García, Sandra; Saavedra, Juan (National Bureau of Economic Research Working Paper Series, 2022)
This chapter reviews the extensive literature to date on CCTs for education. Section 2 provides background on the origins and expansion of CCTs globally, and describes basic design features and variation in characteristics across programs. Section 3 presents a theory of change and an economic household decision-making model highlighting key comparative statics and empirical predictions for the introduction of an education CCT program. Section 4 discusses key methodological challenges in evaluating the impacts of education CCTs. Section 5 integrates and updates the extensive evidence to date on the impacts of education CCTs on various outcome domains over the life cycle, and provides the most comprehensive view to date on learning impacts by meta-analyzing new evidence from more than 30 studies—substantially more than prior reviews of the literature. Section 6 reviews the evidence on indirect and general equilibrium effects. Section 7 presents a simple model of costs commonly used in the literature, which we extend to analyze cost-effectiveness for a subset of programs. Section 8 concludes and highlights open questions for future research.
Author contact info: Sandra García Escuela de Gobierno Universidad de los Andes Cra 1 # 18A -12 Bogota, Colombia E-Mail: sagarcia@uniandes.edu.co Juan Saavedra Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 E-Mail: jesaavedra@hks.harvard.edu

Unequal Expenditure Switching: Evidence from Switzerland - Auer, Raphael; Burstein, Ariel; Lein, Sarah M; Vogel, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices (driven by, e.g., changes in trade costs or exchange rates), most analyses focus on variation across households in initial expenditure shares on imported goods. However, the unequal welfare effects of non-marginal foreign price changes also depend on differences in how consumers substitute between imported and domestic goods, on which there is scant evidence. Using data from Switzerland surrounding the 2015 appreciation of the Swiss franc, we provide evidence that lower-income households have higher price elasticities. We quantify the contribution of heterogeneous elasticities for the unequal welfare effects of observed price changes between 2014–15 and for counterfactual shocks to the mean and dispersion of import price changes.
Author contact info: Raphael Auer Bank for International Settlements Postfach CH-4002 Basel Switzerland E-Mail: raphael.auer@bis.org Ariel Burstein Department of Economics Bunche Hall 8365 Box 951477 UCLA Los Angeles, CA 90095-1477 Tel: 310/206-6732 Fax: 310/825-9528 E-Mail: arielb@econ.ucla.edu Sarah M. Lein Department of Business and Economics University of Basel Switzerland E-Mail: sarah.lein@unibas.ch Jonathan Vogel Department of Economics University of California at Los Angeles 8283 Bunche Hall Mail Code 147703 Los Angeles, CA 90095 Tel: 310/794-7278 E-Mail: jonathan.e.vogel@gmail.com

Reinforcing RCTs with Multiple Priors while Learning about External Validity - Finan, Frederico; Pouzo, Demian (National Bureau of Economic Research Working Paper Series, 2022)
This paper presents a framework for how to incorporate prior sources of information into the design of a sequential experiment. These sources can include previous experiments, expert opinions, or the experimenter's own introspection. We formalize this problem using a multi-prior Bayesian approach that maps each source to a Bayesian model. These models are aggregated according to their associated posterior probabilities. We evaluate a broad of policy rules according to three criteria: whether the experimenter learns the parameters of the payoff distributions, the probability that the experimenter chooses the wrong treatment when deciding to stop the experiment, and the average rewards. We show that our framework exhibits several nice finite sample properties, including robustness to any source that is not externally valid.
Author contact info: Frederico Finan Department of Economics University of California 508-1 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 310/794-5958 Fax: 310/825-9528 E-Mail: ffinan@econ.berkeley.edu Demian Pouzo University of California at Berkeley 530-1 Evans Hall #3880 Berkeley, CA 94720 E-Mail: dpouzo@econ.berkeley.edu

Information and Credible Sanctions in Curbing Online Cheating Among Undergraduates: a Field Experiment - Dench, Daniel L; Joyce, Theodore J (National Bureau of Economic Research Working Paper Series, 2022)
The rapid increase in online instruction in higher education has heightened concerns about cheating. We use a randomized control design to test whether informing students that we can detect plagiarism reduces cheating. We further test whether informing students they have been caught cheating reduces subsequent cheating. We find informing students about our capability to detect plagiarism has little effect on cheating. Notifying students that they have been caught cheating and are on a watch list reduces subsequent cheating attempts by at least 65 percent depending on the class and sample. We test for peer effects but conclude we cannot credibly identify peer effects distinct from own-cheating propensities.
Author contact info: Daniel L. Dench School of Economics 221 Bobby Dodd Way NW Atlanta, GA 30332 Tel: 404 894-4912 E-Mail: dench@gatech.edu Theodore J. Joyce Baruch College, CUNY and National Bureau of Economic Research 39 Broadway, Suite 1620 New York, NY 10006 E-Mail: theodore.joyce@baruch.cuny.edu

Children and the US Social Safety Net: Balancing Disincentives for Adults and Benefits for Children - Aizer, Anna; Hoynes, Hilary W; Lleras-Muney, Adriana (National Bureau of Economic Research Working Paper Series, 2022)
Economic research on the safety net has evolved significantly over time, moving away from a near exclusive focus on the negative incentive effects of means-tested assistance on employment, earnings, marriage and fertility to include examination of the potential positive benefits of such programs to children. Initially, this research on benefits to children focused on short run impacts, but as we accumulated knowledge about skill production and better data became available, the research evolved further to include important long run economic outcomes such as employment, earnings and mortality. Once the positive long-run benefits to children are considered, many safety net programs are cost-effective. However, the current government practice of limiting the time horizon for cost-benefit calculations of major policy initiatives reduces the influence of the most current economic research on the long run benefits. We conclude with a discussion of why the rate of child poverty in the US is still higher than most OECD countries and how research on children and the safety net can better inform policy-making going forward.
Author contact info: Anna Aizer Brown University Department of Economics 64 Waterman Street Providence, RI 02912 Tel: 401/863-9529 Fax: 401/863-1970 E-Mail: anna_aizer@brown.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 Adriana Lleras-Muney Department of Economics 9373 Bunche Hall UCLA Los Angeles, CA 90095 Tel: 310/825-3925 Fax: NA E-Mail: allerasmuney@gmail.com

Who Can Tell Which Banks Will Fail? - Blickle, Kristian; Brunnermeier, Markus K; Luck, Stephan (National Bureau of Economic Research Working Paper Series, 2022)
We use the German Crisis of 1931, a key event of the Great Depression, to study how depositors behave during a bank run in the absence of deposit insurance. We find that deposits decline by around 20% during the run and that there is an equal outflow of retail and non-financial wholesale deposits from both ex-post failing and surviving banks. This implies that regular depositors are unable to identify failing banks. In contrast, the interbank market precisely identifies which banks will fail: the interbank market collapses for failing banks entirely but continues to function for surviving banks, which can borrow from other banks in response to deposit outflows. Since regular depositors appear uninformed, we argue that it is unlikely that deposit insurance would exacerbate moral hazard. Instead, interbank depositors are best positioned for providing “discipline” via short-term funding.
Author contact info: Kristian Blickle Federal Reserve Bank of New York 33 Liberty St New York City, New 10045 E-Mail: kristian.blickle@ny.frb.org Markus K. Brunnermeier Princeton University Department of Economics Bendheim Center for Finance Princeton, NJ 08544 Tel: 609/258-4050 Fax: 609/258-0771 E-Mail: markus@princeton.edu Stephan Luck Federal Reserve Bank of New York 33 Liberty St New York, NY 10045 E-Mail: stephan.luck@ny.frb.org

Valuing the Time of the Self-Employed - Agness, Daniel J; Baseler, Travis; Chassang, Sylvain; Dupas, Pascaline; Snowberg, Erik (National Bureau of Economic Research Working Paper Series, 2022)
People’s value for their own time is a key input in evaluating public policies: evaluations should account for time taken away from work or leisure as a result of policy. Using rich choice data collected from farming households in western Kenya, we show that households exhibit non-transitive preferences consistent with behavioral features such as loss aversion and self-serving bias. As a result, neither market wages nor standard valuation techniques (such as the Becker-DeGroot-Marschak—BDM—mechanism of Becker et al., 1964) correctly measure participants’ value of time. Using a structural model, we identify the mix of behavioral features driving our choice data. We find that these features distort choices when exchanging cash either for time or for goods. Our model estimates suggest that valuing the time of the self-employed at 60% of the market wage is a reasonable rule of thumb.
Author contact info: Daniel Agness E-Mail: dagness@berkeley.edu Travis Baseler E-Mail: travis.baseler@rochester.edu Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: chassang@princeton.edu Pascaline Dupas Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: pdupas@princeton.edu Erik Snowberg David Eccles School of Business University of Utah Salt Lake City, UT 84112-8914 E-Mail: Erik.Snowberg@ubc.ca

The Rise of the Engineer: Inventing the Professional Inventor During the Industrial Revolution - Hanlon, W. Walker (National Bureau of Economic Research Working Paper Series, 2022)
Why was the Industrial Revolution successful at generating sustained growth? Some have argued that there was a fundamental change in the way that new technology was developed during this period, but evidence for this argument remains largely anecdotal. This paper provides direct quantitative evidence showing that how innovation and design work was done changed fundamentally during the Industrial Revolution. This change was characterized by the professionalization of innovation and design work through the emergence of the engineering profession. I also propose a theory describing how this change could have acted as one mechanism behind the transition to modern economic growth.
Author contact info: Walker Hanlon Department of Economics Northwestern University 2211 Campus Drive, 3rd floor Evanston, IL 60208 E-Mail: walker.hanlon@gmail.com

Survey Experiments on Economic Expectations - Fuster, Andreas; Zafar, Basit (National Bureau of Economic Research Working Paper Series, 2022)
In this chapter, we discuss field experiments in surveys that are conducted with the purpose of learning about expectation formation and the link between expectations and behavior. We begin by reviewing the rationale for conducting experiments within surveys, rather than just relying on observational survey data. We then outline the most commonly used experimental paradigm, randomized information provision, along with some examples. Next, we outline a few methodological issues that are important to consider in the design of such experiments. We also provide a discussion of existing extensions of this paradigm, as well as of alternative approaches.
Author contact info: Andreas Fuster Swiss Finance Institute @ EPFL Quartier UNIL-Dorigny Extranef 216 Lausanne CH-1015 Switzerland E-Mail: andreas.fuster@gmail.com Basit Zafar Department of Economics University of Michigan 611 Tappan Street Ann Arbor, Michigan 48109 E-Mail: basitak@gmail.com

Assessing Misallocation in Agriculture: Plots versus Farms - Aragón, Fernando M; Restuccia, Diego; Rud, Juan Pablo (National Bureau of Economic Research Working Paper Series, 2022)
We examine empirically whether the level of data aggregation affects the assessment of misallocation in agriculture. Using data from Ugandan farmers, we document a substantial discrepancy between misallocation measures calculated at the plot and at the farm levels. Estimates of misallocation at the plot level are much higher than those estimated with the same data but aggregated at the farm level. Even after accounting for measurement error and unobserved heterogeneity, estimates of misallocation at the plot level are extremely high, with nationwide agricultural productivity gains of 562%. Furthermore, we find suggestive evidence that granular data may be more susceptible to measurement error in survey data and that data aggregation can attenuate the relative magnitude of measurement error in misallocation measures. Our findings suggest caution in generalizing insights on measurement error and misallocation from plot-level analysis to those at the farm level.
Author contact info: Fernando M. Aragon Sanchez SFU, Dep. Economics 8888 University Drive, V5A 1S6, Burnaby, BC Canada E-Mail: faragons@sfu.ca Diego Restuccia Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 Tel: 416/978-5114 Fax: 416/978-5519 E-Mail: diego.restuccia@utoronto.ca Juan Pablo Rud Dept of Economics, Royal Holloway Egham Hill, Egham Surrey TW20 0EX, UK E-Mail: juan.rud@rhul.ac.uk

Racial Disparities in the Paycheck Protection Program - Chernenko, Sergey; Scharfstein, David S (National Bureau of Economic Research Working Paper Series, 2022)
Using a large sample of Florida restaurants, we document significant racial disparities in borrowing through the Paycheck Protection Program (PPP) and investigate the causes of these disparities. Black-owned restaurants are 25% less likely to receive PPP loans. Restaurant location explains 5 percentage points of this differential. Restaurant characteristics explain an additional 10 percentage points of the gap in PPP borrowing. On average, prior borrowing relationships do not explain disparities. The remaining 10% disparity is driven by a 17% disparity in PPP borrowing from banks, which is partially offset by greater borrowing from nonbanks, largely fintechs. Disparities in PPP borrowing cannot be attributed to lower awareness of PPP loans or lower demand for PPP loans by minority-owned restaurants. Black-owned restaurants are significantly less likely to receive bank PPP loans in counties with more racial bias. In these counties, Black-owned restaurants are more likely to substitute to nonbank PPP loans. This substitution, however, is not strong enough to eliminate racial disparities in PPP borrowing. Finally, we show that our findings apply more broadly across industries in a sample of firms that were likely eligible for PPP.
Author contact info: Sergey Chernenko Mitch E. Daniels, Jr. School of Business Purdue University 403 W. State Street West Lafayette, IN 47907 Tel: 7654944133 E-Mail: schernen@purdue.edu David S. Scharfstein Harvard Business School Baker Library 363 Soldiers Field Boston, MA 02163 Tel: 617/496-5067 Fax: 617/496-8443 E-Mail: dscharfstein@hbs.edu

The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934 - Binz, Oliver; Graham, John (National Bureau of Economic Research Working Paper Series, 2022)
We examine whether the Securities Exchange Act of 1934 increased the information content of corporate earnings disclosures. Prior research questions whether the Act improved disclosure quality but generally relies on long-window tests and yields mixed results. We focus on whether the Act increased earnings informativeness, improving upon prior designs by focusing on short earnings announcement windows and employing a difference-in-differences design to control for potential contemporaneous structural changes. We document an increase in earnings informativeness following the Act, which is larger for treatment firms (which withheld disclosure before the Act) than for control firms. The increase in informativeness is more pronounced for firms that are subject to stronger enforcement.
Author contact info: Oliver Binz E-Mail: oliver.binz@esmt.org John Graham Duke University Fuqua School of Business 100 Fuqua Drive Durham, NC 27708-0120 Tel: 919/660-7857 Fax: 919/660-8038 E-Mail: john.graham@duke.edu

Corporate Flexibility in a Time of Crisis - Barry, John W; Campello, Murillo; Graham, John; Ma, Yueran (National Bureau of Economic Research Working Paper Series, 2022)
We use the COVID shock to study the direct and interactive effects of several forms of corporate flexibility on short- and long-term real business plans. We find that i) workplace flexibility, namely the ability for employees to work remotely, plays a central role in determining firms’ employment plans during the health crisis; ii) investment flexibility allows firms to increase or decrease capital spending based on their business prospects in the crisis, with effects shaped by workplace flexibility; and iii) financial flexibility contributes to stronger employment and investment, in particular when fixed costs are high. While the role of workplace flexibility is new to the COVID crisis, CFOs expect lasting effects for years to come: high workplace flexibility firms foresee continuation of remote work, stronger employment recovery, and shifting away from traditional capital investment, whereas low workplace flexibility firms rely more on automation to replace labor.
Author contact info: John W. Barry E-Mail: john.w.barry@duke.edu Murillo Campello Johnson Graduate School of Management Cornell University 114 East Avenue 369 Sage Hall Ithaca, NY 14853-6201 Tel: 607-255-1282 E-Mail: campello@cornell.edu John Graham Duke University Fuqua School of Business 100 Fuqua Drive Durham, NC 27708-0120 Tel: 919/660-7857 Fax: 919/660-8038 E-Mail: john.graham@duke.edu Yueran Ma Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: E-Mail: Yueran.Ma@chicagobooth.edu

Land Speculation and Wobbly Dynamics with Endogenous Phase Transitions - Hirano, Tomohiro; Stiglitz, Joseph E (National Bureau of Economic Research Working Paper Series, 2022)
This paper examines the global macro-dynamics of an OLG model with capital and land with rational expectations. Through the interactions between capital accumulation and land prices, the economy experiences phase transitions, endogenously moving back and forth from situations with unique and multiple momentary equilibria. Consequently, there can be a plethora of rational expectation equilibria trajectories, without any smooth convergence properties, neither converging to a steady state or even to a limit cycle—what we call “wobbly” macro-dynamics. The price of land and other key macro variables (wages, interest rates, output, consumption, wealth, capital stock) endogenously fluctuate within a well-identified range with repeated boom-bust cycles. The key disturbance to the economy is endogenous; even with rational expectations, there can be real estate booms, with increasing land prices increasingly crowding out productive investments; but such unsustainable land price booms inevitably are followed by a crash. We analyze the set of parameter values for which wobbly fluctuations occur, show that with some parameter values, the only r.e. trajectories involve such wobbly dynamics, demonstrate how changes in parameters affect global macro-dynamics, and show how policy interventions can affect stability and social welfare.
Author contact info: Tomohiro Hirano Royal Holloway, University of London E-Mail: tomohih@gmail.com Joseph E. Stiglitz 5th Floor, Kravis Hall Columbia University 665 West 130th St. New York, NY 10027 Tel: (929) 274-2912 Fax: (929) 349-5197 E-Mail: jes322@columbia.edu

The Value of Arbitrage - Dávila, Eduardo; Graves, Daniel D; Parlatore, Cecilia (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the social value of closing price differentials in financial markets. We show that arbitrage gaps (price differentials between markets) exactly correspond to the marginal social value of executing an arbitrage trade. We further show that arbitrage gaps and measures of price impact are sufficient to compute the total social value from closing an arbitrage gap. Theoretically, we show that, for a given arbitrage gap, the total social value of arbitrage is higher in more liquid markets. We apply our framework to compute the welfare gains from closing arbitrage gaps in the context of covered interest parity violations and several dual-listed companies. The estimates of the value of closing arbitrage gaps vary substantially across applications.
Author contact info: Eduardo Dávila Yale University Department of Economics 87 Trumbull Street New Haven, CT 06511 E-Mail: eduardo.davila@yale.edu Daniel D. Graves 28 Hillhouse Ave Yale Economics Department New Haven, CT-C 06511 E-Mail: d.graves@yale.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

Local Journalism under Private Equity Ownership - Ewens, Michael; Gupta, Arpit; Howell, Sabrina T (National Bureau of Economic Research Working Paper Series, 2022)
Local daily newspapers historically played an important role in U.S. democracy by providing citizens with information about local policy issues. In recent decades, local newspapers have struggled to compete with new online platforms. In the first study of private equity (PE) in a struggling industry, we find nuanced effects. PE leads to higher digital circulation and lower chances of newspaper exit. However, the composition of news shifts away from local governance, the number of reporters and editors falls, and participation in local elections declines. The results have implications for knowledge about local policy issues and highlight trade-offs surrounding media ownership.
Author contact info: Michael Ewens Columbia Business School 665 W 130th St Henry Kravis Hall, 732 New York, NY 10027 E-Mail: me2731@columbia.edu Arpit Gupta E-Mail: arpit.gupta@stern.nyu.edu Sabrina T. Howell NYU Stern School of Business KMC 9-93 44 West 4th Street New York, NY 10012 E-Mail: showell@stern.nyu.edu

A Bridge to Graduation: Post-Secondary Effects of an Alternative Pathway for Students Who Fail High School Exit Exams - Arnold Lincove, Jane; Mata, Catherine; Cortes, Kalena (National Bureau of Economic Research Working Paper Series, 2022)
High school exit exams are meant to standardize the quality of public high schools and to ensure that students graduate with a set of basic skills and knowledge. Evidence suggests that a common perverse effect of exit exams is an increase in dropout for students who have difficulty passing tests, with a larger effect on minority students. To mitigate this, some states offer alternative, non-tested pathways to graduation for students who have failed their exit exams. This study investigates the post-secondary effects of an alternative high school graduation program. Among students who initially fail an exit exam, those who eventually graduate through an alternative project-based pathway have lower college enrollment, but similar employment outcomes to students who graduate by retaking and passing their exit exams. Compared to similar students who fail to complete high school, those students who take the alternative pathway have better post-secondary outcomes in both education and employment.
Author contact info: Jane Arnold Lincove UMBC School of Public Policy 1000 Hilltop Cir Baltimore, MD 21250 E-Mail: jlincove@umbc.edu Catherine Mata 164 Angell St. 2nd floor Providence, RI 02906 USA E-Mail: catherine_mata@brown.edu Kalena Cortes The Bush School Texas A&M University 4220 TAMU 2088 Allen Building College Station, TX 77843 E-Mail: kcortes@tamu.edu

From Anti-vax Intentions to Vaccination: Panel and Experimental Evidence from Nine Countries - Galasso, Vincenzo; Pons, Vincent; Profeta, Paola; Becher, Michael; Brouard, Sylvain; Foucault, Martial (National Bureau of Economic Research Working Paper Series, 2022)
Millions of people refuse COVID-19 vaccination. Using original data from two surveys in nine OECD countries, we analyze the determinants of anti-vax intentions in December 2020 and show that half of the anti-vax individuals were vaccinated by summer 2021. Vaccinations were more likely among individuals aged 50+, exposed to COVID-19, compliant with public restrictions, more informed on traditional media, trusting scientists, and less concerned about vaccines’ side effects. We run a survey experiment with informational messages. In EU countries, a message about protecting health largely increases vaccinations, even among anti-vax individuals. In the U.K. and U.S., a message about protecting the economy generates similar effects. Our findings suggest that informational campaigns should adopt adequate narratives and address concerns about vaccines’ side effects.
Author contact info: Vincenzo Galasso Università Bocconi-IGIER Milano, Italy E-Mail: vincenzo.galasso@unibocconi.it Vincent Pons Harvard Business School Morgan Hall 289 Soldiers Field Boston, MA 02163 Tel: 617/495-9329 E-Mail: vpons@hbs.edu Paola Profeta Università Bocconi via Roentgen 1 20136 Milano Italy E-Mail: paola.profeta@unibocconi.it Michael Becher IE University Paseo de la Castellana, 259 Madrid 28046 Spain E-Mail: michael.becher@ie.edu Sylvain Brouard CEVIPOF (Centre de recherches politiques) 98, rue de l'Université PARIS 75007 France E-Mail: sylvain.brouard@sciencespo.fr Martial Foucault CEVIPOF (Centre de recherches politiques) 98 rue de l’Université PARIS 75007 France E-Mail: martial.foucault@sciencespo.fr

Environmental Liabilities, Borrowing Costs, and Pollution Prevention Activities: The Nationwide Impact of the Apex Oil Ruling - Chen, Jianqiang; Hsieh, Pei-Fang; Hsu, Po-; Levine, Ross (National Bureau of Economic Research Working Paper Series, 2022)
The 2008 Apex Oil court decision reduced the circumstances under which specific environmental clean-up obligations were dischargeable in Chapter 11, potentially affecting the securities prices, credit conditions, and pollution practices of corporations not in Chapter 11. We discover that among financially stressed firms with those specific environmental liabilities, bond and stock prices dropped after Apex. Moreover, those firms (1) experienced a tightening of credit conditions (e.g., paying higher risk premia on debts and receiving lower bond ratings), (2) intensified pollution prevention activities, and (3) reduced the emissions of pollutants causing environmental damages no longer dischargeable in Chapter 11. These findings hold among firms nationwide, not only those within the jurisdiction of the Seventh Circuit court, which issued the Apex decision, suggesting that Apex had a nationwide impact.
Author contact info: Jianqiang Chen College of Technology Management National Tsing Hua University Taiwan E-Mail: cjq456jq@gapp.nthu.edu.tw Pei-Fang Hsieh College of Technology Management National Tsing Hua University Taiwan E-Mail: pfhsieh@mx.nthu.edu.tw Po-Hsuan Hsu College of Technology Management National Tsing Hua University Taiwan E-Mail: pohsuanhsu@mx.nthu.edu.tw Ross Levine Hoover Institution (HHMB 313) Stanford University 434 Galvez Mall Stanford, CA 94305-6010 Tel: 510-643-1419 E-Mail: rosslevine@stanford.edu

How Tight are U.S. Labor Markets? - Domash, Alex; Summers, Lawrence H (National Bureau of Economic Research Working Paper Series, 2022)
Since the outset of the Covid-19 pandemic, labor market indicators that traditionally move together have been sending different signals about the degree of slack in the U.S. labor market. While some indicators on the supply-side, such as the prime-age employment-to-population ratio, suggest that there is still some slack in the labor market, other indicators on the demand-side, such as the job vacancy rate and the quits rate, imply that the labor market is already very tight. In light of these divergent signals, this paper compares alternative labor market indicators as predictors of wage inflation. Using national time series and state cross-section data, we find (i) unemployment is a better predictor of wage inflation than non-employment and (ii) vacancy rates and quit rates have substantial predictive power for wage inflation. We highlight the fact that vacancy and quit rates currently experienced in the United States correspond to a degree of labor market tightness previously associated with sub-2 percent unemployment rates. Finally, we show that predicted firm-side unemployment has dominant explanatory power with respect to subsequent inflation. Our results, along with a cursory analysis of labor force participation information, suggest that labor market tightness is likely to contribute significantly to inflationary pressure in the United States for some time to come.
Author contact info: Alex Domash Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 E-Mail: alex_domash@hks.harvard.edu Lawrence H. Summers Harvard Kennedy School of Government 79 JFK Street Cambridge, MA 02138 Tel: 617/495-9322 Fax: 617/495-0436 E-Mail: lhs@harvard.edu

Minority Underrepresentation in U.S. Cities - Ricca, Federico; Trebbi, Francesco (National Bureau of Economic Research Working Paper Series, 2022)
This paper investigates the patterns of Minority representation and voter registration in U.S. municipal governments. For the period 1981-2020, we report substantial levels of strategic underrepresentation of African American, Asian, and Latino voters in U.S. local politics. Disproportionality in the representation and in voter registration rates of Minority groups are widespread, but stronger when racial or ethnic minorities are electorally pivotal. Underrepresentation is determined by the combination of several endogenous institutional features, starting from systematic disparity in voter registration, strategic selection of electoral rules, city’s form of government, council size, and pay of elected members of the council. We provide causal evidence of the strategic use of local political institutions in reducing electoral representation of minorities based on the U.S. Supreme Court narrow decision of Shelby County v. Holder (2013), which deemed unconstitutional Voting Rights Act (VRA) Section 4(b), removing federal preclearance requirements for a specific subset of U.S. jurisdictions.
Author contact info: Federico Ricca Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 Canada E-Mail: ricca.federico@gmail.com Francesco Trebbi Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: ftrebbi@berkeley.edu

Reconciling Trends in U.S. Male Earnings Volatility: Results from Survey and Administrative Data - Moffitt, Robert A; Abowd, John M; Bollinger, Christopher R; Carr, Michael D; Hokayem, Charles M; McKinney, Kevin L; Wiemers, Emily E; Zhang, Sisi; Ziliak, James P (National Bureau of Economic Research Working Paper Series, 2022)
One strand of the literature in labor economics, household finance, and macroeconomics has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are disagreements in the empirical literature on this question, with some suggestions that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper summarizes the results of a project to reconcile these findings with four different data sets and six different data series--three survey and three administrative data series, including two which match survey respondent data to their administrative data. Four of the six series show no significant trend in male earnings volatility over the last 20-to-30+ years when differences across the data sets are properly accounted for. A fifth shows a positive net trend but small in magnitude. A sixth shows no net trend 1998-2011 and only a small decline thereafter. The remaining differences across data series can be largely explained by differences in the left tail of their cross-sectional earnings distributions. We conclude that the data sets we have analyzed show little evidence of any significant trend in male earnings volatility since the mid-1980s.
Author contact info: 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 John M. Abowd Cornell University Christopher R. Bollinger Department of Economics University of Kentucky Lexington, KY 40506 E-Mail: crboll@email.uky.edu Michael D. Carr Department of Economics University of Massachusetts Boston 100 Morrissey Blvd. Boston, MA 02125 E-Mail: michael.carr@umb.edu Charles M. Hokayem U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 E-Mail: charles.hokayem@census.gov Kevin L. McKinney U.S. Census Bureau 4600 Silver Hill Rd Office 5K041 Washington, DC 20233 E-Mail: Kevin.L.McKinney@census.gov Emily E. Wiemers Department of Public Administration and International Affairs Syracuse University Syracuse, NY 13244 E-Mail: eewiemer@syr.edu Sisi Zhang Institute for Economic and Social Research Jinan University 601 Huangpu Ave West Guangzhou, Guangdong, 510632 China E-Mail: sisi.zhang@gmail.com James P. Ziliak Center for Poverty Research and Department of Economics University of Kentucky 550 South Limestone St. Lexington, KY 40506-0047 E-Mail: jziliak@uky.edu

Designing Benefits for Platform Workers - Gruber, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
Designing benefits for the growing platform workforce in the U.S. poses significant challenges. While platform workers need protection against unforeseen shocks, work that is often part time and spread across multiple platforms makes the traditional benefits model untenable. This paper reports the results from a survey of drivers and couriers working with Uber to help understand their benefits preferences. We find that there is a wide diversity across these workers in platform earnings, the share of platform earnings from Uber, the share of family earnings from platform work and the availability of benefits from other jobs. We use willingness-to-pay questions to show that workers are willing to trade off additional income for benefits; after accounting for the tax advantage of benefits, workers are roughly indifferent on average between the two. While there are some trends in valuation, such as higher valuation for pension than for health contributions, the most notable feature of the data is the wide variation across workers in their preferences across benefits types and relative to income. Workers also show a preference for benefits that can help them commit to increase savings in the future.
Author contact info: Jonathan Gruber Department of Economics, E52-434 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8892 Fax: 617/253-1330 E-Mail: gruberj@mit.edu

How Do Copayment Coupons Affect Branded Drug Prices and Quantities Purchased? - Dafny, Leemore; Ho, Kate; Kong, Edward (National Bureau of Economic Research Working Paper Series, 2022)
We estimate the causal effects of drug copayment coupons, which reduce consumer cost-sharing for branded prescription drugs, on net-of-rebate price and quantities sold. Focusing on drugs without generic substitutes, we show that coupon introductions increase quantity sold by 23-25% for the commercial segment relative to Medicare Advantage, where coupons are banned. To quantify the resulting equilibrium price effects, we estimate a discrete choice model of demand for multiple sclerosis drugs and simulate a model of drug price negotiations. We estimate that net-of-rebate prices are 8% higher due to the availability of coupons for most of these drugs.
Author contact info: Leemore Dafny Harvard Business School Harvard Kennedy School Morgan Hall 481 Soldiers Field Boston, MA 02163 Tel: 617/495-2416 E-Mail: ldafny@hbs.edu Kate Ho Princeton University Department of Economics 237 Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: kate.ho@princeton.edu Edward Kong Harvard University Department of Economics 1805 Cambridge St Cambridge, MA 02138 E-Mail: edkong@nber.org

Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey - de Chaisemartin, Clément; D'Haultfoeuille, Xavier (National Bureau of Economic Research Working Paper Series, 2022)
Linear regressions with period and group fixed effects are widely used to estimate policies’ effects: 26 of the 100 most cited papers published by the American Economic Review from 2015 to 2019 estimate such regressions. It has recently been shown that those regressions may produce misleading estimates, if the policy’s effect is heterogeneous between groups or over time, as is often the case. This survey reviews a fast-growing literature that documents this issue, and that proposes alternative estimators robust to heterogeneous effects. We use those alternative estimators to revisit Wolfers (2006a).
Author contact info: Clément de Chaisemartin Department of Economics University of California at Santa Barbara Santa Barbara, CA 93106 E-Mail: clementdechaisemartin@ucsb.edu Xavier D'Haultfoeuille CREST 5 avenue Henry Le Chatelier 91764 Palaiseau cedex FRANCE E-Mail: xavier.dhaultfoeuille@ensae.fr

A Structural Empirical Model of R&D Investment, Firm Heterogeneity, and Industry Evolution - Chen, Yanyou; Xu, Daniel (National Bureau of Economic Research Working Paper Series, 2022)
This paper develops and estimates an industry equilibrium model of manufacturing plants in the Korean electric motor industry from 1991 to 1996. Plant-level decisions on R&D, physical capital investment, entry, and exit are integrated in a dynamic setting with knowledge spillovers. We use a simulated method of moments estimator and the novel approximation method of Weintraub, Benkard and Van Roy (2008) to estimate the R&D cost, magnitude of knowledge spillovers, adjustment costs of physical investment, and plant scrap value distribution. Knowledge spillovers are essential to explaining the firm-level productivity evolution and the equilibrium market configuration. A counterfactual experiment reveals that a 15% R&D subsidy maximizes industry output and is broadly consistent with a past policy initiative of the Korean government.
Author contact info: Yanyou Chen University of Toronto Max Gluskin House 150 St. George Street Toronto, ON M5S 3G7 Canada Tel: 6478844080 E-Mail: yanyou.chen@utoronto.ca Daniel Xu Department of Economics Duke University 213 Social Science Bldg 419 Chapel Drive Box 90097 Durham, NC 27708-0097 Tel: 919-660-1824 E-Mail: daniel.xu@duke.edu

The 2021 Paycheck Protection Program Reboot: Loan Disbursement to Employer and Nonemployer Businesses in Minority Communities - Fairlie, Robert W; Fossen, Frank (National Bureau of Economic Research Working Paper Series, 2022)
Was the $278 billion reboot of the $800 billion Paycheck Protection Program (PPP) in early 2021 disbursed equitably to minority communities? This paper provides the first analysis of how PPP funds were disbursed to minority communities in the third and final round of the program, which was specifically targeted to underserved and disadvantaged communities. Using administrative microdata on the universe of PPP loans, we find a strong positive relationship between PPP flows, as measured by the number of loans per employer business or loan amounts per employee, and the minority share of the population or businesses in the third round. In contrast, the relationship was negative in the first round of 2020 and less positive in the second round of 2020. We find a stronger positive relationship between minority share and loan numbers or amounts to employer businesses for first draw loans than second draw loans in 2021 (capturing some persistence in inequities). The patterns are similar for loan numbers and amounts to nonemployer businesses but with a strong positive relationship with minority share for both first draw and second draw loans. The rebooted PPP that ran from January to May 2021 appears to have been disbursed to minority communities as intended.
Author contact info: Robert W. Fairlie Department of Public Policy University of California, Los Angeles P.O.Box 951656 Los Angeles, CA 90095 Tel: 831/459-3332 E-Mail: rfairlie@ucla.edu Frank M. Fossen University of Nevada, Reno Department of Economics Reno, NV 89557-0030 Tel: (775) 682-9131 E-Mail: ffossen@unr.edu

Share Pledging in China: Funding Listed Firms or Funding Entrepreneurship? - He, Zhiguo; Liu, Bibo; Zhu, Feifei (National Bureau of Economic Research Working Paper Series, 2022)
This paper studies the connection between share pledging and entrepreneurial activities in China, challenging the common wisdom that share pledging funds circle back to the listed firms. Share pledging funds are at the discretion of the shareholders who pledge their publicly traded shares, and survey evidence shows that a majority of the largest shareholders (67.3%) used pledging funds outside the listed firms. By linking firm registration data with share pledging data, we show a positive relation between shareholders’ pledging transactions and entrepreneurial activities. Utilizing the launch of the exchange market in 2013 as a quasi-natural experiment that favors share pledging by natural person shareholders against that by legal entity shareholders, our difference-in-differences (DiD) analysis shows natural person shareholders increased their entrepreneurial activities significantly in response to the policy shock, relative to legal entity shareholders. In addition to various robustness checks, we also show that shareholders with better access to share pledging invest more heavily in industries with above-median growth potential.
Author contact info: Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Bibo Liu Tsinghua University 43 Chengfu Rd. Haidian District Beijing, China E-Mail: liubb@pbcsf.tsinghua.edu.cn Feifei Zhu School of Finance Central University of Finance and Economics E-Mail: feifei.zhu@cufe.edu.cn

Justifying Dissent - Bursztyn, Leonardo; Egorov, Georgy; Haaland, Ingar K; Rao, Aakaash; Roth, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
Dissent plays an important role in any society, but dissenters are often silenced through social sanctions. Beyond their persuasive effects, rationales providing arguments supporting dissenters' causes can increase the public expression of dissent by providing a \social cover" for voicing otherwise-stigmatized positions. Motivated by a simple theoretical framework, we experimentally show that liberals are more willing to post a Tweet opposing the movement to defund the police, are seen as less prejudiced, and face lower social sanctions when their Tweet implies they had first read credible scientific evidence supporting their position. Analogous experiments with conservatives demonstrate that the same mechanisms facilitate anti-immigrant expression. Our findings highlight both the power of rationales and their limitations in enabling dissent and shed light on phenomena such as social movements, political correctness, propaganda, and anti-minority behavior.
Author contact info: Leonardo Bursztyn Department of Economics University of Chicago 1126 E. 59th Street Chicago, IL 60637 E-Mail: bursztyn@g.uchicago.edu Georgy Egorov Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/467-2154 Fax: 847/467-1220 E-Mail: g-egorov@kellogg.northwestern.edu Ingar K. Haaland Department of Economics Norwegian School of Economics Helleveien 30 Bergen Norway E-Mail: ingar.haaland@nhh.no Aakaash Rao Harvard University Department of Economics Littauer Center of Public Administration 1805 Cambridge St Cambridge, MA 02138 Tel: 5129248016 E-Mail: arao@g.harvard.edu Christopher Roth Department of Economics University of Cologne Albertus-Magnus-Platz Cologne Germany E-Mail: cproth89@gmail.com

Back to Trend: COVID Effects on E-commerce in 47 Countries - Alcedo, Joel; Cavallo, Alberto; Dwyer, Bricklin; Mishra, Prachi; Spilimbergo, Antonio (National Bureau of Economic Research Working Paper Series, 2022)
We study E-commerce across 47 economies and 26 industries during the COVID-19 pandemic using online transaction data from Mastercard. The online share of total credit card transactions surged during the pandemic, especially as governments made transfers to households in lockdown. As the fiscal support and mobility restrictions waned, online shares went back to pre-pandemic trends in almost all countries. We find little evidence of long-lasting structural changes in E-commerce spending patterns.
Author contact info: Joel Alcedo 2000 Purchase St Purchase, NY 10577 United States E-Mail: Joel.Alcedo@mastercard.com Alberto Cavallo Harvard Business School Morgan Hall 287 Soldiers Field Boston, MA 02163 Tel: 617-495-6099 Fax: 617-496-5994 E-Mail: acavallo@hbs.edu Bricklin Dwyer 2000 Purchase St Purchase, NY 10577 United States E-Mail: Bricklin.Dwyer@mastercard.com Prachi Mishra IMF Research Department 700 19th Street NW Washington, DC 20431 E-Mail: pmishra@imf.org Antonio Spilimbergo International Monetary Fund 700 19th Street, N.W. Washington, DC 20431 E-Mail: aspilimbergo@imf.org

Teacher Labor Market Equilibrium and the Distribution of Student Achievement - Bates, Michael D; Dinerstein, Michael; Johnston, Andrew C; Sorkin, Isaac (National Bureau of Economic Research Working Paper Series, 2022)
We study the equity and efficiency consequences of the allocation of teachers to schools. Within a district, wages are uniform across potential assignments. Because teachers tend to prefer schools with more advantaged students, this uniformity may lead to inequity among students. Because there might be match effects in teaching, this uniformity may lead to inefficient allocations. While we do observe inefficient allocations (there are meaningful gains from reallocation), surprisingly, we do not observe inequity: advantaged and disadvantaged students have teachers with similar value-added. To understand why uniform wages lead to inefficiency but not inequity, we use rich data from the teacher transfer system linked to test score data to estimate an equilibrium model of the teacher labor market. We find that the allocation is equitable because principals hire noisily, tending not to select their most effective applicants. Achieving most efficiency gains, however, requires differentiated wages that compensate teachers for match output.
Author contact info: Michael D. Bates 3135 Sproul Hall Department of Economics University of California, Riverside Riverside, CA 92521 United States Tel: 951 827 1585 Fax: (951) 827-5685 E-Mail: michael.bates@ucr.edu Michael Dinerstein Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/795-2937 Fax: 773/702-8490 E-Mail: mdinerstein@uchicago.edu Andrew C. Johnston Department of Economics University of California, Merced 5200 N Lake Road Merced, CA 95340 Tel: 949/290-1948 E-Mail: acjohnston@ucmerced.edu Isaac Sorkin Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 608/440-0052 E-Mail: sorkin@stanford.edu

The Unequal Consequences of Job Loss across Countries - Bertheau, Antoine; Acabbi, Edoardo Maria; Barcelo, Cristina; Gulyas, Andreas; Lombardi, Stefano; Saggio, Raffaele (National Bureau of Economic Research Working Paper Series, 2022)
We document the consequences of losing a job across countries using a harmonized research design applied to seven matched employer-employee datasets. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in between. Key to these differences is that Southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums explains a substantial portion of wage losses in all countries.
Author contact info: Antoine Bertheau E-Mail: bertheau.antoine@gmail.com Edoardo Maria Acabbi Universidad Carlos III de Madrid Calle Madrid 126 Getafe 28903 Spain E-Mail: eacabbi@emp.uc3m.es Cristina Barcelo Bank of Spain Alcala 48 28014 Madrid Spain E-Mail: barcelo@bde.es Andreas Gulyas University of Mannheim E-Mail: andreas.gulyas@gmail.com Stefano Lombardi VATT Institute for Economic Research Arkadiankatu 7 00101 Helsinki Finland E-Mail: stefano.lombardi@vatt.fi Raffaele Saggio Department of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 1L4 Tel: 604/822-1418 E-Mail: rsaggio@mail.ubc.ca

Empirical Strategies in Economics: Illuminating the Path from Cause to Effect - Angrist, Joshua (National Bureau of Economic Research Working Paper Series, 2022)
The view that empirical strategies in economics should be transparent and credible now goes almost without saying. The local average treatment effects (LATE) framework for causal inference helped make this so. The LATE theorem tells us for whom particular instrumental variables (IV) and regression discontinuity estimates are valid. This lecture uses several empirical examples, mostly involving charter and exam schools, to highlight the value of LATE. A surprising exclusion restriction, an assumption central to the LATE interpretation of IV estimates, is shown to explain why enrollment at Chicago exam schools reduces student achievement. I also make two broader points: IV exclusion restrictions formalize commitment to clear and consistent explanations of reduced-form causal effects; compelling applications demonstrate the power of simple empirical strategies to generate new causal knowledge.
Author contact info: Joshua Angrist Department of Economics, E52-436 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8909 Fax: 617/253-1330 E-Mail: angrist@mit.edu

The Transformation of Self Employment - Colaiacovo, Innessa; Dalton, Margaret G; Pekkala Kerr, Sari; Kerr, William R (National Bureau of Economic Research Working Paper Series, 2022)
Over the past half-century, while self-employment has consistently accounted for around one in ten of the United States workforce, its composition has changed. Since 1970, industries with high startup capital requirements have declined from 53% of self-employment to 23%. This same time period also witnessed declines in "hometown" local entrepreneurship and the probability of the self-employed being among top earners. Using 2016 data, we show that high startup capital requirements are linked with lower profitability at small scales. The transition away from high startup capital industries appears most closely linked to changes in small business production functions and less due to advantageous reallocation to other opportunities, growth in returns-to-scale among large businesses, or a worsening of financing conditions and debt levels.
Author contact info: Innessa Colaiacovo Harvard University Margaret G. Dalton Tel: 651-207-9759 E-Mail: maggie.dalton94@gmail.com Sari Pekkala Kerr Wellesley College 106 Central Street Wellesley, MA 02481 E-Mail: skerr3@wellesley.edu William R. Kerr Harvard Business School Rock Center 212 Soldiers Field Boston, MA 02163 Tel: 617/496-7021 E-Mail: wkerr@hbs.edu

Quantum Economic Advantage - Bova, Francesco; Goldfarb, Avi; Melko, Roger G (National Bureau of Economic Research Working Paper Series, 2022)
A quantum computer exhibits a quantum advantage when it can perform a calculation that a classical computer is unable to complete. It follows that a company with a quantum computer would be a monopolist in the market for solving such a calculation if its only competitor was a company with a classical computer. Conversely, economic outcomes are unclear in settings where quantum computers do not exhibit a quantum advantage. We model a duopoly where a quantum computing company competes against a classical computing company. The model features an asymmetric variable cost structure between the two companies and the potential for an asymmetric fixed cost structure, where each firm can invest in scaling its hardware to expand its respective market. We find that even if: 1) the companies can complete identical calculations, and thus there is no quantum advantage, and 2) it is more expensive to scale the quantum computer, the quantum computing company can not only be more profitable but also invest more in market creation. The results suggest that quantum computers may not need to display a quantum advantage to be able to generate a quantum economic advantage for the companies that develop them.
Author contact info: Francesco Bova Rotman School of Management University of Toronto 105 St George St Toronto, ON M5S3E6 Canada E-Mail: Francesco.Bova@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 Roger G. Melko Department of Physics and Astronomy University of Waterloo 200 University Avenue West Waterloo, ON N2L3G1 Canada E-Mail: rmelko@perimeterinstitute.ca

Machine-Learning the Skill of Mutual Fund Managers - Kaniel, Ron; Lin, Zihan; Pelger, Markus; Van Nieuwerburgh, Stijn (National Bureau of Economic Research Working Paper Series, 2022)
We show, using machine learning, that fund characteristics can consistently differentiate high from low-performing mutual funds, as well as identify funds with net-of-fees abnormal returns. Fund momentum and fund flow are the most important predictors of future risk-adjusted fund performance, while characteristics of the stocks that funds hold are not predictive. Returns of predictive long-short portfolios are higher following a period of high sentiment or a good state of the macro-economy. Our estimation with neural networks enables us to uncover novel and substantial interaction effects between sentiment and both fund flow and fund momentum.
Author contact info: Ron Kaniel University of Rochester Simon School of Business 500 Wilson BLVD Carol Simon Hall Box 270100 (Room CS3-312) Tel: 585-275-1836 E-Mail: ron.kaniel@simon.rochester.edu Zihan Lin Stanford University 475 Via Ortega Suite B060 Stanford, CA 94305 E-Mail: zihanl@stanford.edu Markus Pelger Stanford University Department of Management Science & Engineering 312 Huang Engineering Center Stanford, CA 94305 E-Mail: mpelger@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

The Missing Baby Bust: The Consequences of the COVID-19 Pandemic for Contraceptive Use, Pregnancy, and Childbirth among Low-Income Women - Bailey, Martha J; Bart, Lea J; Lang, Vanessa Wanner (National Bureau of Economic Research Working Paper Series, 2022)
Multiple episodes in U.S. history demonstrate that birth rates fall in response to recessions. However, the 2020 COVID-19 recession differed from earlier periods in that employment and access to contraception and abortion fell, as reproductive health centers across the country temporarily closed or reduced their capacity. This paper exploits novel survey and administrative data to examine how reductions in access to reproductive health care during 2020 affected contraceptive efficacy among low-income women. Accounting for 2020’s reductions in access to contraception and the economic slowdown, our results predict a modest decline in births of 1.1 percent in 2021 for low-income women. Further accounting for reductions in access to abortion implies that birth rates may even rise for low-income women. These results also suggest that already economically disadvantaged families disproportionately affected by the COVID-19 economy will experience a large increase in unplanned births.
Author contact info: Martha J. Bailey University of California, Los Angeles Department of Economics Bunche Hall 315 Portola Plaza Los Angeles, CA 90095 E-Mail: marthabailey@ucla.edu Lea J. Bart University of Michigan Department of Economics 611 Tappan St Ann Arbor, MI 48109 E-Mail: leajbart@umich.edu Vanessa W. Lang University of Michigan Institute for Social Research, Population Studies Center 426 Thompson St Ann Arbor, MI 48109 USA E-Mail: vwlang@umich.edu

Omnia Juncta in Uno: Foreign Powers and Trademark Protection in Shanghai’s Concession Era - Alfaro, Laura; Bao, Cathy Ge; Chen, Maggie X; Hong, Junjie; Steinwender, Claudia (National Bureau of Economic Research Working Paper Series, 2022)
We investigate how firms, markets, and consumer welfare adapt to trademark protection, an extensively utilized but under-examined form of IP protection intended to address asymmetric information, by exploring a historical precedent: China’s trademark law of 1923. Exploiting unique, newly digitized firm-employee, price, and newspaper data from Shanghai’s Concession Era, we show that the trademark law, established as an unanticipated and Western-disapproved response to end foreign privileges in China, significantly reduced information friction and shaped firm dynamics and market allocation on the opposite sides of trademark conflicts. Western firms that suffered from counterfeits decreased dependence on alternative communication channels and gained market share from Japanese counterparts who were most frequently accused of counterfeiting. The reduced information friction did not result in higher brand prices as new authentic varieties emerged after the law, leading to a coexistence of trademarks and competitive markets. Quantifying the consumer welfare effect based on the empirical findings suggests a 4.2% welfare gain from the trademark law. A comparison with previous attempts by foreign powers—such as extraterritorial rights and bilateral treaties—shows that the alternative institutions were broadly unsuccessful.
Author contact info: Laura Alfaro Harvard Business School Morgan Hall 263 Soldiers Field Boston, MA 02163 Tel: 617/495-7981 Fax: 617/496-5985 E-Mail: lalfaro@hbs.edu Cathy Ge Bao School of International Trade and Economics University of International Business and Economics Beijing 100029 China E-Mail: baoge@uibe.edu.cn Maggie Chen Dept. of Economics George Washington University 2115 G ST, NW, #367 Washington, DC 20052 Tel: 202-994-0192 E-Mail: xchen@gwu.edu Junjie Hong School of International Trade and Economics University of International Business and Economics Beijing 100029 China E-Mail: hongjunjie@uibe.edu.cn Claudia Steinwender Ludwig Maximilian University of Munich Department of Economics Ludwigstr. 28 (Vgb.) Munich D-80539 Germany E-Mail: claudia.steinwender@econ.lmu.de

Decentralization Through Tokenization - Sockin, Michael; Xiong, Wei (National Bureau of Economic Research Working Paper Series, 2022)
We examine decentralization of digital platforms through tokenization as an innovation to resolve the conflict between platforms and users. By delegating control to users, tokenization through utility tokens acts as a commitment device that prevents a platform from exploiting users. This commitment comes at the cost of not having an owner with an equity stake who, in conventional platforms, would subsidize participation to maximize the platform's network effect. This trade-off makes utility tokens a more appealing funding scheme than equity for platforms with weak fundamentals. The conflict reappears when non-users, such as token investors and validators, participate on the platform.
Author contact info: Michael Sockin Department of Finance UT Austin McCombs School of Business Austin, TX 78712 E-Mail: michael.sockin@mccombs.utexas.edu Wei Xiong Princeton University Department of Economics Bendheim Center for Finance Princeton, NJ 08450 Tel: 609/258-0282 Fax: 609/258-0771 E-Mail: wxiong@princeton.edu

Lethal Unemployment Bonuses? Substitution and Income Effects on Substance Abuse, 2020-21 - Mulligan, Casey B (National Bureau of Economic Research Working Paper Series, 2022)
Marginal prices fell, and disposable incomes increased, for drug and alcohol consumers during the pandemic. Most of the amount, timing, and composition of the 240,000 deaths involving alcohol and drugs since early 2020 can be explained by income effects and category-specific price changes. For alcohol, the pandemic shifted consumption from bars and restaurants to homes, where marginal money prices are lower. For more dangerous illegal drugs like fentanyl and methamphetamine, the full price of consumption also significantly fell whenever employment became financially less attractive, as it was while unemployment bonuses were elevated. Both the wage effect and income effects further reduced marginal opioid prices by inducing shifts toward cheap fentanyl. Drug mortality dipped in the months between the $600 and $300 bonuses, especially for age groups participating most in UI. A corollary to this analysis is that national employment rates will be slow to recover due to the increased prevalence of alcohol and, especially, drug addiction.
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

The Value of Piped Water and Sewers: Evidence from 19th Century Chicago - Coury, Michael; Kitagawa, Toru; Shertzer, Allison; Turner, Matthew (National Bureau of Economic Research Working Paper Series, 2022)
We estimate the impact of piped water and sewers on property values in late-19th century Chicago. The cost of sewer construction depends sensitively on imperceptible variation in elevation, and such variation delays water and sewer service to part of the city. This delay provides quasi-random variation for causal estimates. We extrapolate ATE estimates from our natural experiment to the area treated with water and sewer service during 1874-1880 using a new estimator. Water and sewer access increases property values by more than a factor of two. This exceeds costs by about a factor of 60.
Author contact info: Michael Coury University of Pittsburgh Dietrich School of Arts and Sciences Department of Economics 4700 Wesley W. Posvar Hall 230 South Bouquet Street Pittsburgh, PA 15260 E-Mail: mrc93@pitt.edu Toru Kitagawa Department of Economics Brown University Box B Providence, RI 02912 E-Mail: toru_kitagawa@brown.edu Allison Shertzer Philadelphia Federal Reserve Bank E-Mail: allison.shertzer@gmail.com Matthew Turner Department of Economics Brown University Box B Providence, RI 02912 Tel: 401/863-9331 E-Mail: matthew_turner@brown.edu

Management and Misallocation in Mexico - Bloom, Nicholas; Iacovone, Leonardo; Pereira-Lopez, Mariana; Van Reenen, John (National Bureau of Economic Research Working Paper Series, 2022)
We argue that greater misallocation is a key driver of the worse management practices in Mexico compared to the US. These management practices are strongly associated with higher productivity, growth, trade, and innovation. One indicator of greater misallocation in Mexico is the weaker size-management relationship compared to the US, particularly in the highly distorted Mexican service sector. Second, the size-management relationship is weaker in smaller markets, measured by distance to the US for manufacturing firms and population density for service firms. Third, municipalities with weaker institutions, measured by contract enforcement, crime, and corruption, have a weaker size-management relation. These results are consistent with frictions lowering aggregate management quality and productivity.
Author contact info: Nicholas Bloom Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/725-3266 Fax: 650/725-5702 E-Mail: nbloom@stanford.edu Leonardo Iacovone World Bank Regional Office for Europe and Central Asia Praterstrasse 31 1020 Vienna, Austria E-Mail: Liacovone@worldbank.org Mariana Pereira-Lopez World Bank 1818 H Street NW Washington, DC 20433 E-Mail: mpereiralopez@worldbank.org John Van Reenen Department of Economics London School of Economics Houghton Street London, WC2A 2AE United Kingdom E-Mail: j.vanreenen@lse.ac.uk

Minimax-Regret Climate Policy with Deep Uncertainty in Climate Modeling and Intergenerational Discounting - DeCanio, Stephen J; Manski, Charles F; Sanstad, Alan H (National Bureau of Economic Research Working Paper Series, 2022)
Integrated assessment models have become the primary tools for comparing climate policies that seek to reduce greenhouse gas emissions. Policy comparisons have often been performed by considering a planner who seeks to make optimal trade-offs between the costs of carbon abatement and the economic damages from climate change. The planning problem has been formalized as one of optimal control, the objective being to minimize the total costs of abatement and damages over a time horizon. Studying climate policy as a control problem presumes that a planner knows enough to make optimization feasible, but physical and economic uncertainties abound. Manski, Sanstad, and DeCanio (2021) proposed and studied use of the minimax-regret (MMR) decision criterion to account for deep uncertainty in climate modeling. Here we study choice of climate policy that minimizes maximum regret with deep uncertainty regarding both the correct climate model and the appropriate time discount rate to use in intergenerational assessment of policy consequences. The analysis specifies a range of discount rates to express both empirical and normative uncertainty about the appropriate rate. The findings regarding climate policy are novel and informative. The MMR analysis points to use of a relatively low discount rate of 0.02 for climate policy. The MMR decision rule keeps the maximum future temperature increase below 2°C above the 1900-10 level for most of the parameter values used to weight costs and damages.
Author contact info: Stephen J. DeCanio University of California, Santa Barbara, Emeritus E-Mail: stephen.decanio@gmail.com Charles F. Manski Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208-2600 Tel: 847/491-8223 Fax: 847/491-7001 E-Mail: cfmanski@northwestern.edu Alan H. Sanstad Berkeley, California E-Mail: alansanstad@gmail.com

Consumer Reviews and Regulation: Evidence from NYC Restaurants - Farronato, Chiara; Zervas, Georgios (National Bureau of Economic Research Working Paper Series, 2022)
We investigate the informativeness of hygiene signals in online reviews, and their effect on consumer choice and restaurant hygiene. We first extract signals of hygiene from Yelp. Among all dimensions that regulators monitor through mandated restaurant inspections, we find that reviews are more informative about hygiene dimensions that consumers directly experience - food temperature and pests - than other dimensions. Next, we find causal evidence that consumer demand is sensitive to these hygiene signals. We also find suggestive evidence that restaurants that are more exposed to Yelp are cleaner along dimensions for which online reviews are more informative.
Author contact info: Chiara Farronato Harvard Business School Morgan Hall 427 Soldiers Field Boston, MA 02163 Tel: 617/495-6542 E-Mail: cfarronato@hbs.edu Georgios Zervas Boston University 595 Commonwealth Avenue Boston, MA 02215 E-Mail: zg@bu.edu

State-Level Economic Policy Uncertainty - Baker, Scott R; Davis, Steven J; Levy, Jeffrey A (National Bureau of Economic Research Working Paper Series, 2022)
We quantify and study state-level economic policy uncertainty. Tapping digital archives for nearly 3,500 local newspapers, we construct three monthly indexes for each state: one that captures state and local sources of policy uncertainty (EPU-S), one that captures national and international sources (EPU-N), and a composite index that captures both. EPU-S rises around gubernatorial elections and own-state episodes like the California electricity crisis of 2000-01 and the Kansas tax experiment of 2012. EPU-N rises around presidential elections and in response to 9-11, Gulf Wars I and II, the 2011 debt-ceiling crisis, the 2012 fiscal cliff episode, and federal government shutdowns. Close elections elevate policy uncertainty much more than the average election. VAR models fit to pre-COVID data imply that upward shocks to own-state EPU foreshadow weaker economic performance in the state, as do upward EPU shocks in contiguous states. The COVID-19 pandemic drove huge increases in policy uncertainty and unemployment, more so in states with stricter government-mandated lockdowns.
Author contact info: Scott R. Baker Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 415/244-8274 E-Mail: s-baker@kellogg.northwestern.edu Steven J. Davis Hoover Institution Stanford University 434 Galvez Mall Stanford, CA 94305 Tel: 773/251-1795 Fax: 773/834-0733 E-Mail: stevend5@stanford.edu Jeffrey A. Levy University of Chicago Harris School of Public Policy 1307 E 60th St Office 3101 Chicago, IL 60637 United States Tel: 3129053105 E-Mail: levyjeff@uchicago.edu

Economic Winners Versus Losers and the Unequal Pandemic Recession - Cirelli, Fernando; Gertler, Mark (National Bureau of Economic Research Working Paper Series, 2022)
As is well known, during the pandemic recession firms directly exposed to the virus, i.e. the “contact” sector, contracted sharply and recovered slowly relative to the rest of the economy. Less understood is how firms that “won” by offering safer substitutes for contact sector goods have affected this unequal downturn. Using both firm and industry data, we first construct disaggregated measures of revenue growth that distinguish between contact sector losers, contact sector winners, and the non-contact sector. We show that contact sector losers contracted roughly fifty percent more than the sector average, while winners grew. Further, forecast data suggests that the gap between winners and losers will persist at least through 2022. To explain this evidence, we then develop a simple three sector New Keynesian model with (i) a sector of firms that offers safe substitutes for risky contact sector goods and (ii) learning by doing. Overall, the model captures the unequal sectoral recession. It also accounts for inflation, including the sharp runup in 2021.
Author contact info: Fernando Cirelli Columbia SIPA 420 West 118th Street New York, NY 10027 E-Mail: fgc2114@columbia.edu Mark Gertler Department of Economics New York University 269 Mercer Street, 7th Floor New York, NY 10003 Tel: 212/998-8931 Fax: 212/995-4186 E-Mail: mark.gertler@nyu.edu

A Theory of Asset- and Cash Flow-Based Financing - Hartman-Glaser, Barney; Mayer, Simon; Milbradt, Konstantin (National Bureau of Economic Research Working Paper Series, 2022)
We develop a dynamic contracting theory of asset- and cash flow-based financing that demonstrates how firm, intermediary, and capital market characteristics shape firms’ financing constraints. A firm with imperfect access to equity financing covers financing needs through costly sources—an intermediary and retained cash. The firm’s financing capacity is endogenously determined by either the liquidation value of assets (asset-based) or the intermediary’s going-concern valuation of the firm’s cash flows (cash flow-based). We implement the optimal contract between the firm and intermediary with both unsecured and secured debt (credit lines) in an overlapping pecking order: the firm simultaneously finances cash flow shortfalls with unsecured debt and either cash reserves (if available) or secured debt (otherwise). Improved access to equity financing increases debt capacity, thus debt and equity are dynamic complements. When the firm does well, it repays its debt in full, while when in distress, repayment dynamics mirror U.S. bankruptcy procedures.
Author contact info: Barney Hartman-Glaser University of California at Los Angeles 110 Westwood Plaza Suite C421 Los Angeles, CA 90095 E-Mail: barney.hartman-glaser@anderson.ucla.edu Simon Mayer 6105 Spirit Street Apt # 570 Pittsburgh, PA 15206 United States Tel: 14124786964 E-Mail: simonmay@andrew.cmu.edu Konstantin Milbradt Kellogg School of Management Northwestern University 2001 Sheridan Rd #401 Evanston, IL 60208 Tel: 847/491-8618 Fax: 847/491-5719 E-Mail: milbradt@northwestern.edu

Expectations Formation and Forward Information - Goldstein, Nathan; Gorodnichenko, Yuriy (National Bureau of Economic Research Working Paper Series, 2022)
We propose a model where forecasters have access to noisy signals about the future (forward information). In this setting, information varies not only across agents but also across horizons. As a result, the estimated persistence of forecasts deviates from the persistence of fundamentals and the ability of forecasts at shorter horizons to explain forecasts at longer horizons is limited. These properties tend to diminish as the forecast horizon increases. We document that this novel pattern is consistent with survey data for professional forecasters. We provide further evidence that time-series and cross-sectional variation in professional forecasts are driven by forward information. We propose a simple method for extracting the forward information component from a survey and provide several applications of forward information.
Author contact info: Nathan Goldstein Department of Economics Building 504 Bar-Ilan University Ramat-Gan 5290002 Israel E-Mail: Nathan.Goldstein@biu.ac.il 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

Making Money - Gorton, Gary B; Ross, Chase P; Ross, Sharon Y (National Bureau of Economic Research Working Paper Series, 2022)
It is difficult for private agents to produce money that circulates at par with no questions asked. We study two cases of privately-produced money: pre-Civil War U.S. private banknotes and modern stablecoins. Private monies are introduced when there are no better alternatives, but they initially carry an inconvenience yield. Over time, these monies may become more money-like, but they do not always achieve a positive convenience yield. Technology advances and reputation formation pushed private banknotes toward a positive convenience yield. We show that the same forces are at work for stablecoins.
Author contact info: Gary B. Gorton Yale School of Management 135 Prospect Street P.O. Box 208200 New Haven, CT 06520-8200 Fax: 203/432-8931 E-Mail: Gary.Gorton@yale.edu Chase P. Ross E-Mail: chase.p.ross@frb.gov Sharon Y. Ross Board of Governors of the Federal Reserve System Constitution Ave NW &, 20th St NW Washington, DC 20551 E-Mail: sharon.y.ross@frb.gov

When is TSLS Actually LATE? - Blandhol, Christine; Bonney, John; Mogstad, Magne; Torgovitsky, Alexander (National Bureau of Economic Research Working Paper Series, 2022)
Linear instrumental variable estimators, such as two-stage least squares (TSLS), are commonly interpreted as estimating positively weighted averages of causal effects, referred to as local average treatment effects (LATEs). We examine whether the LATE interpretation actually applies to the types of TSLS specifications that are used in practice. We show that if the specification includes covariates—which most empirical work does—then the LATE interpretation does not apply in general. Instead, the TSLS estimator will, in general, reflect treatment effects for both compliers and always/nevertakers, and some of the treatment effects for the always/never-takers will necessarily be negatively weighted. We show that the only specifications that have a LATE interpretation are "saturated" specifications that control for covariates nonparametrically, implying that such specifications are both sufficient and necessary for TSLS to have a LATE interpretation, at least without additional parametric assumptions. This result is concerning because, as we document, empirical researchers almost never control for covariates nonparametrically, and rarely discuss or justify parametric specifications of covariates. We develop a decomposition that quantifies the extent to which the usual LATE interpretation fails. We apply the decomposition to four empirical analyses and find strong evidence that the LATE interpretation of TSLS is far from accurate for the types of specifications actually used in practice.
Author contact info: Christine Blandhol Department of Economics Princeton University 20 Washington Rd. Princeton, NJ 08544 E-Mail: christine.blandhol@gmail.com John Bonney Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: john.fbonney@gmail.com Magne Mogstad Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 Tel: 773/702-3877 E-Mail: magne.mogstad@gmail.com Alexander Torgovitsky University of Chicago 1126 E. 59th Street Chicago, IL 60637 E-Mail: atorgovitsky@gmail.com

Addressing Endogeneity Using a Two-stage Copula Generated Regressor Approach - Yang, Fan; Qian, Yi; Xie, Hui (National Bureau of Economic Research Working Paper Series, 2022)
A prominent challenge when drawing causal inference using observational data is the ubiquitous presence of endogenous regressors. The classical econometric method to handle regressor endogeneity requires IVs that must satisfy the stringent condition of exclusion restriction, making it infeasible to use in many settings. We propose a new IV-free method using copulas to address the endogeneity problem. Existing copula correction methods require nonnormal endogenous regressors: normally or nearly normally distributed endogenous regressors cause model non-identification or significant finite-sample bias. Furthermore, existing copula control function methods presume the independence of exogenous regressors and the copula control function. Our proposed two-stage copula endogeneity correction (2sCOPE) method simultaneously relaxes the two key identification requirements, and we prove that 2sCOPE yields consistent causal-effect estimates with correlated endogenous and exogenous regressors as well as normally distributed endogenous regressors. Besides relaxing identification requirements, 2sCOPE has superior finite-sample performance and addresses the significant finite-sample bias problem due to insufficient regressor nonnormality. Moreover, 2sCOPE employs generated regressors derived from existing regressors to control for endogeneity, and thus can greatly increase the ease and broaden the applicability of using IV-free methods to handle regressor endogeneity. We further demonstrate the performance of 2sCOPE via simulation studies and illustrate its use in an empirical application.
Author contact info: Fan Yang Sauder School of Business 2053 Main Mall Vancouver, BC V6T 1Z2 Canada E-Mail: fan.yang@sauder.ubc.ca Yi Qian Sauder School of Business University of British Columbia 2053 Main Mall Vancouver, BC V6T 1Z2 Tel: 604/827-5154 E-Mail: yi.qian@sauder.ubc.ca Hui Xie Department of Biostatistics School of Public Health University of Illinois at Chicago E-Mail: huixie@uic.edu

A Goldilocks Theory of Fiscal Deficits - Mian, Atif R; Straub, Ludwig; Sufi, Amir (National Bureau of Economic Research Working Paper Series, 2022)
This paper proposes a tractable framework to analyze fiscal space and the dynamics of government debt, with a possibly binding zero lower bound (ZLB) constraint. Without the ZLB, a greater primary deficit unambiguously raises debt. However, debt need not explode: When R < G – φ, where φ is the sensitivity of R – G to debt, a modest permanent increase in the deficit can be sustained forever, a policy we call “free lunch”. With the ZLB, the relationship between deficit and debt can become non-monotone. Both high and low deficits can increase debt, as the latter weaken demand and reduce nominal growth at the ZLB. A rise in income inequality expands fiscal space outside the ZLB, but contracts it at the ZLB. Calibrating the model, we find little space for “free lunch” policies for the United States in 2019, but ample space for Japan.
Author contact info: Atif R. Mian Princeton University Bendheim Center For Finance 26 Prospect Avenue Princeton, NJ 08540 E-Mail: atif@princeton.edu Ludwig Straub Department of Economics Harvard University Littauer Center Cambridge, MA 02138 E-Mail: ludwigstraub@g.harvard.edu Amir Sufi University of Chicago Booth School of Business 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-6148 Fax: 773/702-0458 E-Mail: amir.sufi@chicagobooth.edu

Have Recreational Marijuana Laws Undermined Public Health Progress on Adult Tobacco Use? - Dave, Dhaval M; Liang, Yang; Pesko, Michael F; Phillips, Serena; Sabia, Joseph J (National Bureau of Economic Research Working Paper Series, 2022)
Public health experts caution that legalization of recreational marijuana may normalize smoking and undermine the decades-long achievements of tobacco control policy. However, very little is known about the impact of recreational marijuana laws (RMLs) on adult tobacco use. Using information from four national datasets (National Survey of Drug Use and Health, Behavioral Risk Factor Surveillance System, Current Population Survey-Tobacco Use Supplements, and Population Assessment of Tobacco and Health) and dynamic difference-in-differences and discrete-time hazard approaches, we find little support for the hypothesis that RML enactment leads to increases in adult tobacco use. In the short-run, RMLs have no effect on tobacco use and in the medium-run, we find some evidence of a lagged reduction in tobacco use on the order of approximately 0.5 to 2 percentage points. This finding generally persists across cigarettes and e-cigarettes, is robust to event-study analyses generated from estimators designed to expunge bias due to heterogeneous dynamic treatment effects, and persists in panel data-based survival analyses that account for consumption dynamics. We conclude that fears of adult tobacco-related public health costs from RMLs are, at least in the short- and medium-run, unfounded; instead, there may be important public health benefits from reductions in adult tobacco use.
Author contact info: Dhaval M. Dave Bentley University Department of Economics 175 Forest Street, AAC 195 Waltham, MA 02452-4705 E-Mail: ddave@bentley.edu Yang Liang San Diego State University Department of Economics Center for Health Economics & Policy Studies 5500 Campanile Drive San Diego, CA 92182 E-Mail: yang.liang@sdsu.edu Michael F. Pesko 615 Locust Street Colombia, MO 65211 United States E-Mail: peskom@missouri.edu Serena Phillips Department of Economics Andrew Young School of Policy Studies Atlanta, GA 30302-3992 E-Mail: sphillips55@gsu.edu Joseph J. Sabia San Diego State University Department of Economics Center for Health Economics & Policy Studies 5500 Campanile Drive San Diego, CA 92182 E-Mail: jsabia@sdsu.edu

Why Are Returns to Private Business Wealth So Dispersed? - Boar, Corina; Gorea, Denis; Midrigan, Virgiliu (National Bureau of Economic Research Working Paper Series, 2022)
We use firm-level data from Orbis to document that average returns to private business wealth are dispersed and persistent, and that firms experience large and fat-tailed changes in output that are not fully accompanied by changes in their capital stock and wage bill, and therefore generate large changes in firm profits. We interpret this evidence using a model of entrepreneurial dynamics in which return heterogeneity arises from both limited span of control, as well as from financial frictions which generate differences in marginal returns to wealth. The model matches the evidence on average returns and predicts that marginal returns are three fourths as dispersed as average returns, mostly reflecting risk as opposed to collateral constraints. Though financial frictions greatly depress individual firms' production choices and cash flows, they generate relatively modest productivity and output losses in the aggregate.
Author contact info: Corina Boar Department of Economics New York University 19 West 4th Street New York, NY 10003 Tel: 585/775-7686 E-Mail: corina.boar@gmail.com Denis Gorea Centralbahnplatz 2 Basel 4051 Switzerland E-Mail: denis.gorea@bis.org Virgiliu Midrigan Department of Economics New York University 19 W. 4th St. New York, NY 10012 Tel: 212/992-8081 Fax: 212/995-4186 E-Mail: virgiliu.midrigan@nyu.edu

Idiosyncratic Income Risk and Aggregate Fluctuations - Debortoli, Davide; Galí, Jordi (National Bureau of Economic Research Working Paper Series, 2022)
We study the role of idiosyncratic income shocks for aggregate fluctuations within a simple heterogeneous household framework with no binding borrowing constraints. We show that the presence of idiosyncratic income shocks affects the economy’s response to an aggregate shock in a way that can be captured by a consumption weighted average of the changes in uncertainty generated by the shock. We apply this framework to two example economies —an endowment economy and a New Keynesian economy— and show that under plausible calibrations the impact of idiosyncratic income shocks on aggregate fluctuations is quantitatively small, since most of the changes in uncertainty are concentrated among poorer (low consumption) households.
Author contact info: Davide Debortoli Universitat Pompeu Fabra Ramon Trias Fargas 25 08005 Barcelona SPAIN E-Mail: davide.debortoli@upf.edu Jordi Galí Centre de Recerca en Economia Internacional (CREI) Ramon Trias Fargas 25 08005 Barcelona SPAIN Tel: 011-34-93-5422754 Fax: 011-34-93-5421860 E-Mail: jgali@crei.cat

Should We Have Automatic Triggers for Unemployment Benefit Duration And How Costly Would They Be? - Chodorow-Reich, Gabriel; Ganong, Peter; Gruber, Jonathan (National Bureau of Economic Research Working Paper Series, 2022)
We model automatic trigger policies for unemployment insurance by simulating a weekly panel of individual labor market histories, grouped by state. We reach three conclusions: (i) policies designed to trigger immediately at the onset of a recession result in benefit extensions that occur in less sick labor markets than the historical average for benefit extensions; (ii) the ad hoc extensions in the 2001 and 2007-09 recessions in total cover a similar number of additional weeks as common proposals for automatic triggers, but concentrate coverage more in weaker labor markets; (iii) compared to ex post policy, the cost of common proposals for automatic triggers is close to zero.
Author contact info: Gabriel Chodorow-Reich Department of Economics Harvard University 1805 Littauer Center Cambridge, MA 02138 Tel: 617/359-2698 E-Mail: chodorowreich@fas.harvard.edu Peter Ganong Harris School of Public Policy University of Chicago 1307 East 60th Street Chicago, IL 60637 E-Mail: ganong@uchicago.edu Jonathan Gruber Department of Economics, E52-434 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8892 Fax: 617/253-1330 E-Mail: gruberj@mit.edu

Incentive-Compatible Critical Values - McCloskey, Adam; Michaillat, Pascal (National Bureau of Economic Research Working Paper Series, 2022)
Statistically significant results are more rewarded than insignificant ones, so researchers have the incentive to pursue statistical significance. Such p-hacking reduces the informativeness of hypothesis tests by making significant results much more common than they are supposed to be in the absence of true significance. To address this problem, we construct critical values of test statistics such that, if these values are used to determine significance, and if researchers optimally respond to these new significance standards, then significant results occur with the desired frequency. Such incentive-compatible critical values allow for p-hacking so they are larger than classical critical values. Using evidence from the social and medical sciences, we find that the incentive-compatible critical value for any test and any significance level is the classical critical value for the same test with approximately one fifth of the significance level—a form of Bonferroni correction. For instance, for a z-test with a significance level of 5%, the incentive-compatible critical value is 2.31 instead of 1.65 if the test is one-sided and 2.57 instead of 1.96 if the test is two-sided.
Author contact info: Adam McCloskey Department of Economics University of Colorado at Boulder 256 UCB Boulder, CO 80309 E-Mail: adam.mccloskey@colorado.edu Pascal Michaillat Economics Department University of California, Santa Cruz 1156 High Street Santa Cruz, CA 95064 E-Mail: pascal.michaillat@gmail.com

Does Quitting Smoking Increase Obesity? Evidence From Accounting for Misreporting - Tchernis, Rusty; Teltser, Keith F; Teotia, Arjun (National Bureau of Economic Research Working Paper Series, 2022)
Smoking and obesity are the two leading causes of preventable deaths in the United States. Because smoking is subject to heavy government intervention, understanding the effect of smoking on obesity is important in determining the extent of unintended costs or benefits of such intervention. The existing literature on this question is mixed among studies using experimental and observational data, which we attempt to reconcile by accounting for misreporting in observational data. We use self-reported data from the Behavioral Risk Factor Surveillance System (BRFSS), cigarette taxes to instrument for changes in smoking, and survey completion to instrument for misreporting. Starting with the baseline two-stage least squares (2SLS) estimator common in the earlier observational literature, we obtain similar estimates suggesting quitting smoking substantially reduces BMI. However, we find the results are sensitive to specification, functional form, and the presence of misreporting. We show that accounting for misreporting using the 2-step estimator developed by Nguimkeu et al. (2019) yields estimates consistent with the experimental literature; quitting smoking has a small positive effect on BMI. Our preferred estimate suggests reduced smoking accounts for 6% of the concurrent rise in obesity.
Author contact info: Rusty Tchernis Department of Economics Andrew Young School of Policy Studies Georgia State University P.O. Box 3992 Atlanta, GA 30302-3992 Tel: 404/413/0154 Fax: 404/413-0145 E-Mail: rtchernis@gsu.edu Keith F. Teltser Department of Economics Andrew Young School of Policy Studies Atlanta, GA 30303 Tel: 404-413-0276 E-Mail: kteltser@gsu.edu Arjun Teotia E-Mail: ateotia1@student.gsu.edu

Ageing and Welfare-State Policy: Macroeconomic Perspective - Razin, Assaf; Schwemmer, Alexander Horst (National Bureau of Economic Research Working Paper Series, 2022)
It has been well recognized that population ageing could generate structural changes centered around the dwindling labor force, on one hand, and the expanding dependency on the generosity of the welfare state, on the other hand. Ageing-related welfare state policy entails both fiscal issues and migration issues. The paper employs a general-equilibrium model with a policy-making focus, to help understand the mechanism governing the provision of social benefits, labor income taxation, capital income taxation, migration curbs on low skilled and high skilled, driven by the ageing of the population. Greater generosity of the welfare state comes together with policy-- incentive compatible with the interests of the majority voters-- of a more liberal migration policy. Effects of ageing on the tax and benefit sides of the welfare state depends on the size of dependents in the population and on whether the country is a capital importer (in which case the capital tax burden is shared with foreigners) or a capital exporter (in which case the age-related wage increase skews taxation towards labor income). Low ageing evolution correlates with a relatively labor-abundant country (low retirement) turns into labor-scarce country (high retirement). Parallel to the evolution of the labor force, a capital-importer country (high rate of return) becomes capital-exporter (low rate of return). Greater ageing-related demand for social benefits is balanced against the rising cost of labor income taxation, and capital income taxation.
Author contact info: Assaf Razin Eitan Berglas School of Economics Tel Aviv University Tel Aviv 69978 ISRAEL Tel: 972/58-7900033 Fax: 972/3-640-9908 E-Mail: razin@tauex.tau.ac.il Alexander Horst Schwemmer Department of Economics Ludwig-Maximilians-Universität Geschwister-Scholl-Platz Munich, 80539 Germany E-Mail: alexander.schwemmer@outlook.com

Currency Undervaluation and Comparative Advantage - Bergin, Paul (National Bureau of Economic Research Working Paper Series, 2022)
This paper highlights a tradeoff implied by a policy of export-led growth through currency undervaluation. While undervaluation can foster domestic manufacturing in countries like China by sustaining trade surplus, it also can harm a country’s comparative advantage by altering the composition of exports. Undervaluation may discourage specializing in high-value added manufacturing and instead favor specialization in non-differentiated goods with higher price elasticity. A dynamic general equilibrium model of two traded good sectors and capital account restrictions shows that undervaluation can either raise or lower welfare depending on two competing effects on comparative advantage: agglomeration versus an elasticity effect.
Author contact info: Paul Bergin Department of Economics University of California, Davis One Shields Ave. Davis, CA 95616 Tel: 530/752-8398 Fax: 530/752-9382 E-Mail: prbergin@ucdavis.edu

Labor Market Fluidity and Human Capital Accumulation - Engbom, Niklas (National Bureau of Economic Research Working Paper Series, 2022)
Using panel data from 23 OECD countries, I document that wages grow more over the life-cycle in countries where job-to-job mobility is more common. A life-cycle theory of job shopping and accumulation of skills on the job highlights that a more fluid labor market allows workers to faster relocate to jobs where they can better use their skills, incentivizing accumulation of skills. Lower labor market fluidity reduces life-cycle wage growth by 20 percent and aggregate labor productivity by nine percent across the OECD relative to the US. I derive a set of testable predictions for training and confront them with comparable cross-country training data, finding support for the theory.
Author contact info: Niklas Engbom Stern School of Business New York University 44 West 4th Street New York, NY 10012 Tel: 609/240-8836 E-Mail: nengbom@stern.nyu.edu

Firm Pay Dynamics - Engbom, Niklas; Moser, Christian; Sauermann, Jan (National Bureau of Economic Research Working Paper Series, 2022)
We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd, Kramarz and Margolis (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer-employee data for Sweden from 1985 to 2016. By drawing on detailed firm financials data, we show that firms that become more productive and accumulate capital raise pay, whereas firms lower pay as they add workers. A secular increase in firm-year pay dispersion in Sweden since 1985 is accounted for by greater persistence of firm pay among incumbent firms as well as greater dispersion in firm pay among entrant firms, as opposed to more volatile firm pay.
Author contact info: Niklas Engbom Stern School of Business New York University 44 West 4th Street New York, NY 10012 Tel: 609/240-8836 E-Mail: nengbom@stern.nyu.edu Christian Moser Columbia Business School 546 Kravis Hall 665 West 130th Street New York, NY 10027 E-Mail: c.moser@columbia.edu Jan Sauermann IFAU Uppsala Kyrkogårdsgatan 6 751 20 Uppsala Sweden E-Mail: jan.sauermann@ifau.uu.se

Earnings Inequality and Dynamics in the Presence of Informality: The Case of Brazil - Engbom, Niklas; Gonzaga, Gustavo; Moser, Christian; Olivieri, Roberta (National Bureau of Economic Research Working Paper Series, 2022)
Using rich administrative and household survey data spanning 34 years from 1985 to 2018, we document a series of new facts on earnings inequality and dynamics in a developing country with a large informal sector: Brazil. Since the mid-1990s, both inequality and volatility of earnings have declined significantly in Brazil’s formal sector. Higher-order moments of the distribution of earnings changes show cyclical movements in Brazil that are similar to those in developed countries like the US. Relative to the formal sector, the informal sector is associated with a significant earnings penalty and higher earnings volatility for identical workers. Earnings changes of workers who switch from formal to informal (from informal to formal) employment are relatively negative (positive) and large in magnitude, dispersed, negatively (positively) skewed, and less leptokurtic. Our results suggest that informal employment is an imperfect insurance mechanism.
Author contact info: Niklas Engbom Stern School of Business New York University 44 West 4th Street New York, NY 10012 Tel: 609/240-8836 E-Mail: nengbom@stern.nyu.edu Gustavo Gonzaga Department of Economics PUC-Rio Rua Marquês de São Vicente, 225 / F210 - Gávea 22451-900, Rio de Janeiro, RJ Brazil E-Mail: gonzaga@econ.puc-rio.br Christian Moser Columbia Business School 546 Kravis Hall 665 West 130th Street New York, NY 10027 E-Mail: c.moser@columbia.edu Roberta Olivieri Cornell University 473 Uris Hall Ithaca, NY 14853 United States E-Mail: rso29@cornell.edu

The Social Consequences of Traditional Religion in Contemporary Africa - Le Rossignol, Etienne; Lowes, Sara; Nunn, Nathan (National Bureau of Economic Research Working Paper Series, 2022)
In sub-Saharan Africa, despite the adoption of Christianity, traditional religious beliefs remain widely held. We examine the social consequences of holding traditional religious beliefs among urban and rural populations in central Africa. Using a variety of lab-in-the-field experiments that randomize partner characteristics, we test whether individuals who believe in traditional religion are treated or viewed differently by others. We find that participants act less prosocially towards partners known to hold traditional religious beliefs. We find that this behavior is supported by norms and by negative perceptions and stereotypes of traditional believers. The effects are economically important, ubiquitous, and are amplified by economic development. Individual-level data from across the African continent reveal patterns consistent with our experimental findings. Individuals who believe in witchcraft have lower incomes, and the effect is stronger in countries that are more developed. Our final analysis speaks to the origins of these effects. Within our experimental sample, the negative effects are stronger in rural villages with more historical missionary activity, and across the continent, the negative relationship between belief in witchcraft and income is stronger in regions with more colonial missionary presence. Both findings are consistent with descriptive accounts of Christianity leading to the stigmatization of African traditional religion.
Author contact info: Etienne Le Rossignol University of Namur PARIS France E-Mail: etienne.lerossignol@unamur.be Sara Lowes Department of Economics University of California at San Diego 9500 Gilman Drive La Jolla, CA 92093 E-Mail: slowes@ucsd.edu Nathan Nunn Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 2E8 Canada E-Mail: nathan.nunn@ubc.ca

Education and Income Gradients in Longevity: The Role of Policy - Lleras-Muney, Adriana (National Bureau of Economic Research Working Paper Series, 2022)
Education and income are strong predictors of health and longevity. In the last 20 years many efforts have been made to understand if these relationships are causal and what the possible role of policy should be as a result. The evidence from various studies is ambiguous: the effects of education and income policies on health are heterogeneous and vary over time, and across places and populations. I discuss explanations for these disparate results and suggest directions for future research.
Author contact info: Adriana Lleras-Muney Department of Economics 9373 Bunche Hall UCLA Los Angeles, CA 90095 Tel: 310/825-3925 Fax: NA E-Mail: allerasmuney@gmail.com

The (Un)Importance of Inheritance - Black, Sandra E; Devereux, Paul J; Landaud, Fanny; Salvanes, Kjell G (National Bureau of Economic Research Working Paper Series, 2022)
Transfers from parents—either in the form of gifts or inheritances—have received much attention as a source of inequality. This paper uses a 19-year panel of administrative data for the population of Norway to examine the share of the Total Inflows available to an individual (defined as the capitalized sum of net labor income, government transfers, and gifts and inheritances received over the period) accounted for by capitalized gifts and inheritances. Perhaps surprisingly, we find that gifts and inheritances represent a small share of Total Inflows; this is true across the distribution of Total Inflows, as well as at all levels of net wealth at a point in time. Gifts and inheritances are only an important source of income flows among those who have very wealthy parents. Additionally, gifts and inheritances have very little effect on the distribution of Total Inflows – when we do a counterfactual Total Inflows distribution with zero gifts and inheritances, it is not much different from the actual distribution. Our findings suggest that inheritance taxes may do little to mitigate the extreme wealth inequality in society.
Author contact info: Sandra E. Black Department of Economics and School of International and Public Affairs Columbia University 1022 International Affairs Building 420 West 118th Street New York, NY 10027 E-Mail: sblack@columbia.edu Paul J. Devereux School of Economics and Geary Institute University College Dublin Belfield, Dublin 4 Ireland E-Mail: devereux@ucd.ie Fanny Landaud CY Cergy Paris Université 33, boulevard du Port 95011 Cergy-Pontoise Cedex France E-Mail: fanny.landaud@cyu.fr Kjell G. Salvanes Department of Economics Norwegian School of Economics Hellev. 30, N-5035 Bergen Norway E-Mail: kjell.salvanes@nhh.no

Civilian alternatives to policing: Evidence from Medellín’s community problem-solving intervention Operación Convivencia - Blattman, Christopher; Duncan, Gustavo; Lessing, Benjamin; Tobon, Santiago (National Bureau of Economic Research Working Paper Series, 2022)
Cities are searching for unarmed approaches to disorder and crime. Colombia is a leader here. Police are a national institution, and mayors have limited control over police staffing and operations. Thus, many cities have developed large civilian apparatuses for dispute resolution, family problems, and street disorder—an approach commonly called convivencia (coexistence). We worked with Medellín’s municipal government to identify 80 typical neighborhoods and experimentally evaluate this approach. The city intensified their civilian apparatus for 20 months in 40 neighborhoods, assigning full-time liaisons to help communities organize to: improve public order, foster communication with the government, and connect residents to dispute resolution and family and social services. A centralized task force ensured city agencies fulfilled these roles. This represented a 60-fold increase in street-level presence, plus increased city agency attention. To our surprise, on average, Operación Convivencia had no impact on reported governance, legitimacy, or crime. Anticipating that impacts could diverge by neighborhood, however, we prespecified that we would break down impacts by initial state presence. This proved revealing. In neighborhoods where the state began weak, the task force and city agencies worked sporadically, and opinions of governance fell. In neighborhoods where the state began relatively strong, the liaisons and task force delivered, and this raised state legitimacy and reduced crime and emergency calls. The divergent results suggest the importance of existing state capacity, plus the dangers of over-promising and under-delivering. This may be especially important in Latin America, where cities like Medellín compete with gangs for local problem-solving and legitimacy.
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 Gustavo Duncan Department of Political Science Universidad EAFIT Carrera 49 N 7 Sur 50 Medellin, Colombia E-Mail: gduncan@eafit.edu.co Benjamin Lessing Department of Political Science University of Chicago 5828 S. University Ave Chicago, IL 60637 E-Mail: blessing@uchicago.edu Santiago Tobon Department of Economics Universidad EAFIT Carrera 49 N 7 Sur 50 Medellin, Colombia E-Mail: stobonz@eafit.edu.co

Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey - de Chaisemartin, Clément; D'Haultfoeuille, Xavier (National Bureau of Economic Research Working Paper Series, 2022)
Linear regressions with period and group fixed effects are widely used to estimate policies' effects: 26 of the 100 most cited papers published by the American Economic Review from 2015 to 2019 estimate such regressions. It has recently been show that those regressions may produce misleading estimates, if the policy's effect is heterogeneous between groups or over time, as is often the case. This survey reviews a fast-growing literature that documents this issue, and that proposes alternative estimators robust to heterogeneous effects.
Author contact info: Clément de Chaisemartin Department of Economics University of California at Santa Barbara Santa Barbara, CA 93106 E-Mail: clementdechaisemartin@ucsb.edu Xavier D'Haultfoeuille CREST 5 avenue Henry Le Chatelier 91764 Palaiseau cedex FRANCE E-Mail: xavier.dhaultfoeuille@ensae.fr

When Do Informational Interventions Work? Experimental Evidence from New York City High School Choice - Cohodes, Sarah; Corcoran, Sean; Jennings, Jennifer; Sattin-Bajaj, Carolyn (National Bureau of Economic Research Working Paper Series, 2022)
This paper reports the results of a large, school-level randomized controlled trial evaluating a set of three informational interventions for young people choosing high schools in 473 middle schools, serving over 115,000 8th graders. The interventions differed in their level of customization to the student and their mode of delivery (paper or online); all treated schools received identical materials to scaffold the decision-making process. Every intervention reduced likelihood of application to and enrollment in schools with graduation rates below the city median (75 percent). An important channel is their effect on reducing nonoptimal first choice application strategies. Providing a simplified, middle-school specific list of relatively high graduation rate schools had the largest impacts, causing students to enroll in high schools with 1.5-percentage point higher graduation rates. Providing the same information online, however, did not alter students’ choices or enrollment. This appears to be due to low utilization. Online interventions with individual customization, including a recommendation tool and search engine, induced students to enroll in high schools with 1-percentage point higher graduation rates, but with more variance in impact. Together, these results show that successful informational interventions must generate engagement with the material, and this is possible through multiple channels.
Author contact info: Sarah Cohodes Gerald R. Ford School of Public Policy University of Michigan 735 South State Street Ann Arbor, MI 48109 E-Mail: scohodes@umich.edu Sean Corcoran Vanderbilt University Peabody College PMB 414 230 Appleton Place Nashville, TN 37203 Tel: 6153228021 E-Mail: sean.p.corcoran@vanderbilt.edu Jennifer Jennings Princeton University Department of Sociology 159 Wallace Hall Princeton, NJ 08544 E-Mail: jlj@princeton.edu Carolyn Sattin-Bajaj Department of Education Gevirtz School University of California Santa Barbara, CA 93106-9490 Tel: 8609665358 E-Mail: carolynsattin-bajaj@ucsb.edu

Long-Term Care Insurance Financing Using Home Equity Release: Evidence from an Online Experimental Survey - Hanewald, Katja; Bateman, Hazel; Fang, Hanming; Ho, Tin Long (National Bureau of Economic Research Working Paper Series, 2022)
This paper explores new mechanisms to fund long-term care using housing wealth. Using data from an online experimental survey fielded to a sample of 1,200 Chinese homeowners aged 45-64, we assess the potential demand for new financial products that allow individuals to access their housing wealth to buy long-term care insurance. We find that access to housing wealth increases the stated demand for long-term care insurance. When they could only use savings, participants used on average 5% of their total (hypothetical) wealth to purchase long-term care insurance. When they could use savings and a reverse mortgage, participants used 15% of their total wealth to buy long-term care insurance. With savings and home reversion, they used 12%. Reverse mortgages do not require regular payments until the home is sold, while home reversion involves a partial sale and leaseback. Our results inform the design of new public or private sector programs that allow individuals to access their housing wealth while still living in their homes.
Author contact info: Katja Hanewald ARC Centre of Excellence in Population Ageing Research (CEPAR) University of New South Wales, Sydney Sydney, NSW, 2052, Australia E-Mail: k.hanewald@unsw.edu.au Hazel Bateman School of Risk and Actuarial Studies ARC Centre of Excellence in Population Ageing Research (CEPAR) UNSW Sydney, 2052 Australia E-Mail: H.Bateman@unsw.edu.au Hanming Fang Department of Economics Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street, Suite 150 Philadelphia, PA 19104 Tel: 215-898-7767 Fax: 215-573-2057 E-Mail: hanming.fang@econ.upenn.edu Tin Long Ho School of Risk & Actuarial Studies University of New South Wales Sydney, NSW 2052 Australia E-Mail: t.ho@unsw.edu.au

Understanding the Resurgence of the SOEs in China: Evidence from the Real Estate Sector - Fang, Hanming; Wu, Jing; Zhang, Rongjie; Zhou, Li-An (National Bureau of Economic Research Working Paper Series, 2022)
We advance a novel hypothesis that China’s recent anti-corruption campaign may have contributed to the recent resurgence of the state-owned enterprises (SOEs) in China as an unintended consequence. We explore the nexus between the anti-corruption campaign and the SOE resurgence by presenting supporting evidence from the Chinese real estate sector, which is notorious for pervasive rent-seeking and corruption. We use a unique data set of land parcel transactions merged with firm-level registration information and a difference-in-differences empirical design to show that, relative to the industrial land parcels which serve as the control, the fraction of residential land parcels purchased by SOEs increased significantly relative to that purchased by private developers after the anti-corruption campaign. This finding is robust to a set of alternative specifications. We interpret the findings through the lens of a model where we show, since selling land to private developers carries the stereotype that the city official may have received bribes, even the “clean” local officials will become more willing to award land to SOEs despite the presence of more efficient competing private developers. We find evidence consistent with the model predictions.
Author contact info: Hanming Fang Department of Economics Ronald O. Perelman Center for Political Science and Economics University of Pennsylvania 133 South 36th Street, Suite 150 Philadelphia, PA 19104 Tel: 215-898-7767 Fax: 215-573-2057 E-Mail: hanming.fang@econ.upenn.edu Jing Wu Department of Construction Management and Hang Lung Center for Real Estate Tsinghua University China E-Mail: ireswujing@tsinghua.edu.cn Rongjie Zhang Department of Construction Management and Hang Lung Center for Real Estate Tsinghua University China E-Mail: zhangrj19@mails.tsinghua.edu.cn Li-An Zhou Guanghua School of Management Peking University Beijing 100871 CHINA E-Mail: zhoula@gsm.pku.edu.cn

Foreign Direct Investment under Uncertainty: Evidence from a Large Panel of Countries - Jardet, Caroline; Jude, Cristina; Chinn, Menzie D (National Bureau of Economic Research Working Paper Series, 2022)
We examine the effect of uncertainty on foreign direct investment inflows for a heterogeneous sample of advanced, emerging market and developing countries over a 25 year long (pre-Covid) sample. Using a push-pull framework, and controlling for both global and local factors, we find policy uncertainty has discernable and significant effects on inflows, but those effects vary in strength and direction between different groups of countries. Moreover, it is not host country uncertainty that seems to matter the most, but rather global uncertainty. Additionally, we find that high levels of uncertainty matter disproportionately. Finally, financial openness accentuates the impact of uncertainty for emerging market and developing countries.
Author contact info: Caroline Jardet Banque de France DGEI - DECI – SEMSI 31, rue Croix des Petits Champs, 49-1374 75049 Paris Cedex 01 E-Mail: caroline.jardet@banque-france.fr Cristina Jude Banque de France DGEI - DECI – SEMSI 31, rue Croix des Petits Champs, 49-1374 75049 Paris Cedex 01 E-Mail: cristina.jude@banque-france.fr Menzie D. Chinn Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-7397 Fax: 608/262-2033 E-Mail: mchinn@lafollette.wisc.edu

Eliciting People's First-Order Concerns: Text Analysis of Open-Ended Survey Questions - Ferrario, Beatrice; Stantcheva, Stefanie (National Bureau of Economic Research Working Paper Series, 2022)
This paper illustrates the design and use of open-ended survey questions as a way of eliciting people's first-order concerns on policies. Multiple choice questions are the backbone of most surveys, but they may prime respondents to select answer options that they would not naturally have thought about, and they may omit relevant options. Open-ended questions that do not constrain respondents with specific answer choices are a valuable tool for eliciting first-order thinking. We discuss three text analysis methods to analyze open-ended questions' answers. To illustrate how to apply these methods, we provide evidence from large-scale surveys on income and estate taxation. We show the that key concerns relate mostly to distribution issues, fairness, and government, rather than to efficiency concerns. There are large partisan gaps in the first-order concerns on policies.
Author contact info: Beatrice Ferrario Harvard University 1805 Cambridge Street Cambridge, MA 02138 E-Mail: bv.ferrario@gmail.com Stefanie Stantcheva Department of Economics Littauer Center 232 Harvard University Cambridge, MA 02138 Tel: 617-496-2614 E-Mail: sstantcheva@fas.harvard.edu

Firm-to-Firm Trade: Imports, Exports, and the Labor Market - Eaton, Jonathan; Kortum, Samuel S; Kramarz, Francis (National Bureau of Economic Research Working Paper Series, 2022)
Customs data reveal heterogeneity and granularity of relationships among buyers and sellers. A key insight is how more exports to a destination break down into more firms selling there and more buyers per exporter. We develop a quantitative general equilibrium model of firm-to-firm matching that builds on this insight to separate the roles of iceberg costs and matching frictions in gravity. In the cross section, we find matching frictions as important as iceberg costs in impeding trade, and more sensitive to distance. Because domestic and imported intermediates compete directly with labor in performing production tasks, our model also fits the heterogeneity of labor shares across French producers. Applying the framework to the 2004 expansion of the European Union, reduced iceberg costs and reduced matching frictions contributed equally to the increase in French exports to the new members. While workers benefitted overall, those competing most directly with imports gained less, even losing in some countries entering the EU.
Author contact info: Jonathan Eaton E-Mail: N/A user is deceased Samuel S. Kortum Yale University Francis Kramarz CREST, ENSAE 5 Avenue Henry Le Chatelier 91120 Palaiseau FRANCE Tel: 33 1 70 26 68 14 E-Mail: kramarz.francis@gmail.com

Two-Sided Search in International Markets - Eaton, Jonathan; Jinkins, David; Tybout, James R; Xu, Daniel (National Bureau of Economic Research Working Paper Series, 2022)
We develop a dynamic model of international business-to-business transactions in which sellers and buyers search for each other, with the probability of a match depending on both individual and aggregate search effort. Fit to customs records on U.S. apparel imports, the model captures key cross-sectional and dynamic features of international buyer-seller relationships. We use the model to make several quantitative inferences. First, we calculate the search costs borne by heterogeneous importers and exporters. Second, we provide a structural interpretation for the life cycles of importers and exporters as they endogenously acquire and lose foreign business partners. Third, we pursue counterfactuals that approximate the phaseout of the Agreement on Textiles and Clothing (the “China shock”) and the IT revolution. Lower search costs can significantly improve consumer welfare, but at the expense of importer profits. On the other hand, an increase in the population of foreign exporters can congest matching to the extent of dampening or even reversing the gains consumers enjoy from access to extra varieties and more retailers.
Author contact info: Jonathan Eaton E-Mail: N/A user is deceased David Jinkins Copenhagen Business School Room: POR/16.A-2.66 Solbjerg Pl. 3 2000 Frederiksberg Denmark E-Mail: david.jinkins@gmail.com James R. Tybout Department of Economics Pennsylvania State University 517 Kern Graduate Building University Park, PA 16802 Tel: 814/865-4259 Fax: 814/863-4775 E-Mail: jtybout@psu.edu Daniel Xu Department of Economics Duke University 213 Social Science Bldg 419 Chapel Drive Box 90097 Durham, NC 27708-0097 Tel: 919-660-1824 E-Mail: daniel.xu@duke.edu

Who Set Your Wage? - Card, David (National Bureau of Economic Research Working Paper Series, 2022)
I discuss the recent literature that has led to new interest in the idea of monopsonistic wage setting. Building on advances in search theory and in models of differentiated products, researchers have used a number of different strategies to identify the elasticity of firm-specific labor supply. A growing consensus is that firms have some wage-setting power, though many questions remain about the sources of that power.
Author contact info: David Card Department of Economics 549 Evans Hall, #3880 University of California, Berkeley Berkeley, CA 94720-3880 Tel: 510/642-5222 Fax: 510/643-7042 E-Mail: card@econ.berkeley.edu

Vaccine Allocation Priorities Using Disease Surveillance and Economic Data - Malani, Anup; Soman, Satej; Ramachandran, Sabareesh; Chen, Alice; Lakdawalla, Darius N (National Bureau of Economic Research Working Paper Series, 2022)
Vaccination is a critical tool, along with suppression and treatment, for controlling epidemics such as SARS-CoV-2. To maximize the impact of vaccination, doses should be allocated to the highest value targets, accounting for health and potential economic benefits. We examine what allocation strategy is optimal and how to translate that strategy into actionable procurement decisions in the context of India. We compare 3 different allocation strategies (oldest first, highest contact rate first, random order) across 4 outcomes (lives saved, life-years saved, value of statistical lives saved, value of statistical life-years saved). We make 3 methodological contributions. First, we estimate the incremental health benefit of vaccination using novel, local seroprevalence data from India. Second, we estimate the value of statistical life-years using disaggregated, monthly data on consumption during the pandemic. Third, and most importantly, we estimate social demand curves for vaccines that can practically guide government procurement decisions. Our analysis yields 4 novel findings. First, the need to speed-up vaccination does not justify deviation from elderly-first prioritization. Second, much of the value of vaccination comes from improvements in consumption rather than longevity. Moreover, vaccination increases the value of a life year because it increases consumption. Third, social demand for vaccination falls over time as natural immunity from infections increases. Therefore, the slower a country vaccinates its population, the fewer doses it should procure. Fourth, there is enough variation in consumption and infection risk that it makes sense to vaccinate some areas before others. Our approach of connecting epidemiological models and data on health and consumption to economic valuation methods generalizes to other infection control strategies, such as suppression, and public health crises, such as influenza and HIV.
Author contact info: Anup Malani University of Chicago Law School 1111 E. 60th Street Chicago, IL 60637 Tel: 773/702-9602 E-Mail: amalani@uchicago.edu Satej Soman School of Information UC Berkeley E-Mail: satej@berkeley.edu Sabareesh Ramachandran Department of Economics UC San Diego E-Mail: saramach@ucsd.edu Alice Chen Schaeffer Center for Health Policy and Economics University of Southern California 635 Downey Way Los Angeles, CA 90089-3333 Tel: (213) 821-1763 E-Mail: alicejc@usc.edu Darius N. Lakdawalla University of Southern California 635 Downey Way, VPD 414-K Schaeffer Center for Health Policy and Economics Los Angeles, CA 90089-7273 Tel: 213/740-6012 E-Mail: dlakdawa@usc.edu

Estimating Candidate Valence - Kawai, Kei; Sunada, Takeaki (National Bureau of Economic Research Working Paper Series, 2022)
We estimate valence measures for candidates running in U.S. House elections from data on vote shares. Our estimates control for endogeneity of campaign spending and sample selection of candidates due to endogenous entry. Our identification and estimation strategy builds on ideas developed for estimating production functions. We find that incumbents have substantially higher valence measures than challengers running against them, resulting in about 9.2 percentage-point differences in the vote share, on average. We find that open-seat challengers have higher valence measures than those running against incumbents by about 5.3 percentage points. Our measure of candidate valence can be used to study various substantive questions of political economy. We illustrate its usefulness by studying the source of incumbency advantage in U.S. House elections.
Author contact info: Kei Kawai Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 E-Mail: kei@berkeley.edu Takeaki Sunada River Campus 500 Joseph C. Wilson Blvd. Rochester, NY 14627 USA E-Mail: tsunada@simon.rochester.edu

Liquidity, Liquidity Everywhere, Not a Drop to Use – Why Flooding Banks with Central Bank Reserves May Not Expand Liquidity - Acharya, Viral V; Rajan, Raghuram (National Bureau of Economic Research Working Paper Series, 2022)
Central bank balance sheet expansion is run through commercial banks. While liquid central bank reserves held on commercial bank balance sheets increase, demandable uninsured deposits issued to finance the reserves also increase. A subsequent shrinkage in the central bank balance sheet may entail a shrinkage in bank-held reserves without a commensurate reduction in deposit claims. Furthermore, during episodes of liquidity stress, when many claims on liquidity are called, surplus banks may hoard reserves. As a result of such bank behavior, central bank balance sheet expansion may create less systemic liquidity than typically thought, and in fact, the demand for liquidity can occasionally exceed available reserves, exacerbating liquidity stress.
Author contact info: Viral V. Acharya Stern School of Business New York University 44 West 4th Street, Suite 9-65 New York, NY 10012 Tel: 212/998-0354 Fax: 212 995 4233 E-Mail: vacharya@stern.nyu.edu Raghuram Rajan Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-4437 Fax: 773/702-0458 E-Mail: raghuram.rajan@ChicagoBooth.edu

Understanding the Ownership Structure of Corporate Bonds - Koijen, Ralph S. J; Yogo, Motohiro (National Bureau of Economic Research Working Paper Series, 2022)
Insurers are the largest institutional investors of corporate bonds. However, a standard theory of insurance markets, in which insurers maximize firm value subject to regulatory or risk constraints, predicts no allocation to corporate bonds. We resolve this puzzle in an equilibrium asset pricing model with leverage-constrained households and institutional investors. Insurers have relatively cheap access to leverage through their underwriting activity. They hold a leveraged portfolio of low-beta assets in equilibrium, relaxing other investors’ leverage constraints. The model explains recent empirical findings on insurers’ portfolio choice and its impact on asset prices.
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 Motohiro Yogo Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: myogo@princeton.edu

Segregation and the Initial Provision of Water in the United States - Beach, Brian; Parman, John; Saavedra, Martin H (National Bureau of Economic Research Working Paper Series, 2022)
U.S. cities invested heavily in water and sewer infrastructure throughout the late 19th and early 20th centuries. These investments improved public health and quality of life by helping U.S. cities control typhoid fever and other waterborne diseases. We show that segregated cities invested in water infrastructure earlier but were slower to reach universal access and slower to eliminate typhoid fever. We develop a theoretical model that illustrates how segregation, by facilitating the exclusion of Black households from water and sewer systems, explains these seemingly paradoxical findings.
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 John Parman Department of Economics P.O. Box 8795 College of William and Mary Williamsburg, VA 23187 Tel: 757/221-2852 Fax: 757/221-1175 E-Mail: jmparman@wm.edu Martin H. Saavedra Department of Economics Rutgers University, New Brunswick New Jersey Hall 202 75 Hamilton St New Brunswick, NJ 08901 Tel: 3013561274 E-Mail: martin.saavedra@rutgers.edu

The Second World War, Inequality and the Social Contract in Britain - Heldring, Leander; Robinson, James A; Whitfill, Parker J (National Bureau of Economic Research Working Paper Series, 2022)
What is the impact of warfare on inequality and the social contract? Using local data on bombing, the evolution of wealth inequality and vote shares for the Labour Party in Britain around World War II we establish two results. First, on average, we find no impact of bombing on inequality. However, there is considerable heterogeneity and this result is driven by the southern Britain. In northern Britain bombing led to significant falls in inequality. Second, heavier bombing led to a significant increase in the vote share for Labour after the War everywhere, but this effect is transitory in the south while it is permanent in the north. Our results obtain both in a simple difference-in-differences framework as well as in a panel-regression discontinuity framework in which we exploit the limited range of German fighter escort planes. Our results provide novel causal evidence for the inequality reducing impact of warfare and we interpret them as consistent with the notion that the impact of the War also led to a reconfiguration of the social contract in Britain.
Author contact info: Leander Heldring Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: leander.heldring@kellogg.northwestern.edu James A. Robinson University of Chicago Harris School of Public Policy and Department of Political Science 1307 East 60th Street Chicago, Illinois 60637 Tel: 617/496-2839 Fax: 617/495-0438 E-Mail: jamesrobinson@uchicago.edu Parker J. Whitfill E-Mail: whitfillp@uchicago.edu

Robots and Firm Investment - Benmelech, Efraim; Zator, Michal (National Bureau of Economic Research Working Paper Series, 2022)
Automation technologies, and robots in particular, are thought to be massively displacing workers and transforming the future of work. We study firm investment in automation using cross-country data on robotization as well as administrative data from Germany with information on firm-level automation decisions. Our findings suggest that the impact of robots on firms has been limited. First, investment in robots is small and highly concentrated in a few industries, accounting for less than 0.30% of aggregate expenditures on equipment. Second, recent increases in robotization do not resemble the explosive growth observed for IT technologies in the past, and are driven mostly by catching-up of developing countries. Third, robot adoption by firms endogenously responds to labor scarcity, alleviating potential displacement of existing workers. Fourth, firms that invest in robots increase employment, while total employment effect in exposed industries and regions is negative, but modest in magnitude. We contrast robots with other digital technologies that are more widespread. Their importance in firms’ investment is significantly higher, and their link with labor markets, while sharing some similarities with robots, appears markedly different.
Author contact info: Efraim Benmelech Kellogg School of Management Northwestern University 2001 Sheridan Road Evanston, IL 60208 Tel: 847/491-4462 Fax: 847/491-5719 E-Mail: e-benmelech@kellogg.northwestern.edu Michal Zator Mendoza College of Business University of Notre Dame Notre Dame, IN 46556 E-Mail: mzator@nd.edu

Slowing Women's Labor Force Participation: The Role of Income Inequality - Albanesi, Stefania; Prados, María José (National Bureau of Economic Research Working Paper Series, 2022)
The entry of married women into the labor force and the rise in women's relative wages are amongst the most notable economic developments of the twentieth century. The growth in these indicators was particularly pronounced in the 1970s and 1980s, but it stalled since the early 1990s, especially for college graduates. In this paper, we argue that the discontinued growth in female labor supply and wages since the 1990s is a consequence of growing inequality. Our hypothesis is that the growth in top incomes for men generated a negative income effect on the labor supply of their spouses, which reduced their participation and wages. We show that the slowdown in participation and wage growth was concentrated among women married to highly educated and high income husbands, whose earnings grew dramatically over this period. We then develop a model of household labor supply with returns to experience that qualitatively reproduces this effect. A calibrated version of the model can account for a large fraction of the decline relative to trend in married women's participation in 1995-2005 particularly for college women. The model can also account for the rise in the gender wage gap for college graduates relative to trend in the same period.
Author contact info: Stefania Albanesi Miami Herbert Business School University of Miami 5250 University Drive Coral Gables, FL 33146 E-Mail: stefania.albanesi@gmail.com María José Prados Dornsife Center for Economic and Social Research University of Southern California 635 Downey Way St 505 Los Angeles, CA 90089 Tel: 3477382930 E-Mail: prados@usc.edu

Designing Quality Certificates: Insights from eBay - Hui, Xiang; Jin, Ginger Zhe; Liu, Meng (National Bureau of Economic Research Working Paper Series, 2022)
Quality certification is a common tool to reduce asymmetric information and enhance trust in marketplaces. Should the certificate focus on seller inputs such as fast shipping, or include output measures such as consumer ratings? In theory, incorporating output measures makes the certificate more relevant for consumer experience, but doing so may discourage seller effort because outputs can be driven by random factors out of seller control. To understand this tradeoff, we study a major redesign of eBay's Top Rated Seller (eTRS) program in 2016, which removed most consumer reports from the eTRS criteria and added direct measures of seller inputs. This change generates immediate selection on certified sellers, and homogenizes the share of certified sellers across product categories of different criticalness in consumer ratings. Post the regime change, sellers improve in the input measures highlighted in the new certificate. These effects are more conspicuous in categories that had less critical consumer ratings, in part because the new algorithm automatically removes the potential negative bias for sellers in critical markets and a clearer threshold motivates sellers to just reach the threshold. The new regime also makes sales more concentrated towards large sellers, especially in the categories that face more critical consumers.
Author contact info: Xiang Hui E-Mail: hui@wustl.edu Ginger Zhe Jin University of Maryland Department of Economics College Park, MD 20742-7211 Tel: 301/405-3484 Fax: 301/405-3542 E-Mail: ginger@umd.edu Meng Liu Washington University in St. Louis E-Mail: mengl@wustl.edu

Average Inflation Targeting: Time Inconsistency and Ambiguous Communication - Jia, Chengcheng; Wu, Jing Cynthia (National Bureau of Economic Research Working Paper Series, 2022)
We study the implications of average inflation targeting (AIT). AIT improves the inflation-output trade-off when the private sector believes the central bank’s announcement. Ex post, the central bank has the incentive to implement inflation targeting instead to maximize social welfare. Next, we examine whether and how the central bank can convince the private sector, and find ambiguous communication helps the central bank gain credibility and improve welfare. These results apply to several key aspects of AIT announcement and do not rely on specific modeling assumptions.
Author contact info: Chengcheng Jia Federal Reserve Bank of Cleveland PO Box 6387 Cleveland, OH 44101 E-Mail: Chengcheng.Jia@clev.frb.org Jing Cynthia Wu Department of Economics 3060 Jenkins Nanovic Hall University of Notre Dame Notre Dame, IN 46556 E-Mail: j.cynthia.wu@gmail.com

Trade Policy Uncertainty - Handley, Kyle; Limão, Nuno (National Bureau of Economic Research Working Paper Series, 2022)
Trade policy uncertainty (TPU) has become an important source of economic uncertainty and research. We review the main sources and measures of TPU. We then provide a conceptual framework for modeling TPU and methods of estimating and quantifying its effects. We analyze its role in trade agreements and discuss open questions for future research.
Author contact info: Kyle Handley University of California, San Diego School of Global Policy and Strategy La Jolla, CA 92093 E-Mail: khandley@ucsd.edu Nuno Limão Georgetown University ICC Building Washington, DC 20557 E-Mail: nuno.limao@georgetown.edu

Understanding Rural Households’ Time Use in a Developing Setting: Validating a Low-Cost Time Use Module - Field, Erica M; Pande, Rohini; Rigol, Natalia; Schaner, Simone G; Stacy, Elena M; Troyer Moore, Charity M (National Bureau of Economic Research Working Paper Series, 2022)
Time use data facilitate deeper understanding of individual labor supply choices, especially for women, who are more likely to engage in unpaid care and home production. However, traditional time use data collection methods are time-consuming, expensive and susceptible to significant attrition. To address these concerns, we develop an abbreviated, low-cost time use survey module designed for low-literacy populations. It captures contextually-determined broad time use categories of interest to researchers - in our case, time allocations across market work, household labor, and leisure. Using survey experiments in the field, we show that, relative to the widely-used assisted diary approach, the new module is lower cost and relatively more accurate in capturing individuals’ average time use. Its primary shortcomings are its limited ability to capture short duration activities and simultaneous activities. Using the example of passive childcare, we show how module design can provide accurate information on multitasking for an identified category of interest.
Author contact info: Erica M. Field Department of Economics Duke University Social Sciences Building Box 90097 Durham, NC 27708 Tel: 919/660-1800 Fax: 919/684-8974 E-Mail: emf23@duke.edu Rohini Pande Yale University Department of Economics 27 Hillhouse Avenue New Haven, CT 06520 Tel: 617-384-5267 Fax: 617-496-8753 E-Mail: rohini.pande@yale.edu Natalia Rigol Harvard Business School Soldiers Field Boston, MA 02163 Tel: 617-495-5682 E-Mail: nrigol@hbs.edu Simone G. Schaner Department of Economics and Center for Economic and Social Research University of Southern California 635 Downey Way Los Angeles, CA 90089 Tel: 213-821-6023 Fax: 213.821.2716 E-Mail: schaner@usc.edu Elena M. Stacy University of California, Berkeley E-Mail: estacy@berkeley.edu Charity M. Troyer Moore Director for South Asia Economics Research MacMillan Center Yale University 34 Hillhouse Ave New Haven, CT 06520 E-Mail: charity.moore@yale.edu

Spillovers at the Extremes: The Macroprudential Stance and Vulnerability to the Global Financial Cycle - Chari, Anusha; Dilts Stedman, Karlye; Forbes, Kristin (National Bureau of Economic Research Working Paper Series, 2022)
The effects of macroprudential policy on portfolio flows vary considerably across the global financial cycle. A tighter ex-ante macroprudential stance amplifies the impact of global risk shocks on bond and equity flows, increasing outflows significantly more during risk-off episodes and increasing inflows significantly more during risk-on episodes. These amplification effects are more prominent at the “extremes,” especially for extreme risk-off periods and for regulations that target specific risks instead of generalized cyclical buffers. This paper estimates these relationships using a policy-shocks approach that corrects for reverse causality by combining high-frequency risk measures with weekly data on portfolio investment and a new measure of macroprudential regulations that captures the intensity of policy stances. Overall, the results support a growing body of evidence that macroprudential regulation can reduce the volume and volatility of bank flows but shift risks in ways that aggravate vulnerabilities in other parts of the financial system.
Author contact info: Anusha Chari Department of Economics, CB #3305 University of North Carolina at Chapel Hill Chapel Hill, NC 27599 Tel: 919/966-5346 E-Mail: achari@unc.edu Karlye Dilts Stedman Federal Reserve Bank of Kansas City 1 Memorial Dr. Kansas City, MO 64108 E-Mail: karlye.stedman@kc.frb.org Kristin Forbes MIT Sloan School of Management 100 Main Street, E62-416 Cambridge, MA 02142 Tel: 617/253-8996 Fax: 617/258-6855 E-Mail: kjforbes@mit.edu

The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did it Go There? - Autor, David; Cho, David; Crane, Leland D; Goldar, Mita; Lutz, Byron; Montes, Joshua K; Peterman, William B; Ratner, David D; Villar Vallenas, Daniel; Yildirmaz, Ahu (National Bureau of Economic Research Working Paper Series, 2022)
The Paycheck Protection Program (PPP) provided small businesses with roughly $800 billion dollars in uncollateralized, low-interest loans during the pandemic, almost all of which will be forgiven. With 93 percent of small businesses ultimately receiving one or more loans, the PPP nearly saturated its market in just two months. We estimate that the program cumulatively preserved between 2 and 3 million job-years of employment over 14 months at a cost of $170K to $257K per job-year retained. These estimates imply that only 23 to 34 percent of PPP dollars went directly to workers who would otherwise have lost jobs; the balance flowed to business owners and shareholders, including creditors and suppliers of PPP-receiving firms. Program incidence was highly regressive, with about three-quarters of PPP funds accruing to the top quintile of households. This compares unfavorably to the other two major pandemic aid programs, enhanced UI benefits and Economic Impact Payments (i.e. stimulus checks). PPP’s breakneck scale-up, its high cost per job saved, and its regressive incidence have a common origin: PPP was essentially untargeted because the United States lacked the administrative infrastructure to do otherwise. The more targeted pandemic business aid programs deployed by other high-income countries exemplify what is feasible with better administrative systems. Building similar capacity in the U.S. would enable greatly improved targeting of either employment subsidies or business liquidity when the next pandemic or other large-scale economic emergency occurs, as it surely will.
Author contact info: David Autor Department of Economics, E52-438 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/258-7698 Fax: 617/253-1330 E-Mail: dautor@mit.edu David Cho Federal Reserve Board of Governors 20th and C Streets, NW Mail Stop 80 Washington, DC 20551 Tel: 202-785-6023 E-Mail: david.cho@frb.gov Leland D. Crane Federal Reserve Board of Governors 20th Street and C Street, NW Washington, DC 20551 E-Mail: leland.d.crane@frb.gov Mita Goldar ADP E-Mail: mitagoldar@yahoo.com Byron Lutz Federal Reserve Board of Governors Research Division 20th and C Streets, NW Washington, DC 20551-0001 E-Mail: Byron.F.Lutz@frb.gov Joshua K. Montes Federal Reserve Board of Governors 20th & C St. NW MS- 80 Washington, DC 20551 E-Mail: joshua.k.montes@frb.gov William B. Peterman Federal Reserve Board of Governors 20th & C St. NW Washington, DC 20551 E-Mail: william.b.peterman@frb.gov David D. Ratner Federal Reserve Board of Governors 20th Street and Constitution Avenue N.W. Washington, DC 20551 E-Mail: david.d.ratner@frb.gov Daniel Villar Vallenas Federal Reserve Board of Governors 20th Street and Constitution Avenue N.W. Washington, D.C. 20551 E-Mail: daniel.villar@frb.gov Ahu Yildirmaz The Coleridge Initiative E-Mail: ahu.yildirmaz@coleridgeinitiative.org

Public School Access or Stay-at-Home Partner: Factors Mitigating the Adverse Effects of the COVID-19 Pandemic on Academic Parents - Deryugina, Tatyana; Shurchkov, Olga; Stearns, Jenna E (National Bureau of Economic Research Working Paper Series, 2022)
The COVID-19 pandemic created unexpected and prolonged disruptions to childcare access. Using survey evidence on time use by academic researchers before and after the pandemic, we analyze the extent to which greater access to either school-based or partner-provided childcare mitigated the severe disruptions to research observed among parents during COVID-19. We find that access to public schools offset the research time loss to a greater extent among mothers of young children relative to fathers, narrowing the emerging post-pandemic gender gap. Having a stay-at-home partner reduced the disruptions to research time equally for both genders.
Author contact info: Tatyana Deryugina Department of Finance University of Illinois at Urbana-Champaign 515 East Gregory Drive, MC-520 Champaign, IL 61820 Tel: 925/349-8999 E-Mail: deryugin@illinois.edu Olga Shurchkov Department of Economics Wellesley College 106 Central St. Wellesley, MA 02481 E-Mail: oshurchk@wellesley.edu Jenna E. Stearns Department of Economics University of California, Davis One Shields Ave Davis, CA 95616 E-Mail: jestearns@ucdavis.edu

Political Constraints and Sovereign Default - Azzimonti, Marina; Mitra, Nirvana (National Bureau of Economic Research Working Paper Series, 2022)
We study how political constraints, characterized by the degree of flexibility to choose fiscal policy, affect the probability of sovereign default. To that end, we relax the assumption that policymakers always repay their debt in the dynamic model of fiscal policy developed by Battaglini and Coate (2008). In our setup, legislators bargain over taxes, general spending, debt repayment, and a local public good that can be targeted to the region they represent. Under tighter political constraints, more legislators have veto power, implying that local public goods need to be provided to a larger number of regions. The resources that are freed after a default have to be shared with a higher number of individuals, which reduces the benefits from defaulting in per-capita terms. This lowers the incentive to default compared to the case with lax political constraints. The model is calibrated to Argentina and the results conform to robust empirical evidence. An event study for the 2001/2002 sovereign debt crisis shows that political constraints had an important role in the buildup that led to the crisis.
Author contact info: Marina Azzimonti Economics Department Stony Brook University 100 Nicolls Road Stony Brook, NY 11794 E-Mail: marina.azzimonti@gmail.com Nirvana Mitra CAFRAL, Reserve Bank of India Main Building, Mezzanine Floor Shahid Bhagat Singh Marg, Mumbai 400001 India Tel: +91 8697421854 E-Mail: nirvana.mitra@gmail.com

Land Security and Mobility Frictions - Adamopoulos, Tasso; Brandt, Loren; Chen, Chaoran; Restuccia, Diego; Wei, Xiaoyun (National Bureau of Economic Research Working Paper Series, 2022)
Frictions that impede the mobility of workers across occupations and space are a prominent feature of developing countries. We disentangle the role of insecure property rights from other labor mobility frictions for the reallocation of labor from agriculture to non-agriculture and from rural to urban areas. We combine rich household and individual-level panel data from China and an equilibrium quantitative framework featuring sorting of workers across locations and occupations. We explicitly model the farming household and the endogenous decisions of who operates the family farm and who potentially migrates, capturing an additional channel of selection within the household. We find that land insecurity has substantial negative effects on agricultural productivity and structural change, raising the share of rural households operating farms by over 40 percentage points and depressing agricultural productivity by more than 20 percent. Comparatively, these quantitative effects are as large as those from all residual labor-mobility frictions. We measure a sharp reduction in overall labor mobility barriers over 2004-2018 in the Chinese economy, all accounted for by improved land security, consistent with reforms covering rural land in China during the period.
Author contact info: Tasso Adamopoulos Department of Economics York University 4700 Keele Street Toronto, ON, M4J 1P3 Canada Tel: (416) 736-2100 Ext. 33269 E-Mail: aadamo@yorku.ca Loren Brandt Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 CANADA Tel: (416) 978-4442 E-Mail: loren.brandt@utoronto.ca Chaoran Chen York University 4700 Keele St. Toronto, ON M3J 1P3 Canada Tel: 416-736-2100 x30106 E-Mail: chenecon@yorku.ca Diego Restuccia Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 Tel: 416/978-5114 Fax: 416/978-5519 E-Mail: diego.restuccia@utoronto.ca Xiaoyun Wei Shanghai Jiao Tong University No. 1954, Huashan Road Shanghai 200030 China E-Mail: xiaoyun_wei@sjtu.edu.cn

Occupational Licensing and the Healthcare Labor Market - Dillender, Marcus; Lo Sasso, Anthony T; Phelan, Brian J; Richards, Michael R (National Bureau of Economic Research Working Paper Series, 2022)
We examine the labor market impact of states easing occupational license requirements by expanding the scope of practice (SOP) for nurse practitioners (NPs), allowing them to practice without physician oversight. Using data on job postings, we find that employers increase their demand for NPs when states expand NP SOP. We then show that SOP laws also increase NP earnings and reallocate NPs across the healthcare sector, including increasing self-employment. The laws only mildly increase employment, however. Therefore, expanding NP SOP has the potential to increase access to primary care, but inelastic NP labor supply has largely prevented this from occurring.
Author contact info: Marcus Dillender Department of Medicine, Health, and Society Vanderbilt University 422 Buttrick Hall Nashville, TN 37235 E-Mail: marcus.o.dillender@vanderbilt.edu Anthony T. Lo Sasso Economics Department DePaul University 1 East Jackson Chicago, IL 60604 USA Tel: 312-362-1242 E-Mail: alosasso@depaul.edu Brian J. Phelan Department of Economics DePaul University 1 East Jackson Blvd. Chicago, IL 60604 E-Mail: bphelan2@depaul.edu Michael R. Richards 3301 MVR Hall Jeb E. Brooks School of Public Policy Cornell University Ithaca, NY 14853 Tel: 254-710-4861 E-Mail: michael.richards@cornell.edu

A Simple Mapping from MPCs to MPXs - Laibson, David; Maxted, Peter; Moll, Benjamin (National Bureau of Economic Research Working Paper Series, 2022)
Standard consumption models assume a notional consumption flow that does not distinguish between nondurable and durable consumption. Such notional-consumption models generate notional marginal propensities to consume (MPC). By contrast, empirical work and policy discussions often highlight marginal propensities for expenditure (MPX), which incorporate spending on a durable stock. We compare the notional-consumption model to an isomorphic model with a durable stock, and map notional MPCs into MPXs. The mapping is especially simple for a one-period horizon: MPX = (1 - s + s/(r+d)) x MPC, with durable share s, real interest rate r, and durable depreciation rate d.
Author contact info: David Laibson Department of Economics Littauer M-12 Harvard University Cambridge, MA 02138 Tel: 617/496-3402 Fax: 617/495-8570 E-Mail: dlaibson@gmail.com Peter Maxted Haas School of Business University of California Berkeley E-Mail: maxted@haas.berkeley.edu Benjamin Moll London School of Economics Houghton Street London WC2A 2AE United Kingdom Tel: 609/258-0329 E-Mail: b.moll@lse.ac.uk

The Agglomeration of Urban Amenities: Evidence from Milan Restaurants - Leonardi, Marco; Moretti, Enrico (National Bureau of Economic Research Working Paper Series, 2022)
In many cities, restaurants and retail establishments are spatially concentrated. Economists have long recognized the presence of demand externalities that arise from spatial agglomeration as a possible explanation, but empirically identifying this type of spillovers has proven difficult. We test for the presence of agglomeration spillovers in Milan's restaurant sector using the abolition of a unique regulation that until recently restricted where new restaurants could locate. Before 2005, Milan mandated a minimum distance between restaurants that kept the spatial distribution of restaurants artificially uniform. As a consequence, restaurants were evenly distributed across neighborhoods. The regulation was abolished in 2005 by a nationwide reform that allowed new restaurants to locate anywhere in the city. Using administrative data on the universe of restaurants and retail establishments in Milan between 2000 and 2012, we study how the spatial distribution of restaurants changed after the reform. Consistent with the existence of significant agglomeration externalities, we find that after 2005, the geographical concentration of restaurants increased sharply. By 2012, 7 years after the liberalization of restaurant entry, the city's restaurants had agglomerated in some neighborhoods and deserted others. By contrast, not much happened to the spatial concentration of retail establishments or even retail establishments that sell food, which were never covered by the minimum distance regulations and therefore were not directly affected by its reform. We also find that in neighborhoods where the number of restaurants grew the most after the reform, restaurants reacted to the increased competition by becoming more differentiated based on price, quality and type of cuisine.
Author contact info: Marco Leonardi University of Milan E-Mail: marco.leonardi@unimi.it Enrico Moretti University of California, Berkeley Department of Economics 549 Evans Hall Berkeley, CA 94720-3880 Tel: 510/642 6649 Fax: 510/643 7042 E-Mail: moretti@econ.berkeley.edu

Minimum Wages, Efficiency and Welfare - Berger, David W; Herkenhoff, Kyle F; Mongey, Simon (National Bureau of Economic Research Working Paper Series, 2022)
It has long been argued that a minimum wage could alleviate efficiency losses from monopsony power. In a general equilibrium framework that quantitatively replicates results from recent empirical studies, we find higher minimum wages can improve welfare, but most welfare gains stem from redistribution rather than efficiency. Our model features oligopsonistic labor markets with heterogeneous workers and firms and yields analytical expressions that characterize the mechanisms by which minimum wages can improve efficiency, and how these deteriorate at higher minimum wages. We provide a method to separate welfare gains into two channels: efficiency and redistribution. Under both channels and Utilitarian social welfare weights the optimal minimum wage is $15, but alternative weights can rationalize anything from $0 to $31. Under only the efficiency channel, the optimal minimum wage is narrowly around $8, robust to social welfare weights, and generates small welfare gains that recover only 2 percent of the efficiency losses from monopsony power.
Author contact info: David W. Berger Department of Economics Duke University 419 Chapel Drive Social Science Building 231 Durham, NC 27708 Tel: 919/660-1853 E-Mail: david.berger@duke.edu Kyle F. Herkenhoff University of Minnesota Department of Economics 4-101 Hanson Hall 1925 Fourth Street South Minneapolis, MN 55455 Tel: 925/360-7623 E-Mail: kfh@umn.edu Simon Mongey Federal Reserve Bank of Minneapolis 90 Hennepin Avenue Minneapolis, MN 55401 E-Mail: simonmongey@gmail.com

Health Insurance for Whom? The ‘Spill-up’ Effects of Children’s Health Insurance on Mothers - Grossman, Daniel S; Tello-Trillo, Sebastian; Willage, Barton (National Bureau of Economic Research Working Paper Series, 2022)
A rich literature documents the benefits of social safety net programs for children. This paper focuses on an unexplored margin: how children’s programs impact parents’ well-being. We explore changes in children’s public health insurance and its effects on parents’ economic and behavioral outcomes. Using a simulated eligibility for Medicaid eligibility expansions in the 1980s and 1990s, we isolate variation in children’s Medicaid eligibility due to changes in government policies. We find that increases in children’s Medicaid eligibility increases the likelihood a mother is married, decreases her labor market participation, and reduces her smoking and alcohol consumption. Our findings suggest improved maternal well-being as measured by the Center for Epidemiological Studies-Depression score, a proxy for mental health. These results uncover a new link that provides an important mechanism, parental well-being, for interpreting the literature’s findings on the long-term, short-term, and intergenerational effects of Medicaid coverage.
Author contact info: Daniel S. Grossman Department of Economics West Virginia University Morgantown, WV 26506-6025 Tel: 304/293-7860 E-Mail: daniel.grossman@mail.wvu.edu Sebastian Tello-Trillo Batten School of Leadership and Public Policy University of Virginia 235 McCormick Road Charlottesville, VA 22904 Tel: 434/924-0903 E-Mail: sebastian.tello@virginia.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

Schools, Job Flexibility, and Married Women's Labor Supply - Hansen, Benjamin; Sabia, Joseph J; Schaller, Jessamyn (National Bureau of Economic Research Working Paper Series, 2022)
This study examines the employment effects of a large shock to mothers' childcare costs generated by the availability of in-person K-12 instruction during the COVID- 19 pandemic. We proxy for school attendance using smartphone data from Safegraph. Using a difference-in-differences approach, we find K-12 reopenings are associated with increases in employment and hours among married women with school-aged children with no measurable effects on labor supply of childless women, custodial fathers, or unmarried women. Event-study analyses are consistent with a causal interpretation. Major activity responses show school reopenings reduced married women remaining out of the labor force to care for children.
Author contact info: Benjamin Hansen Department of Economics 1285 University of Oregon Eugene, OR 97403 Tel: 541/357-8395 E-Mail: bchansen@uoregon.edu Joseph J. Sabia San Diego State University Department of Economics Center for Health Economics & Policy Studies 5500 Campanile Drive San Diego, CA 92182 E-Mail: jsabia@sdsu.edu Jessamyn Schaller Robert Day School of Economics and Finance Claremont McKenna College 500 E Ninth St Claremont, CA 91711 Tel: 530-574-4105 E-Mail: jschaller@cmc.edu

Effects of Daily School and Care Disruptions During the COVID-19 Pandemic on Child Mental Health - Gassman-Pines, Anna; Ananat, Elizabeth; Fitz-Henley, John; Leer, Jane (National Bureau of Economic Research Working Paper Series, 2022)
The COVID-19 pandemic has profoundly affected American children, including disruptions to their care and school settings. Children attending in-person child care or school have contended with unpredictable closures and time in remote school, which in turn is subject to its own types of disruptions (hardware, software, and internet failures). This study investigated the frequency and consequences of disruptions to children’s child care and school arrangements during fall 2020. The study includes a representative sample of hourly service-sector workers parents of a young child from a major U.S. city (N = 679); half are non-Hispanic Black, 23% are Hispanic; 18% are non-Hispanic White. Parents were asked to complete 30 days of daily surveys about whether their care and school arrangements went smoothly and as predicted that day, and about their mood, parenting behaviors, and children’s behavior. Results showed that daily disruptions to care and school were common, with families reporting a disruption on 24% of days. Families with children in remote schooling experienced more frequent disruption than families with children in in-person care or school. For all families, care or school disruptions strongly predicted worse child behavior, more negative parental mood, and increased likelihood of losing temper and punishment.
Author contact info: Anna Gassman-Pines Sanford School of Public Policy Duke University Box 90245 Durham, NC 27708 E-Mail: agassman.pines@duke.edu Elizabeth Ananat Barnard College Columbia University 3009 Broadway Office 1019 Milstein Building New York, NY 10027 E-Mail: eananat@barnard.edu John Fitz-Henley II 20 Washington Road Julis Romo Rabinowitz Building Princeton, NJ 27510 E-Mail: fitzhenley@princeton.edu Jane Leer Sanford School of Public Policy Duke University Durham, NC 27510 E-Mail: jane.leer@duke.edu

The Variability and Volatility of Sleep: An ARCHetypal Behavior - Hamermesh, Daniel S; Pfann, Gerard A (National Bureau of Economic Research Working Paper Series, 2022)
Using Dutch time-diary data from 1975-2005 covering over 10,000 respondents for 7 consecutive days each, we show that individuals’ sleep time exhibits both variability and volatility characterized by stationary autoregressive conditional heteroscedasticity: The absolute values of deviations from a person’s average sleep on one day are positively correlated with those on the next day. Sleep is more variable on weekends and among people with less education, who are younger and who do not have young children at home. Volatility is greater among parents with young children, slightly greater among men than women, but independent of other demographics. A theory of economic incentives to minimize the dispersion of sleep predicts that higher-wage workers will exhibit less dispersion, a result demonstrated using extraneous estimates of earnings equations to impute wage rates. Volatility in sleep spills over onto volatility in other personal activities, with no reverse causation onto sleep. The results illustrate a novel dimension of economic inequality and could be applied to a wide variety of human behavior and biological processes.
Author contact info: Daniel S. Hamermesh 333 West 57th Street, Apt. 706 New York, NY 10019 E-Mail: hamermes@eco.utexas.edu Gerard A. Pfann Faculty of Quantitative Economics Maastricht University Maastricht, THE NETHERLANDS E-Mail: g.pfann@maastrichtuniversity.nl

Inequalities in the Times of a Pandemic - Stantcheva, Stefanie (National Bureau of Economic Research Working Paper Series, 2022)
This paper summarizes the research on some of the major inequalities that have been exacerbated by the COVID-19 pandemic across OECD countries. It reviews findings related to inequalities across the income distribution, sectors and regions, gender, and inequalities in education inputs for children from different socioeconomic backgrounds.
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

Robust Bounds for Welfare Analysis - Kang, Zi Yang; Vasserman, Shoshana (National Bureau of Economic Research Working Paper Series, 2022)
Economists routinely make functional form assumptions about consumer demand to obtain welfare estimates. How sensitive are welfare estimates to these assumptions? We answer this question by providing bounds on welfare that hold for families of demand curves commonly considered in different literatures. We show that commonly chosen functional forms, such as linear, exponential, and CES demand, are extremal in different families: they yield either the highest or lowest welfare estimate among all demand curves in those families. To illustrate our approach, we apply our results to the welfare analysis of energy subsidies, trade tariffs, pensions, and income taxation.
Author contact info: Zi Yang Kang 20 Garden Street Cambridge, MA 02138 E-Mail: zykang@cmsa.fas.harvard.edu Shoshana Vasserman Stanford Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: svass@stanford.edu

A New Era of Midnight Mergers: Antitrust Risk and Investor Disclosures - Barrios, John M; Wollmann, Thomas G (National Bureau of Economic Research Working Paper Series, 2022)
Antitrust authorities search public documents to discover anticompetitive mergers. Thus, investor disclosures may alert them to deals that would otherwise escape scrutiny, creating disincentives for managers to divulge transactions. We study this behavior in publicly traded US companies. First, we estimate a regression discontinuity that exploits mandatory disclosure thresholds stipulated by securities law. We find that releasing information to investors poses antitrust risk. Second, we present a method for measuring undisclosed merger activity that relies on financial accounting reporting requirements. We find that undisclosed mergers total $2.3 trillion between 2002 and 2016.
Author contact info: John M. Barrios Olin Business School Washington University in St. Louis 1 Brookings Drive St. Louis, MO 63130 Tel: 314/935-4652 E-Mail: John.barrios@wustl.edu Thomas G. Wollmann Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/-834-3768 E-Mail: Thomas.Wollmann@chicagobooth.edu

Caught In The Middle: The Bias Against Startup Innovation With Technical And Commercial Challenges - Arora, Ashish; Fosfuri, Andrea; Roende, Thomas (National Bureau of Economic Research Working Paper Series, 2022)
Startups in IT and life sciences appear to be flourishing. However, startups in other sectors, such as new materials, automation, and eco-innovations, which are often called "deep tech", seem to struggle. We argue that innovations with both technical and commercial challenges, typical of deep tech innovations, are especially disadvantaged in a startup-based innovation system. We develop an analytical model where startups are more efficient at solving technical challenges and incumbents are more efficient at solving commercial challenges. We find that the startup-based system works better for "specialized" innovations, where only one type of challenges is significant. Startups which face both technical and commercial challenges are disadvantaged because they capture a smaller fraction of the value they create. We discuss the implications for various public policies that have been proposed to encourage deep-tech.
Author contact info: Ashish Arora Fuqua School of Business Duke University Box 90120 Durham, NC 27708-0120 Tel: 919 660 7746 Fax: 919 684-2818 E-Mail: ashish.arora@duke.edu Andrea Fosfuri Bocconi University Department of Management & Technology Via Roentgen 1 20136 Milan, Italy E-Mail: andrea.fosfuri@unibocconi.it Thomas Roende Copenhagen Business School Department of Innovation and Organizational Econom DK-2000 Frederiksberg, Denmark E-Mail: thr.ino@cbs.dk

Planning for the “Expected Unexpected”: Work and Retirement in the U.S. After the COVID-19 Pandemic Shock - Freeman, Richard B (National Bureau of Economic Research Working Paper Series, 2022)
This chapter analyzes the implications of the unexpected 2020-2021 COVID-19 pandemic for work and retirement in the U.S. The pandemic induced the greatest loss of jobs in the shortest period of time in U.S. history. A slow economic recovery would surely have endangered work longer/retire later policies that seek to adjust the finances of Social Security retirement to an aging population. Boosted by the huge CARES (March 2020) and ARPA (April 2021) rescue packages, the early recovery from the COVID-19 recession was faster and stronger than the recovery from the 2007-2009 Great Recession. Even so, the pandemic greatly altered the job market, with workers suffering from long COVID having difficulty returning to work and more workers working from home. In its immediate effect and potential long-run impact, the pandemic recession/recovery is a wake-up call to the danger that shocks from the natural world pose to work and retirement. Realistic planning for the future of work and retirement should go beyond analyzing socioeconomic trends to analyzing expected unexpected changes from the natural world as well.
Author contact info: Richard B. Freeman NBER 1050 Massachusetts Avenue Cambridge, MA 02138 Tel: 617/868-3900 Fax: 617/868-2742 E-Mail: freeman@nber.org

What Leads to Measurement Errors? Evidence from Reports of Program Participation in Three Surveys - Celhay, Pablo A; Meyer, Bruce D; Mittag, Nikolas (National Bureau of Economic Research Working Paper Series, 2022)
Measurement errors are often a large source of bias in survey data. Lack of knowledge of the determinants of such errors makes it difficult for data producers to reduce the extent of errors and for data users to assess the validity of analyses using the data. We study the determinants of reporting error using high quality administrative data on government transfers linked to three major U.S. surveys. Our results support several theories of misreporting: Errors are related to event recall, forward and backward telescoping, salience of receipt, the stigma of reporting participation in welfare programs and respondent’s degree of cooperation with the survey overall. We provide evidence on how survey design choices affect reporting errors. Our findings help survey users to gauge the reliability of their data and to devise estimation strategies that can correct for systematic errors, such as instrumental variable approaches. Understanding survey errors allows survey producers to reduce them by improving survey design. Our results indicate that survey producers should take into account that higher response rates as well as collecting more detailed information may have negative effects on survey accuracy.
Author contact info: Pablo A. Celhay School of Government and Economics Institute Pontificia Universidad Católica de Chile Avda. Vicuña Mackenna 4860 Macul, Santiago Chile E-Mail: pacelhay@uc.cl Bruce D. Meyer Harris School of Public Policy University of Chicago 1307 E 60th Street Chicago, IL 60637 Tel: 773/702-2712 E-Mail: bdmeyer@uchicago.edu Nikolas Mittag CERGE-EI Politickych veznu 7 Prague Czech Republic E-Mail: nikolasmittag@posteo.de

Inclusive Monetary Policy: How Tight Labor Markets Facilitate Broad-Based Employment Growth - Bergman, Nittai; Matsa, David A; Weber, Michael (National Bureau of Economic Research Working Paper Series, 2022)
This paper analyzes the heterogeneous effects of monetary policy on workers with differing levels of labor force attachment. Exploiting variation in labor market tightness across metropolitan areas, we show that the employment of populations with lower labor force attachment—Blacks, high school dropouts, and women—is more responsive to expansionary monetary policy in tighter labor markets. The effect builds up over time and is long lasting. We develop a New Keynesian model with heterogeneous workers that rationalizes these results. The model shows that expansionary monetary shocks lead to larger increases in the employment of less attached workers when the central bank follows an average inflation targeting rule and when the Phillips curve is flatter. These findings suggest that, by tightening labor markets, the Federal Reserve's recent move from a strict to an average inflation targeting framework especially benefits workers with lower labor force attachment.
Author contact info: Nittai K. Bergman Berglas School of Economics Tel Aviv University Tel Aviv-Yafo Israel E-Mail: nbergman@tauex.tau.ac.il David A. Matsa Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8337 Fax: 847/491-5719 E-Mail: dmatsa@kellogg.northwestern.edu Michael Weber Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-1241 E-Mail: michael.weber@chicagobooth.edu

How Distortive are Turnover Taxes? Evidence from Replacing Turnover Tax with VAT - Xing, Jing; Bilicka, Katarzyna A; Hou, Xipei (National Bureau of Economic Research Working Paper Series, 2022)
In this paper, we investigate distortions created by turnover taxes. As a natural experiment, we explore a reform that replaced turnover taxes with value-added taxes for some service industries in China, while the taxation of manufacturing industries remained unchanged. The reform increased sales, R&D investment, and employment for affected service firms, which is primarily driven by outsourcing from downstream manufacturing firms. We document that smaller and less innovative manufacturing firms outsource more, and reallocation increases the quality of innovation for affected service firms. Our study provides new evidence on the negative impact of turnover taxes imposed on business inputs.
Author contact info: Jing Xing Antai College of Economics & Management Shanghai Jiao Tong University 1954 Huashan Road, Shanghai, 200030, China PRC E-Mail: jing.xing@sjtu.edu.cn Katarzyna A. Bilicka Jon M Huntsman School of Business 3500 Old Main Hill Utah State University Logan, UT 84322 E-Mail: kat.bilicka@usu.edu Xipei Hou Antai College of Economics and Management Shanghai Jiao Tong University 1954 Huashan Road Shanghai 200030 China E-Mail: houxipei@sjtu.edu.cn

A Cross-Country Comparison of Old-Age Financial Readiness in Asian Countries versus the United States: The Case of Japan and the Republic of Korea - Ehrlich, Isaac; Yin, Yong (National Bureau of Economic Research Working Paper Series, 2022)
We pursue a cross-country comparison of relative financial readiness of older households in Japan and the Republic of Korea relative to the United States. Our comparative analysis, using macro-level and harmonized longitudinal household financial data, covers the principal financial channels of old-age support: public and private pension plans, family support, and self-management of private financial portfolios. We find that while all three countries have similar public pension systems, older Americans benefit from more developed and better-funded public and private pension systems, as well as individual management of risky financial portfolios. We find that educational and health attainments of household heads and household wealth lead to a greater tendency to hold and manage risky assets. Our decomposition analysis also shows that the gap in stock ownership in Asian countries relative to the United States can be attributed to lower levels of development in financial and pension markets. However, these gaps have been shrinking more recently.
Author contact info: Isaac Ehrlich Department of Finance and Department of Economics and Center for Human Capital State University of New York at Buffalo Buffalo, NY 14260-1520 Tel: 716/645-2121 Fax: 716/645- 2127 E-Mail: mgtehrl@buffalo.edu Yong Yin 415 Fronczak Hall State University of New York at Buffalo and Center for Human Capital Box 601520 Buffalo, NY 14260 E-Mail: yyin@buffalo.edu

Household Spending Responses to the Economic Impact Payments of 2020: Evidence from the Consumer Expenditure Survey - Parker, Jonathan A; Schild, Jake; Erhard, Laura; Johnson, David (National Bureau of Economic Research Working Paper Series, 2022)
Using the Consumer Expenditure Survey and variation in amount, receipt, and timing of receipt of Economic Impact Payments (EIPs) authorized by the CARES Act, this paper estimates that people spent less of their EIPs in the few months following arrival than in similar previous policy episodes and than estimated by existing studies using other types of data. Accounting for volatility during the pandemic and comparing the consumer spending behavior of broadly similar households, people spent roughly 10 percent (standard error 3.4) of their EIPs on non-durable goods and services in the three months of arrival, with little evidence of additional spending in the subsequent three months or on durable goods. People who report mostly spending their EIPs spent 14.3% (3.7) of their EIPs compared to 5.9% (8.3) and -1.6% (5.0) for those who report mostly paying off debt and saving respectively. People with low liquid wealth and people receiving their EIPs on debit cards spent at higher rates: 21.7% (6.4) and 36.8% (24.6) respectively, with economically larger estimates for total spending.
Author contact info: Jonathan A. Parker MIT Sloan School of Management 100 Main Street, E62-642 Cambridge, MA 02142-1347 Tel: 617-253-7218 E-Mail: JAParker@MIT.edu Jake Schild Bureau of Labor Statistics U.S. Department of Labor 2 Massachusetts Avenue NE Washington, DC 20212-0001 E-Mail: Schild.Jake@bls.gov Laura Erhard US Bureau of Labor Statistics Division of Consumer Expenditure Surveys 2 Massachusetts Avenue NE Washington, DC 20212-0001 US E-Mail: Erhard.Laura@bls.gov David Johnson 500 Fifth Street, NW Washington, DC 20001 United States Tel: 5713296759 E-Mail: djohnson@nas.edu

The Moral Preferences of Investors: Experimental Evidence - Bonnefon, Jean-François; Landier, Augustin; Sastry, Parinitha R; Thesmar, David (National Bureau of Economic Research Working Paper Series, 2022)
We characterize investors’ moral preferences in a parsimonious experimental setting, where we auction stocks with various ethical features. We find strong evidence that investors seek to align their investments with their social values (“value alignment”), and find no evidence of behavior driven by the social impact of investment decisions (“impact-seeking preferences”). First, the willingness to pay for a stock is a linear function of corporate externalities, and is symmetric for positive or negative externalities. Second, whether charity transfers are contingent or independent on investors buying the auctioned stock does not affect their WTP. Our results are thus compatible with a utility model where non-pecuniary benefits of firms’ externalities only accrue through stock ownership, not through the actual impact of investment decisions. Finally, non-pecuniary preferences are linear and additive: willingness to pay for social externalities is proportional to the expected sum of charity transfers made by firms (even if some of these donations are negative).
Author contact info: Jean-François Bonnefon Toulouse School of Economics 21, Allée de Brienne Toulouse 31015 France E-Mail: jfbonnefon@gmail.com Augustin Landier HEC Paris 1 rue de la libération 78351 Jouy en Josas Cedex France E-Mail: landier@hec.fr Parinitha R. Sastry 665 West 130th Street New York, NY 10027 E-Mail: prs2107@columbia.edu David Thesmar MIT Sloan School of Management 100 Main Street, E62-632 Cambridge, MA 02142 Tel: 617/225-9767 E-Mail: thesmar@mit.edu

Large Firms, Consumer Heterogeneity and the Rising Share of Profits - Feenstra, Robert C; Macedoni, Luca; Xu, Mingzhi (National Bureau of Economic Research Working Paper Series, 2022)
We examine the relationship between large firms and the rising profit share in a model that features oligopolistic competition and consumer heterogeneity. Conditional on the sales distribution, the presence of consumer heterogeneity increases the profit share because it increases firm-level markups. Using data on purchases at the household-barcode level from Nielsen, we quantify the role of consumer heterogeneity, finding that the aggregate markup and the profit share are 8 and 3 percentage points larger than those predicted by a model of a representative consumer. Furthermore, we find that the profit share has been increasing over time and that firm targeting of consumer types plays a role in explaining this rise.
Author contact info: Robert C. Feenstra 2400 Rivendell Lane Davis, CA 95616 Tel: 530/574-7668 Fax: 530/752-9382 E-Mail: rcfeenstra@ucdavis.edu Luca Macedoni Aarhus University Department of Economics and Business Economics Fuglesangs Allé 4 8210 Aarhus V Denmark E-Mail: lmacedoni@econ.au.dk Mingzhi Xu Science Building Building No. 1 Room 423N Peking University 5th Yiheyuan Road Haidian District China E-Mail: mingzhixu@nsd.pku.edu.cn

Urban Mobility and the Experienced Isolation of Students - Cook, Cody; Currier, Lindsey; Glaeser, Edward L (National Bureau of Economic Research Working Paper Series, 2022)
Cities provide access to stores, public amenities and other people, but that access may provide less benefit for lower-income and younger urbanites who lack money and means of easy mobility. Using detailed GPS location data, we measure the urban mobility and experienced racial and economic isolation of the young and the disadvantaged. We find that students in major metropolitan areas experience more racial and income isolation, spend more time at home, stay closer to home when they do leave, and visit fewer restaurants and retail establishments than adults. Looking across levels of income, students from higher-income families visit more amenities, spend more time outside of the home, and explore more unique locations than low-income students. Combining a number of measures into an index of urban mobility, we find that, conditional on income, urban mobility is positively correlated with home neighborhood characteristics such as distance from the urban core, car ownership, and social capital.
Author contact info: Cody Cook Graduate School of Business Stanford University E-Mail: codycook@stanford.edu Lindsey Currier Department of Economics Littauer Center Harvard University Cambridge, MA 02138 United States E-Mail: lcurrier@g.harvard.edu Edward L. Glaeser Department of Economics 315A Littauer Center Harvard University Cambridge, MA 02138 Tel: 617/495-0575 Fax: 617/495-7730 E-Mail: eglaeser@harvard.edu

Technology and Resilience - Comin, Diego A; Cruz, Marcio; Cirera, Xavier; Lee, Kyung Min; Torres, Jesica (National Bureau of Economic Research Working Paper Series, 2022)
This paper estimates the impact of technology sophistication pre-COVID-19 on the performance of firms during the early stages of the pandemic. We exploit a unique data covering firms from Brazil, Senegal, and Vietnam using a treatment effect mediation framework to decompose the results into a direct and an indirect effect. Increasing pre-pandemic technology sophistication by one standard deviation is associated with 3.8pp higher sales. Both effects are positive, but the direct effect is about 5 times larger than the indirect effect. The total effect on sales is markedly nonlinear with significantly smaller estimates of the reduction in sales for firms with more sophisticated pre-pandemic technology. Our results are robust to different measures of digital responses and matching estimators.
Author contact info: Diego A. Comin Dartmouth College Economics Department 6106 Rockefeller Hall, Room 327 Hanover, NH 03755 Tel: (603) 646-2531 E-Mail: diego.comin@dartmouth.edu Marcio Cruz 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA E-Mail: marciocruz@ifc.org Xavier Cirera The World Bank 1818 H ST NW Washington, DC 20433 United States E-Mail: xcirera@worldbank.org Kyung Min Lee The World Bank 1818 H St., NW Washington, DC 20433 E-Mail: klee12@worldbank.org Jesica Torres 1850 I Street NW CP 66269 Washington, DC 20006 United States Tel: +12022853696 E-Mail: jesicatorrescoronado@gmail.com

Agrarian Origins of Individualism and Collectivism - Fiszbein, Martin; Jung, Yeonha; Vollrath, Dietrich (National Bureau of Economic Research Working Paper Series, 2022)
This study examines the influence of agricultural labor intensity on individualism across U.S. counties. To measure historical labor intensity in agriculture, we combine data on crop-specific labor requirements and county-specific crop mix around 1900. Potential endogeneity of agricultural labor intensity is addressed using climate-induced variation in crop mix. Our estimates indicate that a one standard deviation increase in labor intensity is associated with a reduction of 0.2-0.3 standard deviations in individualism (as captured by the share of children with infrequent names). We further document significant changes in individualism over time using within-county changes in labor intensity due to mechanization and the boll weevil. We also show that historical agricultural labor intensity continues to influence geographic variation in individualism today.
Author contact info: Martin Fiszbein Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4389 E-Mail: fiszbein@bu.edu Yeonha Jung Sungkyunkwan University Korea E-Mail: yhjung0408@skku.edu Dietrich Vollrath University of Houston 201C McElhinney Hall Houston, TX 77204 Tel: 713-743-3806 E-Mail: devollrath@uh.edu

How Do Top Acquirers Compare in Technology Mergers? New Evidence from an S&P Taxonomy - Jin, Ginger Zhe; Leccese, Mario; Wagman, Liad (National Bureau of Economic Research Working Paper Series, 2022)
Some argue that large platforms, such as Alphabet/Google, Amazon, Apple, Facebook and Microsoft (or GAFAM), are unusual in their number, pace and concentration of technology mergers, with the potential to harm market competition. Using a unique taxonomy developed by S&P Global Market Intelligence, we compare the M&A activities of GAFAM to other top acquirers from 2010 to 2020. We find: (i) GAFAM completed more tech acquisitions per firm than other groups of top acquirers, and acquired younger and more consumer-facing firms on average. (ii) The top 25 private equity firms outpaced GAFAM in tech acquisitions per firm since 2018. (iii) GAFAM acquisitions are less concentrated across tech categories than other top acquirer groups, due, in part, to an “acquire-adjacent-and-then-expand” strategy. (iv) Over time, more and more GAFAM and other top acquirers acquire in the same categories. (v) No evidence suggesting that a GAFAM acquisition in a category, compared to similar categories without GAFAM acquisitions, is correlated with a slowdown in the number of new acquirers acquiring in that category. Overall, we find that technology acquisitions do not shield GAFAM from competition, at least not from other GAFAM members or other firms that acquire in the same categories.
Author contact info: Ginger Zhe Jin University of Maryland Department of Economics College Park, MD 20742-7211 Tel: 301/405-3484 Fax: 301/405-3542 E-Mail: ginger@umd.edu Mario Leccese University of Maryland - Department of Economics Tydings Hall 7343 Preinkert Dr. College Park, MD 20742 United States E-Mail: leccese@umd.edu Liad Wagman Illinois Institute of Technology 565 W Adams, 4th Floor Chicago, IL 60661 Tel: 7739809883 E-Mail: lwagman@stuart.iit.edu

The Impact of U.S. School Closures on Labor Market Outcomes during the COVID-19 Pandemic - Garcia, Kairon Shayne D; Cowan, Benjamin W (National Bureau of Economic Research Working Paper Series, 2022)
A substantial fraction of k-12 schools in the United States closed their in-person operations during the COVID-19 pandemic. These closures may have altered the labor supply decisions of parents of affected children due to a need to be at home with children during the school day. In this paper, we examine the impact of school closures on parental labor market outcomes. We test whether COVID-19 school closures have a disproportionate impact on parents of school-age children (ages 5-17 years old). Our results show that both women’s and men’s work lives were affected by school closures, with both groups seeing a reduction in work hours and the likelihood of working full-time but only women being less likely to work at all. We also find that closures had a corresponding negative effect on the earnings of parents of school-aged children. These effects are concentrated among parents without a college degree and parents working in occupations that do not lend themselves to telework, suggesting that such individuals had a more difficult time adjusting their work lives to school closures.
Author contact info: Kairon Shayne D. Garcia Washington State University E-Mail: kaironshayne.garcia@wsu.edu Benjamin W. Cowan School of Economic Sciences Washington State University 103E Hulbert Hall Pullman, WA 99164 Tel: 509/335-2184 E-Mail: ben.cowan@wsu.edu

The Expected, Perceived, and Realized Inflation of U.S. Households before and during the COVID19 Pandemic - Weber, Michael; Gorodnichenko, Yuriy; Coibion, Olivier (National Bureau of Economic Research Working Paper Series, 2022)
As the pandemic spread across the U.S., disagreement among U.S. households about inflation expectations surged along with the mean perceived and expected level of inflation. Simultaneously, the inflation experienced by households became more dispersed. Using matched micro data on spending of households and their macroeconomic expectations, we study the link between the inflation experienced by households in their daily shopping and their perceived and expected levels of inflation both before and during the pandemic. In normal times, realized inflation barely differs across observable dimensions but low income, low education, and Black households experienced a larger increase in realized inflation than other households did. Dispersion in realized and perceived inflation explains a large share of the rise in dispersion in inflation expectations.
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 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

Limited Supply and Lagging Enrollment: Production Technologies and Enrollment Changes at Community Colleges during the Pandemic - Schanzenbach, Diane Whitmore; Turner, Sarah (National Bureau of Economic Research Working Paper Series, 2022)
Weak labor markets typically lead young workers to invest in skills. High unemployment during COVID diverged from prior downturns: enrollment at community colleges dropped by 9.5 percent between 2019 and 2020, with the drop larger among men. COVID disruptions generated supply-side impacts on courses of study requiring significant capital and “hands on” experiential learning, particularly programs that deliver of assembly, repair and maintenance (ARM) skills. Community colleges that had relative concentrations of credentials in ARM fields pre-pandemic experienced relatively large enrollment declines. The decline in ARM enrollment explains nearly all the difference in enrollment declines by gender during COVID.
Author contact info: Diane Whitmore Schanzenbach Institute for Policy Research Northwestern University 2040 Sheridan Road Evanston, IL 60208 Tel: 847.491.8704 E-Mail: dws@northwestern.edu Sarah Turner Department of Economics University of Virginia Monroe Hall 248 McCormick Rd Charlottesville, VA 22904 Tel: 434/924-7857 Fax: 434/924-1384 E-Mail: set5h@virginia.edu

Financial Intermediaries and the Macroeconomy: Evidence from a High-Frequency Identification - Ottonello, Pablo; Song, Wenting (National Bureau of Economic Research Working Paper Series, 2022)
We provide empirical evidence of the causal effects of changes in financial intermediaries' net worth in the aggregate economy. Our strategy identifies financial shocks as high-frequency changes in the market value of intermediaries' net worth in a narrow window around their earnings announcements, based on U.S. tick-by-tick data. Using these shocks, we estimate that news of a 1-percent decline in intermediaries' net worth leads to a 0.2-0.4 percent decrease in the market value of nonfinancial firms. These effects are more pronounced for firms with high default risk and low liquidity and when the aggregate net worth of intermediaries is low.
Author contact info: Pablo Ottonello Department of Economics University of Maryland Tydings Hall 7343 Preinkert Dr. College Park, MD 20742 E-Mail: ottonell@umd.edu Wenting Song Bank of Canada 234 Wellington St Ottawa, ON K1A 0G9 Canada E-Mail: wenting.w.song@gmail.com

Bounds, Benefits, and Bad Air: Welfare Impacts of Pollution Alerts - Anderson, Michael L; Hyun, Minwoo; Lee, Jaecheol (National Bureau of Economic Research Working Paper Series, 2022)
Though air-quality alert systems (AQAS) cover more than 1.7 billion people worldwide, there has been little welfare analysis of these systems. This paper presents a theoretical framework for deriving lower bounds on the net benefits of an AQAS and applies it to a South Korean system currently covering over 51 million people. Estimating a regression discontinuity design, we find that an alert issuance reduced youth respiratory expenditures by 30% and adult cardiovascular expenditures by 23%. The overall system reduced externalized health expenditures by 28.6 million dollars during 2016–2017, with a minimum benefit-cost ratio of 7.1:1. Including dynamic impacts of alerts increases the minimum benefits (benefit-cost ratio) to 36.7 million dollars (9.2:1). Our findings imply that the AQAS generates significant net benefits and suggests that manipulation of air quality data, which has been observed in other contexts, may negatively impact social welfare.
Author contact info: Michael L. Anderson Department of Agricultural and Resource Economics 207 Giannini Hall, MC 3310 University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-7628 Fax: 510/643-8911 E-Mail: mlanderson@berkeley.edu Minwoo Hyun Department of Economics University of California, Santa Barbara E-Mail: minwoohyun@ucsb.edu Jaecheol Lee University of California, Berkeley Department of Agricultural and Resource Economics E-Mail: ferleejc@berkeley.edu

Information versus Investment - Terry, Stephen J; Whited, Toni M; Zakolyukina, Anastasia A (National Bureau of Economic Research Working Paper Series, 2022)
We quantify the real implications of trade-offs between firm information disclosure and long-term investment efficiency. We estimate a dynamic equilibrium model in which firm managers confront realistic incentives to misreport earnings and distort their real investment choices. The model implies a socially optimal level of disclosure regulation that exceeds the estimated value. Counterfactual analysis reveals that eliminating earnings misreporting completely through disclosure regulation incentivizes managers to distort real investment. Lower earnings informativeness raises the cost of capital, which results in a 5.7% drop in average firm value, but more modest effects on social welfare and aggregate growth.
Author contact info: Stephen J. Terry Department of Economics University of Michigan 611 Tappan Avenue Ann Arbor, MI 48109 Tel: 757/754-3514 E-Mail: stephenjamesterry@gmail.com Toni Whited Department of Economics University of Michigan 307 Lorch Hall 611 Tappan Street Ann Arbor, MI 48109 Tel: 734/764-1269 E-Mail: twhited@umich.edu Anastasia A. Zakolyukina University of Chicago 5807 S. Woodlawn Ave. Chicago, IL 60637 E-Mail: aaz@chicagobooth.edu

On the Aggregation of Probability Assessments: Regularized Mixtures of Predictive Densities for Eurozone Inflation and Real Interest Rates - Diebold, Francis X; Shin, Minchul; Zhang, Boyuan (National Bureau of Economic Research Working Paper Series, 2022)
We propose methods for constructing regularized mixtures of density forecasts. We explore a variety of objectives and regularization penalties, and we use them in a substantive exploration of Eurozone inflation and real interest rate density forecasts. All individual inflation forecasters (even the ex post best forecaster) are outperformed by our regularized mixtures. From the Great Recession onward, the optimal regularization tends to move density forecasts' probability mass from the centers to the tails, correcting for overconfidence.
Author contact info: Francis X. Diebold Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215/898-1507 E-Mail: fdiebold@sas.upenn.edu Minchul Shin Research Department Federal Reserve Bank of Philadelphia Ten Independence Mall Philadelphia, PA 19106 E-Mail: visiblehand@gmail.com Boyuan Zhang Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104-6297 E-Mail: boyuanz@sas.upenn.edu

Cognitive Decline, Limited Awareness, Imperfect Agency, and Financial Well-being - Ameriks, John; Caplin, Andrew; Lee, Minjoon; Shapiro, Matthew D; Tonetti, Christopher (National Bureau of Economic Research Working Paper Series, 2022)
Cognitive decline may lead older Americans to make poor financial decisions. Preventing poor decisions may require timely transfer of financial control to a reliable agent. Cognitive decline, however, can develop unnoticed, creating the possibility of suboptimal timing of the transfer of control. This paper presents survey-based evidence that wealthholders regard suboptimal timing of the transfer of control, in particular delay due to unnoticed cognitive decline, as a substantial risk to financial well-being. This paper provides a theoretical framework to model such a lack of awareness and the resulting welfare loss.
Author contact info: John Ameriks The Vanguard Group, Inc. PO Box 2600, MS V36 Valley Forge PA 19482 Tel: 610-503-5676 Fax: 610-503-5690 E-Mail: john_ameriks@vanguard.com Andrew Caplin Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8950 Fax: 212/995-3932 E-Mail: andrew.caplin@nyu.edu Minjoon Lee Department of Economics Carleton University Ottawa, ON K1S 5B6 Canada E-Mail: minjoon.lee@carleton.ca Matthew D. Shapiro Department of Economics University of Michigan 611 Tappan St Ann Arbor, MI 48109-1220 Tel: 734/764-5419 Fax: 734 764-2769 E-Mail: shapiro@umich.edu Christopher Tonetti Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305 Tel: 650/725-7985 Fax: 650/725-8916 E-Mail: tonetti@stanford.edu

Currency Carry Trade by Trucks: The Curious Case of China's Massive Imports from Itself - Liu, Xuepeng; Tang, Heiwai; Wang, Zhi; Wei, Shang-Jin (National Bureau of Economic Research Working Paper Series, 2022)
With capital controls, the standard financial market transactions needed for currency carry trade are hard to implement. Using detailed trade data reported by both the mainland Chinese and Hong Kong’s governments, we present evidence that indirect currency carry trade likely takes place via round-trip reimports. We also show that greater state control in terms of more state-owned firms does not reduce such “carry trade by trucks.”
Author contact info: Xuepeng Liu Kennesaw State University 1000 Chastain Rd Kennesaw, GA 30144 E-Mail: xliu6@kennesaw.edu Heiwai Tang KKL 920 Pokfulam Road Pokfulam Hong Kong E-Mail: tangecon@hku.hk Zhi Wang Schar School of Policy and Government George Mason Universty 3351 Fairfax Drive, MS 3B1, Alington, VA 22201 E-Mail: zwang36@gmu.edu 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

Intermediation via Credit Chains - He, Zhiguo; Li, Jian (National Bureau of Economic Research Working Paper Series, 2022)
The modern financial system features complicated financial intermediation chains, with each layer performing a certain degree of credit/maturity transformation. We develop a dynamic model in which an entrepreneur borrows from overlapping-generation households via layers of funds, forming a credit chain. Each intermediary fund in the chain faces rollover risks from its lenders, and the optimal debt contracts among layers are time invariant and layer independent. The model delivers new insights regarding the benefits of intermediation via layers: the chain structure insulates interim negative fundamental shocks and protects the underlying cash flows from being discounted heavily during bad times, resulting in a greater borrowing capacity. We show that the equilibrium chain length minimizes the run risk for any given contract and find that restricting credit chain length can improve total welfare once the available funding from households has been endogenized.
Author contact info: Zhiguo He Stanford University Graduate School of Business 655 Knight Way Stanford, CA 94305 E-Mail: hezhg@stanford.edu Jian Li Columbia Business School Kravis Hall, 665 W 130th St New York, NY 10027 United States Tel: 7739871203 E-Mail: jl5964@columbia.edu

Clubs and Networks in Economics Reviewing - Carrell, Scott E; Figlio, David N; Lusher, Lester R (National Bureau of Economic Research Working Paper Series, 2022)
The network of economists who publish in leading journals is generally perceived as small, exclusive, and tightly knit. We study how author-editor and author-reviewer network connectivity and “match” influences editor decisions and reviewer recommendations of economic research at the Journal of Human Resources (JHR). Our empirical strategy employs several dimensions of fixed effects to overcome concerns of endogenous assignment of papers to editors and reviewers in order to identify causal impacts. Results show that clubs and networks play a large role in influencing both editor and reviewer decisions. Authors who attended the same PhD program, were ever colleagues with, are affiliates of the same NBER program(s), or are more closely linked via coauthorship networks as the handling editor are significantly more likely to avoid a desk rejection. Likewise, authors from the same PhD program or who previously worked with the reviewer are significantly more likely to receive a positive evaluation. We also find that sharing “signals” of ability, such as publishing in “top five”, attending a high ranked PhD program, or being employed by a similarly ranked economics department significantly influences editor decisions and/or reviewer recommendations.
Author contact info: Scott E. Carrell Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: scott.carrell@austin.utexas.edu David N. Figlio University of Rochester 220 Hutchinson Road Rochester, NY 14611 E-Mail: david.figlio@rochester.edu Lester R. Lusher Department of Economics University of Pittsburgh E-Mail: lrlusher@hawaii.edu

Nonprofits in Good Times and Bad Times - Exley, Christine L; Lehr, Nils H; Terry, Stephen J (National Bureau of Economic Research Working Paper Series, 2022)
Need fluctuates over the business cycle. We conduct a survey revealing a desire for nonprofit activities to countercyclically expand during downturns. We then demonstrate, using comprehensive US nonprofit data drawn from millions of tax returns, that the public’s hopes are disappointed. Nonprofit expenditure, revenue, and balance sheets fluctuate procyclically: contracting during national and local downturns. This finding is evident even for a narrow group of nonprofits the public most wishes would expand during downturns, e.g., those providing critical needs like food or housing. Our new facts contribute to the charitable giving, nonprofit, and business cycle literatures.
Author contact info: Christine L. Exley Department of Economics University of Michigan Lorch Hall 365B 611 Tappan Ave Ann Arbor, MI 48109 E-Mail: clexley@gmail.com Nils Haakon Lehr 375 Market St Boston, MA 02135 E-Mail: nilslehr@bu.edu Stephen J. Terry Department of Economics University of Michigan 611 Tappan Avenue Ann Arbor, MI 48109 Tel: 757/754-3514 E-Mail: stephenjamesterry@gmail.com

Global Innovation and Knowledge Diffusion - Lind, Nelson; Ramondo, Natalia (National Bureau of Economic Research Working Paper Series, 2022)
We develop a Ricardian model of trade in which countries innovate ideas that diffuse across the globe. In this model, the forces of innovation and diffusion combine to shape trade substitution patterns. Innovation makes a country technologically distinct, reducing their substitutability with other countries, while diffusion between countries generates technological similarity and increases head-to-head competition. In the special case of an innovation-only model where countries do not share ideas, productivities are independent across space, and the demand system is CES. As a consequence, departures from CES expenditure reveal diffusion patterns. Our theoretical results provide a mapping between the dynamics of observable trade flows and the dynamics of innovation and knowledge diffusion.
Author contact info: Nelson Lind Department of Economics Emory University 1602 Fishburne Drive Rich Bldg., 3rd Floor Atlanta, GA 30322-2240 E-Mail: nelslind@gmail.com Natalia Ramondo Boston University Department of Economics 270 Bay State Rd # 445 Boston, MA 02215 E-Mail: nramondo@bu.edu

Macroeconomic Research, Present and Past - Glandon, Philip J; Kuttner, Kenneth; Mazumder, Sandeep; Stroup, Caleb (National Bureau of Economic Research Working Paper Series, 2022)
How is macroeconomic research conducted and what is it trying to accomplish? We explore these questions using information gleaned from 1,894 articles published in ten leading journals. We find that over the past 40 years there has been a growing emphasis on increasingly sophisticated quantitative theory, such as DSGE modeling, and papers employing these methods now account for the majority of articles in macro journals. The shift towards quantitative theory is mirrored by a decline in the use of econometric methods to test economic hypotheses. Econometric techniques borrowed from applied microeconomics have to a large extent displaced time series methods, and empirical papers increasingly rely on micro and proprietary data sources. Market imperfections are pervasive, and the amount of research involving financial frictions has increased significantly in the past ten years. The frequency with which non-macro JEL codes appear in macro articles indicates a great deal of overlap between macroeconomics and other fields.
Author contact info: Philip J. Glandon Jr. 202 College Park Street Economics Department Gambier, Ohio 43022-5002 United States Tel: 17404275927 E-Mail: glandonp@kenyon.edu Kenneth Kuttner Department of Economics Williams College Schapiro Hall 24 Hopkins Hall Drive Williamstown, MA 01267 Tel: 413-597-2300 E-Mail: kenneth.n.kuttner@williams.edu Sandeep Mazumder Hankamer School of Business Baylor University One Bear Place #98001 Waco, TX 76798-8001 United States E-Mail: sandeep_mazumder@baylor.edu Caleb Stroup Department of Economics Davidson College Box 7123 Davidson, NC 28035 United States of America E-Mail: castroup@davidson.edu

Revealing Corruption: Firm and Worker Level Evidence from Brazil - Colonnelli, Emanuele; Lagaras, Spyridon; Ponticelli, Jacopo; Prem, Mounu; Tsoutsoura, Margarita (National Bureau of Economic Research Working Paper Series, 2022)
We study how the disclosure of corrupt practices affects the growth of firms involved in illegal interactions with the government using randomized audits of public procurement in Brazil. On average, firms exposed by the anti-corruption program grow larger after the audits, despite experiencing a decrease in procurement contracts. We manually collect new data on the details of thousands of corruption cases, through which we uncover a large heterogeneity in our firm-level effects depending on the degree of involvement in corruption cases. Using investment-, loan-, and worker- level data, we show that the average exposed firms adapt to the loss of government contracts by changing their investment strategy. They increase capital investment and borrow more to finance such investment, while there is no change in their internal organization. We provide qualitative support to our results by conducting new face-to-face surveys with business owners of government-dependent firms.
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 Spyridon Lagaras University of Pittsburgh Katz Graduate School of Business 334 Mervis Hall 3950 Roberto Clemente Drive Pittsburgh, PA 15260 United States of America Tel: (412) 624-2866 E-Mail: slagaras@katz.pitt.edu Jacopo Ponticelli Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/467-4623 E-Mail: jacopo.ponticelli@kellogg.northwestern.edu Mounu Prem Universidad del Rosario Department of Economics Cl 12C No 4 - 69, Bogotá, Colombia Colombia E-Mail: francisco.munoz@urosario.edu.co Margarita Tsoutsoura Olin Business School Washington University in St. Louis 1 Snow Way Dr St. Louis, MO 63130 E-Mail: tsoutsoura@wustl.edu

Debt as Safe Asset - Brunnermeier, Markus K; Merkel, Sebastian A; Sannikov, Yuliy (National Bureau of Economic Research Working Paper Series, 2022)
The price of a safe asset reflects not only the expected discounted future cash flows but also future service flows, since retrading allows partial insurance of idiosyncratic risk in an incomplete markets setting. This lowers the issuers' interest burden and allows the government to run a permanent (primary) deficit without ever paying back its debt. As idiosyncratic risk rises during recessions, so does the value of the service flows bestowing the safe asset with a negative beta. This resolves government debt valuation puzzles. Nevertheless, the government faces a “Debt Laffer Curve”. The paper also has important implications for fiscal debt sustainability.
Author contact info: Markus K. Brunnermeier Princeton University Department of Economics Bendheim Center for Finance Princeton, NJ 08544 Tel: 609/258-4050 Fax: 609/258-0771 E-Mail: markus@princeton.edu Sebastian A. Merkel University of Exeter Department of Economics Exeter EX44PU UK E-Mail: s.merkel@exeter.ac.uk Yuliy Sannikov Stanford GSB Stanford University Palo Alto, CA E-Mail: sannikov@gmail.com

Using Bid Rotation and Incumbency to Detect Collusion: A Regression Discontinuity Approach - Kawai, Kei; Nakabayashi, Jun; Ortner, Juan M; Chassang, Sylvain (National Bureau of Economic Research Working Paper Series, 2022)
Cartels participating in procurement auctions frequently use bid rotation or prioritize incumbents to allocate contracts. However, establishing a link between observed allocation patterns and firm conduct has been difficult: there are cost-based competitive explanations for such patterns. We show that by focusing on auctions in which the winning and losing bids are very close, it is possible to distinguish allocation patterns reflecting cost differences across firms from patterns reflecting non-competitive environments. We apply our tests to two datasets: the sample of Ohio milk auctions studied in Porter and Zona (1999), and a sample of municipal procurement auctions from Japan.
Author contact info: Kei Kawai Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720 E-Mail: kei@berkeley.edu Jun Nakabayashi Kyoto University Yoshidahonmachi, Sakyo Ward Kyoto Osaka 606-8317 Japan E-Mail: nakabayashi.1@eco.kindai.ac.jp Juan M. Ortner Boston University 270 Bay State Rd. Boston, MA 02215 E-Mail: jortner@bu.edu Sylvain Chassang Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08544 E-Mail: chassang@princeton.edu

The Political Economy of Anti-Bribery Enforcement - Cohen, Lauren; Li, Bo (National Bureau of Economic Research Working Paper Series, 2021)
This paper documents novel evidence on the influence of political incentives in the regulatory enforcement of foreign bribery. Using exogenous variation in the timing and geographic location of U.S. Congressional elections, we find that the probability of a Foreign Corrupt Practices Act (FCPA) enforcement action against foreign firms located in the Senator’s jurisdiction increases significantly pre-election, spiking 23%, with zero equivalent move for equivalently global (but domestic-headquartered) firms in the Senator’s jurisdiction. Using hand-collected case-level data from the U.S. SEC and DOJ, we also observe larger discretion in regions where foreign firms are larger global competitors of in-state firms, operate in locally important industries, and when Senators serve as the Chairman of the Senate Judiciary Committee (which oversees the DOJ). Anti-bribery enforcement has electoral implications, leading to spikes in media coverage of the FCPA enforcement coupled with greater vote shares for the Senator. Moreover, the cases pushed through against these foreign firms just prior to elections appear to be weaker cases. The enforcements result in real effects, as in response to strategic timing in enforcement, firms reallocate business segments and sales.
Author contact info: Lauren Cohen Harvard Business School Baker Library 279 Soldiers Field Boston, MA 02163 Tel: 617/495-3888 E-Mail: lcohen@hbs.edu Bo Li Tsinghua University 43 Chengfu Rd Beijing, China 100083 E-Mail: lib@pbcsf.tsinghua.edu.cn

Worker Beliefs About Outside Options - Jäger, Simon; Roth, Christopher; Roussille, Nina; Schoefer, Benjamin (National Bureau of Economic Research Working Paper Series, 2021)
Standard labor market models assume that workers hold accurate beliefs about the external wage distribution, and hence their outside options with other employers. We test this assumption by comparing German workers’ beliefs about outside options with objective benchmarks. First, we find that workers wrongly anchor their beliefs about outside options on their current wage: workers that would experience a 10% wage change if switching to their outside option only expect a 1% change. Second, workers in low-paying firms underestimate wages elsewhere. Third, in response to information about the wages of similar workers, respondents correct their beliefs about their outside options and change their job search and wage negotiation intentions. Finally, we analyze the consequences of anchoring in a simple equilibrium model. In the model, anchored beliefs keep overly pessimistic workers stuck in low-wage jobs, which gives rise to monopsony power and labor market segmentation.
Author contact info: Simon Jäger Department of Economics, E52-454 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: sjaeger@mit.edu Christopher Roth Department of Economics University of Cologne Albertus-Magnus-Platz Cologne Germany E-Mail: cproth89@gmail.com Nina Roussille Department of Economics MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: nroussil@mit.edu Benjamin Schoefer Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/642-0822 E-Mail: schoefer@berkeley.edu

The Marginal Cost of Mortality Risk Reduction: Evidence from Housing Markets - Bishop, Kelly; Kuminoff, Nicolai V; Mathes, Sophie; Murphy, Alvin (National Bureau of Economic Research Working Paper Series, 2021)
We provide the first evidence that spatial variation in all-cause mortality risk is capitalized into US housing prices. Using a hedonic framework, we recover the annual implicit cost of a 0.1 percentage-point reduction in mortality risk among older Americans and find that this figure is both relatively low and decreasing in age, from $1,346 for a 67 year old to $246 for an 87 year old. These estimates are one-fifth of the size of comparable estimates found in the labor market, suggesting that the housing market provides an alternative, substantially cheaper channel to reducing mortality risk.
Author contact info: Kelly Bishop Department of Economics Arizona State University PO Box 879801 Tempe, AZ 85287-9801 E-Mail: kelly.bishop@asu.edu Nicolai V. Kuminoff Department of Economics Arizona State University P.O. Box 879801 Tempe, AZ 85287 Tel: 480/727-9802 Fax: 480/965-0748 E-Mail: kuminoff@asu.edu Sophie Mathes Department of Economics FGV EPGE Praia de Botafogo, 190 Rio de Janeiro, RJ 22250 Brazil E-Mail: sophie.mathes@fgv.br Alvin Murphy Department of Economics Arizona State University PO Box 879801 Tempe, AZ 85287-9801 Tel: 314-935-6306 E-Mail: Alvin.Murphy@asu.edu

Mandated vs. Voluntary Adaptation to Natural Disasters: The Case of U.S. Wildfires - Baylis, Patrick W; Boomhower, Judson (National Bureau of Economic Research Working Paper Series, 2021)
Despite escalating disaster losses and predicted increases in weather-related catastrophes, takeup of protective technologies and behaviors appears limited by myopia, externalities, and other factors. One response to such frictions is to mandate adaptive investment. We measure the effect of California's wildfire building codes on own- and neighboring structure survival using administrative damage and assessment data for most US homes experiencing wildfires since 2000. Differences across jurisdictions and vintages reveal remarkable resilience effects of building codes initially prompted by the deadly 1991 Oakland Firestorm. Codes also benefit neighbors. We use the results to estimate net social benefits of wildfire building standards.
Author contact info: Patrick Baylis Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T1L4 Canada E-Mail: patrick.baylis@ubc.ca Judson Boomhower Department of Economics University of California at San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 E-Mail: jboomhower@ucsd.edu

Estimating the Effects of Milk Inspections on Infant and Child Mortality, 1880-1910 - Anderson, D. Mark; Charles, Kerwin Kofi; McKelligott, Michael; Rees, Daniel I (National Bureau of Economic Research Working Paper Series, 2021)
In the mid-19th century, the urban milk supply in the United States was regularly skimmed or diluted with water, reducing its nutritional value. At the urging of public health experts, cities across the country hired milk inspectors, who were tasked with collecting and analyzing milk samples with the goal of preventing adulteration and skimming. Using city-level data for the period 1880-1910, we explore the effects of milk inspections on infant mortality and mortality among children under the age of 5. Event-study estimates are small and statistically insignificant, providing little evidence of post-treatment reductions in either infant or child mortality.
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

Fiscal Policy in a Networked Economy - Flynn, Joel P; Patterson, Christina; Sturm, John (National Bureau of Economic Research Working Paper Series, 2021)
Advanced economies feature complicated networks that connect households, ﬁrms, and regions. How do these structures aﬀect the impact of ﬁscal policy and its optimal targeting? We study these questions in a model with input-output linkages, regional structure, and household heterogeneity in MPCs, consumption baskets, and shock exposures. Theoretically, we derive estimable formulae for the eﬀects of ﬁscal policies on aggregate GDP, or ﬁscal multipliers, and show how network structures determine their size. Empirically, we ﬁnd that multipliers vary substantially across policies, so targeting is important. Beneath these aggregate eﬀects are large spatial and sectoral spillovers from policies directed to any one ﬁrm or household. However, virtually all variation in multipliers stems from diﬀerences in policies’ direct incidence onto households’ MPCs. Thus, while the distributional eﬀects of ﬁscal policy depend on the detailed structure of the economy, maximally expansionary ﬁscal policy simply targets households’ MPCs.
Author contact info: Joel P. Flynn 30 Hillhouse Avenue New Haven, CT 06511 E-Mail: joel.flynn@yale.edu Christina Patterson Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 E-Mail: christina.patterson@chicagobooth.edu John S. Becko 33 Lincoln Rd, Apt 4L Brooklyn, New 11225 United States Tel: 16096470720 E-Mail: johnsbecko@gmail.com

Vertical Differentiation in Frictional Product Markets - Albrecht, James; Menzio, Guido; Vroman, Susan (National Bureau of Economic Research Working Paper Series, 2021)
We consider a version of the imperfect competition model of Butters (1977), Varian (1980) and Burdett and Judd (1983) in which sellers make an ex-ante investment in the quality of their variety of the product. Equilibrium exists, is unique and is efficient. In equilibrium, search frictions not only cause sellers to offer different surpluses to buyers but also cause sellers to choose different qualities for their varieties. That is, equilibrium involves endogenous vertical differentiation. As search frictions decline, the market becomes more and more unequal as a smaller and smaller fraction of sellers produces varieties of increasing quality, offers increasing surplus to their customers, and captures an increasing share of the market, while a growing fraction of sellers produces varieties of decreasing quality. Gains from trade and welfare grow. Under some conditions, the growth rate of gains from trade and welfare is constant.
Author contact info: James Albrecht Department of Economics Georgetown University Washington, DC 20057 E-Mail: albrecht@georgetown.edu Guido Menzio Department of Economics New York University 19 West 4th Street, New York, NY 10012 E-Mail: gm1310@nyu.edu Susan Vroman Department of Economics Georgetown University Washington, DC 20057 E-Mail: vromans@georgetown.edu

The Price of Nails since 1695: A Window into Economic Change - Sichel, Daniel E (National Bureau of Economic Research Working Paper Series, 2021)
This paper focuses on the price of nails since 1695 and the proximate source of changes in those prices. Why nails? They are a basic manufactured product whose form and quality have changed relatively little over the last three centuries, yet the process for producing them has changed dramatically. Accordingly, nails provide a useful prism through which to examine a wide range of economic and technological developments that touch on multiple areas of both micro- and macroeconomics. Several conclusions emerge. First, from the late 1700s to the mid 20th century real nail prices fell by a factor of about 10 relative to overall consumer prices. These declines had important effects on downstream industries, most notably construction. Second, while declining materials prices contribute to reductions in nail prices, the largest proximate source of the decline during this period was multifactor productivity growth in nail manufacturing, highlighting the role of the specialization of labor and re-organization of production processes. Third, the share of nails in GDP dropped back from 0.4 percent of GDP in 1810—comparable to today’s share of household purchases of personal computers—to a de minimis share more recently; accordingly, nails played a bigger role in American life in that earlier period. Finally, real nail prices have increased since the mid 20th century, reflecting in part an upturn in materials prices and a shift toward specialty nails in the wake of import competition, though the introduction of nail guns partly offset these increases for the price of installed nails.
Author contact info: Daniel E. Sichel Department of Economics Wellesley College 106 Central Street Wellesley, MA 02481 Tel: 781/283-2988 E-Mail: dsichel@wellesley.edu

Causal Inference from Hypothetical Evaluations - Bernheim, B. Douglas; Björkegren, Daniel; Naecker, Jeffrey; Pollmann, Michael (National Bureau of Economic Research Working Paper Series, 2021)
This paper explores methods for inferring the causal effects of treatments on choices by combining data on real choices with hypothetical evaluations. We propose a class of estimators, identify conditions under which they yield consistent estimates, and derive their asymptotic distributions. The approach is applicable in settings where standard methods cannot be used (e.g., due to the absence of helpful instruments, or because the treatment has not been implemented). It can recover heterogeneous treatment effects more comprehensively, and can improve precision. We provide proof of concept using data generated in a laboratory experiment and through a field application.
Author contact info: B. Douglas Bernheim Department of Economics Stanford University Stanford, CA 94305-6072 Tel: 650/725-8732 Fax: 650/725-5702 E-Mail: bernheim@stanford.edu Daniel Björkegren E-Mail: dan@bjorkegren.com Jeffrey Naecker Google, Inc. 1600 Amphitheatre Pkwy Mountain View, CA 94043 E-Mail: jnaecker@google.com Michael Pollmann 213 Social Sciences 419 Chapel Drive Box 90097 Durham, NC 27708-0097 United States E-Mail: michael.pollmann@duke.edu

Preemptive Policies and Risk-Off Shocks in Emerging Markets - Das, Mitali; Gopinath, Gita; Kalemli-Özcan, Ṣebnem (National Bureau of Economic Research Working Paper Series, 2021)
We show that “preemptive” capital flow management measures (CFM) can reduce emerging markets and developing countries' (EMDE) external finance premia during risk-off shocks, especially for vulnerable countries. Using a panel dataset of 56 EMDEs during 1996-2020 at monthly frequency, we document that countries with preemptive policies in place during the five year window before risk-off shocks experienced relatively lower external finance premia and exchange rate volatility during the shock compared to countries which did not have such preemptive policies in place. We use the episodes of Taper Tantrum and COVID-19 as risk-off shocks. Our identification relies on a difference-in-differences methodology with country fixed effects where preemptive policies are ex-ante by construction and cannot be put in place as a response to the shock ex-post. We control the effects of other policies, such as monetary policy, foreign exchange interventions (FXI), easing of inflow CFMs and tightening of outflow CFMs that are used in response to the risk-off shocks. By reducing the impact of risk-off shocks on countries' funding costs and exchange rate volatility, preemptive policies enable countries' continued access to international capital markets during troubled times.
Author contact info: Mitali Das International Monetary Fund 700 19th Street NW Washington, DC 20431 E-Mail: mdas@imf.org Gita Gopinath International Monetary Fund 700 19th St. NW Washington, DC 20431 Tel: 617/495-8161 Fax: 617/495-7730 E-Mail: ggopinath@imf.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

Interest Received by Banks during the Financial Crisis: LIBOR vs Hypothetical SOFR Loans - Jermann, Urban (National Bureau of Economic Research Working Paper Series, 2021)
The credit sensitivity of LIBOR helped lenders during the financial crisis. SOFR is not credit-sensitive and would not have provided that support. The cumulative additional interest from LIBOR during the crisis is estimated to be between 1% to 2% of the notional amount of outstanding loans, depending on the tenor and type of SOFR rate used. The amount of LIBOR business loans owned by banks could have been as high as about 2trn, and the overall additional interest income banks received thanks to LIBOR could have been as high as 30bn dollars. The analysis also shows that a compounded SOFR reduces insurance relative to a term SOFR.
Author contact info: Urban Jermann Finance Department The Wharton School of the University of Pennsylvania 3620 Locust Walk Philadelphia, PA 19104 Tel: 215/898-4184 Fax: 215/898-6200 E-Mail: jermann@wharton.upenn.edu

Physician Group Influences on Treatment Intensity and Health: Evidence from Physician Switchers - Doyle, Joseph J, Jr.; Staiger, Becky (National Bureau of Economic Research Working Paper Series, 2021)
Treatment intensity varies remarkably across physicians, yet the key drivers are not well understood. Meanwhile, the organization of healthcare is undergoing a secular transformation as physicians increasingly work in groups. This paper tests whether physicians' group affiliation matters for practice styles and patient health. Using Medicare inpatient claims data, we compare these outcomes before and after physicians switch between groups of varying treatment intensity while remaining in the same hospital to control for practice setting. Event studies show that internists who join more-intensive groups immediately increase their own treatment intensity, with an elasticity of approximately 0.3; the opposite is found for internists who switch to groups that are less intensive. This change in Medicare spending largely stems from greater quantities of care provided, with some evidence of a change in coding behavior. We do not detect a change in health outcomes, suggesting that treatment intensity induced by group affiliation may not be productive.
Author contact info: Joseph J. Doyle Jr. MIT Sloan School of Management 100 Main Street, E62-516 Cambridge, MA 02142 Tel: 617/452-3761 Fax: 617/258-6855 E-Mail: jjdoyle@mit.edu Becky Staiger 2121 Berkeley Way #5424 Health Policy & Management School of Public Health Berkeley, CA 94720 E-Mail: bstaiger@berkeley.edu

Trade, Human Capital, and Income Risk - Deng, Liuchun; Krishna, Pravin; Senses, Mine Zeynep; Stegmaier, Jens (National Bureau of Economic Research Working Paper Series, 2021)
In this paper, we empirically assess the causal links between trade and individual income risk and study the role that human capital plays in this relationship using a rich, worker-level, longitudinal data set from Germany spanning 1976 to 2012. Our estimates suggest substantial heterogeneity in labor income risk across workers in different entry cohorts and across workers with different levels of industry- and occupation-specific human capital. Our findings suggest that within-industry changes in imports and exports are causally related to income risk: Imports increase risk and exports decrease risk, and they do so in an economically significant manner. Importantly, we find there to be a complex interplay between human capital and the linkage between trade and risk: While, on average, individuals with higher levels of industry- or occupation-specific human capital experience lower income risk, a given increase in net-imports exposure in an industry increases risk for workers with higher levels of industry tenure more than it does for workers with lower levels of industry tenure. High levels of industry-specific human capital can be costly for workers in highly trade-exposed industries. By contrast, we find no evidence of any interaction between risk, industry trade exposure, and occupation-specific human capital.
Author contact info: Liuchun Deng Yale NUS College 16 College Avenue West #01-220 Singapore 138527 Singapore E-Mail: liuchun.deng@yale-nus.edu.sg Pravin Krishna Johns Hopkins University 1717 Massachusetts Avenue, NW Room 741 Washington, DC 20036 Tel: 202/663 5733 Fax: 202/663 7718 E-Mail: Pravin_Krishna@jhu.edu Mine Zeynep Senses Johns Hopkins University 1740 Massachusetts Avenue, NW Washington, DC 20036 E-Mail: msenses@jhu.edu Jens Stegmaier Institute for Employment Research (IAB) Regensburger Strasse 104 D-90478 Nuremberg Germany E-Mail: jens.stegmaier@iab.de

International Trade and Innovation - Akcigit, Ufuk; Melitz, Marc (National Bureau of Economic Research Working Paper Series, 2021)
This chapter was prepared for the Handbook of International Economics (Vol. 5) edited by Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff. We provide a review of the recent literature -- both theoretical and empirical -- analyzing the multi-dimensional connections between globalization and innovation. We develop a model that features many of those mechanisms that connect trade and innovation. It features the joint selection of firms into innovation and international market participation (in our model, we restrict that participation to exports). Our model also highlights how exposure to international markets affects the incentives for innovation.
Author contact info: Ufuk Akcigit Department of Economics University of Chicago 1126 East 59th Street Saieh Hall, Office 403 Chicago, IL 60637 E-Mail: uakcigit@uchicago.edu Marc Melitz Department of Economics Harvard University 215 Littauer Center Cambridge, MA 02138 E-Mail: mmelitz@harvard.edu

Blackouts: The role of India's Wholesale Electricity Market - Jha, Akshaya; Preonas, Louis; Burlig, Fiona (National Bureau of Economic Research Working Paper Series, 2021)
Blackouts impose substantial costs on electricity consumers in developing countries. We advance a new explanation for their continued prevalence in India, the world’s third-largest power sector: unlike in the developed world, utilities’ wholesale electricity demand is downward-sloping. We construct a novel dataset on power plant operations and demand. Instrumenting for cost with plausibly exogenous power plant equipment outages, we estimate a wholesale demand elasticity of –0.43. As a result, any increase in procurement costs will reduce the amount of electricity retail customers receive. Wholesale market simulations suggest that lowering procurement costs could eliminate blackouts for millions of Indian households.
Author contact info: Akshaya Jha H. John Heinz III College Carnegie Mellon University 4800 Forbes Avenue Pittsburgh, PA 15213 Tel: 608/347-2102 E-Mail: akshayaj@andrew.cmu.edu Louis Preonas Department of Agricultural and Resource Economics University of Maryland 2200 Symons Hall 7998 Regents Drive College Park, MD 20742 E-Mail: lpreonas@umd.edu Fiona Burlig Harris School of Public Policy University of Chicago 1307 East 60th Street Chicago, IL 60637 Tel: 650/283-2931 E-Mail: burlig@uchicago.edu

Race and the Mismeasure of School Quality - Angrist, Joshua; Hull, Peter; Pathak, Parag A; Walters, Christopher R (National Bureau of Economic Research Working Paper Series, 2021)
In large urban districts, schools enrolling more white students tend to have higher performance ratings. We use an instrumental variables strategy leveraging centralized school assignment to explore this relationship. Estimates from Denver and New York City suggest the correlation between school performance ratings and white enrollment shares reflects selection bias rather than causal school value-added. In fact, value-added in these two cities is essentially unrelated to white enrollment shares. A simple regression adjustment is shown to yield school ratings that are uncorrelated with race, while predicting value-added as well or better than the corresponding unadjusted measures.
Author contact info: Joshua Angrist Department of Economics, E52-436 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-8909 Fax: 617/253-1330 E-Mail: angrist@mit.edu Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu Parag A. Pathak Department of Economics, E52-426 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-7458 E-Mail: ppathak@mit.edu Christopher R. Walters Department of Economics University of California, Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 510/643-8596 E-Mail: crwalters@econ.berkeley.edu

Does Physician-Hospital Vertical Integration Signal Care-Coordination? Evidence from Mover-Stayer Analyses of Commercially Insured Enrollees - Encinosa, William; Dor, Avi; Nguyen, PhuongGiang (National Bureau of Economic Research Working Paper Series, 2021)
We examine the impacts of physician-hospital integration on care fragmentation and other measures of care-coordination using a dynamic model of movers and stayers in commercially insured plans. Although recent growth in the share of practicing physicians belonging to these vertical organizations has sparked considerable policy debate, there is a paucity of evidence on the merits of vertical integration in the private segment of the market. We fill the gap by focusing on care-coordination in the relatively open plans that dominate commercial insurance, namely Preferred Provider Organizations (PPOs). We exploit the fact that physician-hospital integration levels vary dramatically across MSA and focus on orthogonal employment-based transfers for identification. We track 415,000 beneficiaries with 17 million claims between 2010 and 2016. We find that standard two-way fixed effect mover-stayer models produce biased estimates since there are heterogeneous effects of integration. Extending the dynamic event study design of Sun and Abraham (2021) to mover-stayer analyses, we are able to avoid these biases. We find that a move from the 10th to 90th percentile of physician integration level causes a 20% relative decrease in a care fragmentation index; similar declines are found in independent markers of fragmentation such as use of out-of-network and single-service facilities. Vertical integration of either primary care physicians or specialists reduced fragmentation significantly. However, only vertical integration of specialists led to significant reductions in medical spending. Our results are robust when adjusting for moves associated with alternative contractual arrangements among providers that do not require outright ownership.
Author contact info: William E. Encinosa III Center for Financing, Access, and Cost Trends Agency for Healthcare Research and Quality 5600 Fishers Lane Rockville, MD 20857 E-Mail: william.encinosa@ahrq.hhs.gov Avi Dor Departments of Health Policy and Economics George Washington University 2021 K street NW, Suite 800 Washington, DC 20037 Tel: 202-530-2368 E-Mail: avidor@gwu.edu PhuongGiang Nguyen RAND 1776 Main Street Santa Monica, CA 90401 E-Mail: pnguyen@rand.org

The COVID-19 Pandemic Disrupted Both School Bullying and Cyberbullying - Bacher-Hicks, Andrew; Goodman, Joshua; Green, Jennifer G; Holt, Melissa (National Bureau of Economic Research Working Paper Series, 2021)
One-fifth of U.S. high school students report being bullied each year. We use internet search data for real-time tracking of bullying patterns as COVID-19 disrupted in-person schooling. We first show that, prepandemic, internet searches contain useful information about actual bullying behavior. We then show that searches for school bullying and cyberbullying dropped 30-35 percent as schools shifted to remote learning in spring 2020. The gradual return to in-person instruction starting in fall 2020 partially returns bullying searches to pre-pandemic levels. This rare positive effect may partly explain recent mixed evidence on the pandemic’s impact on students’ mental health and well-being.
Author contact info: Andrew Bacher-Hicks Boston University Wheelock College of Education 2 Silber Way Boston, MA 02215 E-Mail: abhicks@bu.edu Joshua Goodman Boston University Wheelock College of Education 2 Silber Way Boston, MA 02215 E-Mail: edecjosh@bu.edu Jennifer G. Green Wheelock College of Education & Human Development 2 Silber Way Boston, MA 02215 E-Mail: jggreen@bu.edu Melissa Holt Wheelock College of Education & Human Development 2 Silber Way Boston, MA USA E-Mail: holtm@bu.edu

Measuring U.S. Core Inflation: The Stress Test of COVID-19 - Ball, Laurence M; Leigh, Daniel; Mishra, Prachi; Spilimbergo, Antonio (National Bureau of Economic Research Working Paper Series, 2021)
Large price changes in industries affected by the COVID-19 pandemic have caused erratic fluctuations in the U.S. headline inflation rate. This paper compares alternative approaches to filtering out the transitory effects of these industry price changes and measuring the underlying or core level of inflation over 2020-2021. The Federal Reserve’s preferred measure of core, the inflation rate excluding food and energy prices, has performed poorly: over most of 2020-21, it is almost as volatile as headline inflation. Measures of core that exclude a fixed set of additional industries, such as the Atlanta Fed’s sticky-price inflation rate, have been less volatile, but the least volatile have been measures that filter out large price changes in any industry, such as the Cleveland Fed’s median inflation rate and the Dallas Fed’s trimmed mean inflation rate. These core measures have followed smooth paths, drifting down when the economy was weak in 2020 and then rising as the economy has rebounded.
Author contact info: Laurence M. Ball Department of Economics Johns Hopkins University Baltimore, MD 21218 Tel: 410/516-7605 Fax: 410/516-7600 E-Mail: lball@jhu.edu Daniel Leigh International Monetary Fund Research Department 700 19th Street, NW Rm. 10-700N Washington, DC 20431 E-Mail: dleigh@imf.org Prachi Mishra IMF Research Department 700 19th Street NW Washington, DC 20431 E-Mail: pmishra@imf.org Antonio Spilimbergo International Monetary Fund 700 19th Street, N.W. Washington, DC 20431 E-Mail: aspilimbergo@imf.org

Innovation Networks and R&D Allocation - Liu, Ernest; Ma, Song (National Bureau of Economic Research Working Paper Series, 2021)
We study the cross-sector allocation of R&D resources in a multisector growth model with an innovation network, where one sector's past innovations may benefit other sectors' future innovations. Theoretically, we solve for the optimal allocation of R&D resources. We show a planner valuing long-term growth should allocate more R&D toward central sectors in the innovation network, but the incentive is muted in open economies that benefit more from foreign knowledge spillovers. We derive sufficient statistics for evaluating the welfare gains from improving R&D allocation. Empirically, we build the global innovation network based on patent citations and establish its empirical importance for knowledge spillovers. We evaluate R&D allocative efficiency across countries using model-based sufficient statistics. Japan has the highest allocative efficiency among the advanced economies. For the U.S., improving R&D allocative efficiency to Japan's level could generate more than 19.6% welfare gains.
Author contact info: Ernest Liu Department of Economics Princeton University 20 Washington Road Princeton, NJ 08540 E-Mail: ernestliu@princeton.edu Song Ma Yale School of Management 165 Whitney Avenue New Haven, CT 06511 Tel: 203/436-4687 E-Mail: song.ma@yale.edu

Zombie Lending and Policy Traps - Acharya, Viral V; Lenzu, Simone; Wang, Olivier (National Bureau of Economic Research Working Paper Series, 2021)
We build a model with heterogeneous firms and banks to analyze how policy affects credit allocation and long-term economic outcomes. When firms are hit by small negative shocks, conventional monetary policy can restore efficient bank lending and production by lowering interest rates. Large shocks, however, necessitate unconventional policy such as regulatory forbearance towards banks to stabilize the economy. Aggressive accommodation runs the risk of introducing zombie lending and a “diabolical sorting”, whereby low-capitalization banks extend new credit or evergreen existing loans to low-productivity firms. If shocks reduce the profitability gap between healthy and zombie firms, the optimal forbearance policy is non-monotone in the size of the shock. In a dynamic setting, policy aimed at avoiding short-term recessions can be trapped into protracted low rates and excessive forbearance, due to congestion externalities imposed by zombie lending on healthier firms. The resulting economic sclerosis delays the recovery from transitory shocks, and can even lead to permanent output losses.
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 Simone Lenzu 44 West Fourth Street Suite 9-79 New York, NY 10012 USA E-Mail: slenzu@stern.nyu.edu Olivier Wang New York University Kaufman Management Center 44 West Fourth Street New York, NY 10012 E-Mail: olivier.wang@nyu.edu

College Majors and Skills: Evidence from the Universe of Online Job Ads - Hemelt, Steven W; Hershbein, Brad; Martin, Shawn M; Stange, Kevin M (National Bureau of Economic Research Working Paper Series, 2021)
We document the skill content of college majors as perceived by employers and expressed in the near universe of U.S. online job ads. Social and organizational skills are general in that they are sought by employers of almost all college majors, whereas other skills are more specialized. In turn, general majors––Business and General Engineering––have skill profiles similar to all majors; Nursing and Education are specialized. These cross-major differences in skill profiles explain considerable wage variation, with little role for within-major differences in skills across areas. College majors can thus be reasonably conceptualized as portable bundles of skills.
Author contact info: 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 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

What Drives Variation in Investor Portfolios? Estimating the Roles of Beliefs and Risk Preferences - Egan, Mark L; MacKay, Alexander; Yang, Hanbin (National Bureau of Economic Research Working Paper Series, 2021)
We present an empirical model of portfolio choice that allows for the nonparametric estimation of investors’ (subjective) expectations and risk preferences. Utilizing a comprehensive dataset of 401(k) plans from 2009 through 2019, we explore heterogeneity in asset allocations across plans using our empirical framework. This framework enables us to recover investors’ beliefs about each asset and examine the implications and potential sources of those beliefs. Our estimates suggest that heterogeneity in expectations across investors accounts for twice as much variation in portfolio holdings as heterogeneity in risk aversion. Belief heterogeneity is driven in part by the idiosyncratic characteristics and experiences of investors, reflecting local sources of information such as county-level GDP and employers’ past performance. Our findings suggest that, to the extent it is distortive, belief heterogeneity imposes modest costs on the median investor in terms of foregone annual returns, though the costs for the upper quartile are significant.
Author contact info: Mark L. Egan Harvard Business School Baker Library 365 Soldiers Field Boston, MA 02163 Tel: 617/495-6823 E-Mail: megan@hbs.edu Alexander MacKay Harvard Business School Morgan Hall 221 Soldiers Field Boston, MA 02163 E-Mail: amackay@hbs.edu Hanbin Yang Harvard University E-Mail: hyang1@g.harvard.edu

Currency Wars, Trade Wars, and Global Demand - Jeanne, Olivier (National Bureau of Economic Research Working Paper Series, 2021)
This paper presents a tractable model of a global economy in which countries can use a broad range of policy instruments---the nominal interest rate, taxes on imports and exports, taxes on capital flows or foreign exchange interventions. Low demand may lead to unemployment because of downward nominal wage stickiness. Markov perfect equilibria with and without international cooperation are characterized in closed form. The welfare costs of trade and currency wars crucially depend on the state of global demand and on the policy instruments that are used by national policymakers. Countries have more incentives to deviate from free trade when global demand is low. Trade wars lower employment if they involve tariffs on imports but raise employment if they involve export subsidies. Tariff wars can lead to self-fulfilling global liquidity traps.
Author contact info: Olivier Jeanne Department of Economics Johns Hopkins University 582 Wyman Bldg. 3400 N. Charles Street Baltimore, MD 21218 Tel: 410/516-7604 Fax: 410/516-7600 E-Mail: ojeanne@jhu.edu

Monetary Policy and Endogenous Financial Crises - Boissay, Frederic; Collard, Fabrice; Galí, Jordi; Manea, Cristina (National Bureau of Economic Research Working Paper Series, 2021)
We study whether a central bank should deviate from its objective of price stability to promote financial stability. We tackle this question within a textbook New Keynesian model augmented with capital accumulation and microfounded endogenous financial crises. We compare several interest rate rules, under which the central bank responds more or less forcefully to inflation and aggregate output. Our main findings are threefold. First, monetary policy affects the probability of a crisis both in the short run (through aggregate demand) and in the medium run (through savings and capital accumulation). Second, a central bank can both reduce the probability of a crisis and increase welfare by departing from strict inflation targeting and responding systematically to fluctuations in output. Third, financial crises may occur after a long period of unexpectedly loose monetary policy as the central bank abruptly reverses course.
Author contact info: Frederic Boissay Centralbahnplatz, 2 CH-4002 Basel Switzerland E-Mail: frederic.boissay@bis.org Fabrice Collard Toulouse School of Economics E-Mail: fabrice.collard@gmail.com Jordi Galí Centre de Recerca en Economia Internacional (CREI) Ramon Trias Fargas 25 08005 Barcelona SPAIN Tel: 011-34-93-5422754 Fax: 011-34-93-5421860 E-Mail: jgali@crei.cat Cristina Manea Centralbahnplatz 2 Basel 4051 Switzerland Tel: +41763508670 E-Mail: cristina.manea@bis.org

Choice Overload? Participation and Asset Allocation in French Employer-Sponsored Saving Plans - Briere, Marie; Poterba, James M; Szafarz, Ariane (National Bureau of Economic Research Working Paper Series, 2021)
This paper employs administrative data from one of the largest plan providers in France to investigate the role of plan and default characteristics in affecting whether employees participate in the plan and whether they accept its default investment option. The dataset includes information on the saving choices of 680,392 active employees at 1,610 firms. French employers have wide discretion in structuring employee saving plans. All plans must offer medium-term investments, which cannot be accessed for five years. Employers may also offer long-term investments that cannot be accessed until retirement. When plans include a long-term option, participation is lower than when the plan offers only more liquid medium term investments. The presence of a long-term saving option also reduces the take-up of the plan’s default investment allocation, which must include a long-term component. One interpretation of the findings, consistent with the theory of choice overload, is that some employees are unwilling to forego the liquidity of the medium-term option but find it costly to make an active election when they opt out of the default, and therefore choose not to participate in the plan at all.
Author contact info: Marie Briere Amundi 91 bd Pasteur, 75015 Paris, France E-Mail: marie.briere@amundi.com James M. Poterba E-Mail: poterba@mit.edu Ariane Szafarz Av. F.D. Roosevelt, 50 CP 114/3 UniversitÃ© Libre de Bruxelles and Management Université Libre de Bruxelles Brussels, Belg 1050 Belgium Tel: +3226504865 E-Mail: ariane.szafarz@ulb.be

From Immediate Acceptance to Deferred Acceptance: Effects on School Admissions and Achievement in England - Terrier, Camille; Pathak, Parag A; Ren, Kevin (National Bureau of Economic Research Working Paper Series, 2021)
Countries and cities around the world increasingly rely on centralized systems to assign students to schools. Two algorithms, deferred acceptance (DA) and immediate acceptance (IA), are widespread. The latter is often criticized for harming disadvantaged families who fail to get access to popular schools. This paper investigates the effect of the national ban of the IA mechanism in England in 2008. Before the ban, 49 English local authorities used DA and 16 used IA. All IA local authorities switched to DA afterwards, giving rise to a cross-market difference-in-differences research design. Our results show that the elimination of IA reduces measures of school quality for low-SES students more than high-SES students. After the ban, low-SES students attend schools with lower value-added and more disadvantaged and low-achieving peers. This effect is primarily driven by a decrease in low-SES admissions at selective schools. Our findings point to an unintended consequence of the IA to DA transition: by encouraging high-SES parents to report their preferences truthfully, DA increases competition for top schools, which crowds out low-SES students.
Author contact info: Camille Terrier Faculty of Business and Economics University of Lausanne Internef 553 CH-1015 Lausanne-Dorigny Switzerland Tel: +41786376903 E-Mail: camille.terrier@unil.ch Parag A. Pathak Department of Economics, E52-426 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-7458 E-Mail: ppathak@mit.edu Kevin Ren 2211 Campus Drive Kellogg School of Management Northwestern University Evanston, IL 60208 USA E-Mail: kevin.ren@kellogg.northwestern.edu

Labor Reallocation and Remote Work During COVID-19: Real-time Evidence from GitHub - McDermott, Grant R; Hansen, Benjamin (National Bureau of Economic Research Working Paper Series, 2021)
We investigate the effect of the COVID-19 pandemic on labor activity using real-time data from millions of GitHub users around the world. We show that the pandemic triggered a sharp pattern of labor reallocation at both the global and regional level. Users were more likely to work on weekends and outside of traditional 9 am to 6 pm hours, especially during the early phase of the pandemic. We also document considerable heterogeneity between different user groups and locations. Some locations show a steady reversion back to historical work patterns, while others have experienced persistent trend deviations in the wake of COVID-19. The pattern of labor reallocation is slightly more pronounced among males in our sample, suggesting that men may have benefited more from the increased flexibility provided by remote work than women. Finally, we show that the pattern of reallocation was accompanied by a simultaneous increase in overall activity, though this effect is more transient. We discuss several potential mechanisms and draw tentative conclusions for broader workplace trends given our study population.
Author contact info: Grant R. McDermott Department of Economics 1285 University of Oregon Eugene, OR 97403-1285 E-Mail: grantmcd@uoregon.edu Benjamin Hansen Department of Economics 1285 University of Oregon Eugene, OR 97403 Tel: 541/357-8395 E-Mail: bchansen@uoregon.edu

Inequality in India Declined During COVID - Gupta, Arpit; Malani, Anup; Woda, Bartosz (National Bureau of Economic Research Working Paper Series, 2021)
We use a large, representative panel data set from India with monthly data on household finances to examine the incidence of economic harms during the COVID pandemic. We observe a sharp spike in poverty, peaking during India's sharp but short lockdown. However, there was a striking decrease in income inequality outside the lockdown. There was a smaller decrease in consumption inequality, likely due to consumption smoothing. Evidence supports two mechanisms for the decline in income inequality: the capital income of top-quartile earners covaries more with aggregate income, and demand for labor fell more for higher quartiles.
Author contact info: Arpit Gupta E-Mail: arpit.gupta@stern.nyu.edu Anup Malani University of Chicago Law School 1111 E. 60th Street Chicago, IL 60637 Tel: 773/702-9602 E-Mail: amalani@uchicago.edu Bartosz Woda University of Chicago Law School 1111 E. 60th St. Chicago, IL 60637 USA E-Mail: bartekwoda@gmail.com

Behavioral Responses to Supply-Side Drug Policy During the Opioid Epidemic - Balestra, Simone; Liebert, Helge; Maestas, Nicole; Sherry, Tisamarie B (National Bureau of Economic Research Working Paper Series, 2021)
We investigate behavioral responses to a staggered disruption in the supply of prescription opioids across U.S. states: the introduction of electronic Prescription Drug Monitoring Programs (PDMPs). Using administrative datasets, we find PDMPs curtail the proliferation of prescription opioids. Physicians respond to monitoring on the extensive margin, limiting the number of patients to whom they prescribe opioids without adjusting dosage or duration. This decreases supply to long-term opioid users, who evade the restrictions by acquiring prescriptions from out-of-state prescribers and by substituting to heroin. This causes a surge in heroin overdoses, which offsets reductions in hospitalizations and deaths from prescription opioids.
Author contact info: Simone Balestra University of St. Gallen Varnbüelstrasse 14 9000 St. Gallen Switzerland E-Mail: simone.balestra@unisg.ch Helge Liebert Department of Economics University of Zurich Schönberggasse 1 Zurich 8001 Switzerland E-Mail: helge.liebert@econ.uzh.ch 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 Tisamarie B. Sherry RAND Corporation Arlington, VA E-Mail: tisa.sherry@gmail.com

Racial Inequality in Unemployment Insurance Receipt and Take-Up - Kuka, Elira; Stuart, Bryan A (National Bureau of Economic Research Working Paper Series, 2021)
This paper studies differences in receipt and take-up of unemployment insurance (UI) benefits among white and Black individuals. We combine state-level UI regulations with data containing detailed information on individuals’ work history and UI receipt. Black individuals who separate from a job are 24% less likely to receive UI than whites. The UI receipt gap stems primarily from lower take-up of UI benefits among likely eligible individuals, as opposed to differences in benefit eligibility. Statistical decompositions indicate that about one-half of the take-up gap is explained by Black workers’ lower pre-unemployment earnings and higher tendency to live in the South.
Author contact info: Elira Kuka Economics Department The George Washington University 2115 G Street NW Monroe Hall 340 Washington, DC 20052 E-Mail: ekuka@gwu.edu Bryan A. Stuart Federal Reserve Bank of Philadelphia Research Department 10 Independence Mall Philadelphia, PA 19106 USA E-Mail: bryan.stuart@phil.frb.org

International Evidence of Strengthening Taxes and Spending For Sustainable Development - Aizenman, Joshua; Jinjarak, Yothin; Nguyen, Hien; Park, Donghyun (National Bureau of Economic Research Working Paper Series, 2021)
We trace the linkages between the episodes of fiscal expansion and consolidation in 72 advanced and emerging and developing economies. The findings suggest that fiscal expansions are positively associated with economic growth, which in turn is positively linked with better sustainable development outcomes. The association between fiscal consolidation and growth as well as the sustainable development indicators, however, is not clear-cut. Jointly, more tax revenues and expenditures, together with better governance help explain the association between economic growth and inclusive development. High-income, high-tax-revenue, and manufacture-exporting economies have made significant progress on reducing disease-linked mortality and improving environment protection along with economic growth. Meanwhile, emerging and developing, low-tax-revenue, and commodity-exporting economies have gained notable improvement in poverty reduction, pre-primary enrolment and access to basic sanitation services and clean cooking fuels and technologies, and lowering bribery incidence. On average, the sampled economies have persistently achieved better primary goals such as sanitation, clean fuels and technologies. Achievements in mortality reduction, and environmental protection goals are shown more recently.
Author contact info: Joshua Aizenman Economics and SIR University of Southern California University Park Los Angeles, CA 90089-0043 Tel: 213-740-4066 E-Mail: aizenman@usc.edu Yothin Jinjarak ERCD Asian Development Bank Mandaluyong City 1550 Metro Manila, Philippines E-Mail: yjinjarak@adb.org Hien Nguyen School of Economics and Finance Victoria University of Wellington Rutherford House, Room 328 Wellington 6011 New Zealand Tel: +64 02041598093 E-Mail: hien.nguyen@vuw.ac.nz Donghyun Park Economic Research and Development Impact Department Asian Development Bank Manila, Philippines Tel: (632) 632-5825/6385 Fax: (632) 636-2342 E-Mail: dpark@adb.org

The Impact of the COVID-19 Vaccine Distribution on Mental Health Outcomes - Agrawal, Virat; Cantor, Jonathan H; Sood, Neeraj; Whaley, Christopher M (National Bureau of Economic Research Working Paper Series, 2021)
The COVID-19 pandemic has led to a “second pandemic” of anxiety and depression. While vaccines are primarily aimed at reducing COVID-19 transmission and mortality risks, they may have important secondary benefits. We use data from U.S. Census Bureau’s Household Pulse Survey merged to state-level COVID-19 vaccination eligibility data to estimate the secondary benefits of COVID-19 vaccination on mental health outcomes. To address endogenous COVID-19 vaccination, we leverage state-level variation in the timing of when age groups are eligible for vaccination. We estimate that COVID-19 vaccination reduces anxiety and depression symptoms by nearly 30%. Nearly all the benefits are private benefits, and we find little evidence of spillover effects, that is, increases in community vaccination rates are not associated with improved anxiety or depression symptoms among the unvaccinated. We find that COVID-19 vaccination is associated with larger reductions in anxiety or depression symptoms among individuals with lower education levels, who rent their housing, who are not able to telework, and who have children in their household. The economic benefit of reductions in anxiety and depression are approximately $350 billion. Our results highlight an important, but understudied, secondary benefit of COVID-19 vaccinations.
Author contact info: Virat Agrawal USC Sol Price School of Public Policy Los Angeles, CA 90089 United States E-Mail: viratagr@usc.edu Jonathan H. Cantor RAND Corporation 1776 Main Street Santa Monica, CA 90401 E-Mail: jcantor@rand.org Neeraj Sood Schaeffer Center for Health Policy and Economics Sol Price School of Public Policy University of Southern California University Park Campus Los Angeles CA 90089 Tel: 310/393-0411 Fax: 310/260-8156 E-Mail: nsood@healthpolicy.usc.edu Christopher M. Whaley Brown University 121 South Main Street Providence, RI 02912 United States E-Mail: christopher_whaley@brown.edu

Spatial Equilibria: The Case of Two Regions - Kucheryavyy, Konstantin; Lyn, Gary; Rodríguez-Clare, Andrés (National Bureau of Economic Research Working Paper Series, 2021)
In this paper we characterize the set of equilibria in a generalized version of the canonical two-region economic geography model that nests the class of models in Allen and Arkolakis (2014) as well as Krugman (1991) and features an input-output loop. We provide sufficient conditions for uniqueness of equilibria that — in contrast to the well-know result in Allen and Arkolakis (2014) — allow for positive agglomeration externalities, which concentrate economic activity, even in the absence of congestion effects, which disperse it, and highlight the key role played by three additional parameters: the trade elasticity, which regulates the strength of the dispersion force associated with the decline in the terms of trade caused by migration into a region; trade costs, which weaken this dispersion force by limiting trade across regions; and the importance of the agricultural sector, which pushes against agglomeration forces in manufacturing.
Author contact info: Konstantin Kucheryavyy City University of New York, Baruch College Department of Economics and Finance, office 10-252 One Bernard Baruch Way New York, NY 10010 United States E-Mail: konstantin.kucheryavyy@baruch.cuny.edu Gary Lyn Department of Economics Iowa State University Ames, IA 50011 E-Mail: garyl.lyn@gmail.com Andrés Rodríguez-Clare University of California at Berkeley Department of Economics Berkeley, CA 94720-3880 E-Mail: arc@berkeley.edu